The Times They Are a Changin’ – Current State of the Healthcare Industry Kevin Ericson Vice President Finance United Health Group Wayne Johnson Senior Director Risk & Regulatory Consulting, LLC ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Health Insurance Market Background 10/22/2015 ACA Implementation 2010- ACA Signed into Law 2014- Additional Provisions Decrease in Uninsured Rates 2013-2015 $357 + Billion 2015 Premiums Approximately 11.5 Million On-Exchange Policyholders for 2017 Coverage https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-01-10.html ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Forces Shaping the Health Insurance Market Medical Costs Technology The Patient Protection and Affordable Care Act Public Debate over Access to Health Care Public Debate over More Government ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Current Status of the Market ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

National Healthcare Policy Key Proposed Changes to the ACA Exchanges- Individual Market Cost Sharing / Tax Credits Underwriting / Pricing and MLR ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

National Healthcare Policy Key Proposed Changes to the ACA Coverage Requirements New State Stability Funds Medicaid Expansion / Medicaid Contraction ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Total Medicaid Spending FY2016 Medicaid Spending 10/22/2015 State Medicaid Expansion Total Medicaid Spending Arizona Yes $11,112,248,057 Florida No $21,841,384,373 Georgia $9,837,218,481 Illinois $19,298,315,096 Missouri $9,904,675,663 North Carolina $12,382,079,896 Ohio $21,744,648,983 Vermont $1,679,754,722 Washington $10,935,089,585 FY 2016 refers to the period from October 1, 2015 through September 30, 2016. ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Market Drivers Prescriptions Value Based Contracting and Primary Care Mental Health Data and Technology Consumer Transparency ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Industry Challenges On or Off Exchange Rates Profitability in the Individual Market Open Enrollments and Anti-Selection ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Industry Challenges CMS Reimbursements Billing Issues Lawsuits Grace Periods Reinstatements APTC Credits Changes in APTC Credits ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Health Insurer Insolvencies ACA Cooperatives Other Health Insurers Liquidations Withdrawal from Markets ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

ACA Health Insurance Cooperatives Status 2/1/2015 None Closed Operating

ACA Health Insurance Cooperatives Status 1/31/2017 None Closed Operating

ACA Health Insurance Cooperatives 10/22/2015 Cooperative Issues Major functions outsourced Large number of vendors Fees paid to vendors Expertise of vendors Contract issues Experience of management Unpaid Federal Receivables ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Regulatory Challenges Affordability Availability Solvency Impact of Insurer Failures ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Health Insurance Issues 10/22/2015 Affordability Public disconnect Rates too high Solvency concerns Medical costs Tax credits State rate approval Availability ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Health Insurance Market 10/22/2015 Financial Issues Risk Corridor Risk Adjustment Permanent Budget Neutral Federal Offsets Risk Adjustment Payments against Federal Reinsurance Reinsurance against Federal Start-up Loans http://kff.org/medicaid/state-indicator/medicaid-spending-per-enrollee/?currentTimeframe=0&selectedRows=%7B%22nested%22:%7B%22florida%22:%7B%7D,%22georgia%22:%7B%7D,%22michigan%22:%7B%7D,%22illinois%22:%7B%7D,%22north-carolina%22:%7B%7D,%22ohio%22:%7B%7D%7D%7D ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Health Insurance Issues 10/22/2015 Adequacy of Rates Pre-existing conditions Utilization 4th Quarter surge Special enrollment periods Individual market losses ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent

Questions 10/22/2015 Oregon Territorial Capitol Corvallis 1855 ©Risk & Regulatory Consulting LLC - Not to be Duplicated Without Prior Consent