Ladies and gentlemen, thank you for standing by, and welcome to the WellPoint Second Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to the company's management.

Good morning, and welcome to WellPoint Second Quarter 2013 Earnings Call. This is Doug Simpson, Vice President of Investor Relations. Presenting today are Joe Swedish, Chief Executive Officer; and Wayne Deveydt, Executive Vice President and CFO. Joe will start with an overview second quarter results and provide an update on progress made on structure and leadership during his first full quarter with the company. He will then review our primary business segments and offer his perspective on the longer-term prospects and opportunities. Wayne will then review the quarterly financial highlights in detail and discuss our updated financial outlook. Q&A will follow Wayne's remarks. During the call, we will reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available on our website at 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 today's press release and in our quarterly and annual filings with the SEC. I will now turn the call over to Joe.

Thanks, Doug, and good morning. I'm pleased to update you on another solid quarter for WellPoint and our continued positioning for the emerging opportunities across our major businesses. I'm going to start with some highlights from the quarter and then review the progress we have made in aligning our strategy and structure, following the passing of my 100-day assessment. I will then review our business segments. And finally, I want to offer my perspective on the value creation opportunity we see looking out over the medium to longer term. And I'll then turn it over to Wayne to discuss the financials. We're pleased to report $2.60 in adjusted EPS for the second quarter of '13, which exceeded our expectations and represented growth of over 27% from the same quarter of last year. Operating results in the quarter were characterized by a continued strong Commercial Business performance, reflecting lower-than-expected medical cost trends and ongoing administrative expense discipline. We also saw improvements in our Medicaid business, largely driven by benefits from the Amerigroup transaction, as well as revenue increases in the legacy WellPoint operations. We have modestly raised our full year adjusted EPS guidance to at least $8, which reflects our strong year-to-date performance and our continued expectation for investment spending over the second half of the year as we prepare for 2014. When we spoke 3 months ago on the first quarter conference call, I discussed my 3 principal focus areas as I assessed our company. The first focal point was my initial 90 to 120 days where I would focus on organizational design, infrastructure and continuing the recent operating momentum. The second was the medium-term review of our market position and our preparations for '14 and beyond. And the third was the longer-term strategic outlook. These all build upon one…

Thank you, Joe, and good morning. My comments today will focus on the key financial highlights from the quarter. Please note that the inclusion of Amerigroup business in 2013 results impacts the quarter-over-quarter and year-to-date comparison. I would also highlight that we adjusted our reportable segment structure during the quarter, following Joe's organizational realignment. Prior year amounts have been reclassified to conform to this presentation and are available on our website. Overall, second quarter results were stronger than we expected, reflecting continued improvements in our core operating performance, primarily in the Commercial and Medicaid businesses. On a GAAP basis, we reported EPS of $2.64, which included approximately $0.09 per share of net investment gain, partially offset by $0.05 of costs associated with the early termination notice of Amerigroup’s PBM service contract. Excluding these items, our adjusted EPS was $2.60, an increase of 27.5% from the second quarter of last year. Our quarterly results were comfortably ahead of our forecast and supported by higher-than-expected operating cash flow, strong balance sheet and stability in the operating environment. We have modestly raised our full year EPS and operating cash flow outlooks, reflecting our stronger year-to-date performance. However, we are still being prudent given our continued expectation for a fluid environment and investment spending over the second half of the year as we prepare for 2014. We ended June with approximately 35.7 million medical members, down slightly on a sequential basis but generally in line with our expectations. Looking ahead, as Joe described, we're having increasing success in the ASO market in response to our strong value proposition, which is driving better-than-expected membership trends in these businesses. That said, our forecast continues to include the potential for some fully insured membership pressure later this year in advance to the exchanges opening on January 1.…

Thanks, Wayne. With that, operator, please open the queue for questions.

[Operator Instructions] Our first question comes from the line of A.J. Rice with UBS.

