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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements We generally 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 the three-tier fair value hierarchy. For a description of the methods and assumptions used to: a) estimate the fair value; and b) determine the classification according to the fair value hierarchy for each financial instrument, refer to our 2020 Annual Report on Form 10-K, Note 5, “Fair Value Measurements.” Our financial instruments measured at fair value on a recurring basis at September 30, 2021, were as follows:
|  |  | Observable Inputs |  | Directly or Indirectly Observable Inputs |  | Unobservable Inputs
| Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
| (In millions)
Corporate debt securities | $ | 1,705 |  |  | $ | — |  |  | $ | 1,705 |  |  | $ | — |
Mortgage-backed securities | 610 |  |  | — |  |  | 610 |  |  | — |
U.S. Treasury notes | 235 |  |  | — |  |  | 235 |  |  | — |
Asset-backed securities | 224 |  |  | — |  |  | 224 |  |  | — |
Municipal securities | 97 |  |  | — |  |  | 97 |  |  | — |
Other | 29 |  |  | — |  |  | 29 |  |  | — |
Total assets | $ | 2,900 |  |  | $ | — |  |  | $ | 2,900 |  |  | $ | — |
Contingent consideration liabilities | $ | 26 |  |  | $ | — |  |  | $ | — |  |  | $ | 26 |
Total liabilities | $ | 26 |  |  | $ | — |  |  | $ | — |  |  | $ | 26 |
Our financial instruments measured at fair value on a recurring basis at December 31, 2020, were as follows:
|  |  | Observable Inputs |  | Directly or Indirectly Observable Inputs |  | Unobservable Inputs
| Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
| (In millions)
Corporate debt securities | $ | 1,256 |  |  | $ | — |  |  | $ | 1,256 |  |  | $ | — |
Mortgage-backed securities | 392 |  |  | — |  |  | 392 |  |  | — |
U.S. Treasury notes | 27 |  |  | — |  |  | 27 |  |  | — |
Asset-backed securities | 132 |  |  | — |  |  | 132 |  |  | — |
Municipal securities | 68 |  |  | — |  |  | 68 |  |  | — |
Total assets | $ | 1,875 |  |  | $ | — |  |  | $ | 1,875 |  |  | $ | — |
Contingent consideration liabilities | $ | 46 |  |  | $ | — |  |  | $ | — |  |  | $ | 46 |
Total liabilities | $ | 46 |  |  | $ | — |  |  | $ | — |  |  | $ | 46 |
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 nine months ended September 30, 2021, we recognized a loss of $3 million for the increase in the fair value of the contingent consideration liabilities described below. Contingent Consideration Liabilities As of September 30, 2021, our Level 3 financial instruments recorded at fair value on a recurring basis included contingent consideration liabilities of $26 million, in connection with our 2020 acquisition of certain assets of Passport Health Plan, Inc., a Medicaid health plan in Kentucky. In the first quarter of 2021, the contingent purchase consideration relating to 2021 member enrollment was finalized and half the consideration due, or $23 million, was paid to the seller. The portion of the contingent purchase consideration paid in the first quarter of 2021 has been presented primarily in “Financing activities” in the accompanying consolidated statements of cash flows for the nine months ended September 30, 2021, with the balance reflected in “Operating activities.” We expect to pay the remaining balance of the liabilities, reported in “Accounts payable, accrued liabilities and other” in the accompanying consolidated balance sheets, by the end of the first quarter of 2022. 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.
| September 30, 2021 |  | December 31, 2020
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
| (In millions)
4.375% Notes | $ | 790 |  |  | $ | 835 |  |  | $ | 789 |  |  | $ | 843 |
5.375% Notes | 698 |  |  | 725 |  |  | 697 |  |  | 742 |
3.875% Notes | 642 |  |  | 688 |  |  | 641 |  |  | 691 |
Total | $ | 2,130 |  |  | $ | 2,248 |  |  | $ | 2,127 |  |  | $ | 2,276 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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