An Arizona county is poised to become an Obamacare ghost town because no insurer wants to sell exchange plans there.

Aetna’s recent announcement that it would exit most of the states where it offers Obamacare plans leaves residents of Pinal County, Arizona, without any options to get subsidized health coverage next year, unless regulators scramble to find a carrier to fill the void between now and early October.


About 9,700 people in Pinal signed up for Obamacare plans this year, according to administration data.

The predicament of Pinal County is an extreme example of the contraction of insurers in the Obamacare markets expected in 2017. The federal health care law was supposed to offer a range of affordable health care plans through competition among private insurers. But that competition has dramatically declined in some states as a result of pullbacks by national insurers and failed co-op plans. Decline in competition means fewer choices and, often, higher prices for consumers.

Nearly 1 in 5 potential Obamacare customers may have just one insurer selling plans in their communities — up from just 2 percent of customers who had one option this year, according to the McKinsey Center for U.S. Health System Reform.

But in Pinal County, a rural community within the Phoenix metropolitan area, many may lose health care coverage altogether.

“If you have a several-hundred-dollar-a-month subsidy available and you lose that, that’s going to be huge,” said Thomas Schryer, director of the Pinal County Public Health Services District.

He predicted that many Pinal residents would be unable to afford more costly insurance plans outside the Obamacare marketplace and were likely to roll the dice and go without coverage — something that will be far more risky for those with chronic health problems or who are in the middle of treatments.

Arizona’s Obamacare marketplace had previously offered plans sold by national insurers like UnitedHealth Group and Humana, as well as by a nonprofit co-op plan seeded with Obamacare loans. But the co-op collapsed, and United and Humana, like Aetna, are leaving the exchange. Other companies, like Blue Cross Blue Shield of Arizona, are scaling back their presence.

“It’s a dramatic case of a more general thing: There are weaker markets that are going to be less attractive for carriers,” said Katherine Hempstead of the Robert Wood Johnson Foundation.

It isn’t entirely clear why insurers are fleeing this particular county, which had about an 18 percent poverty rate in 2014 — higher than the roughly 15 percent for the country as a whole but not extreme. Median household income was around $50,250, according to the Census.

Yet there are higher rates of adult obesity, physical inactivity and teen births in Pinal County compared with statewide figures, according to data from the Robert Wood Johnson Foundation. A shortage of health providers is also acute, with only one primary care doctor for every 6,700 people.

“The reason why it’s empty is because nobody wants to be there,” one insurance industry source said of Pinal County. “The only thing a [regulator] can do is beg.”

Although Pinal experienced a population boom in the 2000s, it doesn’t have much of an economic base, so most people work and likely receive their health care in nearby Phoenix, according to Arizona State University professor Tom Rex.

“The health care infrastructure often takes many years to catch up with the population,” said Schryer.

Begging on behalf of Obamacare can be politically problematic in a red state like Arizona, where Obamacare has been a prominent feature of at least one reelection campaign in the current cycle. Sen. John McCain has made it a centerpiece of his bid for another term.

Such was the case in Mississippi in 2013, when state Insurance Commissioner Mike Chaney had to convince an insurer to offer plans in 36 counties that had no options ahead of the first open enrollment period. Chaney said federal regulators helped the state because it was “very unpopular” for a Republican to help recruit someone to cover the entire state. Humana eventually agreed to sell on the exchange in those counties, and it's still there.

“What we’re having to do now to keep companies in our state to cover all of the counties is to grant some pretty heavy rate increases,” Chaney said in a recent interview.

Health policy experts say that Blue Cross Blue Shield of Arizona would be the most likely to sell plans in Pinal if regulators can coax it back. The company had offered plans in the county this year but decided to drop its offerings there, as well as in neighboring Maricopa County, where Phoenix is located, according to its 2017 rate filings.

The company has said that in light of Aetna’s exit, it is re-evaluating where it will offer plans next year. But an agreement to return would likely come at a price. BCBS of Arizona had initially requested a rate increase of 65 percent on average for individual plans, when Maricopa and Pinal counties were part of its filing. When it dropped those counties, the company revised its proposed increase to 51 percent.

Aetna initially submitted an 18 percent rate increase for its individual plans on the exchange. It later jacked up its requested rate increase to 86 percent, before pulling out entirely.

Trish Riley, executive director of the National Academy for State Health Policy, said regulators have discretion in setting coverage rules but few things can be done quickly. Agreeing to look at rates again would offer an incentive to insurers to participate, she said.

“What are your options?” she said of state regulators. “Disenfranchised consumers are going to sue you. People aren’t going to get coverage. Those aren’t good options.”

In the long term, Riley said the recent spate of insurance company exits should spur a broader conversation about strategies to stabilize the exchanges.

“I think this is a wake-up call,” she said.

But state Insurance Department spokesman Stephen Briggs offered a different perspective, saying regulators “are not scrambling” to find another company. He also dismissed the notion that regulators might grant higher rate increases to an insurer if it agreed to serve Pinal. He said the department is still reviewing plan rates for 2017 and final rates would be released in September.

“The decision to really offer a product is a business decision that the company still has the right to make,” he said.

Paul Demko contributed to this story.



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