Medical Claims Liability

3 Months Ended

Mar. 31, 2023

As discussed in Note 1. Organization and Operations, in 2023 the Company updated its segment structure. Prior year information has been adjusted to reflect the change in segment reporting.

The following table summarizes the change in medical claims liability for the three months ended March 31, 2023 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2023	$	11,253	$	3,431	$	1,921	$	140	$	16,745
Less: Reinsurance recoverable	7		—		19		—		26
Balance, January 1, 2023, net	11,246		3,431		1,902		140		16,719

Incurred related to:
Current year	20,813		5,163		4,177		418		30,571
Prior years	(803)		(155)		(172)		(7)		(1,137)
Total incurred	20,010		5,008		4,005		411		29,434
Paid related to:
Current year	12,679		2,988		2,541		294		18,502
Prior years	6,834		2,145		1,063		132		10,174
Total paid	19,513		5,133		3,604		426		28,676
Balance, March 31, 2023, net	11,743		3,306		2,303		125		17,477
Plus: Reinsurance recoverable	9		—		18		—		27
Balance, March 31, 2023	$	11,752	$	3,306	$	2,321	$	125	$	17,504

The following table summarizes the change in medical claims liability for the three months ended March 31, 2022 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2022	$	9,845	$	2,286	$	2,014	$	98	$	14,243
Less: Reinsurance recoverable	23		—		—		—		23
Balance, January 1, 2022, net	9,822		2,286		2,014		98		14,220
Acquisitions	—		—		—		249		249
Incurred related to:
Current year	19,289		5,098		3,423		751		28,561
Prior years	(514)		(52)		(149)		(8)		(723)
Total incurred	18,775		5,046		3,274		743		27,838
Paid related to:
Current year	12,022		2,674		2,012		690		17,398
Prior years	5,643		1,624		1,319		76		8,662
Total paid	17,665		4,298		3,331		766		26,060
Balance, March 31, 2022, net	10,932		3,034		1,957		324		16,247
Plus: Reinsurance recoverable	12		—		—		—		12
Balance, March 31, 2022	$	10,944	$	3,034	$	1,957	$	324	$	16,259

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of minimum health benefits ratio (HBR) and other return of premium programs, the Company recorded $159 million and $67 million as a reduction to premium revenue in the three months ended March 31, 2023 and 2022, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2023 was $11,271 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services, and other relevant factors.