Just maybe as to flesh out a little more on the commentary on exchanges. Obviously, we've gotten a little data since the last conference call as to who's participating with you on some of the various exchanges and at least at a high level what some of the rates and proposed plans looks like. We've also had the delay on employer mandate and the decision to ease some of the upfront documentation. Laying that out, can you just tell us what -- has this changed in any way your either opportunities or risk that you see heading into 2014? And is there any surprises, either positive or negative, from the way that's played out that are worth highlighting?

Thank you, A.J. I appreciate the question. We continue to closely monitor the regulatory developments around ACA implementation. Generally speaking, we do not expect the recent announcements. Such as employer mandate delays and change to premium rating for tobacco use to have a material impact on our implementation of ACA. We are continuing to work with our regulators at both the state and federal levels to make the implementation as smooth as possible. We are actively preparing for an October 1 open enrollment period on the exchanges on the markets we serve. And we expect Medicaid eligibility expansion in about half of our states, as we mentioned in the commentary. At this point, we do not expect any material delays. But should there be any changes, we will adapt and adjust as necessary as I believe we've developed contingency plans and we're well prepared for any kind of headwind of the nature just mentioned.

And our next question comes from the line of Justin Lake from JPMorgan. Justin Lake - JP Morgan Chase & Co, Research Division: First, can you give us some color on where you see that $20 billion of revenue growth opportunity coming from in terms of breakdown from the different business segments, as well as updated thoughts on your employer dumping expectations over that time period? And then also, you mentioned the industry fee as a headwind several times going into 2014. I just wanted to get your thoughts on what percentage of the fee liability we expect might be passed through versus a headwind to earnings next year?

Justin, this is Wayne. Let me start with your latter question first regarding industry fee. We are cautiously optimistic about our ability to pass the industry fee itself on as part of the general pricing and have doing that so far and have been in active dialogue as well with our states in the Medicaid front regarding the importance of this fee and the sustainability of these programs for the long term. That being said, I think it's also important to recognize that the lack of deductibility on the fee is an incremental challenge, though, that needs to be managed as well. So passing on the fee in and of itself is not enough. We have to manage the fact that the fee is not deductible. And for that, we believe over the immediate term through actions around pricing that we're trying to do, coupled with the longer-term actions we can do around G&A efficiency, that we can manage it over the longer period, which gets to your second -- or your original question, which was how our revenue is built out to come up with that $20 billion of incremental revenue between now and the end of 2016. And while we will provide more details at an upcoming IR Day, I would simply say that a substantial portion of that fee comes from both the Medicaid expansion and the individual on exchange expansion with nominal growth necessarily coming from Local Group. I would also highlight that it's important to recognize we clearly expect headwinds in the current small group market. So while we would get a trend adjustment in our fees, we would -- each and every year over the next 3 years in Local Group, a big portion of that would be offset by the migration of small group to the exchanges. So Local Group today, we don't -- we expect to be positive for revenue growth over the next 3 years, but it's a very nominal contributor to that $20 billion with really individual on exchange and Medicaid and Part D being the biggest contributors. Justin Lake - JP Morgan Chase & Co, Research Division: But you don't expect Local Group revenues to shrink in terms of the potential for dumping, you'd expect maybe some modest dumping and offset by growth in employment and growth in -- just in terms of pricing?

Over a 3-year period, we expect those to be fairly neutral to one another. The last thing is that the one item that's a little bit of a wildcard here, although we think that our estimates are reasonable is the pace of duals. Justin Lake - JP Morgan Chase & Co, Research Division: Got it. And then just quickly, you mentioned some very strong ASO gains for 2014. I just wanted to delineate there, whether you're -- is that coming from the ASO conversions accelerating in 2014 in your mind or -- and just in terms of more opportunity there or is it really just the market share gains in your mind and the ASO conversion, the pace of ASO conversions for '14 is not dissimilar from '12 and '13?

Well, we expect a level of ASO conversion. These are absolutely new wins in the market. These are market share gains.

And our next question comes from the line of Kevin Fischbeck with Bank of America Merrill Lynch.

