2012 Progress Report: States Are Implementing Health Reform

In the nearly two years since President Obama signed the Affordable Care Act into law, all 

States have taken some action to implement health reform. For example, forty-four States are 

participating in the new premium rate review system where insurers must justify the rationale for 

any double-digit insurance premium increase. And 28 States and the District of Columbia are on 

their way toward establishing their own Affordable Insurance Exchange – an essential 

component of the law. 

Affordable Insurance Exchanges are one-stop marketplaces where consumers can choose a 

private health insurance plan that fits their health needs. Starting in 2014, they will offer to the 

public the same kinds of insurance choices members of Congress will have. Exchanges will 

select health plans qualified to offer coverage; facilitate consumer assistance, shopping and 

enrollment; and coordinate eligibility for the Exchange and potential premium assistance. 

The Affordable Care Act gives States the resources and power to build and run their own 

Exchange. It offers States access to funding through Exchange “planning,” “establishment,” and 

“Early Innovator” grant programs. On September 30, 2010, the Department of Health and 

Human Services (HHS) awarded $49 million to 48 States and the District of Columbia to 

conduct planning activities (Minnesota was awarded a planning grant later). On February 16, 

2011, HHS awarded Early Innovator grants to six States and one multi-State consortium to get a 

head start developing the information technology (IT) needed for Exchanges. And HHS is, on a 

quarterly basis, awarding establishment grants to support the building of Exchanges. Three 

rounds of establishment grants have been awarded, with 28 States and the District of Columbia

having received establishment grants as of November 29, 2011. Additional States have applied 

for establishment grants in December, with awards to be made in mid-February. 

This report summarizes the actions taken by States to establish Exchanges and focuses on 

examples of the legislation and executive actions, public meetings, and other activities 

undertaken by States across the country to create these new health insurance marketplaces. It 

profiles ten States that cut across the spectrum of geography, demographics, and political 

leadership. The States profiled are not necessarily the States most advanced in establishing an 

Exchange; instead, they illustrate the diversity of approaches and progress being made. 

SNAPSHOT OF TEN STATES

Alabama: Governor Robert Bentley (R), a physician, issued an Executive Order that created the 

Alabama Health Insurance Exchange Study Commission on June 2, 2011. The Commission held 

five meetings and completed its report with recommendations on December 1, 2011. It 

recommended that Alabama establish its own Exchange called the “Alabama Health Insurance 

Marketplace,” which is to be governed by a quasi-public authority. Alabama received an 

Exchange establishment grant of $8.6 million on November 29 from HHS. The State also is 

participating in a technical assistance program run by the Robert Wood Johnson Foundation. 

The legislature, which meets in February, is expected to take up legislation to establish an 

Exchange. 
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What They Are Saying in Alabama:

“My inclination is to get something passed before this next regular session exits, so we 

have something in place. If we fail to do anything in 2012 session, that could be running 

up a white flag to the feds, saying 'Y'all take over.' I can't see that happening.”

State Rep. Jim McClendon (R), Co-Chairman of the Alabama Health Insurance 

Exchange Study Commission, January 3, 2012

“I still believe even if that bill had never been passed that this was something that we 

needed to look at...What we’re trying to do here is set up an Alabama health insurance 

exchange so people in the state, regardless of where you are in life – whether you are a 

young mother or whether you are a college student or whether you are an elderly person 

with a preexisting disease – you will be able to purchase insurance.” 

Governor Robert Bentley (R), September 16, 2011

Colorado: The State began working on a policy like an Exchange in 2006, with the appointment 

of a Blue Ribbon Commission for Health Care Reform whose members were jointly appointed 

by former Governor Bill Owens (R) and current Governor John Hickenlooper (D). In 2008, it 

recommended a “connector” like an Exchange. After the passage of the health reform law, the 

Governor, working with the State Legislature, began hosting public meetings about Exchange 

issues in the summer of 2010. Since early 2011, over 175 Coloradans, representing a crosssection of stakeholders, participated in working groups to prepare for the establishment of the 

Exchange. The State legislature passed a bipartisan bill to establish the independent Colorado 

Health Insurance Exchange, which was signed into law on June 1, 2011. The Governor 

appointed a 12-member Exchange Board on June 29, 2011. The State Legislature approved an 

executive director on December 12, 2011 and the State application for $18 million in grant 

support on December 15, 2011. Like Alabama, Colorado is part of the Robert Wood Johnson 

Foundation technical assistance program. 

