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Monday, May 20, 2013

Status of Federal Funding for State Implementation of Health Insurance Exchanges

Annie L. Mach
Analyst in Health Care Financing

Alex C. Engler
Research Associate

C. Stephen Redhead
Specialist in Health Policy

The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) requires health insurance exchanges to be established in every state by January 1, 2014. ACA intends exchanges to be marketplaces where individuals and small businesses can “shop” for health insurance coverage. An exchange may be established by the state itself as a state-based exchange; otherwise, an exchange will be established by the Secretary of Health and Human Services (HHS) as either a partnership exchange, whereby a state partners with HHS to establish and administer an exchange, or as a federally facilitated exchange wholly operated and administered by HHS.

ACA provided an indefinite appropriation for HHS grants to states to support the planning and establishment of exchanges. For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants. No grant may be awarded after January 1, 2015.

There are three different types of exchanges grants. First, planning grants were awarded to 49 states, the District of Columbia, and four territories. These grants of about $1 million each were intended to provide resources to states to help them plan their health insurance exchanges. Three states returned all or a portion of those funds. Second, there have been multiple rounds of exchange establishment grants. There are two levels of exchange establishment grants: level one establishment grants are awarded to states that have made some progress using their planning funds, and level two establishment grants are designed to provide funding to states that are farther along in the establishment of an exchange. Finally, HHS awarded seven early innovator grants to states (including one award to a consortium of New England states) to support the design and implementation of the information technology systems needed to operate the exchanges. Three states returned their early innovator grant funds.

To date, HHS has awarded a total of $3.8 billion to states and the District of Columbia (DC) in planning, establishment, and early innovator grants.

This report will be periodically revised and updated to reflect important administrative developments and further rounds of exchange grant awards.

Date of Report: May 8, 2013
Number of Pages: 11
Order Number: R43066
Price: $29.95

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