Research Findings #21: Health Care Expenses in the United States, 2000

Trena M. Ezzati-Rice, M.S., David Kashihara, M.S., and Steven R. Machlin, M.S.

Introduction

The Medical Expenditure Panel Survey (MEPS) collects detailed information on health care use, expenses, sources of payment, and insurance coverage from a nationally representative sample of the U.S. civilian noninstitutionalized (community) population. The health care system in the United States is continually changing in keeping with technological advancements in medical care and other factors. As a result, aggregate spending on health care, sources of payment for services and care, and specific expenses such as prescription medicines also change.

This report primarily provides estimates of expenses for health care based on data from the 2000 MEPS, but it also includes selected comparisons with 1996 MEPS estimates. The expense estimates for 2000 and 1996 presented and/or cited in this report were obtained from the compendia of tables available on the MEPS Web site at http://www.meps.ahrq.gov/data_stats/quick_tables.jsp. Expenses are defined as direct payments for health services and care received during the year. Expenses include out-of-pocket payments made by individuals and payments made by private insurance, Medicare, Medicaid, and other sources. Payments for over-the-counter drugs and some alternative care services are not included. Indirect payments not related to specific medical events, such as Medicaid Disproportionate Share and Medicare Direct Medical Education subsidies, are also not included.

The report provides aggregate estimates of health care expenses, as well as estimates for hospital inpatient services, hospital outpatient services, emergency room services, office-based medical provider services, prescription medicines, dental services, home health services, and other medical equipment and services. It also shows the proportion of people whose expenses were paid by various sources, including out of pocket, private insurance, Medicare, Medicaid, and other sources, for each type of service. In addition, distributions of expenses and sources of payment across the population are examined by selected demographic, socioeconomic, and geographic characteristics and by health status and health insurance status.

All differences between estimates discussed in the text are statistically significant at the 0.05 level. Detailed information on data sources and methods of estimation, along with definitions of the variables and categories used in this report, are included in the Technical Appendix.

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Total Health Care Expenses

Type of Service

In 2000, the approximately 278.4 million people in the U.S. community population had health care expenses of about $627.9 billion. Table 1 shows that hospital inpatient care accounted for the largest share of total expenses (36.7 percent). The next largest share was for ambulatory services (31.9 percent), almost two-thirds of which were office-based medical services. Prescription medicines accounted for about 16.4 percent of total expenses. The remaining expenses were for dental care (8.8 percent), home health services (4.1 percent), and other medical equipment and services (2.1 percent).

Data on health expenses for 1996, shown on the MEPS Web site at http://www.meps.ahrq.gov/, reveal some interesting changes over the period 1996-2000. The percent of total health care expenses accounted for by prescription medicines rose from 11.9 percent in 1996 to 16.4 percent in 2000. On the other hand, the percent of total expenses going for home health services decreased from 6.2 percent in 1996 to 4.1 percent in 2000.

Source of Payment

In 2000, 83.5 percent of the U.S. community population had medical expenses (Table 2). The mean expense among those with expenses was $2,700. The median expense was much lower, $721. The large difference between the mean and median expenses results from a very small proportion of the population that accounts for a disproportionate share of the overall health care expenses. For example, in 2000, the 1 percent of the population with the highest health care expenses accounted for about one-quarter of the total health care expenses for the community population, and this level of skewed concentration of health care expenses has been fairly stable over time (Berk and Monheit, 2001). Because of the large difference between mean and median expenses, this report emphasizes medians rather than means when comparing subgroups.

Nearly one-fifth (19.4 percent) of total expenses were paid out of pocket, while the remainder was paid by third parties. Private health insurance was the largest third-party payer of medical expenses (40.5 percent), followed by Medicare (20.9 percent) and Medicaid (9.8 percent).

Demographic, Geographic, and Health Status Characteristics

In 2000, an estimated 95.5 percent of the population 65 and over had medical expenses. This compares to 81.8 percent of the population under 65 years old (Table 2). In addition to being more likely to have medical expenses, the older population also had much higher mean expenses than the younger population group ($6,140 versus $2,127). The largest single payer of medical expenses among the population 65 and over was Medicare (54.7 percent), while private health insurance was the largest source of payment (52.8 percent) for the under-65 population.

The median expense among those with an expense was lower for children under 6 ($267) than for children 6-17 years ($335). The proportion of expenses paid out of pocket was lower for children under 6 (10.3 percent) than for children 6-17 (27.7 percent).

