Agency for Healthcare 

Medical Expenditure Panel Survey Research and Quality 

STATISTICAL BRIEF #80

May 2005 

The Five Most Costly Medical Conditions, 

1997 and 2002: Estimates for the U.S. 

Civilian Noninstitutionalized Population 

Gary L. Olin, PhD and Jeffrey A. Rhoades, PhD 

Introduction 

The Household Component of the Medical Expenditure Panel Survey 

(MEPS-HC) provides critical information for evaluating trends in health 

care expenditures. This Statistical Brief presents data from the MEPSHC concerning medical expenditures for the five most costly medical 

conditions in 1997 and 2002 for the U.S. civilian noninstitutionalized 

(community) population. These five conditions— heart conditions, 

cancer, trauma, mental disorders, and pulmonary conditions—were 

determined by totaling and ranking the expenses for the medical care 

delivered for the diagnosis and treatment of acute and chronic 

conditions. Only differences between estimates that are statistically 

significant at the 0.05 level are discussed in the text. 

Findings 

In terms of health care expenditures, the five most costly chronic 

diseases and acute conditions affecting the U.S. community population 

in 1997 and 2002 included heart conditions, cancer, trauma, mental 

disorders, and pulmonary conditions. During this period, medical 

expenditures (in 2002 dollars) increased the most for mental disorders 

($11.3 billion) and pulmonary conditions ($10.0 billion) (figure 1). 

In 1997, the largest share of total medical expenditures (in 2002 

dollars) was for heart conditions (10.4 percent), cancer (8.2 percent), 

and trauma (8.0 percent). In 2002, the share of total health care 

expenditures for cancer was 6.0 percent, comparable to the shares for 

mental disorders (5.9 percent) and pulmonary conditions (5.6 percent). 

(figure 2) 

A comparable pattern was observed in 1997 and 2002 for the mean 

medical expenditures per person with expenses for medical events 

associated with these five most costly medical conditions. Among the 

top five, the average was highest for cancer ($6,351 and $4,462) and 

heart conditions ($4,120 and $3,434) and lowest for pulmonary 

conditions ($854 and $901) in 1997 and 2002, respectively. Average 

Highlights 

� Five medical conditions 

—heart conditions, 

cancer, trauma, mental 

disorders, and pulmonary 

conditions—ranked 

higher than all other 

medical conditions in 

terms of direct medical 

spending in 1997 and 

2002. 

� Medical expenditures (in 

2002 dollars) increased 

the most for mental 

disorders ($11.3 billion) 

and pulmonary conditions ($10.0 billion) 

between 1997 and 2002. 

� A comparable pattern 

was observed in 1997 

and 2002 for the mean 

medical expenditures per 

person with expenses for 

medical events associated with the five most 

costly medical conditions. Among these top 

five conditions, the mean 

expenditure was highest 

for cancer and heart 

conditions and lowest for 

pulmonary conditions in 

both years. 
medical expenditures for people with expenses for mental disorders ($1,798 and $1,522) and trauma 

($1,454 and $1,561) were less than for cancer and heart conditions but more than for pulmonary 

conditions ($854 and $901) for 1997 and 2002, respectively. (figure 3) 

Between 1997 and 2002, the number of people with medical expenses increased for all of the top five 

medical conditions except trauma. The largest percentage increase during this period was for mental 

disorders (55.0 percent, 20.1 to 31.2 million), followed by cancer (24.3 percent, 8.7 to 10.9 million) and 

pulmonary problems (21.7 percent, 41.3 to 50.2 million). (figure 4) 

Data Source 

The estimates shown in this Statistical Brief are drawn from analyses conducted by MEPS staff from the 

1997 and 2002 Full Year Consolidated Data Files, HC-020 and HC-070, respectively, which are available 

on the MEPS Web site (www.meps.ahrq.gov). 

Definitions 

Medical conditions 

Conditions data were collected from household respondents during each round as verbatim text and 

coded by professional coders using the International Classification of Diseases, Ninth Revision (ICD-9). 

