10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________________________

FORM 10-Q

____________________________________________

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

____________________________________________

Commission file number: 001-31826

____________________________________________

CENTENE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	42-1406317
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
7700 Forsyth Boulevard
St. Louis, Missouri	63105
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(314) 725-4477

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.  Large accelerated filer x Accelerated filer o Non-accelerated filer o (do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No  x

As of October 16, 2015, the registrant had 119,202,788 shares of common stock outstanding.

CENTENE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		PAGE
	Part I
	Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 (unaudited)	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014 (unaudited)	2
	Consolidated Statements of Comprehensive Earnings for the Three and Nine Months Ended September 30, 2015 and 2014 (unaudited)	3
	Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 2015 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (unaudited)	5
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
	Part II
	Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
Signatures		46

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

All statements, other than statements of current or historical fact, contained in this filing are forward-looking statements.  We have attempted to identify these statements by terminology including “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “seek,” “target,” “goal,” “may,” “will,” “would,” “could,” “should,” “can,” “continue” and other similar words or expressions in connection with, among other things, any discussion of future operating or financial performance.  In particular, these statements include statements about our market opportunity, our growth strategy, competition, expected activities and future acquisitions, including our proposed merger with Health Net, Inc. (Health Net) (Proposed Merger), investments and the adequacy of our available cash resources.  These statements may be found in the various sections of this filing, including those entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations,” Part II, Item 1A. “Risk Factors,” and Part II, Item 1 “Legal Proceedings.”  Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions.

All forward-looking statements included in this filing are based on information available to us on the date of this filing and we undertake no obligation to update or revise the forward-looking statements included in this filing, whether as a result of new information, future events or otherwise, after the date of this filing.  Actual results may differ from projections or estimates due to a variety of important factors applicable to both us and Health Net, including but not limited to:

• our ability to accurately predict and effectively manage health benefits and other operating expenses and reserves;

• competition;

• membership and revenue projections;

• timing of regulatory contract approval;

• changes in healthcare practices;

• changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder;

• changes in expected contract start dates;

• changes in expected closing dates, estimated purchase price and accretion for acquisitions;

• inflation;

• foreign currency fluctuations;

• provider and state contract changes;

• new technologies;

• advances in medicine;

• reduction in provider payments by governmental payors;

• major epidemics;

• disasters and numerous other factors affecting the delivery and cost of healthcare;

• the expiration, cancellation or suspension of our or Health Net's managed care contracts by federal or state governments (including but not limited to Medicare and Medicaid);

• the outcome of our or Health Net's pending legal proceedings;

• availability of debt and equity financing, on terms that are favorable to us;

• changes in economic, political and market conditions;

• the ultimate closing date of the Proposed Merger;

• the possibility that the expected synergies and value creation from the Proposed Merger will not be realized, or will not be realized within the expected time period;

• the risk that acquired businesses will not be integrated successfully;

• disruption from the Proposed Merger making it more difficult to maintain business and operational relationships;

• the risk that unexpected costs related to the Proposed Merger will be incurred;

• the possibility that the Proposed Merger does not close, including, but not limited to, due to the failure to satisfy the closing conditions thereto; and

• the risk that financing for the Proposed Merger may not be available on favorable terms.

This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Other Information

The discussion in Part I, Item2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Results of Operations" contains financial information for new and existing businesses. Existing businesses are primarily state markets, significant geographic expansion in an existing state or product that we have managed for four complete quarters. New businesses are primarily new state markets, significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.

Item 1A “Risk Factors” of Part II of this filing contains a further discussion of these and other important factors that could cause actual results to differ from expectations. We disclaim any current intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Due to these important factors and risks, we cannot give assurances with respect to our future premium levels or our ability to control our future medical costs.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this report as the Company believes that these figures are helpful in allowing individuals to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

	September 30, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	1,665		$	1,610
Premium and related receivables	1,281			912
Short term investments	162			177
Other current assets	488			335
Total current assets	3,596			3,034
Long term investments	1,992			1,280
Restricted deposits	106			100
Property, software and equipment, net	488			445
Goodwill	849			754
Intangible assets, net	161			120
Other long term assets	130			91
Total assets	$	7,322		$	5,824
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims liability	$	2,144		$	1,723
Accounts payable and accrued expenses	1,035			768
Return of premium payable	313			236
Unearned revenue	66			168
Current portion of long term debt	5			5
Total current liabilities	3,563			2,900
Long term debt	1,276			874
Other long term liabilities	274			159
Total liabilities	5,113			3,933
Commitments and contingencies
Redeemable noncontrolling interests	156			148
Stockholders’ equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at September 30, 2015 and December 31, 2014	—			—
Common stock, $.001 par value; authorized 200,000,000 shares; 124,940,103 issued and 119,201,560 outstanding at September 30, 2015, and 124,274,864 issued and 118,433,416 outstanding at December 31, 2014	—			—
Additional paid-in capital	909			840
Accumulated other comprehensive loss	(2		)	(1		)
Retained earnings	1,247			1,003
Treasury stock, at cost (5,738,543 and 5,841,448 shares, respectively)	(103		)	(98		)
Total Centene stockholders’ equity	2,051			1,744
Noncontrolling interest	2			(1		)
Total stockholders’ equity	2,053			1,743
Total liabilities and stockholders’ equity	$	7,322		$	5,824

The accompanying notes to the consolidated financial statements are an integral part of these statements. 

1

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues:
Premium	$	4,983		$	3,780		$	13,974		$	10,182
Service	480			379			1,434			1,070
Premium and service revenues	5,463			4,159			15,408			11,252
Premium tax and health insurer fee	358			193			1,050			584
Total revenues	5,821			4,352			16,458			11,836
Expenses:
Medical costs	4,433			3,390			12,475			9,093
Cost of services	413			327			1,234			935
General and administrative expenses	464			334			1,309			951
Premium tax expense	274			161			794			492
Health insurer fee expense	54			32			161			94
Total operating expenses	5,638			4,244			15,973			11,565
Earnings from operations	183			108			485			271
Other income (expense):
Investment and other income	8			6			27			18
Interest expense	(11		)	(9		)	(32		)	(25		)
Earnings from continuing operations, before income tax expense	180			105			480			264
Income tax expense	87			27			234			107
Earnings from continuing operations, net of income tax expense	93			78			246			157
Discontinued operations, net of income tax expense of $0, $0, $0, and $1, respectively	1			1			—			2
Net earnings	94			79			246			159
(Earnings) loss attributable to noncontrolling interests	(1		)	3			(2		)	5
Net earnings attributable to Centene Corporation	$	93		$	82		$	244		$	164
Amounts attributable to Centene Corporation common shareholders:
Earnings from continuing operations, net of income tax expense	$	92		$	81		$	244		$	162
Discontinued operations, net of income tax expense	1			1			—			2
Net earnings	$	93		$	82		$	244		$	164
Net earnings per common share attributable to Centene Corporation:
Basic:
Continuing operations	$	0.77		$	0.69		$	2.05		$	1.40
Discontinued operations	0.01			0.01			—			0.01
Basic earnings per common share	$	0.78		$	0.70		$	2.05		$	1.41
Diluted:
Continuing operations	$	0.75		$	0.67		$	1.99		$	1.35
Discontinued operations	0.01			0.01			—			0.02
Diluted earnings per common share	$	0.76		$	0.68		$	1.99		$	1.37
Weighted average number of common shares outstanding:
Basic	119,121,524			117,226,968			118,970,853			115,912,304
Diluted	123,131,810			121,363,750			122,904,476			119,873,398

The accompanying notes to the consolidated financial statements are an integral part of these statements.

2

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS

(In millions)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net earnings	$	94		$	79		$	246		$	159
Reclassification adjustment, net of tax	—			—			—			—
Change in unrealized gain on investments, net of tax	2			(3		)	3			2
Foreign currency translation adjustments	—			—			(4		)	—
Other comprehensive earnings	2			(3		)	(1		)	2
Comprehensive earnings	96			76			245			161
Comprehensive (earnings) loss attributable to noncontrolling interests	(1		)	3			(2		)	5
Comprehensive earnings attributable to Centene Corporation	$	95		$	79		$	243		$	166

The accompanying notes to the consolidated financial statements are an integral part of this statement.

3

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)

Nine Months Ended September 30,2015

	Centene Stockholders’ Equity
	Common Stock										Treasury Stock
	$.001 Par Value Shares	Amt		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings		$.001 Par Value Shares		Amt			Non controlling Interest			Total
Balance, December 31, 2014	124,274,864	$	—	$	840	$	(1	)	$	1,003	5,841,448		$	(98	)	$	(1	)	$	1,743
Comprehensive Earnings:
Net earnings	—	—		—		—			244		—		—			—			244
Change in unrealized gain on investments, net of $1 tax	—	—		—		3			—		—		—			—			3
Foreign currency translation	—	—		—		(4		)	—		—		—			—			(4		)
Total comprehensive earnings																			243
Common stock issued for acquisition		—		8		—			—		(247,580	)	4			—			12
Common stock issued for employee benefit plans	665,239	—		6		—			—		—		—			—			6
Common stock repurchases	—	—		—		—			—		144,675		(9		)	—			(9		)
Stock compensation expense	—	—		48		—			—		—		—			—			48
Excess tax benefits from stock compensation	—	—		7		—			—		—		—			—			7
Contribution from noncontrolling interest	—	—		—		—			—		—		—			2			2
Reclassification to redeemable noncontrolling interest	—	—		—		—			—		—		—			1			1
Balance, September 30, 2015	124,940,103	$	—	$	909	$	(2	)	$	1,247	5,738,543		$	(103	)	$	2		$	2,053

The accompanying notes to the consolidated financial statements are an integral part of this statement.

4

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net earnings	$	246		$	159
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	82			65
Stock compensation expense	48			35
Deferred income taxes	(14		)	(65		)
Gain on settlement of contingent consideration	(37		)	—
Goodwill and intangible adjustment	28			—
Changes in assets and liabilities
Premium and related receivables	(360		)	(243		)
Other current assets	(103		)	(25		)
Other assets	(40		)	(51		)
Medical claims liabilities	394			476
Unearned revenue	(104		)	54
Accounts payable and accrued expenses	209			427
Other long term liabilities	101			17
Other operating activities	7			4
Net cash provided by operating activities	457			853
Cash flows from investing activities:
Capital expenditures	(101		)	(69		)
Purchases of investments	(1,077		)	(738		)
Sales and maturities of investments	418			320
Proceeds from asset sale	7			—
Investments in acquisitions, net of cash acquired	(16		)	(94		)
Net cash used in investing activities	(769		)	(581		)
Cash flows from financing activities:
Proceeds from exercise of stock options	5			6
Proceeds from borrowings	1,305			1,385
Payment of long term debt	(910		)	(1,118		)
Excess tax benefits from stock compensation	7			7
Common stock repurchases	(9		)	(6		)
Contribution from noncontrolling interest	2			5
Debt issue costs	(4		)	(6		)
Payment of contingent consideration obligation	(29		)	—
Net cash provided by financing activities	367			273
Net increase in cash and cash equivalents	55			545
Cash and cash equivalents, beginning of period	1,610			1,038
Cash and cash equivalents, end of period	$	1,665		$	1,583
Supplemental disclosures of cash flow information:
Interest paid	$	28		$	18
Health insurer fee paid	$	213		$	126
Income taxes paid	$	229		$	167
Equity issued in connection with acquisitions	$	12		$	190

The accompanying notes to the consolidated financial statements are an integral part of these statements.

5

CENTENE CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except share data)

(Unaudited)

1. Basis of Presentation

Basis of Presentation

The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Form 10-K for the fiscal year ended December 31, 2014.  The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the December 31, 2014 audited financial statements have been omitted from these interim financial statements where appropriate.  In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented.

Certain 2014 amounts in the notes to the consolidated financial statements have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on net earnings or stockholders’ equity as previously reported.

On February 2, 2015, the Board of Directors declared a two-for-one split of Centene's common stock in the form of a 100% stock dividend distributed February 19, 2015 to stockholders of record on February 12, 2015. All share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which supersedes existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity's insurance contracts). Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued an ASU which deferred the effective date of the new revenue standard by one year. The new effective date is for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the effect of the new revenue recognition guidance.

In April 2015, the FASB issued an ASU which changes the presentation of debt issuance costs in financial statements. Under the new standard, debt issuance costs are presented in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the cost is reported as interest expense. The new standard is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to adopt this guidance beginning in the first quarter of 2015 and has applied the new standard retrospectively to all prior periods. The reclassification of debt issuance costs impacted the Consolidated Balance Sheets by decreasing both Other Long Term Assets and Long Term Debt by $14 million at December 31, 2014 and $15 million at September 30, 2015. These reclassifications have no effect on net earnings or stockholders' equity as previously reported.

In May 2015, the FASB issued an ASU which expands the disclosure requirements for insurance companies that issue short-duration contracts. The new standard will increase the level of disclosure around the Company's Medical Claims Liability to include the following: claims development by year; claim frequency; a rollforward of the claims liability; and a description of methods and assumptions used for determining the liability. It is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the effect of the new disclosure requirements.

6

In September 2015, the FASB issued an ASU which simplifies the accounting for measurement-period adjustments in business combinations. Under the new standard, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. It is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company elected to adopt this guidance in the current fiscal quarter.

2. Health Net, Inc. Merger

On July 2, 2015, the Company announced that the Company and two direct, newly formed subsidiaries of the Company had entered into a definitive merger agreement with Health Net, Inc. (Health Net) under which the Company will acquire all of the issued and outstanding shares of Health Net. Under the terms of the agreement, at the closing of the transaction, Health Net stockholders (with limited exceptions) would receive 0.622 of a validly issued, fully paid, non-assessable share of Centene common stock and $28.25 in cash for each share of Health Net common stock. The transaction is valued at approximately $6.8 billion (based on the Centene closing stock price on July 1, 2015), including the assumption of debt.

The transaction is expected to close in early 2016 and is subject to approvals by relevant state insurance and healthcare regulators and other customary closing conditions. In August 2015, the Company announced the early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In October 2015, the Company and Health Net announced the transaction was approved by both the Centene and Health Net stockholders. The Company expects to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing.

3. Acquisitions and Redeemable Noncontrolling Interest

Acquisitions

Community Health Solutions of America, Inc.

In July 2014, the Company completed a transaction whereby Community Health Solutions of America, Inc. assigned its contract with the Louisiana Department of Health and Hospitals under the Bayou Health Shared Savings Program to the Company's subsidiary, Louisiana Healthcare Connections (LHC). The fair value of consideration transferred included the present value of the estimated contingent consideration, subject to membership retained by LHC in the first quarter of 2015. The fair value of contingent consideration was $18 million at December 31, 2014. During the first quarter of 2015, the Company determined the amount of the actual contingent consideration to be $8 million. A gain of $10 million related to the settlement of the obligation was recorded in General and Administrative expense.

LiveHealthier, Inc.

In January 2015, the Company acquired the remaining 79% of LiveHealthier, Inc. (LiveHealthier) for $28 million, bringing its total ownership to 100%. LiveHealthier is a provider of technology and service-based health management solutions. The fair value of consideration of $28 million consists of cash paid of $11 million, Centene common stock issued at closing of $13 million, and the fair value of estimated contingent consideration of $4 million to be paid in cash over a three year period. The contingent consideration will not exceed $9 million.

The Company's allocation of fair value resulted in goodwill of $26 million and other identifiable intangible assets of $15 million. The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

7

Fidelis SecureCare of Michigan, Inc.

In May 2015, the Company acquired 100% of Fidelis SecureCare of Michigan, Inc. (Fidelis) a subsidiary of Concerto Healthcare, for $57 million. Fidelis was previously selected by the Michigan Department of Community Health to provide integrated healthcare services to members who are dually eligible for Medicare and Medicaid in Macomb and Wayne counties. The fair value of consideration of $57 million consists of initial cash consideration of $7 million and the fair value of estimated contingent consideration of $50 million. The contingent consideration is based on duals membership and revenue per member during the first year of the contract (July 2015 - June 2016), including reconciliation payments settled over a two year period. The contingent consideration fair value is estimated based on expected membership during the first year of the contract as well as estimated revenue per member reflecting both member mix and risk adjustment. The Company's allocation of fair value resulted in goodwill of $29 million and other identifiable intangible assets of $23 million. 100% of the goodwill is deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

During the third quarter of 2015, the Company experienced higher than anticipated opt-out rates and member attrition in the dual demonstration program, resulting in lower than expected membership and lower blended premium rates. As a result, the fair value of estimated contingent consideration was reduced to $23 million, and the Company recorded a gain of $27 million in general and administrative expenses. In connection with the lower membership and revenue outlook, the Company conducted an impairment analysis of the identifiable intangible assets and goodwill, resulting in a reduction of goodwill and intangible assets of $28 million which was recorded in general and administrative expenses. At September 30, 2015, the Company had goodwill of $15 million and other identifiable intangible assets of $7 million remaining on the balance sheet.

Agate Resources, Inc.

In September2015, the Company completed the acquisition of Agate Resources, Inc. (Agate) for $120 million. Agate is a diversified holding company that offers primarily Medicaid and other healthcare products and services to Oregon residents. The fair value of consideration of $120 million consists of initial cash consideration of $93 million, the present value of future cash payments of $18 million to be paid out over a three year period, and the fair value of estimated contingent consideration of $9 million. A portion of the contingent consideration is based on the achievement of underwriting targets and will be paid in cash over a three year period; the remainder is based on the receipt of a retrospective rate adjustment and is expected to be settled in cash in the fourth quarter of 2015.

The Company's preliminary allocation of fair value resulted in goodwill of $51 million and other identifiable intangible assets of $34 million. The Company has not finalized the allocation of the fair value of assets and liabilities. The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

Redeemable Noncontrolling Interest

In January 2015, the Company sold 25% of its ownership in Celtic Insurance Company for $7 million. No gain or loss was recognized on the sale of the ownership interest. Celtic Insurance Company is included in the Managed Care segment. In connection with the sale of the ownership interest, the Company entered into a put agreement with the noncontrolling interest holder, allowing the noncontrolling interest holder to put its interest back to the Company beginning in 2022. As a result of put option agreements, the noncontrolling interest is considered redeemable and is classified in the Redeemable Noncontrolling Interest section of the consolidated balance sheets.

A reconciliation of the changes in the Redeemable Noncontrolling Interests is as follows ($ in millions):

Balance, December 31, 2014	$	148
Fair value of redeemable noncontrolling interest sold	7
Reclassification to redeemable noncontrolling interest	(1		)
Net earnings attributable to redeemable noncontrolling interests	2
Balance, September 30, 2015	$	156

8

4. Short term and Long term Investments, Restricted Deposits

Short term and long term investments and restricted deposits by investment type consist of the following ($ in millions):

	September 30, 2015									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	468	$	2	$	—		$	470	$	393	$	1	$	(2	)	$	392
Corporate securities	837		4		(4		)	837		556		2		(2		)	556
Restricted certificates of deposit	9		—		—			9		6		—		—			6
Restricted cash equivalents	78		—		—			78		79		—		—			79
Municipal securities	489		2		(2		)	489		174		1		—			175
Asset-backed securities	186		—		—			186		180		—		—			180
Residential mortgage-backed securities	75		2		—			77		84		1		—			85
Commercial mortgage-backed securities	26		—		—			26		—		—		—			—
Cost and equity method investments	72		—		—			72		68		—		—			68
Life insurance contracts	16		—		—			16		16		—		—			16
Total	$	2,256	$	10	$	(6	)	$	2,260	$	1,556	$	5	$	(4	)	$	1,557

The Company’s investments are classified as available-for-sale with the exception of life insurance contracts and certain cost and equity method investments.  The Company’s investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities.  The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of September 30, 2015, 38% of the Company’s investments in securities recorded at fair value that carry a rating by S&P or Moody’s were rated AAA/Aaa, 62% were rated AA-/Aa3 or higher, and 88% were rated A-/A3 or higher.  At September 30, 2015, the Company held certificates of deposit, life insurance contracts and cost and equity method investments which did not carry a credit rating.

The Company's residential mortgage-backed securities are all issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 2.0 years at September 30, 2015.

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The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):

	September 30, 2015										December 31, 2014
	Less Than 12 Months					12 Months or More					Less Than 12 Months					12 Months or More
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	—		$	68	$	—		$	16	$	—		$	72	$	(2	)	$	180
Corporate securities	(3		)	317		(1		)	41		(2		)	311		—			1
Municipal securities	(1		)	120		(1		)	5		—			20		—			7
Asset-backed securities	—			68		—			13		—			70		—			10
Residential mortgage-backed securities	—			—		—			—		—			18		—			—
Total	$	(4	)	$	573	$	(2	)	$	75	$	(2	)	$	491	$	(2	)	$	198

As of September 30, 2015, the gross unrealized losses were generated from 202 positions out of a total of 680 positions.  The change in fair value of fixed income securities is a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes.  If the security meets this criterion, the decline in fair value is other-than-temporary and is recorded in earnings.  The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, there is no indication of other-than-temporary impairment for these securities.

During the nine months ended September 30, 2015, the Company recognized $8 million of income from equity method investments.

