Arizona health insurance marketplace: history and news of the state’s exchange

Overall average proposed rate changes for 2021 range from a 7% decrease to a 9% increase

Highlights and updates

Arizona exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

Arizona is among the states that have done the least to preserve the Affordable Care Act’s gains.

Arizona uses the federally facilitated exchange, so residents in the state use HealthCare.gov to enroll in exchange plans.

Open enrollment for 2021 Arizona health insurance plans will run from November 1 to December 15, 2020, with all plans effective January 1, 2o21. Residents with qualifying events (including the loss of an employer-sponsored plan) can still enroll or make changes to their coverage for 2020.

153,020 people enrolled in individual market plans through the Arizona exchange during open enrollment for 2020 coverage, which is down more than 25% from the exchange’s peak enrollment in 2015.

Arizona’s 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 2020. And three new insurers joined Arizona’s exchange for 2019 – 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 jumped to five insurers for 2019, up from just two in 2018. And in 2020, two of the existing insurers expanded their coverage areas.

The additional insurers 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 (average premiums declined in Arizona’s exchange in 2019 and again in 2020, but average benchmark premiums declined by a more substantial margin).

Overall proposed premium changes for 2021 range from a decrease of 7% to an increase of 9%

Arizona’s five individual market insurers have proposed the following average rate changes for 2021, which range from a decrease of 6.75 percent to an increase of 9.33 percent.:

  • Blue Cross Blue Shield of Arizona: 1.8 percent average increase (following a very slight average decrease in 2020 and a slight increase in 2019). BCBSAZ plans are available statewide, as the insurer returned to Maricopa County for 2020, offering coverage there for the first time since 2016.
  • Health Net of Arizona (Ambetter from Arizona Complete Health): 0.8 percent average decrease (following no average rate change in 2020 and a 6.3 percent decrease in 2019). Health Net also expanded its coverage area in Arizona in 2020.
  • Cigna: 1.87 percent average increase (following a substantial decrease in 2019 and another small decrease in 2020.
  • Oscar: 6.75 percent average decrease (following a decrease of nearly 6 percent in 2020).
  • Bright Health: 9.33 percent average increase (following a very slight average increase in 2020).

Bright Health’s proposed rate changes for specific plans range from about 3 percent to about 21 percent. So although Bright’s overall average proposed rate increase is 9.33 percent, some of their plans are over the 15 percent rate increase threshold that triggers a public rate review. The Arizona Department of Insurance is accepting public comments about the rate filings, as explained here.

The supporting documents that are available on the federal rate review site as of August 2020 are heavily redacted. Additional information will be available in SERFF as of mid-October.

Arizona judge rules that health care reform initiative will not be on 2020 ballot; case has been appealed to the Arizona Supreme Court

The ACA imposed a raft of consumer protections at the federal level, but its future is still in doubt due to the ongoing Texas v. US/Azar lawsuit and the possibility for future Congressional action. And there are some issues, such as surprise balance billing, that the ACA did not address.

Arizona health care reform activists have been working to get a measure on the 2020 ballot that would enshrine various ACA consumer protections into Arizona law. If successful, the ballot initiative would also prevent surprise balance billing on state-regulated health plans, and would increase wages for most hospital employees.

Volunteers in Arizona had until July 2, 2020 to gather 237,645 signatures. A reported 425,000 signatures were submitted, but a Maricopa County judge ruled in August that the measure could not appear on the ballot because some of the signatures were invalid — for a variety of reasons — and because the way the measure was described to people during the signature-gathering process was potentially misleading. Backers of the ballot initiative have appealed to the Arizona Supreme Court, so it’s still possible that the measure could appear on the 2020 ballot in Arizona.

The ballot initiative has been controversial from the start; the Arizona Hospital and Health Care Association has expressed opposition, as the measure would cause hospital expenses to increase in the state due to the higher wages that would have to be paid to hospital staff. And a significant amount of the financial backing for the measure has come from a California-based union for health care workers.

Reinsurance study legislation was considered in 2020 but did not pass

Legislation (HB2425 and SB1213) was introduced in Arizona in 2020 that would call for the Arizona Department of Insurance to conduct an actuarial study to determine the effect of a reinsurance program, and report back to lawmakers with the details. SB1213 passed in the Senate in February and was approved by a House committee in March, although neither bill advanced beyond that during the 2020 session.

A dozen states already have reinsurance programs in effect as of 2020, and two more (Pennsylvania and New Hampshire) will join them in 2021. The specific impacts depend on how a state structures its reinsurance program, but these programs have had a stabilizing effect on individual market premiums in every state where they’ve been implemented; premiums are universally lower with reinsurance than they would otherwise have been.

