Angela Braly - Chairman, President & Chief Executive Officer Wayne DeVeydt - Executive Vice President & Chief Financial Officer Ken Goulet - Executive Vice President & President of Commercial Business Unit Michael Kleinman - Vice President of Investor Relations

John Rex - JPMorgan Justin Lake - UBS Doug Simpson - Morgan Stanley Josh Raskin - Barclays Matthew Borsch - Goldman Sachs Christine Arnold - Cowen & Co.

Ladies and gentlemen, thank you for standing by, and welcome to the WellPoint conference call. At this time all lines are in a listen-only mode. Later there will be a question-and-answer session; instructions will be given at that time. (Operators Instructions) I would know like to turn the conference over the company’s management.

Good morning, and welcome to WellPoint’s first quarter earnings conference call. I’m Michael Kleinman, Vice President of Investor Relations. With me this morning are Angela Braly, our Chairman, President and Chief Executive Officer; and Wayne DeVeydt, Executive Vice President and Chief Financial Officer. Angela will begin this morning’s call with an overview of our first quarter results, actions and accomplishments. Wayne will then offer a detailed review of our first quarter financial performance and current guidance, which will be followed by a question-and-answer session. Ken Goulet, Executive Vice President and President of our Commercial Business is available to participate in the Q-and-A session. During this call we will reference certain non-GAAP measures. Our reconciliation of these non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP is available in our press release and on the investor information page of our company’s website at www.wellpoint.com. We will also be making some forward-looking statements on this call. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of WellPoint. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our press release this morning and in our quarterly and annual filings with the SEC. I will now turn the call over to Angela.

Thank you Michael, and good morning. WellPoint had a good first quarter of 2010. Today we reported adjusted earnings per share of $1.95, which compares to adjusted EPS of $1.62 in the first quarter of 2009. Our adjusted net income increased by 7.8% from the prior year quarter, due primarily to improvements in the local group and state sponsored business. Our results were higher than we expected for the quarter, and benefited from the less severe flu season than predicted. We are encouraged that our medical membership grew by 165,000 or 0.5% in the quarter, despite continued high unemployment levels, which reverses the trend of quarterly enrolment decline that has persisted since mid 2008. We achieved very strong growth of 536,000 members or 4.6% in the national business. Our continued success in this area, reinforces WellPoint’s leading value proposition in the market place. Due to the BlueCard program, we offer access to the broadest provider network in the country, consisting more than 80% of the nations positions and nearly 95% of all hospitals. We also have competitive unite cost, provide reliable customer service, deliver innovative consumer friendly products, and are continuing initiatives to enhance both the cost and quality of health care of our customers. We believe many of these attributes will continue to be valued in a changing market place and uniquely position WellPoint to respond to the changes forthcoming from the recently passed healthcare legislation. Fully insured enrolment declined by 400,000 in the quarter, most of which related to our UniCare subsidiaries withdraw from the commercial markets in Texas and Illinois at the beginning of this year. While we experienced continued attrition due to the economy in our Blue-branded commercial and individual business concern in the quarter, membership grew in the federal employees program and in our senior…

Thank you Angela and good morning. I agree we are off to a solid start in 2010. Premium income was $13.9 billion in the quarter; a decrease of $293 million or 2% from the first quarter of 2009, primarily due to fully insured enrollment declines, including UniCare’s withdrawal from Texas and Illinois commercial markets. Administrative fees were $953 million in the first quarter, up $11 million or 1% in the same period of last year, primarily due to higher per member per month revenue in our commercial ASO business, increased national accounts membership and revenue from the DeCare dental business that we acquired in the second quarter of 2009. These increases were partially offset by lower revenues in the national government services business. Other revenue, which historically consisted almost entirely of revenue associated with the sale of mail-order drugs by NextRx declined by $148 million from the first quarter of last year, reflecting the sale of NextRx in December 2009. The benefit expense ratio for the first quarter of 2010 was 81.8%, a decline of 70 basis points from the year of 2009. As Angela noted, the decline was driven by the local group and state sponsored business, and reflected a lower than anticipated flu season. Also, while COBRA enrollment remains elevated at approximately 2.2% of our fully insured commercial membership, the rate of increase in COBRA penetration has slowed relative to 2009. We continue to expect that our benefit-expense ratio will be 84.3% for the full year of 2010. Since the passage of healthcare reform, much attention has been paid to the minimum medical loss ratio requirements that take effect for certain of our businesses next year. The potential impact of these new requirements varies broadly and likely will depend on a number of factors. We will not be…

