United Healthcare 2008 Annual Report Download - page 83

UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The gross carrying value, accumulated amortization and net carrying value of other intangible assets were as
follows:
December 31, 2008 December 31, 2007
(in millions)
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Customer Contracts and Membership Lists . . $2,620 $(585) $2,035 $1,879 $(394) $1,485
Patents, Trademarks and Technology ..... 392 (169) 223 302 (121) 181
Other ............................... 120 (49) 71 109 (38) 71
Total ............................... $3,132 $(803) $2,329 $2,290 $(553) $1,737
Amortization expense relating to intangible assets was $252 million in 2008, $192 million in 2007 and $181
million in 2006.
Estimated full year amortization expense relating to intangible assets for each of the next five years is as follows:
(in millions)
Estimated
Amortization
Expense
2009 ............................................................................ $236
2010 ............................................................................ 226
2011 ............................................................................ 221
2012 ............................................................................ 219
2013 ............................................................................ 212
8. Medical Costs and Medical Costs Payable
Medical costs and medical costs payable include estimates of the Company’s obligations for medical care
services that have been rendered on behalf of insured consumers, but for which claims have either not yet been
received or processed, and for liabilities for physician, hospital and other medical cost disputes. The Company
develops estimates for medical costs incurred but not reported using an actuarial process that is consistently
applied, centrally controlled and automated. The actuarial models consider factors such as time from date of
service to claim receipt, claim backlogs, care provider contract rate changes, medical care consumption and other
medical cost trends. The Company estimates liabilities for physician, hospital and other medical cost disputes
based upon an analysis of potential outcomes, assuming a combination of litigation and settlement strategies.
Each period, the Company re-examines previously established medical costs payable estimates based on actual
claim submissions and other changes in facts and circumstances. As the medical costs payable estimates recorded
in prior periods develop, the Company adjusts the amount of the estimates and includes the changes in estimates
in medical costs in the period in which the change is identified.
The following table shows the components of the change in medical costs payable for the years ended December 31:
(in millions) 2008 2007 2006
Medical Costs Payable, Beginning of Period ............................ $ 8,331 $ 8,076 $ 7,262
Acquisitions ..................................................... 331 — 224
Reported Medical Costs
Current Year ................................................. 60,589 55,855 53,738
Prior Years .................................................. (230) (420) (430)
Total Reported Medical Costs ............................... 60,359 55,435 53,308
Claim Payments
Payments for Current Year ...................................... (52,872) (48,240) (46,566)
Payments for Prior Year ........................................ (7,485) (6,940) (6,152)
Total Claim Payments ..................................... (60,357) (55,180) (52,718)
Medical Costs Payable, End of Period ................................. $ 8,664 $ 8,331 $ 8,076
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