The Exchange Board meets regularly, it has an information technology committee that is 

intensifying its work, and it has started public education about health reform and the Exchange at 

its website, www.getcoveredco.org. The website includes quick facts related the challenges in 

Colorado, frequently asked questions on the Exchange, and special links with information for 

individuals, small employers, and insurers and brokers. Organizations such as the Colorado 

branch of the National Federation of Independent Business (NFIB) and the Colorado Association 

of Commerce and Industry have been active participants in the creating the small business 

component of the Exchange. The Board will present its first annual report to the Governor, 

Senate Health and Human Services Committee, and House Health and Environment Committee 

in mid-January. 

What They Are Saying in Colorado:

“This is what Colorado businesses need...For them, it’s about price, competition, and 

clarity.” 

Tony Gagliardi, State Director, Colorado National Federation of Independent Business, 

November 4, 2011
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Idaho: Governor Butch Otter (R) has supported the State establishment of an Exchange. He 

vetoed legislation that would prohibit State Executive Offices from accepting Federal funds for 

Exchange planning in April 2011. The State was awarded $20.4 million on November 29, 2011. 

As part of its planning for the Exchange, the State conducted a number of public meetings. In 

March and April of 2011, open sessions were held with businesses, providers and consumer 

advocates, insurers, producers, and the general public. The State established a website, 

www.healthexchange.idaho.gov, and created seven working groups on topics ranging from 

information technology to insurance market issues. In December, the Department of Insurance 

also conducted a round of public meetings about the use of the new Exchange grant. 

On January 1, 2012, as legislators prepared for their upcoming session in Idaho, Governor Otter 

urged the legislature to consider legislation to establish an exchange. On January 6, 2012, a joint 

committee of the Idaho Legislature voted 11 to 1 to send the bill to the full Legislature.

What They Are Saying in Idaho:

“It’s a no-brainer.” 

Rep. John Rusche (D- Nez Perce County), Idaho House Minority Leader, January 6, 

2012

“I want to work with the Legislature to find Idaho solutions to Idaho’s health care issues 

and minimize the federal government’s footprint on how Idahoans obtain their health 

insurance. The fact that it could be June before the Supreme Court issues an opinion on 

constitutional challenges to Obamacare in no way diminishes the need for the Legislature 

to discuss the issue during its 2012 session.” 

Governor Butch Otter, January 1, 2012

“The chamber supports a state exchange rather than a federal exchange so that Idaho can 

maintain authority over the state’s private health insurance market,” 

Boise Metro Chamber of Commerce, November 18, 2011

Michigan: On September 14, 2011, Governor Rick Snyder (R) announced his intent to create a 

State-based Exchange called MIHealth Marketplace. Consistent with recommendations from an 

Exchange Steering Committee, the Governor recommended that the Exchange be a non-profit 

organization, transparent, and focused on information technology and the consumer experience. 

The Senate passed bi-partisan exchange legislation in November, however the House failed to 

act. On November 29, the State was awarded $9.8 million to establish its Exchange and is 

seeking the legislature’s authority to spend the funds. 

The State has made considerable progress in operationalizing its Exchange regardless. Prior to 

the efforts to authorize the Exchange, the Department of Community Health convened five 

stakeholder working groups on topics such as governance, finance, and technology. In October, 

key leadership from five cabinet agencies collaborated in a formal Business Process Review to 

set up systems. It is actively participating in the technical assistance program supported by the 

Robert Wood Johnson Foundation. 
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What They Are Saying in Michigan:

“I strongly support establishing a Michigan-based on-line health insurance exchange that 

will emphasize free market principles and serve as a competitive marketplace for 

individuals and businesses to obtain health insurance, including some of our most 

vulnerable residents who are currently uninsured.” 

