Two states turn down federal grants for insurance exchanges

Alaska and Minnesota were the only two states to turn down federal grants for the development of insurance exchanges, the Department of Health and Human Services announced Thursday.

HHS announced that 48 states and the district of Columbia were receiving a total of $49 million to help them research and plan how to set up a health insurance exchange. The health reform law requires states to have exchanges up and running by 2014; the federal government will take over in states that don't set up their own exchanges.

Joel Ario, the director of the Office of Health Insurance Exchanges at HHS, said it would be "premature" to say that the states that have asked for money will be setting up their own exchanges. Rather, he explained, the grants will allow them to determine if setting up their own exchange is feasible.

On the flip side, the two states that didn't apply for the grants aren't necessarily ruling out starting their own exchange either.

Minnesota Gov. Tim Pawlenty (R), who is mulling a presidential run in 2012, has said he doesn't want to apply for federal grants tied to a law he disagrees with.

And Alaska Insurance Director Linda Hall told The Hill that the state does not want federal funds to set up an exchange that would require people to buy insurance. Alaska is a party to the 20-state lawsuit questioning the constitutionality of the individual mandate.

That's not to say that the state would reject operating its own exchange, she said: "There are a lot of things to consider."

Ario said more grants should be available in early 2011 to help states establish their exchanges. Next year, he said, will be a "critical legislative year" for states to enact bills creating their exchanges if they're going to meet the Jan. 1, 2013 deadline by which HHS will certify that they'll be ready to run their own show in 2014.

The grants announced Thursday cover such issues as: 

- Assessing current information technology (IT) systems and infrastructure and determining new requirements; 

- Developing partnerships with community organizations to gain public input into the exchange planning process;

_ Planning for consumer call centers to answer questions from their residents; 

_ Determining the statutory rules needed to build the exchanges;

_ Hiring key staff and determining ongoing staffing needs;

- Planning the coordination of eligibility and enrollment systems across Medicaid, the Children's Health Insurance Program (CHIP), and the exchanges; and 

_ Developing performance metrics, milestones and ongoing evaluation.