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Feds approve Ill. health exchange with conditions

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Illinois Gov. Pat Quinn smiles as lawmakers applaud his entrance to the House chambers before delivering his State of the State address to a joint session of the General Assembly at the Illinois State Capitol Wednesday, Feb. 6, 2013, in Springfield. (AP Photo/Seth Perlman)

CHICAGO (AP) — Illinois has received conditional federal approval for its plan to create the online marketplace where thousands of state residents will shop for health insurance beginning Oct. 1.

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 the state must meet. The letter was released to The Associated Press by Quinn's office.

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 will mean state officials remain under extreme pressure to get the online marketplace up and running.

Sebelius' letter acknowledges that "Illinois is working under intense timelines."

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 President Barack Obama's health care overhaul.

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. Illinois is partnering with the federal government to offer the online marketplace for coverage in 2014. Quinn hopes to get the Legislature's approval for a state-based exchange to offer coverage in 2015.

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.

"We are going to be working very hard between now and October 1 to educate the people of our state about the health care coverage options they will have through the marketplace, thanks to President Obama's leadership," Quinn said in a statement.

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

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