A reconciliation of the beginning and ending balances for medical claims payable, by segment (see Note 19, “Segment Information”), for the year ended December 31, 2019 is as follows:



	Commercial & Specialty Business			Government Business			Total
Gross medical claims payable, beginning of year	$	2,586		$	4,680		$	7,266
Ceded medical claims payable, beginning of year	(10		)	(24		)	(34		)
Net medical claims payable, beginning of year	2,576			4,656			7,232
Net incurred medical claims:
Current year	25,942			52,753			78,695
Prior years redundancies	(190		)	(310		)	(500		)
Total net incurred medical claims	25,752			52,443			78,195
Net payments attributable to:
Current year medical claims	23,026			47,268			70,294
Prior years medical claims	2,277			4,242			6,519
Total net payments	25,303			51,510			76,813
Net medical claims payable, end of year	3,025			5,589			8,614
Ceded medical claims payable, end of year	14			19			33
Gross medical claims payable, end of year	$	3,039		$	5,608		$	8,647



	Commercial & Specialty Business			Government Business			Total
Gross medical claims payable, beginning of year	$	3,383		$	4,431		$	7,814
Ceded medical claims payable, beginning of year	(78		)	(27		)	(105		)
Net medical claims payable, beginning of year	3,305			4,404			7,709
Business combinations and purchase adjustments	—			199			199
Net incurred medical claims:
Current year	24,094			45,487			69,581
Prior years redundancies	(456		)	(474		)	(930		)
Total net incurred medical claims	23,638			45,013			68,651
Net payments attributable to:
Current year medical claims	21,633			41,115			62,748
Prior years medical claims	2,734			3,845			6,579
Total net payments	24,367			44,960			69,327
Net medical claims payable, end of year	2,576			4,656			7,232
Ceded medical claims payable, end of year	10			24			34
Gross medical claims payable, end of year	$	2,586		$	4,680		$	7,266



	Commercial & Specialty Business			Government Business			Total
Gross medical claims payable, beginning of year	$	3,247		$	4,409		$	7,656
Ceded medical claims payable, beginning of year	(521		)	(18		)	(539		)
Net medical claims payable, beginning of year	2,726			4,391			7,117
Business combinations and purchase adjustments	—			76			76
Net incurred medical claims:
Current year	29,467			40,910			70,377
Prior years redundancies	(462		)	(671		)	(1,133		)
Total net incurred medical claims	29,005			40,239			69,244
Net payments attributable to:
Current year medical claims	26,250			36,673			62,923
Prior years medical claims	2,176			3,629			5,805
Total net payments	28,426			40,302			68,728
Net medical claims payable, end of year	3,305			4,404			7,709
Ceded medical claims payable, end of year	78			27			105
Gross medical claims payable, end of year	$	3,383		$	4,431		$	7,814

Amounts incurred related to prior years vary from previously estimated liabilities as the claims are ultimately settled. Liabilities at any period-end are continually reviewed and re-estimated as information regarding actual claims payments, or runout, becomes known. This information is compared to the originally established year end liability. Negative amounts reported for incurred medical claims related to prior years result from claims being settled for amounts less than originally

estimated. The prior year redundancy of $500 shown above for the year ended December 31, 2019 represents an estimate based on paid claim activity from January 1, 2019 to December 31, 2019. Medical claim liabilities are usually described as having a “short tail,” which means that they are generally paid within twelve months of the member receiving service from the provider. Accordingly, the majority of the $500 redundancy relates to claims incurred in calendar year 2018.

The following table provides a summary of the two key assumptions having the most significant impact on our incurred but not paid liability estimates for the years ended December 31, 2019, 2018 and 2017, which are the completion and trend factors. These two key assumptions can be influenced by utilization levels, unit costs, mix of business, benefit plan designs, provider reimbursement levels, processing system conversions and changes, claim inventory levels, claim processing patterns, claim submission patterns and operational changes resulting from business combinations.



	Favorable Developments by Changes in Key Assumptions
	2019			2018			2017
Assumed trend factors	$	(325	)	$	(515	)	$	(631	)
Assumed completion factors	(175		)	(415		)	(502		)
Total	$	(500	)	$	(930	)	$	(1,133	)

The favorable development recognized in 2019 resulted primarily from trend factors in late 2018 developing more favorably than originally expected as well as a smaller but significant contribution from completion factor development.



	Years Ended December 31
	2019		2018		2017
Net incurred medical claims:
Commercial & Specialty Business	$	25,752	$	23,638	$	29,005
Government Business	52,443		45,013		40,239
Total net incurred medical claims	78,195		68,651		69,244
Quality improvement and other claims expense	3,591		3,244		2,992
Benefit expense	$	81,786	$	71,895	$	72,236



Commercial & Specialty Business	Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	2017		2018
Claim Years	(Unaudited)		(Unaudited)		2019
2017 & Prior	$	31,731	$	31,275	$	31,241
2018			24,094		23,938
2019					25,942
Total					$	81,121



Commercial & Specialty Business	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	2017		2018
Claim Years	(Unaudited)		(Unaudited)		2019
2017 & Prior	$	28,426	$	31,160	$	31,210
2018			21,633		23,860
2019					23,026
Total					$	78,096

At December 31, 2019, the total of incurred but not reported liabilities plus expected development on reported claims for the Commercial & Specialty Business was $31, $78 and $2,916 for the claim years 2017 and prior, 2018 and 2019, respectively.



Government Business	Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	2017		2018
Claim Years	(Unaudited)		(Unaudited)		2019
2017 & Prior	$	44,706	$	44,232	$	44,120
2018			45,686		45,488
2019					52,753
Total					$	142,361



Government Business	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	2017		2018
Claim Years	(Unaudited)		(Unaudited)		2019
2017 & Prior	$	40,302	$	44,147	$	44,104
2018			41,115		45,400
2019					47,268
Total					$	136,772

At December 31, 2019, the total of incurred but not reported liabilities plus expected development on reported claims for the Government Business was $16, $89 and $5,484 for the claim years 2017 and prior, 2018 and 2019, respectively.

The information about incurred claims development, paid claims development and cumulative number of reported claims for the years ended December 31, 2017 and 2018, for both the Commercial & Specialty Business and Government Business, is unaudited and presented as supplementary information.

The cumulative number of reported claims for each claim year, for both the Commercial & Specialty Business and Government Business, have been developed using historical data captured by our claim payment systems. The provided claim amounts are not a precise tool for understanding utilization of medical services. They could be impacted by a variety of factors including changes in provider billing practices, provider reimbursement arrangements, mix of services, benefit design or processing systems. The cumulative number of reported claims has been provided to comply with FASB accounting standards and is not used by management in its claims analysis. Our cumulative number of reported claims may not be comparable to similar measures reported by other health benefits companies.

The reconciliation of the Commercial & Specialty Business and Government Business incurred and paid claims development information for the three years ended December 31, 2019, reflected in the tables above, to the consolidated ending balance for medical claims payable included in the consolidated balance sheet, as of December 31, 2019, is as follows:



	Commercial & Specialty Business		Government Business		Total
Cumulative incurred claims and allocated claim adjustment expenses, net of reinsurance	$	81,121	$	142,361	$	223,482
Less: Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	78,096		136,772		214,868
Net medical claims payable, end of year	3,025		5,589		8,614
Ceded medical claims payable, end of year	14		19		33
Insurance lines other than short duration	—		195		195
Gross medical claims payable, end of year	$	3,039	$	5,803	$	8,842