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Leases (Tables)

12 Months Ended

Dec. 31, 2019

Components of lease expense and supplemental consolidated cash flow information

Supplemental consolidated cash flow information related to leases follows:



	Year Ended December 31, 2019
	(In millions)
Cash used in operating activities:
Operating leases	$	36
Finance leases	15
Cash used in financing activities:
Finance leases	6
ROU assets recognized in exchange for lease obligations:
Operating leases	99
Finance leases	245

The components of lease expense were as follows:



	Year Ended December 31, 2019
	(In millions)
Operating lease expense	$	34

Finance lease expense:
Amortization of ROU assets	$	17
Interest on lease liabilities	15
Total finance lease expense	$	32

Supplemental lease information

Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows:



	December 31, 2019
	(In millions)
Operating leases:
ROU assets
Other assets	$	65
Lease liabilities
Accounts payable and accrued liabilities (current)	$	25
Other long-term liabilities (non-current)	48
Total operating lease liabilities	$	73
Finance leases:
ROU assets
Property, equipment, and capitalized software, net	$	228
Lease liabilities
Accounts payable and accrued liabilities (current)	$	8
Finance lease liabilities (non-current)	231
Total finance lease liabilities	$	239

Operating lease maturities

Maturities of lease liabilities as of December 31, 2019, were as follows:



	Operating Leases			Finance Leases
	(In millions)
2020	$	28		$	23
2021	20			24
2022	14			21
2023	10			21
2024	5			22
Thereafter	3			289
Subtotal - undiscounted lease payments	80			400
Less imputed interest	(7		)	(161		)
Total	$	73		$	239

Finance lease maturities

Maturities of lease liabilities as of December 31, 2019, were as follows:



	Operating Leases			Finance Leases
	(In millions)
2020	$	28		$	23
2021	20			24
2022	14			21
2023	10			21
2024	5			22
Thereafter	3			289
Subtotal - undiscounted lease payments	80			400
Less imputed interest	(7		)	(161		)
Total	$	73		$	239

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Premium revenue	$ 16,208	$ 17,612	$ 18,854
Premium tax revenue	489	417	438
Health insurer fees reimbursed	0	329	0
Service revenue	0	407	521
Investment income and other revenue	132	125	70
Total revenue	16,829	18,890	19,883
Operating expenses:
General and administrative expenses	1,296	1,333	1,594
Premium tax expenses	489	417	438
Health insurer fees	0	348	0
Depreciation and amortization	89	99	137
Restructuring costs	6	46	234
Impairment losses	0	0	470
Total operating expenses	15,785	17,744	20,438
Loss on sales of subsidiaries, net of gain	0	(15)	0
Operating income (loss)	1,044	1,131	(555)
Other expenses, net:
Interest expense	87	115	118
Other (income) expenses, net	(15)	17	(61)
Total other expenses, net	72	132	57
Income (loss) before income tax expense (benefit)	972	999	(612)
Income tax expense (benefit)	235	292	(100)
Net income (loss)	$ 737	$ 707	$ (512)
Net income (loss) per share:
Basic (in dollars per share)	$ 11.85	$ 11.57	$ (9.07)
Diluted (in dollars per share)	$ 11.47	$ 10.61	$ (9.07)
Weighted average shares outstanding:
Basic (in shares)	62.2	61.1	56.4
Diluted (in shares)	64.2	66.6	56.4
Medical care costs
Operating expenses:
Cost of revenue	$ 13,905	$ 15,137	$ 17,073
Cost of service revenue
Operating expenses:
Cost of revenue	$ 0	$ 364	$ 492

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value (dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares outstanding	62,000,000	62,000,000
Preferred stock, par value (dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Numerator:
Net income (loss)	$ 168	$ 175	$ 196	$ 198	$ 201	$ 197	$ 202	$ 107	$ 737	$ 707	$ (512)
Denominator:
Shares outstanding at the beginning of the period (in shares)					62.1					62.1	59.3	55.8
Weighted-average number of shares issued:
Exchange of convertible senior notes (in shares)									0.0	1.4	0.1
Conversion of convertible senior notes (in shares)									0.0	0.2	0.0
Stock-based compensation (in shares)									0.1	0.2	0.5
Denominator for basic net income (loss) per share (in shares)									62.2	61.1	56.4
Effect of dilutive securities:
Warrants (in shares)									1.4	4.8	0.0
Convertible senior notes (in shares)									0.0	0.4	0.0
Share-based compensation (in shares)									0.6	0.3	0.0
Denominator for diluted net (loss) income per share (in shares)									64.2	66.6	56.4
Net income (loss) per share:
Basic (in dollars per share)	$ 2.70	$ 2.81	$ 3.15	$ 3.19	$ 3.24	$ 3.22	$ 3.29	$ 1.79	$ 11.85	$ 11.57	$ (9.07)
Diluted (in dollars per share)	$ 2.67	$ 2.75	$ 3.06	$ 2.99	$ 3.01	$ 2.90	$ 3.02	$ 1.64	$ 11.47	$ 10.61	$ (9.07)
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Stock-based compensation (in shares)									0.0	0.0	0.3
Convertible senior notes
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Potentially dilutive common shares excluded from calculations (in shares)									0.0	0.0	0.4
Stated interest rate	1.625%								1.625%
Warrants
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Potentially dilutive common shares excluded from calculations (in shares)									0.0	0.0	1.9

Medical Claims and Benefits Payable - Medical Claims and Future Benefits (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Insurance [Abstract]
Fee-for-service claims incurred but not paid (“IBNP”)	$ 1,406	$ 1,562	$ 1,717
Pharmacy payable	126	115	112
Capitation payable	55	52	67
Other	267	232	296
Total	$ 1,854	$ 1,961	$ 2,192	$ 1,929

Organization and Basis of Presentation

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Operations

Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We currently have two reportable segments: the Health Plans segment and the Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve.

The Health Plans segment consists of health plans operating in 14 states and the Commonwealth of Puerto Rico. As of December 31, 2019, these health plans served approximately 3.3 million members eligible for Medicaid, Medicare, and other government-sponsored health care programs for low-income families and individuals including Marketplace members, most of whom receive government subsidies for premiums. The health plans are generally operated by our respective wholly owned subsidiaries in those states, each of which is licensed as a health maintenance organization (“HMO”).

Our state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause. Such contracts are subject to risk of loss in states that issue requests for proposal (“RFP”) open to competitive bidding by other health plans. If one of our health plans is not a successful responsive bidder to a state RFP, its contract may not be renewed.

In addition to contract renewal, our state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); populations such as the aged, blind or disabled; and regions or service areas.

Recent Developments – Health Plans Segment

Kentucky. On December 2, 2019, we announced that our Kentucky health plan subsidiary had been selected as an awardee pursuant to the Kentucky Medicaid managed care organizations RFP issued by the Kentucky Finance and Administration Cabinet in May 2019. However, in late December 2019, the newly elected Governor of Kentucky announced that he was canceling the Medicaid contracts that had been awarded by the outgoing Governor, including the contract that had been awarded to our Kentucky health plan subsidiary, and that he was reissuing the RFP for rebidding. We submitted a bid under the new RFP on February 6, 2020.

Texas. In October 2019, the Texas Health and Human Services Commission (“HHSC”) awarded contracts to our Texas health plan for the ABD program (known in Texas as “STAR+PLUS”) in two service areas, consisting of one legacy service area and one new service area. This would be a reduction from our current footprint of six service areas. We believe the initial term of each contract is expected to be three years, and such contracts are currently anticipated to be operational beginning on January 1, 2021, at the earliest. Under our existing STAR+PLUS and related Medicare-Medicaid Plan (“MMP”) contracts, we served approximately 97,000 members as of December 31, 2019, representing premium revenue of approximately $2,062 million in 2019. We are currently exercising our protest rights of the STAR+PLUS RFP awards with HHSC.

In 2019, our Texas health plan submitted an RFP response for the TANF and CHIP programs (known in Texas as “STAR/CHIP”). HHSC has announced that the STAR/CHIP contract awards are delayed to late February 2020. Under our existing STAR/CHIP contracts, we served approximately 114,000 members as of December 31, 2019, representing premium revenue of approximately $315 million in 2019.

Illinois. On December 31, 2019, we entered into a definitive agreement to purchase NextLevel Health Partners, Inc., a Medicaid managed care organization. Upon the closing of this transaction, expected to occur in the first half of 2020, we will assume the right to serve approximately 50,000 Medicaid and Managed Long-Term Services and Supports members in Cook County, Illinois. The purchase price of approximately $50 million will be funded with available cash, and the closing is subject to customary closing conditions.

New York. In October 2019, we entered into a definitive agreement to acquire certain assets of YourCare Health Plan, Inc. Upon the closing of this transaction, expected to occur in the first half of 2020, we will serve approximately 46,000 Medicaid members in seven counties in western New York. The purchase price of approximately $40 million will be funded with available cash, and the closing is subject to customary closing conditions.

Consolidation and Presentation

The consolidated financial statements include the accounts of Molina Healthcare, Inc., and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Financial information related to subsidiaries acquired during any year is included only for periods subsequent to their acquisition. In the opinion of management, all adjustments considered necessary for a fair presentation of the results as of the date and for the periods presented have been included; such adjustments consist of normal recurring adjustments.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Principal areas requiring the use of estimates include:


•	The determination of medical claims and benefits payable of our Health Plans segment;


•	Health Plans segment contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract;


•	Health Plans segment quality incentives that allow us to recognize incremental revenue if certain quality standards are met;


•	Settlements under risk or savings sharing programs;


•	The assessment of long-lived and intangible assets, and goodwill, for impairment;


•	The determination of reserves for potential absorption of claims unpaid by insolvent providers;


•	The determination of reserves for the outcome of litigation;


•	The determination of valuation allowances for deferred tax assets; and

•

The determination of unrecognized tax benefits.

Leases - Supplemental Cash Flow (Details) $ in Millions	12 Months Ended
Leases - Supplemental Cash Flow (Details) $ in Millions	Dec. 31, 2019 USD ($)
Cash used in operating activities:
Operating leases	$ 36
Finance leases	15
Cash used in financing activities:
Finance leases	6
ROU assets recognized in exchange for lease obligations:
Operating leases	99
Finance leases	$ 245

Medical Claims and Benefits Payable - Reconciliation of Claims Development (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Insurance [Abstract]
Incurred claims and allocated claims adjustment expenses	$ 46,125
Less: cumulative paid claims and allocated claims adjustment expenses	(44,460)
All outstanding liabilities before 2017	15
Non-risk and other provider payables	174
Total	$ 1,854	$ 1,961	$ 2,192	$ 1,929

Significant Accounting Policies - Schedule of Premium Revenue (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 16,208	$ 17,612	$ 18,854
Texas
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	2,062
Health Plans
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 16,208	$ 17,612	$ 18,854
Premium revenue percentage	100.00%	100.00%	100.00%
Health Plans \| California
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 2,266	$ 2,150	$ 2,701
Premium revenue percentage	14.00%	12.20%	14.30%
Health Plans \| Florida
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 734	$ 1,790	$ 2,568
Premium revenue percentage	4.50%	10.20%	13.60%
Health Plans \| Illinois
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 1,002	$ 793	$ 593
Premium revenue percentage	6.20%	4.50%	3.10%
Health Plans \| Michigan
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 1,624	$ 1,601	$ 1,596
Premium revenue percentage	10.00%	9.10%	8.50%
Health Plans \| New Mexico
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 0	$ 1,356	$ 1,368
Premium revenue percentage	0.00%	7.70%	7.30%
Health Plans \| Ohio
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 2,553	$ 2,388	$ 2,216
Premium revenue percentage	15.80%	13.60%	11.80%
Health Plans \| Puerto Rico
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 474	$ 696	$ 732
Premium revenue percentage	2.90%	3.90%	3.90%
Health Plans \| South Carolina
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 583	$ 495	$ 445
Premium revenue percentage	3.60%	2.80%	2.40%
Health Plans \| Texas
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 2,991	$ 3,244	$ 2,813
Premium revenue percentage	18.50%	18.40%	14.90%
Health Plans \| Washington
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 2,695	$ 2,361	$ 2,608
Premium revenue percentage	16.60%	13.40%	13.80%
Health Plans \| Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Premium revenue	$ 1,286	$ 738	$ 1,214
Premium revenue percentage	7.90%	4.20%	6.40%

Leases Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

As discussed in Note 2, “Significant Accounting Policies,” we elected the Topic 842 transition provision that allows entities to continue to apply the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption. Accordingly, the Topic 842 disclosures below are presented as of and for the year ended December 31, 2019, only.

We are a party to operating and finance leases primarily for our corporate and health plan offices. Our operating leases have remaining lease terms up to 9 years, some of which include options to extend the leases for up to 10 years. As of December 31, 2019, the weighted average remaining operating lease term is 4 years.

Our finance leases have remaining lease terms of 2 years to 19 years, some of which include options to extend the leases for up to 25 years. As of December 31, 2019, the weighted average remaining finance lease term is 16 years.

As of December 31, 2019, the weighted-average discount rate used to compute the present value of lease payments was 5.6% for operating lease liabilities, and 6.5% for finance lease liabilities. The components of lease expense were as follows:



	Year Ended December 31, 2019
	(In millions)
Operating lease expense	$	34

Finance lease expense:
Amortization of ROU assets	$	17
Interest on lease liabilities	15
Total finance lease expense	$	32

Rental expense related to operating leases amounted to $62 million and $75 million for the years ended December 31, 2018 and 2017, respectively.

Supplemental consolidated cash flow information related to leases follows:



	Year Ended December 31, 2019
	(In millions)
Cash used in operating activities:
Operating leases	$	36
Finance leases	15
Cash used in financing activities:
Finance leases	6
ROU assets recognized in exchange for lease obligations:
Operating leases	99
Finance leases	245

Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows:



	December 31, 2019
	(In millions)
Operating leases:
ROU assets
Other assets	$	65
Lease liabilities
Accounts payable and accrued liabilities (current)	$	25
Other long-term liabilities (non-current)	48
Total operating lease liabilities	$	73
Finance leases:
ROU assets
Property, equipment, and capitalized software, net	$	228
Lease liabilities
Accounts payable and accrued liabilities (current)	$	8
Finance lease liabilities (non-current)	231
Total finance lease liabilities	$	239

Maturities of lease liabilities as of December 31, 2019, were as follows:



	Operating Leases			Finance Leases
	(In millions)
2020	$	28		$	23
2021	20			24
2022	14			21
2023	10			21
2024	5			22
Thereafter	3			289
Subtotal - undiscounted lease payments	80			400
Less imputed interest	(7		)	(161		)
Total	$	73		$	239

Leases



	Year Ended December 31, 2019
	(In millions)
Operating lease expense	$	34

Finance lease expense:
Amortization of ROU assets	$	17
Interest on lease liabilities	15
Total finance lease expense	$	32

Rental expense related to operating leases amounted to $62 million and $75 million for the years ended December 31, 2018 and 2017, respectively.

Supplemental consolidated cash flow information related to leases follows:



	Year Ended December 31, 2019
	(In millions)
Cash used in operating activities:
Operating leases	$	36
Finance leases	15
Cash used in financing activities:
Finance leases	6
ROU assets recognized in exchange for lease obligations:
Operating leases	99
Finance leases	245

Supplemental information related to leases, including location of amounts reported in the accompanying consolidated balance sheets, follows:



	December 31, 2019
	(In millions)
Operating leases:
ROU assets
Other assets	$	65
Lease liabilities
Accounts payable and accrued liabilities (current)	$	25
Other long-term liabilities (non-current)	48
Total operating lease liabilities	$	73
Finance leases:
ROU assets
Property, equipment, and capitalized software, net	$	228
Lease liabilities
Accounts payable and accrued liabilities (current)	$	8
Finance lease liabilities (non-current)	231
Total finance lease liabilities	$	239

Maturities of lease liabilities as of December 31, 2019, were as follows:



	Operating Leases			Finance Leases
	(In millions)
2020	$	28		$	23
2021	20			24
2022	14			21
2023	10			21
2024	5			22
Thereafter	3			289
Subtotal - undiscounted lease payments	80			400
Less imputed interest	(7		)	(161		)
Total	$	73		$	239

Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Lessee, Lease, Description [Line Items]
Operating lease term	9 years
Operating lease renewal term	10 years
Operating leases, weighted average remaining lease term	4 years
Finance lease renewal term	25 years
Finance leases, weighted average remaining lease term	16 years
Operating leases, weighted average discount rate	5.60%
Finance leases, weighted average discount rate	6.50%
Rent expense		$ 62	$ 75
Minimum
Lessee, Lease, Description [Line Items]
Finance lease term	2 years
Maximum
Lessee, Lease, Description [Line Items]
Finance lease term	19 years

Debt - Interest Cost (Details) - USD ($) $ in Millions	12 Months Ended
Debt - Interest Cost (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest cost recognized for the period relating to the:
Contractual interest coupon rate	$ 1	$ 6	$ 11
Amortization of the discount	5	21	32
Total interest cost recognized	$ 6	$ 27	$ 43

Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Accrued expenses and reserve liabilities	$ 35	$ 39
Other accrued medical costs	11	12
Net operating losses	13	16
Fixed assets and intangibles	26	30
Unearned premiums	11	9
Lease financing obligation	5	30
Tax credit carryover	11	12
Other	0	3
Valuation allowance	(24)	(28)
Total deferred income tax assets, net of valuation allowance	88	123
Prepaid expenses	(6)	(6)
Other	(3)	0
Total deferred income tax liabilities	(9)	(6)
Net deferred income tax asset	$ 79	$ 117

Debt - Credit Agreement (Details) - USD ($)	12 Months Ended
Debt - Credit Agreement (Details) - USD ($)	Dec. 31, 2019	Jan. 31, 2019
Line of Credit Facility [Line Items]
Aggregate principal amount of notes outstanding	$ 1,262,000,000
Term Loan Facility \| Term Loan Facility
Line of Credit Facility [Line Items]
Aggregate principal amount of notes outstanding	220,000,000
Current borrowing capacity	380,000,000
Term Loan Facility \| Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	500,000,000	$ 600,000,000
Minimum principal amount of advancements		$ 50,000,000
Current borrowing capacity	499,000,000
Amount outstanding under Letter of Credit	0
Term Loan Facility \| Letter of Credit
Line of Credit Facility [Line Items]
Amount outstanding under Letter of Credit	$ 1,000,000
Minimum \| Term Loan Facility \| Credit Facility
Line of Credit Facility [Line Items]
Amortization payment percentage	1.25%
Maximum \| Term Loan Facility \| Credit Facility
Line of Credit Facility [Line Items]
Amortization payment percentage	2.50%

Fair Value Measurements - Additional Information (Details)	Dec. 31, 2019
1.125% Call Option
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of contractual interest rate on derivative	1.125%
1.125% Conversion Option
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of contractual interest rate on derivative	1.125%

Leases - Lease Maturities (Details) $ in Millions	Dec. 31, 2019 USD ($)
Operating Leases
2020	$ 28
2021	20
2022	14
2023	10
2024	5
Thereafter	3
Subtotal - undiscounted lease payments	80
Less imputed interest	(7)
Total operating lease liabilities	73
Finance Leases
2020	23
2021	24
2022	21
2023	21
2024	22
Thereafter	289
Subtotal - undiscounted lease payments	400
Less imputed interest	(161)
Total finance lease liabilities	$ 239

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Regulatory Capital Requirements and Dividend Restrictions Our health plans, which are operated by our respective wholly owned subsidiaries in those states, are subject to state laws and regulations that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state. The National Association of Insurance Commissioners (“NAIC”), has adopted rules which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for health care coverage. The requirements take the form of risk-based capital (“RBC”) rules which may vary from state to state. All of the states in which our health plans operate, except California, Florida and New York, have adopted these rules. Such requirements, if adopted by California, Florida and New York, may increase the minimum capital required for those states. Regulators in some states may also enforce capital requirements that require the retention of net worth in excess of amounts formally required by statute or regulation. As of December 31, 2019, our health plans had aggregate statutory capital and surplus of approximately $1,852 million compared with the required minimum aggregate statutory capital and surplus of approximately $1,110 million. All of our health plans were in compliance with the minimum capital requirements at December 31, 2019. We have the ability and commitment to provide additional capital to each of our health plans when necessary to ensure that statutory capital and surplus continue to meet regulatory requirements. Such statutes, regulations and informal capital requirements also restrict the timing, payment, and amount of dividends and other distributions that may be paid to us as the sole stockholder. To the extent our subsidiaries must comply with these regulations, they may not have the financial flexibility to transfer funds to us. Based on current statutes and regulations, the net assets in these subsidiaries (after intercompany eliminations) which may not be transferable to us in the form of loans, advances, or cash dividends was approximately $1,811 million at December 31, 2019, and $2,262 million at December 31, 2018. Because of the statutory restrictions that inhibit the ability of our health plans to transfer net assets to us, the amount of retained earnings readily available to pay dividends to our stockholders is generally limited to cash, cash equivalents and investments held by the parent company – Molina Healthcare, Inc. Such cash, cash equivalents and investments amounted to $997 million and $170 million as of December 31, 2019 and 2018, respectively. Legal Proceedings The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. Penalties associated with violations of these laws and regulations include significant fines and penalties, exclusion from participating in publicly funded programs, and the repayment of previously billed and collected revenues. We are involved in legal actions in the ordinary course of business including, but not limited to, various employment claims, vendor disputes and provider claims. Some of these legal actions seek monetary damages, including claims for punitive damages, which may not be covered by insurance. We review legal matters and update our estimates of reasonably possible losses and related disclosures, as necessary. We have accrued liabilities for legal matters for which we deem the loss to be both probable and reasonably estimable. These liability estimates could change as a result of further developments of the matters. The outcome of legal actions is inherently uncertain. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations, or cash flows. Professional Liability Insurance We carry medical professional liability insurance for health care services rendered in the primary care institutions that we manage. In addition, we also carry errors and omissions insurance for all Molina entities.

