The Department of Health and Human Services has released a proposed rule detailing how states can create and operate their health insurance marketplaces, where consumers and small businesses can compare and shop for health plans starting in 2014.

The proposed framework offers states a roadmap and flexibility for establishing the competitive exchanges and consumers and small businesses more choice in deciding their health insurance coverage, said <a href="/directory/department-health-human-services-hhs" target="_blank" class="directory-item-link">HHS Secretary Kathleen Sebelius in an announcement July 11.

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HHS will publish the proposed rule in the Federal Register on July 15 and accept public comments for 75 days. HHS will also convene a series of regional listening sessions and meetings on the proposal to gauge public feedback. 

The exchanges will make it easy for individuals and small businesses to compare health plans, get answers to questions find out if they are eligible for tax credits for private insurance or health programs like the Children’s Health Insurance Program (CHIP), and enroll in a health plan that meets their needs.

“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,” said Sebelius.

The health reform law called for the establishment of the exchanges, which will be similar to online banking and other commercial sites.

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The proposed rule offers guidance and options for states in their efforts to structure and deploy the exchanges, including setting standards for putting them in place and aligning their information systems, setting up a small business health options program (SHOP), performing the basic functions of an exchange, and certifying health plans for participation in the exchange. 

The framework also details how to assure insurance premium stability for plans and enrollees in the exchange, especially in the early years as the effort takes shape and absorbs new enrollees.

Forty-nine states, the District of Columbia and four territories have accepted grants to help plan and operate exchanges. In addition, more than half of all states are taking additional action beyond receiving a planning grant, such as passing legislation or taking administrative action to begin building exchanges. States will continue to implement exchanges on different schedules through 2014.

"This regulation allows us to meet states where they are," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight.  

States can choose to develop an Exchange in partnership with the federal government or develop these systems themselves. This provides states more flexibility to focus their resources on designing the right exchanges for their local insurance markets.

The proposal builds on over a year’s worth of work with states, small businesses, consumers and health insurance plans. For example, it allows states to decide whether their exchanges should be local, regional, or operated by a non-profit organization, how to select plans to participate, and whether to partner with HHS to split up the work.