SEC. 208. OPTIONAL OPERATION OF STATE-BASED HEALTH INSURANCE EXCHANGES.

[a] In General- If--

[1] a State [or group of States, subject to the approval of the Commissioner] applies to the Commissioner for approval of a State-based Health Insurance Exchange to operate in the State [or group of States]; and

[2] the Commissioner approves such State-based Health Insurance Exchange, then, subject to subsections [c] and [d], the State-based Health Insurance Exchange shall operate, instead of the Health Insurance Exchange, with respect to such State [or group of States]. The Commissioner shall approve a State-based Health Insurance Exchange if it meets the requirements for approval under subsection [b].

[b] Requirements for Approval- The Commissioner may not approve a State-based Health Insurance Exchange under this section unless the following requirements are met:

[1] The State-based Health Insurance Exchange must demonstrate the capacity to and provide assurances satisfactory to the Commissioner that the State-based Health Insurance Exchange will carry out the functions specified for the Health Insurance Exchange in the State [or States] involved, including--

[A] negotiating and contracting with QHBP offering entities for the offering of Exchange-participating health benefits plan, which satisfy the standards and requirements of this title and title I;

[B] enrolling Exchange-eligible individuals and employers in such State in such plans;

[C] the establishment of sufficient local offices to meet the needs of Exchange-eligible individuals and employers;

[D] administering affordability credits under subtitle B using the same methodologies [and at least the same income verification methods] as would otherwise apply under such subtitle and at a cost to the Federal Government which does exceed the cost to the Federal Government if this section did not apply; and

[E] enforcement activities consistent with federal requirements.

[2] There is no more than one Health Insurance Exchange operating with respect to any one State.

[3] The State provides assurances satisfactory to the Commissioner that approval of such an Exchange will not result in any net increase in expenditures to the Federal Government.

[4] The State provides for reporting of such information as the Commissioner determines and assurances satisfactory to the Commissioner that it will vigorously enforce violations of applicable requirements.

[5] Such other requirements as the Commissioner may specify.

[c] Ceasing Operation-

[1] IN GENERAL- A State-based Health Insurance Exchange may, at the option of each State involved, and only after providing timely and reasonable notice to the Commissioner, cease operation as such an Exchange, in which case the Health Insurance Exchange shall operate, instead of such State-based Health Insurance Exchange, with respect to such State [or States].

[2] TERMINATION; HEALTH INSURANCE EXCHANGE RESUMPTION OF FUNCTIONS- The Commissioner may terminate the approval [for some or all functions] of a State-based Health Insurance Exchange under this section if the Commissioner determines that such Exchange no longer meets the requirements of subsection [b] or is no longer capable of carrying out such functions in accordance with the requirements of this subtitle. In lieu of terminating such approval, the Commissioner may temporarily assume some or all functions of the State-based Health Insurance Exchange until such time as the Commissioner determines the State-based Health Insurance Exchange meets such requirements of subsection [b] and is capable of carrying out such functions in accordance with the requirements of this subtitle.

[3] EFFECTIVENESS- The ceasing or termination of a State-based Health Insurance Exchange under this subsection shall be effective in such time and manner as the Commissioner shall specify.

[d] Retention of Authority-

[1] AUTHORITY RETAINED- Enforcement authorities of the Commissioner shall be retained by the Commissioner.

[2] DISCRETION TO RETAIN ADDITIONAL AUTHORITY- The Commissioner may specify functions of the Health Insurance Exchange that--

[A] may not be performed by a State-based Health Insurance Exchange under this section; or

[B] may be performed by the Commissioner and by such a State-based Health Insurance Exchange.

[e] References- In the case of a State-based Health Insurance Exchange, except as the Commissioner may otherwise specify under subsection [d], any references in this subtitle to the Health Insurance Exchange or to the Commissioner in the area in which the State-based Health Insurance Exchange operates shall be deemed a reference to the State-based Health Insurance Exchange and the head of such Exchange, respectively.

[f] Funding- In the case of a State-based Health Insurance Exchange, there shall be assistance provided for the operation of such Exchange in the form of a matching grant with a State share of expenditures required.