SACRAMENTO, Calif. (AP) -- The federal government on Thursday approved California's plan to run its own health insurance market, a milestone in the state's effort to meet requirements of the national health care reform law.
California was among seven states that received conditional approval from the U.S. Department of Health and Human Services to operate their own insurance exchanges. Arkansas was approved to operate a partnership exchange with the federal government.
In all, 19 states and Washington, D.C., have been partially or fully approved. Other states have until Feb. 15 to apply for a partnership exchange.
Health and Human Services Secretary Kathleen Sebelius said Thursday's action will accelerate development of the health insurance marketplaces, where she said consumers will be able to buy affordable, high quality insurance. Conditional approval "will provide the information states need to guide their continued work."
California was the first state to authorize a health insurance exchange after passage of the federal Affordable Care Act in 2010.
The California Health Benefit Exchange board, which now goes by Covered California, submitted its operational plan last month to expand coverage by at least 2 million. The California HealthCare Foundation estimates the state has about 7.1 million people —or about 18 percent of its total population — without health insurance.
The federal health care law seeks to increase health coverage by 2014 by creating new online insurance markets for individuals and small businesses to shop for subsidized private coverage, and by expanding Medicaid for low-income people. Medicaid is known as Medi-Cal in California and currently serves 7.7 million adults and children.
In her letter to Gov. Jerry Brown, Sebelius said she was granting approval to California because of the "substantial progress the California exchange has made ..."
The approval was granted on the condition that California demonstrates it can meet exchange requirements and comply with deadlines and regulations.
Covered California plans to have its exchange up and running in time for open enrollment on Oct. 1. Health coverage would take effect Jan. 1, 2014.
The exchange's executive director, Peter Lee, said Thursday's approval means California is hitting its marks.
"Rightly, the federal government is saying, 'You've got all your ducks in a row. You're ready to go and we want to make sure you're going to be ready on Oct. 1,'" Lee said.
He said the exchange will now move ahead on outreach and marketing to California's diverse population, negotiate contracts with health plans and come up with ways to improve the quality of medical care in the state.