“We believe this dislocation will self-correct over time as we continue to work closely with our state partners to ensure the underlying trends are reflected in our rates, but we have not assumed material improvement in our 2024 outlook.”

In context

“tment accrual for the 2023 plan year. These increases were partially offset by the favorable year-over-year impact of prior period development. In Medicare Advantage, strong prior period reserve development improved our first quarter medical cost trend estimates, but we continued to see elevated trends in the second quarter largely in the same categories we previously discussed, including in-patient, supplemental benefits such as dental, and also in pharmacy. Following the close of the quarter, we have seen some evidence of an acceleration of trends in these same categories, which informed our view of risks for the remainder of 2024. We also experienced medical cost pressures in our Medicaid business. This pressure is largely driven by higher acuity resulting from member redeterminations. We believe this dislocation will self-correct over time as we continue to work closely with our state partners to ensure the underlying trends are reflected in our rates, but we have not assumed material improvement in our 2024 outlook. During the quarter, we received final 2023 risk adjustment data for our individual exchange business. As a result, we increased our risk adjustment accrual for the 2023 plan year by approximately $225 million. We were disappointed to see such a large change in the final update. We believe this change was in part driven by the significant growth and disruption in the market, particularly late in 2023. For 2024, our population contains a significantly higher proportion of renewing members, and we continue to enhance our revenue integrity efforts to ensure we are appropriately capturing their acuity. As a result of this update, we now expect margins for our individual exchange business to be below breakeven this year; however, we are confident that our 2025 submitted rate filings, which we f”