As employers and individuals continue to balance their health benefits with the cost of those benefits, Anthem is responding by offering innovative health plans designed to meet the demand for both benefits and value. We offer a portfolio of products that provide a wide variety of benefit options and a broad range of prices—more than a 60 percent difference between our lowest and highest priced products.

One of the choices we offer is Anthem ByDesign, which provides employers and their employees with a number of benefit options from which to choose. In 2003, Anthem offered two Anthem ByDesign products: one especially for small and mid-size employers and one for large, national employers. Both provide more choices, help employers and employees manage health care costs, and encourage individuals to become more involved in their own health care. Smaller employers can offer employees a core benefits package by choosing from among health, dental, vision, life, disability and prescription drug benefits. Employees then can either select the core benefits package or choose from a variety of alternatives depending upon their individual preference and situation. During 2003, the first year for this product, small employers who chose Anthem ByDesign saved about $6 million collectively in annual health insurance premiums and on average, experienced a 12 percent savings in premiums, keeping their premium increases below the national average. Anthem ByDesign for large employers features a “personal care account” that’s funded by the employer. Employees can use this account to pay for eligible health expenses.

The growth of our specialty business product line adds even more choices. Customers can complement their basic health coverage with prescription drug benefits, dental and vision care, behavioral health programs and group life insurance.

Anthem Prescription Management now serves 7 million customers. It is our largest specialty product and an industry success story. Anthem Prescription offers members convenience and cost-savings with its mail-order pharmacy, which handled about 2.6 million new prescriptions, a nearly 29 percent increase from 2002. Prescriptions can be ordered any time online, and a discount is offered for using mail order. In addition, members have realized lower prescription drug costs thanks to the “Think Generics” program, which encourages the appropriate use of less expensive generic drugs.

Our dental benefits now reach nearly 2.5 million members, making us one of the 10 largest dental benefits providers in the nation. We provide life insurance benefits to nearly 900,000 members. Behavioral health—with about 3 million members—is our fastest growing specialty product segment. And our newest offering—vision benefits—features one of the nation’s largest vision networks and is already serving 423,000 members. For 2004, we expect to see even more growth across all of our specialty businesses.

Continuing growth in our total membership and our strong retention rate tell us our products are responding to customer needs. In 2003, we attracted new members to all our major products. Most significant was a 22 percent increase in individual members under 65 years old. We also saw outstanding growth in the number of national accounts, or large, multi-state employers, that chose Anthem to meet their health care benefit needs. National accounts membership grew by 16 percent, and we anticipate substantial growth again in 2004.

As a Blue Cross and Blue Shield health plan, Anthem offers these large employer groups the BlueCard program, providing unparalleled access to the largest number of physicians, hospitals and other health care professionals nationally. Likewise, these health care benefits are also available for employees who travel overseas.

In addition to quality health benefits, we offer employers information and programs that help their employees improve their health and live healthier lives, while also educating them about the cost of health care. One such program analyzes a range of claims and pharmacy benefit data and identifies opportunities to collaborate with members and physicians to improve care. The enthusiastic reception this program has received from national accounts customers, members and physicians has led to the expansion of this program to more than 500,000 members. We anticipate that even more customers will take advantage of this program in 2004.