Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

Medical Claims Liability
9 Months Ended
Sep. 30, 2022
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,
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 84,457  74,736 
Prior years (1,196) (1,526)
Total incurred 83,261  73,210 
Paid related to:
Current year 70,305  62,205 
Prior years 10,968  9,344 
Total paid 81,273  71,549 
Balance, September 30, net
16,457  14,076 
Plus: Reinsurance recoverable 23 
Balance, September 30
$ 16,465  $ 14,099 

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 $121 million and $438 million as a reduction to premium revenue in the nine months ended September 30, 2022 and 2021, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2022 was $11,130 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.