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                                 EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement"), originally entered into by and 
between WELLPOINT HEALTH NETWORKS INC. ("the Company") and LEONARD D. 
SCHAEFFER ("Executive") effective January 22, 1997 (the "Effective Date"), 
and subsequently amended on three separate occasions, is hereby amended and 
restated in its entirety effective February 10, 1999.

                                      RECITALS:

A.   Executive is currently the Chairman of the Board of Directors and Chief
     Executive Officer of the Company and had previously served in such capacity
     for both the Company and Blue Cross of California ("BCC"), which was
     previously the principal stockholder of the Company's
     predecessor-in-interest ("Old WellPoint").

B.   Prior to the Merger, Executive had been party to an employment agreement
     with BCC (the "BCC Employment Agreement"), a portion of the cost which was
     reimbursed by Old WellPoint based upon the estimated time dedicated by
     Executive to the affairs of Old WellPoint, and an employment agreement with
     Old WellPoint that was to take effect upon Executive's termination of
     employment with BCC.

C.   The Company and Executive entered into this Agreement as of the Effective
     Date to clarify the terms of Executive's employment with the Company,
     amended it on three separate occasions and wish to further amend the
     Agreement effective February 10, 1999.

     NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

     1.   EMPLOYMENT.  The Company agrees to continue to employ Executive and 
Executive agrees to continue in the employ of the Company on the terms and 
conditions hereinafter set forth.  

     2.   POSITION.  Executive will serve as the Chairman of the Board and 
Chief Executive Officer of WellPoint Health Networks Inc.

     3.   DUTIES.  Executive will have all rights, powers and duties now 
vested in, and consistent with, the office of the Chairman of the Board and 
Chief Executive Officer of the Company under the current Bylaws of the 
Company, and shall report directly to the Board.  (A description of the 
general duties and responsibilities of the Company's Chairman and Chief 
Executive Officer is set forth as Attachment No. 1.)

     Executive is required to devote his substantial productive time and 
effort full-time and exclusively for the benefit of the Company and will not 
engage in any other employment (including consulting services) without the 
express written approval of the Board.  This shall not, however, preclude 
Executive from the pursuit of limited teaching, speaking, writing or service 
on

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advisory panels, or the acceptance of honoraria or reimbursement for travel 
and incidental expenses associated with such activities.  Service on the 
board of directors of any for-profit entity may be undertaken only with the 
approval of the Board.  If Executive will be out of the country, he will 
inform the Board and will identify an Acting Chief Executive Officer to serve 
during his absence.

     4.   TERM

     The initial term of this Agreement shall commence on the Effective Date. 
The initial term of this Agreement shall terminate sixty (60) months 
following the Effective Date ("Initial Termination Date").  On each 
anniversary of the Effective Date (the "Anniversary Dates"), the term of this 
Agreement shall be automatically extended by an additional twelve months if 
Executive is employed by the Company on the last day of the calendar month 
immediately preceding the applicable Anniversary Date (the "Renewal Date"), 
unless the Board of Directors of WellPoint ("Board"), by written notice 
delivered to Executive on or before the applicable Renewal Date, elects to 
cease such automatic extension, in which case this Agreement will remain in 
force for the forty-eight months remaining in the term of this Agreement on 
the date such notice is received by Executive. Any failure to extend the term 
of this Contract shall not itself be considered a termination or Constructive 
Termination of Executive's employment.

     5.   COMPENSATION

          a.   BASE SALARY AND INCENTIVE COMPENSATION.  The Company agrees to
pay Executive as follows:

          (i)   From the Effective Date through February 28, 1997, a base
                annual salary ("Base Salary") at the rate of $850,000 per year.

          (ii)  Thereafter, the Board or the Compensation Committee thereof
                shall determine the Base Salary of Executive.  However, the
                Base Salary of Executive will not decrease from any previous
                level, except that Executive's Base Salary may be reduced as
                part of, and consistent with, any across-the-board reduction
                in the salaries of senior officers of the Company.

