A Blue Cross and Blue Shield Association Presentation Health Plan Initiatives, Trends and Research in Consumer-Driven Care National Consumer Driven Health Summit October 20, 2008 Maureen E. Sullivan Senior Vice President

Sources: American Association of Preferred Provider Organizations, Blue Cross and Blue Shield Association Blue CDHP Profile Blues serve approximately 4.4 million CDHP enrollees, up more than 50% from a year ago – –2.9 million covered by HSA- qualified plans – –1.5 million members in HRA- based products Members Enrolled in Millions Market Enrollment in CDHPs Launched as a way to increase consumer engagement, CDHP enrollment is up more than 25% in the last year

Percentage of Consumers Offered a CDHP Option CDHP Uptake for Consumers with a Choice of a CDHP Product Sources: 2005, 2007 and 2008 BCBSA CDHP Member Experience Surveys HRAHSA-eligible CDHP Offer and Uptake Rates Growth is being driven by increased employer and health plan offerings of CDHP products

Age Distribution CDHP Demographics CDHP members increasingly mirror non-CDHP population HSA-eligibleNon-CDHP Income Distribution HSA-eligibleNon-CDHP Less than 25K25K-50K50K-75K75K-100K100K+ Sources: 2005, 2007 and 2008 BCBSA CDHP Member Experience Surveys

CDHP & Consumer Engagement Are we creating a more savvy shopper? Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making Non-CDHPHSA-eligible Engaged Consumer

Percentage of Enrollees Examples of Rewards/Incentives Rewards and Incentives 1. 1.Cash 2. 2.Contributions to account 3. 3.Lower premiums, copays and deductibles 4. 4.Points redeemable for merchandise * Statistically different from non-CDHP results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey Consumers Receiving Incentives or Rewards for Health and Wellness Participation HSA-eligible enrollees are offered more incentives Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Opening Rates of Health Savings Accounts More employees open HSAs when offered incentives HSA-eligible Consumers Opening Accounts Percentage of Enrollees Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making * Statistically different from ‘Without Contribution’ results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey

Percentage of Enrollees Consumer Attitudes HSA-eligible enrollees want more control over costs, utilization * Statistically different from non-CDHP results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Surveys Consumer Attitudes Non-CDHPHSA-eligible w/ AccountHSA-eligible w/o Account Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

HSA-eligible consumers more cost-conscious and cost-driven * Statistically different from non-CDHP without Account results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey Percentage of Enrollees Behaviors Considered Because of Cost Cost-Sensitive Behaviors Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Healthcare Financial Behaviors HSA-eligible enrollees are more actively engaged in tracking and estimating their healthcare costs * Statistically different from non-CDHP results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey Percentage of Enrollees Healthcare Financial Behavior Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Health and Wellness HSA-eligible enrollees more engaged in health and wellness *Statistically different from HSA-eligible results at a 95% confidence level Note: Participation among those offered health or wellness program Sources: 2008 BCBSA CDHP Member Experience Survey Percentage of Enrollees Participation in Health or Wellness Programs Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Healthcare Utilization HSA-eligible enrollees use more preventive services, and their use of necessary care mirrors non-CDHP population * Statistically different from non-CDHP results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey Percentage of Enrollees Healthcare Utilization Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

*Statistically different from Traditional PPO - Choice results at a 95% confidence level + Statistically different from Traditional PPO – Full Replacement results at a 95% confidence level Note: CDHC study population restricted to a subset of 1,364 members from an original CDHC enrollment base of 57,365 members in 2006 Sources: Blue Cross Blue Shield of Tennessee, CDHC Impact on Utilization, Costs, & Quality, June 2008 Healthcare Utilization: Study Savings due to reduced utilization are observed in CDHPs, however, CDHP enrollees are not foregoing needed care Savings Due to Reduced Utilization Member Healthcare Compliance Full Replacement Chronic Compliance Preventive Compliance Choice Full Replacement Choice Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Successes Non-CDHPHSA-eligible CDHPs appear to be successfully aligning incentives and engaging consumers around cost and health decisions Engaged Consumer

Information Needs HSA users want more cost information, and their interest in quality information is on par with non-CDHP enrollees * Statistically different from non-CDHP results at a 95% confidence level Sources: 2008 BCBSA CDHP Member Experience Survey Percentage of Enrollees Information Useful When Making Healthcare Decisions Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making HSA-eligible w/Account HSA-eligible w/o Account Non-CDHP

Quality Information Key National Blue Distinction program created to educate consumers and engage them based on quality Blue Distinction Centers for Cardiac Care®Blue Distinction Centers for Cardiac Care® Blue Distinction Centers for Bariatric Surgery® Blue Distinction Centers for Transplants®Blue Distinction Centers for Transplants® Blue Distinction Centers for Complex and Rare Cancers SMBlue Distinction Centers for Complex and Rare Cancers SM Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making Source: BCBSA

Blue Distinction facilities delivering better quality results Note: All cardiac and cardiac related readmissions during the initial admission through 90 days, 90 day eligibility required for patient cohort Source: HealthCore Analysis of WellPoint Data, July 2008 n = % BDCOther 14.2% 18.7% Quality Information Key Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making Percentage of Patients Readmitted in 90 Days

Percentage of Enrollees Likelihood to Recommend Member recommendations starting to reflect the increased maturity of the product *Statistically different from non-CDHP results and HRA results for 2008 at a 95% confidence level Note: 2005 and 2007 non-CDHP results include 4 largest carriers only Sources: 2005, 2007 and 2008 BCBSA CDHP Member Experience Surveys Likelihood to Recommend Coverage Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Drivers of Recommendation HSA-eligible enrollees require more health plan support HSA-eligible Enrollees Non-CDHP Enrollees Out-of-pocket cost Primary Drivers Secondary Drivers Tertiary Drivers Information on health plan benefits Claims payment Network Help to manage healthcare costs Service Website Out-of-pocket cost Access to preventive care Information on health plan benefits Network Claims payment Sources: 2008 BCBSA Member Experience Survey Drivers of Recommendation Offer IncentivesOffer Incentives Encourage Value PurchasingEncourage Value Purchasing Motivate Healthy BehaviorMotivate Healthy Behavior Educate and Support Decision MakingEducate and Support Decision Making

Consumer Engagement HSA-eligible HSA users are more savvy shoppers, and HSA learnings can be leveraged to better engage all consumers Engaged Consumer