Operator, please open the queue for questions.

(Operators Instructions) You first question comes from John Rex – JPMorgan. John Rex – JPMorgan: My question is going to focus just again on, and thinking about assessing minimum MCR impact, and what I really want to focus on is individual and small group and if you can help size for us the impact of distribution costs in those med cost ratios that are reported. When I think about those segments, if one were to strip out the commission costs from the revenue line how much would your MCR’s change in those segments? And just if you can give us an order or magnitude, like how many hundreds of basis points in individual, how many basis points in small group would you see that flex if one to one consider those distribution costs?

: A little bit by saying, first of all this is a lot of land, and obviously our customers are concerned and confused what health care reform means for them, and our commitment is to make sure we are taking the long term strategic view about what these changes may mean for them. So as we think about even the broker question; remember, historically the brokers have sold individual products one at a time, and they sell them across the kitchen table. Now they are selling them by phone and by Internet, but they have been a critical partner to us in that. So as we think about changes with respect to any of these implementation issues, we have to think about the long-term policy issues for us and for our customers. So with that, I think Wayne can be a lit bit more specific about that.

Yes thanks Angela. John on the MLR impact, two things that we have been very public about; one is the range of outcomes that we did. Nothing varies much on the definition that we ultimately get, clearly around whether its defined at a consolidated level, a state level, or legal level, and of course how ultimately legislation defines what costs regarding health IT will ultimately be put in there. Of course as written in the law today, taxes are going to be taken in consideration. So there’s a variety of factors that come up with a range we publicly discussed in the past. Regarding commission rates though, I will say that we think the brokers are an important part of really the long-term stability of the health reform markets, and so we’ve been hesitant to really target brokers for anything in particular, because we really think this is a shared responsibility of all. It’s going to require not only payers, but it is going to require providers and brokers and members to also share in the responsibility of the healthcare cost and those percentages. From a commission perspective, generally individuals, commissions can be in the double digits in year one, but they generally trend down to the single digits thereafter, and small groups are lower than that. So that kind of gives you an idea at lest of some of the responsibility that currently lies within the broker community too, that we will have to work with on a broader view when we deal with occupation that will help to support this initiative. John Rex – JPMorgan: So, when you think about kind of your average commission costs, whether this may be focused on individual and the understanding kind of getting started in the 20s and it comes down, but lets say if it averages a 10 or so; I mean is that the right way to think about it? What I’m just trying to get is, it’s not that I’m implying that broker costs or commissions are going to be stripped out of the calculation. It just seems like an important swing factor as we think about it and as we think about kind of what elements can change an equation, even how those are paid. So if I took an average individual product, and say it was running at a 70% loss ration, if I stripped out the distribution cost, would I essentially be at an 80, an 80 plus, does that sound right to you?

Yes, I mean I think John if you are doing broad calculations like that, those numbers would work. Again though, the problem is that even doing that, that’s assuming more status quo, it doesn’t evaluate the fact that we will get changes for health taxes or account for on health IT investment. Its also important to remember that some of the commissions are paid on a fixed per head basis, not as a percentage of revenue, so that can distort the calculation a little bit, but I think if you are doing just the big picture math, the math is not unreasonable. John Rex – JPMorgan: Are you contemplating moving away from embedding it in the commission and having the customer pay it directly, so its not included in the premium line?

