Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

v3.22.1
Medical Claims Liability
3 Months Ended
Mar. 31, 2022
Insurance [Abstract]  
Medical Claims Liability Medical Claims Liability
The following table summarizes the change in medical claims liability ($ in millions):
Three Months Ended March 31,
2022 2021
Balance, January 1 $ 14,243  $ 12,438 
Less: Reinsurance recoverable 23  23 
Balance, January 1, net 14,220  12,415 
Acquisitions and divestitures 249  — 
Incurred related to:
          Current year 28,561  24,255 
          Prior years (723) (864)
         Total incurred 27,838  23,391 
Paid related to:
          Current year 17,398  15,161 
          Prior years 8,662  7,828 
         Total paid 26,060  22,989 
Balance at March 31, net
16,247  12,817 
Plus: Reinsurance recoverable 12  25 
Balance, March 31
$ 16,259  $ 12,842 

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. The impact from COVID-19 on healthcare utilization and medical claims submission patterns continues to provide increased estimation uncertainty on the incurred but not reported liability. Additionally, as a result of minimum health benefits ratio (HBR) and other return of premium programs, the Company recorded $67 million and $202 million as a reduction to premium revenue in the three months ended March 31, 2022 and 2021, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2022 was $10,480 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.