Medical Expenditure Panel Survey Agency for Healthcare 

Research and Quality

STATISTICAL BRIEF #121 

March 2006 

Out-of-Pocket Expenditures on Health 

Care and Insurance Premiums among 

the Nonelderly Population, 2003 

Highlights 

 In 2003, 43.1 percent of nonelderly adults lived in families 

with out-of-pocket expenditures 

on health care and health 

insurance premiums exceeding 

$2,000; 14.3 percent in families 

with such spending exceeding

$5,000; and 2.8 percent in 

families with such spending 

exceeding $10,000. 

 Those with private non-group 

coverage were most likely to

have high family-level healthrelated spending: 11.8 percent 

had spending exceeding 

$10,000 compared to 3.3 

percent of individuals with 

private group coverage, 1.0 

percent of the uninsured, and

1.0 percent of those with public

insurance. 

 The percentage of individuals

with family-level spending 

exceeding $10,000 was higher

among those living in adult 

couple families (5.1 percent) 

and in two parents with 

child(ren) families (3.8 percent) 

compared to those in single 

parent with child(ren) families 

(0.6 percent) and single adults 

(0.7 percent). 

 The proportion of persons 

with family-level spending 

exceeding $10,000 was higher

among those with high income

(3.9 percent) compared to 

those in the near poor and low

income (1.7 percent) and poor

(1.0 percent) categories. 

 Family-level out-of-pocket 

spending increased with age: 

0.9 percent of adults aged 18–

34 had family-level spending

exceeding $10,000 compared 

to 3.1 percent of adults aged 

35–54 and 6.0 percent of adults 

aged 55–64. 

Didem Bernard, PhD and Jessica Banthin, PhD 

Introduction 

Health care costs continue to rise faster than the overall rate of 

inflation and are consuming a larger share of family budgets.1 In 

examining the full impact of rising health care costs on families, it is 

important to capture out-of-pocket expenditures on premiums as

well as out-of-pocket costs for health care treatments. Out-of-pocket 

premium costs can vary significantly by source of coverage. 

Furthermore, out-of-pocket premium costs are often related to the 

generosity of the plan, so that a higher premium means lower outof-pocket spending on medical care and vice versa. Although 

expenses for health care are attributable to individuals, expenditures for health insurance premiums are attributable to all family 

members covered by the policy. For this reason, it is important to 

look at expenses at the family level. 

This Statistical Brief presents estimates based on data from the 

Household Component of the Medical Expenditure Panel Survey 

(MEPS-HC) on how many nonelderly individuals (age below 65) in

the U.S. civilian noninstitutionalized population lived in families with

high levels of health-related spending in 2003. The brief also presents 

estimates on the percentage of individuals with high family-level outof-pocket spending, by health insurance status, family type, poverty 

status, and age. All differences between estimates discussed in the 

text are statistically significant at the 0.05 level. 

Findings

In 2003, there were approximately 254 million individuals under age 

65 in the U.S. civilian noninstitutionalized population. Among these

nonelderly individuals, 43.1 percent were living in families with

out-of-pocket expenditures on health care and health insurance

premiums exceeding $2,000; 14.3 percent were living in families

with health-related out-of-pocket spending exceeding $5,000; and

2.8 percent were living in families with health-related out-of-pocket

spending exceeding $10,000 (figure 1). 

1 Levit et al. Health Spending Rebound Continues in 2002. Health Affairs, 2004; 

23(1):147–159. 
Out-of-pocket health-related spending, by insurance status 

Among the nonelderly population, 63.8 percent had private group coverage (159.9 million), 3.5 percent 

had private non-group coverage (8.7 million), 13.6 percent had public coverage (34.1 million), and 19.2 

percent were uninsured (48.0 million) in 2003.2 

Those with private non-group coverage were the most likely to have high family-level health-related 

spending, reflecting the high premiums and high deductible plans that are common in the non-group 

market. Among individuals with private non-group coverage, 77.9 percent had family-level spending

exceeding $2,000 compared to 55.7 percent of individuals with private group coverage, 15.9 percent of 

the uninsured, and 14.0 percent of those with public insurance (figure 1). Similarly, among individuals with 

private non-group coverage, 11.8 percent had family-level spending exceeding $10,000 compared to just 

3.3 percent of individuals with private group coverage, 1.0 percent of the uninsured, and 1.0 percent of 

those with public insurance. 

