The U.S. Health and Human Services Department has provided states, already hard at work on preparation, with a proposed “framework” to establish health exchanges, including an offer to partner on developing local health exchanges.

Kathleen Sebelius

Included in the guidance are proposed rules setting minimum standards for exchanges, which HHS says “give states the flexibility they need to design Exchanges that best fit their unique insurance markets, and are consistent with steps states have already taken to move forward with Exchanges,” according to a statement. The health exchanges are a key component of the Patient Protection and Affordable Care Act, the landmark health reform legislation passed in March 2010.

For example, the guidance allows states to decide whether their exchanges should be local, regional, or operated by a non-profit organization, how to select plans to participate, and whether to partner with HHS to “split up the work,” according to its announcement.

Also, “to reduce duplication of effort and the administrative burden on the states,” according to the statement, “HHS also announced that the federal government will partner with states to make Exchange development and operations more efficient.”

States can opt to partner or develop an exchange on their own, the statement says.

The HHS said the option “provides states more flexibility to focus their resources on designing the right Exchanges for their local insurance markets.”

Critics of the exchanges are likely to paint HHS’ partnership proposal as further proof that the government ultimately wants to take a far greater role in or even take control of all health care delivery in the U.S.

Billed as “Affordable Health Exchanges” in its statement, HHS appeared to be providing additional details to states on how they should create the required health exchanges, where individuals and small businesses, starting in January 2014, will be able to compare health plan prices, buy coverage and obtain federal subsidies.

Echoing the comments of President Barack Obama and Democratic congressional leaders for almost two years, the HHS statement also notes that the framework will enable people and small businesses to have the same insurance choices as members of Congress.”

“Exchanges offer Americans competition, choice, and clout,” said HHS Secretary Kathleen Sebelius in the 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.”

The guidance provided by HHS involves:

• Setting standards for establishing exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an exchange, and certifying health plans for participation in the exchange
• Ensuring premium stability for plans and enrollees in the exchange, especially in the early years as new people come in to exchanges to shop for health insurance.

“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 Center for Consumer Information and Insurance Oversight Director Steve Larsen in the statement. “This regulation allows us to meet states where they are.”

The proposals, according to the Obama Administration, build on over a year’s worth of work with states, small businesses, consumers and health insurance plans and offer states substantial flexibility.

In drafting these proposals, the administration said, it examined models of exchanges, held numerous meetings with stakeholders and consulted closely with state leaders, consumer advocates, employers and insurers.

People can comment on the proposed rules over the next 75 days.