Medical Claims Liability

6 Months Ended

Jun. 30, 2023

As discussed in Note 1. Organization and Operations, in the first quarter of 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 six months ended June 30, 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	40,622		10,083		8,857		773		60,335
Prior years	(1,153)		(191)		(208)		(2)		(1,554)
Total incurred	39,469		9,892		8,649		771		58,781
Paid related to:
Current year	31,837		7,726		6,751		656		46,970
Prior years	7,890		2,357		1,282		137		11,666
Total paid	39,727		10,083		8,033		793		58,636
Balance, June 30, 2023, net	10,988		3,240		2,518		118		16,864
Plus: Reinsurance recoverable	5		—		15		—		20
Balance, June 30, 2023	$	10,993	$	3,240	$	2,533	$	118	$	16,884

The following table summarizes the change in medical claims liability for the six months ended June 30, 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 and divestitures	—		—		—		249		249
Incurred related to:
Current year	37,803		9,918		7,001		1,457		56,179
Prior years	(770)		(46)		(198)		(15)		(1,029)
Total incurred	37,033		9,872		6,803		1,442		55,150
Paid related to:
Current year	29,007		6,977		5,475		1,427		42,886
Prior years	6,808		1,784		1,489		80		10,161
Total paid	35,815		8,761		6,964		1,507		53,047
Balance, June 30, 2022, net	11,040		3,397		1,853		282		16,572
Plus: Reinsurance recoverable	9		—		—		—		9
Balance, June 30, 2022	$	11,049	$	3,397	$	1,853	$	282	$	16,581

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 $319 million and $48 million as a reduction to premium revenue in the six months ended June 30, 2023 and 2022, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of June 30, 2023 was $11,360 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.