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 over the course of their lifetimes. In fact, very few people have spending around the average.

This collection of charts is continuously updated and explores trends in health spending variation across the population through an analysis of the Medical Expenditure Panel Survey (MEPS) data. The most recent year of available data is 2019.

Most people reported being in good or better health


In the U.S., most of the population (90%) reported “good” or better health. Only 2% reported being in poor health.

As people age, they are more likely to experience health complications and utilize health services. Among people age 65 and over, 20% report their overall health as “fair” or “poor.”

People age 55 and over account for over half of the total health spending


While there are people with high spending at all ages, overall, people 55 and over accounted for 56% of total health spending in 2019, despite making up only 30% of the population. In contrast, people under age 35 made up 45% of the population but were responsible for only 21% of spending.

A small share of the population incurs most of health spending, including among older adults and people reporting fair or poor health status


A small portion of the population accounts for a large share of health spending in a year. Although we tend to focus on averages, few people have spending around the average, since individual health needs vary over the life course. Some portion of the population (older adults 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 2019, 5% of the population accounted for nearly half of all health spending. The 5% of people with the highest health spending had an average of $61,000 in health expenditures annually; people with health spending in the top 1% have average spending of over $130,000 per year. At the other end of the spectrum, the 50% of the population with total health spending below or equal to the 50th percentile accounted for only 3% of all health spending; the average spending for this group was $374 in 2019. Roughly 14% of the population had $0 in health expenditures in 2019.

Health spending is concentrated even within populations with relatively high average health costs. Among people reporting fair or poor health, the top 10% of people with the highest health spending accounted for 50% of total health spending.

Considerable spending variation exists between those who are 65 and over and those under the age of 65, with younger persons experiencing more concentrated health spending. In 2019, just over half of all health expenditures among adults ages 18 through 64 was concentrated in people in the top 5% of total health spending while almost half of all health expenditures among adults 65 or older was concentrated in people in the top 10% of total health spending.

Although health spending for families includes people with higher and lower spending within each family, the distribution of family spending is almost as skewed as for individual spending. In 2019, 1% of all families accounted for 13% of all family health spending. Families in the top 5% of health spending accounted for about 35% of all spending in this category.

Out-of-pocket spending on health services is concentrated similarly to overall health spending


Out-of-pocket spending includes direct payments to providers and cost-sharing but does not include out-of-pocket premium payments or contributions towards health coverage. Out-of-pocket health spending is similarly concentrated among high-health-need individuals. This small portion of the population accounts for a substantial share of total out-of-pocket health spending in a year.

Just 1 percent of the population accounted for 24% of all out-of-pocket spending for health services in 2019. People in the top 5% accounted for 49% of out-of-pocket spending. At the other end of the spectrum, the population with spending below or equal to the 50th percentile accounted for 2% of all out-of-pocket spending.

On average, people in the top 1% of out-of-pocket spending paid about $19,500 out-of-pocket for health services on average per year, and people in the top 10% spent an average of $5,390 out-of-pocket per year. People who are in the bottom 50% of out-of-pocket spending spent an average of $28 out-of-pocket.

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On average, patients with high needs have higher spending across all types of health services


When it comes to inpatient spending, the people in the bottom 50% of spending had virtually no inpatient expenses, compared to over $22,000 annual inpatient spending for people in the top 5%. The patients with the highest health spending also have higher prescription drug spending. On prescription drugs, individuals in the top 5% had average health spending of over $13,000 a year, compared to the overall average of almost $1,400.

Individuals in the top 5% of health costs make up the majority of total health spending for some services. Patients in the top 5% of health spending account for 73% of all home health expenses and 77% of all hospital inpatient expenses. They also account for nearly half of all prescription drug spending.

Average out-of-pocket spending for all types of services is also concentrated among people with higher spending. In 2019, people in the top 5% of out-of-pocket health spending spent an average of $1,150 for prescription drugs, while people in the bottom 50% spent $8 on average. This concentration in out-of-pocket spending is true for other services as well. People in the top 5% of out-of-pocket spending spent $487 on inpatient stays, while individuals in the bottom 50% had virtually no inpatient stays or inpatient out-of-pocket spending. People in the top 5% of out-of-pocket spending made up 96% of home health out-of-pocket spending, 64% of inpatient out-of-pocket spending, and 51% of all ambulatory out-of-pocket spending.

Health costs increase as individuals grow older, and this trend persists by insurance status and sex


People who lack insurance all year have much lower total health expenditures on average in all age categories than people who have insurance for part of the year or the entire year. This could be because people who are healthier may be more likely to go without insurance, or because people who do not have insurance are more likely to go without needed medical care.

Among children, there is not a significant difference in health spending between sexes. Average health spending increases throughout adulthood for both men and women, but at somewhat different rates. Women have higher health spending than men in their 20s, 30s, and early 40s, largely due to pregnancy and delivery-related care. Spending differences between men and women are not statistically significant in older age groups.

White people in the U.S. have higher health spending than those in other racial and ethnic groups


Overall, White people in the U.S. have significantly higher average total health spending than other race and ethnicity groups. People who identified as either Asian or Hispanic had the lowest average health spending in every age category. Differences in health spending by race may be driven by a variety of factors, including health status, insurance coverage, age distribution, and access to care. People of color are younger, on average, than White people, Hispanic people are more likely to be uninsured, and Hispanic and Black people are more likely to report delaying or going without medical care due to costs. Private health plans tend to pay higher prices for services than public plans do. About three in four Asian and White people are enrolled in private health plans at some point in a given year, while about one in two Black and Hispanic people are covered by private plans at some point in a given year.  Immigrants have lower health spending on average than those born in the United States. Asian and Hispanic people have the highest shares of foreign-born populations at about 66% and 33%, respectively.

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


People with a current or prior diagnosis of certain chronic health condition(s) have much higher spending on average than people without these conditions. Current or prior diagnosis of chronic health conditions is also associated with higher health spending for adults over 65, though the difference is smaller on average when compared to the overall average among all adults. Emphysema is linked with the highest mean spending among those who have ever been diagnosed with a chronic condition.

Diagnosis with a serious or chronic health condition is associated with higher out-of-pocket spending for all adults


People who have been diagnosed with a serious or chronic disease have significantly higher out-of-pocket spending. Among all adults, individuals who have been diagnosed with diseases like cancer or arthritis can have out-of-pocket spending twice as high as those who have not been diagnosed.

Among adults over 65 with diagnosed emphysema, asthma, stroke, high blood pressure, and diabetes, there is no significant difference in out-of-pocket spending from those who have not been diagnosed with the disease. In contrast, out-of-pocket spending is larger for older adults who have been diagnosed with cancer, arthritis, heart disease, and cholesterol than it is for those who have never been diagnosed. 

Methods

This collection of charts is based on the 2019 Medical Expenditure Panel Survey (MEPS) Household Component. MEPS is a nationally representative household survey of the U.S. civilian non-institutionalized population. Estimates account for the MEPS survey design, including the estimation weight, sampling strata, and primary sampling unit.

The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

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