California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Reform Law Does Not Allocate Funding for Federal Health Exchange

The federal health reform law did not provide money for HHS to set up a federal health insurance exchange system for states that do not establish their own exchanges, Politico reports.


Under the reform law, states have until 2014 to establish their own insurance exchanges. If they fail to do so, the federal government will provide residents of those states with access to a federal exchange.

The federal exchange will encompass not only states that oppose the reform law and are not taking steps to implement it, but also states that support the law but do not have time to create their own exchanges by 2014.

Lack of Funding for Federal Exchange System

Politico reports that while the reform law provides almost unlimited funding to help states create their exchanges, it does not provide any funding for the federal government to develop its own system. The federal exchange will not have money until people begin purchasing insurance through it.

Jon Kingsdale, founding director of Massachusetts Connector and consultant on the creation of the federal exchange, said federal officials will have to "get creative about the financing" in order to gather money for development. For example, HHS could find contractors who would agree to be paid once the exchange is up and running.

Tevi Troy, chief operating officer at HHS under President George W. Bush, said, "Money is fungible, and implementation is a priority for the administration." He suggested various options for directing money to exchange development, including strategies to "tap" funds from other programs and to "detail" employees working on other projects (Feder, Politico, 8/16).

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