Agency for Healthcare 

Medical Expenditure Panel Survey Research and Quality 

STATISTICAL BRIEF #81 

May 2005 

Concentration of Health Care 

Expenditures in the U.S. Civilian 

Noninstitutionalized Population 

William W. Yu and Trena M. Ezzati-Rice 

Introduction 

The Household Component of the Medical Expenditure Panel Survey 

(MEPS-HC) provides essential information for assessing trends in 

the concentration of health care expenditures in the U.S. civilian 

noninstitutionalized population. The MEPS-HC data indicate that 

health care spending is highly concentrated, with a relatively small 

proportion of the population accounting for a large share of total 

health care expenses; in 1996, for example, the top 1 percent of the 

U.S. population accounted for 28 percent of the total health care 

expenditures and the top 5 percent for over one-half (56 percent).* 

The data also show that over time there has been some decrease in 

the extent of this concentration at the upper tail of the expenditure 

distribution. 

This Statistical Brief presents estimates from the MEPS-HC and the 

National Medical Expenditure Survey (NMES) on the concentration 

of health care expenditures for the years 1987, 1996, and 2002. All 

differences between estimates discussed in the text are statistically 

significant at the 0.05 level unless noted otherwise. 

Findings 

The majority of the U.S. civilian noninstitutionalized population 

accounts for a very small percentage of annual aggregate health 

care expenditures. Based on 1987, 1996, and 2002 data, the lower 

50 percent of the population as ranked by expenditures consistently 

accounted for only about 3 percent of total expenditures (figure 1). 

Over the decade from 1987 to 1996, the concentration of high-end 

expenditures (upper tail of the expenditure distribution) was also 

relatively stable. From 1996 to 2002, however, some attenuation 

occurred at the upper tail of the distribution, with the share of 

expenditures by the top 1 percent of health care spenders 

* Monheit, A. Persistence in Health Expenditures in the Short Run: Prevalence and 

Consequences. Medical Care, July 2003: 41(7) Supplement: III-53–III-64. 

Highlights 

� In 1987, 1996, and 2002, the 

lower 50 percent of the population as ranked by expenditures 

accounted for only about 3 

percent of total expenditures. 

� Some attenuation in the magnitude at the upper tail of the 

expenditure distribution has 

occurred over time. In 1996, for 

example, the top 1 percent of 

the population accounted for 28 

percent of total health care expenditures; by 2002, this figure 

had decreased to 22 percent. 

� The top 1 percent of the nonelderly population accounted for 

24 percent of 2002 total nonelderly expenditures compared 

to 31 percent in 1996. 

� The magnitude of the concentration of expenditures was less 

in the elderly than in the nonelderly (under 65) population. In 

2002, the top 1 percent of the 

elderly accounted for 12 percent 

of total expenditures compared 

to 24 percent of the non-elderly. 

� Non-elderly persons with any 

private insurance also experienced a decreasing trend at the 

high expenditure tail of the expenditure distribution from 1996 

to 2002. 

� Between 1996 and 2002, the 

concentration of expenditures 

decreased for the top 5 and top 

10 percent of the non-elderly in 

fair/poor health and for the top 

10 percent of those in excellent/ 

very good/good health. 
decreasing from 28 to 22 percent. Also, for the top 5 and 10 percent of spenders, the extent of 

concentration decreased somewhat from 1996 to 2002, from 56 to 49 percent and 69 to 64 percent, 

respectively. (figure 1) 

The attenuation in magnitude at the upper tail of the expenditure distribution over time for the entire 

civilian noninstitutionalized population was also observed for the non-elderly (under 65) population. In 

2002, the concentration of expenditures for the top 1 percent of the non-elderly population was 24 percent 

compared to 31 percent in 1996. Similar decreases occurred among the top 5 and 10 percent of the nonelderly population. (figure 2) 

The magnitude of the concentration of expenditures was much less visible in the elderly population 

compared to the non-elderly. In 2002, the concentration of expenditures for the top 1, 5, and 10 percent of 

the non-elderly population was 24, 49, and 64 percent (figure 2), respectively, as compared to 12, 34, and 

50 percent, respectively, for the elderly (figure 3). 

For the non-elderly, the trend of decreasing concentration from 1996 to 2002 at the upper tail of the 

expenditure distribution was observed for persons with private insurance. In 2002, the top 1, 5, and 10 

percent of the non-elderly with any private insurance population accounted for 21, 45, and 60 percent of 

the expenditures, respectively, as compared to 30, 54, and 67 percent, respectively, in 1996 (figure 4). 

This general decreasing trend was not observed for non-elderly persons uninsured or with public 

insurance coverage (data not shown). 

When self-reported health status is categorized into two groups, fair/poor and excellent/very good/good, 

the general decreasing trend in concentration was noted for the top 10 percent of the non-elderly. In 

2002, the concentration of expenditures for the top 10 percent of the non-elderly in fair/poor health was 

57 percent compared to 66 percent in 1996 (figure 5), while for the top 10 percent of the non-elderly in 

excellent/very good/good health, the 2002 and 1996 percentages were 60 percent and 64 percent, 

respectively, (figure 6). The top 5 percent of the non-elderly with excellent/very good/good health status 

also showed a significant decrease (45 percent in 2002 versus 49 percent in 1996). 

