Medical Claims Liability

9 Months Ended

Sep. 30, 2021

The following table summarizes the change in medical claims liability ($ in millions):


	Nine Months Ended September 30,
	2021		2020

Balance, January 1	$	12,438	$	7,473
Less: Reinsurance recoverable	23		20
Balance, January 1, net	12,415		7,453
Acquisitions and divestitures	—		3,872

Incurred related to:
Current year	74,736		64,105
Prior years	(1,526)		(446)
Total incurred	73,210		63,659
Paid related to:
Current year	62,205		56,074
Prior years	9,344		6,032
Total paid	71,549		62,106
Balance at September 30, net	14,076		12,878
Plus: Reinsurance recoverable	23		21
Balance, September 30	$	14,099	$	12,899

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of minimum health benefits ratio (HBR) and other return of premium programs, the Company recorded $438 million and $97 million as a reduction to premium revenue in the nine months ended September 30, 2021 and 2020, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2021 was $9,346 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.