HHS gives $1.5 billion in grants to 11 states to set up health exchanges

The U.S. Department of Health and Human Services announced Thursday that it is giving $1.5 billion in grants to 11 states to launch or further develop health insurance exchanges.

Those states are California, Delaware, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon and Vermont.

“These states are working to implement the health care law, and we continue to support them as they build new affordable insurance marketplaces,” HHS Secretary Kathleen Sebelius said in a statement. “Starting in 2014, Americans in all states will have access to quality affordable health insurance, and these grants are helping to make that a reality.”

State exchanges are a key part of the Patient Protection and Affordable Care Act. Millions of lower-income uninsured individuals, for example, will receive federal premium subsidies, starting in 2014, to buy coverage through the exchanges, while small employers also will be able to purchase coverage in exchanges for their employees.

Different levels of grants

Delaware, Iowa, Michigan, Minnesota, North Carolina, and Vermont received Level One Exchange Establishment Grants, which are one-year grants states will use to build marketplaces.

California, Kentucky, Massachusetts, New York, and Oregon received Level Two Exchange Establishment Grants. Level Two grants are multiyear awards to states to further develop their marketplaces. Massachusetts, under a 2006 law, already operates two insurance exchanges, but it will need to make certain changes to comply with the federal health care reform law.

In all, 17 states plus the District of Columbia have announced they intend to operate exchanges. Other states such as Arkansas say they will enter partnership arrangements with HHS.

The federal government will operate exchanges in states that decline to set up their own exchanges or do not enter into partnership agreements with HHS.