Bear Stearns 15 th Annual Healthcare Conference Waldorf Astoria, New York City September 19, 2002 Gregory W. Scott Executive Vice President, Chief Financial Officer Pacificare Health Systems

Safe Harbor Statement The statements made during this presentation that are not historical facts are forward-looking statements within the meaning of the Federal securities laws, and may involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the risks discussed in the company’s most recent filings with the SEC, including Form 10Q as of June 30, 2002, and Form 10K as of December 31, 2001.

A Fortune 200 company with ~$11 billion in revenue 2.4 million commercial lives 800 thousand Medicare+Choice lives ~9 million specialty lives Pacificare = largest purchaser of health care services in the western U.S.

Critical Success Factors Executive Leadership Capital Structure Business Model/Mix Operations Regulatory Relations Network Stability Litigation Technology Upgrades

“Brand New Day” at PacifiCare in 2002 Progress Report Capital Structure Issues largely resolved Diversified access to working capital Leadership Strategically focused Shareholder-aligned Committed

“Brand New Day” at PacifiCare in 2002 Progress Report Business Model & Mix Reduced M+C dependency Enhanced commercial profitability -Margin up > 30% Improved retention Offering total Health Benefit Solutions supported by superior quality and service platforms Operations Rapidly meeting/exceeding industry standards Full service systems platform supports all funding solutions

“Brand New Day” at PacifiCare in 2002 Progress Report Networks More stable Require vigilant monitoring Legal/Regulatory Suits/settlements going our way Positive & collaborative regulatory relationships TX AG suit remains to be resolved

“Brand New Day” at PacifiCare in 2002 Progress Report Technology Investments in “Future State” underway Outsourcing generates operational savings & significant flexibility

“Brand New Day” at PacifiCare in 2002 Progress Report Brand Advertising/repositioning campaign launched Quality Tiered network emphasizes quality Physician Quality Index™ : Market leader Introduction of Hospital Quality Index™ : Will be market leader Earnings Visibility improved Increased diversification Rebuilding investor/creditor confidence

Consumer-Aligned Organization Drug Discount Program Debit Card Women’s Health Initiative Stand Alone Rx Plan Tight Network Operations Quality Measurement Rx POS Connectivity Extended Service Hours Customer Welcome Calls Consumer Health Organization (CHO) Top-Level Strategy MCO Product/Segment Extensions PPO Med Supp ASO Defined Contribution 3 rd Party Specialty Business Full Service MCO Fix the Core Operational Control Profit Margin HMO

Earnings Improvement- Pro Forma

Operating Profit* vs. Investment Income Year-over-year Investment Income: (91)% Operating Profit: 102% Investment Income: (65)% Operating Profit: 81% *Adjusted for SFAS 142 change in accounting for goodwill as if adopted January 1, 2001 and excludes impairment, disposition, restructuring, OPM and other charges/credits

2nd Quarter 2002 Results- Drivers of Operating Profit Improvement M+C premiums PMPM 7% -cost trends = 4% Commercial premiums PMPM 15% -cost trends = 12-14% Specialty company net income 19% Increased gross profit margin PMPM 30% -Commercial 33% -M+C 35%

Earnings Guidance in 2002  FY ‘02 EPS Guidance =$3.37-$3.47 (w/ FAS 142)  EOY Membership  Commercial = 2.4 million  M+C = < 800 thousand  Specialty = 11 million  Commercial premium  Increase high teens before buydowns, mid teens after buydowns

Earnings Guidance in 2002  Consolidated MLR = 87-88%  Commercial = 86-87%  Medicare = 89-90%  SG&A ratio = 11.5%-12%  Medical cost trends:  Commercial- low to mid teens  Medicare- high single digits  Pharmacy (after buydowns)-  Commercial: mid teens  Medicare: negative

Texas Q2 ’02 Pre-tax loss of $43 million Extensive provider recontracting interpretation issues unaddressed provisions delayed notice by providers Results not indicative of run rate increase in paid claims from prior 2 quarters increase in claims run rate for Q2 ’02 increase in claims reserves

Recent Events Keystone Health Plan partners with PacifiCare Behavioral Health Effective 11/1/02 Covers > 200,000 Keystone enrollees in PA Reader’s Digest agreement with Senior Solutions Exclusive endorsement of Secure Horizons’ Medicare Supplement products Access to customer database with > 100 million households Working with Reader’s Digest to offer additional products Significant new commercial case wins

Recent Events WebMD agreement with Prescription Solutions Agreement is with WebMD sub, MedE America, which has 4 million lives Prescription Solutions to provide mail order prescriptions & OTC medications 300K members initially; additional mbrs. over next year

Changes to Medicare+Choice in 2003 Discontinuing service in 7 counties in 2 states Affects > 47,300 mbrs.; > 6% of YE ’02 mbrs. 3 counties in TX > 25K members 4 counties in CA > 22.3K members Premium and benefits change for majority of members

Thank You