Out-of-pocket health-related spending, by family type 

In 2003, among the nonelderly population, 47.8 percent were living in two parent with child(ren) families 

(120.7 million), 23.1 percent were living in single adult families (58.3 million), 15.9 percent were living in 

adult couple families (40.1 million), and 13.2 percent were living in single parent with child(ren) families 

(33.4 million).

Individuals living in adult couple families were more likely to have family-level health-related spending 

exceeding $2,000 compared to single adults. Per capita out-of-pocket health-related spending on health 

care was significantly higher among adult couples compared to single adults ($1,765 versus $1,046). This

finding was associated with a significant difference in mean age between these two groups (49 versus 37, 

respectively). Two parent families with children were more likely to have family-level spending exceeding 

$2,000 compared to single parent families. 

Among individuals living in adult couple families, 62.0 percent had family-level spending exceeding 

$2,000 compared to 55.7 percent of individuals living in two parents with child(ren) families, 23.9 percent 

of individuals living in single parent with child(ren) families, and 15.6 percent of single adults (figure 2). 

Similarly, the percentage of individuals with family-level spending exceeding $10,000 was higher among 

those living in adult couple families (5.1 percent) and those living in two parents with child(ren) families 

(3.8 percent) compared to those living in single parent with child(ren) families (0.6 percent), and single 

adults (0.7 percent). 

Out-of-pocket health-related spending, by poverty status 

High income individuals were the most likely to have high family-level health-related spending. Among 

individuals with high income, 58.5 percent had family-level spending exceeding $2,000 compared to 46.1 

percent of middle income individuals, 26.3 percent of near poor and low income individuals, and 14.8 

percent of poor individuals (figure 3). Similarly, among individuals with high income, 19.9 percent had 

family-level spending exceeding $5,000 compared to 15.2 percent of middle income individuals, 7.9 

percent of near poor and low income individuals, and 4.6 percent of poor individuals. 

The proportion of those with family-level spending exceeding $10,000 was higher among those with high 

income (3.9 percent) compared to near poor and low income (1.7 percent) and poor individuals (1.0 

percent) (figure 3). The difference in the probability of family-level spending exceeding $10,000 between 

high income (3.9 percent) and middle income individuals (2.9 percent) was not statistically significant. 

Health-related spending, by age group 

Among nonelderly adults age 18 or more, family-level out-of-pocket spending increased with age: Of 

those aged 18–34, 27.6 percent had family-level spending exceeding $2,000 compared to 48.0 percent of 

adults aged 35–54, and 58.4 percent of adults aged 55–64 (figure 4). Similarly, among those aged 18–34, 

0.9 percent had family-level spending exceeding $10,000 compared to 3.1 percent of adults aged 35–54, 

and 6.0 percent of adults aged 55–64. Among children, 45.3 percent were living in families with out-of2 Population estimates by insurance status are based on the people who were in the survey in the first half of the year.
pocket spending exceeding $2,000, and 3.0 percent were living in families with out-of-pocket spending 

exceeding $10,000. 

Data Source 

The estimates in this Statistical Brief are based on data from the MEPS 2003 Full-Year Consolidated 

Data file: HC-079 and MEPS 2003 Person Round Plan Public Use File: HC-076. 

Definitions 

Family 

The definition of family is based on the MEPS health insurance eligibility unit (HIEU) and includes all 

members of the family that would typically be covered under a private insurance family plan. HIEUs 

include adults, their spouses, and their unmarried natural/adoptive children age 18 and under as well as 

children under age 24 who are full-time students. 

Persons under 65 who live in families with members over and under 65 were included in this analysis. In 

these instances, health care expenses for all family members were included in the totals. 