Governor Rick Snyder (R), September 14, 2011

Minnesota: Previous Governor Tim Pawlenty (R) was one of only two governors who did not 

apply for an Exchange planning grant (Alaska used its own funding for Exchange planning). 

When Governor Mark Dayton (D) took office, he sought and received a planning grant in 

February 2011. The State used this planning grant to assess needs, issue a request for proposals 

on an evaluation of IT infrastructure and options, and apply for a $4.2 million establishment 

grant, which it received on August 12, 2011. On October 31, 2011, the Governor issued an 

Executive Order to direct the Commerce Commissioner to design and develop an Exchange.

The Commissioner appointed a Health Insurance Exchange Advisory Task Force, a cross-section 

of consumers, employers, labor, health care providers, insurers, and experts among others. The 

Task Force meets regularly to discuss recommendations from ten technical advisory groups 

(some of which will start in 2012). On December 5, Minnesota posted a website that has five 

different companies’ mock-up interactive websites for how an individual or small employer 

would access information, plan choices, and eligibility for the Exchange. Feedback is 

encouraged. 

What They Are Saying in Minnesota:

“Federal health care reform offers an opportunity for Minnesota to seize the initiative and 

set our own course for how we want to reform health care.” 

Governor Mark Dayton (D), October 31, 2011

“An Exchange as a model is innocent. Don't slam it because Obama-care adopted it. Is it 

possible that we could create an Exchange that would enhance consumer choice and a 

private marketplace and not be a government-command and control avenue? I think that 

is possible.”

State Rep. Steve Gottwalt (R), Chairman of the State House Health and Human Services 

Reform Committee, November 4, 2011

Mississippi: The State created a Mississippi Health Insurance Exchange Study Commission in 

2010, and used its $1 million planning grant to fund research and outreach. On April 26, 2011, 

then-Governor Haley Barbour (R) signed a law that allowed the Study Commission to continue 

its work through 2011. Mississippi held over a dozen town hall meetings to receive input on the 

design of the Exchange in the summer of 2011. It received a $20.1 million Exchange 

establishment grant on August 12, 2011. In total, Mississippi has received $21.1 million to 

develop its Exchange.

After legislation authorizing an Exchange failed to pass, the State determined in October 2011 

that the previously authorized non-profit high-risk pool association could broaden its mission to 

run the State’s Exchange. The high-risk pool association is finalizing a contract to build the 
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‘shop and compare’ piece of the Mississippi Exchange by March. Once built, Mississippi will 

use it to visually demonstrate what the Exchange will do for its citizens while simultaneously 

building the functional pieces it will ‘plug into’ its Exchange. 

What They Are Saying in Mississippi:

“A healthcare exchange is not a partisan political issue. Across this nation, Republicans 

and Democrats alike have embraced the concept of health exchanges as a way to help 

individuals and small businesses more easily obtain health insurance.” 

Mississippi Commissioner of Insurance Mike Chaney (R), April 17, 2011

Nevada: The Silver State Health Insurance Exchange was authorized through bipartisan 

legislation passed unanimously by both chambers of the Nevada Legislature and signed into law 

by Governor Brian Sandoval (R) on June 16, 2011. It is an independent public agency not 

subject to the State’s regulatory rules. Its seven-member board was appointed on September 23, 

2011 and met for the first time on October 26, 2011. An executive director was named on 

December 30, 2011. Its planning grant was used to produce an implementation and operational 

plan. The State received a $4 million Exchange establishment grant on August 12, 2011 and 

applied for additional funding in December 2011. 

What They Are Saying in Nevada:

“We must also plan for a Health Insurance Exchange so that we – and not the federal 

government – control the program. My budget includes funding to address these issues, 

and I have submitted legislation to address the operation and oversight of a Nevada 

Health Insurance Exchange.”

