The Department for Health and Human Services released a detailed blueprint of the legal and operational requirements states must meet in their proposals if they expect to win federal approval to begin operating regulated insurance markets, in whole or in part, by January 1, 2014, when the 2010 law is scheduled to come into full force.

President Barack Obama's embattled Patient Protection and Affordable Care Act calls on states to establish exchanges that would offer federally subsidized health coverage to an estimated 16 million people who currently do not have health insurance. The exchanges would allow consumers to purchase their insurance from an easy-to-understand menu of competing plans, at premiums set on a sliding scale according to the buyer's income.

But progress at the state level has been uneven, with many states waiting to see how healthcare reform fares in a U.S. Supreme Court ruling anticipated in June that could overturn the law. The main case before the court was brought by 26 states that believe the reforms exceed the federal government's constitutional powers.

Healthcare reform also faces a political test in the November 6 election, which falls 10 days ahead of the new filing deadline for healthcare exchanges. Obama's re-election bid is being challenged by presumptive Republican presidential nominee Mitt Romney, who has vowed to repeal healthcare reform if elected.

Health and Human Services Secretary Kathleen Sebelius told reporters that 34 states, including some that want healthcare reform overturned, and the District of Columbia now have accepted federal grant money to help establish the insurance exchanges.

The administration announced another $181 million in grant awards for Illinois, Nevada, Oregon, South Dakota, Tennessee and Washington.

"What this shows is that states are making real progress in delivering quality, affordable health coverage to their residents and they want to be up and running by January 2014," Sebelius said.

Only about 15 states have actually moved to establish exchanges, either through legislation or executive order.

The administration also released guidelines for assisting states that could be unable to offer full exchange services by 2014 and for establishing federal exchanges in states that are unwilling to participate.

Officials said the administration would partner with state governments in two areas: certifying health insurance providers for the exchanges and helping consumers apply for coverage and enroll in an appropriate plan.

(Reporting by David Morgan; Editing by Bill Trott)

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