The Economic Impacts of THE ECONOMIC AND FISCAL IMPACTS OF CAMBIA HEALTH SOLUTIONS

The Economic Impacts of THE ECONOMIC AND FISCAL IMPACTS OF CAMBIA HEALTH SOLUTIONS

Contents Section 1 Executive Summary Key Findings...4 Section 2 About Cambia HEALTH SOLUTIONS Company History...6 Current Operations...7 Section 3 Cambia s Economic and Fiscal Impacts Types of Economic Impacts...9 Impact Measures...10 Regional Impact...10 Cambia s Impact in Oregon...19 Cambia s Impact in Washington...21 Cambia s Impact in Idaho...23 Cambia s Impact in Utah...25 2

Executive Summary Cambia Health Solutions ( Cambia ) is a nonprofit parent and holding company overseeing a diverse portfolio of health care-related businesses and investments. Cambia s portfolio includes our family of health insurance companies, as well as a group of innovative direct health solutions companies. All offer products and/or services to help consumers, employers, insurance agents and brokers, and health care providers succeed in the rapidly changing health care market. Cambia is headquartered in Portland, Oregon, with major business operations in Idaho, Oregon, Utah and Washington. Cambia retained ECONorthwest to evaluate how its regional business operations and employees contribute to the economy. Impacts are broadly divided into two categories: 1. Economic contributions, which are the effects of Cambia s business operations, spending and charitable contributions on output, income and employment; and, 2. Fiscal contributions, which are the tax and fee revenues that local and state governments receive as a result of Cambia s economic activity. ECONorthwest measured Cambia s impacts in its four-state region and in each individual state based on Cambia s business operations in 2011. Cambia s Regional Impacts in 2011 $1.4 billion in economic activity $741.0 million in income 11,940 jobs Source: Cambia 3

Key Findings 1. Cambia is an economic engine. Regionally, Cambia is associated with $1.4 billion in economic activity, including 11,940 jobs and $741.0 million in income in 2011. 2. Cambia buys local. In 2011, Cambia purchased $122.0 million in goods and services from other businesses, with just over 75 percent directly benefitting local businesses. Given this pattern spending, along with Cambia workers who live and spend money in their local communities, Cambia s financial output packs a strong economic development punch. 3. Paying it forward. Cambia s regional business operations start a chain reaction of spending that support sales, income and jobs in every sector of the regional economy. Secondary impacts in 2011 included an additional $695.0 million in sales, $262.8 million in income and 6,387 jobs. 4. Cambia pays taxes. As a taxable nonprofit entity, Cambia and its employees paid over $110.8 million in taxes and fees to state and local governments in 2011. 5. Neighbors helping neighbors. Cambia and its employees contributed more than $6.7 million to nonprofit organizations in their communities throughout its four-state region. Not including donations by its employees, Cambia as a company contributed an average of $815 per employee to nonprofits in 2011. Based on a survey conducted by the Committee Encouraging Corporate Philanthropy, this is 17 percent higher than the U.S. corporate average of $695 per employee. 1 1 Giving in Numbers, 2012 Edition, by the Committee Encouraging Corporate Philanthropy (CECP) in association with The Conference Board. CECP was founded in 1999 by Paul Newman, John Whitehead, Peter Malkin, and other business leaders. CECP is an international forum of business leaders seeking to increase and improve corporate philanthropy. According to CECP, Membership includes more than 180 global CEOs and chairpersons of companies that together account for more than 40 percent of reported corporate giving in the United States. 4

About Cambia Health Solutions Cambia are the growth rings of a tree. They signify strong, healthy growth from within and a capacity to branch outward. They also describe the emergence of Cambia Health Solutions, a company with nearly a century of experience in developing and providing health solutions in a continually evolving marketplace. Meeting the growing and changing needs of consumers is not new to Cambia. The company s roots go back nearly 100 years, when health insurance was born in the logging camps and timber mills of the Pacific Northwest. Today, Cambia is a nonprofit parent and holding company overseeing a diverse portfolio of health care-related businesses and investments. Cambia is headquartered in Portland, Oregon, with major business operations in Idaho, Oregon, Utah and Washington. Regence Insurance Holding Company is the largest component of Cambia s portfolio. It houses four independent licensees of the Blue Cross and Blue Shield Association, which collectively serve approximately two million members in the Pacific Northwest/Intermountain region. These companies are known as Regence BlueShield of Idaho, Regence BlueCross BlueShield of Oregon, Regence BlueCross BlueShield of Utah and Regence BlueShield (in select Washington counties). Additional Cambia insurance companies include Asuris Northwest Health, LifeMap Assurance Company and BridgeSpan Health Company. Cambia s Direct Health Solutions division is made up of innovative businesses Cambia has invested in, launched or acquired. These businesses offer specialized services to support the accountability and success of consumers, providers and employers in the changing health care system. 5