However, the reduction in premiums is determined before premium subsidies are calculated. When overall premiums decline, premium subsidies decrease as well. And depending on how much the benchmark plan premiums change, after-subsidy premiums can actually increase for some enrollees. As described below, benchmark premiums in Arizona have decreased by more than overall average premiums for the last two years in a row, resulting in less affordable coverage for people who get premium subsidies. This would be a factor that actuaries would have to consider when determining the potential impact of reinsurance on Arizona’s market.

Arizona GOP working to overturn the ACA while also pretending to protect people with pre-existing conditions

Arizona is one of the plaintiff states in the Texas v. Azar lawsuit, in which 18 GOP-led states are working to try to overturn the ACA, including all of its consumer protections (guaranteed-issue coverage, essential health benefits, unlimited annual and lifetime benefit amounts, etc.).

Two courts have agreed with the plaintiffs in their argument that the ACA’s individual mandate is unconstitutional now that there’s no longer a tax to enforce it. But while the lower court further agreed that the individual mandate is not severable from the rest of the ACA and the entire law should thus be overturned, the appeals court has sent the case back to the lower court for a further inspection to determine exactly which aspects of the ACA should be overturned.

The Supreme Court has agreed to hear the case in the 2020-2021 term, so oral arguments could be held as soon as October 2020. The uncertainty caused by the case is harmful to consumers as well as insurers, and it’s left some states scrambling to enact legislation to protect consumers from the possibility of the ACA being overturned.

And some of them are the very states that are working to try to overturn the law in the first place. We’ve written previously about West Virginia and Louisiana, and how their attorneys general are plaintiffs in the Texas v. Azar case while simultaneously supporting legislation that would supposedly protect residents if the AGs are successful in their efforts to overturn the ACA. Arizona Republicans also introduced legislation that purports to protect people with pre-existing conditions. Arizona SB1397, sponsored by 15 GOP lawmakers, would prohibit individual market health insurers from rejecting applications based on medical history, or imposing pre-existing condition exclusions. The legislation passed in the Senate in March, and the House in May. If signed into law, it will only take effect if and when the ACA is overturned.

But it’s crucial to understand that this bill would do very little to help people with pre-existing conditions, nor would it help healthy people who are only currently able to afford coverage because of the ACA’s premium subsidies and expansion of Medicaid. SB1397 does not prohibit insurers from charging higher premiums based on medical history, which was a common practice in the individual market prior to the ACA. And most importantly, it does nothing to replace the federal funding (for premium subsidies and Medicaid expansion) that would be lost if the ACA were to be overturned.

In Arizona in 2019, the average exchange enrollee’s premium was $589/month. But 79 percent of the state’s exchange enrollees were receiving premium subsidies, and the average net premium (after subsidies were applied) was $220/month. Without those subsidies, coverage would be unaffordable for many enrollees. And the nearly 400,000 people covered under expanded Medicaid in Arizona would not have their coverage without the ACA’s enhanced federal funding for Medicaid expansion.

Arizona Democrats introduced a more comprehensive bill (SB1599), which calls for guaranteed-issue coverage and rate-setting based on the factors that are allowed under the ACA (ie, family size, zipcode, age, and tobacco use, although the bill would cap the tobacco surcharge at 7 percent), so premiums could not be adjusted higher based on a person’s health history. But that bill did not advance.

A citizen-led ballot measure that might appear on the 2020 ballot (details below) also calls for health insurance premiums in the state to vary based only on the factors allowed under the ACA (number of people on the policy, age, geographic area, and tobacco use). But the future of the ballot measure is uncertain, as a judge disqualified a significant number of the signatures, resulting in the measure not making it onto the ballot. The Arizona Supreme Court could overturn that ruling, but it’s not clear if they will.

And even with the Democrats’ more robust bill and/or the ballot measure, the loss of federal ACA funding would result in unaffordable health insurance premiums in most states. Unless states can cover that funding themselves (which is unlikely, in most states), there would certainly be a reduction in access to affordable health coverage.

Health Net and BCBSAZ expanded their coverage areas for 2020. Overall average premiums decreased slightly

Arizona’s exchange has five insurers that offer plans in various areas of the state for 2020, They implemented the following average rate changes for 2020:

  • Blue Cross Blue Shield of Arizona: 0.1 percent average decrease (following a very slight increase in 2019). BCBSAZ plans are available statewide, as the insurer returned to Maricopa County for 2020, offering coverage there for the first time since 2016.
  • Health Net of Arizona (Ambetter from Arizona Complete Health): no average rate change (following a 6.3 percent decrease in 2019). Health Net also expanded its coverage area in Arizona in 2020.
  • Cigna: 3.1 percent average decrease (following a 22 percent decrease in 2019; Cigna’s plans were available off-exchange in 2018, but became available through the exchange as of 2019)
  • Oscar: 5.71 percent average decrease (Oscar was new to the market in Arizona in 2019)
  • Bright Health: 0.08 percent average increase (Bright Health was also new to the market in 2019)

At ACA Signups, Charles Gaba calculated a weighted average rate decrease of 0.2 percent — essentially unchanged from 2019.