I just wanted to go back to the exchanges for a second. And I think that you highlighted in your prepared comments that you think that there might be a slower adoption around the exchanges, and I wanted to understand exactly how you were thinking about that, how you were thinking about it both from the context of maybe Individuals picking up but then also may be small group shifting and dumping employees onto the exchanges? And I know that in the past, when you talked about the dynamics of profitability on that business, you kind of indicated that the Individual is kind of already at the margins you might expect on the exchange and that a lot of the impact to you will be from small group dumping. So just I wanted to see if there was a change there and how you thought about small group dumping and any commentary you can provide around that?

Yes. Kevin, I'll take a stab at this. What I would say is Joe makes this quote occasionally, right, when we make -- that's on a crystal ball, usually E-class [ph]. And so let me first start off by saying that we have a framework of what we think is going to occur around small group, and we think maintaining a conservative posture there is the right posture until we see otherwise. That being said, what we are seeing is that more of the small group employers today still can't make a decision on choices yet because those choices are not readily available in the market until the exchanges are fully up and running. And the longer we see that delay, the more we think there is an opportunity that those small group employers will choose to maintain their existing products for another year. That being said, none of us would be able to predict what type of volatility we might see a natural pace. And so we believe maintaining a conservative posture is appropriate, albeit we think there's reasons to believe that may be slower than we initially thought. The second thing I would say is, though, we think in terms of the uptick on exchanges, it's going to be largely driven by a combination of what our efforts are to educate the market regarding the exchanges, as well as what the local state efforts are to educate the markets on exchanges. California is doing a very robust marketing plan in the state, and as you know, that's our largest individual market today. So there is a state where we see a combination of their marketing efforts coupled with ours that we think is a promising formula for exchange growth.

Okay. And then just on the SG&A ramp that you expect in the second half of the year, how do we think about that? Is that largely investments in front of all the changes that are happening in 2014 or is there a portion of this as you guys are going through your new review that says that we were under investing and that a good portion of this may end up being kind of run rate numbers as we think about '14 and beyond?

Let me start by saying that we're still building our '14 plans. So I would not necessarily assume things or run rate or not. I think we recognized the need for G&A efficiency to get the leverage off the growth that we expect over the next 3 years. That being said, of our original $300 million, we are reallocating about 1/3 of those dollars away from Medicare, which is still investing almost $100 million in Medicare. But moving those dollars to some of the growth opportunities we continue to see in Medicaid, plus with the new the membership we believe will have coming on in the open enrollment period being October 1 of this year, we are trying to self-fund that growth with those dollars. So in some cases, I would say, if it becomes run rate, it should be run rate because we're growing top line with it. But as Joe mentioned earlier, we think there's opportunities to invest in the short-term in our IT over the next, say, 24 to 36 months, and at the same time, drive longer-term value in the out years. So again, too early to declare what's run rate or not but recognize that we think we're deploying the dollars commensurate with the revenue that we're getting.

And our next question comes from the line of Chris Rigg with Susquehanna Financial Group.

I actually just wanted to come back to sort of last comment on deploying some of the money back to IT and then Joe's comment earlier about the $1 billion of IT spending annually. I guess can you just help me understand the $1 billion and what you think the right number might be and then sort of frame out what kind of additional moneys you might want to be deploying into that if you think the overall spend is already too high?

Thank you. Yes, it is north of $1 billion. It's an extremely large-scale IT infrastructure. So we do have to acknowledge that. So the level of spend is the expected. We're spending a lot of our time right now, and we're still in a very significant analytical phase to better understand the distribution of spend around what I call lights on compared to, let's say, improved technologies that better prepares for engagement in the marketplace, particularly around points that I mentioned earlier, which is data analytics, customer service, medical management. So I really can't give you specifics at the moment in terms of the sort of -- what I'd call better allocation. Obviously, we want to optimize. We want to create more efficiency and effectiveness in our spend. And my sense is throughout the remainder of the year, we're going to be focusing very heavily on the balance of all of those spends against our future outlook in terms of the need for the technology to better prepare us for the future. So I would tell you to maybe keep an eye open for this. We'll speak more to this through the balance of the year and certainly leading up to the Investor Day.

Okay. And then just one follow-up on the potential membership pressure heading into the end of the year. I guess is that sort of just an academic assumption at this point or is there some sort of hard evidence that suggests that, that pressure is indeed likely to occur?

