Highlights and updates
- Open enrollment for 2019 coverage in Arizona ended on December 15.
- Enrollment is still open for Arizonans with qualifying events.
- Short-term health plans are available in Arizona with initial plan terms up to 185 days.
- Bright Health, Oscar, and Cigna have joined the exchange in the Phoenix area; Phoenix exchange now has five insurers.
- Benchmark premiums are lower in 2019, so premium subsidies have dropped in some areas.
- Year-over-year enrollment dropped more than 15% in 2018, despite stable rates.
- 2018 rates were virtually unchanged from 2017.
- Among the nation’s largest rate increases for 2017; among the smallest for 2018, and a decrease for 2019.
- Health Net added cost of CSR to 2018 premiums, BCBSAZ did not; for 2019, all insurers added the cost of CSR to silver plan rates.
Arizona exchange overview
Arizona uses the federally facilitated exchange, so residents in the state use Healthcare.gov to enroll in exchange plans. The exchange made headlines in the weeks leading up to the start of 2017 open enrollment, due to spiking premiums, insurer exits, and the possibility that Pinal County (southeast of the Phoenix metro area) would have no insurers offering exchange plans.
Ultimately, all areas of the state ended up with a participating insurer, which continues to be the case in 2018. And for 2019, three new insurers are joining Arizona’s exchange — a dramatic turnaround from two years earlier. Although it’s still a far cry from the 11 insurers that offered plans in the state’s exchange in 2015, Arizona’s exchange participation has jumped to five insurers for 2019, up from just two in 2018.
Although Arizona’s exchange situation heading into 2017 was used by many ACA critics as an example of a “death spiral,” higher premiums in 2017 helped insurers to right their financial ships in the individual market, as rates were remaining remarkably stable in Arizona’s exchange for 2018. And the new insurers that have joined the state’s exchange for 2019 have brought added competition and increased the options from which many enrollees can choose (although, as noted below, they’ve also brought lower benchmark plan rates in some cases, which result in smaller premium subsidies and higher net premiums for some enrollees).
U.S. Census data indicates that Arizona’s uninsured rate dropped from 17.1 percent in 2013 to 10.1 percent in 2017. And HHS reported in December 2016 that 410,000 people had gained coverage in Arizona from 2010 to 2015, as a result of the ACA. This includes people who gained coverage as a result of Medicaid expansion (enrollment in Arizona Medicaid/CHIP has grown by nearly half a million people since 2013) and the plans and subsidies available in the exchange, as well as other avenues opened up by the ACA, including young adults being able to remain on a parent’s plan until age 26.
Bright Health, Cigna, and Oscar have joined the exchange for 2019
In 2018, only Health Net and Blue Cross Blue Shield of Arizona offered plans in the Arizona exchange. But for 2019, five insurers are offering plans in the Arizona exchange, albeit mostly in the Phoenix area.
Bright Health, which started offering individual market coverage in Colorado in 2017, and expanded to Alabama in 2018, is offering individual market plans in the Phoenix area for 2019 (Maricopa and Pima counties). Bright Health already expanded into Arizona in 2018 in the Medicare Advantage market.
Oscar Health has also expanded into the Arizona market for 2019, offering plans in Maricopa County.
And Cigna has also returned to the Arizona exchange in Maricopa County, after switching in 2017 to selling plans only outside the exchange.
Although the new entrants to the Arizona exchange are concentrated in the Phoenix area, 60 percent of Arizona’s population is in Maricopa County, and another 14 percent is in Pima County.
Blue Cross Blue Shield of Arizona filed a policy discontinuation notice for an off-exchange bronze plan that was offered in La Paz County in 2018 (but which had no enrollees), and the notice indicated that BCBSAZ planned to continue to offer on- and off-exchange plans in 2019, in all Arizona counties except Maricopa.
Average 2019 premiums are lower, but new entrants to the market have resulted in lower benchmark rates and lower subsidies for many enrollees
For 2019 health plans, the Arizona Department of Insurance approved the following average rate changes:
- Blue Cross Blue Shield of Arizona: 0.2 percent average increase
- Health Net of Arizona: 6.3 percent average decrease
- Cigna: 22 percent average decrease (Cigna is new to the exchange for 2019, but had off-exchange plans available in 2018 so there is an applicable rate change)
- Oscar: new to the market, so no applicable rate change
- Bright Health: new to the market, so no applicable rate change
All of the carriers have added the cost of cost-sharing reductions (CSR) to silver plan rates for 2019, per instructions from the Arizona Department of Insurance. For 2018, the Department of Insurance did not instruct insurers on how to handle the lack of CSR funding (which wasn’t confirmed until two weeks before open enrollment in the fall of 2017), and the two insurers that offered 2018 plans took differing approaches. But for 2019, the approach is consistent: The cost of CSR has been added to silver plan rates.