     The Board or the Compensation Committee thereof will review annually the 
performance of Executive and a written copy thereof will be forwarded to 
Executive.  Executive's performance will be evaluated based upon mutually 
approved written criteria to be developed jointly by the Board and\or 
Compensation Committee and Executive.  In connection with that review, the 
Board or Compensation Committee shall also review and consider appropriate 
adjustments to Executive's Base Salary and other compensation and may retain 
a qualified compensation consultant.  Unless Executive expressly agrees 
otherwise, he shall be eligible to participate in the Company's current long- 
and short-term incentive programs (including the Company's stock option plan) 
and any other incentive programs hereafter established for senior officers of 
the Company (subject to such modifications to such programs as the 
Compensation Committee shall determine to be necessary and appropriate to 
preserve deductibility of bonus

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amounts) at participation levels determined each calendar year in connection 
with Executive's annual performance review.

          b.   MEDICAL AND DENTAL COVERAGE.  The Company shall provide full 
medical and dental coverage for Executive and his family based on the 
programs in effect from time to time for senior officers of the Company.  The 
Company shall pay all premiums for such coverage for the term of this 
Agreement and any extensions.  This coverage shall also be provided following 
termination of Executive's employment, in certain circumstances, in 
accordance with the provisions of Sections 7 and 8, which provisions shall 
not bar the Executive or his dependents, after the periods of time set forth 
therein, from receiving such benefits as are allowable under Section 4980B of 
the Internal Revenue Code of 1986 as amended or any successor section 
("COBRA").  Executive shall remain eligible for retiree health benefits under 
the terms of the Company's retiree health program as it exists on the 
Effective Date, whether or not such program is thereafter otherwise 
terminated or modified with respect to other employees.

          c.   LIFE INSURANCE.  The Company will provide to Executive for the 
term of this Agreement and any extensions life insurance in an amount 
totaling three times Executive's then current Base Salary; which obligation 
may be satisfied in whole or in part by life insurance coverage provided 
through one or more individual policies of insurance or through Company-paid 
coverage under the Company's life insurance programs for employees or 
executives generally.

          d.   LONG-TERM DISABILITY.  The Company shall provide to Executive 
for the term of this Agreement and any extensions long-term disability 
benefits at an annual level equal to Executive's then current Base Salary, 
which obligation may be satisfied in whole or in part by payment of salary 
continuation, disability insurance coverage under one or more individual 
disability insurance policies the premiums of which are paid by the Company, 
through Company-paid coverage under the Company's disability insurance 
programs for employees or executives generally and/or, if necessary 
self-insurance.  Such benefits shall begin upon disability (that prevents 
Executive from performing his duties as Chairman and Chief Executive Officer) 
and shall continue until at least age 65 (or if earlier, the date that such 
disability ceases).  However, if Executive begins to receive retirement 
benefits under the Special Executive Retirement Plan (formerly known as the 
Excess Benefit Plan for Leonard D. Schaeffer), as amended and restated 
effective February 10, 1999 and as hereafter amended (the "SERP"), the 
Company's obligation to provide disability benefits shall be reduced by the 
amount of such retirement benefits.  If any long-term disability policy 
through which the Company satisfies its obligations hereunder does not 
provide for such a reduction, then to the extent necessary to prevent the 
payment of disability payments in excess of Company's obligation hereunder, 
any benefits that continue to be paid from such policy after retirement 
benefits begin under the SERP shall be in satisfaction on a dollar-for-dollar 
basis of the Company's obligation to provide retirement benefits under the 
SERP.

          e.   RETIREMENT AND DEFERRED COMPENSATION PROGRAMS.  Executive 
shall be entitled to participate in any existing retirement or deferred 
compensation programs or other existing employee benefit programs (other than 
severance pay programs, including the Company's Change of Control Severance 
Plan) of the Company on the Effective Date and shall also be entitled to 
participate in any such programs established in the future.  For this purpose 
any split-

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dollar life insurance arrangement maintained for Executive shall not be 
deemed to be a severance benefit.  The Company shall continue to perform its 
obligations, including funding obligations, under the SERP (as defined in (d) 
above)."

          f.   AUTOMOBILE AND CLUB MEMBERSHIPS.  During the term of this 
Agreement and any extensions thereof, the Company will provide Executive with 
one automobile, including operating expenses and insurance, and will pay for 
up to three memberships in luncheon, professional or athletic clubs of 
Executive's choice.

