How health spending patterns vary by demographics in the U.S.

Bradley Sawyer, Nolan Sroczynski, Gary ClaxtonKaiser Family Foundation

Updated with 2014 Medical Expenditure Panel Survey data on January 31, 2017.

In a given year, a small portion of the population is responsible for a very large percentage of total health spending. We tend to focus on averages when discussing health spending, but individuals’ health status and medical diagnoses  –and thus their need to access and utilize health services –varies across the population and the course of a person’s lifetime.  In fact, very few people have spending around the average.

Our updated chart collection explores the variation in health spending across the population through an analysis of the 2014 Medical Expenditure Panel Survey (MEPS) data. We show that just 1% of the population – those with the highest spending – accounted for 23% of health spending and that just 5% of the population was responsible for half of all spending. On the other side of the spectrum, the lowest spending half of the U.S. population accounted for just 3% of total health spending in 2014.

Those with a pre-existing condition – such as having been diagnosed with diabetes, stroke, heart disease, cancer or emphysema – also had higher-than-average spending. Our analysis further indicates that spending is concentrated even within populations with relatively high average health costs. Half of people reporting fair or poor health accounted for 94% of total health spending by all people in fair or poor health. Similarly, half of those over age 65 accounted for 91% of total health spending by all elderly people. Out-of-pocket spending was about as concentrated as overall spending, with 1% of the population accounting for about one fifth of total out-of-pocket health spending.

We also use MEPS to show spending variation across different demographic and health factors, including age, gender, race, insurance status and presence of certain health conditions. People who are older and those who have ever been diagnosed with certain serious or chronic health conditions account for a larger share of health spending. People over age 55 accounted for over half of total health spending in the U.S., despite representing just over a quarter (28%)  of the population.

Average health spending increases throughout adulthood for both males and females, but at somewhat different rates. Among children, health spending is not significantly different by gender, but women on average spend more in their 20s and 30s. Spending differences between males and females are not statistically significant in older age groups.

Health spending also varies by race and ethnicity. Whites have higher average health spending in all age groups, with the exception of those aged 35 to 44, among whom blacks have slightly higher spending. Asians and Hispanics have lower average health spending in all age categories.

People with health insurance for at least part of the year had higher health spending than those who were insured all year. People with no health coverage are more likely to forgo needed medical care due to costs. Additionally, some of the uninsured may also be healthier and thus less likely to need care.

While spending patterns may in certain instances highlight inadequate access to care – as in the case of the uninsured – variations in spending generally mirror differences in health needs. The concentration of spending among a small share of the population points to where efforts to moderate health care costs are likely to produce the biggest payoff.