7 states get grants to develop online shopping systems for health insurance

The Obama administration awarded $241 million in grants to seven states to develop new Internet-based systems that would let many Americans shop for health insurance online.

These so-called exchanges, a key foundation of the health overhaul that President Obama signed last March, are intended to make buying a health plan comparable to shopping the Internet for an airline ticket or a hotel room. The exchanges would begin operation in 2014.

An estimated 24 million Americans who do not get their health insurance from their employer are expected to use these state-based exchanges by 2019, according to the nonpartisan Congressional Budget Office.

Small employers also will be able to use the exchanges, which must offer plans with a minimum level of coverage to be set by the federal government.

Developing the technology to make such a virtual marketplace work is expected to be costly, however. Administration officials hope the grants awarded Wednesday will allow a few states to build systems that others will be able to adopt.

“We know that states understand their health needs better than anyone else, so the law actually puts states in the driving seat,” Health and Human Services Secretary Kathleen Sebelius said. “I know well that states are the laboratories of our democracy and the laboratories of innovation.”

The states receiving grants, which were appropriated by the law last year and thus insulated somewhat from the current budget battle on Capitol Hill, are: Kansas ($31.5 million), Maryland ($6.2 million), Massachusetts ($35.6 million), New York ($27.4 million), Oklahoma ($54.6 million), Oregon ($48.1 million) and Wisconsin ($37.8 million).

Kansas and Missouri are discussing forming a partnership, according to the administration.

Massachusetts, which created its own exchange in 2006, already is partnering with Connecticut, Maine, Rhode Island and Vermont to develop technology for the new exchanges.

In a sign of the sometimes odd nature of healthcare politics, Kansas, Oklahoma and Wisconsin have Republican governors who have complained bitterly about the new law and are challenging its constitutionality in federal court.

noam.levey@latimes.com