The Departments of Health and Human Services and The Treasury took the next steps to set up Affordable Insurance Exchanges, one-stop marketplaces in which customers can select a private health insurance place that suits their health needs and have similar insurance choices as members of Congress.

Along with other policies, the proposed rules explain how middle-class families will obtain access to unprecedented tax relief that will significantly cut down the cost of coverage.

More than half of the states have taken actions to build an Exchange, since President Obama signed the Affordable Care Act on March 23, 2010. Yesterday, HHS awarded $185 million to 13 states and the District of Columbia to assist them in building Affordable Insurance Exchanges and, with theTreasury, posted three proposed rules that will offer a simple, streamlined, and affordable path for customers to use the Exchanges to obtain private health insurance.

Furthermore, HHS Secretary Kathleen Sebelius sent a letter to governors displaying options and resources available to states to set up their Exchanges. Secretary Sebelius explained:

“Too many American families have been priced out or locked out of the health insurance market. Exchanges will give them control and could save them thousands of dollars a year. I am encouraged by the progress states have made to date and am excited to give them more resources to continue their work.”

Treasury Secretary Tim Geithner said:

“Today were laying the foundation to provide tax incentives to help working families purchase health insurance. This new tax credit brings us a big step closer to achieving one of the signature goals of the Affordable Care Act to provide tens of millions of Americans with access to affordable health insurance coverage.”

Beginning in 2014, the Affordable Care Act creates Affordable Insurance Exchanges that will allow those individuals, families and small businesses who qualify to shop for coverage. Over half the states have already taken action to start building an Exchange and the new grant awards will speed up that process. The Exchange Establishment grants awarded today build on prior investments in states. HHS gave 49 states and the District of Columbia $50 million to start planning their Exchanges in 2010. HSS expects the make additional grant awards in following months.

The three proposed rules released by HHS and Treasury focus on the following:

  • Easy, Simple Access to Coverage for Consumers and Small Businesses: New rules will make it simple for customers to join high-quality health plans and get help paying for health coverage through premium tax credits and cost sharing reductions. Small employers taking part in the Small Business Health Options Program will be able to give their employees a choice of health plans and cut their costs with new tax credits.
  • Health Insurance Premium Tax Credit: Individuals and families will receive premium tax credits to help defray insurance costs, increasing access to health coverage for millions of middle class American families.
  • Medicaid Eligibility: Coordinating the Exchange with Medicaid and Children’s Health Insurance Program eligibility will make enrollment seamless for qualified Americans and reduce the administrative burden on states.

Sebelius lays out in her letter to Governors, an innovative partnership that will let states work with HHS to build Exchanges while making more efficient use of shared resources. The letter solicits comments from states on how the partnership model can build on the considerable flexibility states have when creating an Exchange that works for them.

In following weeks, the administration will lead an aggressive outreach campaign and ask the public comment on the proposed rules from employers, consumers, state leaders, health care providers and insurers and the American People. While also accepting public comments for the next 75 days, the departments will hold forums making sure more Americans have the chance to share their views regarding the establishment of Affordable Insurance Exchanges.

Forums will be held in:

  • Atlanta, GA
  • Chicago, IL
  • Denver, CO
  • New York, NY
  • Portland, OR
  • Sacramento, CA

Based on the feedback HHS receives from the American people, the departments expect to modify the proposed rules issued yesterday.

Detailed list of states to receive grants.

Written by Petra Grattue