Centene Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

Medical Claims Liability

6 Months Ended

Jun. 30, 2020

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



	Six Months Ended June 30,
	2020			2019
Balance, January 1	$	7,473		$	6,831
Less: Reinsurance recoverable	20			27
Balance, January 1, net	7,453			6,804
Acquisitions and divestitures	3,746			61
Incurred related to:
Current year	41,149			28,791
Prior years	(422		)	(555		)
Total incurred	40,727			28,236
Paid related to:
Current year	34,783			22,384
Prior years	5,742			5,289
Total paid	40,525			27,673
Balance at June 30, net	11,401			7,428
Plus: Reinsurance recoverable	17			19
Balance, June 30	$	11,418		$	7,447

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 $46 million and $20 million as a reduction to premium revenue in the six months ended June 30, 2020 and 2019, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of June 30, 2020 was $7,691 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.