Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

Medical Claims Liability
9 Months Ended
Sep. 30, 2021
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,
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 —  3,872 
Incurred related to:
          Current year 74,736  64,105 
          Prior years (1,526) (446)
         Total incurred 73,210  63,659 
Paid related to:
          Current year 62,205  56,074 
          Prior years 9,344  6,032 
         Total paid 71,549  62,106 
Balance at September 30, net
14,076  12,878 
Plus: Reinsurance recoverable 23  21 
Balance, September 30
$ 14,099  $ 12,899 

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 $438 million and $97 million as a reduction to premium revenue in the nine months ended September 30, 2021 and 2020, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2021 was $9,346 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.