Chris, I would not call it an academic assumption at this point. We continue to see small group attrition accelerate even more as we get to the back half of the second quarter, and we expect that to continue. And we're not seeing it necessarily being launched in the competitive environment as much as it appears. Some of it is going into the uninsured ranks. And I think it's fair to say that some employers have started taking actions based on what they think will happen with the open enrollment period. We're also seeing in the individual market that fewer individuals are necessarily buying coverage right now as it appears to in preparation for the exchange. So from our perspective, we think it's a prudent view in light of what we've seen in the first 6 months of the year to make an assumption that, that trend will continue. And we believe it will probably slightly accelerate as more education in the exchanges begins to come out in the back half of the year.

Our next question comes from the line of Scott Fidel with Deutsche Bank.

First question, just interested if you can give us some of your thinking on how your decision not to participate in the small group exchange in California, especially given how state-wide you're going to be going into the individual market. And then just maybe remind us what your current small group membership in California is at this point.

Yes. Let me first point out that we are very pleased to have been selected to participate in all 19 regions for the individual exchange in California. So we do have a very significant presence in terms of the rollout. We expect most of the volume growth from the ACA expansion that comes through this individual exchange proposition and give them packed subsidies, et cetera. So again, we're very honored to been selected to participate on such a broad scale. You probably know that initially, the exchange for the California had a requirement that all plans participating on the individual exchange also participate in the shop or the small group public exchange. They recently removed this requirement in June. And as a result, we then chose to withdraw our shop application and then are prepared to focus all of our efforts on the individual exchange in the state. As we said in the prepared remarks, we do intend to selectively participate in shop exchanges. And I would envision they are sort of being an evolutionary kind of migration path with shop in California as time marches on. We will continue to offer small group coverage outside of the exchange in the state, and we look forward to serving a lot of new individual customers as part of covered California. So my sense is it's a very balanced engagement that is now set up because of the choice made by the state, and we feel we're very, very well positioned to move forward and migrate to maybe a bigger position in the later time. But right now, I think we're in a very strong position.

Okay. And then just a follow-up. Just thinking about framing the anticipated declines in the fully insured business in 2014, clearly we're going to be more than offset by, likely, the ASO growth. But as a way to think about it relative to the pacing that we're seeing so far in the first half of the year, I think fully insured is down around 450,000 lives. Would you expect to see sort of a comparable rate of attrition in fully insured next year or do you think that pacing could accelerate a bit given some of the factors you discussed?

The first thing I would say is while we're not giving 2014 guidance yet at this point in time, I think it is important to recognize that clearly, the Medicaid fully insured, we expect substantial growth and that will offset some of this. We are expecting meaningful growth in the exchanges based on what we know today. And it will be our anticipation that the broader trends will begin to at least start stabilizing. What we can't quite answer yet is what the behaviors will be of the individual consumer as the exchanges roll out, those will be eligible for subsidies, how efficient of a process it will be for them to get enrolled. So it's difficult to estimate the trends. From a standpoint of saying that we think that we'll see it this year, I would like to say that it shouldn't repeat next year because this year is about a lot of drop in coverage as people prepare for the exchanges. But ultimately, the behaviors of the consumer are going to be the primary decision maker in this level. But we see growth for Medicaid fully insured. We expect meaningful growth on the exchanges in fully insured. And depending on the small group attrition, if that slows down, it could actually result potentially in growth, but more to come.

Our next question comes from the line of Matt Borsch with Goldman Sachs.

My question is on what you said about the 2014, your view on earnings. I think you said you're directionally targeting growth, but it will be very challenging to get there. Are you saying that you expect earnings growth in 2014 or are you saying we really don't know yet, stay tuned?

I would say, Matt, that we are building plans and that would allow us to grow over the current guidance levels we have this year. But again, there are just too many unknowns. And as these exchanges begin to evolve, our outlook may change. So at this point, I would say that our mandate is very clear from Joe, and the initiatives we need to take to both invest in the business and grow profitably. And that's our focus. That being said, too, as we get more details around the exchanges and the small group and how that's all going to migrate, we're not going to make a short-term decisions for growth if we know that in the longer term, we can make a better investment for the business. So more to come, but we are targeting to grow next year over our current guidance.

