Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

v3.19.1
Medical Claims Liability
3 Months Ended
Mar. 31, 2019
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,
 
 
2019
 
2018
Balance, January 1
 
$
6,831

 
$
4,286

Less: Reinsurance recoverable
 
27

 
18

Balance, January 1, net
 
6,804

 
4,268

Acquisitions and purchase accounting adjustments
 
6

 

Incurred related to:
 
 
 
 
          Current year
 
14,376

 
10,302

          Prior years
 
(494
)
 
(263
)
         Total incurred
 
13,882

 
10,039

Paid related to:
 
 
 
 
          Current year
 
8,771

 
6,579

          Prior years
 
4,560

 
2,970

         Total paid
 
13,331

 
9,549

Balance at March 31, net
 
7,361

 
4,758

Plus: Reinsurance recoverable
 
20

 
13

Balance, March 31
 
$
7,381

 
$
4,771



Reinsurance recoverables related to medical claims are included in premium and related receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years" due to minimum health benefits ratio (HBR) and other return of premium programs, we recorded $8 million as an increase to premium revenues and $13 million as a reduction to premium revenues in the three months ended March 31, 2019 and 2018, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2019 was $5,569 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. We estimate our 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.