There's a pretty stark choice for states to make on health-insurance exchanges right now: They can decide to set one up. Or they can decide not to. Those, along with one choice where the state and feds divvy up the responsibilities, are the options on the table.

That seems to be true everywhere -- except Utah. There, Gov. Gary Herbert is trying to carve out a completely new option: Building a health insurance exchange that is near certainly out of compliance with the federal law, and seeing how the Obama administration responds.

A bit of background here: Before the Affordable Care Act passed, there were two states running statewide health-insurance exchanges. Massachusetts was one, and Utah was the other.

The Utah exchange launched back in August 2009 and is a relatively barebones operation: It has had about two or three employees (depending on the time of year) and an operating budget of $500,000. It caters to small businesses - about 7,000 people currently receive benefits through the Utah exchange - and pretty much lets anyone qualified to sell health insurance in Utah set up shop. Shortly after the health-care law passed, this was the model that got a lot of conservative endorsements as the best way to move forward on insurance exchanges.

There's just one pretty big problem: Utah's exchange is near certain not to meet the requirements for an insurance exchange under the Affordable Care Act. It doesn't do work to certify that health-insurance plans cover certain required benefits, for example, nor does it have the specific consumer-assistance programs that the law envisions. It only works as a "defined contribution" model, where employers put a set amount toward their workers' coverage.

While the Utah health exchange sells to small businesses, a federal health-insurance exchange will need to provide coverage options to individuals as well.

And that brings us to Utah's relatively unique decision: It has decided to continue running its health-insurance exchange, knowing full well that it may not meet the federal requirements.

"I fervently intend to move forward in the best interests of Utahns and their families," Utah Gov. Gary Herbert wrote in a letter to Health and Human Services Secretary Kathleen Sebelius on Monday. "I will continue to pursue all of Utah’s state-based reforms, including our version of an exchange based on defined contribution, consumer choice, and free markets."

To that end, Utah rolled out a new branding campaign for its exchange on Monday, renaming the exchange "Avenue H," sending the message that this health-insurance exchange isn't going anywhere.

This isn't the only space where Utah is making this type of gambit. Earlier this year, the state settled on an essential health-benefits package -- the set of medical treatments all insurers must cover -- that some advocates think is too skimpy to pass muster under federal regulation.

It will be interesting to watch how the Obama administration handles a situation like Utah. On the one hand, the administration has been trying to prove it is as flexible as possible on health reform. You saw that last week, with the extension of deadlines that Republican governors had requested.

At the same time, the administration wants to ensure that it gets health-insurance exchanges that look like the marketplaces envisioned in the Affordable Care Act. They are, by statue, required to make sure that insurance plans go through a quality control process and cover certain health-care benefits.

Moving forward with its health-insurance exchange, Utah is providing an interesting test case for the administration. We'll see how it balances the competing demands of standardization and flexibility, and whether the scale ends up tipping in either direction.