View of the dental benefits industry

1. View of the dental benefits industry DBRA Annual Meeting 2012

2. Dental is highly valued • Dental is the #2 requested benefit after medical • Care is needed • #1 cause of ER visits Children's Hospital Seattle • Self esteem issues in childhood due to pain & appearance • Coverage is often equivalent to access • People with benefit see the dentist more • Have better oral health

3. Dental is dysfunctional • Poor member experience w. exclusions, limitations, utilization review for limited benefit • $1000 PEPY for $1500 Annual Benefit?!? • Source Mercer survey: West Coast • Dental benefits plateau – drop in market size before recession through today (NADP) • Our own employee feedback

4. Business model issues • Reversed leveraged trend & impact on annual max

5. Business model issues cont. • Lack of ROI w. utilization controls • Decreasing value of network discounts • EBD is nice but…. • All becoming like Ortho

6. Future • Dollar based outperforms w. higher annual max • $2500 to $5000 annual max sweet spot • RLH 5 year experience w. Individual products • Dollar-based product up 25% in 5 years • Procedure-based product up 66% in 5 years • Simple to understand • Admin costs can be used differently in lieu of utilization management and cust. svc calls. • Allows for transparency

7. Need for transparency • The only true way to reduce costs… • Markets work • Dollar based products function w. transparency, just like HSAs

8. Importance of marketing • #2 requested benefit • But 50% uninsured rate • More people have cell phone plans than dental insurance • Why? Poor direct to consumer marketing

9. Future cont. • More dollar based products, all funding options • In more areas • Service enhancements: admin justification for good experience, not utilization management • Transparency • “Real” marketing • Market density efforts • All group sizes and individual