HealthCare Group of Arizona (HCGA), a state-sponsored, voluntary health insurance purchasing program offering prepaid health plans to small businesses, became operational in 1988. This article summarizes the results from a wide-ranging evaluation of that program and discusses their implications. In general, enrollees were satisfied with their experience in their plans. HCGA did not appear to attract an adverse mix of health risks, and service utilization rates were consistent with HMO industry averages. However, these findings varied across health plans and the marketing approaches they adopted. Enrollment growth in HCGA has been steady, but premium subsidies may be necessary if HCGA is to substantially increase its enrollment of low-wage, uninsured workers.