Health Care Costs Payable

3 Months Ended

Mar. 31, 2021

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 three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
In millions	2021		2020
Health care costs payable, beginning of the period	$	7,936	$	6,879
Less: Reinsurance recoverables	10		5
Health care costs payable, beginning of the period, net	7,926		6,874
Acquisition	—		412
Add: Components of incurred health care costs
Current year	16,291		14,764
Prior years	(652)		(464)
Total incurred health care costs (1)	15,639		14,300
Less: Claims paid
Current year	9,538		8,773
Prior years	5,767		5,242
Total claims paid	15,305		14,015
Add: Premium deficiency reserve	7		10
Health care costs payable, end of the period, net	8,267		7,581
Add: Reinsurance recoverables	5		4
Health care costs payable, end of the period	$	8,272	$	7,585

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(1)Total incurred health care costs for the three months ended March 31, 2021 and 2020 in the table above exclude (i) $7 million and $10 million, respectively, related to a premium deficiency reserve related to the Company’s Medicaid products, (ii) $13 million and $9 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) $45 million and $68 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 $652 million and $464 million, respectively, in the three months ended March 31, 2021 and 2020, 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 March 31, 2021, 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 $6.5 billion. The majority of the Company’s liabilities for IBNR plus expected development on reported claims at March 31, 2021 related to the current year.