Condensed Financial Information of Registrant (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Condensed balance sheets

Condensed Balance Sheets



	December 31,
	2019		2018
	(In millions, except per-share data)
ASSETS
Current assets:
Cash and cash equivalents	$	836	$	70
Investments	161		100
Receivables	2		2
Due from affiliates	49		90
Prepaid expenses and other current assets	46		47
Derivative asset	29		476
Total current assets	1,123		785
Property, equipment, and capitalized software, net	327		176
Goodwill and intangible assets, net	13		13
Investments in subsidiaries	2,225		2,768
Deferred income taxes	10		39
Advances to related parties and other assets	76		40
Total assets	$	3,774	$	3,821
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	—	$	4
Accounts payable and accrued liabilities	260		223
Current portion of long-term debt	18		241
Derivative liability	29		476
Total current liabilities	307		944
Long-term debt	1,237		1,020
Finance lease liabilities	231		197
Other long-term liabilities	39		13
Total liabilities	1,814		2,174
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018	—		—
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	—		—
Additional paid-in capital	175		643
Accumulated other comprehensive income (loss)	4		(8		)
Retained earnings	1,781		1,012
Total stockholders’ equity	1,960		1,647
Total liabilities and stockholders’ equity	$	3,774	$	3,821

Condensed statements of income

Condensed Statements of Operations



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Revenue:
Administrative services fees	$	1,038		$	1,138		$	1,317
Investment income and other revenue	18			17			16
Total revenue	1,056			1,155			1,333
Expenses:
General and administrative expenses	937			1,007			1,082
Depreciation and amortization	63			69			93
Other operating expenses	—			8			16
Restructuring costs	4			35			153
Impairment losses	—			—			39
Total operating expenses	1,004			1,119			1,383
Gain on sale of subsidiary	—			37			—
Operating income (loss)	52			73			(50		)
Interest expense	87			114			117
Other (income) expense, net	(15		)	17			(61		)
Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries	(20		)	(58		)	(106		)
Income tax expense (benefit)	9			(14		)	8
Net loss before equity in net earnings (losses) of subsidiaries	(29		)	(44		)	(114		)
Equity in net earnings (losses) of subsidiaries	766			751			(398		)
Net income (loss)	$	737		$	707		$	(512	)

Condensed statements of comprehensive (loss)

Condensed Statements of Comprehensive Income (Loss)



	Year Ended December 31,
	2019		2018			2017
	(In millions)
Net income (loss)	$	737	$	707		$	(512	)
Other comprehensive income (loss):
Unrealized investment income (loss)	16		(3		)	(5		)
Less: effect of income taxes	4		(1		)	(2		)
Other comprehensive income (loss), net of tax	12		(2		)	(3		)
Comprehensive income (loss)	$	749	$	705		$	(515	)

Condensed statements of cash flows

Condensed Statements of Cash Flows



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Operating activities:
Net cash provided by operating activities	$	64		$	118		$	166
Investing activities:
Capital contributions to subsidiaries	(43		)	(145		)	(370		)
Dividends received from subsidiaries	1,373			298			286
Purchases of investments	(152		)	(136		)	(331		)
Proceeds from sales and maturities of investments	93			388			156
Purchases of property, equipment and capitalized software	(56		)	(22		)	(67		)
Net cash received from sale of subsidiaries	—			242			—
Change in amounts due to/from affiliates	38			6			(49		)
Other, net	1			—			—
Net cash provided by (used in) investing activities	1,254			631			(375		)
Financing activities:
Repayment of principal amount of convertible notes	(240		)	(362		)	—
Cash paid for partial settlement of conversion option	(578		)	(623		)	—
Cash received for partial settlement of call option	578			623			—
Cash paid for partial termination of warrants	(514		)	(549		)	—
Proceeds from borrowings under term loan facility	220			—			—
Common stock purchases	(47		)	—			—
Repayment of credit facility	—			(300		)	—
Proceeds from senior notes offerings, net of issuance costs	—			—			325
Proceeds from borrowings under credit facility	—			—			300
Other, net	29			19			11
Net cash (used in) provided by financing activities	(552		)	(1,192		)	636
Net (decrease) increase in cash and cash equivalents	766			(443		)	427
Cash and cash equivalents at beginning of period	70			513			86
Cash and cash equivalents at end of period	$	836		$	70		$	513

Leases - Components of Lease Expense (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Leases [Abstract]
Operating lease expense	$ 34
Finance lease expense:
Amortization of ROU assets	17
Interest on lease liabilities	15
Total finance lease expense	$ 32

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Dec. 31, 2019
Postemployment Benefits [Abstract]
Employee Benefit Plans	Employee Benefit Plans We sponsor defined contribution 401(k) plans that cover substantially all employees of our company and its subsidiaries. Eligible employees are permitted to contribute up to the maximum amount allowed by law. We generally match up to the first 4% of compensation contributed by employees. Expense recognized in connection with our contributions to the 401(k) plans amounted to $28 million, $36 million, and $43 million in the years ended December 31, 2019, 2018, and 2017, respectively. We also have a non-qualified deferred compensation plan for certain key employees. Under this plan, eligible participants may defer up to 100% of their base salary and 100% of their bonus to provide tax-deferred growth. The funds deferred are invested in corporate-owned life insurance, under a rabbi trust.

Significant Accounting Policies - Due to Government Agencies (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Medicaid program:
Medical cost floors and corridors	$ 74	$ 103
Other amounts due to states	84	81
Marketplace program:
Risk adjustment	368	466
Cost sharing reduction	0	183
Other	138	134
Total	$ 664	$ 967

Fair Value Measurements - Long-Term Debt (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 1,255	$ 1,260
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 1,347	1,707
5.375% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	5.375%
4.875% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	4.875%
1.125% Convertible Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	1.125%
Senior Notes \| 5.375% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	5.375%
Senior Notes \| 5.375% Notes \| Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 696	694
Senior Notes \| 5.375% Notes \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 745	674
Senior Notes \| 4.875% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	4.875%
Senior Notes \| 4.875% Notes \| Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 327	326
Senior Notes \| 4.875% Notes \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 340	301
Senior Notes \| 1.125% Convertible Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	1.125%
Term Loan Facility \| Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 220	0
Term Loan Facility \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 220	0
1.125% Convertible Notes \| 4.875% Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	4.875%
1.125% Convertible Notes \| 1.125% Convertible Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate	1.125%
1.125% Convertible Notes \| 1.125% Convertible Notes \| Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 12	240
1.125% Convertible Notes \| 1.125% Convertible Notes \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair values of long-term debt	$ 42	732
1.125% Conversion Option
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Percentage of contractual interest rate on derivative	1.125%
1.125% Conversion Option
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
1.125% Conversion Option derivative liability	$ 29	$ 476
Percentage of contractual interest rate on derivative	1.125%

Stockholders' Equity - Fair Value of Awards Granted and Vested (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted shares granted	$ 53	$ 44	$ 36
Fair value of restricted shares vested	21	18	47
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted shares granted	33	28	20
Fair value of restricted shares vested	19	15	23
PSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted shares vested	0	3	15
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted shares granted	20	16	16
Fair value of restricted shares vested	$ 2	$ 0	$ 9

Investments - Schedule of Investments (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 1,941	$ 1,692
Gross Unrealized Gains	7	0
Gross Unrealized Losses	2	11
Estimated Fair Value	1,946	1,681
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,174	1,131
Gross Unrealized Gains	5	0
Gross Unrealized Losses	1	8
Estimated Fair Value	1,178	1,123
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	420
Gross Unrealized Gains	1
Gross Unrealized Losses	1
Estimated Fair Value	420
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	126	83
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	1
Estimated Fair Value	127	82
U.S. Treasury notes
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	86	181
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	86	181
Municipal securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	78	115
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	1
Estimated Fair Value	78	114
GSEs
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	49	164
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	1
Estimated Fair Value	49	163
Foreign securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	7	4
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	7	4
Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1	14
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 1	$ 14

Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 2,452	$ 2,826	$ 3,186
Restricted cash and cash equivalents, non-current	56	100	95
Restricted cash and cash equivalents, current	0	0	9
Total cash, cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows	$ 2,508	$ 2,926	$ 3,290	$ 2,912

Property, Equipment, and Capitalized Software, Net - Additional Information (Details)	12 Months Ended
	Dec. 31, 2019
Furniture and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	3 years
Furniture and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	7 years
Software
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	3 years
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	5 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	10 years
Building and improvements \| Minimum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	31 years 6 months
Building and improvements \| Maximum
Property, Plant and Equipment [Line Items]
Useful life of property plant and equipment	40 years

Goodwill and Intangible Assets, Net - Intangible Assets Balances (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Cost	$ 199	$ 221
Accumulated Amortization	170	174
Carrying Amount	29	47
Contract rights and licenses
Finite-Lived Intangible Assets [Line Items]
Cost	179	201
Accumulated Amortization	156	162
Carrying Amount	23	39
Provider networks
Finite-Lived Intangible Assets [Line Items]
Cost	20	20
Accumulated Amortization	14	12
Carrying Amount	$ 6	$ 8

Segments - Reconciliation of Gross Margin to Consolidated Income (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total margin	$ 578	$ 561	$ 583	$ 581	$ 664	$ 566	$ 673	$ 615	$ 2,303	$ 2,518	$ 1,810
Add: Other operating revenues	$ 4,274	$ 4,243	$ 4,193	$ 4,119	4,664	4,697	4,883	4,646	16,829	18,890	19,883
Less: Other operating expenses									(15,785)	(17,744)	(20,438)
Less: loss on sales of subsidiaries, net of gain					$ (52)	$ 37	$ 0	$ 0	0	(15)	0
Operating income (loss)									1,044	1,131	(555)
Less: other expenses, net									72	132	57
Income (loss) before income tax expense (benefit)									972	999	(612)
Health Plans
Segment Reporting Information [Line Items]
Add: Other operating revenues									16,815	18,471	19,352
Other
Segment Reporting Information [Line Items]
Total margin									0	43	29
Add: Other operating revenues									14	419	531
Operating Segments
Segment Reporting Information [Line Items]
Total margin									2,303	2,518	1,810
Operating Segments \| Health Plans
Segment Reporting Information [Line Items]
Total margin									2,303	2,475	1,781
Operating Segments \| Other
Segment Reporting Information [Line Items]
Total margin									0	43	29
Other Operating
Segment Reporting Information [Line Items]
Add: Other operating revenues									621	871	508
Less: Other operating expenses									(1,880)	(2,243)	(2,873)
Less: loss on sales of subsidiaries, net of gain									$ 0	$ (15)	$ 0

Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Debt

Contractual maturities of debt, as of December 31, 2019, are illustrated in the following table. All amounts represent the principal amounts of the debt instruments outstanding.



	Total		2020		2021		2022		2023		2024		Thereafter

	(In millions)
5.375% Notes	$	700	$	—	$	—	$	700	$	—	$	—	$	—
4.875% Notes	330		—		—		—		—		—		330
Term Loan Facility	220		6		16		22		22		154		—
1.125% Convertible Notes	12		12		—		—		—		—		—
Total	$	1,262	$	18	$	16	$	722	$	22	$	154	$	330

All debt is held at the parent which is reported, for segment purposes, in the Other segment. The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets:



	December 31,
	2019			2018
	(In millions)
Current portion of long-term debt:
1.125% Convertible Notes, net of unamortized discount	$	12		$	241
Term Loan Facility	6			—
Lease financing obligations	—			1
Debt issuance costs	—			(1		)
Total, current portion	$	18		$	241
Non-current portion of long-term debt:
5.375% Notes	$	700		$	700
4.875% Notes	330			330
Term Loan Facility	214			—
Debt issuance costs	(7		)	(10		)
Total, non-current portion	$	1,237		$	1,020

Credit Agreement

We are party to a Credit Agreement, which provides for an unsecured delayed draw term loan facility (the “Term Loan Facility”), and an unsecured $500 million revolving credit facility (the “Credit Facility”). Borrowings under our Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee.

The Credit Agreement contains customary non-financial and financial covenants, including a net leverage ratio and an interest coverage ratio. As of December 31, 2019, we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. Effective as of the date of the Sixth Amendment to the Credit Agreement described below, there are no guarantors as parties to the Credit Agreement.

Term Loan Facility. In January 2019, we entered into a Sixth Amendment to the Credit Agreement that provided for a delayed draw Term Loan Facility in the aggregate principal amount of $600 million, under which we may request up to ten advances, each in a minimum principal amount of $50 million, until July 31, 2020. The Term Loan Facility will amortize in quarterly installments, commencing on September 30, 2020, equal to the principal amount of the Term Loan Facility outstanding multiplied by rates ranging from 1.25% to 2.50% (depending on the applicable fiscal quarter) for each fiscal quarter. The Term Loan Facility expires on January 31, 2024; any remaining outstanding balance under the Term Loan Facility will be due and payable on that date. As of December 31, 2019, $220 million was outstanding under the Term Loan Facility. Each advance under the Term Loan Facility results in a permanent reduction to its borrowing capacity; therefore, our borrowing capacity under the Term Loan Facility as of December 31, 2019, was $380 million.

Credit Facility. The Credit Facility expires on January 31, 2022; therefore, any amounts outstanding under the Credit Facility will be due and payable on that date. As of December 31, 2019, no amounts were outstanding under the Credit Facility, and outstanding letters of credit amounting to $1 million reduced our remaining borrowing capacity under the Credit Facility to $499 million.

5.375% Notes due 2022

We have $700 million aggregate principal amount of senior notes (the “5.375% Notes”) outstanding as of December 31, 2019, which are due November 15, 2022, unless earlier redeemed. Interest at a rate of 5.375% per annum, is payable semiannually in arrears on May 15 and November 15. The 5.375% Notes contain customary non-financial covenants and change of control provisions.

4.875% Notes due 2025

We had $330 million aggregate principal amount of senior notes (the “4.875% Notes”) outstanding as of December 31, 2019, which are due June 15, 2025, unless earlier redeemed. Interest at a rate of 4.875% per annum, is payable semiannually in arrears on June 15 and December 15. The 4.875% Notes contain customary non-financial covenants and change of control provisions.

1.125% Cash Convertible Senior Notes due 2020

In the years ended December 31, 2019 and 2018, we entered into privately negotiated note purchase agreements and, in 2019, received conversion requests, with certain holders of our outstanding 1.125% cash convertible senior notes due January 15, 2020 (the “1.125% Convertible Notes”). For each transaction, the difference between the principal amount extinguished and the total cash paid primarily represented the settlement of the 1.125% Convertible Notes’ embedded cash conversion option feature at fair value (which is a derivative liability we refer to as the “1.125% Conversion Option”).

During 2019, we paid $794 million to settle $240 million aggregate principal amount, or $232 million aggregate carrying amount, of the 1.125% Convertible Notes. During 2018, we paid $911 million to settle $298 million aggregate principal amount, or $278 million aggregate carrying amount of the 1.125% Convertible Notes. In both years, the cash payments included settlement of the related 1.125% Conversion Option, and the mark-to-market valuation adjustments discussed below.

In the years ended December 31, 2019 and 2018, we recorded a (gain) loss on debt extinguishment of approximately $(15) million and $12 million, respectively, for the 1.125% Convertible Notes transactions (net of accelerated original issuance discount amortization), primarily relating to mark-to-market valuations on the partial terminations of the Call Spread Overlay executed in connection with the related debt repayments. These amounts are reported in “Other (income) expenses, net” in the accompanying consolidated statements of operations. No common shares were issued in connection with the transaction.

In connection with the 1.125% Convertible Notes transactions, we also entered into privately negotiated agreements in 2019, to partially terminate the Call Spread Overlay, defined and further discussed in Notes 12, “Derivatives,” and 14, “Stockholders' Equity.” The net cash proceeds from the Call Spread Overlay partial termination transactions partially offset the cash paid to settle the 1.125% Convertible Notes.

As of December 31, 2019, $12 million aggregate principal amount of the 1.125% Convertible Notes were outstanding. Interest at a rate of 1.125% per annum is payable semiannually in arrears on January 15 and July 15. The 1.125% Convertible Notes are convertible only into cash, and not into shares of our common stock or any other securities. The initial conversion rate is 24.5277 shares of our common stock per $1,000 principal amount, or approximately $40.77 per share of our common stock. Holders may convert their 1.125% Convertible Notes under certain circumstances and upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount, equal to the settlement amount, determined in the manner set forth in the indenture. We may not redeem the 1.125% Convertible Notes prior to the maturity date. The 1.125% Convertible Notes matured on January 15, 2020; therefore, they were reported in current portion of long-term debt as of December 31, 2019. (See “Subsequent Event,” below.)

Concurrent with the issuance of the 1.125% Convertible Notes, the 1.125% Conversion Option was separated from the 1.125% Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the 1.125% Conversion Option settled. This initial liability simultaneously reduced the carrying value of the 1.125% Convertible Notes’ principal amount (effectively an original issuance discount), which was amortized to the principal amount through the recognition of non-cash interest expense over the expected life of the debt. The effective interest rate of 6% approximates the interest rate we would have incurred had we issued nonconvertible debt with otherwise similar terms. As of December 31, 2019, the

1.125% Convertible Notes had a remaining amortization period of less than one month, and their ‘if-converted’ value exceeded their principal amount by approximately $26 million and $581 million as of December 31, 2019, and 2018, respectively.

Interest cost recognized relating to our convertible senior notes for the periods presented was as follows:



	Years Ended December 31,
	2019		2018		2017
	(In millions)
Contractual interest at coupon rate	$	1	$	6	$	11
Amortization of the discount	5		21		32
Total	$	6	$	27	$	43

Subsequent Event

In January 2020, we paid $39 million to settle the outstanding 1.125% Convertible Notes, which amount included settlement of the 1.125% Conversion Option.

Cross-Default Provisions

The indentures governing the 4.875% Notes and the 5.375% Notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture.

Debt - Senior Notes (Details)	Dec. 31, 2019 USD ($)
5.375% Senior Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes	5.375%
4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes	4.875%
Senior Notes \| 5.375% Senior Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes	5.375%
Aggregate principal amount of notes outstanding	$ 700,000,000
Senior Notes \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes	4.875%
Aggregate principal amount of notes outstanding	$ 330,000,000

Condensed Financial Information of Registrant - Condensed Statements of Operations (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Investment income and other revenue									$ 132	$ 125	$ 70
Total revenue	$ 4,274	$ 4,243	$ 4,193	$ 4,119	$ 4,664	$ 4,697	$ 4,883	$ 4,646	16,829	18,890	19,883
Expenses:
General and administrative expenses									1,296	1,333	1,594
Depreciation and amortization									89	99	137
Restructuring costs									6	46	234
Impairment losses									0	0	470
Total operating expenses									15,785	17,744	20,438
Gain (loss) on sales of subsidiaries					(52)	37	0	0	0	(15)	0
Operating income (loss)									1,044	1,131	(555)
Interest expense									87	115	118
Other (income) expense, net									(15)	17	(61)
Income tax expense (benefit)									235	292	(100)
Net income (loss)	$ 168	$ 175	$ 196	$ 198	$ 201	$ 197	$ 202	$ 107	737	707	(512)
Parent Company
Revenue:
Administrative services fees									1,038	1,138	1,317
Investment income and other revenue									18	17	16
Total revenue									1,056	1,155	1,333
Expenses:
General and administrative expenses									937	1,007	1,082
Depreciation and amortization									63	69	93
Other operating expenses									0	8	16
Restructuring costs									4	35	153
Impairment losses									0	0	39
Total operating expenses									1,004	1,119	1,383
Gain (loss) on sales of subsidiaries									0	37	0
Operating income (loss)									52	73	(50)
Interest expense									87	114	117
Other (income) expense, net									(15)	17	(61)
Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries									(20)	(58)	(106)
Income tax expense (benefit)									9	(14)	8
Net loss before equity in net earnings (losses) of subsidiaries									(29)	(44)	(114)
Equity in net earnings (losses) of subsidiaries									766	751	(398)
Net income (loss)									$ 737	$ 707	$ (512)

Label	Element	Value
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 7,000,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	85,000,000
AOCI Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (1,000,000)

Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2019	Jan. 01, 2018
Property, Plant and Equipment [Line Items]
Final maturities of investments	10 years
Average maturity of investments	10 years
Medical premium liability based on medical costs threshold	$ 74	$ 103
Amounts due government agencies	664	967
Risk adjustment payable	368	466
Risk adjustment receivable	63	34
Risk adjustment, net payable	305	432
Prepaid reinsurance premiums	17	16	$ 20
Reinsurance recoveries	18	33	24
Reinsurance recoverable for unpaid claims adjustments	21	31	$ 16
Adoption of new accounting standard				$ 85	$ 6
Receivables from state and federal government agencies	1,406	1,330
Retained Earnings
Property, Plant and Equipment [Line Items]
Adoption of new accounting standard				85
Retained Earnings, Including Deferred Income Tax
Property, Plant and Equipment [Line Items]
Adoption of new accounting standard				110
Deferred Income Tax
Property, Plant and Equipment [Line Items]
Adoption of new accounting standard				$ 25
CMS Subsidies
Property, Plant and Equipment [Line Items]
Disposal group, operating expense		81
Medicaid Expansion
Property, Plant and Equipment [Line Items]
Amounts due government agencies	$ 69	87
Minimum
Property, Plant and Equipment [Line Items]
Useful life	5 years
Minimum \| California, Illinois, New Mexico, Ohio, South Carolina, Texas, Washington, and Wisconsin
Property, Plant and Equipment [Line Items]
Percentage of additional incremental revenue earned	1.00%
Maximum
Property, Plant and Equipment [Line Items]
Useful life	15 years
Maximum \| California, Illinois, New Mexico, Ohio, South Carolina, Texas, Washington, and Wisconsin
Property, Plant and Equipment [Line Items]
Percentage of additional incremental revenue earned	4.00%
Structured Securities
Property, Plant and Equipment [Line Items]
Average maturity of investments	10 years
Government receivables
Property, Plant and Equipment [Line Items]
Concentration risk, percentage	75.00%
Receivables from state and federal government agencies	$ 1,056	$ 872

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current:
Federal	$ 204	$ 272	$ (9)
State	12	18	3
Foreign	9	8	0
Total current	225	298	(6)
Deferred:
Federal	5	(3)	(85)
State	6	(3)	(9)
Foreign	(1)	0	0
Total deferred	10	(6)	(94)
Income tax expense (benefit)	$ 235	$ 292	$ (100)

Stockholders' Equity - Restricted and Performance Stock Activity (Details)	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested, shares beginning of period (in shares)	604,310
Granted (in shares)	389,778
Vested (in shares)	(153,488)
Forfeited (in shares)	(68,842)
Unvested, shares end of period (in shares)	771,758
Weighted Average Grant Date Fair Value
Unvested, beginning balance (USD per share) \| $ / shares	$ 71.50
Granted (USD per share) \| $ / shares	136.23
Vested (USD per share) \| $ / shares	73.98
Forfeited (USD per share) \| $ / shares	90.45
Unvested, ending balance (USD per share) \| $ / shares	$ 102.01
RSAs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested, shares beginning of period (in shares)	399,795
Granted (in shares)	243,353
Vested (in shares)	(139,828)
Forfeited (in shares)	(55,640)
Unvested, shares end of period (in shares)	447,680
PSAs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested, shares beginning of period (in shares)	3,132
Granted (in shares)	0
Vested (in shares)	(3,132)
Forfeited (in shares)	0
Unvested, shares end of period (in shares)	0
PSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested, shares beginning of period (in shares)	201,383
Granted (in shares)	146,425
Vested (in shares)	(10,528)
Forfeited (in shares)	(13,202)
Unvested, shares end of period (in shares)	324,078

Receivables

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Receivables

Receivables consist primarily of amounts due from government agencies, which may be subject to potential retroactive adjustments. Because substantially all of our receivable amounts are readily determinable and substantially all of our creditors are governmental authorities, our allowance for doubtful accounts is insignificant. Any amounts determined to be uncollectible are charged to expense when such determination is made.