A higher proportion of females than males had medical expenses (88.4 percent versus 78.4 percent). The median expense per person among females with an expense was $871, as opposed to $580 for males.

The proportion of people with medical expenses was lower for Hispanics (70.3 percent) and blacks (73.2 percent) than for whites/others (87.4 percent). (About 95 percent of the white/other category is white.) The median expense for people with an expense was lower for Hispanics ($386) and blacks ($411) than for whites/others ($833).

A higher percentage of out-of-pocket expenses were paid by whites/others (20.3 percent) and Hispanics (18.9 percent) than by blacks (12.2 percent). The percent of expenses paid by Medicaid was lower for whites (7.8 percent) than for blacks (18.9 percent) and Hispanics (19.3 percent).

While the percent of people with medical expenses did not differ between people residing in metropolitan statistical areas (MSAs) and those living in non-MSAs, the median medical expense was lower for people living in MSAs ($702, compared to $816 for people living in non-MSAs). The percent of people with medical expenses was lower in the South (81.6) and West (81.3) than in the Northeast (86.5) or Midwest (86.2).

People with better perceived health status were less likely to have an expense and had generally lower expenses. For example, 79.3 percent of people with excellent perceived health status had medical expenses in 2000, and the median expense for those who had expenses was $416. In contrast, 97.0 percent of people with poor perceived health status had medical expenses, with a median expense of $5,129. In the aggregate, higher proportions of expenses were paid out of pocket or by private insurance for those with better health status, whereas Medicare and Medicaid paid for larger proportions of expenses incurred by those in poorer health.

Insurance and Income

Among people under 65 years of age, 57.3 percent of the uninsured, 83.3 percent of those with only public insurance, and 85.9 percent of those with any private insurance had medical expenses. The median total expense for uninsured people was $305, lower than the figure for people with public insurance ($465) or any private insurance ($638). While out-of-pocket payments constituted a substantially higher proportion of expenses for the uninsured (40.4 percent) than for people with private insurance (21.0 percent) or public insurance (9.7 percent), other sources such as the Department of Veterans Affairs, public clinics, and other miscellaneous public and private sources paid for a substantial portion (59.6 percent) of medical expenses for the uninsured.

There was no statistically significant difference between the percent of elderly people with medical expenses by type of insurance coverage (ranging from 94.7 percent to 96.4 percent). The proportion of out-of-pocket spending was about two times higher for those with Medicare only (22.2 percent) than for those with Medicare and other public coverage (10.4 percent).

In general, people with lower income were less likely than people with higher income to incur medical expenses and had lower median expenses. For example, 77.3 percent of poor people (those with incomes below the Federal poverty level) had medical expenses, with a median expense of $524, while 88.2 percent of high-income people (those with incomes over 400 percent of the Federal poverty level) had medical expenses and their median expense was $815. (The positive relationship for median expenses did not hold for mean expenses, however.) People with lower income paid a smaller percentage of their health care expenses out of pocket and more of their expenses were paid by Medicaid. For example, poor people paid only 13.9 percent of their medical expenses out of pocket, while Medicaid paid 34.3 percent. In contrast, 22.3 percent of expenses for high-income people were paid out of pocket and 55.6 percent by private insurance.

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Hospital Inpatient Services

The expenditure estimates for hospital inpatient services shown in Table 3 include room and board and all hospital diagnostic and laboratory expenses associated with the basic facility charge, payments for separately billed physician inpatient services, and emergency room expenses incurred immediately prior to inpatient stays.

In 2000, 7.6 percent of the U.S. community population incurred hospital inpatient expenses totaling approximately $230 billion. Like total health care expenses, inpatient expenses are highly skewed, as evidenced by the approximately twofold difference between the mean expense per person with an expense ($10,917) and the median ($5,195).

Slightly more than three-quarters of hospital inpatient expenses were paid by private insurance and Medicare (40.7 and 35.9 percent, respectively), while out-of-pocket payments accounted for only 2.2 percent.

Demographic, Geographic, and Health Status Characteristics

People 65 years of age and over were 3.2 times as likely to incur hospital inpatient expenses as people under 65 (19.0 percent versus 5.9 percent). Also, the median expense per person with an expense was higher for the elderly than the non-elderly ($9,160 versus $4,372).

