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Medicaid, SCHIP, & Federal Authority

  • Health Insurance Flexibility and Accountability (HIFA) Waiver - In 2001, Arizona obtained a waiver to use Title XXI funds to expand coverage to two populations: (1) adults over age 18 without dependent children and with adjusted net family income below 100 percent of the federal poverty level (FPL); and (2) individuals with adjusted net family income above 100 percent of the FPL and at or below 200 percent of the FPL who are parents of children enrolled in the Arizona Medicaid or State Children’s Health Insurance Program (SCHIP) programs, but who themselves are not eligible for either program. In 2007, Arizona requested and received an amendment to increase the eligibility level for pregnant women from 133 percent of the FPL to 150 percent of the FPL.


  • Starting in 1986, the Arizona Health Care Cost Containment System (AHCCCS) has operated a healthcare coverage program, Healthcare Group of Arizona (HCG). In 2000, the legislature subsidized the program with $8 million of general funds. In 2004, the subsidy was cut in half to $4 million, and HCG was directed to become financially self-sufficient (funded by premium only) as of July 1, 2005.  

    Since July of 2005, the state does not subsidize premiums. Employers and employees pay the entire cost of the product. HCG protects carriers using aggregate stop-loss reinsurance financed from member premiums. As of December 2006, HCG reported enrollment of over 24,000 lives (over 8,500 small business groups). More than 90 percent of businesses enrolled have three employees or less.

    HCG contracts with three managed care organizations to provide a health maintenance organization (HMO) health care coverage product for small businesses and a third party administrator to provide a Point of Service product. HCG reinsures its managed care contractors to reduce their risk of adverse selection by small business employees, the self-employed and political subdivisions. No income limits apply, but HCG does have employee participation requirements and firms must not have offered group insurance for six months. In addition to these guaranteed-issue products, HCG offers dental, vision, and a separate behavioral health benefit to employers. Employees can select between several benefit plan options. Since July 2007, the Arizona legislature has capped new employer enrollment into HCG and plans to study whether HCG should be restructured into just a high risk pool.

State Specific Strategies

  • Primary Care Program - The Arizona Department of Health Services operates a Primary Care Program (PCP) that provides access to primary care health services for uninsured, low-income Arizona residents of all ages.  The program serves Arizona residents with family income no greater than 200 percent FPL, who are uninsured and ineligible for AHCCCS, KidsCare, and/or Medicare. The purpose of the program is to develop and maintain an enhanced statewide capacity for delivery of comprehensive, community-based primary (health) care services to low-income, uninsured persons and other medically underserved Arizona residents. The program provides funding for qualified contractors to provide primary and preventive care services, preventive dental services, and limited behavioral health care. Contractors may charge persons a sliding scale fee service for recipients who earn between 100 and 200 percent FPL. 

    Arizona Health Insurance Premium Tax Credit - The Arizona Health Insurance Premium Tax Credit was established in September, 2006. The state pledged up to $5 million in tax credits to subsidize private insurance premiums. Employers must have from 2-25 employees and have not offered coverage for 6 months. Eligible individuals must earn below 250 percent of FPL. The state pays 50 percent of the premium, up to $1,000 for individuals and $3,000 for a family.