References to the terms "we", "our" or "us" used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, refer to WellPoint, Inc., an Indiana corporation, and unless the context otherwise requires, its direct and indirect subsidiaries.

Certain prior year amounts have been reclassified to conform to current year presentation.

The structure of our MD&A is as follows:

II. Overview

III. Significant Transactions

IV. Membership - March 31, 2009 Compared to March 31, 2008

VI. Results of Operations - Three Months Ended March 31, 2009 Compared to the Three Months Ended March 31, 2008

VII. Critical Accounting Policies and Estimates

VIII. Liquidity and Capital Resources

IX. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This MD&A should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2008 and the MD&A included in our 2008 Form 10-K, and in conjunction with our unaudited consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2009 included in this Form 10-Q. Results of operations, cost of care trends, investment yields and other measures for the three month period ended March 31, 2009 are not necessarily indicative of the results and trends that may be expected for the full year ending December 31, 2009.

I. Executive Summary

We are the largest health benefits company in terms of medical membership in the United States, serving 34.6 million medical members as of March 31, 2009. We are an independent licensee of the Blue Cross and Blue Shield Association, or BCBSA, an association of independent health benefit plans. We serve our members as the Blue Cross licensee in California and as the Blue Cross and Blue Shield, or BCBS, licensee for: Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as BCBS in 10 New York City metropolitan and surrounding counties, and as Blue Cross or BCBS in selected upstate counties only), Ohio, Virginia (excluding Northern Virginia suburbs of Washington, D.C.) and Wisconsin. In a majority of these service areas we do business as Anthem Blue Cross, Anthem Blue Cross Blue Shield or Empire Blue Cross Blue Shield (in our New York service areas). We also serve customers throughout the country as UniCare. We are licensed to conduct insurance operations in all 50 states through our subsidiaries.

Operating revenue for the three months ended March 31, 2009 was $15.3 billion, a decrease of $0.1 billion, or less than 1%, over the three months ended March 31, 2008. This decrease was primarily due to fully-insured membership declines in our Local Group and UniCare businesses and our exit from the Ohio Medicaid programs. These decreases were partially offset by premium rate increases for all medical lines of business and increased reimbursement in the Federal Employees Program, or FEP.

Net income for the three months ended March 31, 2009 was $580.4 million, a 1% decrease over the three months ended March 31, 2008. The decline in net income was primarily driven by net realized losses on investments and increased administrative expense, partially offset by improvements in benefit expense. Our fully-diluted earnings per share, or EPS, was $1.16 for the three months ended March 31, 2009, which included $0.46 per share of net realized investment losses and was an 8% increase over the EPS of $1.07 for the three months ended March 31, 2008. The increase in EPS resulted primarily from the lower number of shares outstanding in 2009 due to share buy back activity under our share repurchase program, partially offset by slightly lower net income.

Operating cash flow for the three months ended March 31, 2009 was $1.2 billion, or 2.0 times net income. Operating cash flow for the three months ended March 31, 2008 was $1.0 billion, or 1.8 times net income. The increase in operating cash flow from 2008 was driven primarily by decreased incentive compensation payments and decreased tax payments, partially offset by a slight increase in claims payments.

II. Overview

We manage our operations through three reportable segments: Commercial; Consumer; and Other.

Our Commercial and Consumer segments both offer a diversified mix of managed care products, including preferred provider organizations, or PPOs; health maintenance organizations, or HMOs; traditional indemnity benefits and point-of-service plans, or POS plans; as well as a variety of hybrid benefit plans, including consumer-driven health plans, or CDHPs, hospital only and limited benefit products.

Our Commercial segment includes Local Group (including UniCare), National Accounts and certain other ancillary business operations (dental, vision, life and disability and workers' compensation). Business units in the Commercial segment offer fully-insured products and provide a broad array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services.

Our Consumer segment includes Senior, State-Sponsored and Individual businesses. Senior business includes services such as Medicare Part D, Medicare Advantage and Medicare Supplement, while State-Sponsored business includes our managed care alternatives for the Medicaid and State Children's Health Insurance Plan programs.

