For months now, Utah has put the White House in a sticky spot on Obamacare.

Unlike most Republican-governed states, Utah has been eager to run a health insurance exchange.  In fact, it already has one: When the Affordable Care Act passed in 2010, Utah was one of two states running a marketplace where consumers could compare and purchase coverage (Massachusetts was the other).

Unlike most Democratic-governed states, though, Utah did not want to set up the kind of exchange that that the health-care law envisioned. The state has favored a bare-bones approach: It only sells to small businesses and covers 7,646 Utah residents. Where some states are hiring dozens of staff, the Utah exchange, known as Avenue H, usually has two or three employees. It does not interface with the state's Medicaid program like the federal law envisions, nor does it provide expansive consumer assistance services.

Utah initially told the Obama administration that this is how the Utah exchange works now, and will work in the future. 

"Please instruct the Department of Health and Human Services to certify the current Utah version of an exchange as compliant with the Affordable Care Act," Utah Gov. Gary Herbert wrote in a Dec. 10 letter to President Obama. "You have supported giving flexibility for states. Certifying our current exchange will give us that flexibility."
That strong statement had many health policy observers expecting that the White House would turn down Utah's application to run an exchange, given that the program they operate now is not compliant with the Affordable Care.
Thursday afternoon, however, the opposite happened: The Obama administration approved Utah's application to run an exchange. So did the White House cave? Not really. Rather, Utah decided to run its exchange more in accordance with the Affordable Care Act.  
The Obama administration responded to Gov. Herbert's Dec. 10 letter swiftly. HHS Secretary Kathleen Sebelius wouldn't approve the Utah exchange, but she would offer her office's help in getting the state to become Obamacare compliant. It was a sort of kill-them-with-kindness strategy.
"We look forward to working with you toward certifying the Utah exchange, ensuring that consumers and small businesses have access to affordable, high-quality health insurance," Sebelius wrote in her Dec. 13 letter.
The next day, Herbert writes back, declaring that Utah would indeed would set up an insurance exchange. Accompanying that letter was a thick, 72-page document detailing all the ways Utah would change its exchange to become compliant with Obamacare.
The state will expand its exchange to cover the individual market (Herbert mentioned, in an earlier letter, that this change was in the works) and expand its call center to accommodate the expected growth in demand. The state will insure that the health plans sell the type of products that the Affordable Care Act envisions, making sure different options, with varying prices, will cover certain portions' of an average consumers' health-care bill.
"Utah has said they'll develop a program that's compliant with the law," said Gary Cohen, acting director of the Center for Consumer Information and Insurance Oversight. "They've said they plan to work with the law, so we'll work with them to do that."
Utah doesn't have complete approval from the Obama administration yet. Like the 17 other states that have gotten a preliminary sign-off, the approval is conditional on Utah taking more steps toward becoming Obamacare-compliant.
Sebelius wrote in a Thursday letter to  Herbert that his state would need to better explain how the state will create a funding stream to continue setting up its exchange and also do additional work on its Navigator program, a consumer assistance function that all 50 states will need to have. 
Utah isn't wholly committed to moving forward, though. Herbert Chief of Staff Ally Isom said that the governor will "review the HHS announcement and determine if the conditions are acceptable or reasonable for our state exchange — and that includes sitting down with legislators."
Still, Utah and the Obama administration seem to find themselves in an unexpected, and exceedingly peaceful, space: They're in agreement about how the state should move forward on the health-care law.  
For the real wonks, here's the full text of Utah's 72-page health exchange blueprint:

Request to Run Utah's Version of a State-Based Health Exchange