AG: Insurance Department can set up exchange

Exchanges are online marketplaces where people can shop for insurance. Under the federal health law that President Barack Obama signed in 2010, every state is required to set up an exchange. States that don't create their own will have one run by Washington.

Gov. Phil Bryant and other Republican governors who oppose exchanges have said they fear the exchange will give the federal government a back-door way to force the expansion of Medicaid, which is also envisioned to be part of the federal health care law.

But Chaney, also a Republican, has said the danger of the federal government diverting people from the exchange to Medicaid will be greater if the state doesn't run the exchange.

"He's ruled in our favor... and we thought that would happen," Chaney said in a telephone interview Tuesday. "We are very encouraged. Now everything will rest with HHS. The ball is in HHS' court."

The Department of Health and Human Services has said it had approved exchange proposals for Washington, D.C., and 17 states, four of which have Republican governors. Officials said they did not act on Mississippi's request because of the split between Bryant and Chaney over who has authority to create or oversee a plan.