The Other segment includes our Comprehensive Health Solutions Business unit, or CHS, that brings together our resources focused on optimizing the quality of health care and cost of care management. CHS includes provider relations, care and disease management, employee assistance programs, including behavioral health, radiology benefit management, analytics-driven personal health care guidance and our pharmacy benefit management, or PBM, business, which includes NextRx, and our specialty pharmacy, PrecisionRx Specialty Solutions. Our Other segment also includes results from our Federal Government Solutions, or FGS, business. FGS business includes the FEP and National Government Services, Inc., or NGS, which acts as a Medicare contractor in several regions across the nation. The Other segment also includes other businesses that do not meet the quantitative thresholds for an operating segment as defined in Statement of Financial Accounting Standards ("FAS") No. 131, Disclosures about Segments of an Enterprise and Related Information, as well as intersegment sales and expense eliminations and corporate expenses not allocated to the other reportable segments.

Our operating revenue consists of premiums, administrative fees and other revenue. Premium revenue comes from fully-insured contracts where we indemnify our policyholders against costs for covered health and life benefits. Administrative fees come from contracts where our customers are self-insured, or where the fee is based on either processing of transactions or a percent of network discount savings realized. Additionally, we

earn administrative fee revenues from our Medicare processing business and from other health-related businesses, including disease management programs. Other revenue is principally generated from member co-payments and deductibles associated with the mail-order sale of drugs by our PBM companies.

Our benefit expense primarily includes costs of care for health services consumed by our members, such as outpatient care, inpatient hospital care, professional services (primarily physician care) and pharmacy benefit costs. All four components are affected both by unit costs and utilization rates. Unit costs include the cost of outpatient medical procedures per visit, inpatient hospital care per admission, physician fees per office visit and prescription drug prices. Utilization rates represent the volume of consumption of health services and typically vary with the age and health status of our members and their social and lifestyle choices, along with clinical protocols and medical practice patterns in each of our markets. A portion of benefit expense recognized in each reporting period consists of actuarial estimates of claims incurred but not yet paid by us. Any changes in these estimates are recorded in the period the need for such an adjustment arises. While we offer a diversified mix of managed care products, including PPO, HMO, POS and CDHP products, our aggregate cost of care can fluctuate based on a change in the overall mix of these products.

Our selling expense consists of external broker commission expenses and generally varies with premium volume. Our general and administrative expense consists of fixed and variable costs. Examples of fixed costs are depreciation, amortization and certain facilities expenses. Other costs are variable or discretionary in nature. Certain variable costs, such as premium taxes, vary directly with premium volume. Other variable costs, such as salaries and benefits, do not vary directly with changes in premium, but are more aligned with changes in membership. The acquisition or loss of a significant block of business would likely impact staffing levels, and thus associate compensation expense. Examples of discretionary costs include professional and consulting expenses and advertising. Other factors can impact our administrative cost structure, including systems efficiencies, inflation and changes in productivity.

Our cost of drugs consists of the amounts we pay to pharmaceutical companies for the drugs we sell via mail order through our PBM and specialty pharmacy companies. This amount excludes the cost of drugs related to affiliated health customers recorded in benefit expense. Our cost of drugs can be influenced by the volume of prescriptions at our PBM companies, as well as cost changes, driven by prices set by pharmaceutical companies and the mix of drugs sold.

Our results of operations depend in large part on our ability to accurately predict and effectively manage health care costs through effective contracting with providers of care to our members and our medical management programs. Several economic factors related to health care costs, such as regulatory mandates of coverage as well as direct-to-consumer advertising by providers and pharmaceutical companies, have a direct impact on the volume of care consumed by our members. While we price our business so that premium yield exceeds total cost trends, the potential effect of escalating health care costs as well as any changes in our ability to negotiate competitive rates with our providers may impose further risks to our ability to profitably underwrite our business, and may have a material impact on our results of operations.