Governor Brian Sandoval, State of the State Address, January 24, 2011

New York: Governor Andrew Cuomo (D) is committed to running the New York Health 

Benefit Exchange, which would be a public benefit corporation managed by a Board of 

Directors. Authorizing legislation passed the State Assembly on June 23, 2011 but has not yet 

received a vote in the Senate. 

New York received a $27.4 million Early Innovator Grant Award on February 16, 2011 to 

develop the IT infrastructure for the Exchange. The State is currently reviewing competitive 

bids for a “systems integrator” to build the IT system. The State received a $10.8 million 

establishment grant on August 12, 2011. It submitted a request for an additional $48.5 million 

on December 30, 2011. The New York State Department of Insurance contracted with the Urban 

Institute to conduct simulation modeling work to estimate the cost and coverage impacts of 

health reform in New York and to provide projections of State-specific costs of operating and 

implementing the Exchange. New York continues to involve stakeholders through individual

meetings to discuss their specific concerns and interests regarding the Exchange. More than 80 

such meetings have taken place to date. A private survey released in December 2011 found that 

84 percent of New York’s small business owners describe an Exchange as a “good idea.” 

What They Are Saying in New York:

“It’s very popular in the business — particularly the small business — community. I 

would like to see us move forward as a state.”
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State Senator James Seward (R-51st District), Chairman, State Senate Insurance 

Committee, January 9, 2012

Pennsylvania: On November 23, 2011, Governor Tom Corbett (R) announced his commitment 

to establishing a State-based Exchange. This step built on the input from three stakeholder 

forums and an online survey in August 2011 for individuals and small business owners. 

Pennsylvania reports receiving input from 814 residents and 204 business owners through this 

process. Pennsylvania used the majority of its Exchange planning grant to award a contract to a 

consulting firm to conduct extensive background research. This resulted in a comprehensive 

analysis of Exchange governance models, business operations, structure, plan management and 

financial management. The State has a no-cost extension on its planning grant and is using this 

time and money to research outreach assistance and other strategies.

What They Are Saying in Pennsylvania:

“After careful evaluation and stakeholder input, Pennsylvania has determined that 

developing a state-based health insurance exchange will work best for Pennsylvania 

residents.”

Statement, Pennsylvania State Department of Insurance, November 23, 2011

“It is akin to an Expedia-type function, where you go and you are looking for a particular 

trip and a hotel, and you can look at the different options and what you want to buy – and 

then you can make your choice and buy accordingly.”

Pamela Clarke, Vice President, Delaware Valley Healthcare Council, November 23, 

2011

Rhode Island: In May 2010, the State’s Lieutenant Governor Elizabeth Roberts (D) established 

the Healthy RI Implementation Task Force to “be proactive in implementing the federal health 

reform law.” Within days of taking office in 2011, Governor Lincoln Chafee (I) signed an 

Executive Order creating the Rhode Island Healthcare Reform Commission to guide the 

development of an Exchange and implement other parts of the law. After legislation establishing 

an Exchange did not advance, the Governor signed an Executive Order on September 19, 2011

establishing an Exchange along with appointments to an Exchange Board. 

Rhode Island was awarded an Exchange establishment grant of $5.2 million on May 23, 2011 

and a level II (more advanced) award of $58.5 million on November 29, 2011 – the first State to 

receive this type of award. The State is part of the New England States Collaborative for 

Insurance Exchange Systems (NESCIES) project New England Early Innovator State award and 

is working with Massachusetts on IT solutions. It has launched a consumer-oriented website, 

http://www.healthcare.ri.gov, that includes information for individuals and families, small and 

large employers, and providers – as well as information on the State’s implementation of the law. 

Rhode Island State is also working on a financing model that considers the cost savings of reuse 

or leveraging Exchange IT functions from other New England states. It is currently working 

closely with Massachusetts and Vermont to develop strategies around systems design reusability, 

joint procurement, and systems integration.
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What They Are Saying in Rhode Island:

“Right now, we can’t wait.”

