Felicia Norwood: So, good morning, Ann, and thank you. We are certainly very pleased with the results in Florida. It’s a state that we have been partnering in for a long period of time, but certainly the win here allows us to expand our footprint and additionally serve some complex populations, particularly SMI, which will be very much kind of a collaboration with our Carelon Services business, so very excited about that. We are also very focused on our Virginia go-live, which is coming up in July as well. So a lot of work happening there. Outstanding at this point is certainly Georgia, where we will be defending our procurement with respect to our core business, as well as our foster care business in the state of Georgia, and feel very good about the work that we continue to do there in partnership with the state.
In addition, we are very much focused on a couple of new geographies where we are bidding this year and look forward to hearing those results. But on top of that, the states are very much focused on specialty populations, and we see that as the opportunity for growth as we go forward. Medicaid is a very important business for us. Our recent RFP wins, I think, demonstrate the value that we bring to our state partners, but more importantly, the improvement in quality of outcomes that we are providing to Medicaid beneficiaries. So thank you very much for the question.
Gail Boudreaux: Next question, please.
Operator: Next, we’ll go to the line of Gary Taylor from TD Cowen. Please go ahead.
Gary Taylor: Hi. Good morning. Two quick ones for me. I just wanted to come back to Medicaid for a second. I mean, it’s obvious your commercial book is doing very well, but you had expected Medicaid margins to come down this year, but you’re saying the rate adjustments you’re getting are actuarially sound for the acuity changes. So should we think about the lower Medicaid margins this year primarily just the deleveraging the OpEx impact of losing the revenue and enrollment and that MLR is going to be fairly stable? And then just my second question was, Mark made this comment, John made this comment for years about how days claims payable would eventually come down into the low 40s. That’s a lot of inherent or embedded earnings power that could come through the P&L at some point over time. Can you give us any sort of sense of what long-term means in terms of seeing the reserves move lower?
Mark Kaye: Gary, good morning and thank you for the questions. Let me start maybe with the margins and let me bring it up to the health benefits business segment to talk about first. So in terms of health benefits, the margins this quarter were very much in line with our expectations. It puts us squarely on track to achieve our guidance for the full year of an increase between 25 basis points and 50 basis points. I’m not looking necessarily to comment on a single business’ margin, but you could expect Medicaid margins to normalize, given we already have line of sight, and you heard Felicia talk about this, into approximately 75% of the Medicaid premiums for 2024, and that we are comfortable with the actuarial soundness of the rates that we are seeing.
Over the long term, Medicaid continues to normalize as we spoke about last quarter, and it is performing as expected. On the DCP, for 2024, if we look out through the end of the year, we’re anticipating remaining in the mid to upper 40s range given Medicaid membership is expected to decline to within our guidance range of 8.8 million to 9.2 million members. And as you know, Medicaid has a slightly lower relative DCP compared to commercial, for example. And then over time, to reiterate the guidance, we do expect over the long term, DCPs to return to that more normalized range in the low 40s.
Gail Boudreaux: Thank you, Mark. One more question, please.
Operator: And for our final question, we’ll go to the line of Sarah James from Cantor Fitzgerald. Please go ahead.
Sarah James: Thank you. Just wanted to clarify a couple of things. One, on the reserve boost, are you saying the 1.7 days is fully related to conservatism via Change? Because that seems like about a $600 reserve boost to us, so I wanted to see if there was any other factors in that 1.7 days. And second, could you give us a sense of your Medicaid rate seasonality? Like, what percent of your book renews in 1Q versus 2Q versus 3Q?
Mark Kaye: On your first question, the sequential increase in days in claims payable at quarter result of 1.7 days is primarily related to the Change Healthcare. I just want to — -maybe one clarification around this. It’s worth noting that neither the decrease in claims receipts that we saw during the quarter or the reserve accrual that we took related to Change Healthcare had any discernible impact on our benefit expense ratio or P&L. And that’s because we believe the reserve represents an amount we would otherwise have paid had there been no disruption. So you should think about this as overall for the quarter, incurred claims are completely consistent with our expectations. Given some of the notes that came out this morning, I also would like to just reiterate that we do expect operating cash flow to be at least $8.1 billion for the full year, reiterating our earlier guidance.
Felicia Norwood: And, Sarah, just on your question with respect to our Medicaid states and when our rates are up for renewal, we have roughly 10 states that renew in January, another state that renews in April, another nine that renew in July, and then the last two renew in the back half of the year in September and October.
