New MFA report: Total medical expenses increase 1.7% in 2010

Total medical expenses, that is the amount of money health plans dispensed to pay for medical and hospital benefits, grew 1.7% in 2010, from $395 billion in 2009 to $401 billion in 2010, according to a new report by Mark Farrah Associates (MFA). Medical expenses on a per person per month basis which escalated at nearly 8% per year from 2002 - 2008, increased 4.9% in 2009 and grew only 1.1% in 2010. Using 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 health insurance plans for the years 2002 to 2010. The study found that health plans have succeeded in stabilizing medical expense trends and in lowering them in 2009 and 2010.

In 2010, 86% percent of all fully insured health insurance premiums went toward medical expenses. As a percentage of premiums, that number is down 1.5% over 2009. Regulating medical loss ratios is one way Congress is attempting to lower the cost of health care through the Patient Protection and Affordable Care Act of 2010 (PPACA). However, steps taken by health plans, employers and consumers to lower costs appear to be working ahead of scheduled implementation of PPACA provisions. This is good news for everyone impacted by the health system.

Source: Mark Farrah Associates