For 2019, overall average premiums in Arizona’s exchange are about 6.3 percent lower than they were in 2018, although there’s wide variation from one insurer to another.
But average benchmark premiums in Arizona are 9.6 percent lower than they were in 2018. Decreases in the benchmark premiums can be caused by rate decreases from current insurers, but also by new entrants to the market offering plans that are priced lower than the existing plans, taking over the benchmark spot. Since premium subsidies are based on the cost of the benchmark plan, Arizona residents could see smaller premium subsidies — and thus higher net premiums — even if the pre-subsidy cost of their own plan stays fairly flat. And 85 percent of Arizona exchange enrollees receive premium subsidies, so this is significant for most enrollees.
For example, an applicant in Phoenix only had Ambetter plans available for 2018. But for 2019, there are plans available in that area from Ambetter, Cigna, Bright, and Oscar. A 40-year-old in Phoenix (85001 zip code) earning $30,000 in 2018 would have received a premium subsidy of about $310/month, because the benchmark plan cost $513/month. But in 2019, with four insurers offering plans, there’s a new benchmark plan. It’s offered by Cigna, and it’s only $426/month for our 40-year-old applicant. That means the premium subsidy is much smaller, at $220/month.
If a 40-year-old applicant earning $30,000 selected the cheapest available plan in Phoenix in 2018 (Ambetter Essential Care 1), he was paying an after-subsidy premium of $96/month, although the pre-subsidy cost of the plan was $405/month. [For this example, we’ll keep him the same age in 2019, to avoid the inevitable price increases that come with age — so we’ll say he’s still 40 in order to compare apples to apples.] If a 40-year-old earning $30,000 selects that same Ambetter Essential Care 1 plan for 2019, he’ll pay an after-subsidy price of $140/month. And that’s despite the fact that the pre-subsidy cost of the plan actually declined a little for 2019, dropping from $405/month to $360/month. [The Ambetter Essential Care 1 is no longer the least expensive plan available, however. This applicant could pick a similar plan from Bright Health (with the same $7,900 deductible and out-of-pocket maximum), for a net premium of about $113/month instead. But that’s still more expensive than the lowest-priced plan was in 2018, due to the reduction in the subsidy amount).
This is all because of the increased competition and lower benchmark premiums, which in turn lead to lower premium subsidies. The net cost of a given plan depends on how much it’s pre-subsidy cost differs from the pre-subsidy cost of the benchmark plan. And unlike 2016, when Arizona had by far the largest increase in benchmark premiums in the country (and thus a huge spike in the size of premium subsidies), Arizona’s average benchmark premiums have decreased for 2019. There was an overall average decrease in benchmark premiums throughout the country, but Arizona’s decrease is more significant than the national average.
Increased competition is no doubt good news for people who prefer multiple plan options, but an influx of new insurers into an area can also result in new plans undercutting the previous benchmark plan and triggering reductions in premium subsidies for everyone in the area.
The steep increase in after-subsidy premiums isn’t necessarily seen in areas of the state that continue to have just one insurer. In Snowflake (85937), for example, Blue Cross Blue Shield of Arizona offers four plans for 2019, and those are the only options. Blue Cross Blue Shield of Arizona also offered just four plans in that area for 2018. A 40-year-old earning $30,000 in Snowflake could get the cheapest available plan for about $20/month in 2018. And that’s increased to just $23/month for 2019 (the plan is HSA-qualified, with a $5,850 deductible and a maximum out-of-pocket of $6,750). There were no new entrants to the market in rural Arizona, so while enrollees in rural areas have very few plans from which to select (four in this case, as opposed to 24 in Maricopa County), there also haven’t been any market entrants disrupting the price of the benchmark plan.
2018 enrollment more than 15% lower than 2017 enrollment
Open enrollment for 2018 coverage began on November 1, 2017, and ended on December 15, 2017. That’s much shorter than previous open enrollment periods, and all plans took effect January 1, 2018 — unlike previous years, when open enrollment continued into the new year, and some plans didn’t take effect until February or March.
In Arizona, 165,758 people enrolled in coverage for 2018 during the open enrollment period. That was significantly lower than the 196,291 people who had signed up the year before. Only two states — West Virginia and Louisiana — had larger percentage declines in their year-over-year enrollment.