III. Significant Transactions

Announcement to Sell PBM Operations

On April 13, 2009 we announced that we entered into a definitive agreement to sell our NextRx subsidiaries to Express Scripts, Inc., or Express Scripts, one of the largest PBM companies in North America, for $4.675 billion, consisting of at least $3.275 billion in cash, subject to customary working capital and indebtedness adjustments, and the balance in Express Scripts common stock. We expect to use the net after-tax proceeds from the sale for a variety of purposes, including share repurchases, repayment of current maturities of long-term debt and other general corporate purposes. In connection with the agreement, at closing, we will enter into a 10-year contract for Express Scripts to provide PBM services to us following the close of the Express Scripts transaction.

The Express Scripts transaction is expected to close in the second half of 2009, subject to, customary closing conditions, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and any other required regulatory approvals.

Acquisition of DeCare Dental, LLC

On April 9, 2009, we completed our acquisition of DeCare Dental, LLC, or DeCare, a wholly-owned subsidiary of DeCare International. DeCare is one of the country's largest administrators of dental benefit plans, managing benefits for approximately 4.0 million members as of March 31, 2009. DeCare provides services directly and through partnerships and administrative agreements with 10 dental insurance brands, primarily as a third party administrator. DeCare also operates DeCare Systems Ireland, which offers custom enterprise software solutions, e-business applications and application performance tuning and is also the first American company to offer dental benefits in Ireland as Vhi DeCare Dental.

The acquisition will be accounted for using the purchase method of accounting. Accordingly, the results of operations of DeCare will be included in our consolidated results for periods following April 9, 2009.

Bond Issue

On February 5, 2009 we issued $400.0 million of 6.000% notes due 2014 and $600.0 million of 7.000% notes due 2019 under our shelf registration statement. The proceeds from this debt issuance are expected to be used for general corporate purposes, including, but not limited to, repayment of the current maturities of long-term debt and repurchasing shares of our common stock. The notes have a call feature that allows us to repurchase the notes at any time at our option and a put feature that allows a note holder to require us to repurchase the notes upon the occurrence of both a change of control event and a downgrade of the notes.

Suspension by The Centers for Medicare and Medicaid Services

Over the past several months, we have been working with The Centers for Medicare and Medicaid Services, or CMS, to resolve issues identified as a result of our internal compliance audits and findings from a 2008 CMS audit. Our work included detailed action plans to remediate such findings. Where appropriate, our proposed action plans have been reviewed and accepted by CMS. In addition, we engaged an independent third party to provide CMS with on-going assessments regarding our compliance, including verification of systems, processes and procedures. On January 12, 2009, CMS notified us that we were suspended from marketing to and enrolling new patients in our Medicare Advantage and Medicare Part D prescription drug plans until remediation efforts have been fully implemented and confirmed. This decision does not affect our current members enrolled in our Medicare products. We are in the process of validating our remediation efforts with CMS.

Stock Repurchase Program

Under our Board of Directors' authorization, we maintain a common stock repurchase program. Repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases are effected from time to time in the open market, through negotiated transactions and through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or Exchange Act. During the three months ended March 31, 2009, we repurchased and retired approximately 17.7 million shares at an average share price of $38.55, for an aggregate cost of $681.2 million. On March 5, 2009, our Board of Directors authorized an increase of $1.5 billion in our stock repurchase program. As of March 31, 2009, $1.8 billion remained authorized for future repurchases. Subsequent to March 31, 2009, we repurchased and retired approximately 1.7 million shares for an aggregate cost of approximately $66.2 million, leaving approximately $1.8 billion for authorized future repurchases at April 15, 2009. Our stock repurchase program is discretionary as we are under no obligation to repurchase shares. We repurchase shares under the program when we believe it is a prudent use of capital.

Our medical membership includes seven different customer types: Local Group, Individual, National Accounts, BlueCard, Senior, State-Sponsored and FEP. BCBSA-branded business generally refers to members in our service areas licensed by the BCBSA. Non-BCBSA-branded business refers to UniCare members predominately outside of our BCBSA service areas.

