The percentage of premiums paid to health plans going toward medical expenses is rising.

The percentage of premiums spent on medical expenses ranged from 81% to 96% in the first quarter of this year, an increase from the 88% spent last year, according to research by Mark Farrah Associates.

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.

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, the researchers speculate.

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.