Arizona’s decrease in enrollment can be attributed to a variety of factors, including the reduction of the duration of open enrollment, and the sharp reductions in federal funding for enrollment assistance and exchange marketing. But while average enrollment across all states that use HealthCare.gov only dropped by about 5 percent, enrollment in Arizona dropped by more than 15 percent. This was despite the fact that average premiums were mostly unchanged in Arizona’s individual market. In most states, sharp premium increases resulted in an exodus from the individual market among people who don’t qualify for premium subsidies. But that factor didn’t play as much of a role in Arizona, where unsubsidized premiums are largely the same in 2018 as they were in 2017.
2018 rates and plans: Average premiums largely unchanged from 2017
In October 2017, the Arizona Department of Insurance published the finalized average rate changes for the individual and small group market. The state’s two exchange insurers continued to offer coverage for 2018, but each county had just a single insurer offering exchange plans. This was essentially the case in 2017 as well, although BCBSAZ offered a catastrophic plan in Pima County, along with the Ambetter plans that were available in that county. For 2018, however, BCBSAZ terminated their Pima County catastrophic plan.
After experiencing one of the largest average rate increases in the country for 2017, Arizona’s exchange had among the lowest average rate changes for 2018. Jeff Stelnik, Blue Cross Blue Shield’s senior vice president of strategy, sales, and marketing, noted in June 2017 that they were “starting to see some signs of stability,” regarding the individual market. BCBSAZ raised their average premiums by more than 51 percent for 2017, but it appears that may have been enough to put them on a sustainable path (note that ACA premium subsidies grow to keep pace with premiums, so subsidies were much larger in Arizona in 2017 than they were in 2016, and 86 percent of the people who had coverage in Arizona’s exchange in 2017 were receiving premium subsidies).
Ultimately, rates ended up being very stable from 2017 to 2018, with virtually no change. The following average rate changes were implemented for 2018 for the two participating exchange insurers:
- Centene/HealthNet (Maricopa and Pima counties): 1.8 percent increase
- Blue Cross Blue Shield of Arizona (the other 13 counties in Arizona): 0.9 percent decrease
Cigna and Freedom Life offered plans outside the exchange in 2018 (both with steep rate increases), although Freedom Life typically does not actively market their ACA-compliant plans. Aetna offered off-exchange plans in Arizona in 2017, but they discontinued those plans at the end of 2017. Cigna continued to sell off-exchange plans in Maricopa County, but they discontinued their “open access plus” plans (PPO-style) in favor of limited network plans (HMO-style). For 2019, however, Cigna has returned to the Arizona exchange, in Maricopa County. And as noted above, average rates in Arizona’s individual market are lower for 2019 than they were for 2018, continuing the trend of market stabilization that began in 2018.
CSR and 2018 premiums
One of the issues that affected rate changes for 2018 across the country was the question of whether the federal government would continue to fund cost-sharing reductions (CSR). By September/October 2017, insurers in many states had revised their premium proposals to include the assumption that CSR funding would not continue in 2018, and most of the remaining insurers scrambled to add the cost of CSR to their premiums in the wake of the Trump Administration’s mid-October announcement that CSR funding would indeed be terminated immediately (note that insurers still have to provide CSR benefits to eligible enrollees, but the federal government is no longer covering the cost. Instead, most insurers have added the cost to premiums. In most cases, the federal government will still end up covering most of the cost via larger premium subsidies that stem from the increased premiums).
In Arizona, Health Net’s rate filing already included the assumption that CSR funding would not continue, with the cost of CSR being added to premiums for 2018 (their rate filing did not indicate whether the cost was added to all plans, or only to silver plans).
Blue Cross Blue Shield of Arizona, on the other hand, had filed rates based on the assumption that CSR funding would continue in 2018. But they did not revise their filing after the funding was eliminated. Their 2018 filing summary stated that
“While the premium rates in this filing reflect the assumption that CSR payments to insurers will continue to be funded, Blue Cross and Blue Shield of Arizona indicated that these premium rates are appropriate regardless of the outcome of CSR funding. Thus, AZDOI does not expect any request from the filer for further alteration of rates for this product if the federal government definitively determines that CSR payments to insurers will not be funded in 2018.” (emphasis added).
So despite the fact that CSR funding was eliminated, Blue Cross Blue Shield of Arizona still implemented a slight rate decrease for 2018.
196,291 people enrolled in coverage for 2017 through Arizona’s exchange during open enrollment, including new enrollees and renewals. For perspective, 203,066 people enrolled through the Arizona exchange during the 2016 open enrollment period.
