7.	Health care costs payable

The following table includes estimates for the cost of professional medical services provided by non-employed physicians and other providers, as well as inpatient and other ancillary costs for all markets other than California. The Company does not include inpatient and other ancillary costs for contracts held by its California licensed health plan and for contracts held by its California medical group entities; only professional medical services are included as state regulation does not allow those medical group entities to assume risk for inpatient services. Health care costs payable are included in medical payables in the condensed consolidated balance sheet.

The following table shows the components of changes in health care costs payable for the nine months ended September 30, 2016:

	Nine months ended
	September 30, 2016
Health care costs payable, beginning of the period	$	212,641
Add: Components of incurred health care costs
Current year		1,261,046
Prior years		2,142
Total incurred health care costs		1,263,188
Less: Claims paid
Current year		1,061,880
Prior years		199,015
Total claims paid		1,260,895
Health care costs payable, end of the period	$	214,934

The Company’s prior year estimates of health care costs payable increased by $2,142 resulting from certain medical claims being settled for amounts more than originally estimated. When significant increases (decreases) in prior-year health care cost estimates occur that the Company believes significantly impacts its current year operating results, the Company discloses that amount as unfavorable (favorable) development of prior-year’s health care cost estimates. Actual claim payments for prior year services have not been materially different from the Company’s year-end estimates.