Company History In 1910, a group of doctors formed the Western Clinic, located in Tacoma, Washington, and contracted with the local sawmills to provide medical care for their employees. It was the beginning of modern health insurance and resulted in a win/win for everyone. Employees got access to medical care; employers got a more productive workforce; and doctors got a steady, predictable stream of revenue. A few years later, in 1917, the Western Clinic evolved into Pierce County Medical, one of several burgeoning medical bureaus and physicians organizations that formed throughout the region, later coalescing into the regional health insurance provider known as Regence. Regence s four member Plans first came together in 1995 as The Benchmark Group. The original members were King County Medical Blue Shield (Seattle) and Pierce County Medical Bureau (Tacoma), which merged to become Regence BlueShield in Washington; plus Blue Cross and Blue Shield of Oregon (Portland) and Medical Services Bureau-Blue Shield of Idaho (Lewiston). The company was renamed Regence in 1997 to reflect its regional alliance. That was the same year Blue Cross and Blue Shield of Utah joined the Regence family of companies. In 2010, the company began to expand its efforts to promote a more people-focused, economically sustainable health care system by developing direct health solutions businesses and initiating a corporate restructure to accommodate their growth. In 2011, these solutions were formalized as separate and distinct business units when The Regence Group was renamed Cambia Health Solutions a parent company for both Regence Insurance and Direct Health Solutions activities. Cambia works to foster innovation and create a variety of health-related products and services that serve the changing needs of its customers. 6

Current Operations Cambia Health Solutions is the parent and holding company that provides oversight for the operations of each of the business arms of the company. It is governed by a 15-member board of directors composed of representatives from throughout the region and around the country. Cambia s affiliated health insurance plans serve more than two million members in Idaho, Oregon, Utah and select counties of Washingon. Regence is an affiliation of four taxable nonprofit Blue Plans in contiguous states: Regence BlueShield of Idaho, Regence BlueCross BlueShield of Oregon, Regence BlueCross BlueShield of Utah, and Regence BlueShield (in select Washington counties). All four are independent licensees of the Blue Cross and Blue Shield Association. Additional Cambia health insurance entities include Asuris Northwest Health and BridgeSpan Health Company. Regence BlueCross BlueShield of Oregon is the state s largest health insurance company, with members throughout Oregon and Clark County, Washington. Founded in 1941, it is the successor of many of the state s original medical bureaus, with a tradition of nonprofit service that continues today. Headquartered in Portland, Regence BlueCross BlueShield of Oregon also has operations in Salem and Medford. Regence BlueShield is based in Seattle with additional offices in Tacoma, Everett and Burlington. Founded in Tacoma, Washington, nearly 100 years ago as the first prepaid medical plan in the country, today Regence BlueShield s service area now includes Clallam, Columbia, Cowlitz, Grays Harbor, Island, Jefferson, King, Kitsap, Klickitat, Lewis, Mason, Pacific, Pierce, San Juan, Skagit, Skamania, Snohomish, Thurston, Wahkiakum, Walla Walla, Whatcom and Yakima counties. In eastern Washington, health care coverage is offered through the company s subsidiary, Asuris Northwest Health, located in Spokane. Regence BlueShield of Idaho is a nonprofit mutualized health insurance company serving members throughout Idaho and in Asotin and Garfield counties in Washington. The company was founded in 1946, when a group of physicians joined together to form the North Idaho District Medical Service Bureau. Today, major business operations in in the state include a claims processing center and customer service center in Lewiston. Additional offices are located in Boise, Coeur d Alene, Lewiston, and Pocatello. 7

Regence BlueCross BlueShield of Utah was founded in 1942 as the state s first health insurance carrier. Today, Salt Lake City is home to the company s administrative offices and a large claims processing center. Cambia s Direct Health Solutions Cambia s Direct Health Solutions (DHS) division is made up of innovative businesses Cambia has invested in, launched or acquired. The portfolio includes an array of solutions spanning health care information technology and software development to retail health care and wellness solutions. Each DHS company reflects the Cambia goal to make health care more accessible and more affordable, as well as promote better health outcomes. Brands include (partial list): 8

Measuring Cambia s Economic and Fiscal Impacts Types of Economic Impacts Economists have developed several approaches to measure the impacts, or contributions, of companies on the communities in which they operate. The most common method estimates the economic and fiscal impacts associated with the company s spending on payroll, goods and services, and capital projects. This method is often referred to as the expenditure approach. Under the expenditure approach, company spending directly influences the economy and begins a chain reaction of additional spending elsewhere. These secondary impacts are measured by using clientprovided expenditure data as the inputs into an input-output model. ECONorthwest uses the IMPLAN input-output modeling software to estimate economic impacts (see box to the right). Economic impact analysis employs specific terminology to identify the different types of economic impacts. Direct impacts are those associated with the payroll and employment at Cambia. They also include the direct output associated with Cambia s business activities, which is estimated as the sum of labor and non-labor operating expenses. 2 Cambia generates indirect impacts through the purchases of goods and services from other businesses. These businesses will, in turn, purchase a wide array of goods and services necessary to operate. Because these purchases represent interactions among businesses, indirect effects are often referred to as supply-chain impacts. The direct and indirect increases in employment and income enhance overall economy purchasing power, thereby inducing further consumption and investment-driven stimulus. These induced effects are often referred to as consumption-driven impacts. The IMPLAN Model To perform economic impact analysis, ECONorthwest uses an input-output modeling software program called IMPLAN (IMpact Analysis for PLANning). This model offers several advantages: IMPLAN is widely used and well respected. The United States Department of Agriculture (USDA) recognized IMPLAN as one of the most credible regional impact models used for regional economic impact analysis. The IMPLAN model relies on regional data that are collected and vetted by government agencies. This analysis uses 2010 baseline data the most current year available.»» The IMPLAN model is highly flexible and allows users to input their own data into the economic impact model. This is particularly important in this analysis where detailed data provided by Cambia are used to build a custom production function for its activities. This approach provides the most reliable estimate of economic impacts. 2 This operational cost or spending perspective does not include claims payments. 9