Okay. And just on the industry fee as a headwind, I think that I understood your earlier view maybe going back to last year that you would fully price in the industry fee, meaning the fee and tax impact of the fee. Is it your view evolves on that and is there a factor that you can point to there?

Matt, the one thing I would say that's challenging is what when you're pricing for a new environment using an expectation for medical trend, plus the known fee of 2%, plus what we think the risk pool will look like, I'd like to tell you that we price for the potential impact of the non-deductibility of the tax, but there are so many moving parts around what mix may ultimately look like. That remains to be seen. So I would tell you that it's clearly our intention to price it at that level and to be able to do that. But I would also tell you that there's a challenging dynamic out there, which is the consumer who has to make the buying decision as well and the affordability of that. I think it's also probably more important to recognize that on the Medicaid front, this is a business that you know we're looking at 2% to 3% margin business. And I think for sustainability of the program, you have to be able to pass on the fee or the program doesn't have sustainability. The bigger challenge is ensuring that we can get the gross up for that as well. As you know, states are still having challenges within their own fiscal budgets. And so it's a dynamic process. It's clearly our intention to move down that path. And we want to make sure our shareholders fully understand that this is going to be a challenging market to manage through in terms of how we price for this.

And our next question comes from the line of Christine Arnold from Cowen.

A couple of questions. One, on the MLR second half of the year for this year, it looks like you're thinking kind of 87% to get your 85.5% guidance. Could you talk about the factors that might raise the loss ratio? I think you're talking a little bit about some small group attrition and individual attrition. Are you seeing healthier people attrit? What might bring that loss ratio up? And then, Joe, if you can speak to the numbers that you guided, given in December about your long-term double-digit $600 million MA contribution, and exchanges, 350 [ph]. Do you feel like those targets are still on?

Wayne, do you want to take the first?

Yes. Let me start with the first one, Christine. And part of it is obviously the seasonality pattern that we would typically see current in the back half of the year. And I think it is important to recognize that we continue to see deductibles rise to unprecedented levels than we've seen in recent periods. And so what ends up happening is the seasonality spike that you typically saw happen in the back half of the year becomes even more pronounced if it takes a longer period to work through the deductibles. So one is we are assuming the seasonality will be, again, a little more pronounced than what you've seen historically because of the deductible levels we're seeing. Second is exactly what you said, Christine, is we are assuming a further level of attrition in both small group and individual, and primarily, in the healthy lives, as those individuals will make choices then to enter into the exchanges and potentially go naked, if you will, on coverage for a short period of time between October 1 and January 1.

Great. And Christine, let me take the other part of your question, which dealt with our EPS outlook regarding what we've expressed about our CAGR. Looking into the future, we believe that what we've said is it's certainly still a reasonable target over the next 5 years. You may recall, we said that it would be a low double-digit EPS CAGR over the next 5 years. And it's broken out as follows, about 4% to 6% organic growth. And maybe let me just add that this component, I believe, is then maybe historically challenging component for the company. And we believe that it's an area that we are very heavily focused on in terms of improving various parts of the organization that bring this strengthened outlook. Number two, the 2% to 3% M&A-driven component, we believe, is achievable, particularly in light of our acquisition of Amerigroup. We certainly have seen the accretion come to the company, as we have outlined. And so we continue to look forward to a continued uptick regarding Amerigroup's accretion, as well as other possibilities. And finally, 4% to 5% share repurchase and capital deployment. It's been a historical strong execution effort on the part of the company. And as I said in the commentary, we continue to pursue that and envision that based on market conditions, as well as board approval, and we will continue to support that. Wayne?

