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Arizona and Health Reform

Arizona residents and insurance companies are equally experiencing the impact of the Patient Protection and Affordable Care Act as it comes into fruition. Since the law’s implementation, the state’s rules have adjusted to fit federal guidelines for medical insurance and healthcare, causing conflict, opposition, and increased access to coverage. Between 2014 and 2015, additional regulations are accepted into Arizona state law regarding health coverage and consumer protections.

During the implementation process, Arizona mainly followed the path of other red states in opting for a federally-run health insurance exchange, yet the governor did opt to expand Medicaid. Although the state finally decided to participate in Medicaid expansion, the state initially felt the endeavor would be too costly. As the deadline to accept funds and begin enrolling more applicants in 2014 approached, Gov. Jan Brewer increased eligibility in the low-income insurance program.

To summarize some of the more important changes affecting the people of Arizona, it is best to look at the laws that affect policyholders and their families, as well as the companies who insure them. Individual health insurers in the state will be impacted immensely, as they will be asked to change the way they operate for the benefit of the plan member. Although there is great concern over how much this will cost, insurers and the state are required to move forward with the ACA.


2010-2013 Health Reforms in Arizona

Prior to 2014, many laws had begun to reshape health insurance in Arizona, yet the most noteworthy were saved for Jan. 1, 2014 and later. Up to that point, the market had changed by offering coverage to dependent children up to age 26 under their parent’s plan, and accepting all children with pre-existing conditions for insurance. Individual health plans cannot decline applicants or dependents under age 18 for coverage, which serves as a primer for the future when all ages will be accepted for health plans. In the interim, the state set up the federal risk pool for adults with pre-existing conditions, the PCIP.

Private insurers on the group and individual market were also prohibited from setting lifetime benefit maximums, and annual benefit limits were raised each year until ultimately phased out in 2014. Additionally, all health plans are required to include a variety of preventive services at no cost to members. While the new preventive care options such as free contraceptives are not a big hit in mostly conservative states like Arizona, there are many policyholders who are surely benefiting from this and other forms of prevention.

The medical loss ratio, or 80/20 rule, keeps internal spending regulated among health insurance carriers. The rule states that each insurer must allocate only 15 to 20 percent of premium income for company expenditures, and 80-85 percent on medical care. Each year, insurers will mail out a check refunding the amount they should have spend on healthcare to their members if they do not meet the guidelines.

Insurers on the individual market are also not permitted to cancel your policy for any reason other than something illegal occurring. This law was put in place so that the insured can stay that way, even if they get cancer in the middle of the plan year and suddenly become more expensive to cover. Insurers were terminating benefits for people without just cause, alleging they lied on their application, and rescinding policies of the sick. This is no longer allowed unless someone actually does provide false information or conveniently leaves out their bout with cancer on their application.


Arizona Health Reform in 2014 and Beyond

In Arizona and all 50 states, the federal health law provides coverage to all individuals with conditions, through any kind of plan they choose. Individual health plans have to accept anyone without issuing an exclusion period or increasing their rates for health reasons. Premiums cannot increase based on gender or high-risk occupations, either, and only be determined by age and tobacco use. Rates may increase overall due to the newly-insured sick population, which is why young, healthy people are encouraged to apply for coverage and offset the cost of old or sick policyholders.

Private health plans throughout Arizona will also have to cover at least ten types of benefits under the new law, known as essential health benefits (EHBs). These benefits must be included by all insurers in some of their products, namely the comprehensive plans which would already be covering many of these services such as prevention, hospital care, emergencies, surgery, and physician services.

Another coverage option is available to Arizonans through the health insurance exchange, an online resource for government subsidized private health plans. Consumers can also determine eligibility for Medicaid and apply for benefits. Sold by private Arizona insurers, these plans will include each of the essential benefit categories, which ensures plan members access crucial services such as maternity and newborn care. The state exchange is operated by the federal government, although some aspects are administered by the state. Exchange plans are restricted from covering abortions due to Arizona state legislation, unless a person’s life or their health are seriously threatened.

Medicaid has expanded under the ACA, though the debate was tense. Many Arizona officials were against this provision, noting that the last time they expanded AHCCCS, they “grossly underestimated the number of people who would enroll… Costs went from an estimated $315 million to $1.2 billion,” according to Sen. Kelli Ward, a family physician. Sen. Ward also claimed that “a full expansion of our Medicaid program to 133 percent above the Federal Poverty Level (FPL) will add 400,000 patients or more to an already overloaded system. After carefully studying this complex issue, I have determined the plan is unsustainable and potentially harmful to hardworking Arizona taxpayers.”

Despite Sen. Ward’s perspective and the skepticism from others, Governor Jan Brewer supported Medicaid expansion and the Senate ultimately included Medicaid expansion in the 2014 budget. This move was a major victory for about 350,000 low-income adults throughout the state, who will be able to obtain coverage once again through AHCCCS in 2014.



Making Sense of the ACA

Governor’s Office of Health Insurance Exchange¬†(HIX)

Health Insurance Exchanges

Medicaid Expansion





1. Kaiser Health Reform. State Exchange Profiles: Arizona.

2. Sen. Kelli Ward. Opposition to Medicaid expansion is real.