Gov't issues draft rules for affordable health insurance exchanges

States can design their own exchanges or work with the federal government to develop one

The U.S. Department of Health and Human Services on Monday issued draft rules for how states should establish affordable health insurance exchanges, which will create marketplaces where individuals and businesses can compare private insurance plans.

Starting in 2014, health insurance exchanges will allow people to compare health insurance online on the basis of price, coverage and other options. People will also be able to use the exchanges to submit questions to insurers and find out if they're eligible for tax credits for private insurance programs, or if they qualify for public programs, such as the Children's Health Insurance Program (CHIP).

To date, 49 states, the District of Columbia and four territories have accepted federal grants to set up insurance exchanges.

States can choose to develop health insurance exchanges in partnership with the federal government or develop the systems themselves.

"Exchanges offer Americans competition, choice, and clout," HHS Secretary Kathleen Sebelius said in a statement. "Insurance companies will compete for business on a transparent, level playing field, driving down costs; and exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs."

HHS's new draft rules offer states guidance and options on how to structure affordable insurance exchanges in two key areas: Setting standards for establishing exchanges, and ensuring insurance premium stability for plans and enrollees in the exchange.

The rules also provide guidance on how states can set up a Small Business Health Options Program (SHOP), performing the basic functions of an exchange, and certifying health plans for participation in the exchange.

"States are leading the way in implementing health reform, and today's announcement builds on that momentum by giving states flexibility to design the exchange that works for them," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight. "This regulation allows us to meet states where they are."

HHS is accepting public comment on the proposed rules over the next 75 days, and it will hold a series of regional listening sessions and meetings.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His email address is

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