Understanding Consumer Behavior in Health Insurance Exchanges: Actuarial Value Research in Massachusetts

1. Actuarial Value Consumer Research in Massachusetts Health Insurance Exchanges 1 • Objectives • Gain Insight into Consumer Perceptions of AV and Medal Categories • Better Understand Role of AV Categories in Purchasing Behavior • Identify Potential Consumer Segmentation in Purchasing by AV • Inform Consumer Outreach and Communication • Share Information with Health Plans • Methodology • Qualitative • 4 Focus Groups; 47 Individual, Non-Group Consumers • Timing • February 2007

2. Actuarial Value Consumer Research in Massachusetts Health Insurance Exchanges 2 Highlights • AV Confusing; “Technical;” Requires Examples • Medal Categories • Helpful “Directionally” • Created Perception of Value (Price to Coverage Benefits) • Incomplete – Other Needs (e.g. network, price, reputation) • Importance of Decision Support Tools • “What Are My Real Costs” • Value (“What Plan is Right for Me?”) • Initial Segmentation • “Hand-Holders;” “Independents;” “Analyzers” • Communication Preferences • Easy & Simple Explanations with Examples • On-Line w/ Video Explanation & Call Center Support Company Confidential

3. Actuarial Value Application to Health Plans Health Insurance Exchanges 3 • Gold – Base Line AV – 92% • Benefits Prescribed to Health Plans • Silver – 75% - 83% • Bronze – 60% - 65% • Established Plan Design Flexibility – Silver & Bronze • Design Flexibility within AV Range • 2 Silver Plans; 1 Bronze Plan • 27 Plan Designs (including Young Adult Plans) • Influence on Decision to Standardize Benefit Plans • Member Complaints About Confusion with Choices • Plan Flexibility within Tiers Added to Perceived Complexity • Qualitative/Quantitative Research Suggested Benefits of Standardization • 27 Plan Designs → 9 (including YAP) Company Confidential