Health Net 2007 Annual Report Download - page 5

individual coverage. The individual health care plans are the first-ever cross-border health care
plans made available to individual consumers who purchase benefits directly from insurers.
• Decision PowerSM, a series of programs designed to directly involve patients in their health care
decisions.
• Our It’s Your Life WellsiteSM, which provides commercial and Medicare members easy access to
information they need to make smarter choices about their health, health care and health care
costs.
• Consumer Directed Health Plan products such as Health Savings Accounts and Health
Reimbursement Accounts.
• Community stores such as our Medicare stores in Phoenix, Arizona and Meriden, Connecticut and
our community enrollment and customer service centers in East Los Angeles, California and
Modesto, California.
The pricing of our products is designed to reflect the varying costs of health care based on the benefit
alternatives in our products. We provide employers and employees the ability to select and enroll in products
with greater managed health care and cost containment elements. In general, our HMOs provide comprehensive
health care coverage for a fixed fee or premium that does not vary with the extent or frequency of medical
services actually received by the member. PPO enrollees choose their medical care from a panel of contracting
providers or choose a non-contracting provider and are reimbursed on a traditional indemnity plan basis after
reaching an annual deductible. POS enrollees choose, each time they receive care, from conventional HMO or
indemnity-like (in-network and out-of-network) coverage, with payments and/or reimbursement depending on
the coverage chosen. We assume both underwriting and administrative expense risk in return for the premium
revenue we receive from our HMO, POS and PPO products. We have contractual relationships with health care
providers for the delivery of health care to our enrollees in each product category.
In 2007, we continued to focus on adding more small group (generally defined as employer groups with 2 to
50 employees) members and, as of December 31, 2007, approximately 35% of our commercial risk enrollment
was in small group and individual accounts. On May 31, 2007, we completed our acquisition of The Guardian
Life Insurance Company of America’s 50% interest in our HealthCare Solutions business. Our arrangement with
The Guardian Life Insurance Company of American (“The Guardian”) encompassed all of our small group
business in Connecticut, New Jersey and New York. We believe that by acquiring ownership of 100% of the
HealthCare Solutions business, we will be able to increase our small group enrollment and profitability in the
region. For additional information on our acquisition of The Guardian’s 50% interest in HealthCare Solutions,
see “—Northeast” and “Recent Developments and Other Company Information—Purchase of The Guardian’s
Interest in HealthCare Solutions” below.
The following table contains membership information relating to our commercial large group (generally
defined as an employer group with more than 50 employees) members, commercial small group and individual
members, Medicare members, Medicaid members, ASO members and Part D members as of December 31, 2007
(our Medicare and Medicaid businesses are discussed below under “—Medicare Products” and “—Medicaid and
Related Products”):
Commercial—Large Group .......................................... 1,455,401(a)
Commercial—Small Group & Individual ............................... 769,580(b)
Medicare (Medicare Advantage only) ................................. 236,301
Medicaid ........................................................ 845,753
ASO............................................................ 67,841
Stand-alone PDP .................................................. 379,560
(a) Includes 924,806 HMO members, 162,447 PPO members, 311,288 POS members, 30,530 EPO members
and 26,330 Fee-for-Service (“FFS”) members.
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