Medical Claims Liability

12 Months Ended

Dec. 31, 2022

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


	Year Ended December 31,
	2022		2021		2020
Balance, January 1	$	14,243	$	12,438	$	7,473
Less: reinsurance recoverable	23		23		20
Balance, January 1, net	14,220		12,415		7,453
Acquisitions and divestitures	105		—		3,856

Incurred related to:
Current year	112,896		100,385		86,765
Prior years	(1,367)		(1,783)		(501)
Total incurred	111,529		98,602		86,264
Paid related to:
Current year	97,799		87,427		78,838
Prior years	11,336		9,370		6,320
Total paid	109,135		96,797		85,158
Balance, December 31, net	16,719		14,220		12,415
Plus: reinsurance recoverable	26		23		23
Balance, December 31	$	16,745	$	14,243	$	12,438

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. The impact from COVID-19 on healthcare utilization and medical claims submission patterns provided increased estimation uncertainty on the IBNR liability. Additionally, as a result of minimum HBR and other return of premium programs, the Company recorded approximately $198 million, $492 million, and $86 million of the "Incurred related to: Prior years" as a reduction to premium revenues in 2022, 2021, and 2020, respectively. Further, claims processing initiatives yielded increased claim payment recoveries and coordination of benefits related to prior year dates of service.

Changes in medical utilization and cost trends and the effect of population health management initiatives may also contribute to changes in medical claim liability estimates. While the Company has evidence that population health management initiatives are effective on a case by case basis, population health management initiatives primarily focus on events and behaviors prior to the incurrence of the medical event and generation of a claim. Accordingly, any change in behavior, leveling of care, or coordination of treatment occurs prior to claim generation and as a result, the costs prior to the population health management initiative are not known by the Company. Additionally, certain population health management initiatives are focused on member and provider education with the intent of influencing behavior to appropriately align the medical services provided with the member's acuity. In these cases, determining whether the population health management initiative changed the behavior cannot be determined. Because of the complexity of its business, the number of states in which it operates, and the volume of claims that it processes, the Company is unable to practically quantify the impact of these initiatives on its changes in estimates of IBNR.

The Company reviews actual and anticipated experience compared to the assumptions used to establish medical costs. The Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing policy liabilities together with the present value of future gross premiums will not be sufficient to cover the present value of future benefits, settlement, and maintenance costs.

The Specialty Services segment has an insignificant amount of medical claims liability and, therefore, disclosures related to medical claims liabilities have been aggregated and are presented on a consolidated basis.

Information about incurred and paid claims development as of December 31, 2022 is included in the table below. The claims development information for all periods preceding the most recent reporting period is considered required supplementary information. Incurred and paid claims development as of December 31, 2022 is as follows ($ in millions):


Cumulative Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Claim Year	2020 (unaudited)		2021 (unaudited)		2022
2020	$	88,206	$	86,502	$	86,433
2021			100,385		99,087
2022					112,896
	Total incurred claims				$	298,416

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Claim Year	2020 (unaudited)		2021 (unaudited)		2022
2020	$	76,722	$	85,593	$	86,021
2021			87,427		98,024
2022					97,799
	Total payment of incurred claims				281,844
	All outstanding liabilities prior to 2020, net of reinsurance				147
	Medical claims liability, net of reinsurance				$	16,719

Incurred claims and allocated claim adjustment expenses, net of reinsurance, total IBNR plus expected development on reported claims and cumulative claims data as of December 31, 2022 are included in the following table. For claims frequency information summarized below, a claim is defined as the financial settlement of a single medical event in which remuneration was paid to the servicing provider. 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. Information is summarized as follows (in millions):


	December 31, 2022
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance		Total IBNR Plus Expected Development on Reported Claims		Cumulative Paid Claims
2020	$	86,433	$	—	568.8
2021	99,087		273		623.2
2022	112,896		11,081		608.1