Mark White President and Chief Executive Officer

The discussions at both the national and local levels around health care reform made 2009 a memorable year for all of us at Arkansas Blue Cross and Blue Shield. Everyone who was paying attention noticed the not-so-subtle change from discussions focused on reforming the health care system to a focus on health insurance reform. Throughout the process, we have worked to engage in the discussion in productive ways and to understand the macro issues, political maneuverings and opinions so that we might best position the enterprise for success going forward.

Surprisingly, the federal legislation we anticipated would pass in 2009 is still the topic of great debate and for Arkansas Blue Cross, the uncertainty continues. In this landscape, we continue to analyze the environment, model likely outcomes and develop options that will result in this company continuing to serve its customers in the manner they deserve and expect.

Arkansas Blue Cross supports responsible reform of our health care system. We believe that every American should have access to high-quality, affordable health care. And we believe that the most significant impediment to that goal is cost. In order to responsibly reform our health care system, we must first address our cost problem. We continue to encourage focus on the following areas:

1. We must support research on what works and pay for care that is effective and evidence based.
2. We must reform our payment system so that providers of care are reimbursed for providing high-quality, effective care which achieves positive outcomes.
3. We must provide consumers with the information they need to make well-informed choices about their health and the health care they receive.
4. We must encourage personal responsibility and help consumers understand the impact of lifestyle choices on health and health care costs.
5. We must develop cost-effective public/private partnerships to provide coverage for those Americans who have no insurance.

Although health care reform was a significant issue for the company in 2009, meeting the needs of our customers remained our top priority. During the year, we improved our customer service in the areas of timeliness, accuracy and responsiveness and are proud of the results we achieved. Our membership grew significantly in 2009 and the resulting scale allowed us to improve our administrative cost performance for all our customers. During a difficult economic period, our conservative business and investment philosophy allowed us to maintain our position as an active leader in our industry and the communities we serve.

Going forward, we expect significant change for our industry and our company. And we are well positioned to meet the challenges that change will bring thanks to a flexible business strategy, a talented and tenured team of associates and a commitment to our mission of service that is reflected in all we do.