Grants awarded for state health insurance exchanges

The Obama administration awarded 49 grants Thursday to states and the District of Columbia to plan for new health insurance exchanges designed to help Americans shop for health plans beginning in 2014.

These state-based exchanges, a key foundation of the new healthcare law, are to become the central Internet-based marketplace for consumers who do not get health benefits at work.

By 2019, about 24 million Americans are expected to shop for coverage on the exchanges, choosing among health plans offering a variety of benefits that meet basic government standards. Starting in 2014, most Americans will also be required by the law to get insurance, either through their jobs or on their own.

Massachusetts and Utah already have exchanges, which they created before the federal healthcare law passed in March.

Most states, however, are just beginning to work on setting up their exchanges, which will probably require new Internet systems, new consumer assistance and new regulatory oversight.

Officials at the Department of Health and Human Services said Thursday that the grants, each about $1 million, would help states begin designing the systems and hiring staff.

Joel Ario, a former Pennsylvania insurance commissioner who is overseeing the federal effort, said the administration was also looking to state lawmakers to pass necessary legislation in 2011 to set up the exchanges.

“That is a critical legislative year,” Ario said, noting that the administration expects “robust activity” next year.

Only Minnesota and Alaska, both of which earlier turned down grants designed to bolster state oversight of insurance premiums, did not apply for an exchange grant.

A month ago, Minnesota Gov. Tim Pawlenty, a Republican widely expected to run for president, ordered state officials not to apply for “discretionary” federal healthcare money.

Alaska Insurance Division Director Linda Hall said state officials did not seek the money because they opposed the new insurance mandate in the law. “We are not going to create an instrument to implement something that is unconstitutional,” she said, noting that the state still may decide to create an exchange.

Alaska and Minnesota are among a group of states suing to overturn the mandate.

If a state chooses not to set up an insurance exchange in 2014, the new law requires the federal government to step in and operate one.

noam.levey@latimes.com