I think John, the one thing I would say is that because of the shared responsibility here, its going to be really important I think, that we really get to the intent of the health reform bill, which is to ensure members are getting full value for the dollars they pay. So we are considering all alternatives, but our goal is also to make sure that members get maximum dollar per value, not necessarily find ways around the law that is not our intention at all. So again I think there’s a lot of things we have to explore though, and I think there are models today though that really allow a member to really see how much of a dollar actually goes right to health benefit, and they can have third party brokerage, where we are not involved, and that’s one of many alternatives that we will consider.

Thank you and our next question comes from the line of Justin Lake with UBS, please go ahead.

First question just on some of the recent state decisions on rate reviews and things of that nature. Wayne can you just give us an update on your thoughts on what happened up in Maine, and what’s kind of implied in guidance as far as the timing around California. Then just quickly, it seems to be very focused upon the individual markets, so I just wanted to see if you have seen any kind of chatter that this might leak into some bit of regulated areas like small groups.

Justin, Wayne will get a little more specific than I will, but in terms of these recent decisions, I think we again have to keep in mind the longer terms, strategic implications of these decisions, and we’ve tried to do that all along. WellPoint stayed in Maine when everyone else left the Maine individual business, and we are really striving to make that a sustainable business over time, and we did that through a pursuit of the legal remedies and we will continue to pursue all the options that are available to us there. What we have to be careful about is we have very long-term strategic ideals in place and this is a very highly politicized environment in the short-term varying by state, and so we are going to try to keep the long-term balance here, think about the long-term policy implications, think about how we desire to be able to serve this group of members in the individual market, but we know we need to do so in a way that’s sustainable over time. So as we described, in California in particular, we will continue to work with the California Department of Insurance. Our current guidance does contemplate that we are going to have delays in the ability to assess these rate increases. We are going to work to get the situation resolved as soon as possible, and we have to give a 30-day notice to the rate changes in order to comply with the law once we have them. So, we do think that that is built into our guidance now. In terms of the question about, is it leaking over to other places -- in Massachusetts, there is some suggestion that small group markets would also be implicated by this kind of rate regulation. So, Wayne do you have some specifics to add there?

No, I think Angela addressed most of it. Hi Justin. The only thing I would add is regarding our existing small group. We really haven’t necessarily seen much bleed into other states on this, and I think its been a challenging environment for us, because in both Maine and California, we are talking about rate structures that results in us losing money in the state. So these are very unusual times, and I think as Angela said, they are much more politicized in the current environment and we don’t want to make inappropriate short-term decisions for the long-term value of WellPoint, but I would say we are managing it, and we will continue to manage it and we have it baked appropriately in our guidance, certain delays that we would still further expect right now in California. We are considering all options though. I mean as we can look at Maine and we do have to consider all options, and we will evaluate those in the appropriate context and properly notify all of you at the right time.

Okay great, and then just secondly in regards to results, obviously MLR is a little better, you talked about the flu season, can you just give us some color on two topics; one, what do you think the flu benefit was in the quarter, versus what you kind of had expected; and then second, in the consumer business, obviously state sponsored looked like it might have been a pretty good driver there. Can you talk about some of the impacts there on the Medicaid business? It sounded like specifically your view point on state sponsored might be getting a little bit more positive after some of the tough times you saw in Ohio, and a couple of the other states there. We try to be Blue and also work with states and a slow provider, as you should have there. So can you kind of just give us an update on your thoughts there, and is Medicaid becoming more of a focus for the company, thanks.