	December 31,
	2019		2018
	(In millions)
Government receivables	$	1,056	$	872
Pharmacy rebate receivables	150		146
Health insurer fee reimbursement receivables	5		141
Other	195		171
Total	$	1,406	$	1,330

Income Taxes - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Change in tax rate, deferred tax asset, income tax expense (benefit)			$ 54
Measurement period adjustment, income tax expense (benefit)		$ (4)
Deferred tax assets	$ 24
Decrease in deferred tax asset valuation allowance	4
Valuation allowance	24	28
Impact on effective tax rate if tax benefits are recognized	18	$ 18	$ 12
Liability for unrecognized tax benefits, potential decrease	5
State
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	310
Tax credit carryovers	8
Foreign
Operating Loss Carryforwards [Line Items]
Tax credit carryovers	$ 5

Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Lease financing obligations	$ 0	$ 1
Debt issuance costs	0	(1)
Total, current portion	18	241
Debt issuance costs	(7)	(10)
Total, non-current portion	$ 1,237	1,020
1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
5.375% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	5.375%
4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
Convertible Debt \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
Current portion of long-term debt	$ 12	241
Convertible Debt \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
Senior Notes \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
Senior Notes \| 5.375% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	5.375%
Non-current portion of long-term debt	$ 700	700
Senior Notes \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
Non-current portion of long-term debt	$ 330	330
Term Loan Facility \| Term Loan Facility
Debt Instrument [Line Items]
Current portion of long-term debt	6	0
Non-current portion of long-term debt	$ 214	$ 0

Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stockholders' Equity

Stock Purchase Program

In early December 2019, our board of directors authorized the purchase of up to $500 million, in the aggregate, of our common stock. This program is funded by existing cash on hand and extends through December 31, 2021. The exact timing and amount of any repurchase is determined by management, based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. Under this program, pursuant to a Rule 10b5-1 trading plan, we purchased approximately 400,000 shares of our common stock for $54 million in December 2019 (average cost of $135.30 per share), including approximately 55,000 shares purchased for $7 million in late December 2019, and settled in early January 2020.

Subsequent Event

In January 2020 through February 7, 2020, we purchased 1,533,000 shares for $203 million (average cost of $132.69 per share).

1.125% Warrants

In connection with the Call Spread Overlay transaction described in Note 12, “Derivatives,” in 2013, we issued 13.5 million of the 1.125% Warrants with a strike price of $53.8475 per share. Under certain circumstances, beginning in April 2020, if the price of our common stock were to exceed the strike price of the 1.125% Warrants, we would be obligated to issue shares of our common stock subject to a share delivery cap. The 1.125% Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the 1.125% Warrants. Refer to Note 3, “Net Income (Loss) Per Share,” for dilution

information for the periods presented. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Following the transactions described below, approximately 310,000 of the 1.125% Warrants were outstanding at December 31, 2019.

As described in Note 12, “Derivatives,” in the year ended December 31, 2019, we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the year ended December 31, 2019, we paid $514 million to the Counterparties for the termination of 5.9 million of the 1.125% Warrants outstanding which resulted in a reduction of additional paid-in-capital for the same amount.

Share-Based Compensation

Total share-based compensation expense is presented in the following table. Except as described in the note to the table, we record share-based compensation as “General and administrative expenses” in the accompanying consolidated statements of operations.



	Year Ended December 31,
	2019				2018				2017
	(In millions)
	Pretax Charges		Net-of-Tax Amount		Pretax Charges		Net-of-Tax Amount		Pretax Charges ⁽¹⁾		Net-of-Tax Amount
RSAs, PSAs and PSUs (defined below)	$	29	$	28	$	17	$	17	$	39	$	35
Employee stock purchase plan and stock options	10		9		10		9		7		5
Total	$	39	$	37	$	27	$	26	$	46	$	40

_______________________


(1)	Includes $23 million relating to acceleration of share-based compensation for former executives in the year ended December 31, 2017. This amount is reported in “Restructuring costs” in the accompanying consolidated statements of operations.

Equity Incentive Plans

In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Equity Incentive Plan (the “2019 EIP”). The 2019 EIP provides for awards, in the form of restricted and performance stock awards (“RSAs” and “PSAs”), performance units (“PSUs”), stock options, and other stock– or cash–based awards, to eligible persons who perform services for us. The 2019 EIP will remain in effect until its termination by the board of directors; provided, however, that all awards will be granted no later than May 8, 2029. Concurrent with the adoption of the 2019 EIP, the Molina Healthcare, Inc. 2011 Equity Incentive Plan was amended, restated and merged into the 2019 EIP. A maximum of 2.9 million shares of our common stock may be issued under the 2019 EIP.

Stock-based awards. RSAs, PSAs and PSUs are granted with a fair value equal to the market price of our common stock on the date of grant, and generally vest in equal annual installments over periods up to four years from the date of grant. Certain PSUs may vest in their entirety at the end of three-year performance periods, if their performance conditions are met. We generally recognize expense for RSAs, PSAs and PSUs on a straight-line basis. Activity for stock-based awards in the year ended December 31, 2019 is summarized below:



	RSAs		PSAs		PSUs		Total Shares		Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2018	399,795		3,132		201,383		604,310		$	71.50
Granted	243,353		—		146,425		389,778		136.23
Vested	(139,828	)	(3,132	)	(10,528	)	(153,488	)	73.98
Forfeited	(55,640	)	—		(13,202	)	(68,842	)	90.45
Unvested balance as of December 31, 2019	447,680		—		324,078		771,758		$	102.01

As of December 31, 2019, total unrecognized compensation expense related to unvested RSAs and PSUs was $49 million, which we expect to recognize over a remaining weighted-average period of 2.2 years, and 1.6 years, respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 15.9% for non-executive employees as of December 31, 2019, based on actual forfeitures over the last 4 years.

The total grant date fair value of awards granted and vested is presented in the following table:



	Year Ended December 31,
	2019		2018		2017
	(In millions)
Granted:
RSAs	$	33	$	28	$	20
PSUs	20		16		16
Total granted	$	53	$	44	$	36
Vested:
RSAs	$	19	$	15	$	23
PSAs	—		3		15
PSUs	2		—		9
Total vested	$	21	$	18	$	47

Stock Options. Stock option awards generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest in equal annual installments over periods up to four years from the date of grant, and have a maximum term of ten years from the date of grant. Stock option activity for the year ended December 31, 2019 is summarized below:



	Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual term
				(In millions)		(Years)
Stock options outstanding as of December 31, 2018	405,000	$	64.79
Granted	—	—
Exercised	—	—
Stock options outstanding as of December 31, 2019	405,000	64.79		$	29	7.4
Stock options exercisable and expected to vest as of December 31, 2019	405,000	64.79		$	29	7.4
Exercisable as of December 31, 2019	280,000	63.65		$	20	7.3

The weighted-average grant date fair value per share of stock options awarded in 2017 was $41.43. We estimate the fair value of each stock option award on the grant date using the Black-Scholes option pricing model. To determine the fair value of the stock options awarded in 2017 we applied a risk-free interest rate of 2.3%, expected volatility of 38.4%, dividend yield of 0% and expected life of 8.4 years. No stock options were granted in 2019 and 2018.

As of December 31, 2019, total unrecognized compensation expense related to unvested stock options was $4 million, which we expect to recognize over a weighted-average period of 0.8 years. The total intrinsic value of options exercised during the year ended December 31, 2017 was $2 million. No stock options were exercised in 2019 and 2018. The following is a summary of information about stock options outstanding and exercisable at December 31, 2019:



	Options Outstanding				Options Exercisable
	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
Range of Exercise Prices
$33.02	30,000	3.2	$	33.02	30,000	$	33.02
$67.33	375,000	7.8	67.33		250,000	67.33
Total	405,000				280,000

Employee Stock Purchase Plans (“ESPPs”)

In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan (the “2019 ESPP”), which superseded the Molina Healthcare, Inc. 2011 Employee Stock Purchase Plan (the “2011 ESPP”). A maximum of 3.0 million shares of our common stock may be issued under the 2019 ESPP, the terms of which are substantially similar to the 2011 ESPP. The 2019 ESPP will continue until the earliest of: termination of the 2019 ESPP by the board of directors (which may occur at any time); issuance of all of the shares reserved for issuance under the 2019 ESPP; or May 8, 2029.

Under our ESPPs, eligible employees may purchase common shares at 85% of the lower of the fair market value of our common stock on either the first or last trading day of each six-month offering period. Each participant is limited to a maximum purchase of $25,000 (as measured by the fair value of the stock acquired) per year through payroll deductions. We estimate the fair value of the stock issued using the Black-Scholes option pricing model. For the years ended December 31, 2019, 2018, and 2017, the inputs to this model were as follows: risk-free interest rates of approximately 0.6% to 2.3%; expected volatilities ranging from approximately 31% to 45%, dividend yields of 0%, and an average expected life of 0.5 years. We issued approximately 142,000, 216,000 and 351,000 shares of our common stock under the ESPPs during the years ended December 31, 2019, 2018, and 2017, respectively.

In connection with our employee stock plans, approximately 242,000 shares and 365,000 shares of common stock were purchased or vested, net of shares used to settle employees’ income tax obligations, during the years ended December 31, 2019, and 2018, respectively.

Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Unrecognized tax benefits roll forward
Gross unrecognized tax benefits at beginning of period	$ (20)	$ (13)	$ (11)
Increases in tax positions for current year		(9)	(1)
Increases in tax positions for prior years	0	0	(4)
Decreases in tax positions for prior years	0	0	3
Lapse in statute of limitations		2	0
Gross unrecognized tax benefits at end of period	$ (20)	$ (20)	$ (13)

Property, Equipment, and Capitalized Software, Net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Equipment, and Capitalized Software, Net

Property and equipment are stated at historical cost. Replacements and major improvements are capitalized, and repairs and maintenance are charged to expense as incurred. Furniture and equipment are generally depreciated using the straight-line method over estimated useful lives ranging from three to seven years. Software developed for internal use is capitalized. Software is generally amortized over its estimated useful life of three years. Leasehold improvements are amortized over the term of the lease, or over their useful lives from five to 10 years, whichever is shorter. Buildings are depreciated over their estimated useful lives of 31.5 to 40 years.

A summary of property, equipment, and capitalized software is as follows:



	December 31,
	2019			2018
	(In millions)
Capitalized software	$	421		$	373
Furniture and equipment	213			231
Building and improvements	49			154
Land	4			16
Total cost	687			774
Less: accumulated amortization - capitalized software	(351		)	(320		)
Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements	(179		)	(213		)
Total accumulated depreciation and amortization	(530		)	(533		)
ROU assets - finance leases	228			—
Property, equipment, and capitalized software, net	$	385		$	241

The following table presents all depreciation and amortization recognized in our consolidated statements of operations:



	Year Ended December 31,
	2019		2018		2017
	(In millions)
Recorded in depreciation and amortization:
Amortization of capitalized software	$	33	$	42	$	64
Depreciation and amortization of furniture, equipment, building, and improvements	21		36		42
Amortization of intangible assets	18		21		31
Amortization of finance leases	17		—		—
Subtotal	89		99		137
Recorded in cost of service revenue:
Amortization of capitalized software and deferred contract costs	—		28		41
Total depreciation and amortization recognized	$	89	$	127	$	178

Medical Claims and Benefits Payable - Incurred Claims and Allocated Adjustment Expense (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) claim	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Product Information [Line Items]
Incurred Claims and Allocated Claims Adjustment Expenses	$ 13,905	$ 15,137	$ 17,073
Incurred Claims and Allocated Claims Adjustment Expenses	46,125
Total IBNP	1,391
Benefit Year 2017
Product Information [Line Items]
Incurred Claims and Allocated Claims Adjustment Expenses	16,704	16,728	$ 17,037
Total IBNP	$ 18
Cumulative number of reported claims (in claim) \| claim	119,000,000
Benefit Year 2018
Product Information [Line Items]
Incurred Claims and Allocated Claims Adjustment Expenses	$ 15,245	$ 15,478
Total IBNP	$ 25
Cumulative number of reported claims (in claim) \| claim	110,000,000
Benefit Year 2019
Product Information [Line Items]
Incurred Claims and Allocated Claims Adjustment Expenses	$ 14,176
Total IBNP	$ 1,348
Cumulative number of reported claims (in claim) \| claim	93,000,000

Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating activities:
Net cash provided by operating activities	$ 427	$ (314)	$ 804
Investing activities:
Purchases of investments	(2,536)	(1,444)	(2,697)
Proceeds from sales and maturities of investments	2,302	2,445	1,759
Purchases of property, equipment and capitalized software	(57)	(30)	(86)
Net cash received from sale of subsidiaries	0	190	0
Other, net	(2)	(18)	(38)
Net cash provided by (used in) investing activities	(293)	1,143	(1,062)
Financing activities:
Repayment of principal amount of convertible notes	(240)	(362)	0
Cash paid for partial settlement of conversion option	(578)	(623)	0
Cash received for partial settlement of call option	578	623	0
Cash paid for partial termination of warrants	(514)	(549)	0
Proceeds from borrowings under term loan facility	220	0	0
Common stock purchases	(47)	0	0
Repayment of credit facility	0	(300)	0
Proceeds from senior notes offerings, net of issuance costs	0	0	325
Other, net	29	18	11
Net cash (used in) provided by financing activities	(552)	(1,193)	636
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents	(418)	(364)	378
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period	2,926	3,290	2,912
Cash and cash equivalents at end of period	2,508	2,926	3,290
Parent Company
Operating activities:
Net cash provided by operating activities	64	118	166
Investing activities:
Capital contributions to subsidiaries	(43)	(145)	(370)
Dividends received from subsidiaries	1,373	298	286
Purchases of investments	(152)	(136)	(331)
Proceeds from sales and maturities of investments	93	388	156
Purchases of property, equipment and capitalized software	(56)	(22)	(67)
Net cash received from sale of subsidiaries	0	242	0
Change in amounts due to/from affiliates	38	6	(49)
Other, net	1	0	0
Net cash provided by (used in) investing activities	1,254	631	(375)
Financing activities:
Repayment of principal amount of convertible notes	(240)	(362)	0
Cash paid for partial settlement of conversion option	(578)	(623)	0
Cash received for partial settlement of call option	578	623	0
Cash paid for partial termination of warrants	(514)	(549)	0
Proceeds from borrowings under term loan facility	220	0	0
Common stock purchases	(47)	0	0
Repayment of credit facility	0	(300)	0
Proceeds from senior notes offerings, net of issuance costs	0	0	325
Proceeds from borrowings under credit facility	0	0	300
Other, net	29	19	11
Net cash (used in) provided by financing activities	(552)	(1,192)	636
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents	766	(443)	427
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period	70	513	86
Cash and cash equivalents at end of period	$ 836	$ 70	$ 513

Fair Value Measurements - Financial Instruments on a Recurring Basis (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	$ 1,946	$ 1,681
Total assets	1,975	2,157
Total liabilities	29	476
Corporate debt securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	1,178	1,123
Mortgage-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	420
Asset-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	127	82
U.S. Treasury notes
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	86	181
Municipal securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	78	114
Government-sponsored enterprise securities (“GSEs”)
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	49	163
Foreign securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	7	4
Certificates of deposit
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	1	14
1.125% Call Option derivative asset
Fair value of assets measured on recurring basis
1.125% Call Option derivative asset	$ 29	476
Percentage of contractual interest rate on derivative	1.125%
Conversion Option
Fair value of assets measured on recurring basis
1.125% Conversion Option derivative liability	$ 29	476
Percentage of contractual interest rate on derivative	1.125%
Level 1
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	$ 0	0
Total assets	0	0
Total liabilities	0	0
Level 1 \| Corporate debt securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| Mortgage-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0
Level 1 \| Asset-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| U.S. Treasury notes
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| Municipal securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| Government-sponsored enterprise securities (“GSEs”)
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| Foreign securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| Certificates of deposit
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 1 \| 1.125% Call Option derivative asset
Fair value of assets measured on recurring basis
1.125% Call Option derivative asset	0	0
Level 1 \| Conversion Option
Fair value of assets measured on recurring basis
1.125% Conversion Option derivative liability	0	0
Level 2
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	1,946	1,681
Total assets	1,946	1,681
Total liabilities	0	0
Level 2 \| Corporate debt securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	1,178	1,123
Level 2 \| Mortgage-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	420
Level 2 \| Asset-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	127	82
Level 2 \| U.S. Treasury notes
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	86	181
Level 2 \| Municipal securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	78	114
Level 2 \| Government-sponsored enterprise securities (“GSEs”)
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	49	163
Level 2 \| Foreign securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	7	4
Level 2 \| Certificates of deposit
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	1	14
Level 2 \| 1.125% Call Option derivative asset
Fair value of assets measured on recurring basis
1.125% Call Option derivative asset	0	0
Level 2 \| Conversion Option
Fair value of assets measured on recurring basis
1.125% Conversion Option derivative liability	0	0
Level 3
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Total assets	29	476
Total liabilities	29	476
Level 3 \| Corporate debt securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| Mortgage-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0
Level 3 \| Asset-backed securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| U.S. Treasury notes
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| Municipal securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| Government-sponsored enterprise securities (“GSEs”)
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| Foreign securities
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| Certificates of deposit
Fair value of assets measured on recurring basis
Debt securities, available-for-sale	0	0
Level 3 \| 1.125% Call Option derivative asset
Fair value of assets measured on recurring basis
1.125% Call Option derivative asset	29	476
Level 3 \| Conversion Option
Fair value of assets measured on recurring basis
1.125% Conversion Option derivative liability	$ 29	$ 476

Derivatives (Tables)

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair values of derivative financial instruments

The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets:



		December 31,
	Balance Sheet Location	2019		2018
		(In millions)
Derivative asset:
1.125% Call Option	Current assets: Derivative asset	$	29	$	476
Derivative liability:
1.125% Conversion Option	Current liabilities: Derivative liability	$	29	$	476

Segments - Schedule of Operating Segment Information (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total revenue	$ 4,274	$ 4,243	$ 4,193	$ 4,119	$ 4,664	$ 4,697	$ 4,883	$ 4,646	$ 16,829	$ 18,890	$ 19,883
Margin	578	$ 561	$ 583	$ 581	664	$ 566	$ 673	$ 615	2,303	2,518	1,810
Goodwill and intangible assets, net	172				190				172	190	255
Total assets	6,787				7,154				6,787	7,154	8,471
Health Plans
Segment Reporting Information [Line Items]
Total revenue									16,815	18,471	19,352
Goodwill and intangible assets, net	172				190				172	190	212
Total assets	5,265				6,165				5,265	6,165	6,347
Other
Segment Reporting Information [Line Items]
Total revenue									14	419	531
Margin									0	43	29
Goodwill and intangible assets, net	0				0				0	0	43
Total assets	$ 1,522				$ 989				$ 1,522	$ 989	$ 2,124

Property, Equipment, and Capitalized Software, Net (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Summary of property and equipment and depreciation and amortization recognized

A summary of property, equipment, and capitalized software is as follows:



	December 31,
	2019			2018
	(In millions)
Capitalized software	$	421		$	373
Furniture and equipment	213			231
Building and improvements	49			154
Land	4			16
Total cost	687			774
Less: accumulated amortization - capitalized software	(351		)	(320		)
Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements	(179		)	(213		)
Total accumulated depreciation and amortization	(530		)	(533		)
ROU assets - finance leases	228			—
Property, equipment, and capitalized software, net	$	385		$	241

The following table presents all depreciation and amortization recognized in our consolidated statements of operations:



	Year Ended December 31,
	2019		2018		2017
	(In millions)
Recorded in depreciation and amortization:
Amortization of capitalized software	$	33	$	42	$	64
Depreciation and amortization of furniture, equipment, building, and improvements	21		36		42
Amortization of intangible assets	18		21		31
Amortization of finance leases	17		—		—
Subtotal	89		99		137
Recorded in cost of service revenue:
Amortization of capitalized software and deferred contract costs	—		28		41
Total depreciation and amortization recognized	$	89	$	127	$	178

Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Total revenue	$ 4,274	$ 4,243	$ 4,193	$ 4,119	$ 4,664	$ 4,697	$ 4,883	$ 4,646	$ 16,829	$ 18,890	$ 19,883
Margin	578	561	583	581	664	566	673	615	2,303	2,518	1,810
Gain (loss) on sales of subsidiaries					(52)	37	0	0	0	(15)	0
Net income (loss)	$ 168	$ 175	$ 196	$ 198	$ 201	$ 197	$ 202	$ 107	$ 737	$ 707	$ (512)
Net income per share - Basic (in dollars per share)	$ 2.70	$ 2.81	$ 3.15	$ 3.19	$ 3.24	$ 3.22	$ 3.29	$ 1.79	$ 11.85	$ 11.57	$ (9.07)
Net income per share - Diluted (in dollars per share)	$ 2.67	$ 2.75	$ 3.06	$ 2.99	$ 3.01	$ 2.90	$ 3.02	$ 1.64	$ 11.47	$ 10.61	$ (9.07)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Debt - Convertible Notes (Details) $ / shares in Units, $ in Millions	1 Months Ended	12 Months Ended
	Jan. 31, 2020 USD ($)	Dec. 31, 2019 USD ($) $ / shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
(Gain) loss on debt extinguishment		$ (15)	$ 22	$ 14
Net carrying amount of debt		$ 1,262
1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes		1.125%
4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes		4.875%
5.375% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes		5.375%
Convertible Debt \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes		1.125%
Repayments of debt		$ 794	911
Repayments of principal		240	298
Repayment of aggregate carrying amount		232	278
(Gain) loss on debt extinguishment		15	(12)
Net carrying amount of debt		$ 12
Debt instrument, conversion ratio		0.0245277
Debt instrument conversion price per share (in dollars per share) \| $ / shares		$ 40.77
Senior note effective interest rate		6.00%
Senior notes amortization period		1 month
If-converted value in excess of principal on convertible debt		$ 26	$ 581
Convertible Debt \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes		4.875%
Convertible Debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Debt instrument, conversion ratio		0.0172157
Convertible Debt \| Subsequent Event \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate on notes	1.125%
Repayments of principal	$ 39

Segments - Narrative (Details)	12 Months Ended
Segments - Narrative (Details)	Dec. 31, 2019 segment
Segment Reporting [Abstract]
Number of reportable segments	2

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Postemployment Benefits [Abstract]
Maximum matching contribution by employer under defined contribution plan	4.00%
Expense recognized in connection with contributions	$ 28	$ 36	$ 43
Deferred compensation plan deferral percentage of basic salary	100.00%
Deferred compensation plan deferral percentage of bonus	100.00%

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stock based compensation expense



	Year Ended December 31,
	2019				2018				2017
	(In millions)
	Pretax Charges		Net-of-Tax Amount		Pretax Charges		Net-of-Tax Amount		Pretax Charges ⁽¹⁾		Net-of-Tax Amount
RSAs, PSAs and PSUs (defined below)	$	29	$	28	$	17	$	17	$	39	$	35
Employee stock purchase plan and stock options	10		9		10		9		7		5
Total	$	39	$	37	$	27	$	26	$	46	$	40

_______________________

(1)

Includes $23 million relating to acceleration of share-based compensation for former executives in the year ended December 31, 2017. This amount is reported in “Restructuring costs” in the accompanying consolidated statements of operations.