Yes. One item, Christine, to Joe's comments is that, and you had asked specifically about the $600 million of MA, and that was in the 4% to 6% organic growth. And we've said in the last quarter, and we continue to say this, which is that we think that becomes challenging with the current rate environment along the $600 million of growth. We think we have some other opportunities, though because including our Medicaid margins on the WellPoint business by just 1% adds over $100 million of incremental growth that we had not originally planned for. So I think we're comfortable still saying we believe in our double-digit long-term EPS growth. And as Joe has commented on -- but again, the reason we have a range there is for exactly things like what happened with Medicare, which is there's going to be moving parts and it's our job to figure out if we can offset in someplace else.

And our next question comes the line of Josh Raskin from Barclays.

First question on the ASO at 750,000 lives. I mean, that's more than just sort of incremental change. And that looks like the best year you guys have had in sort of 7 or 8 years, I guess, at this point. So I'm curious, what's changed? I can't imagine it's just simply slightly better market dynamic or something like that. So I'm just curious as to where those adds are coming from, who you think you're taking share from, et cetera? And then the second question just on the 2014 growth. As I think about components here, you guys talked about Amerigroup adding as much as a $1 in EPS in '15. I'm assuming -- I think we've spoken about, about half that amount in '14 with the PBM transitioning fast, I assume, you're at least halfway, probably slightly more. You've got the Medicaid growth. You've got the ASO growth that we're going to talk about. You've got 4% to 5% accretion from share repurchases, et cetera. So as I think about the headwind, whether that's small group or Medicare Advantage, it seems like those would have to be pretty material to land you on the down EPS side of things for next year. So I'm curious, just if you could flesh out a bit more, maybe the magnitude of potential pressure.

Great. Maybe let me take the ASO growth in lives and then maybe shift over to Wayne for the balance. But as you know, the selling season remains in progress. And as a result, we have, I think, some insight looking into the possibilities for '14. At this point, we do expect to be a net membership gainer next year based on our visibility and a variety of accounts, as you point out, with approximately 0.75 million new ASO lives possibly coming into the membership roles. I should point out that our gross wins were even higher, though we continue to expect some in-group attrition next year given some attrition related such as state prisoner accounts movement and commercial coverage to state Medicaid programs. So net-net, we do feel good about the uptick in our ASO membership, and I'm sure we'll be providing a lot more insight to you as the year progresses.

Thanks, Joe. Josh, one part of the question you asked was who the market share is coming from. And I would say that we're being successful across the board in many fronts, and I think we'll let our competitors speak to that on their calls. Relative to your question on headwinds and tailwinds, the one thing that I would highlight is I agree with the numerous tailwinds you've highlighted. I think we all would agree that with the growth on exchanges, that, that should ultimately be a tailwind. But I think you would also agree that there are still uncertainties on how the risk corridors will ultimately going to be settled out, how we'll be able to calculate those, as well as how the risk coding, which is still not fully defined yet on that. So there's a couple of unknowns there that from our perspective, we would agree conceptually should be a tailwind. But we still need to see some more of these data on how we account for our expected growth. Obviously, Medicaid, we expect to be growth. ASO and the accretion from Amerigroup, we agreed with. One item on Amerigroup I do want to highlight, though, is we cannot transition that account contract until a year from now, so we will have the integration associated with transitioning that contract so we won't get the full year benefits of that initially next year. But we do start to pick those up the following year. But in terms of some of the headwinds, we do think the Commercial EBIT right now would be a headwind for us. Now again, only time will tell how that eventually evolves, but we've got strong underlying trend this year. If you assume a lot of that small group membership attrits, you lose not…

Next question comes from the line of Ralph Giacobbe from Credit Suisse. Ralph Giacobbe - Crédit Suisse AG, Research Division: I just want to go back exchanges. First one, I just want to -- I guess I assume exchange products are carved-out products negotiated separately from other parts of your book. First, is that correct? And then within the markets -- within your markets at least, what percentage of contracts have been negotiated? Can you give us a sense of rates? And then last part of that question, you talked about 140 regions that you submitted bids for. I just want to make sure that, that is all in your existing or are there -- are you -- have you ventured at all into new markets?

