As of 2014, what percent of the u.s. economy was represented by healthcare spending?

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Highlights

• In 2014, the top 1 percent of persons ranked by their health care expenditures accounted for 22.8 percent of total health care expenditures, while the bottom 50 percent accounted for only 2.8.
• Persons age 65 and older comprised 15.1 percent of the U.S. civilian noninstitutionalized population and accounted for 33.6 percent of total health care expenditures. In contrast, children under age 18 comprised 23.2 percent of the population and 10.2 percent of expenditures.
• While 14.4 percent of adults under age 65 were uninsured during 2014, this group accounted for only 5.7 percent of health care expenditures.

Introduction

In this Statistical Brief, data from the Household Component of the Agency for Healthcare Research and Quality's (AHRQ) Medical Expenditure Panel Survey (MEPS-HC) are used to estimate and illustrate the overall concentration of health care expenses across the U.S. civilian noninstitutionalized population. The distribution of spending is further described among sub-populations of interest based on age and insurance status, which are two key factors that jointly affect the likelihood that a person needs and receives care, subsequently impacting the magnitude of their health care expenditures. Characterizing the distribution of health care spending across these dimensions can help guide policy-makers toward effective interventions in high-cost groups with disparate spending distributions. All differences discussed in the text are statistically significant at the 0.05 level.

Findings

Age
Children under age 18 comprised 23.2 percent of the U.S. civilian noninstitutionalized population in 2014, but accounted for only 10.2 percent of total health care expenditures (figure 3). Young adults (ages 18–44) comprised 35.5 percent of the population and accounted for only 20.3 percent of total health care expenditures, while middle-aged adults (45-64) represented 26.3 percent of the population and were associated with 35.9 percent of total health care spending. Adults age 65 and older comprised the smallest percentage (15.1) of the U.S. civilian noninstitutionalized population, but accounted for 33.6 percent of total health care spending.

Average expenditures were higher among older age groups (ages 45–64 and 65 and older). Separated by age group, annual expenditures among the top 5 percent of spenders averaged $23,855 among children ages 0–17, $28,275 among adults ages 18–44, $62,472 for adults ages 45–64, and $68,819 for adults age 65 and older (figure 4). The distribution of spending was least concentrated among adults age 65 and older, where the top 5 percent of spenders accounted for 32.6 percent of the total expenditures for this age group (data not shown). In contrast, the top 5 percent of spenders among the age groups under 65 years of age accounted for more than 48.4 percent of expenditures in their respective categories (data not shown).

More than half (56.7 percent) of children ages 0–17 had some private insurance during 2014, and this group accounted for 72.4 percent of total expenditures among children under 18. Public insurance only was held by 39.5 percent of children and accounted for 26.3 percent of expenditures.

Among adults ages 18–64 with private insurance, the top 5 percent spent $41,907 and the bottom 50 percent spent $315 on average in 2014 (figure 6). The top 5 percent of children with private insurance spent $31,066 on average, while the bottom 50 percent spent $257. For those with only public coverage, the top 5 percent of adults averaged $63,681, while the top 5 percent of children averaged $14,969 in annual expenditures. Adults without insurance had the lowest average mean expenditures and the most concentrated spending, with persons in the top 5 percent spending $25,722. Nearly all persons in the bottom 50 percent of this group had no health care expenditures in 2014.

Nearly all persons age 65 and older had Medicare coverage during 2014, about two-thirds of which had supplemental private or public insurance in addition to Medicare. The concentration of spending within each these groups was similar (data not shown).

Data Source

Definitions

Concentration curve
A concentration curve is a graphical representation of the distribution of a variable of interest, such as income or expenditures, across the percentage of the population. The cumulative percentage of the population is represented along the X-axis and the cumulative percentage of expenditures is represented on the Y-axis. A point at the X-axis value of 50 percent and the Y-axis value of 10 percent, for instance, indicates that the bottom 50 percent of the population accounts for 10 percent of total spending, and subsequently, the top 50 percent accounts for 90 percent of total spending. Similarly, a point at the X-axis value of 99 percent and the Y-axis value of 82 percent indicates that the bottom 99 percent of the population accounts for 82 percent of spending, and conversely, that the top 1 percent of the population accounts for 18 percent of expenditures.

Expenditure
MEPS-HC defines total expense as the sum of payments from all sources to hospitals, physicians, other health care providers (including dental care), and pharmacies for services reported by respondents in the MEPS-HC.

Health insurance status
Individuals were classified into the following three insurance categories based on household responses to the health insurance status questions:

• Any private health insurance: Individuals who, at any time during the year had insurance that provided coverage for hospital and physician care (other than Medicare, Medicaid, or other public hospital/physician coverage), were classified as having private insurance. Coverage by TRICARE (Armed Forces-related coverage) was also included as private health insurance. Insurance that provided coverage for a single service only, such as dental or vision coverage, was not included.
• Public coverage only: Individuals were considered to have public coverage only if they met both of the following criteria: 1) they were not covered by private insurance at any time during the year, and 2) they were covered by one of the following public programs at some point during the year: Medicare, Medicaid, or other public hospital/physician coverage.
• Uninsured: The uninsured were defined as people not covered by private hospital/physician insurance, Medicare, TRICARE, Medicaid, or other public hospital/physician programs at any time during the entire year or their period of eligibility for the survey.

About MEPS-HC

References

Cohen, J. Design and Methods of the Medical Expenditure Panel Survey Household Component. MEPS Methodology Report No. 1. AHCPR Pub. No. 97-0026. Rockville, MD. Agency for Healthcare Policy and Research, 1997. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr1/mr1.shtml

Ezzati-Rice, T.M., Rohde, F., Greenblatt, J. Sample Design of the Medical Expenditure Panel Survey Household Component, 1998–2007. Methodology Report No. 22. March 2008. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr22/mr22.shtml

Machlin, S.R., Chowdhury, S.R., Ezzati-Rice, T., DiGaetano R., Goksel H., Wun L.M., Yu W., Kashihara D. Estimation Procedures for the Medical Expenditure Panel Survey Household Component. Methodology Report #24. September 2010. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr24/mr24.shtml

Stagnitti, M. N., Beauregard, K., and Solis, A. Design, Methods, and Field Results of the Medical Expenditure Panel Survey Medical Provider Component (MEPS MPC)—2006 Calendar Year Data. Methodology Report No. 23. November 2008. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr23/mr23.shtml

Suggested Citation

Joel W. Cohen, PhD, Director
Center for Financing, Access, and Cost Trends
Agency for Healthcare Research and Quality
5600 Fishers Lane, Mailstop 07W41A
Rockville, MD 20857

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