Web-Based Insurance Exchanges Attract $1 Billion+

Recent federal investments in state health insurance exchanges bring total grant funding to more than $1 billion. Needed next: strong security.
9 Health IT Tools Patients Should Understand
9 Health IT Tools Patients Should Understand
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Even while the fate of the Patient Protection and Affordable Care Act and its provision to establish state health insurance exchanges (HIXs) await a Supreme Court decision, the federal government is pressing ahead, recently announcing that it will distribute more than $181 million to six states to establish their exchanges. This brings the total spent on exchange-related grants provided to states to more than $1 billion over the last two years.

In a statement, the U.S. Department of Health and Human Services said Illinois, Nevada, Oregon, South Dakota, Tennessee, and Washington will receive the grants to build these exchanges. Health insurance exchanges are websites where consumers and small businesses in each state can compare prices and choose a private health insurance plan to suit their needs.

According to HHS figures, in 2010, 49 states, the District of Columbia, and 4 territories received exchange planning grants totaling more than $54 million; in 2011, seven states received more than $249 million in Early Innovator grants. Also in 2011, 33 states and the District of Columbia received more than $667 million in establishment grants. With the announcement of an additional $181 million and one additional state awardee (South Dakota will receive its first establishment grant), the total establishment grants now exceed $1 billion.

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"The announcement is not surprising," Janice Young, program director at IDC Health Insights, told InformationWeek Healthcare. "Despite the Supreme Court review of the reform legislation, investment in state health insurance exchanges continues to be listed as a priority among health plan investments."

According to Young, recent polling by IDC Health Insights shows that many health insurers are gearing up to meet the target date of January 1, 2014, which is when health insurance exchanges are scheduled to become fully operational and consumers in every state can purchase health coverage through their HIX.

"In our January 2012 survey, 54% of health plans indicated that planned budget increases were due to investments in health insurance exchange strategies (compared to 34% for Accountable Care Organizations)," Young said. "So over half of health plans and many states have actively continued investments despite the [Supreme Court] reform review, and most appear to expect exchange initiatives to move forward in many states, even if they are not federally mandated."

Each state-based exchange will require a robust health IT infrastructure to support secure websites where eligible customers and businesses can compare health plans and send and receive information electronically for applications and verification of personal data. Each exchange must also establish strong standards to protect and secure the privacy of personally identifiable information (PII) provided by the applicant.

Illinois, Nevada, Oregon, South Dakota, and Tennessee have been awarded Level One Exchange Establishment grants, which provide one year of funding to states that have begun the process of building their exchange. Washington is the second state to be awarded a Level Two Establishment grant, which HHS provides to states that are further along in building their exchange.

HHS also issued two guidance documents to help states build their exchanges:

--Draft Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges is a guide that states can use to demonstrate how their HIX will work to offer a wide range of competitively priced private health insurance options. The blueprint also outlines the application process for states seeking to enter into a partnership exchange with HHS. If a state chooses to operate its own exchange or a partnership exchange, HHS will review and potentially approve or conditionally approve the exchange no later than Jan. 1, 2013, so it can begin offering coverage on Jan. 1, 2014.

--General Guidance on Federally-facilitated Exchanges explains that if a state decides not to operate an HIX for its residents, HHS will operate a federally facilitated exchange (FFE). The guide describes how HHS will consult with a variety of stakeholders to implement the exchange where necessary, and it clarifies how states can partner with HHS to implement selected functions in an FFE. It also outlines key policies organized by exchange function.

According to HHS, states can apply for exchange grants through the end of 2014, and these funds are available for states to use beyond 2014 as they continue to establish exchange functionality. This ensures that states have the support and time necessary to build the best exchange for their residents.

The 2012 InformationWeek Healthcare IT Priorities Survey finds that grabbing federal incentive dollars and meeting pay-for-performance mandates are the top issues facing IT execs. Find out more in the new, all-digital Time To Deliver issue of InformationWeek Healthcare. (Free registration required.)

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