State seeks nearly $75 million to create health-benefit exchange

GOV. LINCOLN D. CHAFEE believes that the state’s application for a federal grant to build a health-benefit exchange will keep Rhode Island from being forced to accept a “generic” federal solution.
Posted 10/11/11

PROVIDENCE – Rhode Island is seeking a $74.5 million federal grant to establish a health-benefit exchange, less than a month after Gov. Lincoln D. Chafee moved to allow its creation by executive order.

The funding would cover “the development, design and technology procurement” of an exchange over three years, according to an announcement by Chafee’s office on Tuesday.

The exchange will function as an online marketplace for health insurance for eligible individuals, families and small businesses, linking all Rhode Islanders with affordable health coverage, and providing access to federal subsidies for those who qualify, according to Chafee’s office. It will be operational by January 2014.

Creating the exchange is one of the requirements of federal health care reform law, which gives states the opportunity to design their own exchange, using federal funds to create a system that is individually tailored to meet residents’ needs.

Failure to establish an exchange of its own would result in the federal government imposing a generic exchange on Rhode Island, the governor said.

According to Chafee, the executive order he signed last month after the General Assembly failed to approve enabling legislation has allowed Rhode Island to meet federal deadlines to be eligible for the nearly $75 million in flexible funding the state is now seeking.

If was unclear from the release why the state is making such a large grant request or whether Rhode Island has already received federal money for the exchange. A spokesman for the governor’s office did not immediately return a call seeking comment.

“The federal funds at stake represent one of the largest grants in Rhode Island history and will enable the state to build new systems to make health insurance more understandable, easier to purchase and more affordable for many, while at the same time modernizing antiquated systems in related public insurance programs such as Medicaid,” according to the news release from Chafee’s office.

“I am confident Rhode Island will be awarded this second round of funding and will implement an exchange that allows individuals and small businesses to choose from a range of comprehensive, understandable and affordable insurance options,” Chafee said.

The state expects to know whether it will receive the funding by December.

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