The author contends that the health insurance system in Arizona is in the midst of a crisis. At the beginning of the decade, roughly 21 percent of the state's population was without health insurance. By 1997, that number was up to 28 percent, the highest in the nation, despite the state's strong economy and low rate of unemployment. The author argues that the state's economy is driven by service-sector jobs that offer employees relatively low pay and frequently do not offer health insurance or other benefits. Arizona is also the only state in the nation that requires all Medicaid beneficiaries to receive long-term services from Managed Care companies. The author describes the impact of the states effort to introduce more health plan competition into this program.