Impact Measures The IMPLAN model reports the following impact measures: Output represents the value of goods and services produced and is the broadest measure of economic activity. Income (labor income) consists of employee compensation and proprietary income. Employee compensation (wages) includes workers wages and salaries, as well as other benefits such as health, disability and life insurance; retirement payments; and non-cash compensation. Proprietary income (business income) represents the payments received by small-business owners or self-employed workers. Jobs include both full- and part-time employment. State and local taxes and fees include production business taxes; personal income taxes; business and personal property taxes: social insurance (employer and employee contributions) taxes; and various other taxes, fines, licenses and fees paid by businesses and households. Regional Impact This section of the report presents the economic and fiscal impacts of Cambia in 2011. It begins with Cambia s combined impacts in the fourstate region, followed by the impacts in each state. To provide context for these impacts, as well as a fuller understanding of the modeling process, each section begins with a description of Cambia s business operations. The economic and fiscal impacts associated with Cambia s business operations in the four-state region are attributed to the company s staff and payroll, purchases of goods and services, tax and fee payments, capital spending, and voluntary contributions. 10

Cambia s Workforce and Operations In 2011, Cambia employed 5,547 mostly full-time workers (5,514 FTE) in the four-state region. Oregon, with 2,498 jobs, comprises 45 percent of Cambia s regional workforce and has the greatest concentration of employment. Within Oregon, 72 percent of Cambia s state workforce (1,798 employees) worked in the Portland area where the company s headquarters is situated. Cambia also had 286 employees in Medford, and another 407 in Salem. Seven employees worked elsewhere in Oregon. Cambia employed 1,760 employees in Washington in 2011, with offices located in Seattle, Tacoma, Burlington and Spokane. Another 784 employees worked in Boise and Lewiston, Idaho, and 505 worked in Salt Lake City, Utah. Thirty employees reside outside Cambia s four-state service area but support operations within the service area. In 2011, Cambia total employee compensation reached $445.3 million. 3 Not including taxes, most of this income went directly to Cambia s workers who live and spend money in their local communities. Cambia s Regional Employment, by State, 2011 3,000 +7 elsewhere in OR 407 in Salem 2,000 286 in Medford 1,000 1,760 1,798 in Portland JOBS 505 784 Source: Cambia OTHER UT ID WA OR 3 Cambia s payroll costs in 2011 totaled $478.0 million. This includes total employee compensation and another $32.8 million in other payroll costs incurred by Cambia, such as workers compensation insurance and the employer portion of the FICA contribution. 11

Cambia employees at its headquarters operations in Portland include a larger proportion of management, finance, information technology, and other corporate functions. Most other locations have higher shares of customer service and administrative jobs with multiple levels, allowing opportunities for both entry-level positions and career advancement within Cambia. Cambia s Local Impact In addition to payroll, Cambia also purchases a wide variety of goods and services from other regional businesses. (In economic impact analysis, these non-labor operating costs are referred to as intermediate goods and services.) This includes contractors who provide specialized audit, claims, and other services, as well as firms providing temporary employment services, office equipment and computer repair and maintenance services, and accounting, legal, advertising, and management services. By their very nature, most of these intermediate goods and services are provided by local companies. Indeed, in 2011, Cambia purchased about $122.0 million in goods and services from other businesses. About 75 percent of this spending benefits regional companies and their employees. This buy local effect is further enhanced when payroll costs are included. Cambia s business operations are highly labor-intensive, with about 80 percent of its operating expenses going to payroll. This spending accrues to local workers. In addition, Cambia s non-payroll spending pattern indicates that the majority of that spending benefits local workers and business owners. Taken together, Cambia s business operations have a strong local impact. In 2011, Cambia s operating costs including taxes and fees (or direct economic output) totaled $710.8 million. Of this total, approximately $473.0 million (or 66 percent) benefited local workers and business owners. Cambia Operating Impacts, Four-State Region, 2011 Type of Impact Direct Indirect Induced Total Output $710,809,000 $114,144,000 $493,554,000 $1,318,507,000 Income $478,035,000 $55,385,000 $172,351,000 $705,771,000 State and Local $110,806,000 $5,410,000 $29,495,000 $145,711,000 Taxes Jobs 5,547 1,305 4,269 11,121 12