Yes, Justin let me first address the flu. A little bit with state sponsored, these go a little bit hand in hand, because if you recall last year; while many Medicaid and these were being hurt by H1NI and other flu-related cost, we didn’t have the same impact others did, because we had done a number of changes in California, in particular our largest Medicaid market around capitaid arrangements. So in some ways when we have a higher flu season, it didn’t really hurt us, and we have a lower flu season, we actually benefit. So this year, our state sponsored is benefiting, not only from what I would call just really good management, and the team that we brought in there, and the changes they made, but we are benefiting also within the state sponsored because of the lower flu season. So, clearly state sponsor is a big driver, but I would tell you that when you look at our consumer segment that really all our segments are performing pretty well right now, but state sponsored is the primary driver within the consumer segment for the first quarter results, and yes, we do this is an important business. A business that is very clear that health reform will grow and expand, and that we are very pleased with the recent award of the Wisconsin Badger Program expansion that we’ll get late this year going in the next year. I think you will start to see WellPoint put more than just its toe back into the Medicaid in other states, and continue to expend. Now that we’ve reversed it I think we’ve got a great management team overseeing this group.

And Justin, to your question about medicate, obviously there is going to be a significant need there. To help state manage costs. They are going to have significant obligation to their citizens, and we have lots of evidence of how we can get a better result for them and for the beneficiaries of Medicaid. As Wayne said, I think our team in Medicaid and importunely couldn’t be here this morning, and he could have spoken to it, but they really have figured out your question about, can you be Blue in these states providing this business, and we believed that we can. We can do that not just ourselves, but partnering with other non-WellPoint blue companies to provide these capabilities. So we are looking forward to those opportunities.

The last thing I want to add Justin on the impact of flu in the quarters, as you know, there is no such thing as a flu code and so its generally been very difficult to peg an exact number, but when we try to take year-over-year changes in things we’ve seen, it could be anywhere in the $35 million to $50 million ranges. Somewhere in there is our best range of estimates of outcomes. I do want you to be aware too that we have assumed a normal flu season though in our guidance for the remainder of the year. As you know, generally there is not much of a flu season in the second quarter to begin with so, but we are going to assume for the third and fourth quarter that we do return to kind of normal flu levels.

Your next question comes from Doug Simpson - Morgan Stanley. Doug Simpson – Morgan Stanley: Angela, in your comments I think you can mentioned the 5% rate increase on the individual. You talked about deductible leverage driving rates up more quickly than inflation, and there’s this disconnect, where the industry remains this attractive target and obviously it’s been a lot of unfavorable press. Just trying think here, what is the industry doing and what are you doing specifically to try to correct this, and what do you think its going to take to shift a debate away from the admin piece, which is a relatively small piece to the overall growth and underlying medical cost trend, which really hasn’t been as much of the focus of the last year.

I think we have a number of initiatives underway to make sure that that message is understood. You are right we are being targeted and villainies. They are shooting the messenger, because in the messages we have to address the underlying cost, and that’s our job each and everyday. So as this implementation effort goes forward, and we are working on implementation and regulations etc, we are getting those facts out. I think the rover meets the road as people start to experience these rate increases. We are being very transparent about what the underlying costs are, and we are trying to use our tools like care comparison and other things, so people truly understand what the underlying unit cost is, what the implications are, more clarity around what does cause rate increases to go up in addition to the underlying trend, the things like deductible leveraging, ageing the implications of that on utilization. So you will continue to hear from us based on the data and information, the facts, we’ll get those out, and we’ll be very transparent in the process, so people understand what is driving up, rising health care costs, and as a result premium rates. Doug Simpson – Morgan Stanley: Okay, and then maybe just thinking about risk versus ASO growth over the next five years, obviously a lot of changes coming in the market, but do you guys see larger employers potentially shedding coverage, moving from defying benefit to defying contribution. Can we look at the pension really seen in the 80s? Is that sort of a reasonable [day rate], and just how are you guys thinking about the relative growth, and broadly defined as risk versus ASO?

Doug, Ken Goulet is here with us and he runs our commercial business. He’s working with our customers now and the issues and questions they have about health care reforms. Ken you want to address that?