Restricted and performance stock activity

Activity for stock-based awards in the year ended December 31, 2019 is summarized below:



	RSAs		PSAs		PSUs		Total Shares		Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2018	399,795		3,132		201,383		604,310		$	71.50
Granted	243,353		—		146,425		389,778		136.23
Vested	(139,828	)	(3,132	)	(10,528	)	(153,488	)	73.98
Forfeited	(55,640	)	—		(13,202	)	(68,842	)	90.45
Unvested balance as of December 31, 2019	447,680		—		324,078		771,758		$	102.01

Stock options, activity

The total grant date fair value of awards granted and vested is presented in the following table:



	Year Ended December 31,
	2019		2018		2017
	(In millions)
Granted:
RSAs	$	33	$	28	$	20
PSUs	20		16		16
Total granted	$	53	$	44	$	36
Vested:
RSAs	$	19	$	15	$	23
PSAs	—		3		15
PSUs	2		—		9
Total vested	$	21	$	18	$	47



	Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual term
				(In millions)		(Years)
Stock options outstanding as of December 31, 2018	405,000	$	64.79
Granted	—	—
Exercised	—	—
Stock options outstanding as of December 31, 2019	405,000	64.79		$	29	7.4
Stock options exercisable and expected to vest as of December 31, 2019	405,000	64.79		$	29	7.4
Exercisable as of December 31, 2019	280,000	63.65		$	20	7.3

Stock option plans, by exercise price range

The following is a summary of information about stock options outstanding and exercisable at December 31, 2019:



	Options Outstanding				Options Exercisable
	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
Range of Exercise Prices
$33.02	30,000	3.2	$	33.02	30,000	$	33.02
$67.33	375,000	7.8	67.33		250,000	67.33
Total	405,000				280,000

Cover Page - USD ($) shares in Thousands, $ in Millions	12 Months Ended
Cover Page - USD ($) shares in Thousands, $ in Millions	Dec. 31, 2019	Feb. 07, 2020	Jun. 30, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	1-31719
Entity Registrant Name	MOLINA HEALTHCARE, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-4204626
Entity Address, Address Line One	200 Oceangate
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Long Beach
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90802
City Area Code	562
Local Phone Number	435-3666
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	MOH
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 8,928.7
Entity Common Stock, Shares Outstanding		60,800
Documents Incorporated by Reference	Portions of the registrant’s Proxy Statement for the 2020 Annual Meeting of Stockholders to be held on May 7, 2020, are incorporated by reference into Part III of this Form 10-K, to the extent described therein.
Entity Central Index Key	0001179929
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair value of assets measured on recurring basis

Our financial instruments measured at fair value on a recurring basis at December 31, 2019, were as follows:



	Total		Level 1		Level 2		Level 3
	(In millions)
Corporate debt securities	$	1,178	$	—	$	1,178	$	—
Mortgage-backed securities	420		—		420		—
Asset-backed securities	127		—		127		—
U.S. Treasury notes	86		—		86		—
Municipal securities	78		—		78		—
Government-sponsored enterprise securities (“GSEs”)	49		—		49		—
Foreign securities	7		—		7		—
Certificates of deposit	1		—		1		—
Subtotal	1,946		—		1,946		—
1.125% Call Option derivative asset	29		—		—		29
Total assets	$	1,975	$	—	$	1,946	$	29

1.125% Conversion Option derivative liability	$	29	$	—	$	—	$	29
Total liabilities	$	29	$	—	$	—	$	29

Our financial instruments measured at fair value on a recurring basis at December 31, 2018, were as follows:



	Total		Level 1		Level 2		Level 3
	(In millions)
Corporate debt securities	$	1,123	$	—	$	1,123	$	—
Asset-backed securities	82		—		82		—
U.S. Treasury notes	181		—		181		—
Municipal securities	114		—		114		—
GSEs	163		—		163		—
Foreign securities	4		—		4		—
Certificates of deposit	14		—		14		—
Subtotal	1,681		—		1,681		—
1.125% Call Option derivative asset	476		—		—		476
Total assets	$	2,157	$	—	$	1,681	$	476

1.125% Conversion Option derivative liability	$	476	$	—	$	—	$	476
Total liabilities	$	476	$	—	$	—	$	476

Fair value measurements of senior notes

As of December 31, 2019, the carrying amount of the Term Loan Facility approximated fair value because its interest rate is a variable rate that approximates rates currently available to us.



	December 31, 2019				December 31, 2018
	Carrying		Fair Value		Carrying		Fair Value
	Amount		Fair Value		Amount		Fair Value
	(In millions)
5.375% Notes	$	696	$	745	$	694	$	674
4.875% Notes	327		340		326		301
Term Loan Facility	220		220		—		—
1.125% Convertible Notes ⁽¹⁾	12		42		240		732
Total	$	1,255	$	1,347	$	1,260	$	1,707

_______________________________

(1)

The fair value of the 1.125% Conversion Option (the embedded cash conversion option), which is reflected in the fair value amounts presented above, amounted to $29 million and $476 million as of December 31, 2019 and 2018, respectively. For more information, including information on debt repayments in 2019 and 2020, see Note 11, “Debt,” and Note 12, “Derivatives.”

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income tax expense (benefit) consisted of the following:



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Current:
Federal	$	204		$	272		$	(9	)
State	12			18			3
Foreign	9			8			—
Total current	225			298			(6		)
Deferred:
Federal	5			(3		)	(85		)
State	6			(3		)	(9		)
Foreign	(1		)	—			—
Total deferred	10			(6		)	(94		)
Income tax expense (benefit)	$	235		$	292		$	(100	)

The Tax Cuts and Jobs Act of 2017 (“TCJA”), in part, reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. TCJA’s change in the federal rate required that we revalue deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally the new 21% federal corporate tax rate plus applicable state tax rate. We applied the guidance in SEC Staff Accounting Bulletin No. 118 when accounting for the enactment-date effects of the TCJA in 2017 and throughout 2018.

As of December 31, 2017, we recorded a provisional amount of $54 million for the revaluation of deferred tax assets and liabilities because we had not yet completed our accounting for all of the enactment-date income tax effects of the TJCA under ASC 740, Income Taxes. Upon further analysis of certain aspects of the TCJA and refinement of our calculations in the year ended December 31, 2018, we reduced this provisional amount by $4 million, which is included as a component of income tax expense in the accompanying consolidated statement of operations. As of December 31, 2018, the accounting for all of the enactment-date income tax effects of the TCJA was complete.

A reconciliation of the U.S. federal statutory income tax rate to the combined effective income tax rate is as follows:



	Year Ended December 31,
	2019		2018		2017
Statutory federal tax (benefit) rate	21.0	%	21.0	%	(35.0	)%
State income provision (benefit), net of federal	1.4		1.2		(0.7	)
Nondeductible health insurer fee (“HIF”)	—		7.3		—
Nondeductible compensation	1.2		0.7		2.8
Nondeductible goodwill impairment	—		—		6.6
Worthless stock deduction	—		(1.0	)	—
Revaluation of net deferred tax assets	—		(0.4	)	8.8
Other	0.6		0.4		1.1
Effective tax expense (benefit) rate	24.2	%	29.2	%	(16.4	)%

The effective tax rate was not impacted by the HIF in 2019 and 2017, given the HIF moratorium in each of those years. Our effective tax rate is based on expected income (loss), statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Management estimates and judgments are required in determining our effective tax rate. We are routinely under audit by federal, state, or local authorities regarding the timing and amount of deductions, nexus of income among various tax jurisdictions, and compliance with federal, state, foreign, and local tax laws.

Deferred tax assets and liabilities are classified as non-current. Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows:



	December 31,
	2019			2018
	(In millions)
Accrued expenses and reserve liabilities	$	35		$	39
Other accrued medical costs	11			12
Net operating losses	13			16
Fixed assets and intangibles	26			30
Unearned premiums	11			9
Lease financing obligation	5			30
Tax credit carryover	11			12
Other	—			3
Valuation allowance	(24		)	(28		)
Total deferred income tax assets, net of valuation allowance	88			123
Prepaid expenses	(6		)	(6		)
Other	(3		)	—
Total deferred income tax liabilities	(9		)	(6		)
Net deferred income tax asset	$	79		$	117

At December 31, 2019, we had state net operating loss carryforwards of $310 million, which begin expiring in 2028.

At December 31, 2019, we had California research and development and enterprise zone tax credit carryovers of $8 million, which will begin to expire in 2024, and foreign tax credit carryovers of $5 million, which expire in 2030.

We evaluate the need for a valuation allowance taking into consideration the ability to carry back and carry forward tax credits and losses, available tax planning strategies and future income, including reversal of temporary differences. We have determined that as of December 31, 2019, $24 million of deferred tax assets did not satisfy the recognition criteria. Therefore, we decreased our valuation allowance by $4 million, from $28 million at December 31, 2018, to $24 million as of December 31, 2019.

We recognize tax benefits only if the tax position is more likely than not to be sustained. We are subject to income taxes in the United States, Puerto Rico, and numerous state jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

The roll forward of our unrecognized tax benefits is as follows:



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Gross unrecognized tax benefits at beginning of period	$	(20	)	$	(13	)	$	(11	)
Increases in tax positions for current year				(9		)	(1		)
Increases in tax positions for prior years	—			—			(4		)
Decreases in tax positions for prior years	—			—			3
Lapse in statute of limitations				2			—
Gross unrecognized tax benefits at end of period	$	(20	)	$	(20	)	$	(13	)

The total amount of unrecognized tax benefits at December 31, 2019, 2018 and 2017 that, if recognized, would affect the effective tax rates is $18 million, $18 million, and $12 million, respectively. We expect that during the next 12 months it is reasonably possible that unrecognized tax benefit liabilities may decrease by as much as $5 million due to resolution of a state refund claim. The state refund claim will not result in a cash payment for income taxes if our claim is denied.

Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. Amounts accrued for the payment of interest and penalties as of December 31, 2019, 2018 and 2017 were insignificant.

We are under examination by the IRS for calendar years 2015 through 2017 and may be subject to examination for calendar year 2018. With a few exceptions, which are immaterial in the aggregate, we no longer are subject to state, local, and Puerto Rico tax examinations for years before 2015.

Medical Claims and Benefits Payable - Cumulative Paid Claims and Allocated Claims Adjustment Expenses (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Product Information [Line Items]
Claims paid	$ 44,460
Benefit Year 2017
Product Information [Line Items]
Claims paid	16,686	$ 16,671	$ 15,130
Benefit Year 2018
Product Information [Line Items]
Claims paid	15,220	$ 13,752
Benefit Year 2019
Product Information [Line Items]
Claims paid	$ 12,554

Commitments and Contingencies (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Statutory Accounting Practices [Line Items]
Aggregate statutory capital and surplus	$ 1,852
Required minimum statutory capital surplus	1,110
Net assets of subsidiaries subject to restrictions	1,811	$ 2,262
Parent Company
Statutory Accounting Practices [Line Items]
Cash, cash equivalents, and investments	$ 997	$ 170

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 168	$ 175	$ 196	$ 198	$ 201	$ 197	$ 202	$ 107	$ 737	$ 707	$ (512)
Other comprehensive income (loss):
Unrealized investment income (loss)									16	(3)	(5)
Less: effect of income taxes									4	(1)	(2)
Other comprehensive income (loss), net of tax									12	(2)	(3)
Comprehensive income (loss)									$ 749	$ 705	$ (515)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating activities:
Net income (loss)	$ 737	$ 707	$ (512)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	89	127	178
Deferred income taxes	10	(6)	(94)
Share-based compensation	39	27	46
Amortization of convertible senior notes and finance lease liabilities	5	22	32
(Gain) loss on debt extinguishment	(15)	22	14
Loss on sales of subsidiaries, net of gain	0	15	0
Non-cash restructuring charges	0	17	60
Impairment losses	0	0	470
Other, net	(5)	4	21
Changes in operating assets and liabilities:
Receivables	(76)	(530)	103
Prepaid expenses and other current assets	28	6	(56)
Medical claims and benefits payable	(107)	(226)	263
Amounts due government agencies	(303)	(574)	341
Accounts payable and accrued liabilities	2	45	(12)
Deferred revenue	38	(21)	(34)
Income taxes	(15)	51	(16)
Net cash provided by (used in) operating activities	427	(314)	804
Investing activities:
Purchases of investments	(2,536)	(1,444)	(2,697)
Proceeds from sales and maturities of investments	2,302	2,445	1,759
Purchases of property, equipment and capitalized software	(57)	(30)	(86)
Net cash received from sale of subsidiaries	0	190	0
Other, net	(2)	(18)	(38)
Net cash provided by (used in) investing activities	(293)	1,143	(1,062)
Financing activities:
Repayment of principal amount of convertible senior notes	(240)	(362)	0
Cash paid for partial settlement of conversion option	(578)	(623)	0
Cash received for partial settlement of call option	578	623	0
Cash paid for partial termination of warrants	(514)	(549)	0
Proceeds from borrowings under term loan facility	220	0	0
Common stock purchases	(47)	0	0
Repayment of credit facility	0	(300)	0
Proceeds from senior notes offerings, net of issuance costs	0	0	325
Proceeds from borrowings under credit facility	0	0	300
Other, net	29	18	11
Net cash (used in) provided by financing activities	(552)	(1,193)	636
Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents	(418)	(364)	378
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of period	2,926	3,290	2,912
Cash and cash equivalents at end of period	2,508	2,926	3,290
Cash paid during the period for:
Income taxes	239	240	7
Interest	78	93	78
Schedule of non-cash investing and financing activities:
Common stock issued in exchange for convertible senior notes	0	131	193
Component of convertible senior notes allocated to additional paid-in capital, net of income taxes	0	(23)	(32)
Net increase to additional paid-in capital	0	108	161
Common stock used for stock-based compensation	(7)	(6)	(22)
Common stock purchases not settled at end of period	7	0	0
Details of sales of subsidiaries:
Decrease in carrying amount of assets	0	(327)	0
Decrease in carrying amount of liabilities	0	85	0
Transaction costs	0	(15)	0
Cash received from buyers	0	242	0
Loss on sale of subsidiaries, net of gain	0	(15)	0
Details of change in fair value of derivatives, net:
Change in fair value of derivatives, net	0	0	0
Call Option
Details of change in fair value of derivatives, net:
Change in fair value of derivatives, net	132	577	255
Conversion Option
Details of change in fair value of derivatives, net:
Change in fair value of derivatives, net	$ (132)	$ (577)	$ (255)

Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Maturities of long-term debt

Contractual maturities of debt, as of December 31, 2019, are illustrated in the following table. All amounts represent the principal amounts of the debt instruments outstanding.



	Total		2020		2021		2022		2023		2024		Thereafter

	(In millions)
5.375% Notes	$	700	$	—	$	—	$	700	$	—	$	—	$	—
4.875% Notes	330		—		—		—		—		—		330
Term Loan Facility	220		6		16		22		22		154		—
1.125% Convertible Notes	12		12		—		—		—		—		—
Total	$	1,262	$	18	$	16	$	722	$	22	$	154	$	330

Long term debt

The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets:



	December 31,
	2019			2018
	(In millions)
Current portion of long-term debt:
1.125% Convertible Notes, net of unamortized discount	$	12		$	241
Term Loan Facility	6			—
Lease financing obligations	—			1
Debt issuance costs	—			(1		)
Total, current portion	$	18		$	241
Non-current portion of long-term debt:
5.375% Notes	$	700		$	700
4.875% Notes	330			330
Term Loan Facility	214			—
Debt issuance costs	(7		)	(10		)
Total, non-current portion	$	1,237		$	1,020

Interest costs

Interest cost recognized relating to our convertible senior notes for the periods presented was as follows:



	Years Ended December 31,
	2019		2018		2017
	(In millions)
Contractual interest at coupon rate	$	1	$	6	$	11
Amortization of the discount	5		21		32
Total	$	6	$	27	$	43

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
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-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-Topic 505
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Segments

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segments

We currently have two reportable segments: the Health Plans segment and the Other segment. Our reportable segments are consistent with how we currently manage the business and view the markets we serve. Our Other

segment, which was insignificant to our consolidated results of operations in 2018 and 2019, includes the historical results of the MMIS and behavioral health subsidiaries we sold in late 2018, as well as certain corporate amounts not allocated to the Health Plans segment.

Margin is the appropriate earnings measure for our reportable segments, based on how our chief operating decision maker currently reviews results, assesses performance, and allocates resources.

The key metrics used to assess the performance of our Health Plans segment are premium revenue, medical margin and MCR. MCR represents the amount of medical care costs as a percentage of premium revenue. Therefore, the underlying margin, or the amount earned by the Health Plans segment after medical costs are deducted from premium revenue, is the most important measure of earnings reviewed by management. Margin for our Health Plans segment is referred to as “Medical Margin.”



	Health Plans		Other		Consolidated
	(In millions)
2019
Total revenue	$	16,815	$	14	16,829
Margin	2,303		—		2,303
Goodwill, and intangible assets, net	172		—		172
Total assets	5,265		1,522		6,787
2018
Total revenue	$	18,471	$	419	$	18,890
Margin	2,475		43		2,518
Goodwill, and intangible assets, net	190		—		190
Total assets	6,165		989		7,154
2017
Total revenue	$	19,352	$	531	$	19,883
Margin	1,781		29		1,810
Goodwill, and intangible assets, net	212		43		255
Total assets	6,347		2,124		8,471

The following table reconciles margin by segment to consolidated income (loss) before income tax expense (benefit):



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Margin:
Health Plans	$	2,303		$	2,475		$	1,781
Other	—			43			29
Total margin	2,303			2,518			1,810
Add: other operating revenues ⁽¹⁾	621			871			508
Less: other operating expenses ⁽²⁾	(1,880		)	(2,243		)	(2,873		)
Less: loss on sales of subsidiaries, net of gain	—			(15		)	—
Operating income (loss)	1,044			1,131			(555		)
Less: other expenses, net	72			132			57
Income (loss) before income tax expense (benefit)	$	972		$	999		$	(612	)

______________________


(1)	Other operating revenues include premium tax revenue, health insurer fees reimbursed, investment income and other revenue.

(2)

Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, impairment losses, and restructuring costs.

Receivables (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Summary of accounts receivable



	December 31,
	2019		2018
	(In millions)
Government receivables	$	1,056	$	872
Pharmacy rebate receivables	150		146
Health insurer fee reimbursement receivables	5		141
Other	195		171
Total	$	1,406	$	1,330

Medical Claims and Benefits Payable

12 Months Ended

Dec. 31, 2019

Insurance [Abstract]

Medical Claims and Benefits Payable

The following table provides the details of our medical claims and benefits payable as of the dates indicated.



	December 31,
	2019		2018		2017
	(In millions)
Fee-for-service claims incurred but not paid (“IBNP”)	$	1,406	$	1,562	$	1,717
Pharmacy payable	126		115		112
Capitation payable	55		52		67
Other	267		232		296
Total	$	1,854	$	1,961	$	2,192

“Other” medical claims and benefits payable include amounts payable to certain providers for which we act as an intermediary on behalf of various government agencies without assuming financial risk. Such receipts and payments do not impact our consolidated statements of operations. Non-risk provider payables amounted to $132 million, $107 million and $122 million, as of December 31, 2019, 2018, and 2017, respectively.

The following table presents the components of the change in our medical claims and benefits payable for the periods indicated. The amounts presented for “Components of medical care costs related to: Prior periods” represent the amount by which our original estimate of medical claims and benefits payable at the beginning of the period were (more) less than the actual amount of the liability based on information (principally the payment of claims) developed since that liability was first reported.



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Medical claims and benefits payable, beginning balance	$	1,961		$	2,192		$	1,929
Components of medical care costs related to:
Current period	14,176			15,478			17,037
Prior periods ⁽¹⁾	(271		)	(341		)	36
Total medical care costs	13,905			15,137			17,073

Change in non-risk and other provider payables	24			13			(106		)

Payments for medical care costs related to:
Current period	12,554			13,671			15,130
Prior periods	1,482			1,710			1,574
Total paid	14,036			15,381			16,704
Medical claims and benefits payable, ending balance	$	1,854		$	1,961		$	2,192

________________


(1)	December 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million.

The following tables provide information about incurred and paid claims development as of December 31, 2019, as well as cumulative claims frequency and the total of incurred but not paid claims liabilities. The cumulative claim frequency is measured by claim event, and includes claims covered under capitated arrangements.



Incurred Claims and Allocated Claims Adjustment Expenses							Total IBNP		Cumulative number of reported claims
Benefit Year	2017		2018		2019		Total IBNP		Cumulative number of reported claims

	(Unaudited)		(Unaudited)
	(In millions)
2017	$	17,037	$	16,728	$	16,704	$	18	119
2018			15,478		15,245		25		110
2019					14,176		1,348		93
					$	46,125	$	1,391



Cumulative Paid Claims and Allocated Claims Adjustment Expenses
Benefit Year	2017		2018		2019

	(Unaudited)		(Unaudited)
	(In millions)
2017	$	15,130	$	16,671	$	16,686
2018			13,752		15,220
2019					12,554
					$	44,460

The following table represents a reconciliation of claims development to the aggregate carrying amount of the liability for medical claims and benefits payable.



	2019
	(In millions)
Incurred claims and allocated claims adjustment expenses	$	46,125
Less: cumulative paid claims and allocated claims adjustment expenses	(44,460		)
All outstanding liabilities before 2017	15
Non-risk and other provider payables	174
Medical claims and benefits payable	$	1,854

Our estimates of medical claims and benefits payable recorded at December 31, 2018, 2017 and 2016 developed favorably (unfavorably) by approximately $271 million, $341 million and $(36) million in 2019, 2018 and 2017, respectively.

The favorable prior year development recognized in 2019 was primarily due to lower than expected utilization of medical services by our Medicaid members, and improved operating performance. Consequently, the ultimate costs recognized in 2019 were lower than our original estimates in 2018, which was not discernible until additional information was provided, and as claims payments were processed.