Premium changes in prior years

For perspective, here’s a look at how premiums have changed in Arizona’s exchange over the years. [Detailed information about rates and plan availability in the Arizona exchange is available on the Arizona Department of Insurance website. Arizona regulators do not have the authority to reject rate increases, but can only determine whether they’re actuarially sound]:

2015:  In 2014, Arizona’s premiums were among the lowest of states using HealthCare.gov. A Kaiser Family Foundation analysis showed premiums down 10 percent in the Phoenix area in 2015, but flat or up in many other parts of the state.

2016: For 2016 coverage, final individual market average rate changes in the exchange varied from less than a two percent increase (All Savers and Humana) to 21.4 percent average across the Blue Cross Blue Shield of Arizona plans.

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. And although the average rate increase in Arizona’s individual market was 12 to 14 percent for 2016, after-subsidy premiums (after plan selections were finalized during open enrollment) for the 74 percent of enrollees with premium subsidies were actually lower than they were in 2015.

2017: By 2017, there were only two insurers offering plans in Arizona’s exchange. Ambetter/Centene/Health Net raised premiums an average of 74.5 percent, and Blue Cross Blue Shield of Arizona raised premiums an average of 51.17 percent. The spiking premiums in 2017 pushed Arizona’s rates well above the national average: For 2017, only three states (Alaska, North Carolina, and Oklahoma) that use Healthcare.gov had higher average benchmark premiums than Arizona.

The average benchmark (second-lowest-cost silver plan) premium was 116 percent more expensive in Arizona in 2017 than it was in 2016. So premium subsidies, which are based on the cost of the benchmark plan, grew significantly in Arizona in 2017.

2018: Arizona’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, with virtually no change. Ambetter/Centene/HealthNet (in Maricopa and Pima counties) raised their premiums by an average of 1.8 percent, while Blue Cross Blue Shield of Arizona (in the other 13 counties in the state) decreased their premiums by an average of 0.9 percent.

Health Net’s rate filing included the assumption that cost-sharing reduction (CSR) funding would not continue, with the cost of CSR being added to premiums for 2018.

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, as their filing had indicated that the slightly lower rates for 2018 would be adequate regardless of whether CSR funding was provided by the federal government.

2019: All of the carriers added the cost of cost-sharing reductions (CSR) to silver plan rates for 2019, per instructions from the Arizona Department of Insurance. Overall average premiums in Arizona’s exchange were about 6.3 percent lower in 2019 than they were in 2018, although there was wide variation from one insurer to another.

Find a short-term health plan in Arizona.

Lower benchmark rates result in lower subsidies for many enrollees, potentially contributing to enrollment declines

Although Arizona’s average premiums decreased slightly — by 0.2 percent — for 2020, average benchmark premiums in Arizona decreased by 6 percent. And that came on the heels of a 10 percent decrease in 2019, when overall average premiums decreased by about 6 percent. So for two years in a row, average benchmark premiums in Arizona’s exchange have dropped more significantly than overall average premiums.

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 (three new insurers joined the Arizona exchange in 2019: Oscar, Bright, and Cigna). Since premium subsidies are based on the cost of the benchmark plan, some Arizona residents began receiving smaller premium subsidies in 2019 and 2020, resulting in higher after-subsidy premiums even if the pre-subsidy cost of their own plan stayed fairly flat or decreased slightly. And 83 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 were 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 was a new benchmark plan, offered by Cigna, and it was only $426/month for our 40-year-old applicant. That means the premium subsidy was much smaller, at $220/month.

And the benchmark premium dropped again in 2020 — it’s now a plan offered by Bright Health, and it’s only $400/month for a 40-year-old applicant (we’re keeping the person at age 40 in each year to better compare apples to apples; in reality, they would be 42 by 2020, which means their rate would have increased due to age in addition to the regular annual rate changes; the benchmark plan would be $415/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.

If a 40-year-old earning $30,000 selected that same Ambetter Essential Care 1 plan for 2019, he had to 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 was no longer the least expensive plan available. This applicant could have picked 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 was still more expensive than the lowest-priced plan was in 2018, due to the reduction in the subsidy amount.]

For 2020, if a 40-year-old applicant earning $30,000 wanted to select that same Ambetter Essential Care 1 plan, the after-subsidy premium would be $155/month. And again, that’s despite the fact that the pre-subsidy cost of that plan decreased again for 2020, dropping (slightly) to $356/month. As was the case in 2019, there are less expensive plans available: There’s a plan from Bright Health (with the same $8,150 deductible and out-of-pocket maximum that applies to the Ambetter plan in 2020) with an after-subsidy premium of about $133/month.

