Looking ahead to 2017
UnitedHealthcare (All Savers) and Humana are exiting 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. That will leave six carriers offering plans in the Arizona exchange, but there will be eight rural counties that have only one participating exchange carrier (BCBS of Arizona), and five counties with only two carrier options in the exchange. About 15 percent of Arizona’s exchange enrollees in 2016 are in one of the eight counties that will only have BCBS of AZ as an option for 2017.
Rate filings for 2017 are currently under review by state regulators. The proposed average increases range from under 9 percent (Cigna) to almost 65 percent (BCBS of AZ). At ACA Signups, Charles Gaba has calculated a weighted average rate increase of 53 percent for Arizona’s individual market, although he notes that this is still a rough estimate, since there are some gaps in the data.
Although the average proposed rate increase for Arizona’s individual market is certainly alarming, the impact won’t be as significant for people who are receiving premium subsidies, as long as they shop around during open enrollment to make sure they pick the plan that represents the best value in 2017. The 53 percent average requested rate increase for 2017 is before any subsidies are applied, and assumes everyone keeps their current plans (except for people with All Savers and Humana, who will have no choice but to pick a different plan). But when people shop around during open enrollment, the resulting rate increase is more muted.
For 2016, the average requested 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 drops 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 likely be considerably higher in 2017.
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 likely be considerably higher in 2017. But in 2016, Arizona has among the lowest rates in the country; of the 38 states that use Healthcare.gov, only one state – Utah – has a lower average pre-subsidy premium than Arizona, and Arizona’s average of $324 per month is well below the $396 per month average across all 38 states.
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).
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:
- Blue Cross Blue Shield of Arizona
- Health Choice
- Health Net Life Insurance (PPO) and Health Net of Arizona (HMO)
- Humana – exiting at the end of 2016
- Phoenix Health Plans *
- UnitedHealthcare (All Savers) – exiting at the end of 2016
* For 2016 plans, Phoenix Health Plans will 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 it’s important to note that 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.
Still not insured?
The 2016 open enrollment period, when anyone could sign up for insurance, ended January 31. Enrollment in individual plans is now closed for the year, both on and off-exchange.
The 2017 open enrollment period runs from November 1, 2016 to January 31, 2017. But depending on your circumstances, you may still be able to enroll in 2016 coverage:
- If you have a qualifying life event, you get a 60-day special enrollment period to select a health plan.
- If you qualify for Medicaid, you can sign up at any time.
- If you’re Native American, enrollment continues year-round.
For people who remain uninsured in 2016 and are not eligible for an exemption from the individual mandate, the penalty is significantly higher than it was in 2014 and 2015. For 2016, the penalty is $695 per uninsured adult (half that amount for a child), up to $2,085 per household, OR 2.5 percent of taxable income, whichever is greater.
Fewer PPOs in 2016
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 are still offering PPO options for consumers who prefer a broader network.
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 are 40 percent fewer PPOs available in 2016 than there were in 2015.
Rates higher, but benchmark 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.
Blue Cross Blue Shield of Arizona proposed an average rate increase of 21.4 percent for their individual plans. Health Net also proposed double digit rate hikes for their individual plans (11 percent for PPO plans, and 26 percent for HMO plans). Cigna appeared on the list of carriers with rate increase proposals of at least ten percent, but it’s for a plan sold outside the exchange.
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, 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, 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 is 19 percent more expensive in 2016 than it was in 2015 (Kaiser Family Foundation’s data indicates 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 have increased to keep up with the rising cost of coverage.
But despite the sharp increase in benchmark premiums, it’s worth noting that the average benchmark rate for a 40-year-old in Phoenix is still among the lowest in the nation, at $207/month. Only New Mexico and Indiana have lower average benchmark premiums.
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 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 current enrollees are receiving premium tax credits, and about 54 percent are receiving cost-sharing subsidies. The average premium tax credit in Arizona is $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.
Just more than 120,000 Arizona residents signed up for qualified health plans (QHPs) during open enrollment for 2014. An additional 101,282 people qualified for Medicaid or the Children’s Health Insurance Program (CHIP).
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 March 2016, the waiver proposal 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.
Arizona health insurance exchange links