Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

Medical Claims Liability
6 Months Ended
Jun. 30, 2021
Insurance [Abstract]  
Medical Claims Liability Medical Claims Liability
The following table summarizes the change in medical claims liability ($ in millions):
Six Months Ended June 30,
2021 2020
Balance, January 1 $ 12,438  $ 7,473 
Less: Reinsurance recoverable 23  20 
Balance, January 1, net 12,415  7,453 
Acquisitions and divestitures —  3,746 
Incurred related to:
          Current year 49,147  41,149 
          Prior years (1,367) (422)
         Total incurred 47,780  40,727 
Paid related to:
          Current year 38,618  34,783 
          Prior years 8,837  5,742 
         Total paid 47,455  40,525 
Balance at June 30, net
12,740  11,401 
Plus: Reinsurance recoverable 23  17 
Balance, June 30
$ 12,763  $ 11,418 

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 $350 million and $46 million as a reduction to premium revenue in the six months ended June 30, 2021 and 2020, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of June 30, 2021 was $8,636 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.