United Healthcare 2004 Annual Report Download - page 54

Download and view the complete annual report

Please find page 54 of the 2004 United Healthcare annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 72

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72

52 UNITEDHEALTH GROUP
6 Medical Costs Payable
The following table shows the components of the change in medical costs payable for the years ended
December 31:
(in millions) 2004 2003 2002
MEDICAL COSTS PAYABLE, BEGINNING OF PERIOD
$4,152
$3,741 $3,460
ACQUISITIONS
1,040
165 180
REPORTED MEDICAL COSTS
Current Year
27,210
20,864 18,262
Prior Years
(210)
(150) (70)
Total Reported Medical Costs
27,000
20,714 18,192
CLAIM PAYMENTS
Payments for Current Year
(23,173)
(17,411) (15,147)
Payments for Prior Years
(3,479)
(3,057) (2,944)
Total Claim Payments
(26,652)
(20,468) (18,091)
MEDICAL COSTS PAYABLE, END OF PERIOD
$5,540
$4,152 $3,741
7 Commercial Paper and Debt
Commercial paper and debt consisted of the following as of December 31:
2004 2003
Carrying Fair Carrying Fair
(in millions) Value Value1Value Value1
Commercial Paper
$273 $ 273
$79 $79
Floating-Rate Notes due November 2004
––
150 150
7.5% Senior Unsecured Notes due November 2005
400 417
400 438
5.2% Senior Unsecured Notes due January 2007
400 413
400 427
3.4% Senior Unsecured Notes due August 2007
550 546
––
3.3% Senior Unsecured Notes due January 2008
500 493
500 499
3.8% Senior Unsecured Notes due February 2009
250 247
––
4.1% Senior Unsecured Notes due August 2009
450 452
––
4.9% Senior Unsecured Notes due April 2013
450 453
450 454
4.8% Senior Unsecured Notes due February 2014
250 248
––
5.0% Senior Unsecured Notes due August 2014
500 503
––
Total Commercial Paper and Debt
4,023 4,045
1,979 2,047
Less Current Maturities
(673) (690)
(229) (229)
Long-Term Debt, less current maturities
$3,350 $ 3,355
$1,750 $1,818
1Estimated based on third-party quoted market prices for the same or similar issues.
As of December 31, 2004, our outstanding commercial paper had interest rates ranging from 2.3% to 2.4%.
We have interest rate swap agreements that qualify as fair value hedges to convert the majority of our
interest rate exposure from a fixed to a variable rate. The interest rate swap agreements have aggregate
notional amounts of $2.9 billion with variable rates that are benchmarked to the six-month LIBOR
(London Interbank Offered Rate). At December 31, 2004, the rates used to accrue interest expense on
these agreements ranged from 2.3% to 3.3%. The differential between the fixed and variable rates to be
paid or received is accrued and recognized over the life of the agreements as an adjustment to interest
expense in the Consolidated Statements of Operations.