Cambia s Capital Spending In 2011, Cambia s total regional capital spending amounted to $59.3 million. Cambia invested approximately $48.6 million (or 82 percent of total 2011 capital spending) in new technologies, including computer software and hardware, custom computer programming services, and telecommunications. In addition, Cambia spent about $8.5 million on facilities. This type of spending tends to benefit local construction workers, contractors and wholesalers. By definition, there are no direct impacts associated with Cambia s capital spending because capital expenditures generally facilitate, rather than directly generate, output. Thus, Cambia s capital expenditures enter the model as indirect impacts that work their way through the economy. The indirect impacts shown in the table below include Cambia s capital spending as well as additional spending by contractors and businesses working on Cambia s capital projects. Cambia Capital Spending Impacts, Four-State Region, 2011 Type of Impact Direct Indirect Induced Total Output $0 $52,237,000 $20,846,000 $73,083,000 Income $0 $22,484,000 $6,943,000 $29,427,000 State and Local Taxes $0 $2,984,000 $1,262,000 $4,246,000 Jobs 0 480 178 658 13

Cambia s Contributions In 2011, Cambia and its employees contributed more than $6.7 million to nonprofit organizations in their communities throughout the four-state region. These contributions benefited a wide range of nonprofit community service providers, charities, and civic and educational organizations. Not including donations by its employees, Cambia as a company contributed an average of $815 per employee to nonprofits in 2011. Based on a survey conducted by the Committee Encouraging Corporate Philanthropy, this is 17 percent higher than the U.S. corporate average of $695 per employee. 4 In addition to these monetary contributions, 840 Cambia workers volunteered about 3,800 hours of their time to help nonprofits in their communities in 2011. Cambia and its employees have a history of contributing to their community. Between 2007 and 2011, they gave approximately $33.1 million to nonprofit organizations in the four-state region. During the 2007-2009 recession, Cambia and its employees increased contributions by 89 percent, contributing more than $14.3 million to nonprofits and volunteering almost 10,000 hours of their time. Contributions made by Cambia and its employees allow benefiting nonprofits to purchase goods and services, and expand or maintain the services they provide. Such spending generates indirect and induced impacts in the regional economy. We estimate these impacts separately because they vary independently of Cambia s output level. Because voluntary contributions do not directly generate output by Cambia, there are no direct effects associated with Cambia s voluntary contributions. Instead, they enter the model as indirect impacts that work their way through the economy. In this way, local and state charities, nonprofit organizations, recreational organizations, schools, and others benefit indirectly from Cambia s voluntary contributions. 2011 Cambia Contributions Top Ten Recipients (in alphabetical order) American Heart Association (Oregon) Coalition of Community Health Clinics (Idaho) Food Lifeline (Washington) Genesis World Mission (Idaho) Lewis-Clark State College (Idaho) Oregon Food Bank SMART (Start Making a Reader Today) (Oregon) St. Charles Foundation for Cascade Healthcare Community (Oregon) United Way of the Columbia- Willamette (Oregon) Utah Health Information Network Source: Cambia 4 Giving in Numbers, 2012 Edition, by the Committee Encouraging Corporate Philanthropy (CECP) in association with The Conference Board. CECP was founded in 1999 by Paul Newman, John Whitehead, Peter Malkin, and other business leaders. CECP is an international forum of business leaders seeking to increase and improve corporate philanthropy. According to CECP, Membership includes more than 180 global CEOs and chairpersons of companies that together account for more than 40 percent of reported corporate giving in the United States. 14

Cambia s Contributions, by Major Recipient Group, 2011 Youth programs & services 7% Other 5% Civic 32% Health & human services 42% Education 10% Arts & culture 4% Cambia s Contributions Impacts, Four-State Region, 2011 Type of Impact Direct Indirect Induced Total Output $0 $10,230,000 $3,916,000 $14,146,000 Income $0 $4,302,000 $1,311,000 $5,613,000 State and Local $0 $348,000 $242,000 $590,000 Taxes Jobs 0 122 34 155 Cambia s Combined Impacts The preceding sections describe separately the annual economic impacts attributed to Cambia s operations, capital spending and voluntary contributions. The next section includes tables showing the combined economic impacts from all three sources (Workforce and Operations, Capital Spending, Contributions). The first table summarizes Cambia s combined impacts, by type of impact, in the four-state region. The direct impacts are based on Cambia s business operations in the four-state region. In 2011, Cambia s operating expenses totaled just over $710.8 million, and included $478.0 million in income (or payroll) to support a 5,547-person workforce, and $110.8 million in tax and fee payments to state and local governments. 15

