How do health expenditures vary across the population?

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 thus their need to access and utilize health services – varies from year to year and over the course of their lifetimes. In fact, very few people have spending around the average. This collection of charts and a related brief explore trends in the variation in health spending across the population through an analysis of the 2014 Medical Expenditure Panel Survey (MEPS) data. 

Discussion of health spending often focus on averages, but spending varies considerably across the population

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 2014, 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 $47,000 annually; people in the top 1% have average spending of over $107,000. 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 $264.

Out-of-pocket spending on health services is almost as concentrated as overall health spending

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 nearly a fifth of all out-of-pocket spending on health services in 2014, 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 $11,000 out-of-pocket on health care services, while people spending in the bottom 50% spent $25 on average.

Family spending is very concentrated, with 10% of families accounting for half of spending

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 2014, the top spending 1% of families accounted for about 15% of all health spending and the top 5% accounted for over 38% 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 2014, among families with any spending, the family member requiring the most health expenditures on average accounted for 83% of family health spending.

Most of the population reports being in good or better health

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 2014. Of course, as we age, we are more likely to experience health complications and utilize health services.

Among those reporting fair or poor health, there is considerable concentration of health spending

Health spending is concentrated even within populations with relatively high average health costs. In 2014, half of people reporting fair or poor health accounted for 94% of total health spending by all people in fair or poor health.

Considerable spending variation exists among the elderly, who see the highest proportion of health spending overall

In 2014, half of those over age 65 accounted for 91% of total health spending by all elderly people.

People age 55 and over account for over 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 55% of all health spending in 2014. In contrast, people under age 35 made up 47% of the population but accounted for less than a quarter of health spending.

While health spending increases throughout adulthood for both men and women, spending varies by age

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, and early 40s, in part due to childbirth. Spending differences between males and females are not statistically significant in older age groups.

Diagnosis with a serious or chronic health condition is associated with higher spending

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 health spending in most age categories than people in other groups

Whites have higher average health spending than the other groups shown in all age categories. Asians and Hispanics have lower average health spending in most age categories.

People with some insurance have much higher health spending than people who are uninsured all year

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.

A substantial share of the population spends $200 or less out-of-pocket on health care services

Over half of the population spent $200 or less (including 27% of the population with no out-of-pocket health expenses) in 2014. 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 beneficiaries rises with age and peaks at age 94

Spending in traditional Medicare on a per capita basis increases at a nearly consistent rate until peaking at age 94. It remains relatively stable for several years and then begins to decline around age 98.

Medicare spending for inpatient care peaks at age 92, while hospice peaks at age 100

The per capita Medicare spending for Skilled Nurses, Home Health, Part B outlays all follow a gradual rise and fall between ages 65 to 100.  Spending on Hospice care, however increase rapidly starting around age 75 and peaks at age 100. Inpatient services are the highest category fro all ages until age 99.