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Fair Value Measurements
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
We consider the carrying amounts of current assets and current liabilities to approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. For our financial instruments measured at fair value on a recurring basis, we prioritize the inputs used in measuring fair value according to a three-tier fair value hierarchy as follows:
Level 1 — Observable Inputs. Level 1 financial instruments are actively traded and therefore the fair value for these securities is based on quoted market prices for identical securities in active markets.
Level 2 — Directly or Indirectly Observable Inputs. Fair value for these investments is determined using a market approach based on quoted prices for similar securities in active markets or quoted prices for identical securities in inactive markets.
Level 3 — Unobservable Inputs. Level 3 financial instruments are valued using unobservable inputs that represent management’s best estimate of what market participants would use in pricing the financial instrument at the measurement date. As of December 31, 2020, our Level 3 financial instruments consisted of contingent consideration liabilities. As of December 31, 2019, our Level 3 financial instruments consisted of derivative financial instruments.
The net changes in fair value of Level 3 financial instruments are reported in “Other” operating expenses in our consolidated statements of income. In the year ended December 31, 2020, we recognized a loss of $6 million, primarily for the increase in the fair value of the contingent consideration liability described below, because the opening 2021 enrollment for our Kentucky health plan was higher than our estimate as of September 30, 2020. In the year ended December 31, 2019, the net changes in fair value of Level 3 financial instruments were insignificant to our results of operations.
Our financial instruments measured at fair value on a recurring basis at December 31, 2020, were as follows:
TotalLevel 1Level 2Level 3
 (In millions)
Corporate debt securities$1,256 $— $1,256 $— 
Mortgage-backed securities392 — 392 — 
Asset-backed securities132 — 132 — 
Municipal securities68 — 68 — 
U.S. Treasury notes27 — 27 — 
Total assets$1,875 $— $1,875 $— 
Contingent consideration liabilities$46 $— $— $46 
Total liabilities$46 $— $— $46 
Our financial instruments measured at fair value on a recurring basis at December 31, 2019, were as follows:
TotalLevel 1Level 2Level 3
 (In millions)
Corporate debt securities$1,178 $— $1,178 $— 
Mortgage-backed securities420 — 420 — 
Asset-backed securities127 — 127 — 
Municipal securities
78 — 78 — 
U.S. Treasury notes86 — 86 — 
Government-sponsored enterprise securities (“GSEs”)49 — 49 — 
Certificate of deposit1 — 1 — 
Other7 — 7 — 
Subtotal1,946 — 1,946 — 
Call option derivative asset29 — — 29 
Total assets$1,975 $— $1,946 $29 
Conversion option derivative liability$29 $— $— $29 
Total liabilities$29 $— $— $29 
Contingent Consideration Liabilities
As of December 31, 2020, our Level 3 financial instruments recorded at fair value on a recurring basis included contingent consideration liabilities of $46 million, in connection with the Kentucky acquisition described in Note 4, “Business Combinations.” As of December 31, 2020, the contingent consideration fair value was estimated primarily based on an amount we expect to pay the seller for members enrolled in our Kentucky health plan as of January 1, 2021, over a minimum threshold. Half this amount is payable later in 2021, with the remainder payable in early 2022, subject to review and agreement among us and the seller. The second half payment is contingent upon the outcome of certain legal challenges. The current portion is reported in “Accounts payable, accrued liabilities and other,” and the non-current portion is reported in “Other long-term liabilities,” in the accompanying consolidated balance sheets. Contingent consideration liabilities are remeasured to fair value each quarter until the contingencies are resolved with fair value adjustments, if any, recorded to operations.
Derivatives
The following table summarizes the fair values and the presentation of our derivative financial instruments in the accompanying consolidated balance sheets:
December 31,
Balance Sheet Location20202019
 (In millions)
Derivative asset:
Call OptionCurrent assets: Prepaid expenses and other current assets$— $29 
Derivative liability:
Conversion OptionCurrent liabilities: Accounts payable, accrued liabilities and other$— $29 
Our derivative financial instruments did not qualify for hedge treatment. Gains and losses for our derivative financial instruments are presented individually in the accompanying consolidated statements of cash flows, “Supplemental cash flow information.”
In the year ended December 31, 2020, we received $27 million for the settlement of the call option derivative asset, and we paid $39 million to settle the outstanding $12 million principal amount of the 1.125% Convertible Notes, and settle the related conversion option. For more information, refer to Notes 11, “Debt,” and 13 “Stockholders' Equity.”
Fair Value Measurements – Disclosure Only
The carrying amounts and estimated fair values of our notes payable are classified as Level 2 financial instruments. Fair value for these securities is determined using a market approach based on quoted market prices for similar securities in active markets or quoted prices for identical securities in inactive markets.
 December 31, 2020December 31, 2019
 Carrying
Amount		Fair Value Carrying
Amount		Fair Value
 (In millions)
4.375% Notes
$789 $843 $— $— 
5.375% Notes
697 742 696 745 
3.875% Notes
641 691 — — 
4.875% Notes (1)
— — 327 340 
Term Loan Facility (1)
— — 220 220 
1.125% Convertible Notes (1)
— — 12 42 
Total$2,127 $2,276 $1,255 $1,347 
_______________________________ 
(1)     For more information on debt repayments, refer to Note 11, “Debt.”