Cambia s Combined Impacts, Four-State Region 2011 Type of Impact Direct Indirect Induced Total Output $710,809,000 $176,611,000 $518,316,000 $1,405,736,000 Income $478,035,000 $82,171,000 $180,604,000 $740,810,000 State and Local $110,806,000 $8,742,000 $30,999,000 $150,547,000 Taxes Jobs 5,547 1,907 4,480 11,934 Cambia s spending will generate secondary impacts elsewhere in the regional economy. In 2011, Cambia s business operations, Indirectly supported $176.6 million in economic activity, including $82.1 million in income and 1,907 jobs. The first round of these indirect impacts are concentrated in service providers to Cambia, such as temporary employment services, individuals providing specialized services on a contract basis, and a host of companies providing other business services. Generated income and spending that induced $518.3 million in economic activity, including $180.6 million in income and 4,480 jobs. These induced impacts are spread throughout a variety of regional industries that provide goods and services to households. In total, the regional economic and fiscal contributions of Cambia in 2011 are significant. Approximately $1.4 billion in economic activity can be linked back to Cambia s business operations. This includes just over 11,930 jobs, $740.8 million in income and $150.5 million in tax and fee revenues for state and local governments. Total Impacts of Cambia, 2011 Type of Impact Operations Capital Spending Contributions Total Output $1,318,507,000 $73,083,000 $14,146,000 $1,405,736,000 Income $705,771,000 $29,427,000 $5,613,000 $740,811,000 State and Local $145,711,000 $4,246,000 $590,000 $150,547,000 Taxes Jobs 11,121 658 155 11,934 16

As the preceding discussion indicates, spending associated with Cambia s business operations has multiplier spending effects that benefit workers and business owners in other sectors of the regional economy. All of the impact measures can be summarized across direct, indirect, and/or induced impact categories using mathematical formulae to measure and explain what economists refer to as the multiplier effect. In essence, economic multipliers provide a shorthand way to better understand the linkages between a company and other sectors of the economy, i.e., the larger the economic multipliers, the greater the interdependence between a company s operations and the rest of the economy (multipliers for each state are identified in the state sections). The table below reports the total regional economic impacts, by major industry sector, associated with Cambia s business operations. Cambia Combined Regional Impacts, by Major Industry Sector, 2011 Type of Impact / Output Income Jobs Major Industry Sector Direct Impacts Service $710,809,000 $478,035,000 5,547 Secondary Impacts Natural Resources $3,840,000 $1,010,000 44 Construction $11,819,000 $4,729,000 102 Manufacturing $33,945,000 $4,823,000 72 TIPU $24,815,000 $8,520,000 158 Trade $84,989,000 $39,568,000 1,140 Service $518,058,000 $197,010,000 4,793 Government $17,461,000 $7,115,000 78 Total Secondary Impacts $694,927,000 $262,775,000 6,387 Total Impacts $1,405,736,000 $740,810,000 11,934 Note: TIPU stands for Transportation, Information, and Public Utilities. 17

Additional, secondary impacts include: An additional $518.1 million in sales, and $197.0 million in income and 4,790 jobs for the region s service sector; $85.0 million in economic activity, including $39.6 million in income and 1,140 jobs, for wholesalers and retailers; and Job impacts in transportation, information and public utilities (160 jobs), manufacturing (75 jobs), and construction (100 jobs). The economic activity of Cambia generates taxes and fee revenues for state and local governments. These tax and fee revenues are shown below. Taxes Paid by Cambia in 2011 Taxes Paid by Cambia Employees in 2011 Premium Taxes $56,108,000 Income Taxes $15,045,000 State and Local Income Taxes $2,338,000 Other Taxes $6,069,000 Oregon Medical Insurance Pool $11,155,000 Total Cambia $21,114,000 Washington Business & Occupation $4,855,000 Employee-paid Taxes Washington Health Insurance Pool $13,074,000 Idaho Immunizations & SEHRP $2,162,000 Total Cambia-paid Taxes $89,692,000 Total State and Local Taxes $110,806,000 Sources: Cambia 18

