Peter Lee, executive director of Covered California. (AP Photo/Rich Pedroncelli)

LOS ANGELES (AP) — California formally launched its insurance exchange for small businesses Monday as questions loom about potentially higher rates and just days after the federal government said it was shelving its version of the online portal for a year.

The nation’s most populous state runs its own insurance marketplace, Covered California, and officials have been quick to distinguish it from the troubled federal system that serves 36 other states.

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