The largest source of payment for the elderly was Medicare, which accounted for 75.7 percent of the payments for inpatient services for this age group. The largest source of payment for the non-elderly was private insurance, which accounted for 59.4 percent of their expenses.

Females were more likely than males to have had hospital inpatient expenses (9.2 percent and 5.9 percent, respectively). However, the median expense per person with an expense was higher for males ($6,695) than for females ($4,556).

The proportion of the population with a hospital inpatient expense was higher for blacks (7.7 percent) and whites/others (7.9 percent) than for Hispanics (5.3 percent). There were no statistically significant differences by race/ethnicity in the proportion of inpatient expenses paid by Medicare or private insurance. However, the share of expenses paid out of pocket was higher for Hispanics (4.5 percent) than for whites/others (2.1 percent) or blacks (1.7 percent; note: relative standard error equal to or greater than 30 percent). Further, the percent of expenses paid by Medicaid was higher for blacks (16.4 percent) and Hispanics (18.4 percent) than for whites/others (7.9 percent).

The percent of people with hospital inpatient expenses was higher in non-MSA areas (9.1 percent) than in MSAs (7.2 percent). A higher percentage of people in the South and Midwest Regions had hospital inpatient expenses (8.3 and 8.1 percent, respectively) compared to people in the West Region (6.2 percent).

The more negative people’s perceived health status was, the more likely they were to incur inpatient expenses, and their mean and median expenses also increased. For example, 3.7 percent of people with excellent perceived health had hospital inpatient expenses and the median total expense for those who had an expense was $4,185. In contrast, 36.4 percent of people with poor perceived health had hospital inpatient expenses and their median expense of $8,876 was about two times that of people with excellent health status.

Insurance and Income

Among people under 65 years of age, hospital inpatient expenses were incurred by 3.5 percent of uninsured people, 12.4 percent of those with public insurance only, and 5.4 percent of those with any private insurance. The median expense for people with any private insurance ($4,925) was higher than the medians for public only insurance ($3,761) and uninsured ($3,426).

Among the elderly, people with Medicare and other public insurance were more likely to have hospital inpatient expenses (25.9 percent) than those with Medicare only (17.4 percent) or Medicare and private insurance (18.8 percent).

In general, people with lower incomes were more likely to have hospital inpatient expenses and lower median expenses. For example, among poor people, 11.3 percent had hospital inpatient expenses and the median expense for those with an expense was $4,377. In contrast, among people with high income, 5.7 percent had hospital inpatient expenses and the median expense was $6,477.

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Office-Based Medical Provider Services

Expenses for visits to medical providers seen in office-based settings are shown in Table 4. In 2000, slightly more than two-thirds (68.8 percent) of the U.S. community population had office-based medical provider services and the expenses for these services totaled about $126 billion (Table 4). The mean expense for those with an expense was $657 and the median expense was $243. Private insurance was the single largest payer, accounting for 48.5 percent of total expenses for office-based medical care. The next two largest payer sources were out-of-pocket payments (17.8 percent) and payments by Medicare (16.8 percent).

Demographic, Geographic, and Health Status Characteristics

The proportion of people with office-based medical provider expenses was higher among the elderly (87.6 percent) than the non-elderly (66.1 percent). There was a generally positive relationship between age and median expenses per person. For example, the median expense per person with an expense was $490 for the elderly and $212 for the non-elderly. Among the elderly, the largest single source of payment was Medicare, which accounted for 59.0 percent of the payments for office-based care. Private insurance paid for another 18.6 percent and out-of-pocket spending was 11.4 percent. In this age group, Medicaid paid for only 3.3 percent of office-based care. In comparison, for the non-elderly, private insurance accounted for 58.1 percent of expenses for office-based care, out-of-pocket spending 19.9 percent, and Medicaid 6.6 percent.

More than three-quarters (78.5 percent) of children under 6 had expenses for office-based medical provider services, compared to 60.9 percent of children 6-17. The median expense per child was higher for children under 6 ($160) than for children 6-17 ($127).

Females were more likely than males to have expenses for office-based medical care (75.4 percent versus 61.9 percent). Females also had a higher median total expense per person than males ($278 versus $207). The proportion of expenses paid out of pocket was higher for females (19.0 percent) than males (16.1 percent).

