1. John M Cooper Vice-President Anthem Blue Cross and Blue Shield Affordable Care Act

2. 22 What we’ll cover: ▪Insurance carrier dashboard ▪ACA Impact to individuals & employers ▪Early look at results ▪What does the future hold and key items to monitor Today’s topics

3. 3 Environmental Landscape & Market Factors Margin compression through MLR and payer tax Unsustainable costs plus rate shock ACA market expansion Strong market competitors, new entrants & disruptors Delivery system appetite for taking on risk Consumer demand for information & convenience 3

4. 4 Shifting market dynamics Exchanges become part of the new reality We anticipate significant change ahead … EXPECTED MARKET CHANGES Uninsured Large Group Risk and ASO Small Group Individual Medicaid Medicare 41 21M 20 2010 Population 296M 2015 Population 306M 126 1M 127 32 26 15 26 6M 11M 19M 6M 39 58 43 49 4

5. Overview of 2014 changes

6. Changes that affect premiums Guaranteed issue No one can be denied coverage Broader benefits and limits 10 types of Essential Health Benefits* required, out-of-pocket limits and deductible restrictions Change in rating Rates based on age and address (and tobacco use, in some states), not gender and health status At least 60% actuarial value Plans pay at least 60% of covered services New taxes and fees Apply to certain plans Subsidies/credits Help those with low or moderate incomes pay for coverage Reinsurance program Insurers / TPAs / self-funded plans contribute to fund high claims New Health Insurance Marketplace (Exchanges) Offers plans for individuals and small groups *Not required for large-group and ASO plans

7. Why participate in the Exchange?

8. 8 The pie is getting bigger Market pre-2014 Market post-2014 We anticipate our share will grow too Public Exchanges Medicaid Expansion Fewer Uninsured

9. Individual Penalties Those who do not have a health plan, will pay a tax penalty. 2014: $95 or 1% of taxable earnings, whichever is larger 2015: $325 or 2% of taxable earnings, whichever is larger 2016: $695 or 2.5% of taxable earnings, whichever is larger 9

10. 10 Our strength spans from national to local, putting us in a unique position to affect real change Americans is covered by a Blue Cross or Blue Shield health plan total membership than Blue’s next closest competitor of Fortune 500 are Blue Anthem members Increasing by 1+ million new members in 2014 1 in 33x larger 38236 million

11. 11 The health insurance market is evolving from traditional “wholesale” to a more consumer-oriented retail paradigm  Health insurance exchanges  Guaranteed issue  Essential health benefits/benefit standardization  Cost containment  Transparency  Defined contribution /private exchanges  Small group “dumping” to public exchanges  Increasing cost- sharing  New coverage models & alternatives  Increased desire for health & wellness  Tech-savvy consumers and improved connectivity (mobile, social)  Value seeking  Emerging health care consumerism Retail Marketplace Macro- Trends Employer Coverage Changes Changing Consumer Behavior ACA Market Reforms

12. 12 Innovative Large Group Solution: Introducing the Private Exchange A private exchange is an online distribution tool for education and enrollment Employees can shop, compare, and enroll in health insurance coverage and ancillary products that best meet their needs The private exchange provides an online marketplace experience The employer contributes a defined amount per employee toward the cost of health care benefits Employers deposit defined contribution funds into a health care account (HRA) or payroll deduction Distribution channel Retail shopping experience Online marketplace Defined contribution Health care account Private Exchange