Health Care Costs Payable

12 Months Ended

Dec. 31, 2021

The following is information about incurred and cumulative paid health care claims development as of December 31, 2021, net of reinsurance, and the total IBNR liabilities plus expected development on reported claims included within the net incurred claims amounts. See Note 1 ‘‘Significant Accounting Policies’’ for information on how the Company estimates IBNR reserves and health care costs payable as well as changes to those methodologies, if any. The Company’s estimate of IBNR liabilities is primarily based on trend and completion factors. Claim frequency is not used in the calculation of the Company’s liability. In addition, it is impracticable to disclose claim frequency information for health care claims due to the Company’s inability to gather consistent claim frequency information across its multiple claims processing systems. Any claim frequency count disclosure would not be comparable across the Company’s different claim processing systems and would not be consistent from period to period based on the volume of claims processed through each system. As a result, health care claim count frequency is not included in the disclosures below.

The information about incurred and paid health care claims development for the year ended December 31, 2020 is presented as required unaudited supplemental information.


In millions	Incurred Health Care Claims, Net of Reinsurance For the Years Ended December 31,
Date of Service	2020		2021
	(Unaudited)
2020	$	54,529	$	53,804
2021			62,830
	Total		$	116,634

In millions	Cumulative Paid Health Care Claims, Net of Reinsurance For the Years Ended December 31,
Date of Service	2020		2021
	(Unaudited)
2020	$	47,567	$	53,590
2021			54,600
	Total		$	108,190
All outstanding liabilities for health care costs payable prior to 2020, net of reinsurance			130
Total outstanding liabilities for health care costs payable, net of reinsurance			$	8,574

At December 31, 2021, the Company’s liabilities for IBNR plus expected development on reported claims totaled approximately $6.6 billion. Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at December 31, 2021 related to the current calendar year.

The reconciliation of the December 31, 2021 health care net incurred and paid claims development tables to the health care costs payable liability on the consolidated balance sheet is as follows:


In millions	December 31, 2021
Short-duration health care costs payable, net of reinsurance	$	8,574
Reinsurance recoverables	8
Premium deficiency reserve	16
Insurance lines other than short duration	210
Total health care costs payable	$	8,808

The following table shows the components of the change in health care costs payable during the years ended December 31, 2021, 2020 and 2019:


In millions	2021		2020		2019
Health care costs payable, beginning of period	$	7,936	$	6,879	$	6,147
Less: Reinsurance recoverables	10		5		4
Health care costs payable, beginning of period, net	7,926		6,874		6,143
Acquisitions, net	—		414		—

Add: Components of incurred health care costs
Current year	64,761		55,835		52,723
Prior years	(788)		(429)		(524)
Total incurred health care costs (1)	63,973		55,406		52,199
Less: Claims paid
Current year	56,323		48,770		46,158
Prior years	6,792		6,009		5,314
Total claims paid	63,115		54,779		51,472
Add: Premium deficiency reserve	16		11		4
Health care costs payable, end of period, net	8,800		7,926		6,874
Add: Reinsurance recoverables	8		10		5
Health care costs payable, end of period	$	8,808	$	7,936	$	6,879

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(1)Total incurred health care costs for the years ended December 31, 2021, 2020 and 2019 in the table above exclude (i) $16 million, $11 million and $4 million, respectively, for a premium deficiency reserve related to the Company’s Medicaid products, (ii) $59 million, $41 million and $41 million, respectively, of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the consolidated balance sheets and (iii) $212 million, $221 million and $285 million, respectively, of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the consolidated balance sheets.

The Company’s estimates of prior years’ health care costs payable decreased by $788 million, $429 million and $524 million in 2021, 2020 and 2019, respectively, 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. This development does not directly correspond to an increase in the Company’s operating results as these reductions were offset by estimated current period health care costs when the Company established the estimate of the current year health care costs payable.