Enrollment for 2017 in Arizona’s exchange was 3.3 percent lower than it had been the year before, a decline that was slightly smaller than the average across all states that use HealthCare.gov. Enrollment tended to be lower in 2017, due in part to higher premiums (particularly for people who don’t qualify for premium subsidies) and reduced policy options, uncertainty about the future of the ACA, and the nascent Trump Administration’s decision to cut back on advertising and outreach in the final week of open enrollment.
Less insurer participation in 2017; virtually all enrollees had only one carrier option
Arizona’s health insurance exchange was once among the more robust in the nation. In 2015, there were 11 carriers offering plans in the exchange, some state-wide, and some in select counties. By 2016, that had dropped to eight.
And for 2017, there are only two — Blue Cross Blue Shield of Arizona, and Ambetter by Health Net (Ambetter acquired Health Net, and the plans became “Ambetter by Health Net” as of January 2017). In virtually all of the state, there is only one insurer offering coverage in the exchange. In Pima county, there were two carriers participating, although one was only offering Catastrophic plans, which aren’t available to most enrollees.
As of mid-August, with only two and a half months to go before the start of open enrollment for 2017, Pinal county had no carriers slated to offer plans in the exchange for 2017. But in early September, Blue Cross Blue Shield of Arizona announced that they would not exit Pinal county — as previously planned — at the end of 2016, and would continue to offer plans there in 2017.
BCBSAZ offered Catastrophic plans in Pima County in 2017; more plans in most of the rest of the state
BCBSAZ confirmed by phone in October 2016 that the only plans they would offer in Pima County in 2017 were Catastrophic plans. Those plans are only available to applicants under age 30, or applicants who qualify for a hardship exemption from the ACA’s individual mandate penalty.
Catastrophic plan uptake has been very low nationwide; during the 2016 open enrollment period, fewer than 68,000 people selected Catastrophic plans in all the exchanges nationwide, out of more than 11 million enrollees.
BCBSAZ confirmed that they will continue to offer a variety of plans in the rest of the state, with the exception of Maricopa County, where they had already confirmed they will have no plans available in 2017.
For 2018, BCBSAZ’s rate filing noted that they were terminating their catastrophic plan in Pima County at the end of 2017, but continuing to offer the rest of their plans in 2018 in the same areas they offered coverage in 2017.
Centene/Ambetter entered Maricopa and Pima Counties, Cigna left
Arizona’s health insurance exchange carrier participation for 2017 was in flux throughout much of 2016. As of mid-September, new filings had been submitted by Centene/Ambetter to offer coverage in Maricopa and Pima Counties (the plans offered are from Ambetter by Health Net, following the merger of the two companies)
But with Ambetter’s announcement, Cigna opted to exit the exchange in Maricopa County (the only county where they were planning to offer coverage), and instead partner with Ambetter by having Cigna Medical Group be an in-network provider for Centene/Ambetter in Maricopa County. Cigna Medical Group has about 100 physicians and 50 advanced practice nurses, and Ambetter enrollees are able to see them in-network in 2017.
Plan availability looks like this for 2017 in the Arizona exchange:
- Maricopa County: Ambetter by Health Net
- Pima County: BCBSAZ (Catastrophic plans only), Ambetter by Health Net
- every other county: BCBSAZ
Aetna, United, Humana, Health Choice, & Phoenix Health Plan exited
By May 2016, UnitedHealthcare (All Savers) and Humana had announced that they would exit the individual health insurance market in Arizona at the end of 2016, as was the case in many of the states where they offered plans in 2016.
In August, Aetna announced that they would exit the exchanges in 11 of the 15 states where they offered exchange plans in 2016 — including Arizona.
And the Arizona Department of Insurance released a memo indicating that Health Choice (Iasis Healthcare) would leave the individual market in Arizona at the end of 2016. Iasis reported a net loss of $76.3 million in the quarter that ended September 30, 2016, compared with a net loss of $3 million during the same quarter in 2015. Iasis losses related to Arizona exchange business totaled $10.8 million in the quarter ending September 30, and $19 million in the year ending September 30. Health Choice had 12,200 exchange enrollees who needed to select new plans for 2017.
In early September, Phoenix Health Plan announced that they would exit the exchange at the end of 2016, leaving Maricopa county’s 128,000 residents with only one carrier — Cigna, which was subsequently replaced by Ambetter — slated to offer plans in 2017. Phoenix Health Plan had proposed a 123 percent rate increase for 2017 (and was ultimately approved for a 159.9 percent increase), so it’s unlikely that they would have retained a significant market share had they continued to offer plans in the exchange in 2017.
BCBSAZ left Maricopa County
BCBS of Arizona is focusing on the rural areas of the state in 2017. They exited the exchange in Maricopa County, where about 128,000 people had coverage through the exchange in early 2016. BCBSAZ is continuing to offer plans in 13 counties in Arizona.