Cambia s Impact in Oregon Cambia s portfolio of health care-related businesses and investments includes Regence BlueCross BlueShield of Oregon, the state s largest nonprofit health insurance company with members throughout Oregon and Clark County, Washington. Founded in 1941, Regence BlueCross BlueShield of Oregon is the successor of many of the state s original medical bureaus and today continues the longstanding tradition of nonprofit service. Cambia s Direct Health Solutions division, made up of innovative businesses Cambia has invested in, launched or acquired, is also largely based in Portland. Cambia has nearly 2,500 employees who work in offices in Portland, Salem, Medford, Bend and Pendleton. Cambia also has a claims processing unit in Portland, customer service centers in Portland and Medford, and a Medicare Advantage customer service center in Salem. Cambia s Economic Activity in Oregon Employment Operating Expenditures Capital Expenditures Charitable Contributions 2,498 jobs $363.8 million $22.6 million $3.2 million In 2011, Cambia s business operations in Oregon directly generated $363.8 million in economic activity, including 2,498 jobs and $234.7 million in income. About 78 percent of Cambia s spending in Oregon directly benefits workers and businesses in the state. Cambia s capital spending in Oregon totaled $22.6 million in 2011. The largest investments went toward new technologies and facility improvements. Cambia s employees contributed $3.2 million to Oregon nonprofits in 2011. This includes Cambia s Employee Giving Campaign, an employee donation/employer match program that generated $1.8 million for over 600 Oregon nonprofits. In 2011, Cambia s corporate voluntary monetary contributions in Oregon totaled $2.1 million or $850 per employee. This is about 22 percent greater than the U.S. corporate average as reported in the 2011 corporate giving survey conducted by the Committee to Encourage Corporate Philanthropy. Cambia s Oregon employees volunteered about 2,000 hours of their time to support local nonprofits, community service and other programs. Between 2007 and 2011, Cambia and its Oregon employees contributed $16.0 million and 10,000 volunteer hours to nonprofits. 2011 Cambia Contributions Top Ten Recipients in Oregon (in alphabetical order) American Heart Association Oregon Chapter Chris Dudley Foundation Coalition of Community Health Clinics Doernbecher Foundation Project Access NOW Oregon Food Bank Sacred Heart Medical Center Foundation SMART (Start Making a Reader Today) St. Charles Foundation for Cascade Healthcare Community United Way of the Columbia-Willamette Source: Cambia 5 State annual mean wages from the Bureau of Labor Statistics. See http://dta.bls.gov.oes/ 19

Combined Impacts of Cambia in Oregon, 2011 Type of Impact Direct Indirect Induced Total Output $363,800,000 $104,882,000 $269,359,000 $738,041,000 Income $234,674,000 $50,492,000 $95,071,000 $380,237,000 State and Local $36,528,000 $5,451,000 $17,084,000 59,063,000 Taxes Jobs 2,498 1,241 2,392 6,131 Spending by Cambia generates secondary impacts elsewhere in the Oregon economy as businesses accommodate the supply-chain and consumption-driven spending associated with Cambia s headquarters and service operations. In 2011, Cambia s business operations, Generated supply-chain spending that indirectly supported $104.9 million in economic activity, including $50.5 million in income and 1,241 jobs in Oregon in 2011. Produced additional income and spending that induced $269.4 million in economic activity, including $95.1 million in income and 2,392 jobs. State and Local Taxes Generated by Cambia in 2011 Cambia s Total Economic Impacts in Oregon $738.0 million in economic activity $380.2 million in income 6,130 jobs $59.0 million in state and local taxes Source: Cambia Category Revenues Percent of Total Property Taxes $8,898,000 15.1% Income Taxes $18,179,000 30.8% Sales and Other Taxes $14,553,000 24.6% Fees and Other Non-Taxes $3,273,000 5.5% Social Insurance Taxes $14,191,000 24.0% Total $59,094,000 100.0% Cambia s Multiplier Effect in Oregon Cambia s Output Multiplier is 2.0: Every million dollars in spending by Cambia is linked to another $1.0 million in spending elsewhere in Oregon. Cambia s Income Multiplier is 1.6: Every million dollars in income directly paid by Cambia is associated with another $600,000 in income for workers in other sectors of the Oregon economy. Cambia s Job Multiplier is 2.5: Every 10 direct jobs at Cambia are linked, on average, to another 15 jobs elsewhere in Oregon 20

Cambia s Impact in Washington Cambia s portfolio of health care-related businesses and investments includes Regence BlueShield, founded in Tacoma nearly 100 years ago as the first prepaid medical plan in the United States. Today Regence BlueShield serves members in select Washington counties. Our Asuris Northwest Health subsidiary serves eastern Washington and is based in Spokane. Cambia employs over 1,700 Washington residents who work in offices in Seattle, Tacoma, Everett, Burlington and Spokane. Major business operations in the state include a customer service center in Tacoma, a claims processing unit in Seattle, and an Administrative Services Only (ASO) unit in Burlington. Cambia s Economic Activity in Washington Employment Operating Expenditures Capital Expenditures Charitable Contributions 1,760 jobs $226.2 million $19.6 million $2.1 million In 2011, Cambia s operations in Washington directly generated $226.2 million in economic activity, including 1,760 jobs and $145.5 million in income. Approximately 81 percent of Cambia s spending in Washington directly benefits workers and companies in this state. Cambia s capital spending in Washington totaled $19.6 million. Most of this capital spending was allocated to new software and technologies. Cambia and its employees contributed $2.1 million to Washington nonprofits in 2011. This includes Cambia s highly successful Employee Giving Campaign, an employee donation/employer match program that generated $1.5 million for 510 nonprofits in Washington. Cambia s corporate voluntary monetary contributions in Washington totaled $1.2 million or about $700 per employee. Cambia s Washington employees volunteered almost 1,000 hours of their time to support local nonprofits, community services and other programs Between 2007 and 2011, Cambia and its Washington employees contributed $9.3 million and 4,100 volunteer hours to nonprofits. 2011 Cambia Contributions Top Ten Recipients in Washington (in alphabetical order) American Red Cross Inland Northwest Boys & Girls Clubs South Puget Sound CHOICE Regional Health Network Food Lifeline Leukemia & Lymphoma Society The Martinez Foundation Treehouse United Way King County United Way Pierce County World Vision Source: Cambia 21

