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Arizona gets $30M from feds for state-based exchange

Arizona today received $30 million in grant money from the Obama administration to help the state establish a health insurance exchange.

This is on top of the $1 million in planning grant the state earlier got.

The exchange, which is aimed at making it easier for individuals and small businesses to purchase health insurance, is a key component of the federal health care overhaul.

Arizona and a dozen other states were awarded a total of nearly $220 million.

The amount was different for each state, based on a state’s progress in working towards creating the exchange and how much financial help it asked for.

Rhode Island, for example, received nearly $60 million, while New Mexico got $34 million.

The U.S. Department of Health and Human Services said the money will help Arizona build a website that is fully integrated with the state’s web-based eligibility and enrollment system for Medicaid.

Arizona will also use the money to continue working on how to manage health plans, including their certification, recertification and decertification, officials from the health department said.

In a conference call today, U.S. Health Secretary Kathleen Sebelius also announced more flexibility for states, including an extension of the deadline to apply for grants to June 29, 2012. The original deadline for the second round of grant money was December 30.

“As we’ve seen today, states are moving at their own pace to get their exchanges up and running,” Sebelius said. “This is a natural result of the process that gives states maximum flexibility.”

The $30 million awarded to Arizona comes despite an uncertainty about whether the state will establish an exchange.

Gov. Jan Brewer is pushing for its creation in order to avoid turning over control of the exchange to the federal government. Federal health care law says that the U.S. Department of Health and Human Services will create and manage exchanges for states that do not establish them.

But several influential lawmakers, including Sen. Nancy Barto, chairwoman of the Senate Healthcare and Medical Liability Reform Committee, have strong objections to the exchange, arguing that creating it is tantamount to surrendering Arizona’s case against the health care overhaul.

Arizona is one of several states that is challenging the constitutionality of the federal law.

Chiquita Brooks-LaSure, the health department’s director of coverage policy, explained that Arizona and other states that applied for grant money didn’t have to commit to establishing to create the exchange in order to receive the funds.

“Different states will make different deliberations. As I said, if a state chooses not to run an exchange, we will operate a federally-facilitated exchange, but we encourage states to continue to make progress,” Brooks-LaSure said.

In addition to offering health plans, the exchanges are envisioned to also determine eligibility for Medicaid and the federal Children’s Health Insurance Program, and allow individuals to enroll in these programs online. That is why Brewer’s administration will use the grant money to work on integrating its Medicaid enrolment with the health exchange website.

Also under the law, states have plenty of flexibility in how to run the exchange. The exchange, for example, can operate as an “active purchaser,” where the state solicits bids and negotiate with insurance firms in order to bring down prices for residents.

Under this model, states can select which health plans can be sold on the exchange.

Arizona’s policymakers, however, appear inclined to adopt the “open marketplace” model, where insurers are allowed to sell as they meet certain standards.

According to the governor’s estimates, the exchange, once it is fully operational, has the potential to reduce the number of uninsured Arizonans by nearly half a million.

About 1.2 million Arizonan residents currently do not have health coverage.

2 comments

  1. AHCCCS and Governor Brewer have show good judement and prudence to move forward to take advantage of the funding available to help them set up health exchanges here in AZ should the courts uphold the health care reform. Our stae needs the money and to be ready when the new rules roll out.

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