Gov. Martin O'Malley this week appointed a board that will regulate a new health insurance marketplace in Maryland, one of the first steps in adopting federal health care reform.

Members of the nine-member board, which is made up of doctors, public health experts and state officials, will oversee the establishment and implementation of a health exchange by 2014. The exchange is intended to allow individuals and small businesses to purchase health insurance via a database that juxtaposes plans from various providers.

Board members said they expect the exchange, which was mandated by the federal Affordable Care Act that was passed last year, eventually will drive down the cost of health insurance. But critics dispute the assertion.

One function of the exchange will be to allow people to enroll in Medicaid and the Children's Health Insurance Program and provide an electronic calculator for users to determine the cost of their health care coverage in light of any tax credits or other subsidies individuals or businesses receive.

"The more we can make the market work better for everyone, we can hopefully make health care more affordable across the board," said board member Jennifer A. Goldberg, who is the assistant director of advocacy for elder law and health care at the Maryland Legal Aid Bureau.

Legislation OK'd in the Maryland General Assembly this year established a framework for the exchange. It requires the exchange board to begin drafting regulations for pulling insurance companies into the online marketplace and determining how users access the exchange.

Starting in January 2014, the board will be able to impose user fees and other regulatory charges to operate the exchange. It is expected to be self-sustaining by 2015.

Maryland is one of a handful of states to begin moving on the virtual health care market.

Acting quickly on an exchange program could mean access to federal dollars, as grant money has been allocated for states that chart the course of health care reform.

So far, Maryland has received $7.2 million from the federal Department of Health and Human Services to plan and build the exchange, according to staff in Lt. Gov. Anthony G. Brown's office.

Of that, $6.2 million is through an innovators grant, which was awarded to six states forging the exchange process.

State officials plan to apply for more federal grants as the development process moves forward, Brown spokesman Marc Goldberg said.

Brown, who was tasked by O'Malley (D) with muscling the exchange legislation through the General Assembly, has said the chance to earn the federal money is an opportunity the state shouldn't pass up.

"Unless you drive a process like we did, these things just don't happen by themselves," Brown (D) said during an interview in April. "These are complex, complicated entities that we're creating with broad-reaching implications."

Federal subsidies might not be worth the rush, said Marc Kilmer, a senior fellow at the conservative-leaning Maryland Public Policy Institute.

With pending lawsuits aimed at the federal law, Kilmer said Maryland could be left holding the bag on a defunct program.

At the risk of making mistakes and spending more money than necessary, it would be beneficial to not be first out of the gate on exchanges, he said.

Kilmer points to the exchange established in 2007 in Massachusetts, which has been criticized for not deregulating the insurance market aggressively enough.

"The cost benefits don't seem to have been realized by the exchange," he said. "I'm not sure there will be any benefit from Maryland setting up an exchange."

Dr. Georges Benjamin, executive director of the American Public Health Association and one of the exchange board members, said the costs to Massachusetts have not been that high.

"If you look at Massachusetts, certainly (it) has shown that you can make a functional exchange and their costs haven't gone up that much," Benjamin said. "People were projecting terrible, terrible cost increases."

The exchange also won't drive down health care costs or make insurance more affordable, Kilmer said.

It will further regulate an already heavily governed insurance market in Maryland, forcing companies to spend more and thus drive up premiums, he said.

"If you have access to a computer or can get to a health insurance broker, that part isn't difficult," Kilmer said. "Finding a policy that meets your needs, that is what's difficult and that's what the state has prevented consumers from doing in Maryland."

Benjamin argues that bringing multiple providers together in the exchange and making it easily accessible to consumers will drive down costs to insurance providers and ultimately lower consumer costs.

"If done right, (we can) create a very broad market and really make it much more affordable to people," Benjamin said.

The exchange will make buying health care easier because consumers will be able to compare plans, said board member Enrique Martinez-Vidal, vice president of AcademyHealth, a professional society for health services researchers and policy analysts.

Currently, it is difficult to compare health insurance options, he said.

"If you want to have a functional market, you have to have good information. You need to not have just the sellers' information," Martinez-Vidal said. "The information an exchange can provide can hopefully improve quality and hopefully drive some costs down as well."