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GAO Reviews Federal Grants to States for Health Insurance Exchanges



This week in Washington—GAO officials review federal grants awarded to states for their health insurance exchanges. You are tuning in to America’s Essential Hospitals’ health policy update for the week of July 8, 2013.

Many of you know, the Affordable Care Act (ACA) requires the establishment of health insurance marketplaces, also called exchanges, for people to purchase health insurance. States may establish exchanges on their own or through a partnership with the federal government. If a state elects not to establish its own exchange, the federal government will establish one for the state.

The ACA authorizes the U.S. Department of Health and Human Services (HHS) to award funding to states in order to help them establish their exchanges. This funding also supports states as they develop their own processes for reviewing rates proposed by companies offering health plans on the exchanges. As companies selling insurance in the exchanges can propose rate changes, states must ensure the changes are sound and based on accurate information.

The U.S. Government Accountability Office (GAO) recently outlined how HHS distributed those grants.

So far, HHS has given out roughly $3.7 billion in exchange grants to 49 states and the District of Columbia. Alaska is the only state that did not receive an exchange grant. The amount of the grants varies by state. For example, Wyoming received $0.8 million, while California got more than $900 million.

According to the GAO report, nearly 80 percent of the money that states have spent so far has been on contracts to develop information technology systems and related consulting services for these systems.

GAO also reported that HHS awarded $159 million in grants to 46 states and the District of Columbia for the rate review process. According to GAO, much of this money focused on expanding the scope of programs that review proposed rate increases from companies issuing plans on the exchange, as well as to enhance the transparency of the rate review process.

Thanks for listening to another edition of This Week in Washington. I’m Erin Richardson; join us next week for another update.



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