States gearing up for health insurance exchange spending spree

States are poised to go on a health insurance exchange spending spree with money in the bank from the federal government.

As Republicans in Congress continue to gripe about spending on the health reform law, a new Government Accountability Office report (PDF) found that although HHS has awarded around $3.7 billion to states to help establish health insurance exchanges, just over 10% of it—$380 million—had been spent as of March. Around 80% of that $380 million was spent on contracts and consulting, most of which went toward building out information technology systems.

But with just three months to go until exchanges begin trying to enroll millions of Americans in plans, states are likely to burn through the rest of that money soon, GAO said.

Forty-nine states and the District of Columbia received the grants. The smallest one was the $800,000 delivered to sparsely populated Wyoming, where state leaders set up a steering committee to study the feasibility of running an exchange and ultimately deferred to the feds. The largest sum—$911 million—went to California, the most populous state and an enthusiastic partner in carrying out the reform law.

Although only 12 “level 2 establishment” grants were awarded, they accounted for 54% of the overall $3.7 billion. Meanwhile, 49 states drew exchange planning grants (the least advanced level)—but those accounted for just $51 million, or 1%, of the total.

And spite of the federal help, only 16 states and D.C. will operate their own exchanges this year.

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