|Dangling federal taxpayers’ dollars over states is the carrot that the federal government uses to compel states to take actions they otherwise wouldn’t. States have been well aware of health care exchanges as a policy choice for decades, but only Massachusetts and Utah decided to use them. Since the 10th Amendment limits the federal government’s ability to force states to set up exchanges, they instead coerce states by handing out tax dollars. A state must proactively apply to receive funding. Receiving a grant is a great proxy of the state’s desire to create an exchange.
- Early Innovator Grants: Special type of grant awarded in early 2011. These states volunteered to develop the technology infrastructure for the exchanges and share their progress with other states. This grant is no longer offered by HHS and three states (Oklahoma, Kansas and Wisconsin) eventually returned the money.
- Planning Grant: Grants of up to $1 million dollars issued by HHS to allow states to begin to study, research and plan for creating an Exchange.
- Level 1 Establishment Grant: This grant is funding for a state to continue to study/develop/create an exchange after exceeding its initial planning grant.
- Level 2 Establishment Grant: This grant is the final grant offered by HHS and provides funding for a state exchange through the end of 2014. An exchange must be officially created, either by legislation or executive action, to be eligible for this grant.
For more information on federal funds visit the Kaiser Family Foundation.