Initially, BCBSAZ had said they would also exit the exchange in Pinal County, but that was going to leave the county with no exchange carriers at all. State and federal officials worked with carriers in August and early September in an effort to come to an agreement, and BCBSAZ announced in early September that they would continue to offer exchange plans in Pinal County in 2017. The carrier made it clear however, that “regulators and policy makers must find a way to stabilize the market and put long-term fixes in place.”
Health Net (Ambetter by Health Net as of January 2017) exited the exchange Pinal County, but is continuing to offer coverage in Maricopa County, despite their earlier proposal to leave the county. They are also continuing to offer exchange coverage in Pima County for 2017.
Sharply higher rates in 2017; subsidies offset for most
Detailed information about rates and plan availability in the Arizona exchange for 2017 is available on the Arizona Department of Insurance website.
For the two carriers offering plans in the Arizona exchange for 2017, the following average rate increases apply (Arizona regulators do not have the authority to reject rate increases, but can only determine whether they’re actuarially sound, which they did):
- Ambetter by Health Net: 74.5 percent
- Blue Cross Blue Shield of Arizona: 51.17 percent
The average benchmark (second-lowest-cost silver plan) premium is 116 percent more expensive in Arizona in 2017 than it was in 2016. That’s by far the highest percentage increase in the country, and dramatically higher than the 22 percent average nationwide. The good news is that subsidies are tied to the cost of the benchmark plan, so they too, are significantly larger in 2017. The higher subsidies are necessary in order to keep coverage affordable for people who are subsidy-eligible.
74 percent of Arizona exchange enrollees were eligible for subsidies in 2016, but that number could increase in 2017 due to the increasing premiums — particularly if people who had off-exchange plans in 2016 opt to switch to the exchange instead. HHS estimated that there were 33,000 people in Arizona who had off-exchange coverage in 2016, but who would be eligible for premium subsidies if they switched to on-exchange plans. The spiking premiums for 2017 make it more important than ever for those folks to switch to the exchange during open enrollment, which continues until January 31.
It’s worth noting that in 2016, Arizona had among the lowest rates in the country; of the 38 states that use Healthcare.gov, only one state — Utah — had a lower average pre-subsidy premium than Arizona, and Arizona’s average of $324 per month was well below the $396 per month average across all 38 states. The spiking premiums in 2017 will take them well above the national average, though. For 2017, only three states (Alaska, North Carolina, and Oklahoma) that use Healthcare.gov have higher average benchmark premiums than Arizona.
Shopping around during open enrollment is essential, although the limited number of participating carriers in Arizona means there are few options from which to choose. For 2016, the average rate increase in Arizona’s individual market was 12 to 14 percent, but after plan selections were finalized during open enrollment, after-subsidy premiums for the 74 percent of enrollees with premium subsidies were actually lower than they were in 2015.
For 2016, the average pre-subsidy price in the Arizona exchange was $324 per month, but it dropped to $120 per month after subsidies were applied. In 2015, the average pre-subsidy price was $278 per month; after subsidies, it was $123 per month.
For the 26 percent of enrollees who don’t receive premium subsidies, however, there’s no getting around the fact that premiums were higher in 2016 than they were in 2015, and are dramatically higher in 2017.
Carriers exiting the exchange at the end of 2016 — Arizona particularly hard hit
Three carriers that participated in the Arizona exchange in 2015 did not participate in 2016: Meritus, Time, and University of Arizona Health Plans .
And that exodus became even more of an issue as we transitioned from 2016 to 2017.
Coverage was available in 2016 from eight carriers, although Health Net’s HMO and PPO are listed by the Department of Insurance as separate carriers. In 2017, only three carriers are offering coverage in the exchange, and in 13 of the state’s 15 counties, BCBS of Arizona is the only carrier available in the exchange:
- Aetna – exited at the end of 2016
- Blue Cross Blue Shield of Arizona – exited Maricopa county at the end of 2016, only offering Catastrophic plans in Pima County, but is the only exchange insurer in 13 of Arizona’s 15 counties in 2017.
- Ambetter – new to the exchange in Maricopa and Pima Counties
- Cigna – exited at the end of 2016; Cigna is partnering with Ambetter using the Cigna Medical Group in Maricopa County in 2017.
- Health Choice – exited at the end of 2016
- Health Net Life Insurance (PPO) and Health Net of Arizona (HMO) – exited Maricopa and Pinal counties at the end of 2016, remained in Pima county.