Condition categories for this Statistical Brief were constructed using AHRQ's Clinical Classification 

Software (CCS), which aggregates ICD-9 codes into clinically meaningful categories. Categories were 

collapsed when appropriate. Decisions about collapsing CCS categories were based on maintaining the 

clinical significance of categories, the ability of household respondents to report the condition accurately, 

and the frequency of reporting the condition. CCS codes were aggregated into the following categories: 

heart conditions, 96, 97, 100–108; cancer, 11–45; trauma, 225–236, 239, 240, 244; mental disorders, 65– 

75; and pulmonary conditions, 127–134.* 

Expenditures 

Expenditures refer to what is paid for health care services. More specifically, expenditures in MEPS-HC 

are defined as the sum of direct payments for care provided during the year, including out-of-pocket 

payments and payments by private insurance, Medicaid, Medicare, and other sources. Payments for 

over-the-counter drugs and for alternative care services are not included in MEPS-HC total expenditures. 

Indirect payments not related to specific medical events, such as Medicaid Disproportionate Share and 

Medicare Direct Medical Education subsidies, are also not included. 

Expenditure estimates for 1997 were inflated to 2002 dollars using the medical consumer price index 

(http://www.bls.gov/cpi/home.htm#data). Expenditures may be associated with more than one condition 

and are not unduplicated in the condition totals; summing over conditions will double-count some 

expenses. Total spending does not include other medical expenses, such as durable and nondurable 

supplies, medical equipment, eyeglasses, ambulance services, and dental expenses, because they could 

not be linked to specific conditions. 

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/. 

* Cohen, J. and Krauss, N. Spending and Service Use among People with the Fifteen Most Costly Medical Conditions, 1997. Health 

Affairs, 22(2):129–138, 2003. 
References 

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

sources on 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 

Olin, G. L., and Rhoades, J. A. The Five Most Costly Medical Conditions, 1997 and 2002: Estimates for 

the U.S. Civilian Noninstitutionalized Population. Statistical Brief #80. May 2005. Agency for Healthcare 

Research and Quality, Rockville, Md. http://www.meps.ahrq.gov/papers/st80/stat80.pdf 
47.5 

36.2 35.3 

53.7 55.4 

70.0 

55.8 

67.6 

45.3 48.4 

0 

20 

40 

60 

80 

Heart conditions Cancer Trauma Mental disorders Pulmonary 

conditions 

1997 2002 

conditions, 1997 and 2002 

In billions of 2002 dollars 

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

HC-020 (1997) and HC-070 (2002) 

Figure 1. Expenditures for the five most costly 

5.9 

10.4 

8.2 8.0 

5.4 5.2

6.0 5.6 

8.3 

6.9 

0 

2 

4 

6 

8 

10 

12 

Heart conditions Cancer Trauma Mental disorders Pulmonary 

conditions 

1997 2002 

Figure 2. The five most costly conditions as 

a percentage of total expenditures, 1997 and 2002 

Percent 

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

HC-020 (1997) and HC-070 (2002) 
1,522 1,798 

854 

1,454 

6,351 

4,120 

1,561 

3,434 

901 

4,462 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

7,000 

Heart conditions Cancer Trauma Mental disorders Pulmonary 

conditions 

1997 2002 

Figure 3. Average expenditures per person with expenses 

In 2002 dollars 

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

HC-020 (1997) and HC-070 (2002) 

for the top five most costly conditions, 1997 and 2002 

31.2 

17.0 

8.7 

37.0 

41.3 

20.1 

10.9 

50.2 

19.7 

35.8 

0 

10 

20 

30 

40 

50 

60 

Heart conditions Cancer Trauma Mental disorders Pulmonary 

conditions 

1997 2002 

Figure 4. Number of people with expenses for 

Number in millions 

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

HC-020 (1997) and HC-070 (2002) 

the top five most costly conditions, 1997 and 2002