Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

v3.10.0.1
Medical Claims Liability
9 Months Ended
Sep. 30, 2018
Insurance [Abstract]  
Medical Claims Liability
Medical Claims Liability

The following table summarizes the change in medical claims liability ($ in millions):

 
 
Nine Months Ended September 30,
 
 
2018
 
2017
Balance, January 1
 
$
4,286

 
$
3,929

Less: Reinsurance recoverable
 
18

 
5

Balance, January 1, net
 
4,268

 
3,924

Acquisitions
 
1,319

 

Incurred related to:
 
 
 
 
          Current year
 
33,465

 
28,666

          Prior years
 
(420
)
 
(388
)
         Total incurred
 
33,045

 
28,278

Paid related to:
 
 
 
 
          Current year
 
28,194

 
24,787

          Prior years
 
3,485

 
3,099

         Total paid
 
31,679

 
27,886

Balance at September 30, net
 
6,953

 
4,316

Plus: Reinsurance recoverable
 
30

 
17

Balance, September 30
 
$
6,983

 
$
4,333



Reinsurance recoverables related to medical claims are included in premium and related 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" due to minimum health benefits ratio (HBR) and other return of premium programs, we recorded $23 million as a reduction to premium revenues and $4 million as an increase to premium revenues in the nine months ended September 30, 2018 and 2017, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2018 was $5,326 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. We estimate our 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.