Out-of-pocket health-related expenditures 

Out-of-pocket costs across all members of the family were summed to calculate total out-of-pocket 

spending on health care services. Then out-of-pocket premium costs were summed across all health 

insurance policies covering family members. For example, if there were two single policies covering the 

two adults of a childless couple unit, these were summed together. If there was only one family policy 

covering members of the family unit then it was a simple matter to attribute family level premiums to the 

family unit as defined. Premiums were prorated to account for the number of months of coverage during 

the year. 

Family type 

Individuals were classified into four family types: single adults, adult couples, two parent with child(ren) 

families, and single parent with child(ren) families. In situations where children were not living with their 

biological parents, they were assigned to one parent or two parent families depending on whether there 

were one or two adults in the family unit. For the analysis by family type, a few individual children were 

excluded who were defined as living in their own family unit. These cases included foster children with 

health insurance coverage through state programs and represent less than 0.5% of the nonelderly 

population. 

Insurance status 

Health insurance status is person-level. It was hierarchically defined using insurance status as of the 

Round 1/3 interview. An individual with any private group coverage was assigned that category. If there 

was no private group coverage then individuals with any private non-group coverage were assigned that 

category. Individuals without private coverage of any type who had some type of public coverage were 

assigned to the public insurance category. Finally, individuals without any health insurance coverage of 

any type were assigned to the uninsured category. 

Poverty status 

Family income is defined in terms of poverty status, the ratio of the family’s income to the Federal poverty 

thresholds, which control for the size of the family and the age of the head of the family (see the 2003 

U.S. Department of Health and Human Services Poverty Guidelines at 

http://aspe.hhs.gov/poverty/03poverty.htm for more details). The following classifications were used: 

– Poor: Persons in families with income less than 100 percent of the poverty line, including those whose 

losses exceeded their earnings, resulting in negative income. 

– Near poor and low income: Persons in families with income from 100 to less than 200 percent of the 

poverty line. 

– Middle income: Persons in families with income from 200 to less than 400 percent of the poverty line. 

– High income: Persons in families with income at or above 400 percent of the poverty line.
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 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 

Bernard, D. and Banthin, J. Out-of-Pocket Expenditures on Health Care and Insurance Premiums among 

the Nonelderly Population, 2003. Statistical Brief #121. March 2006. Agency for Healthcare Research and 

Quality, Rockville, Md. http://www.meps.ahrq.gov/papers/st121/ stat121.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 
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

54.4

3.3 4.4

11.8

1.0 1.0

43.1

55.7

77.9

15.9 14.0 17.2

4.4

14.3

2.8

0

10

20

30

40

50

60

70

80

Total population Private group Private non-group Public Uninsured

$2,000 $5,000 $10,000 

Percent

Figure 1. Percentage of nonelderly individuals living in families with

out-of-pocket expenditures on health care and insurance premiums

exceeding $2,000, $5,000, and $10,000, by insurance status, 2003

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

4.2

19.9

5.1

0.6

3.8

55.7

23.9

62.0

15.6

3.4

21.6

0.7

0

10

20

30

40

50

60

70

Single adults Adult couples Single parent with

child(ren)

Two parents with

child(ren)

$2,000 $5,000 $10,000 

Percent

Figure 2. Percentage of nonelderly individuals living in families with

out-of-pocket expenditures on health care and insurance premiums

exceeding $2,000, $5,000, and $10,000, by family type, 2003
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003

15.2

19.9

1.7 2.9 3.9

58.5

46.1

26.3

14.8

4.6

7.9

1.0

0

10

20

30

40

50

60

Poor Near poor & low income Middle income High income

$2,000 $5,000 $10,000 

Percent

Figure 3. Percentage of nonelderly individuals living in families with

out-of-pocket expenditures on health care and insurance premiums

exceeding $2,000, $5,000, and $10,000, by poverty status, 2003

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

15.7

23.6

0.9 3.1

6.0

58.4

48.0

27.6

45.3

15.3

7.1

3.0

0

10

20

30

40

50

60

Age 0-17 Age 18-34 Age 35-54 Age 55-64

$2,000 $5,000 $10,000 

Percent

Figure 4. Percentage of nonelderly individuals living in families with

out-of-pocket expenditures on health care and insurance premiums

exceeding $2,000, $5,000, and $10,000, by age group, 2003