Whites/others were more likely than blacks or Hispanics to have had expenses for office-based medical care (73.2 percent versus 56.0 and 55.0 percent, respectively), and they had higher median expenses ($268 versus $150 and $165, respectively). The proportion of expenses paid out of pocket was higher for Hispanics (19.4 percent) and whites/others (18.2 percent) than for blacks (12.0 percent). With respect to public coverage, Medicaid covered a higher proportion of expenses for blacks (13.5 percent) and Hispanics (12.4 percent) than for whites/others (4.6 percent), while Medicare covered a higher proportion of expenses for blacks (18.6 percent) and whites/others (17.1 percent) than for Hispanics (9.9 percent).

There were no statistically significant differences by MSA status in the percent with office-based expenses, the median expense, or the distribution of sources of payment. With respect to Census region, people in the South and West (66.8 and 65.2 percent) were less likely to have expenses for office-based medical care than people in the Northeast and Midwest (73.2 and 71.8 percent).

People with better perceived health status were less likely to have expenses for office-based care, and annual expenses for those receiving care tended to be lower. For example, 61.1 percent of people with excellent perceived health status had expenses for office-based medical care and the median expense for those who had an expense was $174. In contrast, 87.1 percent of people with poor perceived health status had expenses for office-based medical care, with a median expense of $676.

Insurance and Income

Among the non-elderly population, the proportion with expenses for office-based medical care was much lower for the uninsured (38.8 percent) than for those who had public insurance only (68.0 percent) or any private insurance (70.7 percent). The median expense of $137 for uninsured people was lower than the median expense for those with public only insurance ($163) or any private insurance ($226).

Among the elderly, the proportion with expenses for office-based care was higher for those with Medicare and private insurance (89.0 percent) than those with Medicare only (85.6 percent). The median expense for those with an expense was also higher for people with Medicare and private insurance ($548) than the Medicare-only group ($393).

People with lower income were less likely than those with higher income to incur expenses for office-based medical provider services, and the median expense was also lower. For example, 61.2 percent of poor people had expenses for office-based care and their median expense was $182. However, 73.9 percent of high-income people had these expenses and their median expense was $270. As income increased, the proportion of expenses paid out of pocket or by private insurance increased. For example, 10.5 percent of expenses among the poor were paid out of pocket and 18.9 percent were paid by private insurance. In comparison, 21.7 percent of the expenses for the high-income group were paid out of pocket and 60.6 percent by private insurance. About one-third (33.9 percent) of expenses for poor people were paid by Medicaid.

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Hospital Outpatient Services

The expenses for hospital outpatient services shown in Table 5 comprise expenses for visits to both physicians and other medical providers seen in hospital outpatient departments, including payments for services covered under the basic facility charge and those for separately billed physician services. In 2000, 13.1 percent of the U.S. community population incurred about $55 billion in expenses for hospital outpatient services. The mean expense per person among those with an expense was $1,501 and the median expense was $555.

Approximately one-half of hospital outpatient services were paid for by private insurance (52.9 percent). Medicare was the second largest payer for hospital outpatient expenses (22.2 percent), while out-of-pocket payments and payments by Medicaid accounted for lower proportions-7.5 and 5.0 percent, respectively.

Demographic, Geographic, and Health Status Characteristics

Elderly people were 2.6 times as likely as non-elderly people to incur hospital outpatient expenses (28.3 percent versus 11.0 percent). The largest source of payment for the elderly was Medicare, which accounted for 56.5 percent of their expenses for hospital outpatient services. The largest source of payment for the non-elderly was private insurance, which accounted for 68.0 percent of their expenses.

Females were more likely than males to have hospital outpatient expenses (15.9 percent versus 10.2 percent). However, the median expense per person with an expense was higher for males ($683) than for females ($462).

The proportion of the population with any hospital outpatient expenses was lower for blacks (8.9 percent) and Hispanics (7.4 percent) than for whites/others (14.8 percent). The median expense was also lower for blacks ($383) than whites/others ($577).

A lower proportion of people incurred hospital outpatient expenses in the South (11.5 percent) and West (10.0 percent) than in the Northeast (16.4 percent) and Midwest (16.0 percent).

People with better perceived health status were less likely to incur expenses for hospital outpatient services and tended to have lower expenses. For example, 7.4 percent of people with excellent perceived health had hospital outpatient service expenses, and the median expense for those who had expenses was $362. In contrast, 30.8 percent of people with poor perceived health had these expenses, and their median expense was $1,098.

