1. -AND- 2002 Findings from the Kaiser/HRET and Kaiser/Hewitt Employer Surveys

2. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Overview - Methods - Health Insurance Costs - Plan Choice and Enrollment - Coverage and Benefits - Retiree Coverage

3. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Survey Methods Kaiser/HRET National Employer Health Benefits Survey –Telephone survey was conducted between January and May 2002 –3,262 randomly selected public and private employers, ranging from 3 to 300,000 employees, representative of all regions and industries –2,014 firms responded to the full survey –An additional 1,248 firms indicated whether or not they provide health coverage Kaiser/Hewitt Retiree Health Survey –Online survey was conducted between July and September 2002 –435 private employers with more than 1,000 employees responded to the survey. Only firms offering retiree benefits were surveyed –The sample sample represents 36% of Fortune 100 companies and 28% of Fortune 500 companies, impacting 18.5 million employees and family members, and 5.4 million retirees and family members

4. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2002 Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1989, 1990, 1993, 1996. Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Chart #1

5. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Premium/Cost Increases 1, by Plan Type and Funding Arrangement, 2002* Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. Chart #2 Note 1 : Fully insured plans measure premium increases, self-insured measures cost increases. * Tests found no statistically different estimates between Fully Insured and Self-Insured within a plan type.

6. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Conventional HMO PPO POS All Plans Average Annual Premium Costs for Covered Workers, by Plan Type, 2002 * Estimate is statistically different from All Plans by coverage type. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. Chart #3

7. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Average Monthly Worker Contribution, 1988-2002 * Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996 Percentage of Premium Paid by Covered Workers, 1988-2002 * Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996. Chart #4

8. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 19962000200120021993 Average Monthly Premium Costs for Covered Workers, 1988-2002 * Estimate is statistically different from the previous year shown: 1988-1993, 1993-1996, 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. Data not available for 1993 Single Coverage. All data are nominal figures. Chart #5 NA 19881998 // California Employers Health Benefits Survey 2000 Employer Health Benefits 2002 Annual Survey Source: Health Insurance Association of America, 1988; KPMG, 1996; Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2002. Family premiums are calculated for a family of four. All data are nominal figures. Average Monthly Premium Costs for Covered Workers, 1988-2002 1988199620002002 $89 $197 $170 $442 $202 $529 $255 $663

9. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Percentage of Covered Workers With a Choice of Conventional, HMO, PPO, or POS Plans, 1988-2002 Chart #6 Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996. 10 * Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. ^ Information was not obtained for POS plans in 1988. ^

10. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Health Plan Enrollments for Covered Workers, by Plan Type, 1988-2002 * Distribution is statistically different from the previous year shown: 1996-1998, 1998-1999, 1999-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996. Chart #7 8 * * * * *

11. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Chart #8 12 Percentage of All Firms Offering Health Benefits, 1996-2002 * Estimate is statistically different from the previous year shown: 1996-1998, 1998-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998.

12. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Note: Nationwide, there are about 6,290,665 firms with 3-199 workers and 85,448 with 200+ workers. Percentage of Firms Offering Health Benefits, by Firm Size, 2002 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. Chart #9 13

13. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Note: Nationwide, there are about 6,290,665 firms with 3-199 workers and 85,448 with 200+ workers. Percentage of Firms Offering Health Benefits, by Firm Size, 1996-2002 * Estimate is statistically different from the previous year shown: 1996-1998, 1998-2000, 2000-2001, 2001-2002. ^ Estimate is statistically different from the previous year shown: 2000-2002 at p<0.1. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1996, 1998. Chart #10 14 * ^

14. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Even When a Firm Offers Health Benefits, Not All Workers Are Covered, 2002 Percentage of Workers Employed in Firms That Offer Part-Time and Temporary Workers Health Coverage, 1999-2002 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. * Estimate is statistically different from the previous year shown: 1999-2000, 2000-2001, 2001-2002. Sources: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002. Chart #11 15

15. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Percentage of Covered Workers With Benefit Changes in 2002; Percent of Covered Workers With Benefit Declines, 2000, 2001 and 2002 Chart #12 17 * Estimate is statistically different from the previous year shown: 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002. Percentage of Covered Workers

16. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Average Annual Deductibles for Single Coverage in PPO and POS Plans, 1996 - 2002 Chart #13 * Estimate is statistically different from the previous year shown: 1996-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002; KPMG Survey of Employer Sponsored Health Benefits: 1996. 19

17. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Percentage of Covered Workers Facing Different Cost Sharing Formulas for Prescription Drugs, 2000, 2001, and 2002 * Distribution is statistically different from the previous year shown: 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002. Three Tier = One payment for generic drugs, another for preferred drugs, and a third for non-preferred drugs Two Tier = One payment for generic drugs and one for name brand Payment the same regardless of type of drugs Other/ Don’t know Chart #14 20 * *

18. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Average Copayments for Generic Drugs, Preferred Drugs, and Non-Preferred Drugs, 2000, 2001, and 2002 * Estimate is statistically different from the previous year shown by drug tier: 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2002. Chart #15 21

19. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Likelihood of Large (200 or more workers) Employers Making the Following Changes in the Next Year, 2002 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2002. 30 Chart #16 2%

20. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Chart #17 Percentage of Large Firms Offering Retiree Health Benefits, 1988-2002* All Large Firms (200+Workers) All Small Firms (3-199 Workers) 23 * Test found no significantly different estimates from the previous year shown: 1998-1999, 1999-2000, 2000-2001, 2001-2002. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1991, 1993, 1995, 1998.

21. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Percentage of Large Employers Offering Retiree Health Benefits, by Type of Employee/Retiree Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. Chart #18

22. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Average Estimated Increase in Total Retiree Health Costs, by Firm Size, 2001 to 2002 Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. Chart #19

23. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Employer Caps on Contributions to Retiree Health Benefits for Age 65+ Retirees Have already hit the cap Yes, anticipate hitting the cap within the next year Yes, anticipate hitting the cap within the next 3 years No, do not anticipate hitting the cap Of large private employers with a cap, percentage that anticipate hitting the cap: Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. Chart #20

24. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Average Monthly Premiums for New Retirees, 2002 Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. Weighted average premiums for full-time employees retiring on or after January 1, 2002, in plans with the largest number of enrolled retirees. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. $194 $365 $406 $729 Retiree-Only Retiree+Spouse Chart #21

25. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Changes in Retiree Health Coverage Within the Past Two Years Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. Percentage of large private-sector employers that made the following changes: Chart #22

26. California Employers Health Benefits Survey 2000 Employer Health Benefits, 2002 Expected Changes in Retiree Health Coverage in the Next Three Years Note: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits. SOURCE: Kaiser/Hewitt 2002 Retiree Health Survey, December 2002. Percentage of large private-sector employers very/somewhat likely to make the following changes: Chart #23