The contractual maturities of short term and long term investments and restricted deposits are as follows ($ in millions):

	September 30, 2015								December 31, 2014
	Investments				Restricted Deposits				Investments				Restricted Deposits
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	162	$	162	$	95	$	95	$	176	$	177	$	92	$	92
One year through five years	1,613		1,616		11		11		1,121		1,121		8		8
Five years through ten years	268		268		—		—		121		120		—		—
Greater than ten years	107		108		—		—		38		39		—		—
Total	$	2,150	$	2,154	$	106	$	106	$	1,456	$	1,457	$	100	$	100

Actual maturities may differ from contractual maturities due to call or prepayment options.  Asset-backed and mortgage-backed securities are included in the one year through five years category, while cost and equity method investments and life insurance contracts are included in the five years through ten years category.  The Company has an option to redeem at amortized cost substantially all of the securities included in the greater than ten years category listed above.

The Company continuously monitors investments for other-than-temporary impairment.  Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions.  The Company recognizes an impairment loss for cost and equity method investments when evidence demonstrates that it is other-than-temporarily impaired.  Evidence of a loss in value that is other-than-temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.

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5. Fair Value Measurements

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon observable or unobservable inputs used to estimate fair value.  Level inputs are as follows:

Level Input:	Input Definition:
Level I	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II	Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2015, for assets and liabilities measured at fair value on a recurring basis ($ in millions):  

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,665	$	—	$	—	$	1,665
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	437	$	14	$	—	$	451
Corporate securities	—		837		—		837
Municipal securities	—		489		—		489
Asset-backed securities	—		186		—		186
Residential mortgage-backed securities	—		77		—		77
Commercial mortgage-backed securities	—		26		—		26
Total investments	$	437	$	1,629	$	—	$	2,066
Restricted deposits available for sale:
Cash and cash equivalents	$	78	$	—	$	—	$	78
Certificates of deposit	9		—		—		9
U.S. Treasury securities and obligations of U.S. government corporations and agencies	19		—		—		19
Total restricted deposits	$	106	$	—	$	—	$	106
Other long term assets: Interest rate swap agreements	$	—	$	18	$	—	$	18
Total assets at fair value	$	2,208	$	1,647	$	—	$	3,855

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The following table summarizes fair value measurements by level at December 31, 2014, for assets and liabilities measured at fair value on a recurring basis ($ in millions): 

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,610	$	—	$	—	$	1,610
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	360	$	17	$	—	$	377
Corporate securities	—		556		—		556
Municipal securities	—		175		—		175
Asset-backed securities	—		180		—		180
Residential mortgage-backed securities	—		85		—		85
Commercial mortgage-backed securities	—		—		—		—
Total investments	$	360	$	1,013	$	—	$	1,373
Restricted deposits available for sale:
Cash and cash equivalents	$	79	$	—	$	—	$	79
Certificates of deposit	6		—		—		6
U.S. Treasury securities and obligations of U.S. government corporations and agencies	15		—		—		15
Total restricted deposits	$	100	$	—	$	—	$	100
Other long term assets: Interest rate swap agreements	$	—	$	11	$	—	$	11
Total assets at fair value	$	2,070	$	1,024	$	—	$	3,094

The Company periodically transfers U.S. Treasury securities and obligations of U.S. government corporations and agencies between Level I and Level II fair value measurements dependent upon the level of trading activity for the specific securities at the measurement date.  The Company’s policy regarding the timing of transfers between Level I and Level II is to measure and record the transfers at the end of the reporting period.  At September 30, 2015, there were less than $1 million of transfers from Level I to Level II and $2 million of transfers from Level II to Level I.  The Company utilizes matrix pricing services to estimate fair value for securities which are not actively traded on the measurement date.  The Company designates these securities as Level II fair value measurements.  The aggregate carrying amount of the Company’s life insurance contracts and other non-majority owned investments, which approximates fair value, was $88 million and $84 million as of September 30, 2015 and December 31, 2014, respectively.

6. Health Insurance Marketplace

The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014 for the Health Insurance Marketplace product. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual medical loss ratio for the Health Insurance Marketplace. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum medical loss ratio.

In June 2015, CMS released final results on reinsurance and risk-adjustment for the 2014 plan year. These final results had an insignificant impact to the Company for the 2014 plan year.

The Company's receivables (payables) for each of these programs are as follows ($ in millions):

	September 30, 2015			December 31, 2014
Risk adjustment	$	(77	)	$	(44	)
Reinsurance	14			11
Risk corridor	(31		)	(9		)
Minimum medical loss ratio	(14		)	(6		)

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7. Debt

Debt consists of the following ($ in millions):

	September 30, 2015			December 31, 2014
$425 million 5.75% Senior notes, due June 1, 2017	$	428		$	429
$500 million 4.75% Senior notes, due May 15, 2022	500			300
Fair value of interest rate swap agreements	18			11
Senior notes	946			740
Revolving credit agreement	275			75
Mortgage notes payable	68			70
Capital leases	7			8
Debt issuance costs	(15		)	(14		)
Total debt	1,281			879
Less current portion	(5		)	(5		)
Long term debt	$	1,276		$	874

Senior Notes

In January 2015, the Company issued an additional $200 million of 4.75% Senior Notes ($200 Million Add-on Notes) at par. The $200 Million Add-on Notes were offered as additional debt securities under the indenture governing the $300 million of 4.75% Senior Notes issued in April 2014. In connection with the January 2015 issuance, the Company entered into interest rate swap agreements for a notional amount of $200 million at a floating rate of interest based on the three month LIBOR plus 2.88%. Gains and losses due to changes in the fair value of the interest rate swap completely offset changes in the fair value of the hedged portion of the underlying debt and are recorded as an adjustment to the $200 Million Add-on Notes.

The indentures governing both the $425 million notes due 2017 and the $500 million notes due 2022 contain non-financial and financial covenants, including requirements of a minimum fixed charge coverage ratio.

Interest Rate Swaps

The Company uses interest rate swap agreements to convert a portion of its interest rate exposure from fixed rates to floating rates to more closely align interest expense with interest income received on its cash equivalent and variable rate investment balances. The Company has $750 million of notional amount of interest rate swap agreements consisting of $250 million which are scheduled to expire on June 1, 2017 and $500 million that are scheduled to expire May 15, 2022. Under the Swap Agreements, the Company receives a fixed rate of interest and pays an average variable rate of the three month LIBOR plus 2.85% adjusted quarterly. At September 30, 2015, the weighted average rate was 3.16%.

The Swap Agreements are formally designated and qualify as fair value hedges and are recorded at fair value in the Consolidated Balance Sheet in other assets or other liabilities. Gains and losses due to changes in fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Therefore, no gain or loss has been recognized due to hedge ineffectiveness. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt both were recognized in interest expense in the Consolidated Statement of Operations. The Company does not hold or issue any derivative instrument for trading or speculative purposes.

Revolving Credit Agreement

The Company has an unsecured $500 million revolving credit facility. Borrowings under the agreement bear interest based upon LIBOR rates, the Federal Funds Rate or the Prime Rate. The agreement has a maturity date of June 1, 2018, provided it will mature 90 days prior to the maturity date of the Company's 5.75% Senior Notes due 2017 if such notes are not refinanced (or extended), certain financial conditions are not met, or the Company does not carry $100 million of unrestricted cash. As of September 30, 2015, the Company had $275 million of borrowings outstanding under the agreement with a weighted average interest rate of 3.01%.

The agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0. As of September 30, 2015, there were no limitations on the availability under the revolving credit agreement as a result of the debt-to-EBITDA ratio.

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Letters of Credit & Surety Bonds

The Company had outstanding letters of credit of $46 million as of September 30, 2015, which were not part of the revolving credit facility. The Company also had letters of credit for $52 million (valued at September 30, 2015 conversion rate), or €46 million, representing its proportional share of the letters of credit issued to support Ribera Salud’s outstanding debt, which are a part of the revolving credit facility. Collectively, the letters of credit bore interest at 1.55% as of September 30, 2015. The Company had outstanding surety bonds of $304 million as of September 30, 2015.

8. Earnings Per Share

The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Earnings attributable to Centene Corporation:
Earnings from continuing operations, net of tax	$	92	$	81	$	244	$	162
Discontinued operations, net of tax	1		1		—		2
Net earnings	$	93	$	82	$	244	$	164
Shares used in computing per share amounts:
Weighted average number of common shares outstanding	119,121,524		117,226,968		118,970,853		115,912,304
Common stock equivalents (as determined by applying the treasury stock method)	4,010,286		4,136,782		3,933,623		3,961,094
Weighted average number of common shares and potential dilutive common shares outstanding	123,131,810		121,363,750		122,904,476		119,873,398
Net earnings per common share attributable to Centene Corporation:
Basic:
Continuing operations	$	0.77	$	0.69	$	2.05	$	1.40
Discontinued operations	0.01		0.01		—		0.01
Basic earnings per common share	$	0.78	$	0.70	$	2.05	$	1.41
Diluted:
Continuing operations	$	0.75	$	0.67	$	1.99	$	1.35
Discontinued operations	0.01		0.01		—		0.02
Diluted earnings per common share	$	0.76	$	0.68	$	1.99	$	1.37

The calculation of diluted earnings per common share for the three and nine months ended September 30, 2015 excludes the impact of 28,716 and 84,644 shares, respectively, related to anti-dilutive restricted stock and restricted stock units. The calculation of diluted earnings per common share for the three and nine months ended September 30, 2014 excludes the impact of 47,520 shares and 117,756 shares, respectively, related to anti-dilutive restricted stock and restricted stock units.

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9. Segment Information

Centene operates in two segments: Managed Care and Specialty Services.  The Managed Care segment consists of Centene’s health plans including all of the functions needed to operate them.  The Specialty Services segment consists of Centene’s specialty companies offering auxiliary healthcare services and products.

Segment information for the three months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	4,922	$	541	$	—		$	5,463
Premium and service revenues from internal customers	24		1,274		(1,298		)	—
Total premium and service revenues	$	4,946	$	1,815	$	(1,298	)	$	5,463
Earnings from operations	$	138	$	45	$	—		$	183

Segment information for the three months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	3,730	$	429	$	—		$	4,159
Premium and service revenues from internal customers	16		806		(822		)	—
Total premium and service revenues	$	3,746	$	1,235	$	(822	)	$	4,159
Earnings from operations	$	80	$	28	$	—		$	108

Segment information for the nine months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	13,812	$	1,596	$	—		$	15,408
Premium and service revenues from internal customers	73		3,525		(3,598		)	—
Total premium and service revenues	$	13,885	$	5,121	$	(3,598	)	$	15,408
Earnings from operations	$	358	$	127	$	—		$	485

Segment information for the nine months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	9,925	$	1,327	$	—		$	11,252
Premium and service revenues from internal customers	42		2,121		(2,163		)	—
Total premium and service revenues	$	9,967	$	3,448	$	(2,163	)	$	11,252
Earnings from operations	$	188	$	83	$	—		$	271

10. Contingencies

On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract.  The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million. Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth.

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On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review.

Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims.

On May 26, 2015, the Commonwealth issued a demand for indemnification to its actuarial firm, for "all defense costs, and any resultant monetary awards in favor of Kentucky Spirit, arising from or related to Kentucky Spirit's claims which are predicated upon the alleged omissions and errors in the Data Book and the certified actuarially sound rates." On August 19, 2015, the actuarial firm moved to intervene in the litigation. The Franklin Circuit Court granted the actuarial firm's motion on September 8, 2015 and ordered a forty-five day stay of all pretrial proceedings in order for the firm to review the record. Also, on August 19, 2015, the actuarial firm filed a petition seeking a declaratory judgment that it is not liable to the Commonwealth for indemnification related to the claims asserted by Kentucky Spirit against the Commonwealth. On October 5, 2015, the Commonwealth filed an answer to the actuarial firm's petition and asserted counterclaims/cross-claims against the firm.

On March 9, 2015, the Secretary of the Kentucky Cabinet for Health and Family Services (CHFS) issued a determination letter finding that Kentucky Spirit owed the Commonwealth $40 million in actual damages plus prejudgment interest at 8 percent. On March 18, 2015, in a letter to the Kentucky Finance and Administration Cabinet (FAC), Kentucky Spirit contested CHFS' jurisdiction to make such a determination. The FAC did not issue a decision within the required 120 days. On August 13, 2015, Kentucky Spirit filed a declaratory judgment action against the Commonwealth in Franklin Circuit Court seeking a declaration that the Commonwealth may not purport to issue a decision against Kentucky Spirit awarding damages to itself when the matter is already before the Kentucky courts, and that the Commonwealth has waived its claims against Kentucky Spirit for damages arising out of the contract.

The resolution of the Kentucky litigation matters may result in a range of possible outcomes.  If Kentucky Spirit prevails on its claims, it would be entitled to damages.  If the Commonwealth prevails, a liability to the Commonwealth could be recorded.  The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation.  As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015.  While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known.

Excluding the Kentucky matters discussed above, the Company is also routinely subjected to legal proceedings in the normal course of business.  While the ultimate resolution of such matters in the normal course of business is uncertain, the Company does not expect the results of any of these matters individually, or in the aggregate, to have a material effect on its financial position, results of operations or cash flows.

11. Subsequent Event

In October 2015, the Company's stockholders approved a proposal to increase the Company's authorized shares of common stock from 200 million to 400 million.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this filing.  The discussion contains forward-looking statements that involve known and unknown risks and uncertainties, including those set forth under Part II, Item 1A. “Risk Factors” of this Form 10-Q.

OVERVIEW

In 2013, we classified the operations for Kentucky Spirit Health Plan (KSHP) as discontinued operations for all periods presented in our consolidated financial statements. The following discussion and analysis, with the exception of cash flow information, is presented in the context of continuing operations unless otherwise identified.

On February 2, 2015, the Board of Directors declared a two-for-one split of Centene's common stock in the form of a 100% stock dividend distributed February 19, 2015 to stockholders of record on February 12, 2015. All share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split.

Key financial metrics for the third quarter of 2015 are summarized as follows:

• Quarter-end managed care membership of 4.8 million, an increase of 933,600 members, or 24% year over year.

• Premium and service revenues of $5.5 billion, representing 31% growth year over year.

• Health Benefits Ratio of 89.0%, compared to 89.7% in 2014.

• General and Administrative expense ratio of 8.5%, compared to 8.0% in 2014.

• Operating cash flows of $62 million for the third quarter of 2015.

• Diluted net earnings per share of $0.75, or $0.84 excluding $0.09 of diluted EPS of Health Net merger related expenses, compared to $0.67 in 2014.

The following items contributed to our revenue and membership growth over the last year:

• California. In December 2014, the ABD membership of our California subsidiary, California Health and Wellness, increased as a result of the mandatory transition of the ABD population to managed care. The enrollment of this population to managed care was previously voluntary.

• Centurion. In February 2015, Centurion began operating under a new contract with the State of Vermont Department of Corrections to provide comprehensive correctional healthcare services.

In July 2015, Centurion began operating under a new contract with the Mississippi Department of Corrections to provide comprehensive correctional healthcare services.

• Florida. In May 2014, our Florida subsidiary, Sunshine Health, began operating under a new contract in 9 of 11 regions of the Managed Medical Assistance (MMA) program. The MMA program includes TANF recipients as well as ABD and dual-eligible members. In addition, we began operating as the sole provider under a new statewide contract for the Child Welfare Specialty Plan (Foster Care). Enrollment for both the MMA program and Foster Care began in May 2014 and was implemented by region through August 2014.

• Health Insurance Marketplaces (HIM). In January 2015, we expanded our participation in Health Insurance Marketplaces to include members in certain regions of Illinois and Wisconsin.

• Illinois. In March 2014, our Illinois subsidiary, IlliniCare Health, began operating under a new contract as part of the Illinois Medicare-Medicaid Alignment Initiative serving dual-eligible members in Cook, DuPage, Lake, Kane, Kankakee and Will counties (Greater Chicago region).

In July 2014, IlliniCare Health began operating under a new contract with the Cook County Health and Hospitals System to perform third party administrative services to members enrolled in the CountyCare program, as well as care coordination, behavioral health, vision care and pharmacy benefit management services.

In September 2014, IlliniCare Health began serving additional Medicaid members under the state's Medicaid and Medicaid expansion programs.

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• Indiana. In February 2015, our Indiana subsidiary, Managed Health Services, began operating under an expanded contract with the Indiana Family & Social Services Administration to provide Medicaid services under the state's Healthy Indiana Plan 2.0 program.

In April 2015, Managed Health Services began operating under an expanded contract with the Indiana Family & Social Services Administration to provide services to its ABD Medicaid enrollees who qualify for the new Hoosier Care Connect Program.

• Louisiana. In July 2014, we completed the transaction whereby Community Health Solutions of America, Inc. (CHS) assigned its contract with the Louisiana Department of Health and Hospitals under the Bayou Health Shared Savings Program to our subsidiary, Louisiana Healthcare Connections (LHC).

In February 2015, LHC began operating under a new contract with the Louisiana Department of Health and Hospitals to serve Bayou Health (Medicaid) beneficiaries. Members previously served under the shared savings program were transitioned to the at-risk program on February 1, 2015.

• Michigan. In May 2015, we completed the acquisition of Fidelis SecureCare of Michigan, Inc. (Fidelis). Fidelis began operating under a new contract with the Michigan Department of Community Health and the Centers for Medicare and Medicaid Services to provide integrated healthcare services to members who are dually eligible for Medicare and Medicaid in Macomb and Wayne counties in May 2015. Passive enrollment began in July 2015.

• Mississippi. In July 2014, our Mississippi subsidiary, Magnolia Health, began operating as one of two contractors under a new statewide managed care contract serving members enrolled in the Mississippi Coordinated Access Network program. Program expansion began in December 2014 and continued through July 2015.

In January 2015, Magnolia Health began operating under a new temporary six-month contract with the State of Mississippi to provide services under the Children's Health Insurance Program (CHIP). In July 2015, Magnolia Health began operating under a two-year CHIP contract with the State of Mississippi.

• New Hampshire. In September 2014, our New Hampshire subsidiary, New Hampshire Healthy Families, began serving members under the state's Medicaid expansion program.

• Ohio. In May 2014, our Ohio subsidiary, Buckeye Health Plan (Buckeye), began operating under a new contract with the Ohio Department of Medicaid and the Centers for Medicare and Medicaid Services to serve Medicaid members in a dual-eligible demonstration program in three of seven regions: Northeast (Cleveland), Northwest (Toledo) and West Central (Dayton). This three-year program, which is part of the Integrated Care Delivery System expansion, serves those who have both Medicare and Medicaid eligibility. Passive enrollment for Medicaid began in May 2014 and implementation was completed in July 2014. Passive enrollment for Medicare began in January 2015.

• Oregon. In September 2015, we completed the acquisition of Agate Resources, Inc., a diversified holding company, that offers primarily Medicaid and other healthcare products and services to Oregon residents through Trillium Community Health Plan.

• South Carolina. In February 2015, our South Carolina subsidiary, Absolute Total Care, began operating under a new contract with the South Carolina Department of Health and Human Services and the Centers for Medicare and Medicaid Services to serve dual-eligible members as part of the state's dual demonstration program.

• Texas. In September 2014, we began operating under a new contract with the Texas Health and Human Services Commission (HHSC) to expand our operations and serve STAR+PLUS members in two Medicaid Rural Service Areas. We also began providing expanded coverage in September 2014 under our STAR+PLUS contracts to provide acute care services for intellectually and developmentally disabled members. In March 2015, we began operating under an expanded STAR+PLUS contract with the Texas HHSC to include nursing facility benefits.

In March 2015, we also began operating under a new contract with the Texas HHSC and the Centers for Medicare and Medicaid Services to serve dual-eligible members in three counties as part of the state's dual demonstration program.

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In addition, in July 2014, we completed an investment accounted for under the equity method for the purchase of a noncontrolling interest in Ribera Salud S.A. (Ribera Salud), a Spanish health management group. Centene is a joint shareholder with Ribera Salud's remaining investor, Banco Sabadell S.A.

We expect the following items to contribute to our future growth potential:

• We expect to realize the full year benefit in 2015 of business commenced during 2014 in Florida, Illinois, Louisiana, Mississippi, New Hampshire, Ohio and Texas as discussed above.

• In October 2015, our subsidiary, Superior HealthPlan, Inc., was awarded a contract by the Texas HHSC to serve seven delivery areas for STAR Kids Medicaid recipients, more than any other successful bidder. The new contract is expected to commence in the second half of 2016.

• In October 2015, our subsidiary, Cenpatico Integrated Care, in partnership with University of Arizona Health Plan, began operating under a contract with the Arizona Department of Health Services/Division of Behavioral Health Services to be the Regional Behavioral Health Authority for the new southern geographic service area.

• In October 2015, Sunshine Health began operating under a two-year, statewide contract with the Florida Healthy Kids Corporation to manage healthcare services for children ages five through 18 in all 11 regions of Florida.

• In September 2015, our subsidiary, Peach State Health Plan, was one of the Care Management Organizations selected to serve Medicaid recipients enrolled in the Georgia Families, PeachCare for Kids and Planning for Healthy Babies programs. The contract renewal is expected to commence in July 2016, pending regulatory approvals.

• In August 2015, our subsidiary, Coordinated Care of Washington, was selected by the Washington State Health Care Authority as the sole provider for the Apple Health Foster Care contract. The new contract is expected to commence in the first quarter of 2016, pending regulatory approvals.

• In July 2015, we entered into a definitive merger agreement with Health Net, Inc. (Health Net) under which we will acquire all of the issued and outstanding shares of Health Net. The transaction is valued at approximately $6.8 billion (based on the Centene closing stock price on July 1, 2015), including the assumption of debt. The transaction is expected to close in early 2016.

• In the fourth quarter of 2015, Louisiana Healthcare Connections expects to begin operating under an expanded contract to include behavioral health benefits, and Magnolia Health anticipates operating under an expanded contract to include the inpatient benefit for Medicaid and ABD members.