- Humana – exited at the end of 2016
- Phoenix Health Plans * – exited at the end of 2016
- UnitedHealthcare (All Savers) – exited at the end of 2016
* For 2016 plans, Phoenix Health Plans did not pay broker commissions on new business submitted after November 19, 2015. The carrier said they met their enrollment target for 2016 during the first two weeks of open enrollment; the elimination of broker commissions virtually guarantees that enrollment slowed down for them, as brokers are reluctant to work for free (brokers don’t receive any compensation other than commissions).
203,066 people enrolled in private health plans through the Arizona exchange during the 2016 open enrollment period. That was just under 99 percent of the total the year before (205,666 people enrolled during the 2015 open enrollment period), making Arizona one of just a handful of states where enrollment was lower in 2016 than it was in 2015.
But as of March 31, 2016, effectuated enrollment stood at 179,445. A year prior, effectuated enrollment was 8 percent lower, at 165,026. So although total enrollment at the end of open enrollment was slightly lower than 2015, effectuated enrollment at the end of the first quarter was higher than it was in 2015. This could be because HHS started reporting the data a little differently in 2016; canceled and unpaid enrollments were subtracted in real-time, while open enrollment was on-going, rather than waiting until after the end of open enrollment to account for attrition. So while the enrollment count as of the end of open enrollment was slightly lower in 2016, it did already reflect attrition through February 1.
Fewer PPOs in 2016; none in 2017
PPO plans became rare in Arizona in 2016. Aetna, Cigna, and Blue Cross Blue Shield of Arizona all switched to HMO-only plans in the Arizona exchange in 2016 (Meritus, the ACA-created CO-OP, had also planned to do so prior to being shut down by regulators). Enrollees who had PPO plans in 2015 from those carriers were mapped to the most similar HMO available, but they also had an opportunity to shop around and switch to any other available plan during the 2016 open enrollment period. Health Net and All Savers were still offering PPO options for consumers who preferred a broader network in 2016.
But for 2017, there are no PPO options available in the Arizona exchange (Ambetter is not included on that chart, but their exchange offerings in Maricopa and Pima counties are HMOs).
The trend towards more narrow networks (HMOs and EPOs) is common across the country as insurers look for ways to constrain costs while complying with the ACA’s regulations. Nationwide, there were 40 percent fewer PPOs available in 2016 than there were in 2015, and the trend has continued into 2017.
Rates higher in 2016, but benchmark was still among the lowest
Only three individual-market carriers in Arizona’s exchange requested 2016 rate increases of ten percent or more. One of the three carriers, Time Insurance Co, had proposed rate increases in excess of 70 percent for 2016, but they ended up exiting the insurance market nationwide at the end of 2015.
At ACAsignups, Charles Gaba calculated a proposed weighted average rate increase of 12 to 14 percent for the entire ACA-compliant individual market in Arizona, but with several assumptions and caveats included.
Final rates became available on Healthcare.gov’s rate review tool just prior to the start of open enrollment in October 2015, and rates were included at that time for carries that had requested rate hikes of less than 10 percent. Final individual market average rate changes in the exchange varied from less than a two percent increase (All Savers and Humana) to the 21.4 percent average across the Blue Cross Blue Shield of Arizona plans.
In October 2015, HHS released data on benchmark premium changes across the country. The benchmark plan is the second-lowest-cost Silver plan in a given region, and the benchmark plan is not necessarily offered by the same carrier from one year to another. Across the 37 states that used Healthcare.gov in 2015, the average benchmark premium increase was 7.5 percent for 2016. But in Arizona, the average was a much higher 17.5 percent increase. In Phoenix, the benchmark plan was 19 percent more expensive in 2016 than it was in 2015 (Kaiser Family Foundation’s data indicated a 16.9 percent increase in the benchmark premium in Phoenix). The good news is that subsidy amounts are tied to the benchmark premium, so subsidies in Arizona increased to keep up with the rising cost of coverage in 2016.
But despite the sharp increase in benchmark premiums, it’s worth noting that the average benchmark rate for a 40-year-old in Phoenix was still among the lowest in the nation in 2016 at $207/month. Only New Mexico and Indiana had lower average benchmark premiums. As discussed above, this has been reversed for 2017, with Arizona’s average benchmark premiums becoming among the most expensive in the country.
Arizona CO-OP was 11th to fold
Arizona is among the 23 states where CO-OP health plans were established under the ACA. Meritus had been offering plans in Arizona since the first open enrollment began in the fall of 2013, but they fell far short of their enrollment target in 2014. Total membership stood at 869 people by the end of 2014 (Meritus says the number was closer to 3,500, but that’s still only a small fraction of the projected 24,000 people they had hoped to enroll).
