Highlights and updates
- Open enrollment for 2020 coverage in Arizona will run from November 1 to December 15, 2019.
- Average premiums expected to decrease premiums slightly in 2020; Health Net plans to expand coverage area.
- Short-term health plans can be sold in Arizona with initial plan terms up to 185 days.
- Bright Health, Oscar, and Cigna joined the exchange in the Phoenix area for 2019; Phoenix now has five insurers offering plans in the exchange.
- Benchmark premiums are lower in 2019, so premium subsidies have dropped in some areas.
- Enrollment has dropped by nearly 22% since 2015, when it peaked in Arizona.
- 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. 160,456 people enrolled in individual market plans through the Arizona exchange during open enrollment for 2019 coverage — down about 5,000 people from 2018, and nearly 21 percent lower than enrollment had been in 2016.
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 2019. 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.
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).
For 2020, Arizona’s individual market insurers have proposed an average (unweighted) rate decrease of 2.4 percent.
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 more than 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.
Insurers have proposed a small average rate decrease for 2020; Health Net will expand coverage area
Open enrollment for 2020 health plans will run from November 1 to December 15, 2019. Arizona’s exchange has five insurers that offer plans in various areas of the state, and all five intend to continue to offer plans in the exchange in 2020. They have proposed the following average rate changes for 2020:
- Blue Cross Blue Shield of Arizona: 0.14 percent average decrease (following a very slight increase in 2019)
- Health Net of Arizona (Ambetter from Arizona Complete Health): 2.89 percent average decrease (following a 6.3 percent decrease in 2019). Health Net also plans to expand its coverage area in Arizona in 2020.
- Cigna: 3.32 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 decrease (Bright Health was also new to the market in 2019)
At ACA Signups, Charles Gaba noted that the unweighted average rate change is a 2.4 percent decrease. But because the rate filings are redacted and enrollment numbers aren’t available, it’s difficult to pin down a weighted average rate change.
Average premium declined in 2019, but new entrants to the market resulted in lower benchmark rates and lower subsidies for many enrollees
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. 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 (Health Net added the cost of CSR to premiums, while BCBSAZ did not).
But for 2019, the approach was consistent, with the cost of CSR added to silver plan rates. And 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 (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 are receiving smaller premium subsidies in 2019 — and thus have higher net premiums — even if the pre-subsidy cost of their own plan stayed fairly flat from 2018 to 2019. 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 decreased for 2019. There was an overall average decrease in benchmark premiums throughout the country, but Arizona’s decrease was 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 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.
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.
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. 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, 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 average benchmark (second-lowest-cost silver plan) premium was 116 percent more expensive in Arizona in 2017 than it was in 2016. That was 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, were significantly larger in 2017.
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 took them well above the national average, though. For 2017, only three states (Alaska, North Carolina, and Oklahoma) that use Healthcare.gov had higher average benchmark premiums than Arizona.
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. 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.
Ultimately, rates ended up being very stable from 2017 to 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 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.
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, 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.
2019 enrollment down almost 22 percent from peak enrollment in 2015
As has been the case in most states that use HealthCare.gov, 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 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 nearly 22 percent over four years. Here’s a look at Arizona exchange enrollment totals (during open enrollment) each year since the ACA debuted:
- 2014: 120,071 people enrolled
- 2015: 205,666 people enrolled
- 2016: 203,066 people enrolled
- 2017: 196,291 people enrolled
- 2018: 165,758 people enrolled
- 2019: 160,456 people enrolled
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.
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 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.
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.
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 projects 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
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.