The second objective is to ensure premium stability for plans and enrollees in the exchange, especially, HHS notes, in the early years as new people come in to exchanges to shop for health insurance.

"Exchanges offer Americans competition, choice, and clout," said HHS Secretary Kathleen Sebelius, in a statement. "Insurance companies will compete for business on a transparent, level playing field, driving down costs; and Exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs."

According to HHS, these proposed rules set minimum standards for exchanges, give states the flexibility they need to design exchanges that best fit their unique insurance markets, and are consistent with steps states have already taken to move forward with exchanges.

Forty-nine states, the District of Columbia and four territories accepted grants to help plan and operate exchanges. In addition, more than half of all states are taking additional action beyond receiving a planning grant such as passing legislation or taking Administrative action to begin building exchanges. States will continue to implement exchanges on different schedules through 2014.

Governors in 10 states have already signed laws to establish an insurance exchange, though, according to The Hill.com, exchanges in other states are not being set up fast enough to meet the 2014 deadline.

With regulations explained, experts hope this will be able to aid state lawmakers to develop exchanges that are suitable for their state's needs.

"States are leading the way in implementing health reform, and today's announcement builds on that momentum by giving states flexibility to design the Exchange that works for them," said Center for Consumer Information and Insurance Oversight Director Steve Larsen. "This regulation allows us to meet states where they are."

HHS said the proposals announced Monday build on more than a year's worth of work with states, small businesses, consumers and health insurance plans and offer states substantial flexibility. For example, it allows states to decide whether their Exchanges should be local, regional, or operated by a non-profit organization, how to select plans to participate, and whether to partner with HHS to split up the work.

In drafting these proposals, the administration examined models of exchanges, held numerous meetings with stakeholders and consulted closely with state leaders, consumer advocates, employers and insurers.

To continue that conversation, HHS is accepting public comment on the proposed rules over the next 75 days to learn from states, consumers, and other stakeholders how the rules can be improved and HHS will modify these proposals based on feedback from the American people. To facilitate that public comment process, HHS will convene a series of regional listening sessions and meetings.

To reduce duplication of effort and the administrative burden on the states, HHS also announced that the federal government will partner with states to make Exchange development and operations more efficient. States can choose to develop an exchange in partnership with the federal government or develop these systems themselves. This provides states more flexibility to focus their resources on designing the right Exchanges for their local insurance markets.