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MEMBERSHIP

From September 30, 2014 to September 30, 2015, we increased our managed care membership by 933,600, or 24%.  The following table sets forth our membership by state for our managed care organizations:

	September 30, 2015	December 31, 2014	September 30, 2014
Arizona	223,600	204,000	202,500
Arkansas	40,900	38,400	36,600
California	183,900	163,900	144,700
Florida	486,500	425,700	411,200
Georgia	406,700	389,100	382,600
Illinois	211,300	87,800	31,300
Indiana	276,700	197,700	199,500
Kansas	137,500	143,300	144,200
Louisiana	358,800	152,900	150,800
Massachusetts	63,700	48,400	46,600
Michigan	6,600	—	—
Minnesota	9,400	9,500	9,500
Mississippi	301,000	108,700	99,300
Missouri	88,400	71,000	64,900
New Hampshire	71,900	62,700	56,600
Ohio	308,100	280,100	261,000
Oregon	99,800	—	—
South Carolina	104,800	109,700	106,500
Tennessee	20,200	21,000	21,200
Texas	976,500	971,000	961,100
Vermont	1,500	—	—
Washington	208,600	194,400	192,500
Wisconsin	78,100	83,200	74,700
Total at-risk membership	4,664,500	3,762,500	3,597,300
Non-risk membership	169,900	298,400	303,500
Total	4,834,400	4,060,900	3,900,800

At September 30, 2015, we served 442,600 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio, Oregon and Washington and Indiana HIP 2.0, included in the table above.

The following table sets forth our membership by line of business:

	September 30, 2015	December 31, 2014	September 30, 2014
Medicaid	3,469,800	2,754,900	2,578,300
CHIP & Foster Care	245,200	222,700	247,700
ABD, Medicare & Duals	444,100	392,700	383,400
LTC	73,800	60,800	55,200
Health Insurance Marketplaces	155,600	74,500	76,000
Hybrid Programs 1	—	18,900	19,900
Behavioral Health	216,700	197,000	195,500
Correctional Healthcare Services	59,300	41,000	41,300
Total at-risk membership	4,664,500	3,762,500	3,597,300
Non-risk membership	169,900	298,400	303,500
Total	4,834,400	4,060,900	3,900,800
1 In February 2015, hybrid programs were converted to Medicaid expansion contracts.

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The following table identifies our dual-eligible membership by line of business. The membership tables above include these members.

	September 30, 2015	December 31, 2014	September 30, 2014
ABD	107,400	118,300	119,300
LTC	54,200	35,900	35,500
Medicare	11,400	7,200	7,100
Medicaid / Medicare Duals	27,900	3,200	2,700
Total	200,900	164,600	164,600

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RESULTS OF OPERATIONS

The following discussion and analysis is based on our consolidated statements of operations, which reflect our results of operations for the three and nine months ended September 30, 2015 and 2014, prepared in accordance with generally accepted accounting principles in the United States. 

Summarized comparative financial data for the three and nine months ended September 30, 2015 and 2014 is as follows ($ in millions, except per share data):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2015			2014			% Change 2014-2015		2015			2014			% Change 2014-2015
Premium	$	4,983		$	3,780		31.8	%	$	13,974		$	10,182		37.2	%
Service	480			379			26.6	%	1,434			1,070			34.0	%
Premium and service revenues	5,463			4,159			31.4	%	15,408			11,252			36.9	%
Premium tax and health insurer fee	358			193			85.5	%	1,050			584			79.8	%
Total revenues	5,821			4,352			33.8	%	16,458			11,836			39.1	%
Medical costs	4,433			3,390			30.8	%	12,475			9,093			37.2	%
Cost of services	413			327			26.3	%	1,234			935			32.0	%
General and administrative expenses	464			334			38.9	%	1,309			951			37.6	%
Premium tax expense	274			161			70.2	%	794			492			61.4	%
Health insurer fee expense	54			32			68.8	%	161			94			71.3	%
Earnings from operations	183			108			69.4	%	485			271			79.0	%
Other income (expense), net	(3		)	(3		)	—	%	(5		)	(7		)	28.6	%
Earnings from continuing operations, before income tax expense	180			105			71.4	%	480			264			81.8	%
Income tax expense	87			27			222.2	%	234			107			118.7	%
Earnings from continuing operations, net of income tax	93			78			19.2	%	246			157			56.7	%
Discontinued operations, net of income tax expense of $0, $0, $0 and $1, respectively	1			1			—	%	—			2			(100.0	)%
Net earnings	94			79			19.0	%	246			159			54.7	%
(Earnings) loss attributable to noncontrolling interests	(1		)	3			(133.3	)%	(2		)	5			(140.0	)%
Net earnings attributable to Centene Corporation	$	93		$	82		13.4	%	$	244		$	164		48.8	%
Amounts attributable to Centene Corporation common shareholders:
Earnings from continuing operations, net of income tax expense	$	92		$	81		13.6	%	$	244		$	162		50.6	%
Discontinued operations, net of income tax expense	1			1			—	%	—			2			(100.0	)%
Net earnings	$	93		$	82		13.4	%	$	244		$	164		48.8	%
Diluted earnings per common share attributable to Centene Corporation:
Continuing operations	$	0.75		$	0.67		11.9	%	$	1.99		$	1.35		47.4	%
Discontinued operations	0.01			0.01			—	%	—			0.02			(100.0	)%
Total diluted earnings per common share	$	0.76		$	0.68		11.8	%	$	1.99		$	1.37		45.3	%

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Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Premium and Service Revenues

Premium and service revenues increased 31% in the three months ended September 30, 2015 over the corresponding period in 2014 primarily as a result of the impact from expansions or new programs in many of our states, particularly Florida, Illinois, Louisiana, Mississippi, Ohio and Texas.

Operating Expenses

Medical Costs

Results of operations depend on our ability to manage expenses associated with health benefits and to accurately estimate costs incurred. The Health Benefits Ratio, or HBR, represents medical costs as a percentage of premium revenues (excluding Premium Tax and Health Insurer Fee revenues) and reflects the direct relationship between the premium received and the medical services provided. The table below depicts the HBR for our membership by member category for the three months ended September 30,:

	2015		2014
Medicaid, CHIP, Foster Care & HIM	85.7	%	86.5	%
ABD, LTC and Medicare	93.3		93.9
Specialty Services	84.8		86.8
Total	89.0		89.7

The consolidated HBR for the three months ended September 30, 2015 was 89.0%, compared to 89.7% in the same period in 2014.  The decrease compared to last year is primarily attributable to a lower HBR associated with new Medicaid expansion programs, which had significant growth in membership over the prior year and have a lower HBR.

Revenue and HBR results for new business and existing business are listed below to assist in understanding our results of operations. Existing businesses are primarily state markets or significant geographic expansion in an existing state or product that we have managed for four complete quarters. New businesses are primarily new state markets or significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters. The following table compares the results for new business and existing business for the three months ended September 30,:

	2015		2014
Premium and Service Revenue
New business	21	%	27	%
Existing business	79	%	73	%
HBR
New business	88.7	%	91.4	%
Existing business	89.1	%	89.0	%

The new business HBR decreased compared to last year primarily due to the movement of the Florida MMA business, which operates at a higher HBR, into existing business during the quarter and the mix of new business being weighted towards Medicaid expansion which operates at a lower HBR.

Cost of Services

Cost of services increased by $86 million in the three months ended September 30, 2015, compared to the corresponding period in 2014.  This was primarily due to growth in the AcariaHealth business. The cost of service ratio for the three months ended September 30, 2015, was 86.0%, compared to 86.3% in the same period in 2014.  

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General & Administrative Expenses

General and administrative expenses, or G&A, increased by $130 million in the three months ended September 30, 2015, compared to the corresponding period in 2014.  This was primarily due to expenses for additional staff and facilities to support our membership growth. During the three months ended September 30, 2015, we recorded approximately $18 million of Health Net merger related expenses, which reduced our diluted earnings per share by $0.09.

During the third quarter of 2015, we experienced higher than anticipated opt-out rates and member attrition in the new Michigan dual demonstration program, resulting in lower than expected membership and lower blended premium rates. As a result, the fair value of estimated contingent consideration was reduced to $23 million, and we recorded a gain of $27 million in general and administrative expenses. In connection with the lower membership and revenue outlook, we conducted an impairment analysis of the identifiable intangible assets and goodwill, resulting in a reduction of goodwill and intangible assets of $28 million which was recorded in general and administrative expenses.

The consolidated G&A expense ratio for the three months ended September 30, 2015 and 2014 was 8.5% and 8.0%, respectively.  The year over year increasein the G&A ratio primarily reflects the impact of Health Net merger related expenses. The G&A ratio for the three months ended September 30, 2015 was 8.2% excluding the impact of the Health Net merger related expenses. Excluding the impact of the Health Net merger related expenses, the increase in the G&A ratio is primarily due to the increase in performance based incentive compensation expense.

Health Insurer Fee

During the three months ended September 30, 2015, we recorded $54 million of non-deductible expense for the Affordable Care Act (ACA) annual health insurer fee. As of September 30, 2015, we had received signed agreements from all applicable states which provide for the reimbursement of the ACA insurer fee including the related gross-up for the associated income tax effects. As a result, we recorded $85 million in Premium Tax and Health Insurer Fee revenue associated with the accrual for the reimbursement of the fee. Therefore, the health insurer fee had no impact on diluted earnings per share during the third quarter of 2015.

During the three months ended September 30, 2014, we recorded $32 million of non-deductible expense for the ACA annual health insurer fee. In addition, we received signed agreements from 15 of 17 applicable states as of September 30, 2014, which provide for the reimbursement of the ACA insurer fee including the related gross-up for the associated income tax effects. As a result, we recorded $32 million of revenue in Premium Tax and Health Insurer Fee revenue associated with the accrual for the reimbursement of the fee. The net effect of the health insurer fee reduced our diluted earnings per share by $0.08 during the third quarter of 2014.

Other Income (Expense)

The following table summarizes the components of other income (expense) for the three months ended September 30, ($ in millions): 

	2015			2014
Investment and other income	$	8		$	6
Interest expense	(11		)	(9		)
Other income (expense), net	$	(3	)	$	(3	)

The increase in investment income in 2015 reflects an increase in investment balances over 2014 and improved performance of certain equity investments. Interest expense increased in 2015 compared to 2014, primarily reflecting the issuance of an additional $200 million in Senior Notes in January 2015.

Income Tax Expense

Our effective tax rate for the three months ended September 30, 2015 and 2014, was 48.3% and 25.7%, respectively. The effective tax rate is higher than the applicable statutory rate primarily as a result of the non-deductibility of the health insurer fee expense. During the third quarter of 2014, the IRS issued a final regulation related to the compensation deduction limitation applicable to certain health insurance providers. Accordingly, we reversed previously recorded tax expense for prior periods, resulting in a decrease in the effective tax rate.

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Segment Results

The following table summarizes our consolidated operating results by segment for the three months ended September 30, ($ in millions):

	2015			2014			% Change 2014-2015
Premium and Service Revenues
Managed Care	$	4,946		$	3,746		32.0	%
Specialty Services	1,815			1,235			47.0	%
Eliminations	(1,298		)	(822		)	(57.9	)%
Consolidated Total	$	5,463		$	4,159		31.4	%
Earnings from Operations
Managed Care	$	138		$	80		72.5	%
Specialty Services	45			28			60.7	%
Consolidated Total	$	183		$	108		69.4	%

Managed Care

Premium and service revenues increased32% in the three months ended September 30, 2015, primarily as a result of expansions or new programs in many of our states, particularly Florida, Illinois, Louisiana, Mississippi, Ohio and Texas. Earnings from operations increased$58 million between years primarily reflecting growth in the business.

Specialty Services

Premium and service revenues increased47% in the three months ended September 30, 2015, resulting primarily from increased services associated with membership growth in the Managed Care segment.  Earnings from operations increased$17 million in the three months ended September 30, 2015, primarily reflecting growth in the specialty services provided to our increased Managed Care membership.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Premium and Service Revenues

Premium and service revenues increased 37% in the nine months ended September 30, 2015 over the corresponding period in 2014 primarily as a result of the impact from expansions or new programs in many of our states, particularly Florida, Illinois, Louisiana, Mississippi, Ohio and Texas. During the nine months ended September 30, 2015, we received premium rate adjustments which yielded a net 0% composite change across all of our markets.

Operating Expenses

Medical Costs

Results of operations depend on our ability to manage expenses associated with health benefits and to accurately estimate costs incurred. The Health Benefits Ratio, or HBR, represents medical costs as a percentage of premium revenues (excluding Premium Tax and Health Insurer Fee revenues) and reflects the direct relationship between the premium received and the medical services provided. The table below depicts the HBR for our membership by member category for the nine months ended September 30,:

	2015		2014
Medicaid, CHIP, Foster Care & HIM	86.2	%	86.1	%
ABD, LTC and Medicare	93.3		94.0
Specialty Services	85.6		84.9
Total	89.3		89.3

The consolidated HBR for the nine months ended September 30, 2015, was 89.3%, compared to 89.3% in the same period in 2014.  

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Cost of Services

Cost of services increased by $299 million in the nine months ended September 30, 2015, compared to the corresponding period in 2014.  This was primarily due to growth in the AcariaHealth business. The cost of service ratio for the nine months ended September 30, 2015, was 86.1%, compared to 87.4% in the same period in 2014.  

General & Administrative Expenses

General and administrative expenses, or G&A, increased by $358 million in the nine months ended September 30, 2015, compared to the corresponding period in 2014.  This was primarily due to expenses for additional staff and facilities to support our membership growth. During the nine months ended September 30, 2015, we recorded approximately $20 million of Health Net merger related expenses, which reduced our diluted earnings per share by $0.10.

During the first quarter of 2015, we recorded a gain of $10 million on the settlement of contingent consideration related to the CHS transaction. We also recorded expense of $10 million for a contribution to our charitable foundation during the first quarter of 2015.

During the third quarter of 2015, we experienced higher than anticipated opt-out rates and member attrition in the new Michigan dual demonstration program, resulting in lower than expected membership and lower blended premium rates. As a result, the fair value of estimated contingent consideration was reduced to $23 million, and we recorded a gain of $27 million in general and administrative expenses. In connection with the lower membership and revenue outlook, we conducted an impairment analysis of the identifiable intangible assets and goodwill, resulting in a reduction of goodwill and intangible assets of $28 million which was recorded in general and administrative expenses.

The consolidated G&A expense ratio for the nine months ended September 30, 2015 and 2014 was 8.5% and 8.5%, respectively.  The year over year G&A ratio remained flat, reflecting the leveraging of expenses over higher revenues in 2015 as well as the impact of transaction costs recognized in 2014, offset by Health Net merger related expenses. The G&A ratio for the nine months ended September 30, 2015 was 8.4% excluding the impact of the Health Net merger related expenses.

Health Insurer Fee

During the nine months ended September 30, 2015, we recorded $161 million of non-deductible expense for the Affordable Care Act (ACA) annual health insurer fee. As of September 30, 2015, we had received signed agreements from all applicable states which provide for the reimbursement of the ACA insurer fee including the related gross-up for the associated income tax effects. As a result, we recorded $257 million in Premium Tax and Health Insurer Fee revenue associated with the accrual for the reimbursement of the fee. Therefore, the health insurer fee had no impact on diluted earnings per share during the nine months ended September 30, 2015.

During the nine months ended September 30, 2014, we recorded $94 million of non-deductible expense for the ACA annual health insurer fee. In addition, we recorded $92 million of revenue in Premium Tax and Health Insurer Fee revenue associated with the accrual for the reimbursement of the fee. The net effect of the health insurer fee reduced our diluted earnings per share by $0.25 during the nine months ended September 30, 2014.

Other Income (Expense)

The following table summarizes the components of other income (expense) for the nine months ended September 30, ($ in millions): 

	2015			2014
Investment and other income	$	27		$	18
Interest expense	(32		)	(25		)
Other income (expense), net	$	(5	)	$	(7	)

The increase in investment income in 2015 reflects an increase in investment balances over 2014 and improved performance of certain equity investments. Interest expense increased during the nine months ended September 30, 2015 by $7 million primarily reflecting the issuance of $300 million of Senior Notes in April 2014 and the issuance of an additional $200 million in Senior Notes in January 2015.

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Income Tax Expense

Our effective tax rate for the nine months ended September 30, 2015 and 2014, was 48.8% and 40.5%, respectively. The effective tax rate is higher than the applicable statutory rate primarily as a result of the non-deductibility of the health insurer fee expense. During the third quarter of 2014, the IRS issued a final regulation related to the compensation deduction limitation applicable to certain health insurance providers. Accordingly, we reversed previously recorded tax expense for prior periods, resulting in a decrease in the effective tax rate.

Segment Results

The following table summarizes our consolidated operating results by segment for the nine months ended September 30, ($ in millions):

	2015			2014			% Change 2014-2015
Premium and Service Revenues
Managed Care	$	13,885		$	9,967		39.3	%
Specialty Services	5,121			3,448			48.5	%
Eliminations	(3,598		)	(2,163		)	(66.3	)%
Consolidated Total	$	15,408		$	11,252		36.9	%
Earnings from Operations
Managed Care	$	358		$	188		90.4	%
Specialty Services	127			83			53.0	%
Consolidated Total	$	485		$	271		79.0	%

Managed Care

Premium and service revenues increased39% in the nine months ended September 30, 2015, primarily as a result of expansions or new programs in many of our states, particularly Florida, Illinois, Louisiana, Mississippi, Ohio and Texas. Earnings from operations increased$170 million between years primarily reflecting growth in the business.

Specialty Services

Premium and service revenues increased49% in the nine months ended September 30, 2015, resulting primarily from increased services associated with membership growth in the Managed Care segment and growth in our AcariaHealth business.  Earnings from operations increased$44 million in the nine months ended September 30, 2015, primarily reflecting growth in the specialty services provided to our increased Managed Care membership.

LIQUIDITY AND CAPITAL RESOURCES

Shown below is a condensed schedule of cash flows used in the discussion of liquidity and capital resources ($ in millions).

	Nine Months Ended September 30,
	2015			2014
Net cash provided by operating activities	$	457		$	853
Net cash used in investing activities	(769		)	(581		)
Net cash provided by financing activities	367			273
Net increase in cash and cash equivalents	$	55		$	545

Cash Flows Provided by Operating Activities

Normal operations are funded primarily through operating cash flows and borrowings under our revolving credit facility.  Operating activities provided cash of $457 million in the nine months ended September 30, 2015, compared to $853 million in the comparable period in 2014.  The cash provided by operations in 2015 and 2014 was primarily related to net earnings and an increase in medical claims liabilities resulting from the growth in the business, partially offset by increases in premium and related receivables.

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Cash flows from operations in each year were impacted by the timing of payments we receive from our states.  States may prepay the following month premium payment, which we record as unearned revenue, or they may delay our premium payment, which we record as a receivable.  We typically receive capitation payments monthly, however the states in which we operate may decide to adjust their payment schedules which could positively or negatively impact our reported cash flows from operating activities in any given period.  

The reimbursement of the HIF from our state customers may be settled as a separate payment or monthly in combination with our other premium payments. The vast majority of our state customers are settling the reimbursement through a separate payment after verification of each state’s portion of our HIF, resulting in an increase in Premium and Related Receivables at September 30, 2015. During the third quarter of 2015, we paid the 2015 annual HIF invoice totaling $213 million. This negatively impacted our cash flows as we have not been reimbursed from the majority of our state customers.

Cash Flows Used in Investing Activities

Investing activities used cash of $769 million for the nine months ended September 30, 2015, and $581 million in the comparable period in 2014.  Cash flows used in investing activities in 2015 primarily consisted of additions to the investment portfolio of our regulated subsidiaries, including transfers from cash and cash equivalents to long term investments and capital expenditures.

In January 2015, we sold 25% of our ownership in Celtic Insurance Company. No gain or loss was recognized on the sale of the ownership interest. Celtic Insurance Company is included in the Managed Care segment. Under the terms of the agreement, we entered into a put agreement with the noncontrolling interest holder to purchase the noncontrolling interest at a later date.

Cash flows used in investing activities in 2014 primarily consisted of additions to the investment portfolio of our regulated subsidiaries, including transfers from cash and cash equivalents to long term investments, the acquisition of U.S. Medical Management and capital expenditures.

We spent $101 million and $69 million in the nine months ended September 30, 2015 and 2014, respectively, on capital expenditures for system enhancements and market expansions.  

As of September 30, 2015, our investment portfolio consisted primarily of fixed-income securities with an average duration of 3.8 years.  We had unregulated cash and investments of $91 million at September 30, 2015, compared to $85 million at December 31, 2014.

Cash Flows Provided by Financing Activities

Our financing activities provided cash of $367 million in the nine months ended September 30, 2015, compared to $273 million in the comparable period in 2014.  During 2015 and 2014, our financing activities primarily related to the proceeds from the issuance of Senior Debt. In January 2015, we issued an additional $200 million of 4.75% Senior Notes at par. In connection with the January 2015 issuance, we entered into interest rate swap agreements for a notional amount of $200 million. In April 2014, we issued $300 million 4.75% Senior Notes due May 14, 2022 at par. In connection with the April 2014 issuance, we entered into interest rate swap agreements of a notional amount of $300 million.