Insurance and Income

Among the non-elderly population, hospital outpatient expenses were incurred by a smaller proportion of the uninsured (5.0 percent) than by people with any private insurance (12.0 percent) or public insurance only (11.1 percent). Among the elderly, those with Medicare and private insurance were more likely to incur hospital outpatient expenses (32.5 percent) than either those with Medicare only (22.5 percent) or those with Medicare and other public insurance (24.5 percent).

In general, people with lower income were less likely to incur hospital outpatient expenses and had lower median expenses. For example, 10.0 percent of poor people had hospital outpatient expenses, with a median expense for those who had expenses of $377. However, 14.5 percent of people in the high-income category had these expenses, with a median expense of $581.

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Emergency Room Services

In 2000, 11.6 percent of the U.S. community population incurred expenses of $19.2 billion for hospital emergency room services (Table 6). These expenses include payments for services covered under the basic facility charge and those for separately billed physician services, but exclude expenses for emergency room services followed by a hospital admission. The mean expense per person with an expense was $594 and the median was $315.

Private insurance paid for almost one-half of emergency room expenses (46.1 percent). Medicare was the second largest payer of emergency room expenses (17.9 percent), with lower shares for out-of-pocket (12.2 percent) and Medicaid payments (8.4 percent).

Demographic, Geographic, and Health Status Characteristics

The elderly were more likely to incur emergency room expenses than the non-elderly (16.8 percent versus 10.9 percent). The largest source of payment for emergency room expenses for the elderly was Medicare, which paid for 67.3 percent of their expenses. The largest source of payment for the non-elderly was private insurance, which paid for 55.1 percent of their expenses.

A slightly higher proportion of females (12.3 percent) than males (10.9 percent) had emergency room expenses.

The proportion of the population with emergency room expenses was lower for Hispanics (9.7 percent) than for blacks (13.0 percent) or whites/others (11.7 percent). Hispanics had a lower median expense per person with an expense ($260) than whites/others ($333).

The proportion of people with emergency room expenses was lower in the West Region (9.7 percent) than in the Northeast (12.2 percent), South (11.9 percent), or Midwest (12.7 percent).

In general, the better people’s perceived health status was, the less likely they were to incur emergency room expenses. For example, 8.9 percent of people with excellent perceived health, compared to 34.4 percent of people with poor perceived health, had emergency room expenses.

Insurance and Income

Among the non-elderly, the uninsured were the least likely to have emergency room expenses: only 7.4 percent of this group had expenses, compared to 17.7 percent of those with only public insurance and 10.4 percent of those with any private insurance.

In general, people with lower income were more likely to incur emergency room expenses. For example, 14.8 percent of poor people, but only 9.3 percent of people with high incomes, had emergency room expenses.

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Prescription Medicines

The expenditure estimates for prescription medicines shown in Table 7 include expenses for all prescribed medicines initially purchased or otherwise obtained during 2000, including any refills.

In 2000, the U.S. community population incurred about $103.0 billion in expenses for prescription medicines. This figure represents an increase over the $65.3 billion (MEPS Web site) spent in 1996 ($71.7 billion when inflated to 2000 dollars using the overall Consumer Price Index). Despite this increase in total dollars spent, the proportion of the population with prescription medicine expenses decreased from 64.9 percent in 1996 to 62.3 percent in 2000.

The mean expense per person with an expense was $594 and the median was $186. Nearly half (46.1 percent) of prescription medicine expenses were paid out of pocket and about one-third (33.9 percent) of expenses were paid by private insurance. The next two largest sources of payment were Medicaid (11.2 percent) and Medicare (4.6 percent).

Demographic, Geographic, and Health Status Characteristics

The elderly were 1.5 times more likely than younger people to incur prescription medicine expenses (88.3 percent versus 58.5 percent). The median expense per person with an expense was $695 for the elderly, but only $136 for the non-elderly. For elderly people, the largest source of payment was out of pocket, which accounted for 56.6 percent of their expenses for prescribed medicines. For the non-elderly, the largest payment sources were private insurance (42.4 percent) and out of pocket (41.0 percent).

Females were more likely to incur prescription medicine expenses than males (69.2 percent compared to 54.9 percent). The median expense per person with an expense was $219 for females and $146 for males.

