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STATISTICAL BRIEF #301:
National Health Care Expenses in the U.S. Civilian Noninstitutionalized Population, 2008

December 2010

David Kashihara and Kelly Carper

Highlights

Overall, the mean and median expenses of persons with any expenses in 2008 (84.4 percent of the population) were $4,470 and $1,257, respectively.
In 2008, hospital inpatient expenses and office-based visits each accounted for about one quarter of total expenses for the U.S. civilian noninstitutionalized population, while prescribed medicines accounted for approximately one-fifth of total expenses.
Hospital inpatient expenses comprised the largest single share of expenses for persons age 65 and over, while expenses for ambulatory care in office and hospital outpatient settings comprised the largest share for persons under age 65.
In 2008, private insurance covered 41.9 percent of total expenses; individuals and family members paid 16.7 percent out of pocket, Medicare paid 23.7 percent, and Medicaid/CHIP paid 10.2 percent. While the proportions paid out of pocket did not differ markedly across age groups, shares paid by public and private insurance sources varied considerably by age.
Mean expenses for persons age 65 and over with an expense ($9,585) were more than 2.5 times the amount for persons under 65 ($3,571). Uninsured persons under 65 had the lowest mean expenses while persons 65 and over with Medicare and other supplemental public insurance had the highest mean expenses.

Introduction

This Statistical Brief presents estimates of health care expenses by type of service and distributions by payment sources for the U.S. civilian noninstitutionalized population in 2008. Health care expenses, as reported in this Brief, represent payments to hospitals, physicians, and other health care providers based on utilization information collected in the Medical Expenditure Panel Survey (MEPS) Household Component and payment data collected in both the MEPS Household and Medical Provider Components. Expense estimates include amounts paid by individuals, private insurance, Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and other payment sources. All differences between estimates discussed in the text are statistically significant at the 0.05 level.

Findings

In 2008, there was an estimated total of $1.15 trillion paid for health care received by the U.S. civilian noninstitutionalized population distributed among various service categories including hospital inpatient and outpatient care, emergency room services, office-based medical provider services, dental services, home health care, prescription medicines, and other medical services and equipment (figure 1). Hospital inpatient expenses for both facility and separately billed physician services accounted for 28.7 percent of total expenses, and 32.1 percent of expenses was attributable to the combination of ambulatory care provided in medical offices and hospital outpatient departments (23.6 and 8.5 percent, respectively). Prescribed medicines accounted for 21.5 percent of health expenses, while other health service categories comprised relatively small percentages of the total, ranging from 1.9 percent for other medical services and equipment to 7.3 percent for dental services.

In 2008, 84.4 percent of the U.S. civilian noninstitutionalized population (about 256.9 million persons, data not shown) had some expenses for hospital inpatient and outpatient care, emergency room services, office-based medical provider services, dental services, home health care, prescription medicines, and/or other medical services and equipment (figure 2).¹ The proportion of people with expenses varied widely by type of service, with large proportions having expenses for office-based medical provider visits (71.8 percent) and prescribed medicines (62.3 percent) and much smaller proportions having expenses for hospital inpatient services (7.2 percent) and home health care (2.2 percent).

The mean total expense per person in 2008 was $4,470 (figure 3) for persons with an expense for any type of health care service. Among specific health care service categories, the mean expense per person with an expense ranged from $15,017 for hospital inpatient services and $7,311 for home health care to $671 for dental services and $379 for other medical services and equipment. Because a relatively small proportion of persons accounts for a large proportion of expenses, median expenses were substantially lower than mean expenses (figure 4). The overall median total expense for persons with expenses was $1,257, and ranged across service categories from $8,247 for hospital inpatient services and $2,808 for home health care to $240 for dental services and $219 for other medical services and equipment.

The distribution of expenses by type of service varied substantially when categorized by age (figure 5). Hospital inpatient expenses comprised 34.2 percent of expenses for persons age 65 and over compared to 26.3 percent for adults ages 18-64 and 24.8 percent for children under 18. Conversely, the share of expenses for ambulatory visits (office-based and hospital outpatient) was less for those 65 and older (26.5 percent) than for children under 18 years of age (31.8 percent) or adults 18-64 years of age (35.3 percent). Compared to adults, a substantially smaller share of total expenses for children under 18 were for prescribed medicines (13.0 percent versus 22.3 percent for adults 18 and over). However, a substantially larger share of children's expenses were for dental services (17.9 percent) than for adults ages 18-64 (7.5 percent) or 65 and over (3.7 percent). Expenses for emergency room care comprised a fairly small share of total expenses in all age groups, ranging from 3.0 percent for those 65 and over to 5.3 percent for those under 18 years of age.

