Health Care Costs Payable

9 Months Ended

Sep. 30, 2020

Health Care and Other Insurance Liabilities [Abstract]

Health Care Costs Payable

Health Care Costs Payable

The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
In millions	2020		2019
Health care costs payable, beginning of the period	$	6,879	$	6,147
Less: Reinsurance recoverables	5		4
Health care costs payable, beginning of the period, net	6,874		6,143
Acquisition	444		—
Add: Components of incurred health care costs
Current year	40,777		39,657
Prior years	(448)		(511)
Total incurred health care costs (1)	40,329		39,146
Less: Claims paid
Current year	34,198		33,032
Prior years	5,865		5,253
Total claims paid	40,063		38,285
Add: Premium deficiency reserve	1		6
Health care costs payable, end of the period, net	7,585		7,010
Add: Reinsurance recoverables	8		4
Health care costs payable, end of the period	$	7,593	$	7,014

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(1)Total incurred health care costs for the nine months ended September 30, 2020 and 2019 in the table above exclude (i) $1 million and $6 million, respectively, related to a premium deficiency reserve related to the Company’s Medicaid products, (ii) $31 million and $31 million, respectively, of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets and (iii) $173 million and $213 million, respectively, of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets.

The Company’s estimates of prior years’ health care costs payable decreased by $448 million and $511 million, respectively, in the nine months ended September 30, 2020 and 2019, because claims were settled for amounts less than originally estimated (i.e., the amount of claims incurred was lower than originally estimated), primarily due to lower health care cost trends as well as the actual claim submission time being faster than originally assumed (i.e., the Company’s completion factors were higher than originally assumed) in estimating health care costs payable at the end of the prior year.

At September 30, 2020, the Company’s liabilities for the ultimate cost of (i) services rendered to the Company’s Insured members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid (collectively, “IBNR”) plus expected development on reported claims totaled approximately $5.8 billion. Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at September 30, 2020 related to the current year.