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Conditional OK given for Ill. health exchange

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CHICAGO – Illinois has received conditional federal approval for its plan to help run an online marketplace where thousands of state residents will shop for health insurance beginning Oct. 1 – a big step toward carrying out the national health law in the state.

U.S. Department of Health and Human Services Secretary Kathleen Sebelius issued an approval letter Wednesday to Gov. Pat Quinn that lays out six conditions, some with deadlines, which the state must meet. The letter was released to The Associated Press by Quinn's office.

The milestone was celebrated with a press conference featuring Sebelius and Quinn at a Chicago medical clinic, where an uninsured woman spoke about her hopes for affordable insurance.

Celeste Castillo, 56, an immigrant from Guatemala and a U.S. citizen since 1996, spoke at the press conference. The suburban Chicago resident is a self-employed nanny.

"I have been in this country 37 years. All of those years have been without insurance," Castillo said. "Today, I can so happily say that is no longer going to be just a dream, to have affordable insurance."

Conditional approval isn't unusual. All the federal government's approvals of health insurance marketplaces have been conditional so far, but deadlines set in the letter – including some for choosing contractors to do some of the work – will mean state officials remain under extreme pressure to get the online marketplace up and running.

"I do think they can meet these conditions," said Sonya Schwartz of the National Academy for State Health Policy, which has been tracking states' progress on President Barack Obama's health care overhaul. "They've got a lot of work to do to move to being a state exchange."

Illinois, Obama's home state, is partnering with the federal government to offer the online marketplace for coverage in 2014 – and that's the step that received conditional approval Wednesday.

The next step may be more difficult: Quinn hopes to get the Legislature's approval for a state-based exchange to offer coverage in 2015. The state would have more authority over how the exchange would be run in a state-based model, but Quinn hasn't yet been able to get that off the ground.

Quinn, a Democrat, said Wednesday that a state-based exchange remains his goal, and that he has support from two key Democrats, House Speaker Michael Madigan and Senate President John Cullerton.

"The speaker of the House and the president of the Senate have made it very clear to me that they support the legislation," Quinn said. "I think we have good majorities and people want to do the right thing."

Sebelius' letter acknowledges that "Illinois is working under intense timelines." At the press conference, she praised Quinn as "a great governor and a great leader in health care."

With the Illinois approval, 20 states and the District of Columbia have been conditionally approved to partially or fully run a health insurance marketplace, also known as an insurance exchange.

The exchanges are a key part of the Affordable Care Act, the health care law that is reshaping how Americans buy insurance.

Beginning Oct. 1, people without health insurance will be able to sign up for government-subsidized private coverage through the new exchanges. Coverage will start Jan. 1. Low-income people will be steered to the expanded Medicaid program.

Most Americans will be required to have health insurance, either through an employer, a government program, or by buying their own commercial plan. The subsidies available through the exchange would mean a $10,742 tax credit toward an annual $12,130 insurance premium for a family of four making $35,000 a year.

Nearly 1.8 million Illinois residents are uninsured. An estimated 486,000 Illinois residents will get coverage from commercial insurers through the exchange in 2014. That figure is expected to reach 1 million customers by 2016.

Illinois officials expect 260 health plans to be offered by 16 different insurance carriers when the site is up and running.

The federal government's conditions include signing a memorandum of understanding with Washington for how Illinois will monitor and approve health plans sold on the exchange by March 1 and a separate memorandum of understanding for how the state will run consumer outreach activities by April 1.

The Sebelius letter sets a Feb. 28 deadline for the state to procure an information technology vendor for any customization needed for an existing rate filing platform.

The letter also requires Illinois to lay out in writing the role and responsibilities of the state's Medicaid agency and how it will coordinate work with the state's Department of Insurance to get ready for the exchange.

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Associated Press Medical Writer Carla K. Johnson can be reached at http://www.twitter.com/CarlaKJohnson.

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