HHS: Exchanges rule gives flexibility to states

Obama administration officials emphasized flexibility for the states as they rolled out a highly anticipated regulation on insurance exchanges Monday.

The healthcare law requires the Health and Human Services Department to run a federal exchange in any state that doesn't establish its own, but HHS's regulation provides some leeway for states that need extra time or help with some parts of their exchanges.

"I think it's normal that you're going to have states moving at different paces, for a whole host of different reasons," said Steve Larsen, the director of the HHS office overseeing implementation of the new law.

In 2013, HHS is supposed to either certify that states will have their own exchanges in place by 2014 or step in to run the federal fallback. The regulation released Monday provides a third option: a "conditional approval" for states that haven't met all of HHS's criteria by 2013 but are still likely to be ready by 2014.

Policy analysts and consumer advocates have said they would have expected the states to be further along in setting up exchanges. Ten states have enacted laws to establish an exchange.

Larsen said it's too early to predict how many states will establish their own exchanges and how many will rely on the federal marketplace.

The exchange regulation says HHS can handle certain parts of a state's exchange without running the whole thing. Joel Ario, who leads HHS's exchanges office, said HHS might handle enrollment processes and other information technology components for some states.