The Department of Health and Human Services has released proposed regulations for the how states must establish health insurance exchanges.  These regulations are a result of Section 1311 of ObamaCare.  In addition, HHS released a set of proposed regulations related to how states can reinsure risk.

Notable from the proposed regulations related to health insurance exchanges are the following:

1. States must submit a plan for how it intends to operate the Exchange and receive written approval of that plan from HHS "not later than January 1, 2013."  Section 155.105.  Any changes to the plan, must be approved by HHS prior to those changes taking effect.  Section 155.105(e).  In this respect, the federal government will control each state Exchange much like the feds currently control the states under the Medicaid process.
2. The Exchange cannot issue any "rules that conflict with or prevent the application of regulations promulgated by HHS under subtitle D of title I" of ObamaCare.  Section 155.120.
3. Existing Exchanges must come into compliance with federal rules and "must work with HHS to identify areas of non-compliance with [federal] standards."  Section 155.150.
4. The regulations provide that an Exchange must make eligibility determinations (Sec. 155.200) but does not specify the process for making such determinations (it looks as if the details will be forth coming in other regulations).  This raises the question of whether the determination process will be so weak as to allow illegal aliens to participate in the Exchange.    

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