Liquidity Metrics

The $500 million revolving credit agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. We are required not to exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0. As of September 30, 2015, we had $275 million in borrowings outstanding under our revolving credit facility and we were in compliance with all covenants. As of September 30, 2015, there were no limitations on the availability under the revolving credit agreement as a result of the debt-to-EBITDA ratio.

We had outstanding letters of credit of $46 million as of September 30, 2015, which were not part of our revolving credit facility. We also had letters of credit for $52 million (valued at the September 30, 2015 conversion rate), or €46 million, representing our proportional share of the letters of credit issued to support Ribera Salud’s outstanding debt which are a part of the revolving credit facility. Collectively, the letters of credit bore interest at 1.55% as of September 30, 2015. In addition, we had outstanding surety bonds of $304 million as of September 30, 2015.

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The indentures governing our Senior Notes contain non-financial and financial covenants, including requirements of a minimum fixed charge coverage ratio.

At September 30, 2015, we had working capital, defined as current assets less current liabilities, of $33 million, compared to $134 million at December 31, 2014.  We manage our short term and long term investments with the goal of ensuring that a sufficient portion is held in investments that are highly liquid and can be sold to fund short term requirements as needed.

At September 30, 2015, our debt to capital ratio, defined as total debt divided by the sum of total debt and total equity, was 38.4%, compared to 33.5% at December 31, 2014.  Excluding the $68 million non-recourse mortgage note, our debt to capital ratio was 37.1% as of September 30, 2015, compared to 31.7% at December 31, 2014.  We utilize the debt to capital ratio as a measure, among others, of our leverage and financial flexibility.

2015 Expectations

On July 2, 2015, we entered into a definitive merger agreement with Health Net under which we will acquire all of the issued and outstanding shares of Health Net. Under the terms of the agreement, at the closing of the transaction, Health Net stockholders (with limited exception) would receive 0.622 of a validly issued, fully paid, non-assessable share of Centene common stock and $28.25 in cash for each share of Health Net common stock. The transaction is valued at approximately $6.8 billion (based on the Centene closing stock price on July 1, 2015), including the assumption of debt. The transaction is expected to close in early 2016 and is subject to approvals by relevant state insurance and healthcare regulators and other customary closing conditions. We expect to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing.

During the remainder of 2015, we expect to make net capital contributions to our insurance subsidiaries of approximately$162 million associated with our growth and spend approximately $50 million in additional capital expenditures primarily associated with system enhancements and market expansions. These amounts are expected to be funded by unregulated cash flow generation in 2015 and borrowings on our revolving credit facility.

Based on our operating plan, we expect that our available cash, cash equivalents and investments, cash from our operations and cash available under our credit facility will be sufficient to finance our general operations and capital expenditures, excluding the proposed Health Net transaction, for at least 12 months from the date of this filing.

REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS

Our operations are conducted through our subsidiaries.  As managed care organizations, these subsidiaries are subject to state regulations that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state, and restrict the timing, payment and amount of dividends and other distributions that may be paid to us.  Generally, the amount of dividend distributions that may be paid by a regulated subsidiary without prior approval by state regulatory authorities is limited based on the entity’s level of statutory net income and statutory capital and surplus.

Our subsidiaries are required to maintain minimum capital requirements prescribed by various regulatory authorities in each of the states in which we operate.  As of September 30, 2015, our subsidiaries had aggregate statutory capital and surplus of $2,095 million, compared with the required minimum aggregate statutory capital and surplus requirements of $1,091million.  During the nine months ended September 30, 2015, we contributed $561 million of statutory capital to our subsidiaries. We estimate our Risk Based Capital, or RBC, percentage (including KSHP) to be in excess of 350% of the Authorized Control Level (excluding the interim impact of the health insurer fee).

The National Association of Insurance Commissioners has adopted rules which set minimum risk based capital requirements for insurance companies, managed care organizations and other entities bearing risk for healthcare coverage.  As of September 30, 2015, each of our health plans was in compliance with the risk-based capital requirements enacted in those states.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

INVESTMENTS AND DEBT

As of September 30, 2015, we had short term investments of $162 million and long term investments of $2,098 million, including restricted deposits of $106 million.  The short term investments generally consist of highly liquid securities with maturities between three and 12 months.  The long term investments consist of municipal, corporate and U.S. Treasury securities, government sponsored obligations, life insurance contracts, asset-backed securities and equity securities and have maturities greater than one year.  Restricted deposits consist of investments required by various state statutes to be deposited or pledged to state agencies.  Due to the nature of the states’ requirements, these investments are classified as long term regardless of the contractual maturity date.  Substantially all of our investments are subject to interest rate risk and will decrease in value if market rates increase.  Assuming a hypothetical and immediate 1% increase in market interest rates at September 30, 2015, the fair value of our fixed income investments would decrease by approximately $74 million.  Declines in interest rates over time will reduce our investment income.

We have interest rate swap agreements for a notional amount of $750 million with creditworthy financial institutions to manage the impact of market interest rates on interest expense.  Our swap agreements convert a portion of our interest expense from fixed to variable rates to better match the impact of changes in market rates on our variable rate cash equivalent investments.  As a result, the fair value of $750 million of our long term debt varies with market interest rates.  Assuming a hypothetical and immediate 1% increase in market interest rates at September 30, 2015, the fair value of our debt would decrease by approximately $33 million.  An increase in interest rates decreases the fair value of the debt and conversely, a decrease in interest rates increases the value.

For a discussion of the interest rate risk that our investments are subject to, see Part II, Item 1A "Risk Factors–Risks Related to Our Business–Our investment portfolio may suffer losses from reductions in market interest rates and changes in market conditions which could materially and adversely affect our results of operations or liquidity.”

INFLATION

The inflation rate for medical care costs has been higher than the overall inflation rate for all items.  We use various strategies to mitigate the negative effects of healthcare cost inflation.  Specifically, our health plans try to control medical and hospital costs through our state savings initiatives and contracts with independent providers of healthcare services.  Through these contracted care providers, our health plans emphasize preventive healthcare and appropriate use of specialty and hospital services.  Additionally, our contracts with states require actuarially sound premiums that include healthcare cost trend.

While we currently believe our strategies to mitigate healthcare cost inflation will continue to be successful, competitive pressures, new healthcare and pharmaceutical product introductions, demands from healthcare providers and customers, applicable regulations, an increase in the expected rate of inflation for healthcare costs or other factors may affect our ability to control the impact of healthcare cost increases.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures - We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2015. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2015.

Changes in Internal Control Over Financial Reporting  -  No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings.

On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract.  The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million. Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth.

On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review.

Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims.

On May 26, 2015, the Commonwealth issued a demand for indemnification to its actuarial firm for "all defense costs, and any resultant monetary awards in favor of Kentucky Spirit, arising from or related to Kentucky Spirit's claims which are predicated upon the alleged omissions and errors in the Data Book and the certified actuarially sound rates." On August 19, 2015, the actuarial firm moved to intervene in the litigation. The Franklin Circuit Court granted the actuarial firm's motion on September 8, 2015 and ordered a forty-five day stay of all pretrial proceedings in order for the firm to review the record. Also, on August 19, 2015, the actuarial firm filed a petition seeking a declaratory judgment that it is not liable to the Commonwealth for indemnification related to the claims asserted by Kentucky Spirit against the Commonwealth. On October 5, 2015, the Commonwealth filed an answer to the actuarial firm's petition and asserted counterclaims/cross-claims against the firm.

On March 9, 2015, the Secretary of the Kentucky Cabinet for Health and Family Services (CHFS) issued a determination letter finding that Kentucky Spirit owed the Commonwealth $40 million in actual damages plus prejudgment interest at 8 percent. On March 18, 2015, in a letter to the Kentucky Finance and Administration Cabinet (FAC), Kentucky Spirit contested CHFS' jurisdiction to make such a determination. The FAC did not issue a decision within the required 120 days. On August 13, 2015, Kentucky Spirit filed a declaratory judgment action against the Commonwealth in Franklin Circuit Court seeking a declaration that the Commonwealth may not purport to issue a decision against Kentucky Spirit awarding damages to itself when the matter is already before the Kentucky courts, and that the Commonwealth has waived its claims against Kentucky Spirit for damages arising out of the contract.

The resolution of the Kentucky litigation matters may result in a range of possible outcomes.  If Kentucky Spirit prevails on its claims, it would be entitled to damages.  If the Commonwealth prevails, a liability to the Commonwealth could be recorded.  The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation.  As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015.  While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known.

Excluding the Kentucky matters discussed above, the Company is also routinely subjected to legal proceedings in the normal course of business.  While the ultimate resolution of such matters in the normal course of business is uncertain, the Company does not expect the results of any of these matters individually, or in the aggregate, to have a material effect on its financial position, results of operations or cash flows.

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ITEM 1A. Risk Factors.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND THE

TRADING PRICE OF OUR COMMON STOCK

You should carefully consider the risks described below before making an investment decision.  The trading price of our common stock could decline due to any of these risks, in which case you could lose all or part of your investment.  You should also refer to the other information in this filing, including our consolidated financial statements and related notes.  The risks and uncertainties described below are those that we currently believe may materially affect our Company.  Additional risks and uncertainties that we are unaware of or that we currently deem immaterial also may become important factors that affect our Company.

Reductions in funding or changes to eligibility requirements for government sponsored healthcare programs in which we participate could substantially affect our financial position, results of operations and cash flows.

The majority of our revenues come from government subsidized healthcare programs including Medicaid, Medicare, CHIP, LTC, ABD, Foster Care and Health Insurance Marketplace premiums. The base premium rate paid for each program differs, depending on a combination of factors such as defined upper payment limits, a member’s health status, age, gender, county or region and benefit mix. Since Medicaid was created in 1965, the federal government and the states have shared the costs, with the federal share currently averaging around 57%.

Future levels of funding and premium rates may be affected by continuing government efforts to contain healthcare costs and may further be affected by state and federal budgetary constraints. Governments periodically consider reducing or reallocating the amount of money they spend for Medicaid, Medicare, CHIP, LTC, ABD and Foster Care. Adverse economic conditions may continue to put pressures on state budgets as tax and other state revenues decrease while the population that is eligible to participate in these programs increases, creating more need for funding. We anticipate this will require government agencies to find funding alternatives, which may result in reductions in funding for programs, contraction of covered benefits, and limited or no premium rate increases or premium rate decreases. A reduction (or less than expected increase), a protracted delay, or a change in allocation methodology in government funding for these programs, as well as termination of the contract for the convenience of the government, may materially and adversely affect our results of operations, financial position and cash flows.

Additionally, changes in these programs could reduce the number of persons enrolled in or eligible for these programs or increase our administrative or healthcare costs under these programs. Recent legislation generally requires that eligibility levels be maintained, but this could cause states to reduce reimbursement or reduce benefits in order for states to afford to maintain eligibility levels. If any state in which we operate were to decrease premiums paid to us or pay us less than the amount necessary to keep pace with our cost trends, it could have a material adverse effect on our results of operations, financial position and cash flows.

Lastly, if a federal government shutdown were to occur for a prolonged period of time, federal government payment obligations, including its obligations under Medicaid, Medicare, CHIP, LTC, ABD, Foster Care and the new Health Insurance Marketplaces, may be delayed. If the federal government fails to make payments under these programs on a timely basis, our business could suffer, and our financial position, results of operations or cash flows may be materially affected.

Failure to accurately estimate and price our medical expenses or effectively manage our medical costs or related administrative costs could negatively affect our financial position, results of operations or cash flows.

Our profitability, to a significant degree, depends on our ability to estimate and effectively manage expenses related to health benefits through our ability to contract favorably with hospitals, physicians and other healthcare providers. For example, our Medicaid revenue is often based on bids submitted before the start of the initial contract year. If our actual medical expense exceeds our estimates, our health benefits ratio, or our expenses related to medical services as a percentage of premium revenue, would increase and our profits would decline. Because of the narrow margins of our health plan business, relatively small changes in our health benefits ratio can create significant changes in our financial results. Changes in healthcare regulations and practices, the level of utilization of healthcare services, hospital and pharmaceutical costs, major epidemics or pandemics, new medical technologies, pharmaceutical compounds and other external factors, including general economic conditions such as inflation and unemployment levels, are beyond our control and could reduce our ability to accurately predict and effectively control the costs of providing health benefits.

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Our medical expense includes claims reported but not paid, estimates for claims incurred but not reported, and estimates for the costs necessary to process unpaid claims at the end of each period. Our development of the medical claims liability estimate is a continuous process which we monitor and refine on a monthly basis as claims receipts and payment information as well as inpatient acuity information becomes available. As more complete information becomes available, we adjust the amount of the estimate, and include the changes in estimates in medical expense in the period in which the changes are identified. However, we still cannot be sure that our medical claims liability estimate is adequate or that adjustments to the estimate will not unfavorably impact our results of operations.

Additionally, when we commence operations in a new state, region or product, we have limited information with which to estimate our medical claims liability. For a period of time after the inception of the new business, we base our estimates on state-provided historical actuarial data and limited actual incurred and received claims and inpatient acuity information. The addition of new categories of individuals who are eligible under new legislation may pose the same difficulty in estimating our medical claims liability. Similarly, we may face difficulty in estimating our medical claims liability in 2015 for the relatively new and evolving Health Insurance Marketplaces.

From time to time in the past, our actual results have varied from our estimates, particularly in times of significant changes in the number of our members. If it is determined that our estimates are significantly different than actual results, our results of operations and financial position could be adversely affected. In addition, if there is a significant delay in our receipt of premiums, our business operations, cash flows, or earnings could be negatively impacted.

The implementation of the Health Reform Legislation and other reforms could materially and adversely affect our results of operations, financial position and cash flows.

In March 2010, the Patient Protection and Affordable Care Act and the accompanying Health Care and Education Affordability Reconciliation Act, collectively referred to as the Affordable Care Act (ACA), were enacted. While the constitutionality of the ACA was generally upheld by the Supreme Court in 2012, the Court determined that states could not be required to expand Medicaid and risk losing all federal money for their existing Medicaid programs.

Under the ACA, Medicaid coverage was expanded to all individuals under age 65 with incomes up to 138% of the federal poverty level beginning January 1, 2014, subject to each states' election. The federal government will pay the entire costs for Medicaid coverage for newly eligible beneficiaries for three years (2014 through 2016). Beginning in 2017, the federal share begins to decline, ending at 90% for 2020 and subsequent years. As of September 1, 2015, 31 states and the District of Columbia have expanded Medicaid eligibility, and additional states continue to discuss expansion. The ACA also maintained CHIP eligibility standards through September 2019.

The ACA required the establishment of Health Insurance Marketplaces for individuals and small employers to purchase health insurance coverage commencing in January 2014. Open enrollment for coverage in 2015 began on November 15, 2014 and continued until February 15, 2015. The ACA required insurers participating on the Health Insurance Marketplaces to offer a minimum level of benefits and included guidelines on setting premium rates and coverage limitations.

Our ability to adequately price products offered in the Health Insurance Marketplaces may have a negative impact on our results of operations, financial position and cash flow. We may be adversely selected by individuals who will have a higher acuity level than the anticipated pool of participants. In addition, the risk corridor, reinsurance and risk adjustment ("three Rs") provisions of the ACA established to reduce risk for insurers may not be effective in appropriately mitigating the financial risks related to the Marketplace product. Further, the reinsurance and risk corridor components may not be adequately funded. Any variation from our expectations regarding acuity, enrollment levels, adverse selection, the three Rs, or other assumptions utilized in setting adequate premium rates could have a material adverse effect on our results of operations, financial position and cash flows.

The U.S. Department of Health and Human Services (HHS) has stated that it will consider a limited number of premium assistance demonstration proposals from States that want to privatize Medicaid expansion. States must provide a choice between at least two qualified health plans and offer very similar benefits as those available in the newly created Health Insurance Marketplaces. Arkansas became the first state to obtain federal approval to use Medicaid funding to purchase private insurance for low-income residents and we began operations under the program beginning January 1, 2014.

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The ACA imposes an annual insurance industry assessment of $8.0 billion starting in 2014, and $11.3 billion in each of 2015 and 2016, with increasing annual amounts thereafter. Such assessments are not deductible for federal and most state income tax purposes. The fee will be allocated based on health insurers' premium revenues in the previous year. Each health insurer's fee is calculated by multiplying its market share by the annual fee. Market share is based on commercial, Medicare, and Medicaid premium revenue. Not-for-profit insurers may have a competitive advantage since they are exempt from paying the fee if they receive at least 80% of their premium revenue from Medicare, Medicaid, and CHIP, and other not-for-profit insurers are allowed to exclude 50% of their premium revenue from the fee calculation. If this federal premium assessment is imposed as enacted, and if we are not reimbursed by the states for the cost of the federal premium assessment (including the associated tax impact), or if we are unable to otherwise adjust our business model to address this new assessment, our results of operations, financial position and cash flows may be materially adversely affected.

There are numerous steps required to implement the legislation, including the promulgation of a substantial number of new and potentially more onerous federal regulations. Further, various health insurance reform proposals are also emerging at the state level. Because of the unsettled nature of these reforms and numerous steps required to implement them, we cannot predict what additional health insurance requirements will be implemented at the federal or state level, or the effect that any future legislation or regulation will have on our business or our growth opportunities. Although we believe the legislation may provide us with significant opportunities to grow our business, the enacted reforms, as well as future regulations and legislative changes, may in fact have a material adverse effect on our results of operations, financial position or liquidity. If we fail to effectively implement our operational and strategic initiatives with respect to the implementation of healthcare reform, or do not do so as effectively as our competitors, our results of operations may be materially adversely affected.

Our business activities are highly regulated and new laws or regulations or changes in existing laws or regulations or their enforcement or application could force us to change how we operate and could harm our business.

Our business is extensively regulated by the states in which we operate and by the federal government. In addition, the managed care industry has received negative publicity that has led to increased legislation, regulation, review of industry practices and private litigation in the commercial sector. In each of the jurisdictions in which we operate, we are regulated by the relevant insurance, health and/or human services departments that oversee the activities of managed care organizations providing or arranging to provide services to Medicaid, Medicare and Health Insurance Marketplace enrollees. For example, our health plan subsidiaries, as well as our applicable specialty companies, must comply with minimum statutory capital and other financial solvency requirements, such as deposit and surplus requirements.

The frequent enactment of, changes to, or interpretations of laws and regulations could, among other things: force us to restructure our relationships with providers within our network; require us to implement additional or different programs and systems; restrict revenue and enrollment growth; increase our healthcare and administrative costs; impose additional capital and surplus requirements; and increase or change our liability to members in the event of malpractice by our contracted providers. In addition, changes in political party or administrations at the state, federal or country level may change the attitude towards healthcare programs.

Additionally, the taxes and fees paid to federal, state and local governments may increase due to several factors, including:  enactment of, changes to, or interpretations of tax laws and regulations, audits by governmental authorities, geographic expansions into higher taxing jurisdictions and the effect of expansions into international markets.

Our contracts with states may require us to maintain a minimum health benefits ratio (HBR) or may require us to share profits in excess of certain levels. In certain circumstances, our plans may be required to return premium back to the state in the event profits exceed established levels or HBR does not meet the minimum requirement. Other states may require us to meet certain performance and quality metrics in order to maintain our contract or receive additional or full contractual revenue.

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The governmental healthcare programs in which we participate are subject to the satisfaction of certain regulations and performance standards. For example, under Health Reform Legislation, Congress authorized CMS and the states to implement managed care demonstration programs to serve dually eligible beneficiaries to improve the coordination of their care. Participation in these demonstration programs is subject to CMS approval and the satisfaction of conditions to participation, including meeting certain performance requirements. Our inability to improve or maintain adequate quality scores and star ratings to meet government performance requirements or to match the performance of our competitors could result in limitations to our participation in or exclusion from these or other government programs. Specifically, several of our Medicaid contracts require us to maintain a Medicare health plan. Although we strive to comply with all existing regulations and to meet performance standards applicable to our business, failure to meet these requirements could result in financial fines and penalties. Also, states may not allow us to continue to participate in their government programs, or we may fail to win procurements to participate in such programs which could materially and adversely affect our results of operations, financial position and cash flows.

In addition, as a result of the expansion of our businesses and operations conducted in foreign countries, we face political, economic, legal, compliance, regulatory, operational and other risks and exposures that are unique and vary by jurisdiction. These foreign regulatory requirements with respect to, among other items, environmental, tax, licensing, intellectual property, privacy, data protection, investment, capital, management control, labor relations, and fraud and corruption regulations are different than those faced by our domestic businesses. In addition, we are subject to U.S. laws that regulate the conduct and activities of U.S.-based businesses operating abroad, such as the Foreign Corrupt Practices Act. Our failure to comply with laws and regulations governing our conduct outside the United States or to successfully navigate international regulatory regimes that apply to us could adversely affect our ability to market our products and services, which may have a material adverse effect on our business, financial condition and results of operations.

Our businesses providing pharmacy benefit management (PBM) and specialty pharmacy services face regulatory and other risks and uncertainties which could materially and adversely affect our results of operations, financial position and cash flows.

We provide PBM and specialty pharmacy services through our US Script and AcariaHealth businesses. Each business is subject to federal and state laws that govern the relationships of the business with pharmaceutical manufacturers, physicians, pharmacies, customers and consumers. They also conduct business as a mail order pharmacy and specialty pharmacy, which subjects them to extensive federal, state and local laws and regulations. In addition, federal and state legislatures regularly consider new regulations for the industry that could materially and adversely affect current industry practices, including the receipt or disclosure of rebates from pharmaceutical companies, the development and use of formularies, and the use of average wholesale prices.