But that’s the lowest-cost option in 2020: $133/month, up from $96/month for the cheapest plan in 2018, for a same-age applicant with the same income (and an unchanged income is actually a lower percentage of the poverty level each year, since the poverty level increases; if your income stays flat over the long run, and doesn’t keep up with inflation, you end up worse-off).

This is all because of the increased competition and lower benchmark premiums in Arizona’s exchange, 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 2017, 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 decreased for 2019 and again for 2020. Overall average rates have declined in Arizona in 2019 and 2020, but the benchmark premiums declined more significantly, resulting in larger after-subsidy premiums.

Although there are a variety of factors contributing to the declining enrollment in Arizona’s exchange (and in most states that use HealthCare.gov), the decreasing affordability of coverage for people who get premium subsidies is no doubt one of the factors.

2020 enrollment down more than 25% from peak enrollment in 2015

Enrollment in Arizona’s exchange grew sharply from 2014 to 2015 (when the exchange was functioning much better than it did the first year), but has been declining over the last few years.

And while most states that use HealthCare.gov saw their enrollment peak in 2016, Arizona’s peaked in 2015 and declined slightly in 2016. It has declined fairly significantly since then, dropping by more than 25 percent over five years. Here’s a look at Arizona exchange enrollment totals (during open enrollment) each year since the ACA debuted:

Arizona was one of just a handful of states where enrollment was lower in 2016 than it was in 2015. And only two states – West Virginia and Louisiana – had larger percentage declines in their year-over-year enrollment from 2017 to 2018. 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 in 2018, 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 were largely the same in 2018 as they were in 2017.

In 2019 and again in 2020, overall average premiums declined in Arizona, but average benchmark premiums declined even more. Premium subsidies are based on benchmark premiums, so subsidies dropped more significantly than overall average premiums, leaving some subsidized enrollees with higher after-subsidy premiums. This could certainly be a factor in the declining enrollment the state has seen in recent years.

Insurer participation in Arizona’s exchange: Robust to meager and back to fairly robust in some areas by 2019

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. Three new insurers joined the Arizona marketplace for 2015: UnitedHealthcare, Assurant Health, and Phoenix Health Plans. 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 by about 25 percent in 2015.

By 2016, the number of participating insurers had dropped to eight. Three carriers that participated in the Arizona exchange in 2015 did not participate in 2016: Meritus, Time, and University of Arizona Health Plans. Time had proposed a rate increase in excess of 70 percent for 2016, but ended up leaving the market instead. Meritus, an ACA-created CO-OP, shut down at the end of 2015

And that exodus became even more of an issue the following year. By 2017, only two carriers are offering coverage in the exchange (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), and in 13 of the state’s 15 counties, BCBS of Arizona was 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 offered Catastrophic plans in Pima County, but was 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 returned to the exchange in 2019).
  • 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 guaranteed that enrollment slowed down for them, as brokers are reluctant to work for free (brokers don’t receive any compensation other than commissions).

Plan availability looked 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

As of August 2016, 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. The carrier made it clear however, that “regulators and policymakers must find a way to stabilize the market and put long-term fixes in place.

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 were 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 had about 100 physicians and 50 advanced practice nurses, and Ambetter enrollees were able to see them in-network in 2017.

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.

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.

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, began 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 also expanded into the Arizona market for 2019, offering plans in Maricopa County.

And Cigna 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 in 2019 were concentrated in the Phoenix area, 60 percent of Arizona’s population is in Maricopa County, and another 14 percent is in Pima County.

For 2020, all five insurers continued to offer coverage. Health Net expanded its coverage area in the state, and Blue Cross Blue Shield of Arizona returned to Maricopa County and is offering statewide coverage for the first time since 2016.

Fewer PPOs in 2016; none by 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 as of 2017, there were no PPO options available in the Arizona exchange. 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. All of the plans available in Arizona’s exchange in 2020 are HMOs.

 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 said 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 until the practice of year-round off-exchange enrollment ended in Nevada in the fall of 2019).

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 explained that two carriers were being placed under supervision: 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’s CO-OP also pushed back against regulators’ decision to shut them down, but did ultimately close at the end of 2015).

The 56,000 people who had coverage with Meritus all had to switch to coverage offered by another carrier for 2016. Meritus was the 11th CO-OP to fold, and the seventh since October 2014 when HHS announced that carriers would get just 12.6 percent of what they were owed under the ACA’s risk corridor program.

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 had 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 projected that 30,000 to 40,000 children were 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 law prohibits the 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.

Arizona health insurance exchange links

HealthCare.gov
800-318-2596

Cover Arizona

Arizona Department of Insurance

Office of Health Insurance Exchange


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.

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