12.17.2014 – 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.
Our latest chart collection explores the variation in health spending across the population through an analysis of the 2012 Medical Expenditure Panel Survey (MEPS) data. We show that just 1% of the population – those with the highest spending – accounted for almost one quarter of health spending (23%) and that just 5% of the population is responsible for almost 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 2012. Out-of-pocket spending was almost as concentrated as overall spending, with 1% of the population accounting for just over one fifth (21%) of total 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 just over half of total health spending in the U.S., despite representing just over a quarter of the population. Those who have ever been diagnosed with diabetes, stroke, heart disease, cancer and 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 95% 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.
Average health spending increases throughout adulthood for both males and females, but at somewhat different rates. Among children, health spending is higher on average for boys than for girls, but women on average spend more in their 20s, 30s and early 40s. Spending differences between males and females are not statically 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 49, among whom whites and blacks have almost equivalent spending. Asians and Hispanics have lower average health spending in most age categories.
People with health insurance for at least part of the year had higher health spending than those who were insured all year. In 2013, 83% of adults reported having health coverage. People with no health coverage are more likely to forgo needed medical care due to costs. Additionally, some of the uninsured may 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.