New Report Proves Great-West Healthcare Plan Reduces Use of Medical Services; Lower Plan Use Drives Claims Costs Savings of up to 21%.

GREENWOOD VILLAGE, Colo. -- Most employers believe that controlling the cost of health care is one of the three most important issues confronting them, according to a 2006 Goldman Sachs Independent Insight report. A new independent study confirms that Great-West Healthcare Consumer Advantage(SM)offers employers a proven solution to this concern.

A study by consulting firm Reden & Anders shows that employers using Great-West Healthcare Consumer Advantage enjoyed an average 5.6 percent decrease in members' use of medical services versus expected use under the carrier's traditional PPOs. Great-West Healthcare's PPOs are typical of those industry-wide.

Lower plan use helps hold down claims costs, and this contributes to lower average claims costs under Great-West Healthcare Consumer Advantage. According to 2006 pricing data from the carrier's book of business, a Great-West Healthcare Consumer Advantage client can expect claims cost reductions of 11 to 18 percent versus a traditional PPO plan. Deeper claims cost savings of 14 to 21 percent are possible for employers that choose a leaner pharmacy benefits plan, as well.

"For the second consecutive year, verification by an outside actuarial firm confirms that Great-West Healthcare Consumer Advantage is a viable option to control benefit costs," said Julie McCarter, vice president of product management at Great-West Healthcare. "Employers are looking for benefit designs that will save them money and this study is a solid endorsement that our plan truly lives up to its core philosophy -- engage members when appropriate, help them spend their health care dollars wisely, and ultimately, save employers money."

The study was conducted with employers who previously offered a Great-West Healthcare PPO to employees and then fully replaced the PPO with Great-West Healthcare Consumer Advantage. The Reden & Anders study revealed reductions in eight of nine medical service categories analyzed. Results included reductions in radiology, outpatient services and office visits. Additionally, prescription drug use, a growing share of benefits costs, declined under Great-West Healthcare Consumer Advantage. Claims data from March 2003 to September 2005 was used for the analysis.

"The Great-West Healthcare Consumer Advantage approach to increasing cost sharing could be more member-friendly than a traditional health reimbursement account (HRA) and health savings account (HSA) consumer-directed approach," said James Drennan, a principal of Reden & Anders and author of the report. "Due to the larger database of experience this year, a much more solid analysis of true Consumer Advantage savings has been achieved."

Dual-option enrollment in Great-West Healthcare Consumer Advantage is high, which is important because employers save only if employees enroll. When presented with a choice, 37 percent of workers choose this plan. Great-West Healthcare Consumer Advantage is part of the carrier's consumer-driven health care (CDHC) portfolio, which also includes an HRA and HSA. The carrier's CDHC portfolio plans accounted for nearly 7.3 percent of its enrollment as of Jan. 1, 2006. This is more than double the industry average of 3.3 percent(1).

Great-West Healthcare Consumer Advantage and other consumer-driven models are benefit plans that engage members in health care decisions and purchases. The premise of these plans is that consumers, with their own money at stake, and information and tools with which to make informed decisions, will be more discriminating about ordering tests and making trips to the doctor. This level of engagement is absent from traditional managed care plans, where the employer pays just about everything for medical services, except small copayments.

When Great-West Healthcare launched this product in January 2004, it introduced a more evolutionary alternative to HRAs and HSAs -- a new category of consumer-driven health care. Great-West Healthcare Consumer Advantage takes a three-tiered approach to benefits coverage (see graphic). Unlike HRAs and HSAs, the plan engages members only in Tier III, with scheduled or discretionary services, when members have time to make informed choices.

With Tier III services, members typically have a variety of options. For instance, rather than elect knee surgery, a member might want to try physical therapy first. In such cases, the member can consider alternatives, investigate costs and quality, and plan ahead for treatment. Tier I -- preventive care and office visits -- is covered at 100 percent after copays. And Tier II services for when members need care most -- hospitalizations and hospice, for example -- are covered at a high level and combined with support from Great-West Healthcare's medical management program, which helps chronically ill members who account for significant claims costs.

About Great-West Healthcare

Great-West Healthcare, a division of Great-West Life & Annuity Insurance Company, is a national employee benefits provider with expertise in self-funding and health care management solutions. Nationally, the division operates a health care network that includes more than 4,250 hospitals and 547,000 providers and provides health care services to 2 million people. Visit www.greatwesthealthcare.com for more information.

Great-West Life & Annuity Insurance Company, headquartered in metro-Denver, serves its customers through a full range of health care plans, life and disability insurance, annuities, and retirement savings products and services. It is an indirect, wholly owned subsidiary of Great-West Lifeco Inc. and a member of the Power Financial Corporation group of companies. Great-West Life & Annuity Insurance Company is not licensed to do business in New York. Products are sold in New York by its subsidiary First Great-West Life & Annuity Insurance Company, White Plains, N.Y.

About Reden & Anders

Reden & Anders, the independent actuarial consulting firm of Ingenix, is a national actuarial, clinical and management consulting firm specializing in financial and business support for the health care industry. Reden & Anders consultants work with a full range of clients: managed care companies, insurance carriers, health care providers, employers, pharmaceutical companies and device manufacturers. Founded in 1990, the firm's reputation for outstanding service, creativity, flexibility and industry knowledge is a direct result of the continued growth and success of Reden & Anders' clients.

(1) Industry CDH enrollment percentage calculated based on figures from Jan. 27, 2006 Inside Consumer Directed Care and August 2005 ChapterHouse Healthcare Market Outlook.