Doug, it’s a good question and we are doing a lot of market research to make sure that as we make decisions over the next couple of years, we’ll be best prepared to win going forward. I would say the ASO fully insured transition will occur. It’ll be some transition of business from fully insured to ASO. I would however highlight that stop loss will become credibly important in the new world, and will be a fully insured business that will be a very active participant, because as customers transition and as there are no annual or life time maximums, stop loss will be important for protection for our clients. The question that define benefits, quite frankly our clients haven’t really thought about it. As we talk with them about it, they are still considering their own options. A lot of consultants are actively working with clients to share scenario planning with them. There will be some transition to that, but it really will be segmented on the type of business, and the salary ranges of what the companies pay their associates, because depending on salary range we’ll identify the subsidies that the individual receives. So the lower salary ranges would be more likely to consider it, but quite frankly, most of the clients haven’t given it enough thought at this point.

The other item I would just highlight Dough, is that clearly I think we all know in the next five years we’ll see a growth in the fully insured, in the Medicate environment, you will see more members in the Medicare because of the influx and I think you’ll see a lot more wanting Medicare sup, because of what’s going to happen with some of the benefits around Medicare. Then of course we know ultimately the individual market will grow as we have insured moving into this population, as well as with the subsidies that are out there. But even to the extent that there is a decline in fully insured, it is important to recognize that WellPoint is $6.6 billion over capitalized on RBC right now on a state regulatory basis and so, to the extent you have that shift, we actually would have a significant free up of excess capital as well, that this currently there to support that fully insured basis.

Our next question comes from Josh Raskin - Barclays. Josh Raskin – Barclays: In the press release Angela, I think you mentioned that as well in your prepared comment. The company was talking about strategic actions I guess to anticipate market changes, you have transitioned that to some of the non-blues businesses, and you sold the PDM. So I’m just curious at the end of day, your business mix kind of looks similar still. So first maybe, could you tell us just from a revenue prospective, how much of your business comes from on the commercial side, a large group versus sort of a small group under hundred and an individual. Then how should we think about that mix going forward in light of your strategic actions that you are taking?

Let me talk about the strategy a little bit, and then I’ll have Wayne speak to the way that we report the revenue not gained by segment. Clearly, Josh you are right, we have been preparing ourselves, more focused on our ability to take advantage of whatever market place changes were to occur. Clearly we have the health care reform in marketplace changes now to implement, and I think that actually has been a great way to be prepared. I think scale is going to matter tremendously in the future. I think our brand is going to be incredibly important in the future, and our ability to collaborate and work with other Blue plans is critical to that. Our continuing ability of focus on medical cost and get the best in class solution, in the case of the PDM Express Scripts solutions for our customers. So I think in each of the segments that we are going to serve, including individual and commercial, small group, large group and Medicaid and Medicare, we are going to bring best in class capabilities. I do think we have the best assets to bring, and I do think it will be a very challenging environment for other particularly smaller company to navigate through. So I think we have made the right decisions going forward. As Wayne described, our Medicaid team, we have got the right leadership in places to deal with them as a potential growth opportunities as well. So Wayne do you want to get more specific about the break down?

No, the only thing I would say and Josh, I know you are aware of this, but we don’t typically report operating results on large by business. But we have said very publicly always that the operating earnings off gain from our individual represents less than 10% of our total EBIT. So individual in and of itself is not been a significant driver and of course, that number is only shrinking further with us not getting appropriate rate increases in Maine and California. So the impact is not really all that significant there. We do think there will be a conversion though in the individual and small group markets, and we think that will be more driven by the health reform and the subsidies all get put forward. So I think overtime the real issue is, and so much what it is today, its whether or not we will get appropriate and adequate rates going forward. We think post reform environment that will occur and it’s really more of a short-term issue and it will need to occur for the health system to work the way it needs to work. Josh Raskin – Barclays: Right, I apologize if I miss asked the question, but regardless I am not looking for earnings contributions, I am just looking sort of from a revenue prospective, how much are you booked as individuals; how much is small group defined under a hundred; and then how much of the rest of large groups? I think Angela you mentioned the PVM sale as sort of a relationship to medical manage, and I think in your prepared comments you talked about low double digit cost trends on the pharmacy which is actually higher than what we saw last quarter, understanding that the big transition was April 1, but I was just a little confused to see your pharmacy trends sort of improving a little bit quicker, may be you could talk that.