The favorable prior year development recognized in 2018 includes a benefit of approximately $81 million in reduced medical care costs relating to Marketplace CSR subsidies for 2017 dates of service. The remainder of the favorable prior period development was primarily due to lower than expected utilization of medical services by our Medicaid and Marketplace members and improved operating performance. The differences between our original estimates in 2017 and the ultimate costs in 2018 were not discernable until additional information was provided to us in 2018 and the effect became clearer over time as claim payments were processed.

The unfavorable prior year development in 2017 was primarily due to higher than expected costs for settling certain claims with certain providers in states where we had recently commenced operations, such as in Illinois and Puerto Rico, or had instituted significant changes due to provider contract changes, such as in Florida and New Mexico. The differences between our original estimates in 2016 and the ultimate costs in 2017 were not discernible until additional information was provided to us in 2017, and the effect became clearer over time as claim payments were processed.

Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

The following table summarizes quarterly unaudited results of operations for the periods presented.



	For The Quarter Ended
	March 31, 2019		June 30, 2019		Sept. 30, 2019		December 31, 2019
	(In millions, except per-share data)
Total revenue	$	4,119	$	4,193	$	4,243	$	4,274
Margin	581		583		561		578
Net income	198		196		175		168

Net income per share - Basic ⁽¹⁾	$	3.19	$	3.15	$	2.81	$	2.70
Net income per share - Diluted ⁽¹⁾	$	2.99	$	3.06	$	2.75	$	2.67



	For The Quarter Ended
	March 31, 2018		June 30, 2018		Sept. 30, 2018		December 31, 2018
	(In millions, except per-share data)
Total revenue	$	4,646	$	4,883	$	4,697	$	4,664
Margin	615		673		566		664
Gain (loss) on sales of subsidiaries	—		—		37		(52		)
Net income	107		202		197		201

Net income per share - Basic ⁽¹⁾	$	1.79	$	3.29	$	3.22	$	3.24
Net income per share - Diluted ⁽¹⁾	$	1.64	$	3.02	$	2.90	$	3.01

________________________

(1)

The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method and is based on the weighted-average common share equivalents outstanding during each quarter. Accordingly, the sum of the quarterly net income per share amounts may not agree to the total for the year.

Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Goodwill

The following table presents the changes in the carrying amounts of goodwill by segment, for the periods presented.



	Health Plans		Other			Total
	(In millions)
Balance, December 31, 2017	$	143	$	43		$	186
Acquisitions	—		—			—
Dispositions	—		(43		)	(43		)
Impairment and other	—		—			—
Balance, December 31, 2018	143		—			143
Acquisitions	—		—			—
Dispositions	—		—			—
Impairment and other	—		—			—
Balance, December 31, 2019	$	143	$	—		$	143

For the Health Plans segment, gross goodwill amounted to $445 million, and accumulated impairment losses amounted to $302 million, at each of December 31, 2019, and 2018.

2017 Impairment Losses. As a result of reporting unit quantitative goodwill assessments using discounted cash flows and/or asset liquidation analyses, we recorded goodwill impairment losses of $244 million and $190 million for the Health Plans segment and Other segment, respectively, in the year ended December 31, 2017. The Health Plans segment impairment losses were due primarily to certain health plans’ Medicaid contract terminations, and insufficient estimated future cash flows. The Other segment impairment losses were due to the expectation of fewer future benefits, and related lower cash flows, to be derived from certain subsidiaries. Such subsidiaries were disposed in 2018.

Intangible Assets, Net

The following table provides the details of identified intangible assets, by major class, for the periods indicated:



	December 31, 2019						December 31, 2018
	Cost		Accumulated Amortization		Carrying Amount		Cost		Accumulated Amortization		Carrying Amount
	(In millions)
Contract rights and licenses	$	179	$	156	$	23	$	201	$	162	$	39
Provider networks	20		14		6		20		12		8
Total	$	199	$	170	$	29	$	221	$	174	$	47

As of December 31, 2019, we estimate that our intangible asset amortization will be approximately $14 million in 2020, $5 million in 2021, and $3 million in 2022, 2023 and 2024. For a presentation of our intangible assets by reportable segment, refer to Note 18, “Segments.”

2017 Impairment Losses. For the reasons described above, reporting unit undiscounted cash flow analyses produced intangible asset impairment losses of $25 million and $11 million for the Health Plans segment and Other segment, respectively, in the year ended December 31, 2017.

Restructuring Costs	12 Months Ended
Restructuring Costs	Dec. 31, 2019
Restructuring and Related Activities [Abstract]
Restructuring Costs	Restructuring Costs Restructuring costs are reported by the same name in the accompanying consolidated statements of operations. IT Restructuring Plan Management’s margin recovery plan identified and implemented various profit improvement initiatives. This included the plan to restructure our information technology department (the “IT Restructuring Plan”) in 2018, which is reported in the Other segment. In connection with this plan, in early 2019, we entered into services agreements with an outsourcing vendor who manages certain of our information technology services. As of December 31, 2019, the IT Restructuring Plan was substantially complete. Under this plan, we incurred cumulative restructuring costs of $12 million, including $7 million of one-time termination benefits and $5 million of other restructuring costs (primarily consulting fees). The final amount of costs incurred is lower than the $20 million we originally estimated and reported in our Annual Report on Form 10-K for the year ended December 31, 2018. Because more of our IT employees transitioned to our outsourcing vendor than originally contemplated, such employees were no longer included in the IT Restructuring Plan, resulting in lower one-time termination costs. As of December 31, 2018, $6 million was accrued under the IT Restructuring Plan, primarily for one-time termination benefits that require cash settlement. In the year ended December 31, 2019, we incurred $3 million of other restructuring costs, paid $5 million to settle one-time termination benefits, and paid $3 million to settle other restructuring costs. As of December 31, 2019, $1 million was accrued under the IT Restructuring Plan. 2017 Restructuring Plan As of December 31, 2018, $18 million was accrued for the restructuring and profitability improvement plan approved by the board of directors in June 2017 (the “2017 Restructuring Plan”). In the year ended December 31, 2019, we incurred $3 million of restructuring costs for adjustments to previously recorded lease contract termination costs, and paid $9 million to settle one-time termination and lease contract termination costs. As of December 31, 2019, $12 million was accrued for lease contract termination costs under the 2017 Restructuring Plan. We expect to continue to settle these liabilities through 2025, unless the leases are terminated sooner.

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 2,452	$ 2,826
Investments	1,946	1,681
Receivables	1,406	1,330
Prepaid expenses and other current assets	134	149
Derivative asset	29	476
Total current assets	5,967	6,462
Property, equipment, and capitalized software, net	385
Property, equipment, and capitalized software, net		241
Goodwill and intangible assets, net	172	190
Restricted investments	79	120
Deferred income taxes	79	117
Other assets	105	24
Total assets	6,787	7,154
Current liabilities:
Medical claims and benefits payable	1,854	1,961
Amounts due government agencies	664	967
Accounts payable and accrued liabilities	455	390
Deferred revenue	249	211
Current portion of long-term debt	18	241
Derivative liability	29	476
Total current liabilities	3,269	4,246
Long-term debt	1,237	1,020
Finance lease liabilities	231
Finance lease liabilities		197
Other long-term liabilities	90	44
Total liabilities	4,827	5,507
Stockholders’ equity:
Common stock, $0.001 par value per share; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018	0	0
Preferred stock, $0.001 par value per share; 20 million shares authorized, no shares issued and outstanding	0	0
Additional paid-in capital	175	643
Accumulated other comprehensive income (loss)	4	(8)
Retained earnings	1,781	1,012
Total stockholders’ equity	1,960	1,647
Total liabilities and stockholders’ equity	$ 6,787	$ 7,154

Investments - Narrative (Details) $ in Millions	12 Months Ended
Investments - Narrative (Details) $ in Millions	Dec. 31, 2019 USD ($)
Investments, Debt and Equity Securities [Abstract]
Gross realized investment gains	$ 13

Medical Claims and Benefits Payable - Components of the Change (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Medical claims and benefits payable, beginning balance	$ 1,961	$ 2,192	$ 1,929
Components of medical care costs related to:
Current period	14,176	15,478	17,037
Prior periods	(271)	(341)	36
Total medical care costs	13,905	15,137	17,073
Change in non-risk and other provider payables	24	13	(106)
Payments for medical care costs related to:
Current period	12,554	13,671	15,130
Prior periods	1,482	1,710	1,574
Total paid	14,036	15,381	16,704
Medical claims and benefits payable, ending balance	$ 1,854	1,961	$ 2,192
CMS Subsidies
Liability for Claims and Claims Adjustment Expense [Line Items]
Disposal group, operating expense		$ 81

Goodwill and Intangible Assets, Net - Balances of Goodwill (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Beginning balance	$ 143	$ 186
Acquisitions	0	0
Dispositions	0	(43)
Impairment and other	0	0
Ending balance	143	143	$ 186
Health Plans
Goodwill [Roll Forward]
Beginning balance	143	143
Acquisitions	0	0
Dispositions	0	0
Impairment and other	0	0	(244)
Ending balance	143	143	143
Other
Goodwill [Roll Forward]
Beginning balance	0	43
Acquisitions	0	0
Dispositions	0	(43)
Impairment and other	0	0	(190)
Ending balance	$ 0	$ 0	$ 43

Derivatives

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

The following table summarizes the fair values and the presentation of our derivative financial instruments (defined and discussed individually below) in the consolidated balance sheets:



		December 31,
	Balance Sheet Location	2019		2018
		(In millions)
Derivative asset:
1.125% Call Option	Current assets: Derivative asset	$	29	$	476
Derivative liability:
1.125% Conversion Option	Current liabilities: Derivative liability	$	29	$	476

Our derivative financial instruments do not qualify for hedge treatment; therefore, the change in fair value of these instruments is recognized immediately in our consolidated statements of operations, and reported in “Other (income) expenses, net.” Gains and losses for our derivative financial instruments are presented individually in the accompanying consolidated statements of cash flows, “Supplemental cash flow information.”

1.125% Convertible Notes Call Spread Overlay

Concurrent with the issuance of the 1.125% Convertible Notes in 2013, we entered into privately negotiated hedge transactions (collectively, the “1.125% Call Option”) and warrant transactions (collectively, the “1.125% Warrants”), with certain of the initial purchasers of the 1.125% Convertible Notes (the “Counterparties”). We refer to these transactions collectively as the Call Spread Overlay. Under the Call Spread Overlay, the cost of the 1.125% Call Option we purchased to cover the cash outlay upon conversion of the 1.125% Convertible Notes was reduced by proceeds from the sale of the 1.125% Warrants. Assuming full performance by the Counterparties (and 1.125% Warrants strike prices in excess of the conversion price of the 1.125% Convertible Notes), these transactions are intended to offset cash payments in excess of the principal amount of the 1.125% Convertible Notes due upon any conversion of such notes.

In the year ended December 31, 2019, in connection with the 1.125% Convertible Notes purchases (described in Note 11, “Debt”), we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the year ended December 31, 2019, we received $578 million for the

settlement of the 1.125% Call Option (which is a derivative asset), and paid $514 million for the partial termination of the 1.125% Warrants, for an aggregate net cash receipt of $64 million from the Counterparties.

1.125% Call Option

The 1.125% Call Option, which is indexed to our common stock, is a derivative asset that requires mark-to-market accounting treatment due to cash settlement features until the 1.125% Call Option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Call Option, refer to Note 4, “Fair Value Measurements.”

1.125% Conversion Option

The embedded cash conversion option within the 1.125% Convertible Notes is accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of operations until the cash conversion option settles or expires. For further discussion of the inputs used to determine the fair value of the 1.125% Conversion Option, refer to Note 4, “Fair Value Measurements.”

As of December 31, 2019, the 1.125% Call Option and the 1.125% Conversion Option were classified as a current asset and current liability, respectively, because the 1.125% Convertible Notes matured on January 15, 2020.

Subsequent Event

As described in Note 11, “Debt,” we repaid the aggregate principal amount of the 1.125% Convertible Notes, including settlement of the related 1.125% Conversion Option. In addition, in January 2020 we received $27 million for the settlement of the 1.125% Call Option.

Investments - Balances of Restricted Investments (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	$ 79	$ 120
Florida
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	12	32
New Mexico
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	21	43
Ohio
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	12	12
Puerto Rico
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	11	10
Other
Schedule of Held-to-maturity Securities [Line Items]
Restricted investments	$ 23	$ 23

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Consolidation and Presentation

Use of Estimates


•	The determination of medical claims and benefits payable of our Health Plans segment;


•	Health Plans segment contractual provisions that may limit revenue recognition based upon the costs incurred or the profits realized under a specific contract;


•	Health Plans segment quality incentives that allow us to recognize incremental revenue if certain quality standards are met;


•	Settlements under risk or savings sharing programs;


•	The assessment of long-lived and intangible assets, and goodwill, for impairment;


•	The determination of reserves for potential absorption of claims unpaid by insolvent providers;


•	The determination of reserves for the outcome of litigation;


•	The determination of valuation allowances for deferred tax assets; and

•

The determination of unrecognized tax benefits.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term, highly liquid investments that are both readily convertible into known amounts of cash and have a maturity of three months or less on the date of purchase. The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts presented in the accompanying consolidated statements of cash flows. The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.

Investments

Our investments are principally held in debt securities, which are grouped into two separate categories for accounting and reporting purposes: available-for-sale securities, and held-to-maturity securities. Available-for-sale (“AFS”) securities are recorded at fair value and unrealized gains and losses, if any, are recorded in stockholders’ equity as other comprehensive income, net of applicable income taxes. Held-to-maturity securities are recorded at amortized cost, which approximates fair value, and unrealized holding gains or losses are not generally recognized. Realized gains and losses and unrealized losses judged to be other than temporary with respect to available-for-sale and held-to-maturity securities are included in the determination of net income (loss). The cost of securities sold is determined using the specific-identification method.

Our investment policy requires that all of our investments have final maturities of less than 10 years, or less than 10 years average life for structured securities. Investments and restricted investments are subject to interest rate risk

and will decrease in value if market rates increase. Declines in interest rates over time will reduce our investment income.

Long-Lived Assets

Long-Lived Assets, including Intangible Assets

Long-lived assets consist primarily of property, equipment, capitalized software (see Note 7, “Property, Equipment, and Capitalized Software, Net”), and intangible assets resulting from acquisitions. Finite-lived, separately-identified intangible assets acquired in business combinations are assets that represent future expected benefits but lack physical substance (such as purchased contract rights and provider contracts). Intangible assets are initially recorded at fair value and are then amortized on a straight-line basis over their expected useful lives, generally between five and 15 years.

Our intangible assets are subject to impairment tests when events or circumstances indicate that a finite-lived intangible asset’s (or asset group’s) carrying value may not be recoverable. Consideration is given to a number of potential impairment indicators, including the ability of our health plan subsidiaries to obtain the renewal by amendment of their contracts in each state prior to the actual expiration of their contracts. However, there can be no assurance that these contracts will continue to be renewed. Following the identification of any potential impairment indicators, to determine whether an impairment exists, we would compare the carrying amount of a finite-lived intangible asset with the greater of the undiscounted cash flows that are expected to result from the use of the asset or related group of assets, or its value under the asset liquidation method. If it is determined that the carrying amount of the asset is not recoverable, the amount by which the carrying value exceeds the estimated fair value is recorded as an impairment.

Intangible Assets

Long-Lived Assets, including Intangible Assets

Leases

Right-of-use (“ROU”) assets represent our right to use the underlying assets over the lease term, and lease liabilities represent our obligation for lease payments arising from the related leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise such options. If applicable, we account for lease and non-lease components within a lease as a single lease component.

Because most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate to determine the present value of lease payments. Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term, and the related ROU assets and liabilities are reduced to the present value of the remaining lease payments at the end of each period. Finance lease payments reduce finance lease liabilities, the related ROU assets are amortized on a straight-line basis over the lease term, and interest expense is recognized using the effective interest method.

The significant majority of our operating leases consist of long-term operating leases for office space. Short-term leases (those with terms of 12 months or less) are not recorded as ROU assets or liabilities in the consolidated balance sheets. For certain leases that represent a portfolio of similar assets, such as a fleet of vehicles, we apply a portfolio approach to account for the related ROU assets and liabilities, rather than account for such assets and the related liabilities individually. A nominal number of our lease agreements include rental payments that adjust periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Goodwill and Business Combinations

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment on an annual basis and more frequently if impairment indicators are present. Such events or circumstances may include experienced or expected operating cash-flow deterioration or losses, significant losses of membership, loss of state funding, loss of state contracts, and other factors. Goodwill is impaired if the carrying amount of the reporting unit (one of our state health plans)

exceeds its estimated fair value. This excess is recorded as an impairment loss and adjusted if necessary for the impact of tax-deductible goodwill. The loss recognized may not exceed the total goodwill allocated to the reporting unit.

When testing goodwill for impairment, we may first assess qualitative factors, such as industry and market factors, the dynamic economic and political environments in which we operate, cost factors, and changes in overall performance, to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. If our qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, we perform the quantitative assessment. We may also elect to bypass the qualitative assessment and proceed directly to the quantitative assessment. If performing a quantitative assessment, we generally estimate the fair values of our reporting units by applying the income approach, using discounted cash flows.

For the annual impairment test under a quantitative assessment, the base year in the reporting units’ discounted cash flows is derived from the annual financial planning cycle, which commences in the fourth quarter of the year. When computing discounted cash flows, we make assumptions about a wide variety of internal and external factors, and consider what the reporting unit’s selling price would be in an orderly transaction between market participants at the measurement date. Significant assumptions include financial projections of free cash flow (including significant assumptions about membership, premium rates, healthcare and operating cost trends, contract renewal and the procurement of new contracts, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods, and discount rates. When determining the discount rate, we consider the overall level of inherent risk of the reporting unit, and the expected rate an outside investor would expect to earn. As part of a quantitative assessment, we may also apply the asset liquidation method to estimate the fair value of individual reporting units, which is computed as total assets minus total liabilities, excluding intangible assets and deferred taxes. Finally, we apply a market approach to reconcile the value of our reporting units to our consolidated market value. Under the market approach, we consider publicly traded comparable company information to determine revenue and earnings multiples which are used to estimate our reporting units’ fair values. The assumptions used are consistent with those used in our long-range business plan and annual planning process. However, if these assumptions differ from actual results, the outcome of our goodwill impairment tests could be adversely affected.

Accounting for business combinations requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the values of assets acquired or liabilities assumed, or one year after the date of acquisition, whichever comes first, any subsequent adjustments are recorded within our consolidated statements of operations.

Premium Revenue - Health Plans

Premium Revenue

Premium revenue is generated from our Health Plans segment contracts, including agreements with other managed care organizations for which we operate as a subcontractor. Premium revenue is generally received based on per member per month (“PMPM”) rates established in advance of the periods covered. These premium revenues are recognized in the month that members are entitled to receive healthcare services, and premiums collected in advance are deferred. The state Medicaid programs and the federal Medicare program periodically adjust premiums. Additionally, many of our contracts contain provisions that may adjust or limit revenue or profit, as described below. Consequently, we recognize premium revenue as it is earned under such provisions.

The following table summarizes premium revenue by health plan for the periods presented:



	Year Ended December 31,
	2019				2018				2017
	Amount		% of Total		Amount		% of Total		Amount		% of Total
	(Dollars in millions)
California	$	2,266	14.0	%	$	2,150	12.2	%	$	2,701	14.3	%
Florida	734		4.5		1,790		10.2		2,568		13.6
Illinois	1,002		6.2		793		4.5		593		3.1
Michigan	1,624		10.0		1,601		9.1		1,596		8.5
New Mexico ⁽¹⁾	—		—		1,356		7.7		1,368		7.3
Ohio	2,553		15.8		2,388		13.6		2,216		11.8
Puerto Rico	474		2.9		696		3.9		732		3.9
South Carolina	583		3.6		495		2.8		445		2.4
Texas	2,991		18.5		3,244		18.4		2,813		14.9
Washington	2,695		16.6		2,361		13.4		2,608		13.8
Other ⁽¹⁾	1,286		7.9		738		4.2		1,214		6.4
Total	$	16,208	100.0	%	$	17,612	100.0	%	$	18,854	100.0	%

_______________________

(1)

“Other” includes the Idaho, Mississippi, New York, Utah and Wisconsin health plans, which are not individually significant to our consolidated operating results. In 2019, “Other” also includes the New Mexico health plan. The New Mexico health plan’s Medicaid contract terminated on December 31, 2018, and therefore its results are not individually significant to our consolidated operating results in 2019.

Certain components of premium revenue are subject to accounting estimates and fall into the following categories:

Contractual Provisions That May Adjust or Limit Revenue or Profit

Medicaid Program

Medical Cost Floors (Minimums), and Medical Cost Corridors. A portion of our premium revenue may be returned if certain minimum amounts are not spent on defined medical care costs. In the aggregate, we recorded liabilities under the terms of such contract provisions of $74 million and $103 million at December 31, 2019, and December 31, 2018, respectively. Approximately $69 million and $87 million of the liabilities accrued at December 31, 2019, and December 31, 2018, respectively, relates to our participation in Medicaid Expansion programs.

In certain circumstances, the health plans may receive additional premiums if amounts spent on medical care costs exceed a defined maximum threshold. Receivables relating to such provisions were insignificant at December 31, 2019, and December 31, 2018.

Profit Sharing and Profit Ceiling. Our contracts with certain states contain profit-sharing or profit ceiling provisions under which we refund amounts to the states if our health plans generate profit above a certain specified percentage. In some cases, we are limited in the amount of administrative costs that we may deduct in calculating the refund, if any. Liabilities for profits in excess of the amount we are allowed to retain under these provisions were insignificant at December 31, 2019, and December 31, 2018.

Retroactive Premium Adjustments. State Medicaid programs periodically adjust premium rates on a retroactive basis. In these cases, we must adjust our premium revenue in the period in which we learn of the adjustment, based on our best estimate of the ultimate premium we expect to realize for the period being adjusted.

Medicare Program

Risk Adjusted Premiums: Our Medicare premiums are subject to retroactive increase or decrease based on the health status of our Medicare members (as measured by member risk score). We estimate our members’ risk scores and the related amount of Medicare revenue that will ultimately be realized for the periods presented based on our knowledge of our members’ health status, risk scores and CMS practices. Consolidated balance sheet amounts related to anticipated Medicare risk adjusted premiums and Medicare Part D settlements were insignificant at December 31, 2019, and December 31, 2018.

Minimum MLR: The Affordable Care Act (“ACA”) has established a minimum annual medical loss ratio (“Minimum MLR”) of 85% for Medicare. The medical loss ratio represents medical costs as a percentage of premium revenue. Federal regulations define what constitutes medical costs and premium revenue. If the Minimum MLR is not met, we may be required to pay rebates to the federal government. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. The amounts payable for the Medicare Minimum MLR were insignificant at December 31, 2019, and December 31, 2018.

