Health Care Costs Payable

6 Months Ended

Jun. 30, 2023

Health Care and Other Insurance Liabilities [Abstract]

The following table shows the components of the change in health care costs payable during the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
In millions	2023		2022
Health care costs payable, beginning of the period	$	10,142	$	8,678
Less: Reinsurance recoverables	5		8
Less: Impact of discount rate on long-duration insurance reserves (1)	8		—
Health care costs payable, beginning of the period, net	10,129		8,670
Acquisitions, net	1,102		—
Add: Components of incurred health care costs
Current year	42,705		35,884
Prior years	(619)		(666)
Total incurred health care costs (2)	42,086		35,218
Less: Claims paid
Current year	32,502		26,971
Prior years	8,800		6,732
Total claims paid	41,302		33,703
Add: Premium deficiency reserve	—		5

Health care costs payable, end of the period, net	12,015		10,190
Add: Reinsurance recoverables	5		4
Add: Impact of discount rate on long-duration insurance reserves (1)	(22)		8
Health care costs payable, end of the period	$	11,998	$	10,202

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(1)Reflects the difference between the current discount rate and the locked-in discount rate on long-duration insurance reserves which is recorded within accumulated other comprehensive loss on the unaudited condensed consolidated balance sheets. Refer to Note 1 ‘‘Significant Accounting Policies’’ for further information related to the adoption of the long-duration insurance contracts accounting standard.

(2)Total incurred health care costs for the six months ended June 30, 2023 and 2022 in the table above exclude $42 million and $41 million, respectively, of health care costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheets and $102 million and $149 million, respectively, of health care costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheets. The incurred health care costs for the six months ended June 30, 2022 also exclude $5 million for a premium deficiency reserve related to the Company’s Medicaid products.

The Company’s estimates of prior years’ health care costs payable decreased by $619 million and $666 million, respectively, in the six months ended June 30, 2023 and 2022, 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 June 30, 2023, 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 $8.7 billion. Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at June 30, 2023 related to the current year.