• Local Group consists of those employer customers with less than 1,000 employees eligible to participate as a member in one of our health plans, as well as customers with generally 1,000 or more eligible employees with less than 5% of eligible employees located outside of the headquarter state. In addition, Local Group includes UniCare local group members.

• Individual consists of individual customers under age 65 (including UniCare) and their covered dependents.

• Beginning January 1, 2008, we revised our definition of National accounts to correspond with our current organizational structure. National Accounts customers now are generally multi-state employer groups primarily headquartered in a WellPoint service area with 2,500 or more eligible employees, of which at least 5% are located outside of the headquarter state. Some exceptions are allowed based on broker relationships. Service area is defined as the geographic area in which we are licensed to sell BCBS products.

• BlueCard host members represent enrollees of Blue Cross and/or Blue Shield plans not owned by WellPoint who receive health care services in our BCBSA licensed markets. BlueCard membership consists of estimated host members using the national BlueCard program. Host members are generally members who reside in or travel to a state in which a WellPoint subsidiary is the Blue Cross and/or Blue Shield licensee and who are covered under an employer-sponsored health plan issued by a non-WellPoint controlled BCBSA licensee (i.e., the "home" plan). We perform certain administrative functions for BlueCard members, for which we receive administrative fees from the BlueCard members' home plans. Other administrative functions, including maintenance of enrollment information and customer service, are performed by the home plan. Host members are computed using, among other things, the average number of BlueCard claims received per month.

• Senior members are Medicare-eligible individual members age 65 and over who have enrolled in Medicare Advantage, a managed care alternative for the Medicare program, or who have purchased Medicare Supplement benefit coverage.

• State-Sponsored membership represents eligible members with State-Sponsored managed care alternatives in Medicaid and State Children's Health Insurance Plan programs.

• FEP members consist of United States government employees and their dependents within our geographic markets through our participation in the national contract between the BCBSA and the U.S. Office of Personnel Management.

In addition to reporting our medical membership by customer type, we report by funding arrangement according to the level of risk that we assume in the product contract. Our two funding arrangement categories are fully-insured and self-funded. Fully-insured products are products in which we indemnify our policyholders against costs for health benefits. Self-funded products are offered to customers, generally larger employers, who elect to retain most or all of the financial risk associated with their employees' health care costs. Some self-funded customers choose to purchase stop-loss coverage to limit their retained risk.

The following table presents our medical membership by customer type, funding arrangement and reportable segment as of March 31, 2009 and 2008. Also included below are other businesses' key metrics, including prescription volume for our PBM companies and other membership by product. The medical membership and other businesses' metrics presented are unaudited and in certain instances include estimates of the number of members represented by each contract at the end of the period.

                                                      March 31
(In thousands)
Medical Membership                                  2009     2008        Change         % Change
Customer Type
Local Group                                        16,071   16,691         (620 )             (4 )%
Individual                                          2,235    2,368         (133 )             (6 )
National:
National Accounts                                   7,034    6,743          291                4
BlueCard                                            4,836    4,726          110                2

Total National                                     11,870   11,469          401                3
Senior                                              1,256    1,301          (45 )             (3 )
State-Sponsored                                     1,742    2,158         (416 )            (19 )
FEP                                                 1,385    1,386           (1 )              0

Total Medical Membership by Customer Type          34,559   35,373         (814 )             (2 )

Funding Arrangement
Self-Funded                                        18,646   18,354          292                2
Fully-Insured                                      15,913   17,019       (1,106 )             (6 )

Total Medical Membership by Funding Arrangement    34,559   35,373         (814 )             (2 )

Reportable Segment
Commercial                                         28,141   28,421         (280 )             (1 )
Consumer                                            5,033    5,566         (533 )            (10 )
Other                                               1,385    1,386           (1 )              0

Total Medical Membership by Reportable Segment     34,559   35,373         (814 )             (2 )

