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The Affordable Care Act helps create a new competitive private health insurance market – through state-run health insurance Exchanges -- that will give millions of Americans and small businesses access to affordable coverage, and the same choices of insurance that members of Congress will have. Today, the Department of Health and Human Services announced the availability of up to $1 million in grants per state to help states begin work to establish these Exchanges and called for public input on the rules that Exchanges will be required to follow.

High-Quality, Affordable Choices for the American People

Today, many individuals and small businesses are on their own when trying to find affordable health insurance.  Because they lack purchasing power and the ability to pool risk, individuals and small businesses too often pay higher rates when it comes to insurance.  The Affordable Care Act changes that by putting greater control and greater choice in the hands of individuals and small businesses through Exchanges.

Starting in 2014, improved choices will be offered through health insurance Exchanges – new, competitive, state-run and consumer-centered health insurance marketplaces.  The Exchanges will make purchasing health insurance easier by providing eligible consumers and businesses with “one-stop-shopping” where they can compare and purchase health insurance coverage.  In the Exchanges, Americans who choose to use them will also have access to a wide range of customer assistance tools – including information about prices, quality, and physician and hospital networks – to help them make the best choice for themselves, their families, or their employees. And the plans offered in the Exchanges will be required to provide at least a basic level of comprehensive benefits.   Competitive state Exchanges will also keep prices low by:

• Increasing competition among private insurance plans through greater comparative shopping and more informed consumers; and
• Providing small businesses the same purchasing power in Exchanges as large businesses.

Additionally, the increased competition in the Exchanges combined with provisions in the law to streamline administrative costs by standardizing forms and reducing the amount of paperwork doctors are forced to complete will reduce average premiums for a comparable package of benefits by 7 to 10 percent, according to the Congressional Budget Office.  And provisions in the law that prohibit insurance companies from discriminating against Americans with pre-existing conditions will force insurance companies to provide high-quality benefits at a competitive price, rather than working to only insure the healthiest Americans.

Millions of Americans will have the opportunity to purchase insurance in the exchanges and the exchanges will be the sole venue where Members of Congress will get their health insurance.

Exchange Planning Grants

The Affordable Care Act authorized State Planning and Establishment Grants to help States establish health insurance Exchanges. Today, HHS announced the availability of the first round of funding - up to $1 million for each State and the District of Columbia. 

Although state Exchanges are not required to be up and running until 2014, work is already underway to conduct the necessary market research and planning.   These grants will give states the resources to conduct the research and planning needed to build a better health insurance marketplace and determine how their Exchanges will be operated and governed. States can use these funds for a variety of initial planning activities including, but not limited to:

• Assessing current information technology (IT) systems and determining any needs,
• Planning for consumer call centers to answer questions from their residents
• Developing partnerships with community organizations to gain public input into the Exchange planning process. 

Grant applications are available now by visiting http://www.healthcare.gov/center/grants and searching for CFDA number 93.525.  Grant applications must be filed by September 1, 2010 and HHS expects to award grants soon thereafter.

Future funding will support development and implementation activities that States will undertake through 2014.

Each State has the option to establish and operate its own Exchange or partner with another state or states to operate a multi-state Exchange. If a State decides not to create an Exchange for its residents, HHS will help establish one on their behalf.  This offers states flexibility while making sure Americans have access to affordable new coverage options available under the Affordable Care Act.

Soliciting Public Input on Exchanges

Keeping with President Obama’s commitment to transparency and open government, HHS today published a Request for Comment, inviting the public to share their thoughts as HHS develops the rules that will govern the Exchanges. In particular, HHS asks States, consumer advocates, employers, insurers, and other interested stakeholders to comment on the types of standards Exchanges should be required to meet.

The public is encouraged to provide input on a variety of specific topics related to Exchanges, as well as information regarding general Exchange standards. HHS will use this input in developing the standards to support the establishment and operation of Exchanges. Comments are due by October 4, 2010.  Read the complete request for comment by visiting http://www.healthcare.gov/center/regulations.

What Does This Mean for You?

Today, many individuals and small businesses struggle to find affordable health coverage options that meet their needs.  A 2007 survey by the Commonwealth Fund found that 73% of individuals searching for coverage on the individual market gave up without purchasing a policy.

Exchanges will offer individuals and small businesses a choice of health plans that are both affordable and provide access to high-quality care. Through the Exchanges, people will be able to compare competing health insurance options and choose the one that fits their needs.

Exchanges will also help Americans struggling with the costs of health coverage to find affordable options.  Individuals and families with incomes between 133% and 400% of the Federal poverty line (up to $43,000 for an individual or $88,000 for a family of four in 2010) who do not have access to other affordable coverage will be eligible for tax credits that will make it easier to afford coverage offered in the Exchange.  The Exchanges will also help those who are eligible to enroll in State Medicaid and Children’s Health Insurance Programs (CHIP).  Small businesses with up to 100 employees will have access to state-based Small Business Health Options Program (SHOP) Exchanges, which will expand their purchasing power. And an estimated 4 million small businesses nationwide could qualify for a small business tax credit this year, which will provide a total of $40 billion in relief for small firms over the next 10 years. Combined, these tax credits for individuals and small businesses are the single largest tax cut aimed at health care in American history.

The steps taken today to thoughtfully and carefully move forward in establishing the health insurance Exchanges will help meet the health coverage needs of Americans.