Health and Human Services Secretary Kathleen Sebelius released rules for the new health exchanges on Monday but says to expect many modifications before they become final.
The draft proposals set standards for establishing exchanges and include what HHS is calling a Small Business Health Options Program (SHOP). They offer states guidance on what the basic functions of an exchange should be, how to certify health plans for participation, and how to control premiums.
"Today’s proposals build on over a year’s worth of work with states, small businesses, consumers and health insurance plans, and offer states substantial flexibility. For example, it allows states to decide whether their exchanges should be local, regional, or operated by a nonprofit organization, how to select plans to participate, and whether to partner with HHS to split up the work," HHS said in a 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," Sebelius added.
Health exchanges are meant to be the virtual marketplaces used to buy and sell insurance in each state. Most experts describe them as being similar to the travel booking site Travelocity, and different states are taking differing approaches to them.
Along with Affordable Care Organizations -- the conglomerations of doctors, hospitals, and other providers designed to coordinate care -- exchanges are one of the basic structures of health care reform as envisioned by the 2010 law.
The federal rules are meant to be a framework for states to follow in setting up their own exchanges.
"In developing them, we looked at the models of Utah and Massachusetts, held countless meetings with stakeholders, and consulted closely with state leaders, consumer advocates, employers, and insurers," Sebelius wrote on Sunday in a Huffington Post column.
"But we want to hear more, so we will be traveling across the country to gather input, and we fully expect to modify our proposals based on what we hear from the American people."
This article appears in the July 11, 2011 edition of National Journal Daily PM Update.