Other Membership
Behavioral Health                                  23,525   23,373          152                1
Life and Disability                                 5,470    5,594         (124 )             (2 )
Dental                                              4,374    4,805         (431 )             (9 )
Vision                                              2,782    2,542          240                9
Medicare Part D                                     1,705    1,836         (131 )             (7 )

PBM Prescription Volume Paid (Quarterly)
Retail Scripts                                     59,391   61,722       (2,331 )             (4 )
Mail Order Scripts1                                 6,269    6,601         (332 )             (5 )
Specialty Pharmacy Scripts                            200      146           54               37

Total Scripts                                      65,860   68,469       (2,609 )             (4 )

1 Mail order scripts generally cover a 60 or 90 day supply with a weighted average supply of approximately 86 days. The mail order script volume shown in the above table has been adjusted to reflect a 30 day supply.

Medical Membership

During the twelve months ended March 31, 2009, total medical membership decreased approximately 814,000, or 2%, primarily due to decreases in Local Group, State-Sponsored and Individual businesses, partially offset by increases in our National Accounts and BlueCard membership.

Self-funded medical membership increased 292,000, or 2%, primarily due to an increase in self-funded National Account membership resulting from additional sales, BlueCard growth and ongoing conversions to self-funded arrangements, partially offset by the loss of the Connecticut Medicaid program and declines in self-funded Local Group membership.

Fully-insured membership decreased by 1,106,000 members, or 6%, primarily due to declines in fully-insured Local Group membership, our exit from the Ohio Medicaid programs and ongoing conversions to self-funded arrangements.

Local Group membership decreased 620,000, or 4%, primarily due to membership declines in our BCBSA-branded business, particularly in California, and the loss of members in our UniCare business.

Individual membership decreased 133,000, or 6%, due to competitive pricing pressures and overall economic conditions. The decline was evenly distributed between our UniCare and BCBSA-branded businesses.

National Accounts membership increased 291,000, or 4%, primarily driven by additional sales, reflective of our extensive and cost-effective provider networks and a broad and innovative product portfolio. These increases were partially offset by lapses due to the recent economic downturn.

BlueCard membership increased 110,000, or 2%, primarily due to increased utilization by other BCBSA licensee members who reside in or travel to our licensed areas.

Senior membership decreased 45,000, or 3%, primarily due to the loss of membership at UniCare resulting from product portfolio changes with Medicare Advantage plans.

State-Sponsored membership decreased 416,000, or 19%, primarily due to our exit from the Ohio Medicaid programs and the loss of the Connecticut Medicaid program.

Other Membership

Our Other products are often ancillary to our health business, and can therefore be impacted by growth in our medical membership.

Behavioral health membership increased 152,000, or 1%, primarily due to new sales of our employee assistance programs, which include behavioral health products.

Life and disability membership decreased 124,000, or 2%, primarily due to overall membership declines from a very competitive marketplace, reduction of members following employment declines at certain large customers and lapse due to the current economic environment. Life and disability products are generally offered as a part of Commercial medical fully-insured membership sales.

Dental membership decreased 431,000, or 9%, primarily due to the loss of several large customers and sales continuing to lag due to a slowing economy.

Vision membership increased 240,000, or 9%, primarily due to continued market penetration of our Blue View vision product.

Medicare Part D membership decreased 131,000, or 7%, primarily due to decreases in standalone external Medicare Part D products.

PBM Prescription Volume

Prescription volume in our PBM companies decreased by 2,609,000, or 4%, due to a decrease in retail scripts resulting from lower membership and lower utilization of our mail order business resulting primarily from the current economic conditions and the exit from a joint venture in the Northeast.

V. Cost of Care

The following discussion summarizes our aggregate underlying cost of care trends for the rolling 12 months ended March 31, 2009 for our Local Group fully-insured business only. As previously discussed, these costs are influenced by our mix of managed care products, including PPO, HMO, POS and CDHP products, in addition to changes in the unit costs and utilization levels.

Our cost of care trends are calculated by comparing the year-over-year change in . . .