Combined Impacts of Cambia in Washington, 2011 Type of Impact Direct Indirect Induced Total Output $226,184,000 $45,295,000 $158,327,000 $429,806,000 Income $145,521,000 $20,463,000 $54,914,000 $220,898,000 State and Local Taxes $61,010,000 $1,871,000 $8,339,000 $71,220,000 Jobs 1,760 376 1,213 3,349 Spending by Cambia will generate secondary impacts elsewhere in the Washington economy as businesses accommodate the supplychain and consumption-driven spending associated with Cambia s service and claims operations. In 2011, Cambia s business operations, Generated supply-chain spending that indirectly supported $45.3 million in economic activity, including $20.5 million in income and 376 jobs in Washington. Produced additional income and spending that induced $158.3 million in economic activity, including $54.9 million in income and 1,213 jobs. State and Local Taxes Generated by Cambia in 2011 Category Revenues Percent of Total Property Taxes $2,724,000 3.8% Sales and Other Taxes $53,105,000 74.5% Fees and Other Non-Taxes $896,000 1.3% Social Insurance Taxes $14,495,000 20.4% Total $71,220,000 100.0% Cambia s Total Impacts in Washington $429.8 million in economic activity $220.9 million in income 3,350 jobs $71.2 million in state and local taxes Source: Cambia Cambia s Multiplier Effect in Washington Cambia s Output Multiplier is 1.9: Every million dollars in spending by Cambia is linked to another $900,000 in spending elsewhere in Washington. Cambia s Input Multiplier is 1.5: Every million dollars in income directly paid by Cambia is associated with another $500,000 in income for workers in other sectors of the Washington economy. Cambia s Job Multiplier is 1.9: Every 10 direct jobs at Cambia are linked, on average, to another nine jobs elsewhere in Washington. 22

Cambia s Impact in Idaho Cambia s portfolio of health care-related businesses and investments includes Regence BlueShield of Idaho, a leader in the state s health insurance industry for more than 65 years. Today, Regence BlueShield of Idaho serves members throughout Idaho and in Asotin and Garfield counties in Washington. Cambia employs 784 Idaho residents who work in offices in Boise, Coeur d Alene, Lewiston and Pocatello. Major business operations in the state include a claims processing center and customer service center in Lewiston. Cambia s Economic Activity in Idaho Employment 784 jobs Operating Expenditures $66.4 million Capital Expenditures $5.9 million Charitable Contributions $752,000 In 2011, Cambia s business operations in Idaho directly generated $66.4 million in economic activity, including 784 jobs and $52.2 million in income. Approximately 77 percent of Cambia s total spending in Idaho directly accrues to workers and business owners in the state. Cambia s capital spending in Idaho totaled $5.9 million in 2011, with most of this capital spending allocated to new software and technologies. Cambia and its employees contributed $752,000 to Idaho nonprofits in 2011. This includes Cambia s Employee Giving Campaign, an employee donation/employer match program that generated $322,000 for 72 nonprofits in Idaho. Cambia s corporate voluntary monetary contributions In Idaho totaled $560,000 or about $720 per employee. This is slightly greater than the U.S. corporate average reported in the 2011 corporate giving survey conducted by the Committee to Encourage Corporate Philanthropy. Cambia s Idaho employees volunteered over 500 hours of their time to support local nonprofits, community services and other programs. Between 2007 and 2011, Cambia and its Idaho employees contributed $3.6 million and 3,700 volunteer hours to nonprofits. 2011 Cambia Contributions Top Ten Recipients in Idaho (in alphabetical order) American Red Cross Inland Northwest Boys & Girls Clubs of Lewis Clark Valley Genesis World Mission Idaho Foodbank Lewis-Clark State College Lewiston Catholic Community Building Fund Modie Park Conservancy Northwest Children s Home Regence Caring Foundation for Children Ronald McDonald House Charities Treasure Valley YMCA Source: Cambia 23

