The Department of Health and Human Services (HHS) announced a new round of grants this afternoon to help states expedite and simplify the process of developing IT systems for the new exchanges (the Travelocity-like market places that will help Americans find comprehensive insurance coverage). By the time the exchanges become operational in 2014, states should be able to use information technology to determine eligibly, enrollment, premium tax credits, cost-sharing assistance administration, and integrate the system with Medicaid and CHIP. Officials believe that sophisticated, yet “consumer friendly” IT systems are “critical to the success of the exchanges” and hope that the final product will look similar to the new HealthCare.gov website, where beneficiaries can compare different plans, identify if they’re eligible for government aid, and enroll in insurance.

But as Politico’s Jennifer Haberkorn points out this morning, “states view the project as an enormous undertaking, requiring them to design a system, develop the information technology and put it into action in just three years amid tight budgets. In response, the Department of Health and Human Services is planning to ask five states to develop systems that can hopefully serve as prototypes for other states to replicate.” “The states have told us that they don’t all want to all have re-invent the wheel on each aspect of the exchange; they want to be able to re-use and leverage the work of their fellow states so that the resources are used more efficiently and effectively,” Joel Ario the Director of the Office of Insurance Exchanges at HHS said on a conference call attended by the Wonk Room.

The so-called “Early Innovators Grants” will be offered to five states or coalition of states “that demonstrate leadership in developing cutting-edge and cost-effective consumer-based technologies and models for insurance eligibility and enrollment for Exchanges” that “can be adopted and tailored by other States.”

“The benefits to the states are three-fold,” Ario said. “First, there are lower costs through the uses of shared models, second there is an improved implementation schedule, increased quality and reduced risk through the re-use, the peer-collaboration and the leveraging of lessons learned across the state boundaries. And finally, there is improved capacity for program evaluation because of the more uniform implementation theory,” he explained.

Last month, the federal government awarded exchange planning grants to 48 states and the District of Columbia and has announced that it will award “Establishment Grants” in February of 2011. “We’re looking for a lot of collaboration, we’re looking for states to lead….to really kind of provide the direction and progress that needs to be made early rather than later,” Henry Chao — the Chief Technology Officer at the Office of Consumer Information and Insurance Oversight — explained on the call, noting that states struggled to implement the IT requirements in Medicare Part D because they were given “very very short timeframes” “in terms of systems development.” “I think the lessons learned have really told us that we need to collaborate much more so upfront, not just with the states, but across the federal government, with other agencies.”

I’m enjoying Jonathan Cohn’s, Greg Sargent’s, and Ezra Klein’s counterfactuals about Democrats’ mid-term election prospects had they they never taken up health care reform. All agree that Democrats would find themselves in the same spot, or be even worse off than they are today:

- COHN: A Newsweek economics columnist called Obama’s failure to address health care costs, at a time when the political forces for action were finally aligned, an unforgivable act of political cowardice. It’s hard to know whether voters share that assessment, but the perception that Obama whiffed at tackling the nation’s major issues certainly isn’t helping his approval ratings. The phrase “Carterbama” comes up a lot in conversation.

- SARGENT: There are a host of reasons to believe Dems might have been in a pretty bad position even if they hadn’t attempted reform at all. And if that had happened, and Dems had sustained big losses all the same, it could have postponed action on reform for a decade or more. Those who think Dems shouldn’t have tried reform this time around need to be asked when Dems would have gotten their next bite at the health care apple — particularly with such big majorities.

- KLEIN: In conversations over the past few weeks, some of the party’s leading strategists told me that it all comes down to accomplishments, or — here’s that ubiquitous word again — “deliverables.” The president, who ran such a brilliant campaign, they argue, has utterly failed to live up to the promise of his election. They cited perceived missed opportunities like the president’s decision to expand S-CHIP rather than pursuing health-care reform and suggested that he hadn’t done enough to re-regulate the financial sector in the aftermath of one of the worst financial crises in the nation’s history.

I agree with the above, but also wonder where Democrats would be today (regardless of the economy) if the President had approached reform in a more hands-on manner, publicly advocated for progressive priorities like the public option and drug reimportation, and crafted a more coherent and specific vision of what he wanted the final reform bill to look like. On one hand, it’s certainly possible that this more confrontational style would have put off the self-important lawmakers who took pride in personally crafting the law and pushed away the special interests whose acquiescence the administration bought with special agreements and tradeoffs. Reform might have died a slow death and Obama would likely be no better off than he is today — again, maybe even worse.