Blacks (50.8 percent) and Hispanics (47.2 percent) were less likely to incur prescription medicine expenses than whites/others (66.6 percent). The median prescription medicine expense per person with an expense was lower for blacks ($125) and Hispanics ($92) than for whites/others ($214).

The median prescription medicine expense per person with an expense was $174 for people living in an MSA and $239 for people not living in an MSA. People in the West Region were the least likely to have prescription medicine expenses: 58.1 percent versus 62.6 percent in the South, 64.1 percent in the Midwest, and 64.3 percent in the Northeast. People in the West Region also had the lowest median prescription medicine expenses: $135 versus $172 in the Northeast, $204 in the Midwest, and $223 in the South.

People with better perceived health status were less likely than people in poor health to incur prescription medicine expenses and their total expenses were also lower. For example, 49.0 percent of people with excellent perceived health had prescription medicine expenses and their median expense per person with an expense was $80. In contrast, 92.2 percent of people with poor perceived health had prescription medicine expenses, with a median expense of $1,230.

Insurance and Income

Among the non-elderly, the percent of people with prescription medicine expenses was smallest for the uninsured: 37.6 percent, compared to 62.1 percent for those with public only insurance and 61.7 percent for those with any private insurance. The median expense for those with an expense was also lowest for uninsured people: $89, compared to $119 for those with public only insurance and $144 for those with any private insurance.

Among the elderly, those with Medicare and other public insurance had higher median expenses ($934) than those with either Medicare only ($627) or Medicare and private insurance ($708).

Poor people had a lower likelihood of having prescription medicine expenses (58.6 percent) than high-income people (64.8 percent), and the median expense was less among poor people ($139) than for people with high income ($205). (This positive relationship did not hold for mean expenses.)

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Dental Services

The expenditure estimates for dental services shown in Table 8 include expenses for any type of dental care provider. In 2000, 40.1 percent of the U.S. community population incurred a total of about $55.6 billion in expenses for dental services, an increase over the $43.1 billion (MEPS Web site) spent in 1996 ($47.4 billion when inflated to 2000 dollars using the overall Consumer Price Index).

The mean expense per person with an expense increased from $384 in 1996 ($421 when inflated to 2000 dollars using the overall Consumer Price Index) to $498 in 2000. The median expense per person with an expense increased from $137 in 1996 ($150 when inflated to 2000 dollars using the overall Consumer Price Index) to $168 in 2000. About half (49.3 percent) of the payments for dental expenses were out of pocket and another 42.2 percent of dental expense payments came from private insurance.

Demographic, Geographic, and Health Status Characteristics

The median total expense per person with a dental expense was $196 for the elderly and $164 for the non-elderly. For the elderly, the largest source of payment for dental expenses (76.7 percent) was out of pocket.    For the non-elderly, the largest source of payment was private insurance (46.3 percent), followed closely by out-of-pocket payments (45.2 percent).

Females were more likely than males to have dental expenses (43.2 percent versus 36.9 percent). Whites/others (45.0 percent) were much more likely than blacks (26.0 percent) or Hispanics (24.4 percent) to have dental expenses. Blacks ($107) and Hispanics ($128) also had lower median dental expenses than whites/others ($178).

The proportion of people using dental services was greater in the Northeast (45.7 percent) and Midwest (45.0 percent) than in the South (35.4 percent) and West (37.8 percent). The median total dental expense per person with an expense also varied by region: lower in the South ($154) and Midwest ($149) and higher in the Northeast ($185) and West ($200). The median total dental expense was $170 for people living in MSAs and $151 for people not living in MSAs.

The proportion of people with dental expenses was higher for people with excellent (42.6 percent) or very good (42.8 percent) perceived health than those in poor health (26.4 percent). However, there was no statistically significant difference between the groups in the median expense for those who had an expense.

Insurance and Income

Among the non-elderly, 17.5 percent of those who were uninsured, 27.9 percent of those with only public insurance, and 46.1 percent of those who had any private insurance had dental expenses. The median expense among those who had an expense was $151 for people who were uninsured. In comparison, the median expense was $87 for those with public only insurance and $174 for those with any private insurance. Among the elderly, 32.6 percent of those with Medicare only, 47.9 percent of those with Medicare and private insurance, and only 16.4 percent of those with Medicare and other public insurance had dental expenses.