Combined Impacts of Cambia in Idaho, 2011 Type of Impact Direct Indirect Induced Total Output $66,402,000 $6,765,000 $37,088,000 $110,225,000 Income $52,222,000 $2,887,000 $12,694,000 $67,803,000 State and Local Taxes $10,802,000 $467,000 $2,421,000 $13,690,000 Jobs 784 91 372 1,247 Spending by Cambia will generate secondary impacts elsewhere in the Idaho economy as businesses accommodate the supply-chain and consumption-driven spending associated with Cambia s service and claims operations. In 2011, Cambia s business operations, Generated supply-chain spending that indirectly supported $6.8 million in economic activity, including $2.9 million in income and 91 jobs in Idaho. These impacts are modest, but, given Cambia s non-payroll operating costs totaled just $3.4 million in 2011, they clearly demonstrate how this spending is concentrated among local Idaho businesses. Produced additional income and spending that induced $37.1 million in economic activity, including $12.7 million in income and 372 jobs. State and Local Taxes Generated by Cambia in 2011 Category Revenues Percent of Total Property Taxes $791,000 5.8% Income Taxes $2,158,000 15.8% Sales and Other Taxes $7,687,000 56.1% Fees and Other Non-Taxes $227,000 1.7% Social Insurance Taxes $2,827,000 20.7% Total $13,690,000 100.0% Cambia s Total Impacts in Idaho $110.3 million in economic activity $67.8 million in income 1,250 jobs $13.7 million in state and local taxes Source: Cambia Cambia Multiplier Effect in Idaho Cambia s Output Multiplier is 1.6: Every million dollars in spending by Cambia is linked to another $600,000 in spending elsewhere in Idaho. Cambia s Input Multiplier is 1.3: Every million dollars in income directly paid by Cambia is associated with another $300,000 in income for workers in other sectors of the Idaho economy. Cambia s Job Multiplier is 1.6: Every 10 direct jobs at Cambia are linked, on average, to another six jobs elsewhere in Idaho. 24

Cambia s Impact in Utah Cambia s portfolio of health care-related businesses and investments includes Regence BlueCross BlueShield of Utah, a leader in the health insurance industry since its founding in 1942 as the state s first health insurance carrier. Cambia employs more than 500 residents in Utah s Salt Lake City office. In addition to administrative offices, Salt Lake City is home to a large claims processing center. Cambia s Economic Activity in Utah Employment 505 jobs Operating Expenditures $54.4 million Capital Expenditures $11.2 million Charitable Contributions $775,000 In 2011, Cambia s business operations in Utah directly generated $54.4 million in economic activity, including 505 jobs and $45.6 million in income. Approximately 81 percent of Cambia s total spending benefits local workers and companies. Cambia s capital spending in Utah totaled $11.2 million in 2011, including over $4.0 million on buildings and improvements. Cambia and its employees contributed $770,000 to Utah nonprofits in 2011. This includes Cambia s Employee Giving Campaign, an employee donation/employer match program that generated $256,000 for 65 nonprofits in Utah. Cambia s corporate voluntary monetary contributions in Utah totaled $625,000 or about $1,250 per employee. This is about 80 percent greater than the U.S. corporate average reported in the 2011 corporate giving survey conducted by the Committee to Encourage Corporate Philanthropy. Cambia s Utah employees volunteered over 250 hours of their time to support local nonprofits, community services and other programs Between 2007 and 2011, Cambia and its Utah employees contributed $4.3 million and 3,200 volunteer hours to nonprofits. 2011 Cambia Contributions Top Ten Recipients in Utah (in alphabetical order) American Red Cross Salt Lake City Big Brothers Big Sisters of Greater Salt Lake Habitat for Humanity Salt Lake City Regence Caring Foundation for Children United Way Salt Lake City University of Utah Autism Project Utah Food Bank Utah Health Info Network Utah Partners for Health Utah Salt Lake City CAP Head Start Source: Cambia Combined Impacts of Cambia in Utah, 2011 Type of Impact Direct Indirect Induced Total Output $54,423,000 $19,670,000 $53,542,000 $127,635,000 Income $45,618,000 $8,329,000 $17,925,000 $71,872,000 State and Local Taxes $2,465,000 $953,000 $3,155,000 $6,573,000 Jobs 505 199 503 1,207 25

Spending by Cambia will generate secondary impacts elsewhere in the Utah economy as businesses accommodate the supply-chain and consumption-driven spending associated with Cambia s service and claims operations. In 2011, Cambia s business operations, Generated supply-chain spending that indirectly supported $19.7 million in economic activity, including $8.3 million in income and 199 jobs in Idaho. These impacts are modest, but, given Cambia s non-payroll operating costs totaled just $6.3 million in 2011, they clearly demonstrate how this spending is concentrated among local Utah businesses. Produced additional income and spending that induced $53.5 million in economic activity, including $17.9 million in income and 503 jobs. State and Local Taxes Generated by Cambia in 2011 Category Revenues Percent of Total Property Taxes $1,110,000 16.9% Income Taxes $2,750,000 41.8% Sales and Other Taxes $1,926,000 29.3% Fees and Other Non-Taxes $541,000 8.2% Social Insurance Taxes $247,000 3.8% Total $6,574,000 100.0% Cambia s Multiplier Effect in Utah Cambia s Output Multiplier is 2.4: Every million dollars in spending by Cambia is linked to another $1.4 million in spending elsewhere in Utah. Cambia s Input Multiplier is 1.6: Every million dollars in income directly paid by Cambia is associated with another $600,000 in income for workers in other sectors of the Utah economy. Cambia s Job Multiplier is 2.4: Every 10 direct jobs at Cambia are linked, on average, to another 14 jobs elsewhere in Utah. Cambia s Total Economic Impacts in Utah $127.6 million in economic activity $71.9 million in income 1,210 jobs $6.6 million in state and local taxes Source: Cambia 26