Lieutenant Governor Elizabeth Roberts (D), September 19, 2011

“I am extremely pleased with the progress we are making toward making accessible and 

affordable healthcare a reality for Rhode Island families and small businesses.”

Governor Lincoln Chafee (I), November 29, 2011

OTHER STATES

Two States, Massachusetts and Utah, had Exchange-like structures in place before the 

Affordable Care Act was enacted. Massachusetts passed comprehensive reforms in 2006 similar 

to the Affordable Care Act. Its Health Insurance Connector includes both Commonwealth 

Choice, an online system for signing up for a health plan, and Commonwealth Care, its premium 

assistance program. Combined with insurance reforms and the individual responsibility 

requirement, Massachusetts leads the nation in coverage, with 95 percent of its residents insured. 

Massachusetts is preparing to align its program with the Affordable Care Act design (e.g., 

Massachusetts has focused recent its work on building an integrated IT system with other States 

through the New England Collaborative for Insurance Exchange Systems, which received a 

$35.6 million Early Innovators Grant for this work). 

Utah would like to maintain its current Utah Health Exchange, a portal for purchasing insurance, 

www.exchange.utah.gov, with few changes. As such, State officials have been focused on the 

Federal guidance for Exchanges. After the release of State guidance that addressed some of the 

State’s concerns, the Lieutenant Governor Greg Bell (R) wrote in a statement on December 1, 

2011, “We are encouraged that Secretary Sebelius recognizes the critical role of the States and 

the value of not forcing a one-size-fits-all solution on us."

With the start of 2012, new States have indicated an interest in establishing an Exchange. For 

example, on January 10, 2012, the New Hampshire State Senate voted unanimously to set up a 

Health Insurance Exchange. State officials in Wyoming presented a tentative plan on January 

10, 2012 at a town hall meeting, and explained what an Exchange is: “It’s like a farmers’ market 

where you can squeeze the tomatoes and smell the cucumbers ... and compare the price and the 

quality. We do think an exchange will help people be better informed about insurance.” On 

January 3, 2012, reports indicate that Alaska has undertaken planning even without an Exchange 

establishment grant. And new reports suggest that States like Ohio and Nebraska may move 

forward on State-based Exchanges this year.

The Administration has also proposed new options for States reluctant to establish their own 

Exchange. States can participate in a “Partnership” Exchange in which the State performs some 

but not all of the functions of an Exchange. For example, the State could opt to manage the 

participation of health insurance plans in the Exchange while HHS manages eligibility 

determinations and enrollment. It can oversee in-person consumer assistance, manage the 

program to provide direct help in signing people up for insurance, and conduct outreach and 

education – building on existing State systems and relationships. States can also use 
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establishment grants to test their systems for their Exchanges that start later than 2014 (States 

that do not run Exchanges in 2014 can be certified to run Exchanges for subsequent years). 

Some States have already expressed interest in a Partnership Exchange. For example, in 

Arkansas, Governor Mike Beebe (D) whose legislature has blocked the establishment of a Statebased Exchange announced in December 2011 his intent to participate in a Partnership 

Exchange: “Insurance options are best modeled with local needs and perspectives in mind, and 

this partnership program will give Arkansas a voice in that process, even with the federal 

government in control of this exchange.” The State Insurance Commissioner announced that 

Arkansas applied for a $7.5 million Exchange grant in December 2011.

HHS is continuing to make investments in the development of a Federally-facilitated Exchange

for States that opt to not create their own State-based Exchange. The Department has the 

capacity to ensure all Americans will be able to purchase insurance in an Exchange on January 1, 

2014. Last July, HHS issued a request for proposals and this fall awarded contracts for IT, 

financial management (e.g., managing payments and collections, and program integrity), 

marketing, and State support. In collaboration with contractors, other agencies, and States, HHS 

has completed work on key IT and operational business processes and business requirements for 

the Federally-facilitated Exchange. The Department is also developing working groups with 