Our PBM and specialty pharmacy businesses would be materially and adversely affected by an inability to contract on favorable terms with pharmaceutical manufacturers and other suppliers, and could face potential claims in connection with purported errors by our mail order or specialty pharmacies, including in connection with the risks inherent in the authorization, compounding, packaging and distribution of pharmaceuticals and other healthcare products. Disruptions at any of our mail order or specialty pharmacies due to an event that is beyond our control could affect our ability to process and dispense prescriptions in a timely manner and could materially and adversely affect our results of operations, financial position and cash flows.

If any of our government contracts are terminated or are not renewed or we receive an adverse review, audit or investigation, our business will suffer.

We provide managed care programs and selected services to individuals receiving benefits under governmental assistance programs. We provide those healthcare services under contracts with regulatory entities in the areas in which we operate. Our government contracts are generally intended to run for three years and may be extended for additional years if the contracting entity or its agent elects to do so. When our contracts expire, they may be opened for bidding by competing healthcare providers, and there is no guarantee that our contracts will be renewed or extended. Competitors may buy their way into the market by submitting bids with lower pricing. Further, our government contracts contain certain provisions regarding eligibility, enrollment and dis-enrollment processes for covered services, eligible providers, periodic financial and informational reporting, quality assurance, timeliness of claims payment and agreement to maintain a Medicare plan in the state and financial standards and are subject to cancellation if we fail to perform in accordance with the standards set by regulatory agencies.

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We are also subject to various reviews, audits and investigations to verify our compliance with the terms of our contracts with various governmental agencies and applicable laws and regulations. Any adverse review, audit or investigation could result in: cancellation of our contracts; refunding of amounts we have been paid pursuant to our contracts; imposition of fines, penalties and other sanctions on us; loss of our right to participate in various programs; increased difficulty in selling our products and services; or loss of one or more of our licenses.

If any of our government contracts are terminated, not renewed, renewed on less favorable terms, or not renewed on a timely basis, or we have an adverse review, audit or investigation, our business will suffer, our goodwill could be impaired and our financial position, results of operations or cash flows may be materially affected.

Ineffectiveness of state-operated systems and subcontractors could adversely affect our business.

Our health plans rely on other state-operated systems or subcontractors to qualify, solicit, educate and assign eligible members into managed care plans. The effectiveness of these state operations and subcontractors can have a material effect on a health plan’s enrollment in a particular month or over an extended period. When a state implements new programs to determine eligibility, new processes to assign or enroll eligible members into health plans, or chooses new subcontractors, there is an increased potential for an unanticipated impact on the overall number of members assigned to managed care plans.

Our investment portfolio may suffer losses which could materially and adversely affect our results of operations or liquidity.

We maintain a significant investment portfolio of cash equivalents and short term and long term investments in a variety of securities, which are subject to general credit, liquidity, market and interest rate risks and will decline in value if interest rates increase or one of the issuers’ credit ratings is reduced. As a result, we may experience a reduction in value or loss of liquidity of our investments, which may have a negative adverse effect on our results of operations, liquidity and financial condition.

Execution of our growth strategy may increase costs or liabilities, or create disruptions in our business.

Our growth strategy includes the acquisition of health plans participating in government sponsored healthcare programs and specialty services businesses, contract rights and related assets of other health plans both in our existing service areas and in new markets and start-up operations in new markets or new products in existing markets. Although we review the records of companies or businesses we plan to acquire, it is possible that we could assume unanticipated liabilities or adverse operating conditions, or an acquisition may not perform as well as expected or may not achieve timely profitability. We also face the risk that we will not be able to effectively integrate acquisitions into our existing operations effectively without substantial expense, delay or other operational or financial problems and we may need to divert more management resources to integration than we planned.

In connection with start-up operations, we may incur significant expenses prior to commencement of operations and the receipt of revenue. For example, in order to obtain a certificate of authority in most jurisdictions, we must first establish a provider network, have systems in place and demonstrate our ability to administer a state contract and process claims. We may experience delays in operational start dates. As a result of these factors, start-up operations may decrease our profitability. In addition, we are planning to expand our business internationally and we will be subject to additional risks, including, but not limited to, political risk, an unfamiliar regulatory regime, currency exchange risk and exchange controls, cultural and language differences, foreign tax issues, and different labor laws and practices.

If we are unable to effectively execute our growth strategy, our future growth will suffer and our results of operations could be harmed.

If competing managed care programs are unwilling to purchase specialty services from us, we may not be able to successfully implement our strategy of diversifying our business lines.

We are seeking to diversify our business lines into areas that complement our government sponsored health plan business in order to grow our revenue stream and balance our dependence on risk reimbursement. In order to diversify our business, we must succeed in selling the services of our specialty subsidiaries not only to our managed care plans, but to programs operated by third-parties. Some of these third-party programs may compete with us in some markets, and they therefore may be unwilling to purchase specialty services from us. In any event, the offering of these services will require marketing activities that differ significantly from the manner in which we seek to increase revenues from our government sponsored programs. Our ineffectiveness in marketing specialty services to third-parties may impair our ability to execute our business strategy.

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Adverse credit market conditions may have a material adverse effect on our liquidity or our ability to obtain credit on acceptable terms.

The securities and credit markets have been experiencing extreme volatility and disruption over the past several years. The availability of credit, from virtually all types of lenders, has at times been restricted. In the event we need access to additional capital to pay our operating expenses, fund subsidiary surplus requirements, make payments on or refinance our indebtedness, pay capital expenditures, or fund acquisitions, our ability to obtain such capital may be limited and the cost of any such capital may be significant, particularly if we are unable to access our existing credit facility.

Our access to additional financing will depend on a variety of factors such as prevailing economic and credit market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity, and perceptions of our financial prospects. Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. If a combination of these factors were to occur, our internal sources of liquidity may prove to be insufficient, and in such case, we may not be able to successfully obtain additional financing on favorable terms or at all.

If state regulators do not approve payments of dividends and distributions by our subsidiaries to us, we may not have sufficient funds to implement our business strategy.

We principally operate through our health plan subsidiaries. As part of normal operations, we may make requests for dividends and distributions from our subsidiaries to fund our operations. These subsidiaries are subject to regulations that limit the amount of dividends and distributions that can be paid to us without prior approval of, or notification to, state regulators. If these regulators were to deny our subsidiaries’ request to pay dividends, the funds available to us would be limited, which could harm our ability to implement our business strategy.

We derive a majority of our premium revenues from operations in a limited number of states, and our financial position, results of operations or cash flows would be materially affected by a decrease in premium revenues or profitability in any one of those states.

Operations in a limited number of states have accounted for most of our premium revenues to date. If we were unable to continue to operate in any of our current states or if our current operations in any portion of one of those states were significantly curtailed, our revenues could decrease materially. Our reliance on operations in a limited number of states could cause our revenue and profitability to change suddenly and unexpectedly depending on legislative or other governmental or regulatory actions and decisions, economic conditions and similar factors in those states. For example, states we currently serve may bid out their Medicaid program through a request for proposal process. Our inability to continue to operate in any of the states in which we operate could harm our business.

Competition may limit our ability to increase penetration of the markets that we serve.

We compete for members principally on the basis of size and quality of provider networks, benefits provided and quality of service. We compete with numerous types of competitors, including other health plans and traditional state Medicaid programs that reimburse providers as care is provided. In addition, the impact of healthcare reform legislation and potential growth in our segment may attract new competitors.

Some of the health plans with which we compete have greater financial and other resources and offer a broader scope of products than we do. In addition, significant merger and acquisition activity has occurred in the managed care industry, as well as complementary industries, such as the hospital, physician, pharmaceutical, medical device and health information systems businesses. To the extent that competition intensifies in any market that we serve, as a result of industry consolidation or otherwise, our ability to retain or increase members and providers, or maintain or increase our revenue growth, pricing flexibility and control over medical cost trends may be adversely affected.

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If we are unable to maintain relationships with our provider networks, our profitability may be harmed.

Our profitability depends, in large part, upon our ability to contract at competitive prices with hospitals, physicians and other healthcare providers. Our provider arrangements with our primary care physicians, specialists and hospitals generally may be canceled by either party without cause upon 90 to 120 days prior written notice. We cannot provide any assurance that we will be able to continue to renew our existing contracts or enter into new contracts on a timely basis or under favorable terms enabling us to service our members profitably. Healthcare providers with whom we contract may not properly manage the costs of services, maintain financial solvency or avoid disputes with other providers. Any of these events could have a material adverse effect on the provision of services to our members and our operations.

In any particular market, physicians and other healthcare providers could refuse to contract, demand higher payments, or take other actions that could result in higher medical costs or difficulty in meeting regulatory or accreditation requirements. In some markets, certain healthcare providers, particularly hospitals, physician/hospital organizations or multi-specialty physician groups, may have significant market positions or near monopolies that could result in diminished bargaining power on our part. In addition, accountable care organizations, practice management companies, which aggregate physician practices for administrative efficiency and marketing leverage, and other organizational structures that physicians, hospitals and other healthcare providers choose may change the way in which these providers interact with us and may change the competitive landscape. Such organizations or groups of healthcare providers may compete directly with us, which could adversely affect our operations, and our results of operations, financial position and cash flows by impacting our relationships with these providers or affecting the way that we price our products and estimate our costs, which might require us to incur costs to change our operations. Provider networks may consolidate, resulting in a reduction in the competitive environment. In addition, if these providers refuse to contract with us, use their market position to negotiate contracts unfavorable to us or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially and adversely affected.

From time to time healthcare providers assert or threaten to assert claims seeking to terminate non-cancelable agreements due to alleged actions or inactions by us. In addition, we are aware that other managed care organizations have been subject to class action lawsuits by healthcare providers with respect to claim payment procedures, and we may be subject to similar lawsuits. Regardless of whether any lawsuits brought against us are successful or have merit, they will still be time-consuming and costly and could distract our management’s attention. As a result, we may incur significant expenses and may be unable to operate our business effectively. If we are unable to retain our current provider contract terms or enter into new provider contracts timely or on favorable terms, our profitability may be harmed.

We may be unable to attract, retain or effectively manage the succession of key personnel.

We are highly dependent on our ability to attract and retain qualified personnel to operate and expand our business. We would be adversely impacted if we are unable to adequately plan for the succession of our executives and senior management. While we have succession plans in place for members of our executive and senior management team, these plans do not guarantee that the services of our executive and senior management team will continue to be available to us. Our ability to replace any departed members of our executive and senior management or other key employees may be difficult and may take an extended period of time because of the limited number of individuals in the managed care and specialty services industry with the breadth of skills and experience required to operate and successfully expand a business such as ours. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these personnel. If we are unable to attract, retain and effectively manage the succession plans for key personnel, executives and senior management, our business and financial position, results of operations or cash flows could be harmed.

If we are unable to integrate and manage our information systems effectively, our operations could be disrupted.

Our operations depend significantly on effective information systems. The information gathered and processed by our information systems assists us in, among other things, monitoring utilization and other cost factors, processing provider claims, and providing data to our regulators. Our healthcare providers also depend upon our information systems for membership verifications, claims status and other information. Our information systems and applications require continual maintenance, upgrading and enhancement to meet our operational needs and regulatory requirements. We regularly upgrade and expand our information systems’ capabilities. If we experience difficulties with the transition to or from information systems or are unable to properly maintain or expand our information systems, we could suffer, among other things, operational disruptions, loss of existing members and difficulty in attracting new members, regulatory problems and increases in administrative expenses. In addition, our ability to integrate and manage our information systems may be impaired as the result of events outside our control, including acts of nature, such as earthquakes or fires, or acts of terrorists.

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From time to time, we may become involved in costly and time-consuming litigation and other regulatory proceedings, which require significant attention from our management.

We are a defendant from time to time in lawsuits and regulatory actions relating to our business, including, without limitation, medical malpractice claims. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material adverse impact on our business and financial position, results of operations or cash flows. In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings are costly and time consuming and require significant attention from our management, and could therefore harm our business and financial position, results of operations or cash flows.

An impairment charge with respect to our recorded goodwill and intangible assets could have a material impact on our results of operations.

We periodically evaluate our goodwill and other intangible assets to determine whether all or a portion of their carrying values may be impaired, in which case a charge to earnings may be necessary. Changes in business strategy, government regulations or economic or market conditions have resulted and may result in impairments of our goodwill and other intangible assets at any time in the future. Our judgments regarding the existence of impairment indicators are based on, among other things, legal factors, market conditions, and operational performance. For example, the non-renewal of our health plan contracts with the state in which they operate may be an indicator of impairment. If an event or events occur that would cause us to revise our estimates and assumptions used in analyzing the value of our goodwill and other intangible assets, such revision could result in a non-cash impairment charge that could have a material impact on our results of operations in the period in which the impairment occurs.

If we fail to comply with applicable privacy, security, and data laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.

As part of our normal operations, we collect, process and retain confidential member information. We are subject to various federal and state laws and rules regarding the use and disclosure of confidential member information, including the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Gramm-Leach-Bliley Act, which require us to protect the privacy of medical records and safeguard personal health information we maintain and use. Certain of our businesses are also subject to the Payment Card Industry Data Security Standard, which is a multifaceted security standard that is designed to protect credit card account data as mandated by payment card industry entities. Despite our best attempts to maintain adherence to information privacy and security best practices as well as compliance with applicable laws and rules, our facilities and systems, and those of our third party service providers, may be vulnerable to privacy or security breaches, acts of vandalism or theft, malware, misplaced or lost data including paper or electronic media, programming and/or human errors or other similar events. In the past, we have had data breaches resulting in disclosure of confidential or protected health information that have not resulted in any material financial loss or penalty to date. However, future data breaches could require us to expend significant resources to remediate any damage, interrupt our operations and damage our reputation, subject us to state or federal agency review and could also result in enforcement actions, material fines and penalties, litigation or other actions which could have a material adverse effect on our business, reputation and results of operations, financial position and cash flows.

In addition, HIPAA broadened the scope of fraud and abuse laws applicable to healthcare companies.  HIPAA created civil penalties for, among other things, billing for medically unnecessary goods or services.  HIPAA established new enforcement mechanisms to combat fraud and abuse, including civil and, in some instances, criminal penalties for failure to comply with specific standards relating to the privacy, security and electronic transmission of protected health information.  The HITECH Act expanded the scope of these provisions by mandating individual notification in instances of breaches of protected health information, providing enhanced penalties for HIPAA violations, and granting enforcement authority to states’ Attorneys General in addition to the HHS Office for Civil Rights.  It is possible that Congress may enact additional legislation in the future to increase penalties and to create a private right of action under HIPAA, which could entitle patients to seek monetary damages for violations of the privacy rules. In addition, HHS has announced that it will continue its audit program to assess HIPAA compliance efforts by covered entities with a focus on security risk assessments. Although we are not aware of HHS plans to audit any of our covered entities, an audit resulting in findings or allegations of noncompliance could have a material adverse effect on our results of operations, financial position and cash flows.

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Under HIPAA, health plans are required to have the capacity to accept and send all covered transactions in a standardized electronic format. Penalties can be imposed for failure to comply with these requirements. The transaction standards have been modified to version 5010 to prepare for the implementation of the ICD-10 coding system. While we have prepared for the transition to ICD-10 in October 2015, if unforeseen circumstances arise, it is possible that we could be exposed to investigations and allegations of noncompliance. In addition, if some providers continue to use ICD-9 codes on claims after October 1, 2015, we may have to reject such claims, which may lead to claim resubmissions, increased call volume and provider and customer dissatisfaction. Further, providers may use ICD-10 codes differently than they used ICD-9 codes in the past, which could result in higher costs and reimbursement levels, or lost revenues under risk adjustment. During the transition to ICD-10, certain claims processing and payment information we have historically used to establish our reserves may not be reliable or available in a timely manner. As a result, implementation of ICD 10 may have a material adverse effect on our results of operations, financial position and cash flows.

A failure in or breach of our operational or security systems or infrastructure, or those of third parties with which we do business, including as a result of cyber attacks, could have an adverse effect on our business.

Information security risks have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct our operations, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state agents. Our operations rely on the secure processing, transmission and storage of confidential, proprietary and other information in our computer systems and networks.

Security breaches may arise from external or internal threats. External breaches include hacking personal information for financial gain, attempting to cause harm to our operations, or intending to obtain competitive information. We experience attempted external hacking or malicious attacks on a regular basis. We maintain a rigorous system of preventive and detective controls through our security programs; however, our prevention and detection controls may not prevent or identify all such attacks. Internal breaches may result from inappropriate security access to confidential information by rogue employees, consultants or third party service providers. Any security breach involving the misappropriation, loss or other unauthorized disclosure or use of confidential member information, financial data, competitively sensitive information, or other proprietary data, whether by us or a third party, could have a material adverse effect on our business reputation, financial condition, cash flows, or results of operations.

Consummation of the merger with Health Net is subject to receipt of regulatory approvals and certain other conditions and we cannot predict when or if such conditions will be satisfied or waived or if, in connection with the receipt of necessary approvals, regulators will impose conditions on us that have an adverse effect on our business.

Consummation of the merger with Health Net is subject to receipt of certain remaining regulatory approvals and certain other conditions, including, among others:

• certain filings or consents required for the consummation of the Merger and the other transactions under applicable state and foreign insurance and health care regulatory laws having been made or obtained; and

• certain other customary conditions.

We cannot provide any assurance that the merger will be completed, that there will not be a delay in the completion of the merger or that all or any of the anticipated benefits of the merger will be realized. Any delay could also, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the merger. In the event the merger agreement is terminated or the transaction is materially delayed for any reason, the price of our common stock may be impacted. Regulatory authorities reviewing the merger may refuse to permit the merger or may impose restrictions or conditions on the merger that may adversely affect the Company if the merger is completed.

We may be unable to successfully integrate our business with Health Net and realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on our ability to successfully combine the businesses of the Company and Health Net, which currently operate as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation and operational efficiencies, from the combination. If we are unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected and the value of our common stock may be harmed.

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The merger involves the integration of Health Net’s business with our existing business, which is a complex, costly and time-consuming process. We have not previously completed a transaction comparable in size or scope to the proposed merger. The integration of the two companies may result in material challenges, including, without limitation:

• the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the merger;

• managing a larger combined company;

• maintaining employee morale and retaining key management and other employees;

• the possibility of faulty assumptions underlying expectations regarding the integration process;

• retaining existing business and operational relationships and attracting new business and operational relationships;

• consolidating corporate and administrative infrastructures and eliminating duplicative operations;

• coordinating geographically separate organizations;

• unanticipated issues in integrating information technology, communications and other systems;

• unanticipated changes in federal or state laws or regulations, including the ACA and the Health Care Education Affordability Reconciliation Act and any regulations enacted thereunder; and

• unforeseen expenses or delays associated with the merger.

Many of these factors will be outside of our control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially affect our financial position, results of operations and cash flows.

We and Health Net are currently permitted to conduct only limited planning for the integration of the two companies following the merger and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the merger. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized.

Our financial results after the merger will depend on our ability to maintain our and Health Net’s business and operational relationships.

A substantial portion of each of our and Health Net’s revenues are received under contracts with states. Our success following the merger will depend in part on our ability to maintain these state contracts and other business and operational relationships, including those of Health Net. Health Net’s state contracts and other business and operational relationships may have termination or other rights that may be triggered by the merger, or the states or other business and operational relationships may decide not to renew their existing relationships with Health Net or, after the merger, with us. If Health Net (prior to the completion of the merger) and we (after the completion of the merger) are unable to maintain these contracts and other business and operational relationships, our financial position, results of operations or cash flows could be materially affected.

We are expected to incur substantial expenses related to the completion of the merger and the integration of Health Net.

We are expected to incur substantial expenses in connection with the completion of the merger and the integration of Health Net. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. In addition, the businesses of Centene and Health Net will continue to maintain a presence in St. Louis, Missouri and Woodland Hills, California, respectively. The substantial majority of these costs will be non-recurring expenses related to the merger (including financing of the merger), facilities and systems consolidation costs. We may incur additional costs to maintain employee morale and to retain key employees. We will also incur transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs. Additionally, as a result of the merger, rating agencies may take negative actions with regard to our credit ratings. This may increase our costs in connection with the financing of the merger. These incremental transaction and merger-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs.

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Failure to complete the merger could impact our stock price and our future business and financial position, results of operations and cash flows.

If the merger is not completed or our financing for the transaction becomes unavailable, our ongoing business and financial position, results of operations and cash flows may be materially affected and we will be subject to a number of risks, including the following:

• depending on the reasons leading to such termination we could be liable to Health Net for termination fees in connection with the termination of the merger agreement;

• we could be responsible for the transaction costs relating to the merger, whether or not the merger is completed;

• while the merger agreement is in force, we are subject to certain restrictions on the conduct of our business, which may adversely affect our ability to execute certain of our business strategies;

• the market price of our common stock could decline to the extent that the current market price reflects, and is positively affected by, a market assumption that the transactions contemplated by the merger will be completed; and

• matters relating to the merger (including integration planning) may require substantial commitments of time and resources by our management, whether or not the merger is completed, which could otherwise have been devoted to other opportunities that may have been beneficial to us.

In addition, if the merger is not completed, we may experience negative reactions from the financial markets and from our providers, members and employees. We may also be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against us to perform our obligations under the merger agreement. If the merger is not completed, these risks may materialize and may materially affect our financial position, results of operations and cash flows, as well as the price of our common stock.

The market price of our common stock may decline as a result of the merger with Health Net.