Marketplace Program

Risk Adjustment: Under this program, our health plans’ composite risk scores are compared with the overall average risk score for the relevant state and market pool. Generally, our health plans will make a risk adjustment payment into the pool if their composite risk scores are below the average risk score (risk adjustment payable), and will receive a risk adjustment payment from the pool if their composite risk scores are above the average risk score (risk adjustment receivable). We estimate our ultimate premium based on insurance policy year-to-date experience, and recognize estimated premiums relating to the risk adjustment program as an adjustment to premium revenue in our consolidated statements of operations. As of December 31, 2019, Marketplace risk adjustment payables amounted to $368 million and related receivables amounted to $63 million, for a net payable of $305 million. As of December 31, 2018, Marketplace risk adjustment payables amounted to $466 million and related receivables amounted to $34 million, for a net payable of $432 million.

Minimum MLR: The ACA has established a Minimum MLR of 80% for the Marketplace. If the Minimum MLR is not met, we may be required to pay rebates to our Marketplace policyholders. The Marketplace risk adjustment program is taken into consideration when computing the Minimum MLR. We recognize estimated rebates under the Minimum MLR as an adjustment to premium revenue in our consolidated statements of operations. Aggregate balance sheet amounts related to the Minimum MLR were insignificant at December 31, 2019, and December 31, 2018.

A summary of the categories of amounts due government agencies is as follows:



	December 31,
	2019		2018
	(In millions)
Medicaid program:
Medical cost floors and corridors	$	74	$	103
Other amounts due to states	84		81
Marketplace program:
Risk adjustment	368		466
Cost sharing reduction	—		183
Other	138		134
Total	$	664	$	967

Quality Incentives

At many of our health plans, revenue ranging from approximately 1% to 4% of certain health plan premiums is earned only if certain performance measures are met

Medical Care Costs - Health Plans

Medical Care Costs, Medical Claims and Benefits Payable

Medical care costs are recognized in the period in which services are provided and include fee-for-service claims, pharmacy benefits, capitation payments to providers, and various other medically-related costs. Under fee-for-service claims arrangements with providers, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of hospital and physician services. Such medical care costs include amounts paid by us as well as estimated medical claims and benefits payable for costs that were incurred but not paid as of the reporting date (“IBNP”). Pharmacy benefits represent payments for members' prescription drug costs, net of rebates from drug manufacturers. We estimate pharmacy rebates based on historical and current utilization of prescription drugs and contractual provisions. Capitation payments represent monthly contractual fees paid to providers, who are responsible for providing medical care to members, which could include medical or ancillary costs like dental, vision and other supplemental health benefits. Such capitation costs are fixed in advance of the periods covered and are not subject to significant accounting estimates. Other medical care costs include all medically-related administrative costs, amounts due to providers pursuant to risk-sharing or other incentive arrangements, provider claims, and other healthcare expenses. Examples of medically-related administrative costs include expenses relating to health education, quality assurance, case management, care coordination, disease management, and 24-hour on-call nurses. Additionally, we include an estimate for the cost of settling claims incurred through the reporting date in our medical claims and benefits payable liability.

Medical claims and benefits payable consist mainly of fee-for-service IBNP, unpaid pharmacy claims, capitation costs, other medical costs, including amounts payable to providers pursuant to risk-sharing or other incentive arrangements and amounts payable to providers on behalf of certain state agencies for certain state assessments in which we assume no financial risk. IBNP includes the costs of claims incurred as of the balance sheet date which have been reported to us, and our best estimate of the cost of claims incurred but not yet reported to us. We also include an additional reserve to ensure that our overall IBNP liability is sufficient under moderately adverse conditions. We reflect changes in these estimates in the consolidated results of operations in the period in which they are determined.

The estimation of the IBNP liability requires a significant degree of judgment in applying actuarial methods, determining the appropriate assumptions and considering numerous factors. Of those factors, we consider estimated completion factors and the assumed healthcare cost trend to be the most critical assumptions. Other relevant factors also include, but are not limited to, healthcare service utilization trends, claim inventory levels, changes in membership, product mix, seasonality, benefit changes or changes in Medicaid fee schedules, provider contract changes, prior authorizations and the incidence of catastrophic or pandemic cases.

Because of the significant degree of judgment involved in estimation of our IBNP liability, there is considerable variability and uncertainty inherent in such estimates. Each reporting period, the recognized IBNP liability represents our best estimate of the total amount of unpaid claims incurred as of the balance sheet date using a consistent methodology in estimating our IBNP liability. We believe our current estimates are reasonable and adequate; however, the development of our estimate is a continuous process that we monitor and update as more complete claims payment information and healthcare cost trend data becomes available. Actual medical care costs may be less than we previously estimated (favorable development) or more than we previously estimated (unfavorable development), and any differences could be material. Any adjustments to reflect favorable development would be

recognized as a decrease to medical care costs, and any adjustments to reflect unfavorable development would be recognized as an increase to medical care costs, in the period in which the adjustments are determined.

Refer to Note 10, “Medical Claims and Benefits Payable,” for a table presenting the components of the change in our medical claims and benefits payable, for all periods presented in the accompanying consolidated financial statements.

Reinsurance

We limit our risk of catastrophic losses by maintaining high deductible reinsurance coverage. Such reinsurance coverage does not relieve us of our primary obligation to our policyholders. We report reinsurance premiums as a reduction to premium revenue, while related reinsurance recoveries are reported as a reduction to medical care costs. Reinsurance premiums amounted to $17 million, $16 million, and $20 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoveries amounted to $18 million, $33 million, and $24 million for the years ended December 31, 2019, 2018, and 2017, respectively. Reinsurance recoverable of $21 million, $31 million, and $16 million, as of December 31, 2019, 2018, and 2017, respectively, is included in “Receivables” in the accompanying consolidated balance sheets.

Marketplace Cost Share Reduction (“CSR”)

In the year ended December 31, 2018, we recognized a benefit of approximately $81 million in reduced medical care costs related to 2017 dates of service, as a result of the federal government’s confirmation that the reconciliation of 2017 Marketplace CSR subsidies would be performed on an annual basis. In the fourth quarter of 2017, we had assumed a nine-month reconciliation of this item pending confirmation of the time period to which the 2017 reconciliation would be applied.

Premium Deficiency Reserves on Loss Contracts

We assess the profitability of our contracts to determine if it is probable that a loss will be incurred in the future by reviewing current results and forecasts. For purposes of this assessment, contracts are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts. A premium deficiency is recognized if anticipated future medical care and administrative costs exceed anticipated future premium revenue, investment income and reinsurance recoveries. No premium deficiency reserves were recorded as of December 31, 2019 and 2018.

Income Taxes

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Taxes Based on Premiums

Health Insurer Fee (“HIF”). The federal government under the ACA imposes an annual fee, or excise tax, on health insurers for each calendar year. The HIF is based on a company’s share of the industry’s net premiums written during the preceding calendar year and is non-deductible for income tax purposes. We recognize expense for the HIF over the year on a straight-line basis. Within our Medicaid program, we must secure additional reimbursement from our state partners for this added cost. We recognize the related revenue when we have obtained a contractual commitment or payment from a state to reimburse us for the HIF, and such HIF revenue is recognized ratably throughout the year. The Consolidated Appropriations Act of 2016 provided for the HIF moratorium in 2017, and Public Law No. 115-120 provided for the HIF moratorium in 2019. Therefore, there were no health insurer fees reimbursed, nor health insurer fees incurred, in those years.

Premium and Use Tax. Certain of our health plans are assessed a tax based on premium revenue collected. The premium revenues we receive from these states include the premium tax assessment. We have reported these taxes on a gross basis, as premium tax revenue and as premium tax expenses in the consolidated statements of operations.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments, receivables, and restricted investments. Our investments and a portion of our cash equivalents are managed by professional portfolio managers operating under documented investment guidelines. Our portfolio managers must obtain our prior approval before selling investments where the loss position of those

investments exceeds certain levels. Our investments consist primarily of investment-grade debt securities with final maturities of less than 10 years, or less than 10 years average life for structured securities. Restricted investments are invested principally in cash, cash equivalents and U.S. Treasury securities.

Concentration of credit risk with respect to accounts receivable is limited because our payors consist principally of the federal government, and governments of each state or commonwealth in which our health plan subsidiaries operate. See further information below, under “Recent Accounting Pronouncements Not Yet Adopted” regarding our adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020.

Risks and Uncertainties

Our profitability depends in large part on our ability to accurately predict and effectively manage medical care costs. We continually review our medical costs in light of our underlying claims experience and revised actuarial data. However, several factors could adversely affect medical care costs. These factors, which include changes in health care practices, inflation, new technologies, major epidemics, natural disasters, and malpractice litigation, are beyond our control and may have an adverse effect on our ability to accurately predict and effectively control medical care costs. Costs in excess of those anticipated could have a material adverse effect on our financial condition, results of operations, or cash flows.

We operate health plans primarily as a direct contractor with the states (or Commonwealth), and in Los Angeles County, California, as a subcontractor to another health plan holding a direct contract with the state. We are therefore dependent upon a small number of contracts to support our revenue. The loss of any one of those contracts could have a material adverse effect on our financial position, results of operations, or cash flows. In addition, our ability to arrange for the provision of medical services to our members is dependent upon our ability to develop and maintain adequate provider networks. Our inability to develop or maintain such networks might, in certain circumstances, have a material adverse effect on our financial position, results of operations, or cash flows.

Recent Accounting Pronouncements Adopted and Not Yet Adopted

Recent Accounting Pronouncements Adopted

Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Topic 842, which was subsequently modified by several ASUs issued in 2017 and 2018. Topic 842 was issued to increase transparency and comparability among organizations by requiring the recognition of ROU assets and lease liabilities on the balance sheet. Most prominent among the changes in Topic 842 is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. In addition, Topic 842’s disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842’s transition provisions are applied using a modified retrospective approach; entities may elect whether to apply the transition provisions, including disclosure requirements, at the beginning of the earliest comparative period presented or on the adoption date.

We adopted Topic 842 effective January 1, 2019, and elected to apply the transition provisions as of that date. Accordingly, we recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019. In addition, we elected the available practical expedients and implemented internal controls and information systems functionality to enable the preparation of financial information on adoption.

As indicated in the accompanying consolidated statements of stockholders’ equity, the cumulative effect adjustment was an increase of $85 million to retained earnings ($110 million, net of $25 million deferred income tax expense), relating primarily to the transition provisions for sale-leaseback arrangements that did not qualify for sale treatment. Accordingly, such arrangements were de-recognized and recorded as finance lease ROU assets and lease liabilities. The difference between the de-recognized assets and lease financing obligations resulted in an increase to retained earnings. The recognition of these arrangements as finance lease ROU assets and lease liabilities will not materially impact our consolidated results of operations over the terms of the leases.

Software Licenses. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We early adopted ASU 2018-15 effective January 1, 2019, using the prospective method, with no material impact to our financial condition, results of operations or cash flows. Adoption of this guidance may be significant to us in the future depending on the extent to which we use cloud computing arrangements that qualify as service contracts.

Recent Accounting Pronouncements Not Yet Adopted

Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was subsequently modified by several ASUs issued in 2018 and 2019. This standard introduces a new current expected credit loss (“CECL”) model for measuring expected credit losses for certain types of financial instruments measured at amortized cost and replaces the incurred loss model. The CECL model requires an entity to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount the entity expects to collect over the instrument’s contractual life after consideration of historical experience, current conditions, and reasonable and supportable forecasts. This standard also introduces targeted changes to the AFS debt securities impairment model. It eliminates the concept of other-than-temporary impairment and requires an entity to determine whether any impairment is the result of a credit loss or other factors. We will adopt Topic 326 effective January 1, 2020, using the modified retrospective approach. Under this method we will recognize the cumulative effect of adopting the standard as an adjustment to the opening balance of retained earnings on January 1, 2020.

Under Topic 326, we will record an allowance for credit losses for financial assets subject to the CECL model. The most significant type of financial instrument reported in our consolidated balance sheets, subject to the CECL model, is “Receivables.” As of December 31, 2019, approximately 75%, or $1,056 million of the receivables balance constitutes receivables from state and federal government agencies. Based on our analysis, we believe that the credit risk associated with such receivables is nominal due to a very low risk of default.

The AFS debt securities impairment model will apply to “Investments” reported in our consolidated balance sheets. We believe that the credit risk associated with our non-government issued Investments is nominal due to the high quality of such investments.

The adoption of Topic 326 will be immaterial to our consolidated results of operations and financial condition.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not have, nor does management expect such pronouncements to have, a significant impact on our present or future consolidated financial statements.

Receivables

Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Cash and Cash Equivalents



	December 31,
	2019		2018		2017
	(In millions)
Cash and cash equivalents	$	2,452	$	2,826	$	3,186
Restricted cash and cash equivalents, non-current	56		100		95
Restricted cash and cash equivalents, current	—		—		9
Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows	$	2,508	$	2,926	$	3,290

Investments

and will decrease in value if market rates increase. Declines in interest rates over time will reduce our investment income.

In general, our AFS securities are classified as current assets without regard to the securities’ contractual maturity dates because they may be readily liquidated. We monitor our investments for other-than-temporary impairment. For comprehensive discussions of the fair value and classification of our investments, see Note 4, “Fair Value Measurements,” and Note 5, “Investments.”

Long-Lived Assets, including Intangible Assets

Leases

For further information, including the amount and location of the ROU assets and lease liabilities recognized in the accompanying consolidated balance sheet, see Note 8, “Leases.” For further information regarding our adoption and implementation of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), see “Recent Accounting Pronouncements Adopted,” below.

Goodwill and Business Combinations

Premium Revenue

The following table summarizes premium revenue by health plan for the periods presented:



	Year Ended December 31,
	2019				2018				2017
	Amount		% of Total		Amount		% of Total		Amount		% of Total
	(Dollars in millions)
California	$	2,266	14.0	%	$	2,150	12.2	%	$	2,701	14.3	%
Florida	734		4.5		1,790		10.2		2,568		13.6
Illinois	1,002		6.2		793		4.5		593		3.1
Michigan	1,624		10.0		1,601		9.1		1,596		8.5
New Mexico ⁽¹⁾	—		—		1,356		7.7		1,368		7.3
Ohio	2,553		15.8		2,388		13.6		2,216		11.8
Puerto Rico	474		2.9		696		3.9		732		3.9
South Carolina	583		3.6		495		2.8		445		2.4
Texas	2,991		18.5		3,244		18.4		2,813		14.9
Washington	2,695		16.6		2,361		13.4		2,608		13.8
Other ⁽¹⁾	1,286		7.9		738		4.2		1,214		6.4
Total	$	16,208	100.0	%	$	17,612	100.0	%	$	18,854	100.0	%

_______________________

(1)

Certain components of premium revenue are subject to accounting estimates and fall into the following categories:

Contractual Provisions That May Adjust or Limit Revenue or Profit

Medicaid Program

Medicare Program

Marketplace Program

A summary of the categories of amounts due government agencies is as follows:



	December 31,
	2019		2018
	(In millions)
Medicaid program:
Medical cost floors and corridors	$	74	$	103
Other amounts due to states	84		81
Marketplace program:
Risk adjustment	368		466
Cost sharing reduction	—		183
Other	138		134
Total	$	664	$	967

Quality Incentives

At many of our health plans, revenue ranging from approximately 1% to 4% of certain health plan premiums is earned only if certain performance measures are met. Such performance measures are generally found in our Medicaid and MMP contracts. As described in Note 1, “Organization and Basis of Presentation–Use of Estimates,” recognition of quality incentive premium revenue is subject to the use of estimates.

The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the periods presented and prior periods.



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Maximum available quality incentive premium - current period	$	186		$	182		$	150

Amount of quality incentive premium revenue recognized in current period:
Earned current period	$	156		$	133		$	97
Earned prior periods	38			31			10
Total	$	194		$	164		$	107

Quality incentive premium revenue recognized as a percentage of total premium revenue	1.2		%	0.9		%	0.6		%

Medical Care Costs, Medical Claims and Benefits Payable

Reinsurance

Marketplace Cost Share Reduction (“CSR”)

Premium Deficiency Reserves on Loss Contracts

Income Taxes

Taxes Based on Premiums

Concentrations of Credit Risk

Risks and Uncertainties

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

The adoption of Topic 326 will be immaterial to our consolidated results of operations and financial condition.

Condensed Financial Information of Registrant - Condensed Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Condensed Financial Statements, Captions [Line Items]
Net income (loss)	$ 168	$ 175	$ 196	$ 198	$ 201	$ 197	$ 202	$ 107	$ 737	$ 707	$ (512)
Unrealized investment income (loss)									16	(3)	(5)
Less: effect of income taxes									4	(1)	(2)
Other comprehensive income (loss), net of tax									12	(2)	(3)
Comprehensive income (loss)									749	705	(515)
Parent Company
Condensed Financial Statements, Captions [Line Items]
Net income (loss)									737	707	(512)
Unrealized investment income (loss)									16	(3)	(5)
Less: effect of income taxes									4	(1)	(2)
Other comprehensive income (loss), net of tax									12	(2)	(3)
Comprehensive income (loss)									$ 749	$ 705	$ (515)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

We consider the carrying amounts of current assets and current liabilities (not including derivatives and the current portion of long-term debt) 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. Our Level 3 financial instruments consist primarily of derivative financial instruments.

The derivatives include the 1.125% Call Option derivative asset and the 1.125% Conversion Option derivative liability (for detailed descriptions of these instruments, see Note 12. “Derivatives”). These derivatives are not actively traded and are valued based on an option pricing model that uses observable and unobservable market data for inputs. Significant market data inputs used to determine fair value as of December 31, 2019, included the price of our common stock, the time to maturity of the derivative instruments, the risk-free interest rate, and the implied volatility of our common stock. The 1.125% Call Option asset and the 1.125% Conversion Option liability were designed such that changes in their fair values offset, with minimal impact to the consolidated statements of operations. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is mitigated.

The net changes in fair value of Level 3 financial instruments were insignificant to our results of operations for the years ended December 31, 2019, and 2018.

Our financial instruments measured at fair value on a recurring basis at December 31, 2019, were as follows:



	Total		Level 1		Level 2		Level 3
	(In millions)
Corporate debt securities	$	1,178	$	—	$	1,178	$	—
Mortgage-backed securities	420		—		420		—
Asset-backed securities	127		—		127		—
U.S. Treasury notes	86		—		86		—
Municipal securities	78		—		78		—
Government-sponsored enterprise securities (“GSEs”)	49		—		49		—
Foreign securities	7		—		7		—
Certificates of deposit	1		—		1		—
Subtotal	1,946		—		1,946		—
1.125% Call Option derivative asset	29		—		—		29
Total assets	$	1,975	$	—	$	1,946	$	29

1.125% Conversion Option derivative liability	$	29	$	—	$	—	$	29
Total liabilities	$	29	$	—	$	—	$	29

Our financial instruments measured at fair value on a recurring basis at December 31, 2018, were as follows:



	Total		Level 1		Level 2		Level 3
	(In millions)
Corporate debt securities	$	1,123	$	—	$	1,123	$	—
Asset-backed securities	82		—		82		—
U.S. Treasury notes	181		—		181		—
Municipal securities	114		—		114		—
GSEs	163		—		163		—
Foreign securities	4		—		4		—
Certificates of deposit	14		—		14		—
Subtotal	1,681		—		1,681		—
1.125% Call Option derivative asset	476		—		—		476
Total assets	$	2,157	$	—	$	1,681	$	476

1.125% Conversion Option derivative liability	$	476	$	—	$	—	$	476
Total liabilities	$	476	$	—	$	—	$	476

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. The carrying amount and estimated fair value of the Term Loan Facility is classified as a Level 3 financial instrument, because certain inputs used to determine its fair value are not observable. As of December 31, 2019, the carrying amount of the Term Loan Facility approximated fair value because its interest rate is a variable rate that approximates rates currently available to us.



	December 31, 2019				December 31, 2018
	Carrying		Fair Value		Carrying		Fair Value
	Amount		Fair Value		Amount		Fair Value
	(In millions)
5.375% Notes	$	696	$	745	$	694	$	674
4.875% Notes	327		340		326		301
Term Loan Facility	220		220		—		—
1.125% Convertible Notes ⁽¹⁾	12		42		240		732
Total	$	1,255	$	1,347	$	1,260	$	1,707

_______________________________

(1)

- 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 + Details

Investments - Available-for-Sale (Details) $ in Millions	Dec. 31, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months	$ 365	$ 509
In a Continuous Loss Position for 12 Months or More	0	694
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months	2	3
In a Continuous Loss Position for 12 Months or More	$ 0	$ 8
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security	239	285
In a Continuous Loss Position for 12 Months or More \| Security	0	516
Corporate debt securities
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months	$ 222	$ 509
In a Continuous Loss Position for 12 Months or More	0	412
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months	1	3
In a Continuous Loss Position for 12 Months or More	$ 0	$ 5
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security	167	285
In a Continuous Loss Position for 12 Months or More \| Security	0	298
Mortgage-backed securities
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months	$ 143
In a Continuous Loss Position for 12 Months or More	0
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months	1
In a Continuous Loss Position for 12 Months or More	$ 0
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security	72
In a Continuous Loss Position for 12 Months or More \| Security	0
Asset-backed securities
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months		$ 0
In a Continuous Loss Position for 12 Months or More		68
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months		0
In a Continuous Loss Position for 12 Months or More		$ 1
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security		0
In a Continuous Loss Position for 12 Months or More \| Security		52
Municipal securities
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months		$ 0
In a Continuous Loss Position for 12 Months or More		87
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months		0
In a Continuous Loss Position for 12 Months or More		$ 1
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security		0
In a Continuous Loss Position for 12 Months or More \| Security		90
GSEs
Estimated Fair Value
In a Continuous Loss Position for Less than 12 Months		$ 0
In a Continuous Loss Position for 12 Months or More		127
Unrealized Losses
In a Continuous Loss Position for Less than 12 Months		0
In a Continuous Loss Position for 12 Months or More		$ 1
Total Number of Positions
In a Continuous Loss Position for Less than 12 Months \| Security		0
In a Continuous Loss Position for 12 Months or More \| Security		76

Stockholders' Equity - Components of Share-based Compensation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pretax Charges	$ 39	$ 27	$ 46
Net-of-Tax Amount	37	26	40
Restructuring settled without cash			23
RSAs, PSAs and PSUs (defined below)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pretax Charges	29	17	39
Net-of-Tax Amount	28	17	35
Employee stock purchase plan and stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pretax Charges	10	10	7
Net-of-Tax Amount	$ 9	$ 9	$ 5

Organization and Basis of Presentation (Details) member in Thousands, $ in Millions		1 Months Ended	6 Months Ended	12 Months Ended
	Dec. 31, 2019 USD ($) member state	Oct. 31, 2019	Jun. 30, 2020 USD ($) member county	Dec. 31, 2019 USD ($) member segment state	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Basis Of Presentation [Line Items]
Number of reportable segments \| segment				2
Premium revenue				$ 16,208	$ 17,612	$ 18,854
Texas
Basis Of Presentation [Line Items]
Number of members served, approximately (in member) \| member	97			97
Premium revenue				$ 2,062
Texas Health and Human Services Commission, STARPLUS Program
Basis Of Presentation [Line Items]
Contract term		3 years
Health Plans
Basis Of Presentation [Line Items]
Number of states in which company operates (in state) \| state	14			14
Number of members eligible for the health care programs \| member	3,300			3,300
Minimum contract terms				3 years
Maximum contract term				5 years
Premium revenue				$ 16,208	17,612	18,854
Health Plans \| Texas
Basis Of Presentation [Line Items]
Premium revenue				2,991	3,244	2,813
Health Plans \| Illinois
Basis Of Presentation [Line Items]
Premium revenue				$ 1,002	$ 793	$ 593
Health Plans \| STAR/CHIP Contracts \| Texas
Basis Of Presentation [Line Items]
Number of members served, approximately (in member) \| member	114			114
Premium revenue				$ 315
NextLevel Health Partners, Inc. \| Illinois
Basis Of Presentation [Line Items]
Number of members served, approximately (in member) \| member	50			50
Purchase price of assets	$ 50
YourCare Health Plan \| Forecast \| New York
Basis Of Presentation [Line Items]
Number of members served, approximately (in member) \| member			46
Purchase price of assets			$ 40
Number of countries \| county			7

Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Cash and cash equivalents

The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.