Josh let me address the pharmacy trends real quick, and in fact let me address all the trends that you heard and we use a rolling 12 month, and because of the rolling 12 months remember first quarter of last year we were really, we didn’t have the H1M1 starting at that point, we didn’t have COBRA uptick occurring at that point, etc, so it is a little bit distorted and misleading, because of it being a rolling 12 month of that going away. We still think our full year trend at the end of this year will be completely aligned with our guidance that we provided back in February. So I would say everything is still in sync with what our expectations were. It’s just the way the math works on the rolling 12 month averages.

And Josh, this is Ken. I can address your question regarding the size of each of the segments. I won’t get into the specific revenue, but individual is just shy of 2 million lives. Small groups which we currently define as under 50 is about 2.4 million lives, Medicare advantage 472,000. What I would say is, in the as subsidies occur, one thing that the post reform world will do is put more insured into the market place. So there will be a much higher participation rate by small groups and individual going forward.

Your next question comes from Matthew Borsch - Goldman Sachs.

Hi I just wondered, could you just talk a little bit more and maybe I missed something here about the California individual rate increase. Specifically can you tell us what assumption is embedded in your guidance precisely in terms of when you expect that rate increase to go through or what you are assuming for guidance? Also just anymore you can tell us about, what are the points of discussion or debate around the rate increase? Is it similar to Maine, in which the question being, is well pointed title to earn any profit on that business?

Let me state that at this point of time we have not seen a final issued report, so it is very difficult for me to comment on where this ultimately will land. What I can’t say though is because of the 30 day notice, we have no intension of putting forward rate increases for the numbers until we have closure on this, and we plan to continue to work with the department to get this resolved. So with that in mind, clearly, initially our assumption was really delayed to May 1, at a minimum amount because of the notice period. That is, at least one more month I will tell you we paid a little more conservatism in our guidance beyond that, because again ultimately we are not sure where this will land. So we think we’ve got an appropriate provision in the guidance for the potential delays and/or potential reductions in the rates, but until we can see a final report and actually continue to get closure on this, I really can’t comment beyond that, but I think we are probably considering this at this point.

Matt the issue you raise is the issue we addressed a little bit earlier. We know that we have to, and the policy has to support sustainability in terms of this business. So that means that the rate increase has to be actuarially sound, they can’t be arbitratarily capped, because actuaries ultimately can’t certify to that, and that’s not sustainable over the long term. Originally the way that the law worked in terms of state regulation of insurance companies was to protect the consumer, and the question now is to how does affordability fit there with the issues of consumer protection from insolvencies and other important things. So we are very focused on making sure that overtime, over the long-term, keeping in mind those highly political situations occurring, that over the long-term that this is sustainable market place for us to serve individual members.

And I don’t believe the state in anyway should it perform, does not think its appropriate or reasonable. It’s not able to be earn a fair return, and I think the goal is to comply with the law, and I think that’s what the commissioner is trying to ensure, but I will tell you because of the rate delays, we will lose money this year in individual book in California.

If I can just back to follow up on different topic; can you just comment on the commercial enrollment outlook for the remainder of this year? Maybe I’m reading it wrong; it looks like your first quarter came in better than expected. What’s pulling down the year end figure relative to your prior projection.

This is Ken again. The difference for now to year-end is an accelerated transition of the UniCare business. As you know, we transitioned. In UniCare and Illinois and Texas we have had conversations and agreements with other states to convert it to Blue in other states; that’s moving faster than we anticipated which is a good things, and that’s what’s built into our guidance.