But had these Clintonian tactics led to a different result — if reform passed, it would have either included the kind of progressive ideas that Democrats could rally around or it would have mirrored something similar or even more conservative than the Affordable Care Act. In either outcome, if Obama steered the ship, the actual reform process could have been cut in half and even in the latter instance, Obama could have been seen as someone who stood and fought for what he campaigned for. And, it’s possible that his progressive base would have been more likely to stand with him than many are today. Conservatives, moreover, would have had less time to smear the law and concoct lies; without those falsehoods, and with a shorter legislative process, the American public would have been more receptive to the policy.”

Of course, all of this is mere speculation, but one can’t help but question if Democrats would see more public support for the law and their party today had the President publicly acted like it really mattered to him 16 months ago.

AHIP President and CEO Karen Ignagni appeared on Fox Business on Wednesday to lay out the insurance industry’s opposition to the Affordable Care Act. Ignagni wouldn’t say if insurers support repealing the law outright, but highlighted several provisions that she claims would increase costs for small businesses and individuals. She maintained that the law needs to be fixed:

IGNAGNI: I think the most important thing, Neil, is that what is being telegraphed all over the country is that people are worried about costs. [...] Small businesses in 2014 are going to face an unprecedented sales tax on their health insurance premiums….. Right now, going, starting January 1, there are new regulations going into effect that cap administrative costs. It’s going to be happening overnight, a shock to the system. And it is going to lead to a number of disruptions all over the country. [...]

CAVUTO: So you think that’s more likely if Republicans grab power or what?

IGNAGNI: I think that the American people are telegraphing to both sides of the aisle that this is a priority for them. They’re worried about costs. They should be worried about costs. We need to get on with that job of addressing that.

Watch it:

Ignagni’s efforts to demur are telling. Even though the health insurance industry is in the process of massively shifting its campaign donations to Republicans and independent groups dedicated to defunding or repealing the law, I’ve suspected that insurers are more interested in favorable regulations that don’t cut into industry profits than outright repeal. Ignagni’s appearance only confirms this hypothesis.

While she may genuinely have some concerns about the penalties associated with the free rider provision that goes into effect in 2014 (employers with more than 50 workers wouldn’t be required to provide health insurance, but they would face fines if their work force received a government subsidy to buy health insurance), she’s probably more worried that if employers respond to the penalties by dropping coverage (and moving their workers into the exchanges), they’ll abandon their existing insurance products.

Other companies and plans operating inside the exchanges will pick up that business, but they will probably have to operate under better regulated market conditions. And, since companies would have to compete for business in the exchange (which in some states may include a public option) those products could bring in smaller profits. Ignagni is determined to shield the companies she represents form this kind of erosion and she’s happy to inflame concerns about rising health care costs to do so.

Besides Gov. Tim Pawlenty (R-MN), Alaska’s Sean Parnell is the only governor who is using his opposition to the Affordable Care Act to prevent his state from applying for federal grants to fund employer retirement health plans, help regulators police unreasonable insurance health premiums and plan for the exchanges. Asked to defend his resistance to accepting federal funds for reform’s most popular programs during last night’s final gubernatorial debate, Parnell — who has joined the Florida-led lawsuit challenging the constitutionality of reform — claimed that he would refuse all federal funding until the lawsuit was settled:

MODERATOR: Governor Parnell, mentioning the health care lawsuit, Democrats have accused you of footdragging in implementing some of the more popular provisions for state employees. Senator Hollis French says you’re delaying as long as legally possible provisions like getting kids staying on their parents’ health care plans until age 26 and there are Democrats who are upset you are not offering the health care benefits to state employees. States aren’t required to do that, but some are, it’s an option. Do they have some validity in saying you’re holding back? [...]

PARNELL: When I’m accused of foot dragging what I’m doing is taking each deadline in the federal legislation on a case by case basis. For example, when the federal government says here is some money to set up a health insurance exchange, but you don’t have to do it until 2014, but you ought start doing it now and here is the money if you want to try a little bit. I said no because let’s finish this lawsuit and see if the individual mandate gets overturned. That will directly bare on the health insurance exchanges and we got three years more, four years more until we’ve got to buy into a system that right now, I don’t buy.

Listen:

Interestingly, Parnell is the odd man out of the 21 other states that are part of Florida’s health care lawsuit and is offering an odd argument for why he’s refusing federal dollars for programs that have noting to do with the individual requirement. Every other state has accepted some of the early benefits of reform. In fact, even Pawlenty — who has gone out of his way to condemn the law — applied for funds to implement abstinence-only education programs and several other grants. Alaska, meanwhile, is suffering from a fairly severe health care crisis and would stand to benefit from the aforementioned grants to employers and regulators. Nineteen percent of Alaskans and 12 percent of children are without insurance coverage and the state’s health care costs tend to grow faster than the national average.

During a more lighthearted moment in the debate, Parnell was asked how old the earth was. He refused to answer, replying simply, “only God knows.” “I really don’t know. I mean, for either one of us to do it, would be quite speculative.” You can watch that exchange here.