Health care expenses are paid largely by individuals and third-party payers, such as private insurance and public programs. In 2008, private insurance covered 41.9 percent of total expenses; individuals and family members paid 16.7 percent out of pocket, Medicare paid 23.7 percent, and Medicaid/CHIP paid 10.2 percent (figure 6). While the proportion paid out of pocket was only slightly lower for persons age 65 and over than for those under age 65 (14.6 versus about 17 percent for the non-elderly), shares paid by public and private sources varied considerably. For example, private insurance paid for nearly half of expenses for children (44.9 percent) and over half of those for non-elderly adults (56.3 percent) but only 15.2 percent of expenses for the elderly age 65 and over. Conversely, Medicare paid over half (60.3 percent) for persons age 65 and over versus only 7.4 percent for younger adults. Moreover, Medicaid/CHIP paid almost one-third of expenses for children under 18 (30.5 percent), which was almost three times the proportion for adults ages 18-64 (10.6 percent) and about 10 times that for persons age 65 and over (3.1 percent).

As shown in figure 7, average annual health care expenses varied substantially by age and type of health insurance coverage. People under 65 years of age with an expense had a mean total expense of $3,571 and a median total expense of $985, while those 65 years and older had a mean total expense of $9,585 and a median total expense of $4,513. Mean expenses for people under age 65 with any private insurance ($3,591) were almost twice that for the uninsured ($1,870), while mean expenses for people under age 65 with public insurance only ($4,552) were more than twice that for the uninsured. Among persons age 65 and older with an expense, those with Medicare and other public insurance coverage had the highest mean expense ($13,167).

Data Source

The estimates in this Statistical Brief are based upon data from the MEPS HC-121: 2008 Full Year Consolidated Data File.

Definitions

Expenditures
Expenditures include the total direct payments from all sources to hospitals, physicians, other health care providers (including dental care), and pharmacies for services reported by respondents in the MEPS-HC. Expenditures for hospital-based services include those for both facility and separately billed physician services.

Sources of payment

Out of pocket: This category includes expenses paid by the user or other family member.
Private insurance: This category includes payments made by insurance plans covering hospital and medical care (excluding payments from Medicare, Medicaid, and other public sources). Payments from Medigap plans or TRICARE (Armed Forces-related coverage) are included.
Medicare: Medicare is a federally financed health insurance plan for the elderly, persons receiving Social Security disability payments, and persons with end-stage renal disease. Medicare Part A, which provides hospital insurance, is automatically given to those who are eligible for Social Security. Medicare Part B provides supplementary medical insurance that pays for medical expenses and can be purchased for a monthly premium. Medicare Part D provides coverage for prescribed medicines.
Medicaid/CHIP: Medicaid and CHIP are means-tested government programs jointly financed by federal and state funds that provide health care to those who are eligible. Medicaid is designed to provide health coverage to families and individuals who are unable to afford necessary medical care while CHIP provides coverage to additional low income children not eligible for Medicaid. Eligibility criteria for both programs vary significantly by state.
Other sources: This category includes payments from the Department of Veterans Affairs (except TRICARE); other federal sources (Indian Health Service, military treatment facilities, and other care provided by the federal government); various state and local sources (community and neighborhood clinics, state and local health departments, and state programs other than Medicaid/CHIP); Workers' Compensation; various unclassified sources (e.g., automobile, homeowner's, or other liability insurance, and other miscellaneous or unknown sources); Medicaid/CHIP payments reported for persons who were not reported as enrolled in the Medicaid or CHIP programs at any time during the year; and private insurance payments reported for persons without any reported private health insurance coverage during the year.

Health insurance status
Individuals under age 65 were classified in the following three insurance categories, based on household responses to health insurance status questions:

Any private health insurance: Individuals who, at any time during the year, had insurance that provides coverage for hospital and physician care (other than Medicare, Medicaid/CHIP, or other public hospital/physician coverage) were classified as having private insurance. Coverage by TRICARE (Armed Forces-related coverage) was also included as private health insurance. Insurance that provides coverage for a single service only, such as dental or vision coverage, was not included.
Public coverage only: Individuals were considered to have public coverage only if they met both of the following criteria: 1) they were not covered by private insurance at any time during the year, 2) they were covered by any of the following public programs at any point during the year: Medicare, Medicaid/CHIP, or other public hospital/physician coverage.
Uninsured: The uninsured were defined as people not covered by private hospital/physician insurance, Medicare, TRICARE, Medicaid/CHIP, or other public hospital/physician programs at any time during the entire year or period of eligibility for the survey.

Individuals age 65 and older were classified into the following three insurance categories:

Medicare and private insurance: This category includes persons classified as Medicare beneficiaries and covered by Medicare and a supplementary private policy.
Medicare and other public insurance: This category includes persons classified as Medicare beneficiaries who met both of the following criteria: 1) They were not covered by private insurance at any point during the year, 2) They were covered by one of the following public programs at any point during the year: Medicaid, other public hospital/physician coverage.
Medicare only: This category includes persons classified as Medicare beneficiaries but not classified as Medicare and private insurance or as Medicare and other public insurance. This group includes persons who were enrolled in Medicare HMOs and persons who had Medicare fee-for-service coverage only.

About MEPS-HC

MEPS-HC is a nationally representative longitudinal survey that collects detailed information on health care utilization and expenditures, health insurance, and health status, as well as a wide variety of social, demographic, and economic characteristics for the U.S. civilian noninstitutionalized population. It is cosponsored by the Agency for Healthcare Research and Quality and the National Center for Health Statistics.

