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Former White House Health Policy Advisor Says More Price Transparency Needed

North Richland Hills, Texas – December 14, 2006 – More than 70 percent of U.S. consumers say they know little or nothing about how much their doctors charge compared to other doctors, according to a survey sponsored by HealthMarkets, a leading provider of affordable health and life insurance to individuals, the self-employed and small businesses.

When it comes to Americans estimating the cost of health care, usually, the price is wrong – because the estimate is too low. Most adults (65 percent) think that, in general, a high-priced doctor in the U.S. charges two or three times as much for the same procedure as a low-priced doctor. In fact, a review of HealthMarkets data for several selected procedures shows that some doctors charge nearly 10 times what others charge for the same procedure.

“Most Americans have no idea how much health care costs or how much it varies from one provider to another,” HealthMarkets President and CEO William J. Gedwed said. “If consumers are going to effectively manage their health care dollars, they need to know how much things will cost them.”

The survey found few people have a sense of how much health care can cost, or how much costs can vary from one doctor to another. For example:

• Told that the lowest price charged nationwide for a CT scan of the abdomen was $298, most people (73 percent) said the highest price other doctors charge for the same procedure would be no more than $2,000. (The low price was based on actual 2005 HealthMarkets claims data.)
  • In fact, the actual charge for the same CT scan varied from $298 to $2,858 – or almost 10 times as much as the low price – according to HealthMarkets 2005 claims data.
• Told that the lowest price charged for a knee replacement was $22,000, 83 percent said the highest price was no more than $66,000.
  • In fact, the actual price charged for a knee replacement varied from $22,000 to $77,239, or more than three times as much as the low price.
• Only 1 out of 10 respondents correctly guessed the high price range for a tonsillectomy.
  • The low price charged was $2,300. The high was nearly six times as much, or $13,187.
• Even the price charged for a new patient office visit can vary greatly, ranging from $60 to more than four times as much, or $261, HealthMarkets data shows.

The survey found strong demand for tools that provide greater transparency for health care services. Almost 70 percent of people said it would be useful to have online data comparing health care providers.

Roy Ramthun, a former senior health policy advisor at the White House, said a lack of price transparency is one reason health care costs rise faster than inflation year after year.

“As consumers watch health care costs rise, they are eager to take more control over their health care decisions and spending,” Ramthun said. “Fortunately, some companies, such as HealthMarkets, are making great strides in helping consumers shop wisely for health care.”

HealthMarkets offers price and quality transparency tools that provide members detailed information on more than 430,000 medical professionals, 4,000 hospitals and medical centers, and 26,000 other resources, such as labs, MRI centers, medical equipment providers and home health care centers. HealthMarkets tools also provide price transparency for more than 20,000 procedures and services, from a routine check-up to a specialist visit to a surgical procedure. No other insurance company offers more price transparency information.

The tools, offered in the company’s CareOne Select Plans, are being rolled out nationwide and currently are sold in Alabama, Arizona, Georgia, Illinois, Michigan, Missouri, Mississippi and Texas. They are sold by HealthMarkets subsidiaries The MEGA Life and Health Insurance Company and Mid-West National Life Insurance Company of Tennessee.

Other findings of the survey include:

• Close to 60 percent of consumers surveyed said that health insurance is not affordable. In fact, more than one out of 10 Americans (13 percent) said the high cost of health care had caused them to fall behind on paying bills for essentials such as food, electricity and housing.
• A quarter of Americans (24 percent) said during the past two years they have skipped a visit to the doctor for a check up or medical problem because the amount they would have to pay is too high.
• Among those who are self-employed or work in small business, nearly a third (31 percent) said they have delayed a doctor visit because out-of-pocket costs would be too high.

“Health care is taking a bigger and bigger bite out of family budgets, forcing people to make very difficult decisions,” Gedwed said. “We are committed to making health care as affordable as possible, and price transparency is one step in the right direction. We know that when consumers have better information, they become more prudent health care shoppers.”

The HealthMarkets survey of 1,028 American adults was conducted by telephone from November 22-27, 2006, as part of a national omnibus survey by Opinion Research Corp. The survey has a margin of error of plus or minus three percentage points.

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About HealthMarkets

HealthMarkets, headquartered in North Richland Hills, Texas, is a provider of health and life insurance products to individuals, families, the self-employed, Medicare beneficiaries and small businesses. HealthMarkets offers products and services through its licensed insurance subsidiaries The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and The Chesapeake Life Insurance Company. The Company’s offerings include individual and self-employed health insurance, small employer group health insurance, life insurance and reinsurance. Through its Consumer Guided Health Insurance plans, HealthMarkets seeks to provide affordable and accessible health coverage to individuals and small businesses. The Company is owned by a group of private equity investors, including affiliates of The Blackstone Group, Goldman Sachs Capital Partners and DLJ Merchant Banking Partners, members of management and the Company’s independent, licensed agents through the Company’s agent stock accumulation plans. For more information, visit http://www.healthmarkets.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

Some of the matters discussed in this news release may contain forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "objective," "plan," "possible," "potential" and similar expressions. Actual results may vary materially from those included in the forward-looking statements. Factors that could cause actual results to differ materially from those included in the forward-looking statements include, but are not limited to, general economic conditions; the continued ability of the Company to compete for customers and insureds in an industry where many of its competitors may have greater market share and/or greater financial resources; the Company’s ability to accurately estimate medical claims and control costs; changes in government regulation that could increase the costs of compliance or cause the Company to discontinue marketing its products in certain states; the Company’s failure to comply with new or existing government regulations that could subject it to significant fines and penalties and/or result in restrictions on its operations; changes in the relationship between the Company and the membership associations that make available to their members the health insurance and other insurance products issued by the Company’s insurance subsidiaries; changes in the laws and regulations governing so-called “association group” insurance (particularly changes that would subject the issuance of policies to prior premium rate approval and/or require the issuance of policies on a “guaranteed issue” basis); significant liabilities and costs associated with litigation; failure of the Company’s information systems to provide timely and accurate information; negative publicity regarding the Company’s business practices and/or regarding the health insurance industry in general; the Company’s inability to enter into or maintain satisfactory relationships with networks of hospitals, physicians, dentists, pharmacies and other health care providers; failure of the Company’s regulated insurance company subsidiaries to maintain their current ratings by A.M. Best Company, Fitch and/or Standard & Poor’s; and the other risk factors set forth in the reports filed by the Company from time to time with the Securities and Exchange Commission.

Media Contacts:

Donna Ledbetter
HealthMarkets Corporate Communications
(817) 255-5405
Donna.Ledbetter@healthmarkets.com
www.HealthMarkets.com

Karen Mellen
For HealthMarkets
(312) 596-3487
Karen.Mellen@bm.com