1. Live and Be Well Who Cares About Health Care? Annual Business Conference University of Michigan Business School October 12, 2001 Isadore J. King President and CEO The Wellness Plan

2. Live and Be Well Dr. Entrepreneur Gall Bladder Surgery $2,000 or Two For $3,000 Bring a Friend SALE ENDS AT AGE 60

3. Live and Be Well Current Drivers of Health Care Costs  Law of Supply and Demand Inoperative  Health Care Inflation  Cost vs. Quality Dynamic  Changes in the Practice of Medicine  Consumers’ Quality of Life Demands

4. Live and Be Well Law of Supply & Demand Inoperative  Uneducated Consumer  Minimal Consumer Financial Participation  Supplier (Provider) Induced Demand  Value Purchasing Not Effective

5. Live and Be Well Health Care Inflation Sources: www.twv.com/researchlegal/resrchstats.html & HealthINFLATION News, www.healthinflation.comwww.twv.com/researchlegal/resrchstats.html

6. Live and Be Well Michigan Average Revenue Per Member Per Month Source: Baumgarten, Allen. “Michigan Managed Care Review” Part One, 2001

7. Live and Be Well Major Drug Company After Tax Profit Source: Individual Company Annual Reports 20%21%21.5% Average Profit Margin

8. Live and Be Well Michigan HMO Before Tax Profit Source: Kennedy, Sheryl. “Urgency Prods HMOs To Become Lean” Detroit Free Press. Friday June 2 2000. Fin. Ed. Pg.2E.

9. Live and Be Well Michigan HMO After Tax Profit Source: Baumgarten, Allen. “Michigan Managed Care Review” Part One, 2001

10. Live and Be Well Cost vs. Quality Dynamic Current Quality Cost Optimum

11. Live and Be Well Quality Cost Optimum Desired Cost vs. Quality Dynamic

12. Live and Be Well Cost vs. Quality Dynamic Quality Cost Optimum Projected

13. Live and Be Well Changes In The Practice of Medicine  Biotechnology Research Findings  Therapeutic Drug Advances  Stem Cell Research Findings  Genetic Research Findings

14. Live and Be Well Life Sciences Institute University of Michigan “We are going to transform the practice of medicine, and this place will be one of the leaders.” Ann Arbor News March 2001 Dr. Gil Omenn Executive Vice President Medical Affairs University of Michigan

15. Live and Be Well Consumers’ Quality of Life Demands  Living Longer is Not Enough  Living Longer and Feeling Good is Demanded  Consumers Willing to Assume Greater Responsibility for Health Status

16. Live and Be Well Strategies To Deal With Uncertainties  Growth on the Margin  Continuous and Vigilant Cost Control  Evidence Based Medicine  Outcome Based Incentives  Managed Health