The Health & Human Services Department (HHS) announced it will award five grants to states to create health insurance exchanges.

The “early innovator” grants will be awarded to states who are currently working on setting up their own exchanges, which serve as primary destinations for purchasing health care. The grants are scheduled to be awarded on February 15^th, 2011.

“This will help to create a simpler, consumer-oriented system for individuals, families and businesses to sign up for the health insurance plan that they choose,” said Joel Ario, director of health insurance exchanges in HHS’ Office of Consumer Information and Insurance Oversight. “By encouraging and rewarding states for their innovation, we can build and leverage models that can be adopted and tailored by other states and generate taxpayer savings across the board,” Ario said.

HHS said that after the February grants are announced, all states will be eligible for a second round of health insurance exchange grants.

Read more about the announcement here.