Your next question comes from Christine Arnold - Cowen. Christine Arnold - Cowen & Co. : On healthcare reform you said that you anticipate increased cost associated with reform. I know it’s tough to quantify exactly, what’s going to happen here. So if we even take the large flows off the table, what kinds of increases do you think reform might produce in cost, but of course after he passed on to consumers in terms of SG&A and medical costs, what categories and quantification you could give would be great.

Christine, thanks for the question and I’ll began to answer that. When we committed to include in our plan individuals up to age 26 on their parents policy, you know younger members are usually relatively healthy. In many cases we don’t have the opportunity to collect that additional premium, because they are getting added to existing family coverage. So we made that commitment. It was the right thing to do. I think its serves our customers well and there will be a cost incurred in it, counter played in our guidance. We also know there is going to be a higher full year tax rate, because of the changes specifically around health care reform, around the deductibility of executive compensation, but we don’t know all the specifics around that, and what that might mean overall for the overall effective tax rate. There will be some operational cost for implementation and we are working on a number of those now that have a more immediate impact. Then as we think about going forward, absence the due point, absence the MLR, we may make investments in creating a scale that we know we have the opportunity to capture, and to position ourselves to serve as a members of future as they come through in 2014, and so we’ll get more specific as there is more clarity around implementation. Wayne you want to add anything to that?

Yes, I think for those items Angela has laid out so far, I think that’s maybe about a dime for the year impact, but that doesn’t really consider the real significant IT, G&A cost, etc., until we get more clarity around some of the things that they are going to require and the pace they require will be implemented. We really can’t bake that in; it’s kind of a little bit of an unknown, so where we know things we have taken actions on. Again, as Angelo said, like retaining individual of age 26 going to tax rate, knowing the tax rate and the impact it’s going to have on it etc, we got an idea of what those are. Now clearly, prospectively we have to start pricing for some of this. So you have that short-term hit that we got in there now. We’ll start pricing for some of that going forward, but we really haven’t been able to completely size what the ultimate kind of GA technology costs are going to be. Also its going to important to know on health reform what those costs are going to be, because its going to very relevant around what those costs are going to be, because it’s going to be very relevant around what we need to invest, how those get classified if they have to go to G&A, and whether not then certain segments make sense still then. So until you get more clarity there, I wish I could give you a better answer, but we really need more clarity around the legislation. Christine Arnold - Cowen & Co. : But what about insuring sick kids? I know it depends on how we do this if it's full guaranteed issue forever versus an open enrollment period. How are you thinking about the cost of that?

Again, we need more clarity on some of the regs there. I men we estimated some different scenarios, but we really more clarity on the regs.

Your next question comes from Carl Mcdonald - Oppenheimer.

I was hoping you can give us some invisibility in to what your premium taxes looks like, if you could sort of range from sort of high or low across your states, thinking specifically about the group business, we’re even better if you got an average impact.

Yes, I mean they vary. I’d say on average they are running to about a 2% premium tax rate. The problem is not all state have a premium tax. Some state actually have more of a reciprocal state tax which is a higher tax rate. It could be as high as the state tax rate is, but that’s base more on that profits in the state, versus premium tax based on gross revenues. So when you kind of take the averages about everything you blend it around 1.5% to 2%.

Then secondly going back to the rest ASO trend, do you have a sense of from a group size perspective what that’s looked like say over the last five years. Was it initially more the large employers consolidating the number of HML plans, moving everybody into ASO. Has it moved more down over the last couple of years?

Carl, you actually nailed it. Initially there was a transition of fully insured ASO as large groups were consolidating their coverage’s, falling in HMLs and falling into one or two ASO plans. Over the last couple of years, it has gone more down stream and because of the potential fact, consequences to an earlier question, will there be more of transaition? There will be a higher tax on fully insured as we know under the health care reform lines and we’ll continue to go down stream. The market right now, customers are still looking for predictability in pricing, which is lets say get to a fully insured basis. More have gone in to the down stream level and I would say down to the 100 life group. Many will with high stop loss coverage or with solid stop loss coverage consider that.

