FAIR VALUE

Financial Assets

The following table summarizes our fair value measurements at March 31, 2016 and December 31, 2015, respectively, for financial assets measured at fair value on a recurring basis:



	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(in millions)
March 31, 2016
Cash equivalents	$	2,669	$	2,669	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	453		—		453		—
Mortgage-backed securities	2,034		—		2,034		—
Tax-exempt municipal securities	3,038		—		3,035		3
Mortgage-backed securities:
Residential	11		—		11		—
Commercial	859		—		859		—
Asset-backed securities	253		—		252		1
Corporate debt securities	3,030		—		3,025		5
Total debt securities	9,678		—		9,669		9
Total invested assets	$	12,347	$	2,669	$	9,669	$	9

December 31, 2015
Cash equivalents	$	2,229	$	2,229	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	332		—		332		—
Mortgage-backed securities	1,891		—		1,891		—
Tax-exempt municipal securities	2,668		—		2,663		5
Mortgage-backed securities:
Residential	13		—		13		—
Commercial	985		—		985		—
Asset-backed securities	263		—		263		—
Corporate debt securities	2,958		—		2,952		6
Total debt securities	9,110		—		9,099		11
Total invested assets	$	11,339	$	2,229	$	9,099	$	11

There were no material transfers between Level 1 and Level 2 during the three months ended March 31, 2016 or 2015.

Our Level 3 assets had a fair value of $9 million at March 31, 2016, or 0.1% of our total invested assets. During the three months ended March 31, 2016 and 2015, the changes in the fair value of the assets measured using significant unobservable inputs (Level 3) were comprised of the following:



	For the three months ended March 31,
	2016								2015
	Private Placements		Auction Rate Securities			Total			Private Placements			Auction Rate Securities			Total
	(in millions)
Beginning balance at January 1	$	6	$	5		$	11		$	24		$	8		$	32
Total gains or losses:
Realized in earnings	—		—			—			—			—			—
Unrealized in other comprehensive income	—		—			—			—			—			—
Purchases	—		—			—			—			—			—
Sales	—		—			—			(18		)	(2		)	(20		)
Settlements	—		(2		)	(2		)	—			—			—
Balance at March 31	$	6	$	3		$	9		$	6		$	6		$	12

Financial Liabilities

Our long-term debt is recorded at carrying value in our consolidated balance sheets. The carrying value of our long-term debt outstanding, net of unamortized debt issuance costs, was $3,793 million at March 31, 2016 and $3,794 million at December 31, 2015. The fair value of our long-term debt was $4,035 million at March 31, 2016 and $3,986 million at December 31, 2015. The fair value of our long-term debt is determined based on Level 2 inputs, including quoted market prices for the same or similar debt, or if no quoted market prices are available, on the current prices estimated to be available to us for debt with similar terms and remaining maturities.

Due to the short-term nature, carrying value approximates fair value for our commercial paper borrowings. There were outstanding borrowings of $300 million as of March 31, 2016 and $299 million as of December 31, 2015.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

As disclosed in Note 3, we completed the acquisition of certain health and wellness related businesses during 2015. The values of net tangible assets acquired and the resulting goodwill and other intangible assets were recorded at fair value using Level 3 inputs. The majority of the tangible assets acquired and liabilities assumed were recorded at their carrying values as of the respective dates of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in these acquisitions were internally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations. Other than assets acquired and liabilities assumed in these acquisitions, there were no material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2016 or 2015.