          g.   FINANCIAL COUNSELING.  The Company shall provide financial, 
legal and/or tax counseling services to Executive or, at his request, 
reimburse him for such services provided by the provider of his choice, at a 
cost not to exceed $10,000 in each calendar year of this Agreement.  This 
shall be in addition to the financial and/or tax counseling, if any, 
available to Executive under a standard program maintained by the Company for 
senior officers of the Company.

          h.   VACATION.  Executive will be entitled to paid vacation of four 
weeks per calendar year and any other holiday, sick leave and time off 
benefits per existing Company policy, with payment for unused vacation to be 
made consistent with Company policy for other employees.

          i.   DEFERRED STOCK COMPENSATION.  Simultaneous with execution of 
the February 10, 1999 restatement of this Agreement, the Company shall issue 
to Executive those sixty-four thousand one hundred eighty-seven (64,187) 
shares of the Company's common stock previously credited to a deferred stock 
account on his behalf and otherwise payable upon Executive's termination of 
employment. Issuance of these shares shall be in full satisfaction of the 
Company's obligations with respect to such shares.  To assist Executive in 
the payment of taxes resulting from such issuance, the Company shall make an 
extension of credit to Executive under the terms of the promissory note 
attached to here as Attachment No. 2.

     6.   EXPENSES AND INDEMNIFICATION

          a.   EXPENSES.  Executive is authorized to incur and shall be 
reimbursed in full for all reasonable expenses incurred in promoting and 
conducting business of the Company, including expenses for entertainment, 
travel, business and professional association dues, and similar items.

          b.   INDEMNIFICATION.  The Company will indemnify Executive against 
liability claims in accordance with the terms of the Company's standard 
Indemnification Agreement made available to its directors and certain of its 
officers.

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     7.   TERMINATION OF AGREEMENT BEFORE EXPIRATION OF TERM.

     This Agreement shall terminate prior to the expiration of its term only 
upon the occurrence of any one of the following events:

          a.   MUTUAL AGREEMENT.  This Agreement may be terminated by mutual 
agreement between the Board and Executive upon such terms as the Board and 
Executive shall agree.

          b.   DEATH.  This Agreement shall terminate upon the death of 
Executive.  In such case, Executive's estate or, as appropriate, his 
designated beneficiary shall be entitled to (i) the full compensation which 
Executive would have received hereunder up to the date of such termination, 
(ii) a prorata portion of any bonus that he would otherwise have received for 
the year of termination; (iii) continuation of the Company-provided medical 
and dental coverage described in section 5.b. for forty-eight (48) months 
following termination (or, if longer, to Executive's spouse until such time 
as she remarries, and to Executive's children until their twenty-third 
birthday or, if enrolled in a junior college, college or university, until 
their twenty-sixth birthday); and (iv) such other benefits as are determined 
in accordance with the Company's employee benefit plans.

          c.   DISABILITY.  If Executive has become so physically or mentally 
disabled as to be incapable of satisfactorily performing the duties of the 
office of the Chairman of the Board and Chief Executive Officer for a period 
of one hundred eighty (180) consecutive days, either Executive or the Company 
may, by written notice to the other, elect to terminate this Agreement.  In 
such case, Executive shall be entitled to (i) the full compensation which 
Executive would have received hereunder up to the date of such termination; a 
prorata portion of the bonus that he would have otherwise received for the 
year of termination; (ii) continuation of the Company-provided medical and 
dental coverage and group life insurance described in sections 5.b. and 5.c. 
for forty-eight (48) months following termination (or, if longer, in the case 
of medical and dental coverage, for the remaining term of this Agreement);  
and (vi) such other benefits as are determined in accordance with the 
Company's employee benefit plans.  The determination  of whether or not 
Executive is disabled shall be made by an independent physician selected by 
mutual consent of the Chairman of the Compensation Committee of the Board and 
Executive or, if appropriate, Executive's representative. 

          d.   TERMINATION FOR CAUSE.  The Company may terminate this 
Agreement for cause (as defined below).  In such event, Executive shall be 
entitled to compensation paid and salary and bonus (including any prorata 
bonus earned for the year of termination) earned through the date of 
termination; continuation of the Company-provided medical and dental benefits 
described in section 5.b. for 120 days from the date of termination; but no 
further compensation hereunder, except such other benefits as are determined 
in accordance with the Company's employee benefit plans.  For purposes of 
this Agreement, "cause" means:

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          (i)   any act of fraud, embezzlement or theft of property of the
                Company by Executive, including any conviction which
                adversely affects the bonding or liability insurability of
                Executive or the Company; or

          (ii)  conviction of Executive of a felony; or

          (iii) an intentional act or omission by Executive, other than one
                performed in good faith, that is determined by a ruling of a
                regulatory body with jurisdiction in the matter to violate the
                law.

