Exchanges will function as online marketplaces where people who don't get health coverage through an employer can buy private insurance, usually with help from a government subsidy.
Illinois Gov. Pat Quinn (D) praised President Obama in announcing the conditional approval.
Although the partnership model is partially geared toward Republican governors who resisted state-based exchanges until it was too late to establish one, the model is available to any state that isn't ready to meet the Oct. 1 deadline for open enrollment.
States can either remain partners with the federal government or gradually take over more of their exchanges as they're able.