Let me start -- I'm going to kind of hit this in reverse order. The 140 regions represent our 14 states. It does not represent every region in every state though. So the population was larger. I would simply say that our focus was clearly on where we thought we had density and the cost of goods sold advantage. So if we didn't feel like we had that in a particular region within a particular state, we did not choose to participate. Second thing I would say is from a product perspective and a pricing perspective, we feel like we're bait. And what I mean by that is that we've got our contracting done with the products we filed. And as we said historically, we think that over time, that the rates are going to migrate to somewhere between Medicare and Commercial and be more biased over time towards the Medicare rates. Now the only way to do that is to have narrower networks, which we have accomplished, and to have the willing participants, which we have because of the volume we think we can bring to them. So at this point, we like our positioning in most regions. It's fair to say that in some regions, we don't quite understand the bidding that we've seen relative to our pricing, knowing the market share we have and the knowledge we have at the underlying population because of the market share we have. But in general, fairly optimistic about where we're at. The next key component is how we market, though, because this isn't your typical direct to consumer. This is educating on the exchanges and getting those lives to enroll. So I think this will evolve literally day by day and month by month. And I think on the next call, we'll have even more details. But even today, we still haven't seen what final pricing looks like in all 14 states relative to our competitors. Ralph Giacobbe - Crédit Suisse AG, Research Division: Okay, that's helpful. And then just a quick follow up. Can you quantify at all the level of second half investment spending, maybe compare to what you've done in the first half?

Yes. The one thing I would say, Rob, is it's meaningfully higher than the first half spend, meaning I think you could still consider roughly the $300 million level at this point in time. It's very fungible, though, so we have many dollars allocated to be spent on an absolute basis in the second half, but recognize that we may turn those dollars off depending on how the exchanges evolve or we may reallocate those dollars depending on how we move forward. Recognize though that as you've heard us say on a net basis, we expect at least 750,000 new members by the end of '14. On a gross basis, as Joe said, we're well north of that already. And because we're well north of that, we're going to have to spend considerable dollars in the fourth quarter to ramp up for all that new enrollment. It doesn't relate to the exchanges at this point in time to get those folks done properly, which is one of the reasons we paid our inventories down. So, so much in both for the second quarter and planning to do in the third quarter so we can shift some of those resources. But there's clearly going to be incremental dollars. But we believe we can cover those in our original G&A budget for the year.

I might add that -- and I think your question is really a strong question regarding our outlook as we prepare for '14. We have, over the last 90 days, engaged heavily in analytics around kind of creating the building blocks for '14. And our view is the next 6 months, we're going to be fairly dynamic regarding building our organization to execute on our commitments in and around the exchanges and other facets of our company in terms of securing member growth, et cetera. So my sense is all the effort we've been putting into our alignment with -- and preparation for '14 has been very strong. And I look forward to beginning to execute in a variety of spaces as we move into 1/1/14.

Our last question this morning comes from the line of Ana Gupte with Dowling & Partners. Ana Gupte - Dowling & Partners Securities, LLC: I have a question first on CareMore specifically and then also on your broader network strategy. So on CareMore specifically, when we do the stat analysis, it looks like outside of California, the other states, Arizona, Nevada, are not profitable. I'm just wondering what your thoughts are about scalability as a model like this outside of specific market like California? And also just on the $150 million you had earmarked specifically, $50 million you said will be redirected. How much of that is likely to fall to the bottom line for this year and going forward?

Let me take a run at the first part of your question, and Wayne can maybe jump on how it might translate to bottom line. Just as a reminder, as you know -- you may know, CareMore, as we look at it, has been historically built on 3 pillars. Number one, it's a care center model, which I think you are referencing. Number two, it is a model that provides acute care and institutional and home care service support that we believe has great potential to both serve our organization, WellPoint, in a variety of spaces where we deal with chronically ill and high need patients. But also, we now believe that we have the ability to reach outside of WellPoint in terms of alignment with a variety of organizations that also need that kind of support. So we believe we'll be able to leverage that so-called intellectual property to benefit both internal, as well as external needs. And the third pillar deals with preventive care aspects of the program. As we provided in our remarks, we have maybe pulled back with respect to bricks and mortar expansion, recognizing that the reimbursement rates these last quarters that came to us as an insight came to us were very, very kind of strong to the negative. And so we've adjusted, and we believe we've repositioned CareMore for a good run. And we certainly will avoid the $3 million to $4 million in investments that go along with building out the bricks and mortar capabilities. And so I think our kind of restructured emphasis and outreach in some new areas will create a strong CareMore, and that will benefit us in the long run. So Wayne?