The market price of the common stock of our company may decline as a result of the merger if, among other things, we are unable to achieve the expected growth in earnings, or if the operational cost savings estimates in connection with the integration of Health Net’s business with ours are not realized, or if the transaction costs related to the merger are greater than expected, or if the financing related to the transaction is on unfavorable terms. The market price also may decline if we do not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the merger on our financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

The merger will substantially reduce the percentage ownership interests of our current stockholders; it may not be accretive and may cause dilution to our earnings per share, which may negatively affect the market price of our common stock.

Our stockholders have the right to vote in the election of our Board of Directors and on certain other matters affecting the Company. If the merger is completed we will pay approximately $6.8 billion and Health Net’s stockholders are expected to hold approximately 29% of the common stock of the Company after the merger. As a result, if the merger is completed, our pre-merger stockholders will own a smaller proportion of our outstanding common stock than the proportion of our outstanding common stock they owned before the merger and, as a result, they will have less influence on our management and policies following the merger than they now have on our management and policies. We currently anticipate that the merger will be accretive to our earnings per share. This expectation is based on preliminary estimates which may materially change. We could also encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger, or unforeseen liabilities or other issues existing or arising with the business of Health Net or otherwise resulting from the merger. All of these factors could cause dilution to our earnings per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the price of our common stock.

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Uncertainties associated with the merger may cause a loss of management personnel and other key employees which could adversely affect the future business and operations of the combined company.

Centene and Health Net are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. The combined company’s success after the completion of the merger will depend in part upon the ability of Centene and Health Net to retain key management personnel and other key employees. Prior to completion of the merger, current and prospective employees of Centene and Health Net may experience uncertainty about their roles within the combined company following the completion of the merger, which may have an adverse effect on the ability of each of Centene and Health Net to attract or retain key management and other key personnel. In addition, no assurance can be given that the combined company will be able to attract or retain key management personnel and other key employees of Centene and Health Net to the same extent that Centene and Health Net have previously been able to attract or retain their own employees.

The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the merger.

Following the completion of the merger, the size of the combined company’s business will be significantly larger than the current size of either Centene’s or Health Net’s respective businesses. The combined company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of two discrete companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the merger.

The combined company will be significantly more leveraged than Centene is currently.

Upon completion of the merger, the combined company expects to incur approximately $2,382 million in additional indebtedness. The combined company will have consolidated indebtedness of approximately $4,136 million, which is greater than the current indebtedness of Centene prior to the merger. The increased indebtedness and higher debt-to-equity ratio of the combined company in comparison to that of Centene on a historical basis will have the effect, among other things, of reducing the flexibility of Centene to respond to changing business and economic conditions and increasing borrowing costs.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities Third Quarter 2015
Period	Total Number of Shares Purchased 1	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs2
July 1 - July 31, 2015	6,200	$	72.98	—	3,335,448
August 1 - August 31, 2015	3,429	68.71		—	3,335,448
September 1 - September 30, 2015	4,515	58.92		—	3,335,448
Total	14,144	$	67.46	—	3,335,448
(1) Shares acquired represent shares relinquished to the Company by certain employees for payment of taxes or option cost upon vesting of restricted stock units or option exercise. (2) Our Board of Directors adopted a stock repurchase program which allows for repurchases of up to a remaining amount of 3,335,448 shares.  No duration has been placed on the repurchase program.

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ITEM 6. Exhibits.

EXHIBIT NUMBER	DESCRIPTION
12.1	Computation of ratio of earnings to fixed charges.
31.1	Certification of Chairman, President and Chief Executive Officer pursuant to Rule 13(a)-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13(a)-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chairman, President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	XBRL Taxonomy Instance Document.
101.2	XBRL Taxonomy Extension Schema Document.
101.3	XBRL Taxonomy Extension Calculation Linkbase Document.
101.4	XBRL Taxonomy Extension Definition Linkbase Document.
101.5	XBRL Taxonomy Extension Label Linkbase Document.
101.6	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized as of October 27, 2015.

CENTENE CORPORATION
By:	/s/ MICHAEL F. NEIDORFF
	Chairman, President and Chief Executive Officer (principal executive officer)

By:	/s/ WILLIAM N. SCHEFFEL
	Executive Vice President and Chief Financial Officer (principal financial officer)

By:	/s/ JEFFREY A. SCHWANEKE
	Senior Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer)

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EX-12.1

Exhibit 12.1

Centene Corporation

Computation of ratio of earnings to fixed charges

($ in millions)

	Nine Months Ended			Year Ended December 31,
	09/30/15			2014		2013			2012		2011		2010
Earnings:
Pre-tax earnings from continuing operations	$	480		$	457	$	269		$	123	$	188	$	154
Addback:
Fixed charges	47			50		37			29		28		26
Subtract:
Noncontrolling interest	(2		)	7		(1		)	13		3		(3		)
Interest capitalized	—			—		—			—		—		(1		)
Total earnings	$	525		$	514	$	305		$	165	$	219	$	176
Fixed Charges:
Interest expensed and capitalized	$	32		$	35	$	27		$	20	$	20	$	19
Interest component of rental payments (1)	15			15		10			9		8		7
Total fixed charges	$	47		$	50	$	37		$	29	$	28	$	26
Ratio of earnings to fixed charges	11.2			10.3		8.2			5.7		7.8		6.8
(1) Estimated at 33% of rental expense as a reasonable approximation of the interest factor.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Michael F. Neidorff, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Centene Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	October 27, 2015	/s/ MICHAEL F. NEIDORFF
		Chairman, President and Chief Executive Officer (principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, William N. Scheffel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Centene Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	October 27, 2015	/s/ WILLIAM N. SCHEFFEL
		Executive Vice President and Chief Financial Officer (principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C.  SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Centene Corporation (the Company) for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, Michael F. Neidorff, Chairman, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 27, 2015	/s/ MICHAEL F. NEIDORFF
		Chairman, President and Chief Executive Officer (principal executive officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C.  SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Centene Corporation (the Company) for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, William N. Scheffel, Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 27, 2015	/s/ WILLIAM N. SCHEFFEL
		Executive Vice President and Chief Financial Officer (principal financial officer)

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Health Insurance Marketplace (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Health Insurance Marketplace [Abstract]
Risk adjustment	$ (77)	$ (44)
Reinsurance	14	11
Risk corridor	(31)	(9)
Minimum medical loss ratio	$ (14)	$ (6)

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Short-Term And Long-Term Investments And Restricted Deposits (Narrative) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($) position
Investments, Debt and Equity Securities [Abstract]
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of AAA/Aaa	38.00%
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of AA-/Aa3 or higher	62.00%
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of A-/A3 or higher	88.00%
Positions from which gross unrealized losses were generated	202
Total unrealized investment positions	680
Income from equity method investments | $	$ 8
Percentage of investments recorded at fair value that carry rating of AA, weighted average (in years)	2 years

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Health Insurance Marketplace Health Insurance Marketplace (Tables)

9 Months Ended

Sep. 30, 2015

Health Insurance Marketplace [Abstract]

Schedule of receivables (payables) related to the Health Insurance Marketplace programs

The Company's receivables (payables) for each of these programs are as follows ($ in millions):

	September 30, 2015			December 31, 2014
Risk adjustment	$	(77	)	$	(44	)
Reinsurance	14			11
Risk corridor	(31		)	(9		)
Minimum medical loss ratio	(14		)	(6		)

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Earnings from continuing operations, net of tax	$ 92	$ 81	$ 244	$ 162
Discontinued operations, net of tax	1	1	0	2
Net earnings attributable to Centene Corporation	$ 93	$ 82	$ 244	$ 164
Weighted average number of common shares outstanding (in shares)	119,121,524	117,226,968	118,970,853	115,912,304
Common stock equivalents (as determined by applying the treasury stock method) (in shares)	4,010,286	4,136,782	3,933,623	3,961,094
Weighted average number of common shares and potential dilutive common shares outstanding (in shares)	123,131,810	121,363,750	122,904,476	119,873,398
Basic:
Continuing operations (in dollar per share)	$ 0.77	$ 0.69	$ 2.05	$ 1.40
Discontinued operations (in dollar per share)	0.01	0.01	0.00	0.01
Basic earnings per common share (in dollar per share)	0.78	0.70	2.05	1.41
Diluted:
Continuing operations (in dollar per share)	0.75	0.67	1.99	1.35
Discontinued operations (in dollar per share)	0.01	0.01	0.00	0.02
Diluted earnings per common share ( in dollar per share)	$ 0.76	$ 0.68	$ 1.99	$ 1.37
Anti-dilutive restricted stock and restricted stock units excluded from the calculation of diluted earnings per common share ( in shares)	28,716	47,520	84,644	117,756

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Fair Value Measurements (Fair Value Measurements By Level For Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 1,665	$ 1,610
U.S. Treasury securities and obligations of U.S. government corporations and agencies	451	377
Corporate securities	837	556
Municipal securities	489	175
Asset-backed securities	186	180
Total investments	2,066	1,373
Cash and cash equivalents	78	79
Certificates of deposit	9	6
U.S. Treasury securities and obligations of U.S. government corporations and agencies	19	15
Total restricted deposits	106	100
Interest rate swap agreements	18	11
Total assets at fair value	3,855	3,094
Level I [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	1,665	1,610
U.S. Treasury securities and obligations of U.S. government corporations and agencies	437	360
Corporate securities	0	0
Municipal securities	0	0
Asset-backed securities	0	0
Total investments	437	360
Cash and cash equivalents	78	79
Certificates of deposit	9	6
U.S. Treasury securities and obligations of U.S. government corporations and agencies	19	15
Total restricted deposits	106	100
Interest rate swap agreements	0	0
Total assets at fair value	2,208	2,070
Level II [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
U.S. Treasury securities and obligations of U.S. government corporations and agencies	14	17
Corporate securities	837	556
Municipal securities	489	175
Asset-backed securities	186	180
Total investments	1,629	1,013
Cash and cash equivalents	0	0
Certificates of deposit	0	0
U.S. Treasury securities and obligations of U.S. government corporations and agencies	0	0
Total restricted deposits	0	0
Interest rate swap agreements	18	11
Total assets at fair value	1,647	1,024
Level III [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
U.S. Treasury securities and obligations of U.S. government corporations and agencies	0	0
Corporate securities	0	0
Municipal securities	0	0
Asset-backed securities	0	0
Total investments	0	0
Cash and cash equivalents	0	0
Certificates of deposit	0	0
U.S. Treasury securities and obligations of U.S. government corporations and agencies	0	0
Total restricted deposits	0	0
Interest rate swap agreements	0	0
Total assets at fair value	0	0
Residential Mortgage Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	77	85
Residential Mortgage Backed Securities [Member] | Level I [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	0	0
Residential Mortgage Backed Securities [Member] | Level II [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	77	85
Residential Mortgage Backed Securities [Member] | Level III [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	0	0
Commercial Mortgage Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	26	0
Commercial Mortgage Backed Securities [Member] | Level I [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	0	0
Commercial Mortgage Backed Securities [Member] | Level II [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	26	0
Commercial Mortgage Backed Securities [Member] | Level III [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities	$ 0	$ 0

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Consolidated Statements Of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net earnings	$ 246	$ 159
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	82	65
Stock compensation expense	48	35
Deferred income taxes	(14)	(65)
Gain on settlement of contingent consideration	(37)	0
Goodwill and intangible adjustment	28	0
Changes in assets and liabilities
Premium and related receivables	(360)	(243)
Other current assets	(103)	(25)
Other assets	(40)	(51)
Medical claims liabilities	394	476
Unearned revenue	(104)	54
Accounts payable and accrued expenses	209	427
Other long term liabilities	101	17
Other operating activities	7	4
Net cash provided by operating activities	457	853
Cash flows from investing activities:
Capital expenditures	(101)	(69)
Purchases of investments	(1,077)	(738)
Sales and maturities of investments	418	320
Proceeds from asset sale	7	0
Investments in acquisitions, net of cash acquired	(16)	(94)
Net cash used in investing activities	(769)	(581)
Cash flows from financing activities:
Proceeds from exercise of stock options	5	6
Proceeds from borrowings	1,305	1,385
Payment of long term debt	(910)	(1,118)
Excess tax benefits from stock compensation	7	7
Common stock repurchases	(9)	(6)
Contribution from noncontrolling interest	2	5
Debt issue costs	(4)	(6)
Payment of contingent consideration obligation	(29)	0
Net cash provided by financing activities	367	273
Net increase in cash and cash equivalents	55	545
Cash and cash equivalents, beginning of period	1,610	1,038
Cash and cash equivalents, end of period	1,665	1,583
Supplemental disclosures of cash flow information:
Interest paid	28	18
Health insurer fee paid	213	126
Income taxes paid	229	167
Equity issued in connection with acquisitions	$ 12	$ 190

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Segment Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) segment	Sep. 30, 2014 USD ($)
Number of reportable segments | segment			2
Revenues	$ 5,821	$ 4,352	$ 16,458	$ 11,836
Premium and service revenues	5,463	4,159	15,408	11,252
Earnings from operations	183	108	485	271
Intersegment Eliminations [Member]
Premium and service revenues	(1,298)	(822)	(3,598)	(2,163)
Earnings from operations	0	0	0	0
Operating Segments [Member] | Medicaid Managed Care [Member]
Premium and service revenues	4,946	3,746	13,885	9,967
Earnings from operations	138	80	358	188
Operating Segments [Member] | Specialty Services [Member]
Premium and service revenues	1,815	1,235	5,121	3,448
Earnings from operations	45	28	127	83
Internal Customer [Member]
Revenues	0	0	0	0
Internal Customer [Member] | Intersegment Eliminations [Member]
Revenues	(1,298)	(822)	(3,598)	(2,163)
Internal Customer [Member] | Operating Segments [Member] | Medicaid Managed Care [Member]
Revenues	24	16	73	42
Internal Customer [Member] | Operating Segments [Member] | Specialty Services [Member]
Revenues	1,274	806	3,525	2,121
External Customer [Member]
Revenues	5,463	4,159	15,408	11,252
External Customer [Member] | Intersegment Eliminations [Member]
Revenues	0	0	0	0
External Customer [Member] | Operating Segments [Member] | Medicaid Managed Care [Member]
Revenues	4,922	3,730	13,812	9,925
External Customer [Member] | Operating Segments [Member] | Specialty Services [Member]
Revenues	$ 541	$ 429	$ 1,596	$ 1,327

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Basis Of Presentation (Details) $ in Millions	Feb. 19, 2015	Feb. 02, 2015	Sep. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Stock split conversion ratio		2
Percentage of common stock distributed as dividends	100.00%
New Accounting Pronouncement, Effect of adoption on balance sheet			$ 15	$ 14

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment information for the three months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	4,922	$	541	$	—		$	5,463
Premium and service revenues from internal customers	24		1,274		(1,298		)	—
Total premium and service revenues	$	4,946	$	1,815	$	(1,298	)	$	5,463
Earnings from operations	$	138	$	45	$	—		$	183

Segment information for the three months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	3,730	$	429	$	—		$	4,159
Premium and service revenues from internal customers	16		806		(822		)	—
Total premium and service revenues	$	3,746	$	1,235	$	(822	)	$	4,159
Earnings from operations	$	80	$	28	$	—		$	108

Segment information for the nine months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	13,812	$	1,596	$	—		$	15,408
Premium and service revenues from internal customers	73		3,525		(3,598		)	—
Total premium and service revenues	$	13,885	$	5,121	$	(3,598	)	$	15,408
Earnings from operations	$	358	$	127	$	—		$	485

Segment information for the nine months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	9,925	$	1,327	$	—		$	11,252
Premium and service revenues from internal customers	42		2,121		(2,163		)	—
Total premium and service revenues	$	9,967	$	3,448	$	(2,163	)	$	11,252
Earnings from operations	$	188	$	83	$	—		$	271

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Contingencies (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Mar. 09, 2015
Loss Contingencies [Line Items]
Kentucky Spirit performance bond	$ 25
Commonwealth of Kentucky alleged increased program costs - low end of range	28
Commonwealth of Kentucky alleged increased program costs - high end of range	40
Commonwealth of Kentucky alleged associated CMS expenditures - low end of range	92
Commonwealth of Kentucky alleged associated CMS expenditures - high end of range	$ 134
Secretary of the Kentucky Cabinet for Health and Family Services determination letter damages		$ 40
Secretary of the Kentucky Cabinet for Health and Family Services determination letter damages prejudgment interest rate		8.00%
Loss contingency, allegations	On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract.  The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million. Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth. On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review. Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims.
Inestimable loss	The resolution of the Kentucky litigation matters may result in a range of possible outcomes.  If Kentucky Spirit prevails on its claims, it would be entitled to damages.  If the Commonwealth prevails, a liability to the Commonwealth could be recorded.  The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation.  As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015.  While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known.

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Health Net Merger (Details) - Health Net, Inc. [Member] $ / shares in Units, $ in Billions	Jul. 02, 2015 USD ($) subsidiary $ / shares shares
Business Acquisition [Line Items]
Newly formed subsidiaries of Centene | subsidiary	2
Share exchange, per share	0.622
Cash to be paid, per share | $ / shares	$ 28.25
Consideration to be paid per agreement | $	$ 6.8

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Acquisitions and Redeemable Noncontrolling Interest Acquisitions and Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions	1 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2015	May. 31, 2015	Jan. 31, 2015	Sep. 30, 2015	Mar. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
Payment of contingent consideration obligation						$ 29	$ 0
Gain on settlement of contingent consideration						37	0
Goodwill	$ 849			$ 849		849		$ 754
Goodwill and intangible adjustment						28	$ 0
LiveHealthier, Inc. [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration			$ 4
Percentage of acquisition			79.00%
Consideration transferred			$ 28
Total percentage of ownership after the acquisition			100.00%
Payments to acquire business			$ 11
Common stock issued for acquisition			$ 13
Contingent consideration, period of payout			3 years
Maximum contingent consideration			$ 9
Goodwill			26
Intangibles acquired			$ 15
Celtic Insurance Company [Member]
Business Acquisition [Line Items]
Ownership percentage sold by parent, percentage			25.00%
Proceeds from divestiture of businesses			$ 7
Fidelis SecureCare of Michigan, Inc. [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration	23	$ 50		23		23
Gain on settlement of contingent consideration				27
Percentage of acquisition		100.00%
Consideration transferred		$ 57
Payments to acquire business		$ 7
Contingent consideration, period of payout		2 years
Goodwill	15	$ 29		15		15
Intangibles acquired		$ 23
Finite-Lived Intangible Assets, Net	7			7		7
Description of contingent consideration arrangement		duals membership and revenue per member during the first year of the contract (July 2015 - June 2016), including reconciliation payments settled over a two year period
Goodwill deductible for income tax , percentage		100.00%
Community Health Solutions [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration								$ 18
Payment of contingent consideration obligation					$ 8
Gain on settlement of contingent consideration					$ 10
Agate Resources, Inc. [Member]
Business Acquisition [Line Items]
Fair value of contingent consideration	9			9		9
Consideration transferred	120
Payments to acquire business	93
Goodwill	51			51		51
Intangibles acquired	$ 34			34		34
Description of contingent consideration arrangement	A portion of the contingent consideration is based on the achievement of underwriting targets and will be paid in cash over a three year period; the remainder is based on the receipt of a retrospective rate adjustment and is expected to be settled in cash in the fourth quarter of 2015.
Present value of future consideration	$ 18			18		$ 18
Business Combination, Deferred Payment, Period of Payments	3 years
Contingent consideration based on achievement of underwriting targets, duration of cash payment	3 years
General and Administrative Expense [Member] | Fidelis SecureCare of Michigan, Inc. [Member]
Business Acquisition [Line Items]
Goodwill and intangible adjustment				$ 28

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Consolidated Statement Of Stockholders' Equity (Parenthetical) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
Statement of Stockholders' Equity [Abstract]
Change in unrealized gain on investments, tax	$ 1

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Acquisitions and Redeemable Noncontrolling Interest Redeemable Noncontrolling Interest (Details) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Opening balance	$ 148
Fair value of redeemable noncontrolling interest sold	7
Reclassification to redeemable noncontrolling interest	(1)
Net earnings attributable to redeemable noncontrolling interests	2
Closing balance	$ 156

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Debt (Schedule Of Debt) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Fair value of interest rate swap agreements	$ 18	$ 11
Senior notes	946	740
Revolving credit agreement	275	75
Mortgage notes payable	68	70
Capital leases	7	8
Debt issuance costs	(15)	(14)
Total debt	1,281	879
Less current portion	(5)	(5)
Long term debt	1,276	874
5.75% Senior Notes, Due June 1, 2017 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
$425 million 5.75% Senior notes, due June 1, 2017	428	429
Debt, face amount	$ 425	$ 425
Interest rate, stated	5.75%	5.75%
4.75% Senior Notes, Due on May 15, 2022 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
$500 million 4.75% Senior notes, due May 15, 2022	$ 500	$ 300
Debt, face amount	$ 500	$ 500
Interest rate, stated	4.75%	4.75%