	December 31,
	2019		2018		2017
	(In millions)
Cash and cash equivalents	$	2,452	$	2,826	$	3,186
Restricted cash and cash equivalents, non-current	56		100		95
Restricted cash and cash equivalents, current	—		—		9
Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows	$	2,508	$	2,926	$	3,290

Restricted cash and cash equivalents

The restricted cash and cash equivalents presented below are included in “Restricted investments” in the accompanying consolidated balance sheets.



	December 31,
	2019		2018		2017
	(In millions)
Cash and cash equivalents	$	2,452	$	2,826	$	3,186
Restricted cash and cash equivalents, non-current	56		100		95
Restricted cash and cash equivalents, current	—		—		9
Total cash and cash equivalents, and restricted cash and cash equivalents presented in the consolidated statements of cash flows	$	2,508	$	2,926	$	3,290

Summarized premium revenue

The following table summarizes premium revenue by health plan for the periods presented:



	Year Ended December 31,
	2019				2018				2017
	Amount		% of Total		Amount		% of Total		Amount		% of Total
	(Dollars in millions)
California	$	2,266	14.0	%	$	2,150	12.2	%	$	2,701	14.3	%
Florida	734		4.5		1,790		10.2		2,568		13.6
Illinois	1,002		6.2		793		4.5		593		3.1
Michigan	1,624		10.0		1,601		9.1		1,596		8.5
New Mexico ⁽¹⁾	—		—		1,356		7.7		1,368		7.3
Ohio	2,553		15.8		2,388		13.6		2,216		11.8
Puerto Rico	474		2.9		696		3.9		732		3.9
South Carolina	583		3.6		495		2.8		445		2.4
Texas	2,991		18.5		3,244		18.4		2,813		14.9
Washington	2,695		16.6		2,361		13.4		2,608		13.8
Other ⁽¹⁾	1,286		7.9		738		4.2		1,214		6.4
Total	$	16,208	100.0	%	$	17,612	100.0	%	$	18,854	100.0	%

_______________________

(1)

Amounts due to government agencies

A summary of the categories of amounts due government agencies is as follows:



	December 31,
	2019		2018
	(In millions)
Medicaid program:
Medical cost floors and corridors	$	74	$	103
Other amounts due to states	84		81
Marketplace program:
Risk adjustment	368		466
Cost sharing reduction	—		183
Other	138		134
Total	$	664	$	967

Quality incentive premium revenue recognized

The following table quantifies the quality incentive premium revenue recognized for the periods presented, including the amounts earned in the periods presented and prior periods.



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Maximum available quality incentive premium - current period	$	186		$	182		$	150

Amount of quality incentive premium revenue recognized in current period:
Earned current period	$	156		$	133		$	97
Earned prior periods	38			31			10
Total	$	194		$	164		$	107

Quality incentive premium revenue recognized as a percentage of total premium revenue	1.2		%	0.9		%	0.6		%

Condensed Financial Information of Registrant - Condensed Balance Sheets - Additional Information (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Condensed Financial Statements, Captions [Line Items]
Common stock, par value (dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares outstanding	62,000,000	62,000,000
Preferred stock, par value (dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Parent Company
Condensed Financial Statements, Captions [Line Items]
Common stock, par value (dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares outstanding	62,000,000	62,000,000
Preferred stock, par value (dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Investments - Contractual Maturities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Amortized Cost
Due in one year or less	$ 453
Due after one year through five years	957
Due after five years through ten years	171
Due after ten years	360
Amortized Cost	1,941	$ 1,692
Estimated Fair Value
Due in one year or less	453
Due after one year through five years	962
Due after five years through ten years	171
Due after ten years	360
Estimated Fair Value	$ 1,946

Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of Registrant

The condensed balance sheets as of December 31, 2019 and 2018, and the related condensed statements of operations, comprehensive income (loss) and cash flows for each of the three years in the period ended December 31, 2019 for our parent company Molina Healthcare, Inc. (the “Registrant”), are presented below.

Condensed Balance Sheets



	December 31,
	2019		2018
	(In millions, except per-share data)
ASSETS
Current assets:
Cash and cash equivalents	$	836	$	70
Investments	161		100
Receivables	2		2
Due from affiliates	49		90
Prepaid expenses and other current assets	46		47
Derivative asset	29		476
Total current assets	1,123		785
Property, equipment, and capitalized software, net	327		176
Goodwill and intangible assets, net	13		13
Investments in subsidiaries	2,225		2,768
Deferred income taxes	10		39
Advances to related parties and other assets	76		40
Total assets	$	3,774	$	3,821
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable	$	—	$	4
Accounts payable and accrued liabilities	260		223
Current portion of long-term debt	18		241
Derivative liability	29		476
Total current liabilities	307		944
Long-term debt	1,237		1,020
Finance lease liabilities	231		197
Other long-term liabilities	39		13
Total liabilities	1,814		2,174
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018	—		—
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	—		—
Additional paid-in capital	175		643
Accumulated other comprehensive income (loss)	4		(8		)
Retained earnings	1,781		1,012
Total stockholders’ equity	1,960		1,647
Total liabilities and stockholders’ equity	$	3,774	$	3,821

See accompanying notes.

Condensed Statements of Operations



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Revenue:
Administrative services fees	$	1,038		$	1,138		$	1,317
Investment income and other revenue	18			17			16
Total revenue	1,056			1,155			1,333
Expenses:
General and administrative expenses	937			1,007			1,082
Depreciation and amortization	63			69			93
Other operating expenses	—			8			16
Restructuring costs	4			35			153
Impairment losses	—			—			39
Total operating expenses	1,004			1,119			1,383
Gain on sale of subsidiary	—			37			—
Operating income (loss)	52			73			(50		)
Interest expense	87			114			117
Other (income) expense, net	(15		)	17			(61		)
Loss before income tax (benefit) expense and equity in net earnings (losses) of subsidiaries	(20		)	(58		)	(106		)
Income tax expense (benefit)	9			(14		)	8
Net loss before equity in net earnings (losses) of subsidiaries	(29		)	(44		)	(114		)
Equity in net earnings (losses) of subsidiaries	766			751			(398		)
Net income (loss)	$	737		$	707		$	(512	)

Condensed Statements of Comprehensive Income (Loss)



	Year Ended December 31,
	2019		2018			2017
	(In millions)
Net income (loss)	$	737	$	707		$	(512	)
Other comprehensive income (loss):
Unrealized investment income (loss)	16		(3		)	(5		)
Less: effect of income taxes	4		(1		)	(2		)
Other comprehensive income (loss), net of tax	12		(2		)	(3		)
Comprehensive income (loss)	$	749	$	705		$	(515	)

See accompanying notes.

Condensed Statements of Cash Flows



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Operating activities:
Net cash provided by operating activities	$	64		$	118		$	166
Investing activities:
Capital contributions to subsidiaries	(43		)	(145		)	(370		)
Dividends received from subsidiaries	1,373			298			286
Purchases of investments	(152		)	(136		)	(331		)
Proceeds from sales and maturities of investments	93			388			156
Purchases of property, equipment and capitalized software	(56		)	(22		)	(67		)
Net cash received from sale of subsidiaries	—			242			—
Change in amounts due to/from affiliates	38			6			(49		)
Other, net	1			—			—
Net cash provided by (used in) investing activities	1,254			631			(375		)
Financing activities:
Repayment of principal amount of convertible notes	(240		)	(362		)	—
Cash paid for partial settlement of conversion option	(578		)	(623		)	—
Cash received for partial settlement of call option	578			623			—
Cash paid for partial termination of warrants	(514		)	(549		)	—
Proceeds from borrowings under term loan facility	220			—			—
Common stock purchases	(47		)	—			—
Repayment of credit facility	—			(300		)	—
Proceeds from senior notes offerings, net of issuance costs	—			—			325
Proceeds from borrowings under credit facility	—			—			300
Other, net	29			19			11
Net cash (used in) provided by financing activities	(552		)	(1,192		)	636
Net (decrease) increase in cash and cash equivalents	766			(443		)	427
Cash and cash equivalents at beginning of period	70			513			86
Cash and cash equivalents at end of period	$	836		$	70		$	513

Notes to Condensed Financial Information of Registrant

Note A - Basis of Presentation

The Registrant was incorporated in 2002. Prior to that date, Molina Healthcare of California (formerly known as Molina Medical Centers) operated as a California health plan and as the parent company for three other state health plans. In June 2003, the employees and operations of the corporate entity were transferred from Molina Healthcare of California to the Registrant.

The Registrant’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. The accompanying condensed financial information of the Registrant should be read in conjunction with the consolidated financial statements and accompanying notes.

Note B - Transactions with Subsidiaries

The Registrant provides certain centralized medical and administrative services to our subsidiaries pursuant to administrative services agreements that include, but are not limited to, information technology, product development and administration, underwriting, claims processing, customer service, certain care management services, human resources, marketing, purchasing, risk management, actuarial, underwriting, finance, accounting, legal and public

relations. Fees are based on the fair market value of services rendered and are recorded as operating revenue. Payment is subordinated to the subsidiaries’ ability to comply with minimum capital and other restrictive financial requirements of the states in which they operate. Charges in 2019, 2018, and 2017 for these services amounted to $1,038 million, $1,137 million, and $1,317 million, respectively, and are included in operating revenue.

The Registrant and its subsidiaries are included in the consolidated federal and state income tax returns filed by the Registrant. Income taxes are allocated to each subsidiary in accordance with an intercompany tax allocation agreement. The agreement allocates income taxes in an amount generally equivalent to the amount which would be expensed by the subsidiary if it filed a separate tax return. Net operating loss benefits are paid to the subsidiary by the Registrant to the extent such losses are utilized in the consolidated tax returns.

Note C - Dividends and Capital Contributions

When the Registrant receives dividends from its subsidiaries, such amounts are recorded as a reduction to the investments in the respective subsidiaries.

For all periods presented, the Registrant made capital contributions to certain subsidiaries primarily to comply with minimum net worth requirements and to fund business combinations. Such amounts have been recorded as an increase in investment in the respective subsidiaries.

Stockholders' Equity - Stock Options by Exercise Price (Details)	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	405,000
Options Exercisable, Number Exercisable	280,000
$33.02
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	30,000
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	3 years 2 months 12 days
Options Outstanding, Weighted-Average Exercise Price \| $ / shares	$ 33.02
Options Exercisable, Number Exercisable	30,000
Options Exercisable, Weighted-Average Exercise Price \| $ / shares	$ 33.02
$67.33
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	375,000
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	7 years 9 months 18 days
Options Outstanding, Weighted-Average Exercise Price \| $ / shares	$ 67.33
Options Exercisable, Number Exercisable	250,000
Options Exercisable, Weighted-Average Exercise Price \| $ / shares	$ 67.33

Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Beginning Balance (in shares) at Dec. 31, 2016	55.8	57.0
Beginning Balance at Dec. 31, 2016	$ 1,649	$ 0	$ 841	$ (2)	$ 810
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(512)				(512)
Exchange of convertible senior notes (in shares)		3.0
Exchange of convertible senior notes	161		161
Other comprehensive income (loss), net	(3)			(3)
Share-based compensation	$ 42		42
Ending Balance (in shares) at Dec. 31, 2017	59.3	60.0
Ending Balance at Dec. 31, 2017	$ 1,337	$ 0	1,044	(5)	298
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	707				707
Exchange of convertible senior notes (in shares)		2.0
Exchange of convertible senior notes	108		108
Other comprehensive income (loss), net	(2)			(2)
Share-based compensation	37		37
Partial termination of warrants	(550)		(550)
Conversion of convertible senior notes	$ 4		4
Ending Balance (in shares) at Dec. 31, 2018	62.1	62.0
Ending Balance at Dec. 31, 2018	$ 1,647	$ 0	643	(8)	1,012
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	737				737
Common stock purchases	(54)	$ (54)	(1)		(53)
Exchange of convertible senior notes	0
Other comprehensive income (loss), net	12			12
Share-based compensation	47		47
Partial termination of warrants	(514)		(514)
Ending Balance (in shares) at Dec. 31, 2019		62.0
Ending Balance at Dec. 31, 2019	$ 1,960	$ 0	$ 175	$ 4	$ 1,781

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision for income taxes

Income tax expense (benefit) consisted of the following:



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Current:
Federal	$	204		$	272		$	(9	)
State	12			18			3
Foreign	9			8			—
Total current	225			298			(6		)
Deferred:
Federal	5			(3		)	(85		)
State	6			(3		)	(9		)
Foreign	(1		)	—			—
Total deferred	10			(6		)	(94		)
Income tax expense (benefit)	$	235		$	292		$	(100	)

Effective income tax rate reconciliation to the statutory federal income tax rate

A reconciliation of the U.S. federal statutory income tax rate to the combined effective income tax rate is as follows:



	Year Ended December 31,
	2019		2018		2017
Statutory federal tax (benefit) rate	21.0	%	21.0	%	(35.0	)%
State income provision (benefit), net of federal	1.4		1.2		(0.7	)
Nondeductible health insurer fee (“HIF”)	—		7.3		—
Nondeductible compensation	1.2		0.7		2.8
Nondeductible goodwill impairment	—		—		6.6
Worthless stock deduction	—		(1.0	)	—
Revaluation of net deferred tax assets	—		(0.4	)	8.8
Other	0.6		0.4		1.1
Effective tax expense (benefit) rate	24.2	%	29.2	%	(16.4	)%

Significant components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows:



	December 31,
	2019			2018
	(In millions)
Accrued expenses and reserve liabilities	$	35		$	39
Other accrued medical costs	11			12
Net operating losses	13			16
Fixed assets and intangibles	26			30
Unearned premiums	11			9
Lease financing obligation	5			30
Tax credit carryover	11			12
Other	—			3
Valuation allowance	(24		)	(28		)
Total deferred income tax assets, net of valuation allowance	88			123
Prepaid expenses	(6		)	(6		)
Other	(3		)	—
Total deferred income tax liabilities	(9		)	(6		)
Net deferred income tax asset	$	79		$	117

Unrecognized tax benefits roll forward

The roll forward of our unrecognized tax benefits is as follows:



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Gross unrecognized tax benefits at beginning of period	$	(20	)	$	(13	)	$	(11	)
Increases in tax positions for current year				(9		)	(1		)
Increases in tax positions for prior years	—			—			(4		)
Decreases in tax positions for prior years	—			—			3
Lapse in statute of limitations				2			—
Gross unrecognized tax benefits at end of period	$	(20	)	$	(20	)	$	(13	)

Condensed Financial Information of Registrant - Notes to Condensed Financial Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Parent Company
Related Party Transaction [Line Items]
Services revenue from subsidiaries	$ 1,038	$ 1,137	$ 1,317

Investments (Tables)

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investments

The following tables summarize our current investments as of the dates indicated:



	December 31, 2019
	Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
	(In millions)
Corporate debt securities	$	1,174	$	5	$	1	$	1,178
Mortgage-backed securities	420		1		1		420
Asset-backed securities	126		1		—		127
U.S. Treasury notes	86		—		—		86
Municipal securities	78		—		—		78
GSEs	49		—		—		49
Foreign securities	7		—		—		7
Certificates of deposit	1		—		—		1
Total	$	1,941	$	7	$	2	$	1,946



	December 31, 2018
	Amortized Cost		Gross Unrealized				Estimated Fair Value
	Amortized Cost		Gains		Losses		Estimated Fair Value
	(In millions)
Corporate debt securities	$	1,131	$	—	$	8	$	1,123
Asset-backed securities	83		—		1		82
U.S. Treasury notes	181		—		—		181
Municipal securities	115		—		1		114
GSEs	164		—		1		163
Foreign securities	4		—		—		4
Certificates of deposit	14		—		—		14
Total	$	1,692	$	—	$	11	$	1,681

Contractual maturities of investments

The contractual maturities of our current investments as of December 31, 2019 are summarized below:



	Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	453	$	453
Due after one year through five years	957		962
Due after five years through ten years	171		171
Due after ten years	360		360
Total	$	1,941	$	1,946

Available-for-sale investments

The following table segregates those available-for-sale investments that have been in a continuous loss position for less than 12 months, and those that have been in a continuous loss position for 12 months or more as of December 31, 2019:



	In a Continuous Loss Position for Less than 12 Months					In a Continuous Loss Position for 12 Months or More
	Estimated Fair Value		Unrealized Losses		Total Number of Positions	Estimated Fair Value		Unrealized Losses		Total Number of Positions
	(Dollars in millions)
Corporate debt securities	$	222	$	1	167	$	—	$	—	—
Mortgage-backed securities	143		1		72	—		—		—
Total	$	365	$	2	239	$	—	$	—	—



	In a Continuous Loss Position for Less than 12 Months					In a Continuous Loss Position for 12 Months or More
	Estimated Fair Value		Unrealized Losses		Total Number of Positions	Estimated Fair Value		Unrealized Losses		Total Number of Positions
	(Dollars in millions)
Corporate debt securities	$	509	$	3	285	$	412	$	5	298
Asset-backed securities	—		—		—	68		1		52
Municipal securities	—		—		—	87		1		90
GSEs	—		—		—	127		1		76
Total	$	509	$	3	285	$	694	$	8	516

Balances of restricted investments

The following table presents the balances of restricted investments:



	December 31,
	2019		2018
	(In millions)
Florida	$	12	$	32
New Mexico	21		43
Ohio	12		12
Puerto Rico	11		10
Other	23		23
Total Health Plans segment	$	79	$	120

Condensed Financial Information of Registrant - Condensed Balance Sheets (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 2,452	$ 2,826	$ 3,186
Investments	1,946	1,681
Receivables	1,406	1,330
Prepaid expenses and other current assets	134	149
Derivative asset	29	476
Total current assets	5,967	6,462
Property, equipment, and capitalized software, net		241
Goodwill and intangible assets, net	172	190	255
Deferred income taxes	79	117
Total assets	6,787	7,154	8,471
Current liabilities:
Medical claims and benefits payable	1,854	1,961	2,192	$ 1,929
Accounts payable and accrued liabilities	455	390
Current portion of long-term debt	18	241
Derivative liability	29	476
Total current liabilities	3,269	4,246
Long-term debt	1,237	1,020
Finance lease liabilities	231
Finance lease liabilities		197
Other long-term liabilities	90	44
Total liabilities	4,827	5,507
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018	0	0
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	0	0
Additional paid-in capital	175	643
Accumulated other comprehensive income (loss)	4	(8)
Retained earnings	1,781	1,012
Total stockholders’ equity	1,960	1,647	$ 1,337	$ 1,649
Total liabilities and stockholders’ equity	6,787	7,154
Parent Company
Current assets:
Cash and cash equivalents	836	70
Investments	161	100
Receivables	2	2
Due from affiliates	49	90
Prepaid expenses and other current assets	46	47
Derivative asset	29	476
Total current assets	1,123	785
Property, equipment, and capitalized software, net	327	176
Goodwill and intangible assets, net	13	13
Investments in subsidiaries	2,225	2,768
Deferred income taxes	10	39
Advances to related parties and other assets	76	40
Total assets	3,774	3,821
Current liabilities:
Medical claims and benefits payable	0	4
Accounts payable and accrued liabilities	260	223
Current portion of long-term debt	18	241
Derivative liability	29	476
Total current liabilities	307	944
Long-term debt	1,237	1,020
Finance lease liabilities	231
Finance lease liabilities		197
Other long-term liabilities	39	13
Total liabilities	1,814	2,174
Stockholders’ equity:
Common stock, $0.001 par value; 150 million shares authorized; outstanding: 62 million shares at each of December 31, 2019, and December 31, 2018	0	0
Preferred stock, $0.001 par value; 20 million shares authorized, no shares issued and outstanding	0	0
Additional paid-in capital	175	643
Accumulated other comprehensive income (loss)	4	(8)
Retained earnings	1,781	1,012
Total stockholders’ equity	1,960	1,647
Total liabilities and stockholders’ equity	$ 3,774	$ 3,821

Derivatives (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
Derivatives (Details) - USD ($) $ in Millions	Jan. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Derivative [Line Items]
Cash received for partial settlement of call option		$ 578	$ 623	$ 0
Cash paid for partial termination of 1.125% Warrants		514	549	$ 0
Convertible debt, converted amount of instrument		$ 64
1.125% Convertible Notes
Derivative [Line Items]
Percentage of contractual interest rate		1.125%
1.125% Convertible Notes \| Subsequent Event
Derivative [Line Items]
Cash received for partial settlement of call option	$ 27
1.125% Call Option
Derivative [Line Items]
Percentage of contractual interest rate on derivative		1.125%
1.125% Call Option \| Subsequent Event
Derivative [Line Items]
Percentage of contractual interest rate on derivative	1.125%
1.125% Call Option \| Current assets
Derivative [Line Items]
Derivative asset		$ 29	476
1.125% Conversion Option
Derivative [Line Items]
Percentage of contractual interest rate on derivative		1.125%
1.125% Conversion Option \| Current liabilities
Derivative [Line Items]
Derivative liability		$ 29	$ 476
1.125% Warrants
Derivative [Line Items]
Percentage of contractual interest rate on derivative		1.125%
Cash paid for partial termination of 1.125% Warrants		$ 514

Segments (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Operating segment information



	Health Plans		Other		Consolidated
	(In millions)
2019
Total revenue	$	16,815	$	14	16,829
Margin	2,303		—		2,303
Goodwill, and intangible assets, net	172		—		172
Total assets	5,265		1,522		6,787
2018
Total revenue	$	18,471	$	419	$	18,890
Margin	2,475		43		2,518
Goodwill, and intangible assets, net	190		—		190
Total assets	6,165		989		7,154
2017
Total revenue	$	19,352	$	531	$	19,883
Margin	1,781		29		1,810
Goodwill, and intangible assets, net	212		43		255
Total assets	6,347		2,124		8,471

The following table reconciles margin by segment to consolidated income (loss) before income tax expense (benefit):



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Margin:
Health Plans	$	2,303		$	2,475		$	1,781
Other	—			43			29
Total margin	2,303			2,518			1,810
Add: other operating revenues ⁽¹⁾	621			871			508
Less: other operating expenses ⁽²⁾	(1,880		)	(2,243		)	(2,873		)
Less: loss on sales of subsidiaries, net of gain	—			(15		)	—
Operating income (loss)	1,044			1,131			(555		)
Less: other expenses, net	72			132			57
Income (loss) before income tax expense (benefit)	$	972		$	999		$	(612	)

______________________


(1)	Other operating revenues include premium tax revenue, health insurer fees reimbursed, investment income and other revenue.

