CONSULTING AGREEMENT



     This CONSULTING AGREEMENT, dated as of January 1, 2001 (this "Agreement"),

is made and entered into by and between PacifiCare Health Systems, Inc., a

Delaware corporation ("Company"), and DAVID REED, an individual ("Consultant"),

with reference to the following facts:



                                    PREAMBLE



     A. The Company desires to engage Consultant, as a consultant on an

independent contracting basis, to act as the Chairman of the Board of Directors

of the Company and to assist the Company in the area of executive and strategic

management including, without limitation, assistance in strategic planning and

transitional management and direction; and



     B. Consultant desires to accept such engagement, in accordance with the

terms and subject to the conditions set forth in this Agreement.



     NOW, THEREFORE, in consideration of the above premises and the covenants

and promises exchanged by the parties hereinbelow, the Company and Consultant

hereby agree as follows:



                                    ARTICLE 1



                               CONSULTING SERVICES



     1.1 Duties. The Company hereby engages Consultant as an independent

contractor to provide the Company with services as Chairman of the Company's

Board of Directors. As Chairman, Consultant shall be responsible for working

with and assisting the Executive Committee in carrying out its responsibilities.

The Chairman is the primary line of communication between management and the

Company's Executive Committee. The Chairman is responsible for (i) oversight of

and communicating and coordinating with the Company's Chief Executive Officer in

the discharge of his or her duties; (ii) for communicating with and reporting to

the Company's Board of Directors; and (iii) responding or determining with the

Company's Executive Committee who should respond to investor relations and media

inquiries. Consultant agrees to perform those services described above (the

"Consulting Services"), and Consultant hereby accepts such engagement. In

connection with the performance of the Consulting Services, Consultant shall do

and perform any and all services, acts, or things incident thereto which may be

necessary, advisable, or appropriate to fully perform the Consulting Services.



     1.2 Method of Performing Services. Consultant shall perform the Consulting

Services as an independent consultant and the method, details, and means of

performing the Consulting Services shall be determined by Consultant in his sole

discretion.



     1.3 Devotion of Skills and Time. Consultant shall use its best efforts,

skills, and abilities to perform the Consulting Services. While Consultant may

perform services for other clients as he sees fit, Consultant shall not engage

in any activities during the term of this Agreement which would unreasonably

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