But for 2015, Meritus lowered their rates and membership skyrocketed. By August 2015, they were covering 56,000 people in Arizona. And it’s noteworthy that Meritus was not among the carriers that proposed double digit rate hikes for 2016.
Meritus was also unique – nationwide – in that they initially allowed applicants to purchase coverage year-round, outside the exchange. In the exchange, regular open enrollment periods applied, but outside the exchange, the CO-OP would enroll applicants at any time, albeit without access to premium tax credits and cost-sharing reductions (those are only available through the exchange).
In late summer 2015, they ended that policy and adjusted their enrollment guidelines to match Healthcare.gov and the rest of the off-exchange market, making Meritus coverage only available outside open enrollment for people who had a qualifying event, both on and off the exchange. Incidentally, Nevada Health CO-OP’s demise in August 2015 was partially blamed on the fact that they allowed year-round enrollment with no waiting period (and later, with just a 30 day waiting period, as opposed to the 90 days used by other Nevada carriers).
But on October 30, 2015 – just two days before the start of the 2016 open enrollment period – the Arizona Department of Insurance announced that Meritus had been placed under supervision and would wind down their activities by the end of 2015. The press release explains that two carriers were being placed under supervision, but Meritus Mutual Health Partners was the PPO version, and Meritus Health Partners was the HMO.
The CO-OP did not agree with the Arizona Department of Insurance decision, but they were “unable to convince Arizona Department of Insurance’s director that the co-op was on solid financial footing.” Meritus CEO Tom Zumtobel said that the DOI’s ruling “really caught [Meritus] by surprise… We couldn’t get feedback from DOI on what specifically we needed to do.” Although Meritus was the 11th CO-OP to fold, most closed willingly. Colorado Health OP is the only other one that publicly rejected the state’s decision to shut them down.
The 56,000 people who had coverage with Meritus all had to switch to coverage offered by another carrier for 2016. For any former CO-OP members who haven’t yet enrolled in a new plan, there’s a special enrollment period that continues through February 29, triggered by loss of coverage.
Meritus was the 11th CO-OP to fold, and the seventh since October 1 when HHS announced that carriers would get just 12.6 percent of what they were owed under the ACA’s risk corridor program.
Arizona’s CO-OP folded, but Zumtobel is still in the business of leading health plans. In March 2016, Melody Health Insurance reported that Zumtobel has been named as its President of Western Markets. Melody, which changed its name to Canopy Health Insurance, is a start-up that will launch health plans in Las Vegas, Nevada and Cheyenne, Wyoming for 2017 (the plans will be available during the open enrollment period that begins November 1, 2017).
2015 enrollment numbers
By the end of the 2015 open enrollment period, 205,666 people had selected private plans through the Arizona exchange. 48 percent of them were new to the exchange for 2015.
But as expected, some enrollees didn’t pay their initial premiums, and some opted to cancel their coverage early in the year. By March 31, effectuated enrollment in the Arizona exchange stood at 165,026 people, and it had dropped to 154,121 by June 30 (Healthcare.gov stepped up enforcement of documentation requirements for immigration and financial status during the second quarter, resulting in a number of policy and/or premium terminations nationwide).
About 76 percent of the enrollees were receiving premium tax credits, and about 54 percent were receiving cost-sharing subsidies. The average premium tax credit in Arizona was $159 per month in 2015 – well below the national average of $270/month.
In addition to private plan enrollments, 49,814 people had enrolled in Arizona’s expanded Medicaid program through the exchange between November 15, 2014 and February 15, 2015.
Nationwide, the uninsured rate among children reached a new low of 6 percent in 2014. But in Arizona it remained significantly higher, at 10 percent. According to Gallup data, the uninsured rate among adults in Arizona was 20.4 percent in 2013, and had fallen to 14.5 percent by the first half of 2015.
Arizona law prohibits creation of state-run exchange
In April 2015, Governor Doug Ducey signed House Bill 2643 into law, effectively banning the state from creating a state-run exchange. Gov. Ducey told reporters that he signed the bill because he’s “no fan of [Obamacare]” and “not in favor of a state exchange.”
The law was enacted prior to the Supreme Court’s ruling in King v. Burwell, and at ACAsignups, Charles Gaba estimates that 133,000 people in Arizona would have lost their subsidies – and most likely their insurance – if the Court had ruled that subsidies could only be provided by state-run exchanges.
Luckily for the people of Arizona, the Supreme Court issued a ruling in June 2015, upholding the legality of subsidies in every state, regardless of whether the exchange is run by the state or the federal government.
