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Statement of Need: A central aim of Title I of the Affordable Care Act is to expand access to health insurance coverage through the establishment of Exchanges. The number of uninsured Americans is rising due to the lack of affordable insurance, barriers to insurance for people with pre-existing conditions, and high prices due to limited competition and market failures. Millions of people without health insurance use health care services for which they do not pay, shifting the uncompensated cost of their care to health care providers. Providers pass much of this cost to insurance companies, resulting in higher premiums that make insurance unaffordable to even more people. The Affordable Care Act includes a number of policies to address these problems, including the creating of Affordable Insurance Exchanges.

Summary of the Legal Basis: This rule implements the new Affordable Insurance Exchanges consistent with title I of the Affordable Care Act of 2010.

Alternatives: None. This is a statutory requirement.

Anticipated Costs and Benefits: This rule will help enhance competition in the health insurance market, promote the choice of affordable health insurance, and give small businesses the same purchasing clout as large businesses. States seeking to operate an Exchange will incur administrative expenses as a result of implementing and subsequently maintaining Exchanges. There is no Federal requirement that each State establish an Exchange.

Risks: If this regulation is not published, the Exchanges will not become operational by January 1, 2014, thereby violating the statute.