Thanks, Joe. The one thing I would highlight, too, is Arizona and Colorado, those are the newest markets for the buildup. And just as a reminder, it take 18 months just to get to roughly breakeven and so -- coupled with the volume you need. So I would say in Arizona, we have actually one market that is well exceeding those expectations to date, and we have one market that's slightly behind in those. But to look at the blank by itself would not necessarily show you those pieces. So we want to let you know, those markets are progressing in total where we thought they'd be at. But the challenge, as Joe said, is the headwind from new rate reimbursement that doesn't allow us to get the ultimate tail of the benefits in the long term, which is why we did redirect roughly $50 million, and it is not redirected to go to the bottom line. It is redirected to, one, help self-fund the significant growth we've seen in our ASO contracts this year, as well as some of the growth that we expect in exchanges and how we plan to further market and advertise our exchanges. So at this point in time, we fully expect to spend the $300 million we talked about at the beginning of the year, albeit with some of those Medicare dollars we deployed to Commercial enrollment, both ASO and exchanges.

I also like to add that, just as a reminder, CareMore represents about 13% of our Medicare Advantage membership portfolio. So it is, in our view, an integral part of our portfolio. And we really are looking favorably at it in terms of being able to leverage it to provide greater support to our MA book. Ana Gupte - Dowling & Partners Securities, LLC: Okay. Just as a follow-up then on the broader strategy related to this in the sense, and Joe, with your experience coming from the provider side of the house, you talked about the $71 billion to $90 billion in '16. Much of that growth is coming from Government Business. Rates, obviously, are under pressure everywhere. We hear a lot from some of your peers on either vertically integrated strategy, a primary care medical home from CareFirst, for example, accountable care. How are you thinking about you leveraging that competitive advantage you have on market share? And what type of medical cost structure advantage could you develop to keep your margins healthy as well with that top line growth?

Yes. There are various parts and pieces to the question. First of all, that growth from $71 billion to $90 billion, we believe, is achievable related to enrollment growth in exchanges, Medicaid, duals and other products. I just want to maybe encourage that I think we are maybe best positioned at the moment to tell you that we're going to give more details at our Investors' Day. We're deep in the analysis on those varied questions. But we do believe it's a reasonable target based on where we sit today and what we see. So I'd just ask you to stay tuned for us to give you more insight in the near future.

Thank you. I'd now like to turn the conference back to Mr. Swedish with the company's closing comments.

Thank you for your questions. I really appreciate the opportunity to receive them, as well as be responsive. In closing, we are pleased with the strong financial results of the first 6 months, and we are on track for a better-than-expected full year of 2013. Looking ahead, we will deliver on our purpose to transform health care with trusted and caring solutions and our vision to be a valued and trusted health care partner for those we serve. We are encouraged by the positive momentum we see building in our membership and revenue trends. And we continue to plan and prepare for uncertainties around the near-term implementation of health care reform provisions. Longer term, I believe there is a clear opportunity for the Blue Cross and Blue Shield plans to leverage their local market expertise and familiarity to broadly advance both care access and affordability. This strong competitive positioning leads to a substantial value creation opportunity for our enterprise, driven by accelerating top line growth opportunities, strong cash flow generation, our continued focus on returning capital through our share repurchase and dividend programs. And as we continue to review our portfolio of assets, we will ensure we are most appropriately allocating your capital in a way that best drives us to deliver on the opportunities we see ahead. I want to thank everyone for participating on our call this morning. Operator, please provide the call replay instructions.

Ladies and gentlemen, this conference will be available for replay after 11:30 today through August 8 at midnight. You may access the AT&T replay system at any time by dialing 1 (800) 475-6701 and entering the access code 272703. International participants, dial (320) 365-3844. That does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.