Quarterly report pursuant to Section 13 or 15(d)

Affordable Care Act

v3.7.0.1
Affordable Care Act
6 Months Ended
Jun. 30, 2017
Affordable Care Act [Abstract]  
Affordable Care Act
Affordable Care Act

The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual medical loss ratio (MLR) and cost sharing reductions. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum MLR. The 2016 benefit year was the final year for transitional reinsurance and risk corridor. No additional balances were recorded for the 2017 benefit year for these programs.

The Company recognized a $48 million net pre-tax benefit related to the reconciliation of the 2016 risk adjustment program during the second quarter of 2017 and a $70 million net pre-tax benefit related to the reconciliation of the 2015 risk adjustment and reinsurance programs during the second quarter of 2016.

The Company's receivables (payables) for each of these programs are as follows ($ in millions):
 
June 30, 2017
 
December 31, 2016
Risk adjustment
$
(866
)
 
$
(425
)
Reinsurance
90

 
122

Risk corridor
(7
)
 
(3
)
Minimum MLR
(27
)
 
(18
)
Cost sharing reductions
(280
)
 
(147
)