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After much scrutiny, HHS releases health insurance exchange rules

Federal regulators Monday released proposed rules that will govern how states set up and run new marketplaces where individuals and small businesses can shop for health insurance.

The so-called exchanges are a key element of the federal health care overhaul law. Sliding scale subsidies for private insurance on the exchanges will be available for residents who earn up to 400 percent of the poverty level, about $43,560 this year. Those who qualify for Medicaid, the state-federal program for the poor, will be able to sign up for it through the exchanges.

The proposal from the Department of Health and Human Services runs to hundreds of pages. Industry groups, consumer advocates and others will have 75 days to comment. Final rules are expected later this year.

"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 federal Center for Consumer Information and Insurance Oversight Director Steve Larsen. "This regulation allows us to meet states where they are."

Insurers want states to be granted great flexibility in how they design their exchanges – and don't want to be barred from seats on oversight boards. Consumer groups, however, would prefer that insurers not be allowed on the boards or, if they are, to meet strict conflict-of-interest rules.

The groups also are watching closely to see whether the federal government will require states to choose which insurers can participate – and negotiate with them over prices and other issues – or allow a looser structure in which all insurers that meet the minimum standards under the law can participate.

Exchanges must be up and running by Jan. 1, 2014, although states must prove a year earlier that they will be ready. The federal government will establish exchanges for states that can't or won't do so themselves.

The Congressional Budget Office estimates 8.9 million people will use the exchanges in 2014 and 23.4 million in 2018. Most will be people who are eligible for subsidies, which will average an estimated $4,600 per person in 2014. Subsidies will go to people who earn less than 400 percent of poverty, which this year is $43,560. Undocumented immigrants will be barred from buying insurance on the exchanges.

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Kaiser Health News is an editorially independent news service. It is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy research organization unaffiliated with Kaiser Permanente.

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