In general, people with lower income were less likely than higher income people to incur dental expenses, and their median expenses were lower. For example, 24.8 percent of poor people had dental expenses, and the median expense was $105. However, 51.6 percent of people with high income had dental expenses, and their median expense was $185.

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Home Health Services

The expenditure estimates for home health services shown in Table 9 include expenses for care provided by home health agencies and paid independent home health providers. Even though a relatively small percentage of the community population had home health expenses (1.8 percent), expenses for home health ranked second in terms of mean and median expenses per person with an expense, with a mean expense of $5,136 and a median of $1,710. Only hospital inpatient services (Table 3) had higher per-user expenses.

Medicaid paid for the highest proportion of home health service expenses (48.2 percent), followed by Medicare (25.6 percent) and out of pocket (12.4 percent). The share of home health expenses covered by Medicaid tripled from 1996 (16.2 percent) to 2000 (48.2 percent). The share covered by Medicare decreased from 52.6 percent in 1996 (MEPS Web site) to 25.6 percent in 2000, while the proportion paid out of pocket was similar in 2000 and 1996, about 12 percent.

Demographic, Geographic, and Health Status Characteristics

The elderly were more likely to have home health expenses than the non-elderly (8.7 percent versus 0.8 percent). A lower proportion of the elderly had expenses in 2000 (8.7 percent) than in 1996 (13.2 percent). The share of home health expenses among the elderly paid by Medicare, the primary source of payment for home health services, decreased significantly, from 58.9 percent in 1996 to 38.4 percent in 2000. In addition, Medicaid payments for home health expenses for the elderly rose from 11.2 percent in 1996 to 28.1 percent in 2000. Another 21.2 percent of home health expenses for the elderly were paid out of pocket.

Females (2.1 percent) were more likely than males (1.5 percent) to have home health expenses; however, the median expense per person did not differ for females and males. Hispanics (1.0 percent) were less likely than whites/others (1.9 percent) to incur home health expenses; there were no statistically significant differences between blacks and the whites/others group or blacks and Hispanics.

There was no statistically significant difference in the proportion of people with home health expenses in terms of place of residence-either MSA status or region.

Insurance and Income

Non-elderly people with public only insurance were about seven times as likely as those with private insurance to incur expenses for home health services-3.7 percent versus 0.5 percent. Among elderly people, those with Medicare and other public coverage were about three times as likely as those with Medicare and private coverage to have expenses for home health services-22.2 percent versus 6.9 percent.

The proportion with home health expenses was lower among high-income people (1.0 percent) than among the poor (3.1 percent) or near-poor (3.7 percent).

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Other Medical Equipment and Services

The expenditure estimates for other medical equipment and services shown in Table 10 include expenses for eyeglasses, contact lenses, ambulance services, orthopedic items, hearing devices, prostheses, bathroom aids, medical equipment, disposable supplies, alterations/modifications, and other miscellaneous items or services that were obtained, purchased, or rented during the year. About two-thirds of the expenses in this category were for vision-related items. In 2000, about 19 percent of the community population had expenses for other medical equipment and services, totaling about $13.4 billion. As with other health care expenses, the median expense ($180) was less than the mean expense ($260). Approximately 71 percent of the total expenses were paid out of pocket, by far the most common source of payment.

Demographic, Geographic, and Health Status Characteristics

Elderly people were more likely than non-elderly people to have other medical expenses (26.7 percent versus 17.4 percent), and they had higher median expenses for those with an expense ($200 versus $178). Other medical expenses were more common for whites/others (20.6 percent) than either blacks (12.9 percent) or Hispanics (11.8 percent). They were also more common for people in fair health (24.1 percent) or poor health (31.9 percent) than for those in good, very good, or excellent health (19.4, 19.0, and 15.1 percent, respectively).

Insurance and Income

Among the non-elderly, the percent with other medical expenses was higher for people with any private insurance (19.2 percent) than those with public only (14.7 percent) or the uninsured (9.8 percent). High-income people were more likely than poor people to have other medical expenses (22.9 percent versus 14.0 percent), and they paid a higher percentage out of pocket (75.6 percent versus 52.4 percent).

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Summary

In 2000, about 84 percent of the approximately 278.4 million people living in the U.S. civilian noninstitutionalized population at any time during the year had at least one health care expense. Aggregate health care spending by this population was approximately $627.9 billion. The mean expense per person with an expense was $2,700. The median expense was much lower at $721, a differential primarily caused by the highly skewed distribution of medical expenses resulting from a small proportion of the population that accounts for a disproportionate share of high health care expenses.