For more information about MEPS, call the MEPS information coordinator at AHRQ (301) 427-1406 or visit the MEPS Web site at http://www.meps.ahrq.gov/.

References

Cohen, J. Design and Methods of the Medical Expenditure Panel Survey Household Component. MEPS Methodology Report No. 1. AHCPR Pub. No. 97-0026. Rockville, MD: Agency for Healthcare Policy and Research, 1997. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr1/mr1.shtml

Cohen, S. Design Strategies and Innovations in the Medical Expenditure Panel Survey. Medical Care, July 2003: 41(7) Supplement: III-5-III-12.

Ezzati-Rice, T.M., Rohde, F., Greenblatt, J., Sample Design of the Medical Expenditure Panel Survey Household Component, 1998-2007. Methodology Report No. 22. March 2008. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr22/mr22.shtml

Sing, M., Banthin, J., Selden, T., et al.: Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2002. Health Care Financing Review 28(1):25-40, Fall 2006. Internet Address: http://findarticles.com/p/articles/mi_m0795/is_1_28/ai_n27096170/

Suggested Citation

Kashihara, D. and Carper, K. National Health Care Expenses in the U.S. Civilian Noninstitutionalized Population, 2008. Statistical Brief #301. December 2010. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/st301/stat301.shtml

* * *
AHRQ welcomes questions and comments from readers of this publication who are interested in obtaining more information about access, cost, use, financing, and quality of health care in the United States. We also invite you to tell us how you are using this Statistical Brief and other MEPS data and tools and to share suggestions on how MEPS products might be enhanced to further meet your needs. Please e-mail us at mepspd@ahrq.gov or send a letter to the address below:

Steven B. Cohen, PhD, Director
Center for Financing, Access, and Cost Trends
Agency for Healthcare Research and Quality
540 Gaither Road
Rockville, MD 20850

¹ Of the 15.6 percent of the population with no health care expenses, a very small proportion actually received health services for which no direct payments were made.

Figure data for accessible table follows the image

Total expenses = $1.5 trillion

	Hospital inpatient	Office-based visits	Prescribed medicines	Hospital outpatient	Dental	Emergency room	Home health care	Other medical services and equipment
Figure 1. Percentage distribution of health care spending, by type of service, U.S. civilian noninstitutionalized population, 2008
Percentage	28.7	23.6	21.5	8.5	7.3	4.1	4.3	1.9
Note: Percentages may not add to exactly 100.0 due to rounding.
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	Any services	Hospital inpatient services	Office-based medical provider	Prescribed medicines	Hospital outpatient services	Dental services	Emergency room services	Home health care	Other medical services and equipment
Figure 2. Percentage of persons with an expense, by type of service, 2008
Percentage	84.4	7.2	71.8	62.3	14.7	41.2	12.3	2.2	18.8
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	All services (total)	Hospital inpatient services	Office-based medical provider	Prescribed medicines	Hospital outpatient services	Dental services	Emergency room services	Home health care	Other medical services and equipment
Figure 3. Mean expense per person with an expense, by type of service, 2008
Mean expense (dollars)	4,470	15,017	1,241	1,305	2,181	671	1,265	7,311	379
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	All services (total)	Hospital inpatient services	Office-based medical provider	Prescribed medicines	Hospital outpatient services	Dental services	Emergency room services	Home health care	Other medical services and equipment
Figure 4. Median expense per person with an expense, by type of service, 2008
Median expense (dollars)	1,247	8,247	422	339	606	240	569	2,808	219
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	Hospital inpatient	Prescribed medicines	Dental	Home health/ other medical	Emergency room	Office-based/ hospital outpatient
Figure 5. Type of service distribution for health care spending, by age, 2008
Less than 18 years	24.8	13.0	17.9	7.2	5.3	31.8
Ages 18 thru 64 years	26.3	22.3	7.5	4.0	4.5	35.3
Age 65 plus years	34.2	22.8	3.7	9.7	3.0	26.5
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	Medicare	Out of pocket	Medicaid	Other	Private insurance
Figure 6. Source of payment distribution for health care spending, by age, 2008
All ages	23.7	16.7	10.2	7.5	41.9
Less than 18 years	1.2	17.0	30.5	6.4	44.9
Ages 18 thru 64 years	7.4	17.8	10.6	8.0	56.3
Age 65 plus years	60.3	14.6	3.1	6.8	15.2
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

	All persons less than 65 years	Any private	Public only	Uninsured	All persons 65 plus years	Medicare only	Medicare/ private	Medicare/ other public
Figure 7. Mean and median expenses for persons with an expense, by age and insurance status, 2008
Mean (dollars)	3,571	3,591	4,552	1,870	9,585	8,819	9,410	13,167
Median (dollars)	985	1,139	660	526	4,513	4,112	4,632	6,067
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2008

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STATISTICAL BRIEF #301: National Health Care Expenses in the U.S. Civilian Noninstitutionalized Population, 2008