As the health care reform debate rages on, and health plans scramble to reduce administrative costs and make up for losses to investment portfolios, reducing medical expenses is also a priority. According to a new analysis done by Mark Farrah Associates (MFA), medical expenses on a per member per month (PMPM) basis have escalated at nearly 8% per year for the past six years. Although some venues may see a stable 7% to 8% growth rate as good, this rate does not bode well for the overall cost of health care in the future.

Health insurance plans paid nearly $96 billion for fully insured (risk-based) medical expenses during the first quarter of 2009. During this period, 22 companies received a total of $74.6 billion in risk-based health insurance premiums. These plans incurred a total of $64.9 billion for medical expenses through the first quarter. The percentage of premiums spent on medical expenses ranged from 81% to 96%.

In 2008, 88% percent of all fully insured health insurance premiums went toward medical expenses; as a percentage of revenue, that number is up 1% over 2007 and is a 3% increase over 2006. On a per member per month basis medical expenses have grown from $154.64 in 2002 to $238.67 in 2008.


In the latest Healthcare Business Strategy report "Medical Expense Trend Stabilized," Mark Farrah Associates (MFA) released results from its recent study of the statutory filings that health plans submit to state regulators and to the National Association of Insurance Commissioners (NAIC), MFA analyzed medical expenses for risk-based insurance plans for the years 2002 to 2008 and for first quarter 2009. To read the full text of "Medical Expense Trend Stabilized," visit the Healthcare Business Strategy library on Mark Farrah Associates' website www.markfarrah.com.

About Mark Farrah Associates (MFA)

MFA is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry. Committed to simplifying analysis of health insurance business, our products include Medicare Business Onlineâ„¢, the Health Coverage Portalâ„¢, Health Insurer Insightsâ„¢ and Health Plans USAâ„¢.





Mark Farrah Associates

Debra Donahue, 207-985-8484

www.markfarrah.com

Source: Mark Farrah Associates