11 States Getting $1.5B to Set Up Obamacare Exchanges, But Half of the 50 States Won’t Do It

By Susan Jones | January 18, 2013 | 7:20 AM EST

Then-Sen. Barack Obama and then-Kansas Gov. Kathleen Sebelius at a campaign rally at Butler County Community College in El Dorado, Kan., on Jan. 29, 2008. (AP Photo/Orlin Wagner)

(CNSNews.com) - Health and Human Services Secretary Kathleen Sebelius is giving another $1.5 Billion in taxpayer money to eleven states to build their new health insurance exchanges.

But it appears that half of the 50 states will let the federal government do it for them.

The “Exchange Establishment Grants” announced on Thursday will go to California, Delaware, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon, and Vermont.

“These states are working to implement the health care law, and we continue to support them as they build new affordable insurance marketplaces,” Secretary Sebelius said. “Starting in 2014, Americans in all states will have access to quality, affordable health insurance and these grants are helping to make that a reality.”

The Affordable Care Act says states may set up their own health insurance exchange or the federal government will do it for them.

HHS says a total of 49 states, the District of Columbia and four territories have now received up to $1 million in "planning” grants to study the "feasibility" of setting up their own exchanges. Only Alaska has not applied for an exchange planning grant.

But so far, fewer than half of the states – 19 plus the District of Columbia -- have asked HHS for permission to set up their own exchanges. The remaining states have until February 15, 2013 (the deadline was recently extended) to apply to set up their own exchanges.

And what if they don’t?

A Jan. 4 report in the Tulsa World says Oklahoma officials “have seen little evidence that federal officials are working on building a health insurance exchange for Oklahoma.”

The report says the state has received a 25-question federal survey seeking to define the legal boundaries for exchange issues.

"That's it so far," the  paper quoted Julie Cox-Kain, chief operating officer of the Oklahoma Department of Health, as saying.

The report also quoted Gary Cohen, deputy administrator of the U.S. Centers for Medicare and Medicaid Services, as saying that consumers in Oklahoma – and other states that are not building their own exchanges – can be sure that a federally operated exchange will be ready to go on Oct. 1, which is when enrollment is set to begin.

"The commitment is: They'll either operate a state-based exchange, or we'll have a federally facilitated exchange in every state," Cohen said.

As CNSNews.com has reported, Sebelius said just this week that the health insurance marketplaces "are being set up in every state across the country."

“And I gotta’ tell you, in spite of what your governor may be saying, that he or she doesn’t want to participate – the way the law is written, we will set up an insurance marketplace in every state in the country.”

Under the Affordable Care Act, individuals and small businesses in every state must have access to a health insurance exchange starting in 2014.

The online marketplace is billed as a "one-stop" shop where Americans can find health insurance that fits their budget.

"By increasing competition between insurance companies and allowing individuals and small businesses to band together to purchase insurance, exchanges will help lower costs," HHS says.

HHS’s Marketplace website also promises that "more people than ever before (even "working families") will qualify for free or low-cost health insurance programs."

Tax credits are available -- "even if you think your income is too high to get help."