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Arizona: Another shoe drops...Phoenix Health Plans drops off exchange

When I last crunched the numbers for the 2017 individual market in Arizona, the average requested rate hike statewide was a whopping 68%. However, that was before Aetna dropped their bombshell about dropping out of the exchanges in 11 states (AZ included), leaving about 6,400 residents receiving ACA tax credits in Pinal County with no subsidized policy options whatsoever.

Since Aetna had intended on requesting a jaw-dropping 85.8% average rate hike if they had stuck around, this technically meant that the average requested hike for the other carriers would have dropped somewhat, although this would be limited by Aetna only having about 7% of the individual market in the state.

Well, today I learned that another domino has fallen in AZ: Phoenix Health Plans, which currently has over 21% of the market (and which was requesting an even more shocking 123% rate hike), is also dropping off the exchange next year:

Phoenix Health Plans Inc. — which proposed a 122.8 percent rate increase next year for its Obamacare marketplace plans — is bailing out.

The gigantic rate increase is probably a good indication the Tenet Healthcare Corp.-owned (NYSE: THC) health plan wasn't making money providing health insurance coverage to individuals on the Affordable Care Act's health insurance marketplace.

I've seen several articles which specify that Phoenix is only pulling out of Maricopa County, which made me think perhaps they're sticking around in other parts of the state...except that as far as I can tell, Maricopa is the only county they were participating in to begin with.

This means that Maricopa--which has over 58% of Arizona's total population anyway--is now down to just one exchange-based carrier, Cigna:

Lo and behold, Cigna is the only health insurance carrier standing in Maricopa County, giving it access to upwards of 127,000 enrollees in the Valley.

Both Humana and Health Choice were supposed to be participating in the exchange next year, but both of them already bailed out of Arizona earlier this year, so Cigna appears to be it for most of the state. Ironically, this may prove to have a silver lining, according to one expert:

If Cigna decides to stick with the exchange marketplace, it will have access to a solid mix of healthy and unhealthy patients, said Jim Hammond, publisher of the Hertel Report.

"The first question is, will Cigna stay in," Hammond said. "If Cigna bails, then we have a real problem and the state and federal officials are going to have to figure out what to do about it. They've made this mandate and there's no way for people to actually meet the mandate."

Once an insurance carrier gets a decent mix of healthy and unhealthy patients, and targets the unhealthy patients with special programs, then it should be fine, he said.

In any event, here's what this means for my spreadsheet: A 19 point drop in the average requested rate increases...which, again, is actually not good news because large chunks of the market will have to scramble to shop around whether they want to or not: