Medical Expenditure Panel Survey Agency for Healthcare 

Research and Quality

STATISTICAL BRIEF #126 

May 2006 

Out-of-Pocket Health Care Expenses by 

Age and Insurance Coverage, 2003 

Steven R. Machlin, MS, and Marc W. Zodet, MS 

Introduction 

In 2003, about 85 percent of persons under 65 and 96 percent of the

elderly had some expenditure for health care. In the aggregate, 

about one of every five dollars spent on health care (excluding health

insurance premiums) was paid out of pocket by individuals and 

families. Annual levels of out-of-pocket expenses for individuals are 

affected by several factors, including whether the person is insured, 

the generosity of insurance for those with coverage, and frequency 

of health care use. Variations in out-of-pocket expenses across 

different segments of the population are important to understand 

because of their financial burden implications and potential impact 

on access to and use of health care. 

This Statistical Brief uses data from the Household Component of 

the Medical Expenditure Panel Survey (MEPS-HC) for 2003 to 

examine levels of out-of-pocket payments for individuals in the U.S.

civilian noninstitutionalized population with expenses for health care. 

Estimates are shown according to age and insurance coverage, 

since levels of out-of-pocket expenses differ substantially according

to these characteristics. All differences between estimates discussed 

in the text are statistically significant at the .05 level or better. 

Findings

Average/median out-of-pocket expenses 

In 2003, an average of $707 was paid out of pocket for health care

among persons with some health care expenses (figure 1a). This 

average ranged from $261 among children (those under age 18) to 

$1,547 among the elderly (those age 65 and over). Overall, half of 

persons with some health care expenses had out-of-pocket 

payments of less than or equal to $254 (median), and half paid more 

than $254. The average was substantially larger than the median 

out-of-pocket expense because a small proportion of persons had extremely large out-of-pocket 

expenses. Median out-of-pocket expenses were substantially lower than averages across all age groups. 

Highlights 

 In 2003, an average of $707 

was paid out of pocket for 

health care among persons 

with some health care 

expenses. Overall, half of 

persons with some health care

expenses had out-of-pocket 

payments of less than or 

equal to $254 (median), and 

half paid more than $254. 

 Average out-of-pocket 

expenses increased with age, 

ranging from $261 among 

children under 18 to $1,547 

among persons age 65 and 

over. 

 Out-of-pocket expenses 

varied substantially by type of 

insurance coverage across all 

age groups, with persons 

under 65 covered by public 

insurance only and persons 

age 65 and over covered by

Medicare and other public 

insurance having lower 

median levels of out-of-pocket 

expenses. 

 Overall, 19.4 percent of 

persons had out-of-pocket 

expenses greater than $1,000,

and 8.4 percent had expenses

greater than $2,000. The 

percentage of persons with 

high levels of out-of-pocket 

expenses increased substantially with age. 

Average annual out-of-pocket expenses varied by type of insurance coverage across all age groups 

(figure 1b). For example, these expenses were notably smaller ($85) among children under 18 with public

insurance (i.e., primarily Medicaid) than for children who had private coverage ($321) or were uninsured 

($407). Similarly, among persons age 65 and over, average out-of-pocket expenses for those with 

Medicare and supplemental public coverage ($1,083) were substantially lower than for other elderly
Medicare beneficiaries ($1,552–1,754). Among adults age 18–64, average out-of-pocket expenses were 

lower on average for those with private insurance ($663) than for their uninsured counterparts ($848). In 

contrast, uninsured adults age 18–64 and those with private insurance had higher median out-of-pocket 

expenses than their counterparts with public insurance only (figure 1c). Median and average annual outof-pocket expenses had similar patterns by insurance coverage for children and the elderly. 

Distribution of out-of-pocket expenses 

About one out of every 13 persons (7.6 percent) paid nothing out of pocket for their health care expenses 

in 2003 (figure 2a). However, this proportion decreased substantially with age, ranging from a high of 17.6 

percent for children under 18 to a low of 1.8 percent for persons age 65 and over. Conversely, the 

percentage of persons with high levels of out-of-pocket expenses increased with age. Overall, 19.4 

percent of persons had out-of-pocket expenses greater than $1,000, and 8.4 percent had expenses 

greater than $2,000, but the percentage with greater than $1,000 in out-of-pocket expenses ranged from

5.7 percent for children under age 18 to 44.8 percent for the elderly age 65 and over. Further, more than

one in five (21.6 percent) persons age 65 and over had expenses greater than $2,000 versus only 7.9 

percent for younger adults and 2.3 percent for children under 18. 

Nearly half (45.1 percent) of children with public insurance coverage only had no out-of-pocket payments 

made for their health care versus only 7.1 percent of privately insured and 8.4 percent of uninsured 

children (figure 2b). While differences were less dramatic than for children, adults age 18–64 with public

coverage only and persons age 65 and over with supplemental public coverage to Medicare were also 

more likely than their counterparts to have no out-of-pocket expenses. 

The elderly with Medicare and other public coverage and children with public coverage only were less 

likely to have high levels of out-of-pocket expenses than their counterparts (figure 2b). About half of 

persons age 65 and over with only Medicare coverage and nearly half of those with Medicare and 

supplemental private coverage had out-of-pocket expenses over $1,000 versus only about one-third (30.6 

percent) of those with Medicare and supplemental public insurance coverage. Among children under age 

18, only 1.9 percent of those with public insurance coverage had more than $1,000 in out-of-pocket 

expenses versus about 7 percent of privately insured and uninsured children. Approximately one-fifth of 

adults age 18–64 had expenses greater than $1,000, regardless of type of insurance coverage. 

Out-of-pocket expenses as percentage of total expenses 

Among persons with health care expenses in 2003, an average of 35.0 percent was paid out of pocket, 

while the median was about 10 percentage points lower (figure 3a). Both average and median

percentages paid out of pocket were lowest for children and highest for adults age 18–64. 

Among persons under age 65, the uninsured had by far the highest proportion of their health expenses 

paid out of pocket (figure 3b). On average, nearly two-thirds of health care expenses for uninsured 

children and about three-fourths of expenses for uninsured adults age 18–64 were paid out of pocket.* In 

contrast, persons under age 65 with public insurance only had the smallest shares paid out of pocket 

(average of 11.0 percent for children and 21.1 percent for adults age 18–64). Among persons age 65 and 

over, those with only Medicare coverage paid an average of nearly half (44.5 percent) of their expenses 

out of pocket. Medicare beneficiaries with supplemental private or public coverage paid a significantly 

smaller portion of their expenses out of pocket—about one-third (32.6 percent) for those with 

supplemental private coverage and one-fifth (20.8 percent) for those with supplemental public coverage. 

Definitions 

Out-of-pocket expenses 

MEPS total expenses include payments from all sources (including third-party payers and other 

miscellaneous sources) to hospitals, physicians, other health care providers (including dental care), and 

pharmacies for services reported by respondents in the MEPS-HC. Out-of-pocket expenses comprise the 

portion of total payments made by individuals and families for services received during the year. 

*The remaining portion of expenses for uninsured persons were likely paid by various miscellaneous sources that are not classified 

as health insurance coverage in MEPS, such as the Indian Health Service, Veterans’ Administration, community and neighborhood 

clinics, State and local health departments, Worker's Compensation, as well as automobile, homeowner's, and liability insurance. 
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, 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, 

or other public hospital/physician coverage. 

– Uninsured: The uninsured were defined as people not covered by private hospital/physician insurance, 

Medicare, TRICARE, Medicaid, 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 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 (301-427-1656) or 

visit the MEPS Web site at http://www.meps.ahrq.gov/. 

References 

For a detailed description of the MEPS-HC survey design, sample design, and methods used to minimize 

sources of nonsampling error, see the following publications: 

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 Health Care Policy and 

Research, 1997. 

Cohen, S. Sample Design of the 1996 Medical Expenditure Panel Survey Household Component. MEPS 

Methodology Report No. 2. AHCPR Pub. No. 97-0027. Rockville, Md.: Agency for Health Care Policy and 

Research, 1997. 

Cohen, S. Design Strategies and Innovations in the Medical Expenditure Panel Survey. Medical Care,

July 2003: 41(7) Supplement: III-5–III-12. 
Suggested Citation 

Machlin, S. R and Zodet, W. M. Out-of-Pocket Health Care Expenses by Age and Insurance Coverage, 

United States, 2003. Statistical Brief #126. May 2006. Agency for Healthcare Research and Quality, 

Rockville, Md. http://www.meps.ahrq.gov/papers/st126/stat126.pdf 

∗ ∗ ∗

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 
*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 1a. Average and median out-of-pocket 

expenses for health care,* by age, 2003

707

261

696

1,547

254

70

296

861

0

500

1,000

1,500

2,000

All ages <18 18-64 65 and over

Average Median

D

ollars

 

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 1b. Average out-of-pocket expenses for health

care,* by age and type of insurance coverage, 2003 

321

85

663

848

1,754

1,083

1,552

801

407

0

500

1,000

1,500

2,000

Any

private

 Public 

only

Uninsured Any

private

 Public 

only

Uninsured Medicare

only

Medicare

& private

Medicare

& other

public

D

ollars

<18 18-64 65 and over
*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 1c. Median out-of-pocket expenses for health care,* 

by age and type of insurance coverage, 2003

110

3

318 287

1,075

488

881

129 136

0

500

1,000

1,500

2,000

Any

private

 Public 

only

Uninsured Any

private

 Public 

only

Uninsured Medicare

only

Medicare

& private

Medicare

& other

public

D

ollars

<18 18-64 65 and over

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 2a. Distribution of out-of-pocket payments 

for health care,* by age, 2003

7.6

17.6

76.7

76.0

53.4

11.0 11.4

23.2

7.9

4.7

1.8

73.0

3.4

21.6

8.4

2.3

0%

20%

40%

60%

80%

100%

All ages <18 18-64 65 and over

$0 $1-1,000 $1,001-2,000 >$2,000

Percent
*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 2b. Distribution of out-of-pocket payments for health 

care,* by age and type of insurance coverage, 2003

7.1

45.1

3.7 5.4 1.3

53.0

84.4

77.3

68.4

73.6

47.2 53.9

63.8

4.3

11.7 9.4 10.8

22.5

25.6

14.7

2.8 7.3 9.7 10.2

29.1

19.5 15.9

8.4 12.5

1.0 5.6

85.8

1.3

2.7

4.5

0.6

0%

20%

40%

60%

80%

100%

Any

private

 Public 

only

Uninsured Any

private

 Public 

only

Uninsured Medicare

only

Medicare

& private

Medicare

& other

public

$0 $1-1,000 $1,001-2,000 >$2,000

Percent

<18 18-64 65 and over

 

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 3a. Average and median percentage of total health

care expenses paid out of pocket,* by age, 2003

35.0

26.9

38.4

34.6

16.9

29.1

25.4 26.5

0

20

40

60

80

All ages <18 18-64 65 and over

Average Median

Percent
*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

Figure 3b. Average percentage of total health care expenses

paid out of pocket,* by age and type of insurance coverage, 2003

30.5

11.0

35.4

75.1

44.5

20.8

32.6

21.1

63.5

0

20

40

60

80

100

Any private Public 

only

Uninsured Any private Public 

only

Uninsured Medicare

only

Medicare

& private

Medicare

& other

public

Percent

<18 18-64 65 and over