In late-October, the Department of Health and Human Services (HHS) announced state grants to design and implement information technology in order to operate health insurance exchanges. Created by the new healthcare reform law in order to assist individuals and small business in shopping for health insurance, the exchanges are currently under development and are due to be operational in 2014.

Known as “early innovator” grants, the competitive program will award funding to as many as five states by mid-February 2011. According to HHS’ Office of Consumer Information and Insurance Oversight (OCIIO), “…states that are willing and able to lead the race to develop IT systems will be able to obtain federal funding.” The OCIIO also stressed the need for the systems to be consumer-friendly, saying that they must allow individuals and small businesses to compare insurance options, determine their eligibility for programs, enroll in policies and receive any eligible tax credits or cost-sharing assistance.

HHS believes this early innovator grant program will increase quality, speed up implementation and enhance collaboration among states and within federal agencies. In addition to the early innovator program, all states will be eligible for additional grants to establish their exchanges, which will be announced in February 2011.