Medical Claims Liability

9 Months Ended

Sep. 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 nine months ended September 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	60,379		14,680		13,994		1,095		90,148
Prior years	(1,303)		(326)		(256)		(3)		(1,888)
Total incurred	59,076		14,354		13,738		1,092		88,260
Paid related to:
Current year	50,774		12,069		11,575		984		75,402
Prior years	8,517		2,452		1,376		136		12,481
Total paid	59,291		14,521		12,951		1,120		87,883
Balance, September 30, 2023, net	11,031		3,264		2,689		112		17,096
Plus: Reinsurance recoverable	4		—		41		—		45
Balance, September 30, 2023	$	11,035	$	3,264	$	2,730	$	112	$	17,141

The following table summarizes the change in medical claims liability for the nine months ended September 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	57,074		14,624		10,609		2,150		84,457
Prior years	(966)		(22)		(193)		(15)		(1,196)
Total incurred	56,108		14,602		10,416		2,135		83,261
Paid related to:
Current year	47,481		11,603		9,046		2,175		70,305
Prior years	7,343		1,963		1,580		82		10,968
Total paid	54,824		13,566		10,626		2,257		81,273
Balance, September 30, 2022, net	11,106		3,322		1,804		225		16,457
Plus: Reinsurance recoverable	8		—		—		—		8
Balance, September 30, 2022	$	11,114	$	3,322	$	1,804	$	225	$	16,465

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 development within "Incurred related to: Prior years," the Company recorded $341 million and $121 million as a reduction to premium revenue in the nine months ended September 30, 2023 and 2022, respectively, for minimum health benefits ratio (HBR) and other return of premium programs.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2023 was $11,661 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.