Hospital inpatient care accounted for the largest share of total health care expenses (36.7 percent), and another 20.1 percent of the total was for office-based medical provider services. The nearly $103 billion spent on prescription medicines was the third largest share of total expenses (16.4 percent).

Hospital inpatient services ranked first in terms of mean and median expenses per person with an expense ($10,917 and $5,195, respectively). Even though home health services accounted for only 4.1 percent of total expenses, this category of health care ranked the second highest in terms of mean and median expenses per person with an expense, with a mean expense of about $5,100 and a median of about $1,700.

The largest source of payment for health care expenses was third-party payers. Specifically, private health insurance accounted for 40.5 percent of total payments, followed by two public sources of payment: Medicare (20.9 percent) and Medicaid (9.8 percent). Another 19.4 percent of health care expenses were paid out of pocket by individuals and/or family members.

The proportion of expenses paid by different sources varied by type of service provided. For example, 49.3 percent of dental expenses and 46.1 percent of prescription medicine expenses were paid out of pocket, while private insurance and Medicare were the largest sources of payment for hospital inpatient services (40.7 and 35.9 percent, respectively) and hospital outpatient services (52.9 and 22.2 percent, respectively).

The percent of people with an expense, as well as the mean and median level of spending, varied by demographic characteristics, income, health status, and geographic residence. Regardless of age, the majority of people had at least one health care expense during 2000. Specifically, 95.5 percent of the population age 65 and over had medical expenses and 81.8 percent of the under-65 population had expenses. The mean expense for the elderly was $6,140, compared to $2,127 for the non-elderly. With respect to race/ethnicity, the proportion of people with medical expenses was lower for Hispanics (70.3 percent) and blacks (73.2 percent) than for whites/others (87.4 percent). Further, among those with expenses, the median expenses of $386 for Hispanics and $411 for blacks were lower than the $833 for whites/others. In the aggregate, people with better perceived health status were less likely to have health care expenses and they had generally lower expenses. For example, the median expense for those with excellent perceived health status was $416, compared to $5,129 for people with poor perceived health status. People with lower incomes were less likely to incur medical expenses and their median expenses were also lower than those of high-income people. For example, 77.3 percent of poor people had medical expenses (median of $524), while 88.2 percent of high-income people had expenses (median of $815). Variations in these patterns were observed across the various service types.

In summary, the health expenditure data from the 2000 MEPS indicate that the levels of expenses, proportions of people with expenses, and sources of payment vary by type of service and by sociodemographic, geographic, health insurance, and health status characteristics. These estimates, along with estimates from past and future MEPS surveys, provide researchers and health policymakers with critical data to study trends in health care expenses and the distribution of expenses and sources of payment in the U.S. population.

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References

Berk M, Monheit A. The concentration of health care expenditures revisited. Health Affairs 2001; 20(2):9-18.

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Cohen SB. Sample design of the 1997 Medical Expenditure Panel Survey Household Component. Rockville (MD):Agency for Healthcare Research and Quality; 2000. MEPS Methodology Report No. 11. AHRQ Pub. No. 01-0001.

Cohen SB. Design strategies and innovations in the Medical Expenditure Panel Survey. Medical Care 2003; 41(7):5-12.

Machlin SR, Taylor AK. Design, methods, and field results of the 1996 Medical Expenditure Panel Survey Medical Provider Component. Rockville (MD):Agency for Healthcare Research and Quality; 2000. MEPS Methodology Report No. 9. AHRQ Pub. No. 00-0028.

Moeller JF, Stagnitti MN, Horan E, et al. Outpatient prescription drugs: data collection and editing in the 1996 Medical Expenditure Panel Survey (HC-010A). Rockville (MD):Agency for Healthcare Research and Quality; 2001. MEPS Methodology Report No. 12. AHRQ Pub. No. 01-0002.

Selden TM, Levit KR, Cohen JW, et al. Reconciling medical expenditure estimates from the Medical Expenditure Panel Survey and the NHA, 1996. Health Care Financing Review 2001 Fall; 23(1):161-78.

Zuvekas SH, Cohen JW. A guide to comparing health care expenditures in the 1996 MEPS to the 1987 NMES. Inquiry 2002 Spring; 39(1):76-86.

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Tables