(2)

Other operating expenses include general and administrative expenses, premium tax expenses, health insurer fees, depreciation and amortization, impairment losses, and restructuring costs.

Debt - Maturities (Details) $ in Millions	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Net carrying amount	$ 1,262
2020	18
2021	16
2022	722
2023	22
2024	154
Thereafter	$ 330
5.375% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	5.375%
4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
Senior Notes \| 5.375% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	5.375%
Net carrying amount	$ 700
2020	0
2021	0
2022	700
2023	0
2024	0
Thereafter	$ 0
Senior Notes \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
Net carrying amount	$ 330
2020	0
2021	0
2022	0
2023	0
2024	0
Thereafter	$ 330
Senior Notes \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
Term Loan Facility \| Term Loan Facility
Debt Instrument [Line Items]
Net carrying amount	$ 220
2020	6
2021	16
2022	22
2023	22
2024	154
Thereafter	$ 0
Convertible Debt \| 4.875% Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	4.875%
Convertible Debt \| 1.125% Convertible Notes
Debt Instrument [Line Items]
Percentage of contractual interest rate	1.125%
Net carrying amount	$ 12
2020	12
2021	0
2022	0
2023	0
2024	0
Thereafter	$ 0

Stockholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Shares
Beginning balance, outstanding (in shares)	405,000
Granted (in shares)	0	0
Exercised (in shares)	0
Ending balance, outstanding (in shares)	405,000	405,000
Weighted Average Exercise Price
Beginning balance, outstanding (usd per share)	$ 64.79
Granted (usd per share)	0
Exercised (usd per share)	0
Ending balance, outstanding (usd per share)	$ 64.79	$ 64.79
Outstanding, Aggregate Intrinsic Value	$ 29
Outstanding, Weighted Average Remaining Contractual term	7 years 4 months 24 days
Stock options exercisable and expected to vest (in shares)	405,000
Stock options exercisable and expected to vest (usd per share)	$ 64.79
Exercisable (in shares)	280,000
Exercisable (usd per share)	$ 63.65
Exercisable, Aggregate Intrinsic Value	$ 20
Exercisable, Weighted Average Remaining Contractual term	7 years 3 months 18 days

Property, Equipment, and Capitalized Software, Net - Depreciation and Amortization (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Recorded in depreciation and amortization:
Amortization of capitalized software	$ 33	$ 42	$ 64
Depreciation and amortization of furniture, equipment, building, and improvements	21	36	42
Amortization of intangible assets	18	21	31
Amortization of finance leases	17
Subtotal	89	99	137
Recorded in cost of service revenue:
Amortization of capitalized software and deferred contract costs	0	28	41
Total depreciation and amortization recognized	$ 89	$ 127	$ 178

Restructuring Costs (Details) - USD ($) $ in Millions	12 Months Ended
Restructuring Costs (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 6	$ 46	$ 234
IT Restructuring
Restructuring Cost and Reserve [Line Items]
Cumulative restructuring costs	12
Decrease to estimated expected costs remaining		20
Accrued liabilities under restructuring plan	1	6
Other restructuring costs	3
IT Restructuring \| One-Time Termination Benefits
Restructuring Cost and Reserve [Line Items]
Cumulative restructuring costs	7
Payments for restructuring	5
IT Restructuring \| Consulting Fees
Restructuring Cost and Reserve [Line Items]
Cumulative restructuring costs	5
Payments for restructuring	3
2017 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Accrued liabilities under restructuring plan		$ 18
2017 Restructuring Plan \| Contract Termination
Restructuring Cost and Reserve [Line Items]
Accrued liabilities under restructuring plan	12
Payments for restructuring	9
Restructuring costs	$ 3

Goodwill and Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

The following table presents the changes in the carrying amounts of goodwill by segment, for the periods presented.



	Health Plans		Other			Total
	(In millions)
Balance, December 31, 2017	$	143	$	43		$	186
Acquisitions	—		—			—
Dispositions	—		(43		)	(43		)
Impairment and other	—		—			—
Balance, December 31, 2018	143		—			143
Acquisitions	—		—			—
Dispositions	—		—			—
Impairment and other	—		—			—
Balance, December 31, 2019	$	143	$	—		$	143

Summary of identified intangible assets, by major class

The following table provides the details of identified intangible assets, by major class, for the periods indicated:



	December 31, 2019						December 31, 2018
	Cost		Accumulated Amortization		Carrying Amount		Cost		Accumulated Amortization		Carrying Amount
	(In millions)
Contract rights and licenses	$	179	$	156	$	23	$	201	$	162	$	39
Provider networks	20		14		6		20		12		8
Total	$	199	$	170	$	29	$	221	$	174	$	47

Significant Accounting Policies - Quality Incentive Premium Revenue (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Maximum available quality incentive premium - current period	$ 186	$ 182	$ 150
Amount of quality incentive premium revenue recognized in current period:
Earned current period	156	133	97
Earned prior periods	38	31	10
Total quality incentive premium revenue recognized	$ 194	$ 164	$ 107
Quality incentive premium revenue recognized as a percentage of total premium revenue	1.20%	0.90%	0.60%

Receivables (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Past Due [Line Items]
Total receivables	$ 1,406	$ 1,330
Government receivables
Financing Receivable, Past Due [Line Items]
Total receivables	1,056	872
Pharmacy rebate receivables
Financing Receivable, Past Due [Line Items]
Total receivables	150	146
Health insurer fee reimbursement receivables
Financing Receivable, Past Due [Line Items]
Total receivables	5	141
Other
Financing Receivable, Past Due [Line Items]
Total receivables	$ 195	$ 171

Net Income (Loss) Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

The following table sets forth the calculation of basic and diluted net income (loss) per share:



	Year Ended December 31,
	2019		2018		2017
	(In millions, except net income (loss) per share)
Numerator:
Net income (loss)	$	737	$	707	$	(512	)
Denominator:
Shares outstanding at the beginning of the period	62.1		59.3		55.8
Weighted-average number of shares issued:
Exchange of convertible senior notes ⁽¹⁾	—		1.4		0.1
Conversion of convertible senior notes ⁽¹⁾	—		0.2		—
Stock-based compensation	0.1		0.2		0.5
Denominator for basic net income (loss) per share	62.2		61.1		56.4
Effect of dilutive securities:
Warrants ⁽²⁾	1.4		4.8		—
Convertible senior notes ⁽¹⁾	—		0.4		—
Stock-based compensation	0.6		0.3		—
Denominator for diluted net income (loss) per share	64.2		66.6		56.4

Net income (loss) per share: ⁽³⁾
Basic	$	11.85	$	11.57	$	(9.07	)
Diluted	$	11.47	$	10.61	$	(9.07	)

Potentially dilutive common shares excluded from calculations: ⁽²⁾
Warrants	—		—		1.9
Convertible senior notes ⁽¹⁾	—		—		0.4
Stock-based compensation	—		—		0.3

_______________________________


(1)	“Convertible senior notes” in this table refer to the 1.625% convertible senior notes due 2044 that were settled in 2018.

(2)

For more information regarding the warrants, including partial termination transactions, refer to Note 14, “Stockholders' Equity.” The dilutive effect of all potentially dilutive common shares is calculated using the treasury stock method. Certain potentially dilutive common shares issuable are not included in the computation of diluted net income (loss) per share because to do so would have been anti-dilutive.

(3)

Source data for calculations in thousands.

Medical Claims and Benefits Payable (Tables)

12 Months Ended

Dec. 31, 2019

Insurance [Abstract]

Schedule of liability for unpaid claims and claims adjustment expense

The following table provides the details of our medical claims and benefits payable as of the dates indicated.



	December 31,
	2019		2018		2017
	(In millions)
Fee-for-service claims incurred but not paid (“IBNP”)	$	1,406	$	1,562	$	1,717
Pharmacy payable	126		115		112
Capitation payable	55		52		67
Other	267		232		296
Total	$	1,854	$	1,961	$	2,192

Components of the change in medical claims and benefits payable



	Year Ended December 31,
	2019			2018			2017
	(In millions)
Medical claims and benefits payable, beginning balance	$	1,961		$	2,192		$	1,929
Components of medical care costs related to:
Current period	14,176			15,478			17,037
Prior periods ⁽¹⁾	(271		)	(341		)	36
Total medical care costs	13,905			15,137			17,073

Change in non-risk and other provider payables	24			13			(106		)

Payments for medical care costs related to:
Current period	12,554			13,671			15,130
Prior periods	1,482			1,710			1,574
Total paid	14,036			15,381			16,704
Medical claims and benefits payable, ending balance	$	1,854		$	1,961		$	2,192

________________

(1)

December 31, 2018, includes the 2018 benefit of the 2017 Marketplace CSR reimbursement of $81 million.

Incurred and paid claims development



Incurred Claims and Allocated Claims Adjustment Expenses							Total IBNP		Cumulative number of reported claims
Benefit Year	2017		2018		2019		Total IBNP		Cumulative number of reported claims

	(Unaudited)		(Unaudited)
	(In millions)
2017	$	17,037	$	16,728	$	16,704	$	18	119
2018			15,478		15,245		25		110
2019					14,176		1,348		93
					$	46,125	$	1,391



Cumulative Paid Claims and Allocated Claims Adjustment Expenses
Benefit Year	2017		2018		2019

	(Unaudited)		(Unaudited)
	(In millions)
2017	$	15,130	$	16,671	$	16,686
2018			13,752		15,220
2019					12,554
					$	44,460

Reconciliation of claims development to liability

The following table represents a reconciliation of claims development to the aggregate carrying amount of the liability for medical claims and benefits payable.



	2019
	(In millions)
Incurred claims and allocated claims adjustment expenses	$	46,125
Less: cumulative paid claims and allocated claims adjustment expenses	(44,460		)
All outstanding liabilities before 2017	15
Non-risk and other provider payables	174
Medical claims and benefits payable	$	1,854

Leases - Supplemental Balance Sheet Information (Details) $ in Millions	Dec. 31, 2019 USD ($)
ROU assets
Other assets	$ 65
Lease liabilities
Accounts payable and accrued liabilities (current)	25
Other long-term liabilities (non-current)	48
Total operating lease liabilities	73
ROU assets
Property, equipment, and capitalized software, net	228
Lease liabilities
Accounts payable and accrued liabilities (current)	8
Finance lease liabilities (non-current)	231
Total finance lease liabilities	$ 239

Property, Equipment, and Capitalized Software, Net - Summary of Property, Equipment, and Capitalized Software (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Total cost	$ 687	$ 774
Less: accumulated amortization - capitalized software	(351)	(320)
Less: accumulated depreciation and amortization - furniture, equipment, building, and improvements	(179)	(213)
Total accumulated depreciation and amortization	(530)	(533)
ROU assets - finance leases	228
Property, equipment, and capitalized software, net	385
Property, equipment, and capitalized software, net		241
Capitalized software
Property, Plant and Equipment [Line Items]
Total cost	421	373
Furniture and equipment
Property, Plant and Equipment [Line Items]
Total cost	213	231
Building and improvements
Property, Plant and Equipment [Line Items]
Total cost	49	154
Land
Property, Plant and Equipment [Line Items]
Total cost	$ 4	$ 16

Net Income (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Summary of denominators for the computation of basic and diluted earnings per share

The following table sets forth the calculation of basic and diluted net income (loss) per share:



	Year Ended December 31,
	2019		2018		2017
	(In millions, except net income (loss) per share)
Numerator:
Net income (loss)	$	737	$	707	$	(512	)
Denominator:
Shares outstanding at the beginning of the period	62.1		59.3		55.8
Weighted-average number of shares issued:
Exchange of convertible senior notes ⁽¹⁾	—		1.4		0.1
Conversion of convertible senior notes ⁽¹⁾	—		0.2		—
Stock-based compensation	0.1		0.2		0.5
Denominator for basic net income (loss) per share	62.2		61.1		56.4
Effect of dilutive securities:
Warrants ⁽²⁾	1.4		4.8		—
Convertible senior notes ⁽¹⁾	—		0.4		—
Stock-based compensation	0.6		0.3		—
Denominator for diluted net income (loss) per share	64.2		66.6		56.4

Net income (loss) per share: ⁽³⁾
Basic	$	11.85	$	11.57	$	(9.07	)
Diluted	$	11.47	$	10.61	$	(9.07	)

Potentially dilutive common shares excluded from calculations: ⁽²⁾
Warrants	—		—		1.9
Convertible senior notes ⁽¹⁾	—		—		0.4
Stock-based compensation	—		—		0.3

_______________________________


(1)	“Convertible senior notes” in this table refer to the 1.625% convertible senior notes due 2044 that were settled in 2018.

(2)

(3)

Source data for calculations in thousands.

Investments

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investments

Available-for-Sale Investments

We consider all of our investments classified as current assets to be available-for-sale. The following tables summarize our current investments as of the dates indicated:



	December 31, 2019
	Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
	(In millions)
Corporate debt securities	$	1,174	$	5	$	1	$	1,178
Mortgage-backed securities	420		1		1		420
Asset-backed securities	126		1		—		127
U.S. Treasury notes	86		—		—		86
Municipal securities	78		—		—		78
GSEs	49		—		—		49
Foreign securities	7		—		—		7
Certificates of deposit	1		—		—		1
Total	$	1,941	$	7	$	2	$	1,946



	December 31, 2018
	Amortized Cost		Gross Unrealized				Estimated Fair Value
	Amortized Cost		Gains		Losses		Estimated Fair Value
	(In millions)
Corporate debt securities	$	1,131	$	—	$	8	$	1,123
Asset-backed securities	83		—		1		82
U.S. Treasury notes	181		—		—		181
Municipal securities	115		—		1		114
GSEs	164		—		1		163
Foreign securities	4		—		—		4
Certificates of deposit	14		—		—		14
Total	$	1,692	$	—	$	11	$	1,681

The contractual maturities of our current investments as of December 31, 2019 are summarized below:



	Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	453	$	453
Due after one year through five years	957		962
Due after five years through ten years	171		171
Due after ten years	360		360
Total	$	1,941	$	1,946

Gross realized gains and losses from sales of available-for-sale securities are calculated under the specific identification method and are included in investment income. Gross realized investment gains amounted to $13 million in the year ended December 31, 2019. Gross realized investment losses were insignificant in the year ended December 31, 2019. Gross realized investment gains and losses for the years ended December 31, 2018 and 2017 were insignificant.

We have determined that unrealized losses at December 31, 2019 and 2018 are temporary in nature, because the change in market value for these securities resulted from fluctuating interest rates, rather than a deterioration of the creditworthiness of the issuers. So long as we maintain the intent and ability to hold these securities to maturity, we are unlikely to experience losses. In the event that we dispose of these securities before maturity, we expect that realized losses, if any, will be insignificant.



	In a Continuous Loss Position for Less than 12 Months					In a Continuous Loss Position for 12 Months or More
	Estimated Fair Value		Unrealized Losses		Total Number of Positions	Estimated Fair Value		Unrealized Losses		Total Number of Positions
	(Dollars in millions)
Corporate debt securities	$	222	$	1	167	$	—	$	—	—
Mortgage-backed securities	143		1		72	—		—		—
Total	$	365	$	2	239	$	—	$	—	—



	In a Continuous Loss Position for Less than 12 Months					In a Continuous Loss Position for 12 Months or More
	Estimated Fair Value		Unrealized Losses		Total Number of Positions	Estimated Fair Value		Unrealized Losses		Total Number of Positions
	(Dollars in millions)
Corporate debt securities	$	509	$	3	285	$	412	$	5	298
Asset-backed securities	—		—		—	68		1		52
Municipal securities	—		—		—	87		1		90
GSEs	—		—		—	127		1		76
Total	$	509	$	3	285	$	694	$	8	516

Held-to-Maturity Investments

Pursuant to the regulations governing our Health Plans segment subsidiaries, we maintain statutory deposits and deposits required by government authorities primarily in cash, cash equivalents, and U.S. Treasury securities. We also maintain restricted investments as protection against the insolvency of certain capitated providers. The use of these funds is limited as required by regulation in the various states in which we operate, or as needed in the event of insolvency of capitated providers. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets.

We have the ability to hold these restricted investments until maturity, and as a result, we would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. Our held-to-maturity restricted investments are carried at amortized cost, which approximates fair value, and mature in one year or less. The following table presents the balances of restricted investments:



	December 31,
	2019		2018
	(In millions)
Florida	$	12	$	32
New Mexico	21		43
Ohio	12		12
Puerto Rico	11		10
Other	23		23
Total Health Plans segment	$	79	$	120

Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Summary of quarterly results of operations

The following table summarizes quarterly unaudited results of operations for the periods presented.



	For The Quarter Ended
	March 31, 2019		June 30, 2019		Sept. 30, 2019		December 31, 2019
	(In millions, except per-share data)
Total revenue	$	4,119	$	4,193	$	4,243	$	4,274
Margin	581		583		561		578
Net income	198		196		175		168

Net income per share - Basic ⁽¹⁾	$	3.19	$	3.15	$	2.81	$	2.70
Net income per share - Diluted ⁽¹⁾	$	2.99	$	3.06	$	2.75	$	2.67



	For The Quarter Ended
	March 31, 2018		June 30, 2018		Sept. 30, 2018		December 31, 2018
	(In millions, except per-share data)
Total revenue	$	4,646	$	4,883	$	4,697	$	4,664
Margin	615		673		566		664
Gain (loss) on sales of subsidiaries	—		—		37		(52		)
Net income	107		202		197		201

Net income per share - Basic ⁽¹⁾	$	1.79	$	3.29	$	3.22	$	3.24
Net income per share - Diluted ⁽¹⁾	$	1.64	$	3.02	$	2.90	$	3.01

________________________

(1)

Stockholders' Equity - Additional Information (Details) - USD ($)		1 Months Ended		12 Months Ended
	Dec. 31, 2019	Feb. 07, 2020	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2013	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchased of common stock				$ 54,000,000
Cash paid for partial termination of 1.125% Warrants				514,000,000	$ 549,000,000	$ 0
Unrecognized compensation expense	$ 49,000,000		$ 49,000,000	$ 49,000,000
Unrecognized compensation forfeited rate				15.90%
Weighted average grant date fair value of stock options granted (usd per share)				$ 41.43
Common stock issued during period (in shares)				142,000	216,000	351,000
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum award vesting period				4 years
Weighted average period of unrecognized compensation expense				2 years 2 months 12 days
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of unrecognized compensation expense				1 year 7 months 6 days
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum award vesting period				4 years
Unrecognized compensation expense	$ 4,000,000		$ 4,000,000	$ 4,000,000
Weighted average period of unrecognized compensation expense				9 months 18 days
Stock option expiration period				10 years
Risk free interest rate				2.30%
Expected volatility rate				38.40%
Dividend yield				0.00%
Expected term of awards				8 years 4 months 24 days
Options exercised, intrinsic value						$ 2,000,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield				0.00%	0.00%	0.00%
Expected term of awards				6 months	6 months	6 months
Employee purchase price as a percentage of stock price				85.00%
Maximum annual contribution per employee				$ 25,000
Risk-free interest rate, minimum				0.60%	0.60%	0.60%
Risk-free interest rate, maximum				2.30%	2.30%	2.30%
Minimum expected volatility rate inputs for fair value measurement				31.00%	31.00%	31.00%
Maximum expected volatility rate inputs for fair value measurement				45.00%	45.00%	45.00%
2019 EIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issued under ESPP (in shares)								2,900,000
2019 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issued under ESPP (in shares)								3,000,000.0
1.125% Warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stated interest rate	1.125%		1.125%	1.125%
Number of warrants issued (in shares)							13,500,000
Striking price of warrants (USD per share)							$ 53.8475
Class of warrant	310,000		310,000	310,000
Cash paid for partial termination of 1.125% Warrants				$ 514,000,000
Number of warrants terminated (in shares)				5,900,000
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized	$ 500,000,000		$ 500,000,000	$ 500,000,000
Repurchased of common stock (in shares)	55,000			400,000
Repurchased of common stock	$ 7,000,000			$ 54,000,000
Average cost (USD per share)			$ 135.30
Share-based compensation (in shares)				242,000	365,000,000
Subsequent Event \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchased of common stock (in shares)		1,533,000
Repurchased of common stock		$ 203,000,000
Average cost (USD per share)		$ 132.69

Medical Claims and Benefits Payable - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Insurance [Abstract]
Medical claims and benefits payable	$ 132	$ 107	$ 122
Favorable (unfavorable) adjustment	$ (271)	(341)	$ 36
CMS Subsidies
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, operating expense		$ 81

Income Taxes - Reconciliation of the U.S. Federal Statutory Income Tax Rate (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Statutory federal tax (benefit) rate	21.00%	21.00%	35.00%
State income provision (benefit), net of federal	1.40%	1.20%	0.70%
Nondeductible health insurer fee (“HIF”)	0.00%	7.30%	0.00%
Nondeductible compensation	1.20%	0.70%	(2.80%)
Nondeductible goodwill impairment	0.00%	0.00%	(6.60%)
Worthless stock deduction	0.00%	(1.00%)	0.00%
Revaluation of net deferred tax assets	0.00%	(0.40%)	(8.80%)
Other	0.60%	0.40%	(1.10%)
Effective tax expense (benefit) rate	24.20%	29.20%	16.40%

Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment charges	$ 0	$ 0
Future Amortization Expenses
Future amortization expense, 2020	14
Future amortization expense, 2021	5
Future amortization expense, 2022	3
Future amortization expense, 2023	3
Future amortization expense, 2024	3
Health Plans
Finite-Lived Intangible Assets [Line Items]
Gross goodwill	445	445
Accumulated impairment loss	302	302
Goodwill impairment charges	0	0	$ 244
Future Amortization Expenses
Impairment of intangible assets			25
Other
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment charges	$ 0	$ 0	190
Future Amortization Expenses
Impairment of intangible assets			$ 11