Arizona uses the federally-facilitated exchange, so residents in the state use Healthcare.gov to enroll in exchange plans. 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 will be only three — Blue Cross Blue Shield of Arizona, Health Net, and Ambetter. In most of the state, there will be only one insurer offering coverage in the exchange. but in Pima and Maricopa counties, there are multiple carriers participating.
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 will only offer Catastrophic plans in Pima County
BCBSAZ confirmed by phone in early October that the only plans they’ll offer in Pima County will be 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.
Centene/Ambetter entering Maricopa and Pima Counties, Cigna leaving
Arizona’s health insurance exchange carrier participation for 2017 has been 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.
But with Ambetter’s announcement, Cigna has opted to exit the exchange in Maricopa County (the only county where they were planning to offer coverage), and will 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 will be able to see them in-network in 2017.
Health Net had planned to exit Maricopa County, but reversed course on that decision. Their plans are available in the exchange for 2017 in Pima County and Maricopa County.
Plan availability looks like this for 2017 in the Arizona exchange:
- Maricopa County: Ambetter and Health Net
- Pima County: BCBSAZ (Catastrophic plans only), Health Net, and Ambetter
- every other county: BCBSAZ
Aetna, United, Humana, Health Choice, & Phoenix Health Plan exiting
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 is the case in many of the states where they currently offer plans.
In August, Aetna announced that they would exit the exchanges in 11 of the 15 states where they currently offer exchange plans — including Arizona.
And the Arizona Department of Insurance released a memo indicating that Health Choice (Iasis Healthcare) is leaving the individual market in Arizona at the end of 2016. Health Choice has 12,200 exchange enrollees who will need to select new plans.
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 is now being 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. Health Net reversed their decision to leave Maricopa County, so there are still two carriers offering plans there for 2017.
But most areas of the state — everywhere except Maricopa and Pima Counties, as noted above — have just one carrier offering plans in the exchange in 2017.
BCBSAZ leaving Maricopa County
BCBS of Arizona will be focusing on the rural areas of the state in 2017. They are exiting the exchange in Maricopa County, where about 128,000 people had coverage through the exchange in early 2016. BCBSAZ will continue 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 is exiting the exchange Pinal County, but will continue to offer coverage in Maricopa County, despite their earlier proposal to leave the county. They will also continue to offer exchange coverage in Pima County for 2017.
Sharply higher rates in 2017; subsidies will offset for most
For the three carriers offering plans in the Arizona exchange for 2017, the following average rate increases were approved:
- Ambetter: New to the exchange for 2017
- Health Net: 74.5 percent
- Blue Cross Blue Shield of Arizona: 51.17 percent
The average benchmark (second-lowest-cost silver plan) premium will be 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, will be significantly larger in 2017. The higher subsidies will be 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 are currently off-exchange opt to switch to the exchange instead. HHS has estimated that there are 33,000 people in Arizona who currently have off-exchange coverage, 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.
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 will have higher average benchmark premiums than Arizona.
Shopping around during open enrollment is essential, although the limited number of participating carriers in Arizona will result in few options from which to choose (this chart indicates the extremely limited number of plans available in each area, although Ambetter’s plans are not included on that chart, and they are offering plans in Maricopa and Pima counties). 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 is $324 per month, but it dropped to $120 per month after subsidies are 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 are higher in 2016 than they were in 2015, and will be considerably higher in 2017.
Carriers exiting the exchange – Arizona particularly hard hit
Three carriers that participated in the Arizona exchange in 2015 are not participating in 2016: Meritus, Time, and University of Arizona Health Plans (UAHP published a list of FAQs regarding their exit from the exchange).
And that exodus is becoming even more of an issue as we transition from 2016 to 2017.
Coverage is 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 will offer coverage in the exchange, and in 13 of the state’s 15 counties, BCBS of Arizona will be the only carrier available in the exchange:
- Aetna – exiting at the end of 2016
- Blue Cross Blue Shield of Arizona – exiting Maricopa county at the end of 2016, only offering Catastrophic plans in Pima County, but will be the only exchange insurer in 13 of Arizona’s 15 counties in 2017.
- Ambetter – new to the exchange in Maricopa and Pima Counties
- Cigna – exiting at the end of 2016; Cigna plans to partner with Ambetter using the Cigna Medical Group in Maricopa County.
- Health Choice – exiting at the end of 2016
- Health Net Life Insurance (PPO) and Health Net of Arizona (HMO) – exiting Maricopa and Pinal counties at the end of 2016, remaining in Pima county.
- Humana – exiting at the end of 2016
- Phoenix Health Plans * – exiting at the end of 2016
- UnitedHealthcare (All Savers) – exiting at the end of 2016
* For 2016 plans, Phoenix Health Plans is not paying 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 this year; cancelled 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 are much more rare in Arizona in 2016. Aetna, Cigna, and Blue Cross Blue Shield of Arizona have 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 prefer a broader network in 2016.
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 is continuing 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 have 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 covrage 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.
But subsidies are safe
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. Had that not been the case, not only would subsidies have evaporated for 133,000 people in Arizona, but rates for people who don’t currently get subsidies could have climbed by 60 – 90 percent. Instead, subsidies will remain available, and the health insurance industry in Arizona is stabilized by the Court’s ruling.
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