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2010, and is primarily due to increases in claims and enrollment processing fees and other outsourcing costs and
higher investments in information technology as we prepare for health care reform.
Selling expense in our Western Region Operations was $235.6 million for the year ended December 31,
2010 compared with $233.3 million for the year ended December 31, 2009. The selling costs ratio was flat at 2.4
percent for each of the years ended December 31, 2010 and 2009.
Interest expense was $34.9 million for the year ended December 31, 2010 compared with $41.0 million for
the year ended December 31, 2009. The decline is due to the decrease in our total outstanding debt, including the
retirement of our amortizing financing facility in May 2010. See “—Liquidity and Capital Resources—Capital
Structure—Termination of Amortizing Financing Facility” for additional information.
Year Ended December 31, 2009 compared to Year Ended December 31, 2008
Revenues
Total revenues in the Western Region Operations increased 2.6 percent to $10.0 billion for the year ended
December 31, 2009 compared to the same period in 2008. Health plan services premiums revenues in the
Western Region Operations increased 2.7 percent to $9.9 billion for the year ended December 31, 2009 compared
to the same period in 2008 primarily due to Medicare premium rate increases and an increase in Medicaid
membership, partially offset by lower commercial membership.
Investment income in the Western Region Operations decreased to $67.6 million for the year ended
December 31, 2009 from $75.9 million for the same period in 2008 due to lower interest rates.
Health Plan Services Expenses
Health plan services expenses in the Western Region Operations were $8.5 billion for the year ended
December 31, 2009 compared to $8.4 billion for the year ended December 31, 2008.
Commercial Premium Yield and Health Care Cost Trends
In the Western Region Operations, commercial premium yields PMPM increased by 9.4 percent to
approximately $316 for the year ended December 31, 2009 compared with approximately $288 in the same
period of 2008.
The Western Region Operations commercial health care costs PMPM increased by 9.6 percent to
approximately $274 for the year ended December 31, 2009, compared with approximately $250 for the year
ended December 31, 2008. The increases in the commercial health care cost trend on a PMPM basis for the year
ended December 31, 2009 were primarily due to higher utilization related to the H1N1 flu and COBRA.
Medical Care Ratios
The health plan services MCR in the Western Region Operations was 86.7 percent for the year ended
December 31, 2009 compared with 87.4 percent for the year ended December 31, 2008.
The Western Region Operations commercial MCR was 86.8 percent for the year ended December 31, 2009,
compared with 86.7 percent for the year ended December 31, 2008. This increase was primarily due to higher
utilization related to the H1N1 flu and COBRA.
The Medicare Advantage MCR in the Western Region Operations was 88.1 percent for the year ended
December 31, 2009 compared with 90.6 percent for the year ended December 31, 2008. The Medicare Part D
70