No termination for cause shall occur under this subsection 7.d. unless 
Executive first shall have received written notice from the Board specifying 
the acts or omissions alleged to constitute such event of termination, and 
Executive fails to correct the event specified (in the case of an event 
specified in subsection 7.d.(i) or (ii)) or such conduct continues after 
Executive shall have had reasonable opportunity to correct the events 
specified.

          e.   INVOLUNTARY TERMINATION WITHOUT CAUSE.  The Company may, after 
giving ninety (90) days' notice in writing to Executive terminate this 
Agreement without cause.  In the event of such a termination, Executive shall 
be entitled to (i) an immediate lump sum cash severance payment equal to 2.99 
times Executive's then current annual Base Salary plus 2.99 times Executive's 
then current annual target incentive compensation; (ii) the full compensation 
which Executive would have received hereunder up to the date of such 
termination; (iii) a prorata portion of any bonus that he would otherwise 
have received for the year of termination; (iv) a continuation for forty 
eight (48) months of the benefits provided under subsections 5.b. through 
5.g. (relating to medical and dental benefits, life insurance, long-term 
disability benefits, retirement and deferred compensation benefits, financial 
counseling, automobile and club memberships) and subsection 6.b. (relating to 
indemnification); (v) the immediate exercisability of any options granted to 
Executive on or after January 22, 1997; and (vii) such other benefits as are 
determined in accordance with the Company's benefit plans. 

          f.   VOLUNTARY TERMINATION.  Upon ninety (90) days' written notice 
to the Company, Executive may terminate this Agreement for any reason.  In 
such event, Executive's Base Salary will continue for a period of three (3) 
months following the date of Executive's notice.  Executive shall also be 
entitled to (i) continuation of the Company-provided health and dental 
coverage, life insurance and disability benefits described in sections 5.b., 
5.c. and 5.d. for a period of six (6) months following the date of 
Executive's notice and (ii) such other benefits as are determined in 
accordance with the Company's employee benefit plans.  Subsection 7.g., 
rather than this subsection 7.f., shall govern a termination without cause if 
it constitutes a Constructive Termination described therein.

          g.   CONSTRUCTIVE TERMINATION.  If there is a Constructive 
Termination of Executive's employment, Executive shall be entitled to the 
severance pay and other benefits described in section 7.e. as if this 
Agreement had been terminated by reason of involuntary termination without 
cause.  For purposes of this Agreement, "Constructive Termination" means one 
or more of the following:

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          (i)   A material reduction in the duties, responsibilities, status, 
                reporting responsibilities, title, or offices that Executive 
                had with the Company immediately before the reduction.

          (ii)  Reduction by more than 10% of the total annual cash 
                compensation (including base salary and target bonuses) that 
                Executive was eligible to receive from the Company and its 
                affiliates immediately before the reduction, except a 
                reduction that both (A) is part of, and consistent with, an 
                across-the-board reduction in the salaries of senior officers 
                of the Company and (B) is not implemented on or after, or in 
                contemplation of, a Change of Control (as defined in section 
                8.a. hereof).

          (iii) A change in Executive's principal place of employment with 
                the Company such that Executive's one-way commute will be 
                increased by more than thirty-five (35) miles.

          (iv)  The failure of any successor to the Company by merger, 
                consolidation or acquisition of all or substantially all of 
                the business of the Company to assume the Company's 
                obligations under this Contract.

          (v)   A material breach by the Company of its obligations under this
                Contract.