2015 plans and premiums
Three new insurers joined the Arizona marketplace for 2015: UnitedHealthcare, Assurant Health, and Phoenix Health Plans (Assurant will not participate in 2016, as they are exiting the individual market nationwide). In total, 13 insurers participated in the second year of enrollment in the Arizona exchange, up from 10 in 2014. Nationally, the number of participating insurers increased about 25 percent in 2015.
A Kaiser Family Foundation analysis shows premiums down 10 percent in the Phoenix area in 2015, but flat or up in many other parts of the state. While rates increased in 2015 for some Arizona residents, the baseline is better than in many other areas. In 2014, Arizona’s premiums were among the lowest of states using the federal exchange in 2014.
What happened during 2014 open enrollment?
Arizona saw positive effects during the first year with the Obamacare marketplace in operation. The state’s uninsured rate dropped by 2.9 percentage points, state hospitals saw uncompensated care costs drop by nearly one-third, and the state added health care-related jobs.
Among Arizona residents selecting a QHP, 77 percent qualified for financial assistance, compared to 85 percent nationally. A report released in June 2014 by the U.S. Department of Health and Human Services showed the average monthly premium, after tax credits, for Arizona consumers was $113. Among states using the federal marketplace, the average was $82. Twenty-six percent of Arizona enrollees pay $50 or less per month after subsidies.
Twelve percent of Arizona residents selected a bronze plan (20 percent nationally), 60 percent selected a silver plan (65 percent nationally), 14 percent selected a gold plan (9 percent nationally), 13 percent selected a platinum plan (5 percent nationally) and 1 percent selected a catastrophic plan (2 percent nationally). Twenty-one percent of Arizona enrollees were between the ages of 18 and 34.
Arizona and Medicaid expansion
Medicaid expansion was passed by the Arizona Legislature with some Republican support and was approved by then-Governor Jan Brewer. The Medicaid decision allowed people earning up to 138 percent of the federal poverty level — about $15,000 for an individual — to gain health coverage. About 300,000 are eligible under the expanded criteria.
Some Republican legislators and conservatives challenged Medicaid expansion. They first launched a petition to put Medicaid expansion on the November 2014 ballot. The referendum push failed, prompting a legal challenge. The suit claimed that because the tax plan to fund the state’s portion of expansion costs was passed with less than a two-thirds majority, it was unconstitutional. Oral arguments were made in mid-December 2013, and a judge dismissed the case in early February 2014.
A group of conservative Republican representatives appealed the decision, and the Arizona Court of Appeals ruled that the case could proceed. The Arizona Supreme Court heard the case in November 2014 and later ruled that the case could proceed. Governor Doug Ducey began reviewing the decision and consulting with legal experts on how to proceed.
In February 2015, the Arizona legislature passed Senate Bill 1092, which requires the state to seek an annual waiver from CMS to allow additional restrictions on Medicaid eligibility. The waiver request would include requirements that enrollees be working or involved in job training or school, and it would also limit an able-bodied person’s eligibility for Medicaid to no more than five years. The bill excludes pregnant women, those caring for young children, and people with disabilities. Governor Ducey signed the bill into law in March 2015. The bill is largely symbolic, as CMS is unlikely to approve such a waiver. But under state law, Arizona must now request one each year.
Gov. Ducey unveiled the provisions of the 2015 waiver in August, and the waiver proposal was under review by CMS as of October 2015. In December 2015, numerous consumer advocacy organizations submitted comments to CMS, urging them to reject many of the modifications that Arizona had proposed.
As of July 2016, the waiver proposal had been updated by the state and was still under review by CMS. It’s likely that the agency will reject at least some of the proposed changes, but it also appears that Arizona has no plans to do away with Medicaid expansion if CMS rejects the current 1115 waiver proposal, since the law requires the state to keep asking, on an annual basis, for the changes to be approved.
CHIP enrollment reinstated after six years
Arizona’s CHIP coverage had been frozen to new enrollments for six years due to a budget crisis, but in July 2016, CMS approved Arizona’s proposal to begin allowing new CHIP enrollments. As of July 26, 3016, the enrollment freeze for Arizona CHIP was lifted, which means that every state in the country now has CHIP coverage available to new enrollees.
In Arizona, CHIP is available to children up to age 18 with household income between 133 percent and 200 percent of the poverty level (Medicaid is available below 133 percent of the poverty level). Arizona projects that 30,000 to 40,000 children are newly-eligible for CHIP thanks to the enrollment freeze being lifted. Prior to July 2016, families in this income bracket had to purchase coverage in the exchange to cover their kids. The benefits were not as robust as those offered by CHIP, and even with subsidies, the premiums were higher.
Arizona health insurance exchange links
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.