2003 HMO Rates to Increase an Average of 17%; Milliman USA Survey Data Details High Trends and Variation in the Market.

Business Editors

Preliminary results from Milliman USA's eleventh annual HMO Intercompany Rate Survey indicate continuing double-digit rate increases into 2003.

The 2003 expected increase, if implemented, would be the largest annual increase in the eleven year history of Milliman's survey. Increases of this magnitude are likely to prompt the development of consumer driven approaches to health care and to accelerate the movement of cost sharing to employees as employers seek to reduce their health benefit costs.

One hundred of the four hundred HMOs that serve the commercial employer market responded to the Milliman USA flash survey, which asked for the anticipated rate increase for January 2003 renewals. Over 95% of those responding expected increases over 10%, with more than 70% indicating increases would be over 15%. These increases reflect increased provider expenses and rising consumer demand.

"If it holds, this 2003 increase will mark the third year in a row of double digit increases. We would need to look back to the mid-1990s to find a time when HMO rates increased by less than the general inflation rate," notes Steve Cigich, author of the Milliman USA annual survey. "Increases of this level cannot be sustained without significant reaction in the marketplace. I look for employers to increase employee responsibility regarding health care financial decisions. In addition to shifting more of the premium responsibility to employees and a continuation of increases in copayments a continued emergence of personal spending accounts is likely to occur to help employees bear this increased burden."

Regional results varied narrowly around the 17% national average. Regional increases are expected to range from a low of 14% in the East North Central region to a high of 19% in the Mountain, South Atlantic, and West South Central regions.

                           Regional Results
        Estimated Annual Rate Change for January 2003 Renewals
        ------------------------------------------------------

           Region                          Estimated Increase
          ========                       =====================
  East North Central                               14%
  East South Central                        Insufficient Data
  Mid-Atlantic                                     15%
  Mountain                                         19%
  New England                                      17%
  Pacific                                          17%
  South Atlantic                                   19%
  West North Central                               17%
  West South Central                               19%

  Nationwide Average                               17%


                         Definition of Regions
                        =======================

          East North Central                 East South Central
       -----------------------             ----------------------
Illinois            Ohio              Alabama            Mississippi
Indiana             Wisconsin         Kentucky           Tennessee
Michigan

               Mountain                         New England
           ----------------                  ------------------
Arizona             Nevada            Connecticut        Rhode Island
Colorado            New Mexico        Maine              Vermont
Idaho               Utah              Massachusetts
Montana             Wyoming           New Hampshire

            South Atlantic                    West North Central
         --------------------               -----------------------
Delaware            Maryland          Iowa               Nebraska
District of         North Carolina    Kansas             North Dakota
   Columbia         South Carolina    Minnesota          South Dakota
Florida             Virginia          Missouri
Georgia             West Virginia

           Mid-Atlantic                           Pacific
        ------------------                    ----------------
New Jersey                            Alaska             Oregon
New York                              California         Washington
Pennsylvania                          Hawaii

        West South Central
      ----------------------
Arkansas           Oklahoma
Louisiana          Texas

Final results for the survey will be available later this year and will include premium rates and trends by component, unit price and utilization data, physician reimbursement levels, medical expense ratios and profit levels. Results will be provided by metropolitan area, state, region and nationwide. This year's survey will also include changes employers and health plans are making to address these high rate increases.

Milliman USA, Inc., headquartered in Seattle, serves the full spectrum of business, financial, government and union organizations. Founded in 1947 as Milliman & Robertson, it has 28 offices in the United States as well as offices in London, Bermuda, Hong Kong, Melbourne and Tokyo. It is a founding member of Milliman Global, an international service organization serving insurance, employee benefits and healthcare clients worldwide. Milliman USA employs approximately 1,750 people, including a professional staff of over 700 qualified consultants and actuaries. The firm has consulting practices in property and casualty insurance, pensions, employee benefits, healthcare, life insurance and risk management. For further information, visit www.milliman.com.