Today, the Obama administration announced that nearly $220 million in government grants have been awarded to 13 states in order to set up health insurance exchanges by 2014 as laid out in the Patient Protection and Affordable Care Act, commonly known as Obama's Health Care Act. Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee, and Vermont were awarded the funds in response to their efforts planning their exchanges. Other state governors are awaiting the results of a Supreme Court ruling on the constitutionality of the law before beginning work on their states' exchanges. All states have until June 29th of 2012 to submit applications for the health exchange grants.

Health insurance exchanges are marketplaces offered by each individual state which provide a way for individuals and businesses to comparison shop for health insurance plans based on benefits and cost. All plans within the exchange will be state-regulated. If eligible, low and middle income users of the exchanges will be able to purchase insurance subsidized by a federal government tax credit.

If a state fails to act by the June 29th application deadline, it will lose out in millions of dollars in grants. If a state does not create its health insurance exchange by January 1, 2014, as mandated by the health care act, either due to lack of funds or an unwillingness to due so, the federal government will step in and create the exchange.