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Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 1,665	$ 1,610
Premium and related receivables	1,281	912
Short term investments	162	177
Other current assets	488	335
Total current assets	3,596	3,034
Long term investments	1,992	1,280
Restricted deposits	106	100
Property, software and equipment, net	488	445
Goodwill	849	754
Intangible assets, net	161	120
Other long term assets	130	91
Total assets	7,322	5,824
Current liabilities:
Medical claims liability	2,144	1,723
Accounts payable and accrued expenses	1,035	768
Return of premium payable	313	236
Unearned revenue	66	168
Current portion of long term debt	5	5
Total current liabilities	3,563	2,900
Long term debt	1,276	874
Other long term liabilities	274	159
Total liabilities	$ 5,113	$ 3,933
Commitments and contingencies
Redeemable noncontrolling interests	$ 156	$ 148
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at September 30, 2015 and December 31, 2014	0	0
Common stock, $.001 par value; authorized 200,000,000 shares; 124,940,103 issued and 119,201,560 outstanding at September 30, 2015, and 124,274,864 issued and 118,433,416 outstanding at December 31, 2014	0	0
Additional paid-in capital	909	840
Accumulated other comprehensive loss	(2)	(1)
Retained earnings	1,247	1,003
Treasury stock, at cost (5,738,543 and 5,841,448 shares, respectively)	(103)	(98)
Total Centene stockholders’ equity	2,051	1,744
Noncontrolling interest	2	(1)
Total stockholders’ equity	2,053	1,743
Total liabilities and stockholders’ equity	$ 7,322	$ 5,824

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Subsequent Events (Details) - shares	Oct. 27, 2015	Sep. 30, 2015	Dec. 31, 2014
Subsequent Event [Line Items]
Common stock, shares authorized (in shares)		200,000,000	200,000,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Common stock, shares authorized (in shares)	400,000,000

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Consolidated Statement Of Comprehensive Earnings - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net earnings	$ 94	$ 79	$ 246	$ 159
Reclassification adjustment, net of tax	0	0	0	0
Change in unrealized gain on investments, net of tax	2	(3)	3	2
Foreign currency translation adjustments	0	0	(4)	0
Other comprehensive earnings	2	(3)	(1)	2
Comprehensive earnings	96	76	245	161
Comprehensive (earnings) loss attributable to noncontrolling interests	(1)	3	(2)	5
Comprehensive earnings attributable to Centene Corporation	$ 95	$ 79	$ 243	$ 166

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Short-Term And Long-Term Investments And Restricted Deposits (Fair Value Of Available-For-Sale Investments With Gross Unrealized Losses By Investment Type And Length Of Time) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	$ (4)	$ (2)
Less Than 12 Months, Fair Value	573	491
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	(2)	(2)
12 Months or More, Fair Value	75	198
U.S. Treasury Securities And Obligations Of U.S. Government Corporations And Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	0	0
Less Than 12 Months, Fair Value	68	72
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	0	(2)
12 Months or More, Fair Value	16	180
Corporate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	(3)	(2)
Less Than 12 Months, Fair Value	317	311
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	(1)	0
12 Months or More, Fair Value	41	1
Municipal Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	(1)	0
Less Than 12 Months, Fair Value	120	20
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	(1)	0
12 Months or More, Fair Value	5	7
Asset Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	0	0
Less Than 12 Months, Fair Value	68	70
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	0	0
12 Months or More, Fair Value	13	10
Residential Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments	0	0
Less Than 12 Months, Fair Value	0	18
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	0	0
12 Months or More, Fair Value	$ 0	$ 0

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Acquisitions and Redeemable Noncontrolling Interest Acquisitions and Redeemable Noncontrolling Interest (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Redeemable Noncontrolling Interest

A reconciliation of the changes in the Redeemable Noncontrolling Interests is as follows ($ in millions):

Balance, December 31, 2014	$	148
Fair value of redeemable noncontrolling interest sold	7
Reclassification to redeemable noncontrolling interest	(1		)
Net earnings attributable to redeemable noncontrolling interests	2
Balance, September 30, 2015	$	156

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Short-Term And Long-Term Investments And Restricted Deposits (Contractual Maturities Of Short-Term And Long-Term Investments And Restricted Deposits) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
One year or less, Amortized Cost	$ 162	$ 176
One year through five years, Amortized Cost	1,613	1,121
Five years through ten years, Amortized Cost	268	121
Greater than ten years, Amortized Cost	107	38
Total, Amortized Cost	2,150	1,456
One year or less, Fair Value	162	177
One year through five years, Fair Value	1,616	1,121
Five years through ten years, Fair Value	268	120
Greater than ten years, Fair Value	108	39
Total, Fair Value	2,154	1,457
Restricted Deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
One year or less, Amortized Cost	95	92
One year through five years, Amortized Cost	11	8
Five years through ten years, Amortized Cost	0	0
Greater than ten years, Amortized Cost	0	0
Total, Amortized Cost	106	100
One year or less, Fair Value	95	92
One year through five years, Fair Value	11	8
Five years through ten years, Fair Value	0	0
Greater than ten years, Fair Value	0	0
Total, Fair Value	$ 106	$ 100

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements By Level For Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table summarizes fair value measurements by level at September 30, 2015, for assets and liabilities measured at fair value on a recurring basis ($ in millions):  

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,665	$	—	$	—	$	1,665
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	437	$	14	$	—	$	451
Corporate securities	—		837		—		837
Municipal securities	—		489		—		489
Asset-backed securities	—		186		—		186
Residential mortgage-backed securities	—		77		—		77
Commercial mortgage-backed securities	—		26		—		26
Total investments	$	437	$	1,629	$	—	$	2,066
Restricted deposits available for sale:
Cash and cash equivalents	$	78	$	—	$	—	$	78
Certificates of deposit	9		—		—		9
U.S. Treasury securities and obligations of U.S. government corporations and agencies	19		—		—		19
Total restricted deposits	$	106	$	—	$	—	$	106
Other long term assets: Interest rate swap agreements	$	—	$	18	$	—	$	18
Total assets at fair value	$	2,208	$	1,647	$	—	$	3,855

The following table summarizes fair value measurements by level at December 31, 2014, for assets and liabilities measured at fair value on a recurring basis ($ in millions): 

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,610	$	—	$	—	$	1,610
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	360	$	17	$	—	$	377
Corporate securities	—		556		—		556
Municipal securities	—		175		—		175
Asset-backed securities	—		180		—		180
Residential mortgage-backed securities	—		85		—		85
Commercial mortgage-backed securities	—		—		—		—
Total investments	$	360	$	1,013	$	—	$	1,373
Restricted deposits available for sale:
Cash and cash equivalents	$	79	$	—	$	—	$	79
Certificates of deposit	6		—		—		6
U.S. Treasury securities and obligations of U.S. government corporations and agencies	15		—		—		15
Total restricted deposits	$	100	$	—	$	—	$	100
Other long term assets: Interest rate swap agreements	$	—	$	11	$	—	$	11
Total assets at fair value	$	2,070	$	1,024	$	—	$	3,094

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Consolidated Statement Of Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Millions	Total	Centene Stockholders' Equity - Common Stock [Member]	Centene Stockholders' Equity - Additional Paid-In Capital [Member]	Centene Stockholders' Equity - Accumulated Other Comprehensive Income (Loss) [Member]	Centene Stockholders' Equity - Retained Earnings [Member]	Centene Stockholders' Equity - Treasury Stock [Member]	Centene Stockholders' Equity - Non Controlling Interest [Member]
Balance at Dec. 31, 2014	$ 1,743	$ 0	$ 840	$ (1)	$ 1,003	$ (98)	$ (1)
Balance (in shares) at Dec. 31, 2014	118,433,416	124,274,864				5,841,448
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	$ 244				244		0
Comprehensive Earnings:
Change in unrealized gain on investments, net of $1 tax	3			3
Foreign currency translation	(4)			(4)
Total comprehensive earnings	243
Common stock issued for acquisition	12	$ 0	8			$ 4
Common stock issued for acquisition (in shares)						(247,580)
Common stock issued for employee benefit plans	6	$ 0	6
Common stock issued for employee benefit plans (in shares)		665,239
Common stock repurchases	(9)					$ (9)
Common stock repurchases (in shares)						144,675
Stock compensation expense	48		48
Excess tax benefits from stock compensation	7		7
Contribution from noncontrolling interest	2						2
Reclassification to redeemable noncontrolling interest	1						1
Balance at Sep. 30, 2015	$ 2,053	$ 0	$ 909	$ (2)	$ 1,247	$ (103)	$ 2
Balance (in shares) at Sep. 30, 2015	119,201,560	124,940,103				5,738,543

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Stockholders' equity
Preferred stock, par value (in dollar per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	124,940,103	124,274,864
Common stock, shares outstanding (in shares)	119,201,560	118,433,416
Treasury stock, at cost (in shares)	5,738,543	5,841,448

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Earnings Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Earnings attributable to Centene Corporation:
Earnings from continuing operations, net of tax	$	92	$	81	$	244	$	162
Discontinued operations, net of tax	1		1		—		2
Net earnings	$	93	$	82	$	244	$	164
Shares used in computing per share amounts:
Weighted average number of common shares outstanding	119,121,524		117,226,968		118,970,853		115,912,304
Common stock equivalents (as determined by applying the treasury stock method)	4,010,286		4,136,782		3,933,623		3,961,094
Weighted average number of common shares and potential dilutive common shares outstanding	123,131,810		121,363,750		122,904,476		119,873,398
Net earnings per common share attributable to Centene Corporation:
Basic:
Continuing operations	$	0.77	$	0.69	$	2.05	$	1.40
Discontinued operations	0.01		0.01		—		0.01
Basic earnings per common share	$	0.78	$	0.70	$	2.05	$	1.41
Diluted:
Continuing operations	$	0.75	$	0.67	$	1.99	$	1.35
Discontinued operations	0.01		0.01		—		0.02
Diluted earnings per common share	$	0.76	$	0.68	$	1.99	$	1.37

The calculation of diluted earnings per common share for the three and nine months ended September 30, 2015 excludes the impact of 28,716 and 84,644 shares, respectively, related to anti-dilutive restricted stock and restricted stock units. The calculation of diluted earnings per common share for the three and nine months ended September 30, 2014 excludes the impact of 47,520 shares and 117,756 shares, respectively, related to anti-dilutive restricted stock and restricted stock units.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 16, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	CENTENE CORP
Entity Central Index Key	0001071739
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		119,202,788

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Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

Centene operates in two segments: Managed Care and Specialty Services.  The Managed Care segment consists of Centene’s health plans including all of the functions needed to operate them.  The Specialty Services segment consists of Centene’s specialty companies offering auxiliary healthcare services and products.

Segment information for the three months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	4,922	$	541	$	—		$	5,463
Premium and service revenues from internal customers	24		1,274		(1,298		)	—
Total premium and service revenues	$	4,946	$	1,815	$	(1,298	)	$	5,463
Earnings from operations	$	138	$	45	$	—		$	183

Segment information for the three months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	3,730	$	429	$	—		$	4,159
Premium and service revenues from internal customers	16		806		(822		)	—
Total premium and service revenues	$	3,746	$	1,235	$	(822	)	$	4,159
Earnings from operations	$	80	$	28	$	—		$	108

Segment information for the nine months ended September 30, 2015, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	13,812	$	1,596	$	—		$	15,408
Premium and service revenues from internal customers	73		3,525		(3,598		)	—
Total premium and service revenues	$	13,885	$	5,121	$	(3,598	)	$	15,408
Earnings from operations	$	358	$	127	$	—		$	485

Segment information for the nine months ended September 30, 2014, follows ($ in millions):

	Managed Care		Specialty Services		Eliminations			Consolidated Total
Premium and service revenues from external customers	$	9,925	$	1,327	$	—		$	11,252
Premium and service revenues from internal customers	42		2,121		(2,163		)	—
Total premium and service revenues	$	9,967	$	3,448	$	(2,163	)	$	11,252
Earnings from operations	$	188	$	83	$	—		$	271

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Consolidated Statements Of Operations - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Premium	$ 4,983	$ 3,780	$ 13,974	$ 10,182
Service	480	379	1,434	1,070
Premium and service revenues	5,463	4,159	15,408	11,252
Premium tax and health insurer fee	358	193	1,050	584
Total revenues	5,821	4,352	16,458	11,836
Expenses:
Medical costs	4,433	3,390	12,475	9,093
Cost of services	413	327	1,234	935
General and administrative expenses	464	334	1,309	951
Premium tax expense	274	161	794	492
Health insurer fee expense	54	32	161	94
Total operating expenses	5,638	4,244	15,973	11,565
Earnings from operations	183	108	485	271
Other income (expense):
Investment and other income	8	6	27	18
Interest expense	(11)	(9)	(32)	(25)
Earnings from continuing operations, before income tax expense	180	105	480	264
Income tax expense	87	27	234	107
Earnings from continuing operations, net of income tax expense	93	78	246	157
Discontinued operations, net of income tax expense of $0, $0, $0, and $1, respectively	1	1	0	2
Net earnings	94	79	246	159
(Earnings) loss attributable to noncontrolling interests	(1)	3	(2)	5
Net earnings attributable to Centene Corporation	93	82	244	164
Earnings from continuing operations, net of income tax expense	$ 92	$ 81	$ 244	$ 162
Basic:
Continuing operations (in dollar per share)	$ 0.77	$ 0.69	$ 2.05	$ 1.40
Discontinued operations (in dollar per share)	0.01	0.01	0.00	0.01
Basic earnings per common share (in dollar per share)	0.78	0.70	2.05	1.41
Diluted:
Continuing operations (in dollar per share)	0.75	0.67	1.99	1.35
Discontinued operations (in dollar per share)	0.01	0.01	0.00	0.02
Diluted earnings per common share ( in dollar per share)	$ 0.76	$ 0.68	$ 1.99	$ 1.37
Weighted Average Number of Common Shares Outstanding (in shares)
Basic (in shares)	119,121,524	117,226,968	118,970,853	115,912,304
Diluted (in shares)	123,131,810	121,363,750	122,904,476	119,873,398

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Acquisitions and Redeemable Noncontrolling Interest

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Acquisitions and Redeemable Noncontrolling Interest

Acquisitions and Redeemable Noncontrolling Interest

Acquisitions

Community Health Solutions of America, Inc.

In July 2014, the Company completed a transaction whereby Community Health Solutions of America, Inc. assigned its contract with the Louisiana Department of Health and Hospitals under the Bayou Health Shared Savings Program to the Company's subsidiary, Louisiana Healthcare Connections (LHC). The fair value of consideration transferred included the present value of the estimated contingent consideration, subject to membership retained by LHC in the first quarter of 2015. The fair value of contingent consideration was $18 million at December 31, 2014. During the first quarter of 2015, the Company determined the amount of the actual contingent consideration to be $8 million. A gain of $10 million related to the settlement of the obligation was recorded in General and Administrative expense.

LiveHealthier, Inc.

In January 2015, the Company acquired the remaining 79% of LiveHealthier, Inc. (LiveHealthier) for $28 million, bringing its total ownership to 100%. LiveHealthier is a provider of technology and service-based health management solutions. The fair value of consideration of $28 million consists of cash paid of $11 million, Centene common stock issued at closing of $13 million, and the fair value of estimated contingent consideration of $4 million to be paid in cash over a three year period. The contingent consideration will not exceed $9 million.

The Company's allocation of fair value resulted in goodwill of $26 million and other identifiable intangible assets of $15 million. The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

Fidelis SecureCare of Michigan, Inc.

In May 2015, the Company acquired 100% of Fidelis SecureCare of Michigan, Inc. (Fidelis) a subsidiary of Concerto Healthcare, for $57 million. Fidelis was previously selected by the Michigan Department of Community Health to provide integrated healthcare services to members who are dually eligible for Medicare and Medicaid in Macomb and Wayne counties. The fair value of consideration of $57 million consists of initial cash consideration of $7 million and the fair value of estimated contingent consideration of $50 million. The contingent consideration is based on duals membership and revenue per member during the first year of the contract (July 2015 - June 2016), including reconciliation payments settled over a two year period. The contingent consideration fair value is estimated based on expected membership during the first year of the contract as well as estimated revenue per member reflecting both member mix and risk adjustment. The Company's allocation of fair value resulted in goodwill of $29 million and other identifiable intangible assets of $23 million. 100% of the goodwill is deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

During the third quarter of 2015, the Company experienced higher than anticipated opt-out rates and member attrition in the dual demonstration program, resulting in lower than expected membership and lower blended premium rates. As a result, the fair value of estimated contingent consideration was reduced to $23 million, and the Company recorded a gain of $27 million in general and administrative expenses. In connection with the lower membership and revenue outlook, the Company conducted an impairment analysis of the identifiable intangible assets and goodwill, resulting in a reduction of goodwill and intangible assets of $28 million which was recorded in general and administrative expenses. At September 30, 2015, the Company had goodwill of $15 million and other identifiable intangible assets of $7 million remaining on the balance sheet.

Agate Resources, Inc.

In September2015, the Company completed the acquisition of Agate Resources, Inc. (Agate) for $120 million. Agate is a diversified holding company that offers primarily Medicaid and other healthcare products and services to Oregon residents. The fair value of consideration of $120 million consists of initial cash consideration of $93 million, the present value of future cash payments of $18 million to be paid out over a three year period, and the fair value of estimated contingent consideration of $9 million. A portion of the contingent consideration is based on the achievement of underwriting targets and will be paid in cash over a three year period; the remainder is based on the receipt of a retrospective rate adjustment and is expected to be settled in cash in the fourth quarter of 2015.

The Company's preliminary allocation of fair value resulted in goodwill of $51 million and other identifiable intangible assets of $34 million. The Company has not finalized the allocation of the fair value of assets and liabilities. The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment.

Redeemable Noncontrolling Interest

In January 2015, the Company sold 25% of its ownership in Celtic Insurance Company for $7 million. No gain or loss was recognized on the sale of the ownership interest. Celtic Insurance Company is included in the Managed Care segment. In connection with the sale of the ownership interest, the Company entered into a put agreement with the noncontrolling interest holder, allowing the noncontrolling interest holder to put its interest back to the Company beginning in 2022. As a result of put option agreements, the noncontrolling interest is considered redeemable and is classified in the Redeemable Noncontrolling Interest section of the consolidated balance sheets.

A reconciliation of the changes in the Redeemable Noncontrolling Interests is as follows ($ in millions):

Balance, December 31, 2014	$	148
Fair value of redeemable noncontrolling interest sold	7
Reclassification to redeemable noncontrolling interest	(1		)
Net earnings attributable to redeemable noncontrolling interests	2
Balance, September 30, 2015	$	156

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Health Net Merger

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Health Net Merger

Health Net, Inc. Merger

On July 2, 2015, the Company announced that the Company and two direct, newly formed subsidiaries of the Company had entered into a definitive merger agreement with Health Net, Inc. (Health Net) under which the Company will acquire all of the issued and outstanding shares of Health Net. Under the terms of the agreement, at the closing of the transaction, Health Net stockholders (with limited exceptions) would receive 0.622 of a validly issued, fully paid, non-assessable share of Centene common stock and $28.25 in cash for each share of Health Net common stock. The transaction is valued at approximately $6.8 billion (based on the Centene closing stock price on July 1, 2015), including the assumption of debt.

The transaction is expected to close in early 2016 and is subject to approvals by relevant state insurance and healthcare regulators and other customary closing conditions. In August 2015, the Company announced the early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In October 2015, the Company and Health Net announced the transaction was approved by both the Centene and Health Net stockholders. The Company expects to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing.

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Short-Term And Long-Term Investments And Restricted Deposits (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Short-Term And Long-Term Investments And Restricted Deposits By Investment Type

Short term and long term investments and restricted deposits by investment type consist of the following ($ in millions):

	September 30, 2015									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	468	$	2	$	—		$	470	$	393	$	1	$	(2	)	$	392
Corporate securities	837		4		(4		)	837		556		2		(2		)	556
Restricted certificates of deposit	9		—		—			9		6		—		—			6
Restricted cash equivalents	78		—		—			78		79		—		—			79
Municipal securities	489		2		(2		)	489		174		1		—			175
Asset-backed securities	186		—		—			186		180		—		—			180
Residential mortgage-backed securities	75		2		—			77		84		1		—			85
Commercial mortgage-backed securities	26		—		—			26		—		—		—			—
Cost and equity method investments	72		—		—			72		68		—		—			68
Life insurance contracts	16		—		—			16		16		—		—			16
Total	$	2,256	$	10	$	(6	)	$	2,260	$	1,556	$	5	$	(4	)	$	1,557

Fair Value Of Available-For-Sale Investments With Gross Unrealized Losses By Investment Type And Length Of Time

The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):

	September 30, 2015										December 31, 2014
	Less Than 12 Months					12 Months or More					Less Than 12 Months					12 Months or More
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	—		$	68	$	—		$	16	$	—		$	72	$	(2	)	$	180
Corporate securities	(3		)	317		(1		)	41		(2		)	311		—			1
Municipal securities	(1		)	120		(1		)	5		—			20		—			7
Asset-backed securities	—			68		—			13		—			70		—			10
Residential mortgage-backed securities	—			—		—			—		—			18		—			—
Total	$	(4	)	$	573	$	(2	)	$	75	$	(2	)	$	491	$	(2	)	$	198

Contractual Maturities Of Short-Term And Long-Term Investments And Restricted Deposits

The contractual maturities of short term and long term investments and restricted deposits are as follows ($ in millions):

	September 30, 2015								December 31, 2014
	Investments				Restricted Deposits				Investments				Restricted Deposits
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	162	$	162	$	95	$	95	$	176	$	177	$	92	$	92
One year through five years	1,613		1,616		11		11		1,121		1,121		8		8
Five years through ten years	268		268		—		—		121		120		—		—
Greater than ten years	107		108		—		—		38		39		—		—
Total	$	2,150	$	2,154	$	106	$	106	$	1,456	$	1,457	$	100	$	100

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Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract.  The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million. Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth.

On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review.

Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims.

