A small portion of the population accounts for a large share of health care spending in a year. Although we tend to focus on averages, few people actually have spending around the average, since individual health care needs vary over the life course. Some portion of the population (the elderly and those with serious or chronic illnesses) require more and higher-cost health services than those who are younger or otherwise typically in need of fewer and less costly services.
In 2013, half of the population accounted for 97% of health spending. The 5% of people who spend the most on health care spend an average of around $43,000 annually; people in the top 1% have average spending of over $95,000. At the other end of the spectrum, the 50% of the population with the lowest spending accounted for 3% of all total health spending; the average spending for this group was $253.
A small portion of the population accounts for a large share of out-of-pocket health care spending in a year. This figure looks at out-of-pocket spending directly on services (payments to providers, including cost-sharing) and does not include premiums or premium contributions towards coverage.
One percent of the population accounted for 20% of out-of-pocket spending on health services in 2013, and the top 5% of spenders accounted for 45%. At the other end of the spectrum, the 50% of the population with the lowest out-of-pocket spending accounted for 2% of all out-of-pocket health spending. On average, people spending in the top 1% paid over $12,000 out-of-pocket on health care services, while people spending in the bottom 50% spent $26 on average.
Although health spending for families includes higher and lower spenders within each family, the distribution of family spending is almost as skewed as for individual spending. In 2013, the top spending 1% of families accounted for about 14% of all health spending and the top 5% accounted for over 35% of all spending.
Health spending is skewed even at the family level, because one family member typically accounts for the vast majority of family spending: in 2013, among families with any spending, the family member requiring the most health expenditures on average accounted for 83% of family health spending.
In the U.S., most of the population (89%) report their health as at least good. Only 3% of the population reported being in poor health when surveyed in 2013. Of course, as we age, we are more likely to experience health complications and utilize health services.
Health spending is concentrated even within populations with relatively high average health costs. In 2013, half of people reporting fair or poor health accounted for 94% of total health spending by all people in fair or poor health.
In 2013, half of those over age 65 accounted for 91% of total health spending by all elderly people.
People age 55 and over account for almost half of total health spending
While there are people with high spending at all ages, overall, people age 55 and over made up 28% of the population but accounted for 48% of all health spending in 2013. In contrast, people under age 35 made up 47% of the population but accounted for a quarter of health spending.
Among children, there is not a significant difference in health spending between girls and boys. Average health spending increases throughout adulthood for both males and females, but at somewhat different rates. Women on average spend more in their 20s, 30s, 40s, and early 50s, in part due to childbirth. Spending differences between males and females are not statistically significant in older age groups.
People with a current or prior diagnosis of chronic health condition(s) have higher spending on average than people without a diagnosis.
Whites have higher average health spending than the other groups shown in most age categories. Asians and Hispanics have lower average health spending in most age categories.
People who lack insurance all year have much lower health spending on average in all age categories than people who have insurance part or all of the year. People who are healthier may be more likely to go without insurance. Also, people who do not have insurance are more likely to go without needed medical care.
Over half of the population spent $200 or less (including 27% of the population with no out-of-pocket health expenses) in 2013. At the other end of the spectrum, about 16% of people spent more than $1,000 out-of-pocket on health care services.
Spending in traditional Medicare rises with age and peaks at 96
Medicare spending increases with age and does not currently peak until beneficiaries reach their late 90s, on average. As we live longer, the spending peak is also likely to come later; just fifteen years ago the peak spending age was 92, but climbed to 96 by 2011 (the most recent year with available data).
Medicare spending for inpatient care peaks at age 89, while hospice peaks at age 104
Although overall Medicare spending increases with age, somewhat different patterns emerge when breaking spending out into types of care. Inpatient hospital care, for example, peaks when Medicare enrollees are in their late-80s on average, while spending on hospice and skilled nursing peaks much later in life.