However, a Constructive Termination shall not be deemed to have occurred 
unless (i) within sixty (60) days of the occurrence that Executive deems to 
be a Constructive Termination, Executive shall have notified the Company in 
writing that he has experienced a Constructive Termination, which notice 
shall describe the event that he believes constitutes a Constructive 
Termination, (ii) the Company has not, within fifteen (15) days of receipt of 
such notice, corrected the circumstance that would otherwise result in a 
Constructive Termination and (iii) Executive terminates his employment within 
one hundred twenty (120) days thereafter.

          h.   ADDITIONAL BENEFITS UPON TERMINATION OF AGREEMENT.  If 
Executive's employment with the Company terminates for reason other than 
cause (as defined above), he shall be entitled to the following additional 
benefits, if and to the extent that such benefits would not otherwise be 
provided under Sections 7.b. through 7.g. above:  (i) transfer to Executive 
of full title and ownership of the automobile then provided to him pursuant 
to section 5.f., (ii) the financial counseling benefits referred to in 
section 5.g. for the five calendar years following the year of termination 
(which shall include the services referred to in the first sentence thereof 
along with such financial and/or tax counseling then provided generally to 
senior officers of the Company), (iii) office space and clerical support for 
a period of sixty (60) months following such termination and (iv) such other 
retirement benefits as are determined in accordance with the Company's 
employee benefit plans.

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     8.   EFFECT OF CHANGE OF CONTROL AND EXCESS PARACHUTE PAYMENTS

          a.   EFFECT OF CHANGE OF CONTROL.  In the event of a change of 
control of the Company, including a `Change-in-Control' as defined in the 
WellPoint Health Networks Inc. Officer Change-in-Control Plan effective as of 
February 12, 1998 or any subsequently adopted similar plan, Executive shall 
not lose any of the rights, privileges or guarantees provided to Executive by 
this Agreement.. The Company, or any successor to the Company following such 
change of control, shall be obligated to provide all rights and benefits 
applicable to Executive under any plan or program of the Company, and shall, 
as a condition to the consummation of such change of control, agree to 
continue and assume all obligations to provide all such rights and benefits.

          b.   EFFECT OF EXCESS PARACHUTE PAYMENTS.  If any compensation 
under this Agreement, alone or together with other compensation payable to 
Executive, would, in the determination of counsel or other advisor mutually 
acceptable to the Company and Executive, constitute a parachute payment 
within the meaning of Section 280G of the Code that would subject Executive 
to an excise tax under Section 4999 of the Code or any successor provisions, 
the Company shall pay Executive an additional amount in cash, which when 
added to such compensation, provides Executive with the same net after-tax 
compensation (considering Executive's federal and state income tax brackets 
and the excise tax on such compensation and such additional payment) that 
Executive would realize from such compensation (without such additional 
payment) if no excise tax applied.

     9.   ARBITRATION

     Any disputes arising out of our in connection with this Agreement or 
employment of Executive by the Company which are not resolved between the 
Company and Executive shall be submitted to arbitration in accordance with 
the rules of Commercial Arbitration of the American Arbitration Association.

     Any such arbitration shall take place in the city of which Executive 
resides at the time of the arbitration.  The arbitrator shall be a person 
experienced in employment and compensation of corporate business executives 
who is mutually acceptable to the Company and Executive.  If an arbitrator 
cannot be agreed upon within 15 days after a dispute is submitted to 
arbitration, the parties shall each select one representative who is not and 
has never been associated with the Company and who is not related to 
Executive, and these two representatives shall choose a neutral arbitrator 
with the qualifications described above.  If the representatives cannot reach 
agreement, one arbitrator with the qualifications described above shall be 
selected by the nearest regional office of the American Arbitration 
Association.

     All actions and proceedings under this section shall be kept 
confidential and neither party shall divulge any part thereof to third 
parties without the prior written consent of the other party.

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     10.  ENTIRE AGREEMENT

     This Agreement, including all attachments and documents incorporated by 
reference herein, constitutes the entire understanding between the parties 
with respect to Executive's employment with the Company, superseding all 
prior agreements, written or oral, concerning said employment and no 
representations or statements not incorporated or referred to in this 
Agreement shall be binding on either party.  This Agreement may not be 
amended except in writing by the parties hereto.

     11.  SUCCESSORS AND ASSIGNS

     This Agreement shall inure to the benefit of, and be binding upon, the 
successors and assigns of the Company.

     12.  CONSTRUCTION OF AGREEMENT.  This Agreement is made and entered into 
in the State of California and shall be construed under the laws of 
California, without regard to its conflict of laws rules.



Executive                                  Company

/s/ Leonard D. Schaeffer
------------------------------             By /s/ Stephen L. Davenport
                                             ---------------------------------
                                               Chair, Compensation Committee



Attachments



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