On May 26, 2015, the Commonwealth issued a demand for indemnification to its actuarial firm, for "all defense costs, and any resultant monetary awards in favor of Kentucky Spirit, arising from or related to Kentucky Spirit's claims which are predicated upon the alleged omissions and errors in the Data Book and the certified actuarially sound rates." On August 19, 2015, the actuarial firm moved to intervene in the litigation. The Franklin Circuit Court granted the actuarial firm's motion on September 8, 2015 and ordered a forty-five day stay of all pretrial proceedings in order for the firm to review the record. Also, on August 19, 2015, the actuarial firm filed a petition seeking a declaratory judgment that it is not liable to the Commonwealth for indemnification related to the claims asserted by Kentucky Spirit against the Commonwealth. On October 5, 2015, the Commonwealth filed an answer to the actuarial firm's petition and asserted counterclaims/cross-claims against the firm.

On March 9, 2015, the Secretary of the Kentucky Cabinet for Health and Family Services (CHFS) issued a determination letter finding that Kentucky Spirit owed the Commonwealth $40 million in actual damages plus prejudgment interest at 8 percent. On March 18, 2015, in a letter to the Kentucky Finance and Administration Cabinet (FAC), Kentucky Spirit contested CHFS' jurisdiction to make such a determination. The FAC did not issue a decision within the required 120 days. On August 13, 2015, Kentucky Spirit filed a declaratory judgment action against the Commonwealth in Franklin Circuit Court seeking a declaration that the Commonwealth may not purport to issue a decision against Kentucky Spirit awarding damages to itself when the matter is already before the Kentucky courts, and that the Commonwealth has waived its claims against Kentucky Spirit for damages arising out of the contract.

The resolution of the Kentucky litigation matters may result in a range of possible outcomes.  If Kentucky Spirit prevails on its claims, it would be entitled to damages.  If the Commonwealth prevails, a liability to the Commonwealth could be recorded.  The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation.  As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015.  While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known.

Excluding the Kentucky matters discussed above, the Company is also routinely subjected to legal proceedings in the normal course of business.  While the ultimate resolution of such matters in the normal course of business is uncertain, the Company does not expect the results of any of these matters individually, or in the aggregate, to have a material effect on its financial position, results of operations or cash flows.

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Health Insurance Marketplace

9 Months Ended

Sep. 30, 2015

Health Insurance Marketplace [Abstract]

Health Insurance Marketplace

Health Insurance Marketplace

The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014 for the Health Insurance Marketplace product. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual medical loss ratio for the Health Insurance Marketplace. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum medical loss ratio.

In June 2015, CMS released final results on reinsurance and risk-adjustment for the 2014 plan year. These final results had an insignificant impact to the Company for the 2014 plan year.

The Company's receivables (payables) for each of these programs are as follows ($ in millions):

	September 30, 2015			December 31, 2014
Risk adjustment	$	(77	)	$	(44	)
Reinsurance	14			11
Risk corridor	(31		)	(9		)
Minimum medical loss ratio	(14		)	(6		)

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Short-Term And Long-Term Investments And Restricted Deposits

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Short term and Long term Investments, Restricted Deposits

Short term and Long term Investments, Restricted Deposits

Short term and long term investments and restricted deposits by investment type consist of the following ($ in millions):

	September 30, 2015									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	468	$	2	$	—		$	470	$	393	$	1	$	(2	)	$	392
Corporate securities	837		4		(4		)	837		556		2		(2		)	556
Restricted certificates of deposit	9		—		—			9		6		—		—			6
Restricted cash equivalents	78		—		—			78		79		—		—			79
Municipal securities	489		2		(2		)	489		174		1		—			175
Asset-backed securities	186		—		—			186		180		—		—			180
Residential mortgage-backed securities	75		2		—			77		84		1		—			85
Commercial mortgage-backed securities	26		—		—			26		—		—		—			—
Cost and equity method investments	72		—		—			72		68		—		—			68
Life insurance contracts	16		—		—			16		16		—		—			16
Total	$	2,256	$	10	$	(6	)	$	2,260	$	1,556	$	5	$	(4	)	$	1,557

The Company’s investments are classified as available-for-sale with the exception of life insurance contracts and certain cost and equity method investments.  The Company’s investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities.  The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of September 30, 2015, 38% of the Company’s investments in securities recorded at fair value that carry a rating by S&P or Moody’s were rated AAA/Aaa, 62% were rated AA-/Aa3 or higher, and 88% were rated A-/A3 or higher.  At September 30, 2015, the Company held certificates of deposit, life insurance contracts and cost and equity method investments which did not carry a credit rating.

The Company's residential mortgage-backed securities are all issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 2.0 years at September 30, 2015.

The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):

	September 30, 2015										December 31, 2014
	Less Than 12 Months					12 Months or More					Less Than 12 Months					12 Months or More
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	—		$	68	$	—		$	16	$	—		$	72	$	(2	)	$	180
Corporate securities	(3		)	317		(1		)	41		(2		)	311		—			1
Municipal securities	(1		)	120		(1		)	5		—			20		—			7
Asset-backed securities	—			68		—			13		—			70		—			10
Residential mortgage-backed securities	—			—		—			—		—			18		—			—
Total	$	(4	)	$	573	$	(2	)	$	75	$	(2	)	$	491	$	(2	)	$	198

As of September 30, 2015, the gross unrealized losses were generated from 202 positions out of a total of 680 positions.  The change in fair value of fixed income securities is a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes.  If the security meets this criterion, the decline in fair value is other-than-temporary and is recorded in earnings.  The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, there is no indication of other-than-temporary impairment for these securities.

During the nine months ended September 30, 2015, the Company recognized $8 million of income from equity method investments.

The contractual maturities of short term and long term investments and restricted deposits are as follows ($ in millions):

	September 30, 2015								December 31, 2014
	Investments				Restricted Deposits				Investments				Restricted Deposits
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	162	$	162	$	95	$	95	$	176	$	177	$	92	$	92
One year through five years	1,613		1,616		11		11		1,121		1,121		8		8
Five years through ten years	268		268		—		—		121		120		—		—
Greater than ten years	107		108		—		—		38		39		—		—
Total	$	2,150	$	2,154	$	106	$	106	$	1,456	$	1,457	$	100	$	100

Actual maturities may differ from contractual maturities due to call or prepayment options.  Asset-backed and mortgage-backed securities are included in the one year through five years category, while cost and equity method investments and life insurance contracts are included in the five years through ten years category.  The Company has an option to redeem at amortized cost substantially all of the securities included in the greater than ten years category listed above.

The Company continuously monitors investments for other-than-temporary impairment.  Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions.  The Company recognizes an impairment loss for cost and equity method investments when evidence demonstrates that it is other-than-temporarily impaired.  Evidence of a loss in value that is other-than-temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon observable or unobservable inputs used to estimate fair value.  Level inputs are as follows:

Level Input:	Input Definition:
Level I	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II	Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2015, for assets and liabilities measured at fair value on a recurring basis ($ in millions):  

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,665	$	—	$	—	$	1,665
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	437	$	14	$	—	$	451
Corporate securities	—		837		—		837
Municipal securities	—		489		—		489
Asset-backed securities	—		186		—		186
Residential mortgage-backed securities	—		77		—		77
Commercial mortgage-backed securities	—		26		—		26
Total investments	$	437	$	1,629	$	—	$	2,066
Restricted deposits available for sale:
Cash and cash equivalents	$	78	$	—	$	—	$	78
Certificates of deposit	9		—		—		9
U.S. Treasury securities and obligations of U.S. government corporations and agencies	19		—		—		19
Total restricted deposits	$	106	$	—	$	—	$	106
Other long term assets: Interest rate swap agreements	$	—	$	18	$	—	$	18
Total assets at fair value	$	2,208	$	1,647	$	—	$	3,855

The following table summarizes fair value measurements by level at December 31, 2014, for assets and liabilities measured at fair value on a recurring basis ($ in millions): 

	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	1,610	$	—	$	—	$	1,610
Investments available for sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	360	$	17	$	—	$	377
Corporate securities	—		556		—		556
Municipal securities	—		175		—		175
Asset-backed securities	—		180		—		180
Residential mortgage-backed securities	—		85		—		85
Commercial mortgage-backed securities	—		—		—		—
Total investments	$	360	$	1,013	$	—	$	1,373
Restricted deposits available for sale:
Cash and cash equivalents	$	79	$	—	$	—	$	79
Certificates of deposit	6		—		—		6
U.S. Treasury securities and obligations of U.S. government corporations and agencies	15		—		—		15
Total restricted deposits	$	100	$	—	$	—	$	100
Other long term assets: Interest rate swap agreements	$	—	$	11	$	—	$	11
Total assets at fair value	$	2,070	$	1,024	$	—	$	3,094

The Company periodically transfers U.S. Treasury securities and obligations of U.S. government corporations and agencies between Level I and Level II fair value measurements dependent upon the level of trading activity for the specific securities at the measurement date.  The Company’s policy regarding the timing of transfers between Level I and Level II is to measure and record the transfers at the end of the reporting period.  At September 30, 2015, there were less than $1 million of transfers from Level I to Level II and $2 million of transfers from Level II to Level I.  The Company utilizes matrix pricing services to estimate fair value for securities which are not actively traded on the measurement date.  The Company designates these securities as Level II fair value measurements.  The aggregate carrying amount of the Company’s life insurance contracts and other non-majority owned investments, which approximates fair value, was $88 million and $84 million as of September 30, 2015 and December 31, 2014, respectively.

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Debt

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of the following ($ in millions):

	September 30, 2015			December 31, 2014
$425 million 5.75% Senior notes, due June 1, 2017	$	428		$	429
$500 million 4.75% Senior notes, due May 15, 2022	500			300
Fair value of interest rate swap agreements	18			11
Senior notes	946			740
Revolving credit agreement	275			75
Mortgage notes payable	68			70
Capital leases	7			8
Debt issuance costs	(15		)	(14		)
Total debt	1,281			879
Less current portion	(5		)	(5		)
Long term debt	$	1,276		$	874

Senior Notes

In January 2015, the Company issued an additional $200 million of 4.75% Senior Notes ($200 Million Add-on Notes) at par. The $200 Million Add-on Notes were offered as additional debt securities under the indenture governing the $300 million of 4.75% Senior Notes issued in April 2014. In connection with the January 2015 issuance, the Company entered into interest rate swap agreements for a notional amount of $200 million at a floating rate of interest based on the three month LIBOR plus 2.88%. Gains and losses due to changes in the fair value of the interest rate swap completely offset changes in the fair value of the hedged portion of the underlying debt and are recorded as an adjustment to the $200 Million Add-on Notes.

The indentures governing both the $425 million notes due 2017 and the $500 million notes due 2022 contain non-financial and financial covenants, including requirements of a minimum fixed charge coverage ratio.

Interest Rate Swaps

The Company uses interest rate swap agreements to convert a portion of its interest rate exposure from fixed rates to floating rates to more closely align interest expense with interest income received on its cash equivalent and variable rate investment balances. The Company has $750 million of notional amount of interest rate swap agreements consisting of $250 million which are scheduled to expire on June 1, 2017 and $500 million that are scheduled to expire May 15, 2022. Under the Swap Agreements, the Company receives a fixed rate of interest and pays an average variable rate of the three month LIBOR plus 2.85% adjusted quarterly. At September 30, 2015, the weighted average rate was 3.16%.

The Swap Agreements are formally designated and qualify as fair value hedges and are recorded at fair value in the Consolidated Balance Sheet in other assets or other liabilities. Gains and losses due to changes in fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Therefore, no gain or loss has been recognized due to hedge ineffectiveness. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt both were recognized in interest expense in the Consolidated Statement of Operations. The Company does not hold or issue any derivative instrument for trading or speculative purposes.

Revolving Credit Agreement

The Company has an unsecured $500 million revolving credit facility. Borrowings under the agreement bear interest based upon LIBOR rates, the Federal Funds Rate or the Prime Rate. The agreement has a maturity date of June 1, 2018, provided it will mature 90 days prior to the maturity date of the Company's 5.75% Senior Notes due 2017 if such notes are not refinanced (or extended), certain financial conditions are not met, or the Company does not carry $100 million of unrestricted cash. As of September 30, 2015, the Company had $275 million of borrowings outstanding under the agreement with a weighted average interest rate of 3.01%.

The agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0. As of September 30, 2015, there were no limitations on the availability under the revolving credit agreement as a result of the debt-to-EBITDA ratio.

Letters of Credit & Surety Bonds

The Company had outstanding letters of credit of $46 million as of September 30, 2015, which were not part of the revolving credit facility. The Company also had letters of credit for $52 million (valued at September 30, 2015 conversion rate), or €46 million, representing its proportional share of the letters of credit issued to support Ribera Salud’s outstanding debt, which are a part of the revolving credit facility. Collectively, the letters of credit bore interest at 1.55% as of September 30, 2015. The Company had outstanding surety bonds of $304 million as of September 30, 2015.

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Short-Term And Long-Term Investments And Restricted Deposits (By Investment Type) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	$ 2,256	$ 1,556
Gross Unrealized Gains	10	5
Gross Unrealized Losses	(6)	(4)
Fair Value	2,260	1,557
U.S. Treasury Securities And Obligations Of U.S. Government Corporations And Agencies [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	468	393
Gross Unrealized Gains	2	1
Gross Unrealized Losses	0	(2)
Fair Value	470	392
Corporate Securities [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	837	556
Gross Unrealized Gains	4	2
Gross Unrealized Losses	(4)	(2)
Fair Value	837	556
Restricted Certificates Of Deposit [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	9	6
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	9	6
Restricted Cash Equivalents [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	78	79
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	78	79
Municipal Securities [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	489	174
Gross Unrealized Gains	2	1
Gross Unrealized Losses	(2)	0
Fair Value	489	175
Asset Backed Securities [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	186	180
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	186	180
Residential Mortgage Backed Securities [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	75	84
Gross Unrealized Gains	2	1
Gross Unrealized Losses	0	0
Fair Value	77	85
Commercial Mortgage Backed Securities [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	26	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	26	0
Cost And Equity Method Investments [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	72	68
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	72	68
Life Insurance Contracts [Member]
Schedule Of Investments And Restricted Deposits By Type [Line Items]
Amortized Cost	16	16
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 16	$ 16

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Basis of Presentation Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recent Accounting Pronouncements, Policy

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which supersedes existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity's insurance contracts). Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued an ASU which deferred the effective date of the new revenue standard by one year. The new effective date is for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the effect of the new revenue recognition guidance.

In April 2015, the FASB issued an ASU which changes the presentation of debt issuance costs in financial statements. Under the new standard, debt issuance costs are presented in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the cost is reported as interest expense. The new standard is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to adopt this guidance beginning in the first quarter of 2015 and has applied the new standard retrospectively to all prior periods. The reclassification of debt issuance costs impacted the Consolidated Balance Sheets by decreasing both Other Long Term Assets and Long Term Debt by $14 million at December 31, 2014 and $15 million at September 30, 2015. These reclassifications have no effect on net earnings or stockholders' equity as previously reported.

In May 2015, the FASB issued an ASU which expands the disclosure requirements for insurance companies that issue short-duration contracts. The new standard will increase the level of disclosure around the Company's Medical Claims Liability to include the following: claims development by year; claim frequency; a rollforward of the claims liability; and a description of methods and assumptions used for determining the liability. It is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the effect of the new disclosure requirements.

In September 2015, the FASB issued an ASU which simplifies the accounting for measurement-period adjustments in business combinations. Under the new standard, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. It is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company elected to adopt this guidance in the current fiscal quarter.

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Debt (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule Of Debt

Debt consists of the following ($ in millions):

	September 30, 2015			December 31, 2014
$425 million 5.75% Senior notes, due June 1, 2017	$	428		$	429
$500 million 4.75% Senior notes, due May 15, 2022	500			300
Fair value of interest rate swap agreements	18			11
Senior notes	946			740
Revolving credit agreement	275			75
Mortgage notes payable	68			70
Capital leases	7			8
Debt issuance costs	(15		)	(14		)
Total debt	1,281			879
Less current portion	(5		)	(5		)
Long term debt	$	1,276		$	874

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Debt (Narrative) (Details) € in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2015 EUR (€)	Sep. 30, 2015 USD ($)	Jan. 31, 2015 USD ($)	Dec. 31, 2014	Apr. 30, 2014 USD ($)
Debt Instrument [Line Items]
Derivative, notional amount			$ 200
Revolving credit facility, maximum borrowing capacity		$ 500
Revolving credit facility, due date	Jun. 01, 2018
Line of credit, minimum carrying amount of unrestricted cash		$ 100
Line of credit facility, covenant terms	The agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0.
Ratio of debt to EBITDA	3.0
Weighted average interest rate	3.01%	3.01%
Senior notes, effective yield	1.55%	1.55%
Maximum exposure, undiscounted		$ 304
4.75% Add-on Notes [Member]
Debt Instrument [Line Items]
Senior notes, at par			$ 200		$ 300
Interest rate, stated			4.75%		4.75%
5.75% Senior Notes [Member]
Debt Instrument [Line Items]
Senior notes, at par		425
4.75% Senior Notes [Member]
Debt Instrument [Line Items]
Senior notes, at par		500
Ribera Salud [Member]
Debt Instrument [Line Items]
Letters of credit outstanding, amount	€ 46	52
Non Revolver Letter of Credit [Member]
Debt Instrument [Line Items]
Letters of credit outstanding, amount		$ 46
$200 Million Interest Rate Swap [Member]
Debt Instrument [Line Items]
Variable rate of swap, percentage	2.88%	2.88%
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Derivative, notional amount		$ 750
Variable rate of swap, percentage	2.85%	2.85%
Weighted average interest rate, interest rate swap agreements	3.16%	3.16%
June 1, 2017 Expiration [Member]
Debt Instrument [Line Items]
Derivative, notional amount		$ 250
Interest rate swap agreements expire date	Jun. 01, 2017
May 15, 2022 Expiration [Member]
Debt Instrument [Line Items]
Derivative, notional amount		$ 500
Interest rate swap agreements expire date	May 15, 2022
5.75% Senior Notes, Due June 1, 2017 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Interest rate, stated	5.75%	5.75%		5.75%

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Consolidated Statements Of Operations Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Discontinued operations, income tax expense (benefit)	$ 0	$ 0	$ 0	$ 1

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Basis Of Presentation

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Basis of Presentation

The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Form 10-K for the fiscal year ended December 31, 2014.  The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the December 31, 2014 audited financial statements have been omitted from these interim financial statements where appropriate.  In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented.

Certain 2014 amounts in the notes to the consolidated financial statements have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on net earnings or stockholders’ equity as previously reported.

On February 2, 2015, the Board of Directors declared a two-for-one split of Centene's common stock in the form of a 100% stock dividend distributed February 19, 2015 to stockholders of record on February 12, 2015. All share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which supersedes existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity's insurance contracts). Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued an ASU which deferred the effective date of the new revenue standard by one year. The new effective date is for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the effect of the new revenue recognition guidance.

In April 2015, the FASB issued an ASU which changes the presentation of debt issuance costs in financial statements. Under the new standard, debt issuance costs are presented in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the cost is reported as interest expense. The new standard is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to adopt this guidance beginning in the first quarter of 2015 and has applied the new standard retrospectively to all prior periods. The reclassification of debt issuance costs impacted the Consolidated Balance Sheets by decreasing both Other Long Term Assets and Long Term Debt by $14 million at December 31, 2014 and $15 million at September 30, 2015. These reclassifications have no effect on net earnings or stockholders' equity as previously reported.

In May 2015, the FASB issued an ASU which expands the disclosure requirements for insurance companies that issue short-duration contracts. The new standard will increase the level of disclosure around the Company's Medical Claims Liability to include the following: claims development by year; claim frequency; a rollforward of the claims liability; and a description of methods and assumptions used for determining the liability. It is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the effect of the new disclosure requirements.

In September 2015, the FASB issued an ASU which simplifies the accounting for measurement-period adjustments in business combinations. Under the new standard, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. It is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company elected to adopt this guidance in the current fiscal quarter.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Calculation Of Basic And Diluted Net Earnings Per Common Share

The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Earnings attributable to Centene Corporation:
Earnings from continuing operations, net of tax	$	92	$	81	$	244	$	162
Discontinued operations, net of tax	1		1		—		2
Net earnings	$	93	$	82	$	244	$	164
Shares used in computing per share amounts:
Weighted average number of common shares outstanding	119,121,524		117,226,968		118,970,853		115,912,304
Common stock equivalents (as determined by applying the treasury stock method)	4,010,286		4,136,782		3,933,623		3,961,094
Weighted average number of common shares and potential dilutive common shares outstanding	123,131,810		121,363,750		122,904,476		119,873,398
Net earnings per common share attributable to Centene Corporation:
Basic:
Continuing operations	$	0.77	$	0.69	$	2.05	$	1.40
Discontinued operations	0.01		0.01		—		0.01
Basic earnings per common share	$	0.78	$	0.70	$	2.05	$	1.41
Diluted:
Continuing operations	$	0.75	$	0.67	$	1.99	$	1.35
Discontinued operations	0.01		0.01		—		0.02
Diluted earnings per common share	$	0.76	$	0.68	$	1.99	$	1.37

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Transfers from Level I to Level II	$ 1
Transfers from Level II to Level I	2
Life insurance contracts and other non-majority owned investments, fair value	$ 88	$ 84

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Event

In October 2015, the Company's stockholders approved a proposal to increase the Company's authorized shares of common stock from 200 million to 400 million.