Data Source 

The 1996 and 2002 estimates in this Statistical Brief are based upon data from the MEPS-HC 1996 and 

2002 Full Year Consolidated Data Files, HC-012 and HC-070. The 1987 estimates are based on the 1987 

NMES. 

Definitions 

Expenditures 

The 1987 NMES collected information on expenditures in terms of total charges while MEPS-HC 

measures this information in terms of total expense. NMES defined total charge as the amount charged 

for the medical service provided. MEPS-HC defines total expense as the sum of 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. Sources include direct payments from individuals and 

families, private insurance, Medicare, Medicaid, and miscellaneous other sources. No attempt was made 

to account for this change in measurement. 

Health insurance status 

– Any private coverage: Private health insurance coverage is defined as nonpublic insurance that 

provides coverage for hospital and physician care (including Medigap coverage). Persons covered by 

TRICARE (Armed Forces-related coverage) are also included in this category. 

– Public only coverage: People are considered to have public only health insurance coverage if they are 

not covered by private insurance, and they are covered by Medicare, Medicaid, or other public hospital 

and physician coverage. 

– Uninsured: People who did not have insurance coverage at any time during the survey year are 

classified as uninsured. People who are covered only by noncomprehensive, State-specific programs 

(e.g., Maryland Kidney Disease Program) or private single service plans (e.g., coverage for dental or 

vision care only, coverage for accidents or specific diseases) are considered to be uninsured. 
About MEPS and NMES 

The Medical Expenditure Panel Survey (MEPS) is the third in a series of nationally representative surveys 

of medical care use and expenditures. MEPS is cosponsored by the Agency for Healthcare Research and 

Quality (AHRQ) and the National Center for Health Statistics. MEPS collects nationally representative 

data on health care use, expenditures, sources of payment, and insurance coverage for the U.S. civilian 

noninstitutionalized population. The first survey, the National Medical Care Expenditure Survey (NMCES) 

was conducted in 1977; and the second survey, the National Medical Expenditure Survey (NMES), was 

carried out in 1987. 

NMES and MEPS data are released to the public in public use data files. NMES data files are available 

from the AHRQ Publications Clearinghouse (E-mail: ahrqpubs@ahrq.gov). MEPS data files are available 

on the MEPS Web site. 

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 

U.S. Department of Health and Human Services. Surgeon General's Report on Physical Activity and 

Health. Atlanta, Ga.: Centers for Disease Control and Prevention, National Center for Chronic Disease 

Prevention and Health Promotion, 1996. 

For more information on what can be done to improve health, see AHRQ’s The Pocket Guide to Good 

Health for Adults, which is available at http://www.ahrq.gov/ppip/adguide/. 

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. 

For more information on the NMES survey design, see the following publications: 

Cohen, S., R. DiGaetano, and J. Waksberg. Sample design of the 1987 Household Survey. AHCPR Pub. 

No. 91-0037. National Medical Expenditure Survey Methods 3. Agency for Healthcare Policy and 

Research. Rockville, Md.: U.S. Department of Health and Human Services, Public Health Service, 1991. 

Edwards, W. and M. Berlin. Questionnaires and data collection methods for the household survey and the 

survey of American Indians and Alaskan Natives. DHHS Pub. No. (PHS) 89-3450. National Medical 

Expenditure Survey Methods 2. National Center for Health Services Research and Health Care 

Technology Assessment. Rockville, Md.: U.S. Department of Health and Human Services, Public Health 

Service, 1989. 

Suggested Citation 

Yu, W. W. and Ezzati-Rice, T. M. Concentration of Health Care Expenditures in the U.S. Civilian 

Noninstitutionalized Population. Statistical Brief #81. May 2005. Agency for Healthcare Research and 

Quality, Rockville, Md. http://www.meps.ahrq.gov/papers/st81/stat81.pdf 
97 

70 

56 

28 

97 

69 

28 

56 

97 

64 

49 

22 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% Top 50% 

1987 1996 2002 

Percentage of expenditures 

Figure 1. Concentration of health care expenditures in 

the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

Component of the Medical Expenditure Panel Survey, 1996 and 2002 

Source: Center for Financing, Access, and Cost Trends, AHRQ, National Medical Expenditure Survey, 1987, and Household 

64 69 

56 

31 

24 

49 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% 

1996 2002 

Percentage of expenditures 

Figure 2. Concentration of health care expenditures 

in the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

1996 and 2002 

(age <65 years) 

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 
50 

56 

39 

15 12 

34 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% 

1996 2002 

Percentage of expenditures 

Figure 3. Concentration of health care expenditures 

in the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

1996 and 2002 

(age >=65 years) 

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

60 

67 

54 

30 

21 

45 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% 

1996 2002 

Percentage of expenditures 

Figure 4. Concentration of health care expenditures 

in the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

1996 and 2002 

(age <65 years, with private insurance) 

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 
57 

66 

51 

25 

16 

42 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% 

1996 2002 

Percentage of expenditures 

Figure 5. Concentration of health care expenditures 

in the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

1996 and 2002 

(age <65 years, fair/poor health status) 

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

60 64 

49 

24 21 

45 

0 

20 

40 

60 

80 

100 

Top 1% Top 5% Top 10% 

1996 2002 

Percentage of expenditures 

Figure 6. Concentration of health care expenditures in 

the U.S. civilian noninstitutionalized population 

Population ranked by expenditures 

1996 and 2002 

(age <65 years, excellent/very good/good health status) 

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