Your next question comes from Scott Fidel - Deutsche Bank.

I was just wondering if you could talk about your thoughts around Blue’s consolidation at this point post reform, and it just seems pretty clear that given the Blue’s focus on the individual small group market, just is there really a need or a capacity for 39 separate blues in the system, given the ability to take out administrative costs across the blues when he fold in all these duplicative, administrative structures. So just have we started those conversations with some of the other blues executives, and just given the changing environment, where do you think this accelerates consolidation amongst the blues?

Scott, I think it’s a good question, because you know as I described earlier, scale is going to be incredibly important in this post reform environment. The ability to achieve that scale relatively quickly, and then have the strength that our Blue brand represents. Deep in our markets, we have great relationship and we are very local. So I would say there are two things that are occurring; one, we continue to always be a potential partner for other blue plans in terms of the true consolidation, but as we said before you’re seeing one blue consolidation; you see one blue consolidation in the applicant. Each of the blue plan has a different history regulates them and indicates what their capabilities and possibilities for consolidation or acquisition. The other thing though that’s really happening is, our ability to become more seen more, as blue plans are essentially integrating through things like comparison, where at one point it created this opportunity and now its really a shared opportunity around transparency. So there’s a lot of other potential opportunities for us to think about having a seamless back office essentially over time, but goal plans are our top choice with opportunity, we think sales can be incredibly important. We think we have a great track record and history of creating those synergies and sharing best practices, getting the SG&A savings through consolidation and I look forward to the opportunity now that healthcare reform has going through, to think about those opportunities more specifically.

Okay and then just my follow-up question relates to the rate control authority legislation that’s being proposed at the federal level by senator Feinstein, and essentially takes the President’s proposal and tries to run with that. Just your thoughts on how much potential there is, that this could actually move at the federal level, and clearly its a very full legislative calendar for the rest of the year. CBO did score that proposal initially as essentially, being a nationalization of the insurance market, so clearly they would have to score very significant costs for the federal government, but just your views on how much potential this is to move forward here.

Well, really we believe its not necessary. For one, we have the MLR provisions in the legislation that haven’t even been clarified at this point, but they have the effectiveness of holding us accountable with respect to how we are caring for our members. So whatever at your point, to create another regulatory authority to invest and that regulatory authority to go through that process, creates a whole another set of issues. We know rates has to actually sound to ensure that the health plans can pay the claims of their customers. That’s the philosophy of a health insurance market, and the regulation has been. Those safeguards exists in the state. The state has the authority to protect their consumers and to protect their consumers around affordability as well as the solvency of carriers who will be there to pay the claims. So, we think it’s an unnecessary requirement. I can’t tell you what I think about the political likelihood of it coming forward. I think its time for us now to turn to the real question about underlying healthcare costs, and what are we going to do under the model of shared responsibility, where we as payers for employers who are concerned about their costs as government, as hospitals and doctors, and suppliers, and pharmaceutical companies think about what the future affordability is of all these benefits, that we need to really be focused on that now. So with that I think, that was our last question. I want to thank you all for your questions. In closing I want to reiterate we are pleased with the start to 2010, and we remain confident in the future. There are opportunities and challenges presented by health care reforms, and we are preparing for market place changes by taking strategic actions to drive even stronger future membership growth, and enhance our services and capabilities while we create a lower cost structure. As the nations leading health benefit company our ongoing priority is to continue to meets the needs of our nearly 34 million members, and insure they have access to affordable quality health care. We’ll continue to do this while investing in our products and operations, and enhancing value for our shareholders. I want to thank everybody for participating in our call this morning. Operator, would you please provide the call replay instructions.

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