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Kaiser Foundation Health Plan and Hospitals' Second Quarter Results Enable Investments in Health Programs and Infrastructure

Volatility in the financial markets impacted KFHP/H's investment portfolio in the second quarter, resulting in a net loss of $148 million in non-operating items versus a net gain of $248 million in the second quarter of 2007. Net income in the second quarter was $351 million versus $1.1 billion in the same period last year. Total membership remained flat at nearly 8.7 million members in the second quarter of this year.

"Though the difficult economic climate and turbulence in the financial markets dampened our second quarter results, our strong financial position enables us to continue making important investments in our integrated health care delivery system," said Executive Vice President and Chief Financial Officer Kathy Lancaster. "As we navigate the challenging economic environment, we are placing even greater emphasis on our ongoing effort to moderate expense trends and the rate of premium increases for our customers and members."

Capital spending for the second quarter totaled $628 million, compared to $627 million in the same quarter of 2007. KFHP/H continued to invest in its health programs and services, integrated health care system, technology and facilities to enhance the quality of the care and service it provides. "Our earnings allow us to support our capital spending program, which is needed to help us meet the growing and evolving needs of our members," said Chairman and Chief Executive Officer George Halvorson. "We recently opened a new hospital inIrvine, California, a hospital tower expansion in Moanalua,Hawaii, and are now focused on opening additional state-of-the-art facilities in the remainder of this year and next."

As a not-for-profit organization, KFHP/H also uses its earnings to support a wide range of community benefit programs, which provide direct health care coverage for uninsured families and support community-based health partnerships, and research and collaboration with community health organizations. A portion of KFHP/H's community benefit activities in the second quarter included the approval of more than 415 community benefit grants and donations. In 2007 KFHP/H provided more than $1 billion to support community benefit programs and services.

A leader in integrating technology in the delivery of health care, KFHP/H continues to expand its electronic health record project KP HealthConnect(TM). All Kaiser Permanente members can now securely access their personal health records online and communicate with their Kaiser Permanente physicians through My Health Manager on kp.org. This unprecedented access enables members and their physicians to make the best health care choices with improved quality, service and safety. "We are making rapid progress in becoming the world standard for electronic connectivity between members and patients," said Halvorson. "With two and a quarter million users now accessing My Health Manager online, I am pleased to say that our teams of physicians, nurses, caregivers and other health care professionals have passed another milestone in our goal to transform the way members choose and receive their health care. We like to point out that with our new electronic patient connectivity, we achieved millions of patient visits last year without our members expending one gallon of gas."

About Kaiser Permanente

Kaiser Permanente is America's leading integrated health care delivery system. Founded in 1945, it is a group practice prepayment program headquartered inOakland, California. Kaiser Permanente serves the health care needs of nearly 8.7 million members in nine states and theDistrict of Columbia. It encompasses the not-for-profit Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups. Nationwide, Kaiser Permanente includes approximately 165,000 technical, administrative and clerical employees and caregivers, and more than 14,000 physicians representing all specialties. The system's Labor Management Partnership is the largest health care labor-management partnership inthe United States. It governs how workers, managers, physicians and dentists work together to make Kaiser Permanente the best place to receive care, and the best place to work. For more Kaiser Permanente news, visit the KP News Center at: http://www.kp.org/newscenter.

Except for historical information contained herein, the statements in this release may contain forward-looking statements. Forward-looking statements include, among other things, statements that refer to plans and expectations such as future events and future financial performance. Forward-looking statements involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied by the statements herein based on a number of factors including, but not limited to: the impact of competitor products and pricing; government regulations; health care legislation; changing membership requirements; and the change in economic conditions of the various markets the system serves.

                       http://www.kaiserpermanente.org

SOURCE Kaiser Permanente