This is an archived article that was published on in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Utah is among the first Republican-led states to win conditional approval to run their own health exchanges.

But federal officials made clear the Beehive State's existing insurance marketplace, Avenue H, still needs upgrading to become fully compliant with the Affordable Care Act — dashing Gov. Gary Herbert's hopes that it might serve as a "bare minimum" standard for other states to follow.

Also conditionally blessed by the U.S. Department of Health and Human Services (HHS) on Thursday were exchanges from GOP-led Idaho, Nevada, New Mexico and Democrat-leaning California, Hawaii and Vermont.

"In all these states there's more work to be done. But we believe they've made significant progress," said Gary Cohen, deputy administrator of the department's Center for Consumer Information and Insurance Oversight. "What we've said is, in order to be certified, [Utah's exchange] needs to comply with our statute and regulations."

Utah must submit by Feb. 1 a timeline for upgrading its 3-year-old insurance portal. The state must also show that it can fund it and that it has legal authority to set up a consumer-outreach program to help shoppers navigate their insurance options.

"We recognize that Utah is working under intense timelines and will work with you to establish benchmark dates that are appropriate and will allow us to jointly monitor Utah's progress," wrote HHS Secretary Kathleen Sebelius in a Thursday letter to Herbert.

Exchanges are designed to be a path to health coverage for tens of millions of Americans who don't have access to employer benefits. It's where consumers can compare plans, see if they're eligible for federal subsidies to purchase them, or enroll in low-income programs such as Medicaid.

"Finding the right plan will be less costly and less complicated than ever before," Sebelius said.

Utah already has a "shop" exchange for small businesses, Avenue H, which officials have said would cost between $15 million and $30 million to expand to individuals starting in October.

Herbert promised to do just that and to enforce new federal price controls and consumer protections. But he wanted the feds to enforce the mandate that people have insurance and to determine if consumers are eligible for tax credits, or subsidies.

In the end, he conceded that Avenue H will have to "seamlessly" interface with these federal systems.

Herbert is reviewing HHS' conditions with the Legislature to determine if they are "acceptable or reasonable," said the governor's deputy chief of staff, Ally Isom. But she said, "Utah's position on our state health exchange has not changed and it will not change. Because it's consumer-driven, market-based and flexible, Utah's model is the right solution for Utah."

Convincing Republican Legislative leaders to fund a new-and-improved Avenue H won't be easy considering they have said they want nothing to do with a federal exchange.

"That's the question. Where is the money?" said Legislative Health Reform Task Force Chairman Rep. Jim Dunnigan, R-Taylorsville, who fears that, weeks out from the start of the 2013 legislative session, time for finding consensus is running short.

"It's late in the game to think we're going to launch anything resembling a consumer-friendly exchange between now and October," he said. "It's a real stretch."

Consumer advocates, though, note that tens-of-millions in federal grants are available to helps states launch their exchanges.

"If Utah's leaders are serious about reforming health care to reduce costs, improve quality of care, and expand coverage to the state's 400,000 uninsured residents, they need to set politics aside and build a state-run exchange that can do the job," said Jason Stevenson, education and communications director at the Utah Health Policy Project.

To date, 19 states and Washington, D.C., have been conditionally approved to partially or fully run their marketplaces. The remaining states have until Feb. 15 to apply to partner with the feds on an exchange or have the feds run one for them.

Visit for a full copy of Utah's exchange proposal.

Twitter: @kirstendstewart