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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2022
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, 2022 and 2021, our Level 3 financial instruments consisted of contingent consideration liabilities. 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 years ended December 31, 2022 and 2021, we recognized a loss of $4 million and $24 million, respectively, primarily for the increase in the fair value of the contingent consideration liability described below. Our financial instruments measured at fair value on a recurring basis at December 31, 2022, were as follows:
| Total |  | Level 1 |  | Level 2 |  | Level 3
| (In millions)
Corporate debt securities | $ | 2,184 |  |  | $ | — |  |  | $ | 2,184 |  |  | $ | — |
Mortgage-backed securities | 731 |  |  | — |  |  | 731 |  |  | — |
Asset-backed securities | 288 |  |  | — |  |  | 288 |  |  | — |
Municipal securities | 149 |  |  | — |  |  | 149 |  |  | — |
U.S. Treasury notes | 105 |  |  | — |  |  | 105 |  |  | — |
Other | 42 |  |  | — |  |  | 42 |  |  | — |
Total assets | $ | 3,499 |  |  | $ | — |  |  | $ | 3,499 |  |  | $ | — |
Contingent consideration liabilities | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 8 |
Total liabilities | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 8 |
Our financial instruments measured at fair value on a recurring basis at December 31, 2021, were as follows:
| Total |  | Level 1 |  | Level 2 |  | Level 3
| (In millions)
Corporate debt securities | $ | 1,833 |  |  | $ | — |  |  | $ | 1,833 |  |  | $ | — |
Mortgage-backed securities | 614 |  |  | — |  |  | 614 |  |  | — |
Asset-backed securities | 247 |  |  | — |  |  | 247 |  |  | — |
Municipal securities | 123 |  |  | — |  |  | 123 |  |  | — |
U.S. Treasury notes | 353 |  |  | — |  |  | 353 |  |  | — |
Other | 32 |  |  | — |  |  | 32 |  |  | — |
Total assets | $ | 3,202 |  |  | $ | — |  |  | $ | 3,202 |  |  | $ | — |
Contingent consideration liabilities | $ | 47 |  |  | $ | — |  |  | $ | — |  |  | $ | 47 |
Total liabilities | $ | 47 |  |  | $ | — |  |  | $ | — |  |  | $ | 47 |
Level 3 Contingent Consideration Liabilities Our Level 3 financial instruments at December 31, 2022 are comprised solely of contingent consideration liabilities of $8 million, in connection with our 2020 acquisition of certain assets of Passport Health Plan, Inc., a Medicaid health plan in Kentucky. Refer to Note 2, “Significant Accounting Policies—Business Combinations”, for further details. Such liabilities are recorded at fair value on a recurring basis. In 2022, the estimated fair value of contingent purchase consideration increased by approximately $4 million, relating to an operating income guarantee. In the year ended December 31, 2022, we paid the seller $43 million, of which $23 million was for the remaining half of the consideration due for minimum member enrollment targets and $20 million was for the first payment of the consideration due for the operating income guarantee. 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, 2022 |  | December 31, 2021
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
| (In millions)
4.375% Notes due 2028 | $ | 792 |  |  | $ | 729 |  |  | $ | 791 |  |  | $ | 829 |
3.875% Notes due 2030 | 643 |  |  | 554 |  |  | 642 |  |  | 675 |
3.875% Notes due 2032 | 741 |  |  | 629 |  |  | 740 |  |  | 760 |
Total | $ | 2,176 |  |  | $ | 1,912 |  |  | $ | 2,173 |  |  | $ | 2,264 |

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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 https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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