State insurance commissioners and other State officials to harmonize the rules and the systems in 

each State for the operation of their Exchange. HHS has begun to issue guidance about how a 

Federally-facilitated Exchange would function. Additional guidance will be issued in the 

coming months. 
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State Affordable Insurance Exchange Actions and Funding

State Authority for 

Exchange

Exchange 

Planning Grant

Exchange 

Establishment 

Grants

Exchange 

Innovator Grants

Total Exchange 

Grants

Alabama EO for Study $1,000,000 $8,592,139 $9,592,139

Alaska $0

Arizona $999,670 $29,877,427 $30,877,097

Arkansas $1,000,000 $1,000,000

California Passed $1,000,000 $39,421,383 $40,421,383

Colorado Passed $999,987 $999,987

Connecticut Passed $996,850 $6,687,933 $7,684,783

Delaware $1,000,000 $3,400,096 $4,400,096

District of Columbia Passed $1,000,000 $8,200,716 $9,200,716

Florida $1,000,000 * $1,000,000

Georgia EO for Study $1,000,000 $1,000,000

Hawaii Passed $1,000,000 $14,440,144 $15,440,144

Idaho $1,000,000 $20,376,556 $21,376,556

Illinois Study bill $1,000,000 $5,128,454 $6,128,454

Indiana EO $1,000,000 $6,895,126 $7,895,126

Iowa $1,000,000 $7,753,662 $8,753,662

Kansas $1,000,000 $31,537,465 * $32,537,465

Kentucky $1,000,000 $7,670,803 $8,670,803

Louisiana $998,416 * $998,416

Maine Study bill $1,000,000 $5,877,676 $6,877,676

Maryland Passed $999,227 $27,186,749 $6,227,454 $34,413,430

Massachusetts Pre-existing $1,000,000 $35,591,333 *** $36,591,333

Michigan E O $999,772 $9,849,305 $10,849,077

Minnesota Pre-existing $1,000,000 $4,168,071 $5,168,071

Mississippi Pre-existing $1,000,000 $20,143,618 $21,143,618

Missouri $1,000,000 $20,865,716 $21,865,716

Montana $1,000,000 $1,000,000

Nebraska $1,000,000 $5,481,838 $6,481,838

Nevada Passed $1,000,000 $4,045,076 $5,045,076

New Hampshire $1,000,000 $1,000,000

New Jersey $1,000,000 $1,000,000

New Mexico $1,000,000 $34,279,483 $35,279,483

New York Pending $1,000,000 $10,774,898 $27,431,432 $39,206,330

North Carolina $1,000,000 $12,396,019 $13,396,019

North Dakota Study bill $1,000,000 $1,000,000

Ohio $1,000,000 $1,000,000

Oklahoma $1,000,000 $54,582,269 * $55,582,269

Oregon Passed $1,000,000 $8,969,600 $48,096,307 $58,065,907

Pennsylvania $1,000,000 $1,000,000

Rhode Island E O $1,000,000 $63,756,539 ** $64,756,539

South Carolina EO for Study $1,000,000 $1,000,000

South Dakota $1,000,000 $1,000,000

Tennessee $1,000,000 $1,560,220 $2,560,220

Texas $1,000,000 $1,000,000

Utah Pre-existing $1,000,000 $1,000,000

Vermont Passed $1,000,000 $18,090,369 $19,090,369

Virginia Study bill $1,000,000 $1,000,000

Washington Passed $996,285 $22,942,671 $23,938,956

West Virginia Passed $1,000,000 $9,667,694 $10,667,694

Wisconsin $999,873 $37,757,266 $38,757,139

Wyoming $800,000 $800,000

Total $49,790,080 $438,499,981 $241,223,526 $729,513,587

* Governor subsequently stated that the grant would not be used.

** Rhode Island is the first State to receive a Level II grant which is larger because it encompasses more functions.

*** Massachusetts is the grantee for a coalition of New England States.

Source: Grants described in fact sheets at www.cciio.cms.gov, dated 9-29-10, 2-16-11, 8-12-11, 11-29-11.