Health Net 2006 Annual Report Download - page 7

membership in Connecticut was 182,647 as of December 31, 2006 (including 29,770 members under The
Guardian joint venture), which represented a decrease of approximately 12% since December 31, 2005. This
decrease was primarily due to continued pricing discipline and competition. Our Medicare membership in
Connecticut was 33,477 as of December 31, 2006, which represented an increase of approximately 26% during
2006, and our Medicaid membership in Connecticut was 83,807 as of December 31, 2006, which represented a
decrease of approximately 5% during 2006.
We believe our New Jersey operations make us the fourth largest managed care provider in New Jersey as
measured by total membership and third largest as measured by size of provider network. Our commercial
membership in New Jersey was 102,755 as of December 31, 2006 (including 59,069 members under The
Guardian joint venture), which represented a decrease of approximately 19% during 2006. This decrease was
primarily due to continued pricing discipline and competition. Our Medicaid membership in New Jersey was
46,277 as of December 31, 2006, which represented an increase of approximately 6% during 2006. We did not
have any Medicare members in New Jersey as of December 31, 2006.
We believe our New York operations make us the sixth largest managed care provider in New York as
measured by total membership in our operating area and fourth largest as measured by size of provider network.
In New York, we had 224,192 commercial members as of December 31, 2006 (including 102,077 members
under The Guardian joint venture), which represented an increase of approximately 3% during 2006. Our
Medicare membership in New York was 6,388 as of December 31, 2006, which represented a decrease of
approximately 6% during 2006. We did not have any Medicaid members in New York as of December 31, 2006.
Medicare Products
We offer our Medicare products directly to individuals and through employer groups. To enroll in one of
our Medicare plans, covered persons must be eligible for Medicare. We provide or arrange health care services
normally covered by Medicare, plus a broad range of health care services not covered by traditional Medicare
programs. Any additional benefits in our plans are covered by a monthly premium charged to the enrollee.
Following the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(“MMA”), we significantly expanded our Medicare health plans. We now offer 64 Medicare Advantage plans in
five states (California, Oregon, Arizona, New York and Connecticut). We believe we are the nation’s fifth-largest
Medicare Advantage contractor based on membership with 198,633 members as of December 31, 2006
compared to membership of 174,040 as of December 31, 2005. We are also are a major participant in the
“Part D” stand-alone drug benefit with 300,089 members in 10 states (Arizona, California, Connecticut,
Massachusetts, New Jersey, New York, Rhode Island, Oregon, Vermont and Washington) as of December 31,
2006. All of our Medicare plans focus on simplicity so that members can sign up and use benefits with minimal
paperwork and coverage that starts immediately upon enrollment. We also provide Medicare supplemental
coverage to 35,409 members through either individual Medicare supplement policies or employer group
sponsored coverage.
On January 1, 2007, we began offering Medicare Advantage Private-Fee-For Service (“PFFS”) plans in 194
counties in seven states (California, Connecticut, Hawaii, New Mexico, New York, Texas and Washington).
PFFS plans are non-network based plans that allow Medicare-eligible consumers to participate in a private health
insurance plan with the flexibility of original Medicare and better benefits than the standard Medicare Part A/Part
B coverage. In addition, we began marketing our stand-alone Part D plans in all 50 states and the District of
Columbia for 2007. We also increased the number of Part D plan choices that we offer seniors from two in 2006
to three in 2007, one of which provides beneficiaries with coverage of generic drug expenses through the
coverage gap.
We participate as a Special Needs plan provider in Arizona, California, Connecticut and New York. Special
Needs plans are designed to ensure that Medicare beneficiaries with limited financial means and disabled
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