Agency for Healthcare 

Medical Expenditure Panel Survey Research and Quality 

STATISTICAL BRIEF #73 

March 2005 

Characteristics of Persons with High 

Medical Expenditures in the U.S. 

Civilian Noninstitutionalized Population, 

2002 

Leslie J. Conwell, MHS and Joel W. Cohen, PhD 

Introduction 

This Statistical Brief presents characteristics of persons in the U.S. 

civilian noninstitutionalized (community) population in calendar year 

2002 who were in the top 5 percent of the medical expenditure 

distribution compared with persons in the bottom 50 percent of that 

distribution. The distribution of medical expenditures is determined 

by ranking individuals in descending order according to their total 

medical expenses and determining aggregate spending at specific 

percentiles of the population. Total expenditures include expenditures for services provided by hospitals, physicians, and other health 

care providers, as well as expenditures for prescribed medicines and 

medical equipment. Expenses are defined as direct payments to 

providers by individuals, private insurance, Medicare, Medicaid, and 

other payment sources. 

The estimates provided in this brief are derived from the Household 

Component of the 2002 Medical Expenditure Panel Survey (MEPSHC). All differences between estimates discussed in the text are 

statistically significant at the 0.05 level. 

Findings 

In 2002, the top 5 percent of the U.S. community population, ranked 

according to their level of expenditures, accounted for 49 percent of 

overall U.S. medical spending. Medical expenses for these people 

equaled or exceeded $11,487 during the year. In contrast, the 

bottom 50 percent of the expenditure distribution (that is, the half of 

the population with the lowest expenditures, those with annual 

medical spending below $664) represented only 3 percent of total 

national medical expenditures (figure 1). 

Levels of expenditures are generally inversely related to age (figure 

2). The youngest age group, those less than 19, accounted for 37 

percent of the bottom 50 percent of the expenditure distribution, but 

only 5 percent of the top 5 percent, while those age 65 and over 

accounted for just under half (43 percent) of the top 5 percent of the 

distribution, but only 4 percent of the bottom 50 percent. 

Highlights 

� In 2002, 5 percent of the 

population accounted for 49 

percent of total medical 

expenditures, and half the 

population accounted for only 

3 percent of the total. 

� More than one-quarter of 

individuals in the top 5 

percent of the expenditure 

distribution were between the 

ages of 65 and 79, and 

another 14 percent were age 

80 and above. 

� Among persons under the 

age of 65 in the top 5 percent 

of the expenditure distribution, 

more than 70 percent had 

private insurance during the 

year, and only 4 percent were 

uninsured. 

� About one-third of persons in 

the top 5 percent of the medical expenditure distribution 

had out-of-pocket expenses 

that exceeded 10 percent of 

family income. 

� Persons in the top 5 percent 

of the medical expenditure 

distribution were much more 

likely than those in the bottom 

half of the distribution to 

report their physical or mental 

health as being only fair or 

poor. 

� More than one-quarter of 

persons in the top 5 percent 

of the medical expenditure 

distribution had one or more 

activity limitations compared 

with 1 percent of persons in 

the bottom half of that 

distribution. 
Within the population under age 65, most of the individuals in both the top 5 percent and bottom 50 

percent of the expenditure distribution had private health insurance at some time during the year (figure 3, 

left side). Those with private insurance did make up a slightly higher proportion of the top 5 percent of the 

distribution than the bottom 50 percent (71 versus 66 percent). In contrast, the uninsured accounted for 

almost one-fifth of the bottom 50 percent of the expenditure distribution, but less than one-twentieth of the 

top 5 percent. 

Within the population age 65 and older (figure 3, right side), the overwhelming majority of individuals in 

the top 5 percent of the expenditure distribution had Medicare plus private insurance (59 percent). Those 

65 and older in the bottom 50 percent of that distribution were more likely than those in the top 5 percent 

to have Medicare only (39 percent versus 26 percent). 

Among persons in the top 5 percent of the expenditure distribution, more than one-third had out-of-pocket 

medical expenses that exceeded 10 percent of family income and almost one-fifth had out-of-pocket 

expenses that exceeded 20 percent of family income (figure 4). Persons in the bottom 50 percent of the 

distribution were much less likely than those in the top 5 percent to have out-of-pocket expenses for 

medical care that exceeded 10 or 20 percent of family income. Only 5 percent of persons in the bottom 50 

percent had expenses that exceeded 10 percent of family income and only 3 percent had out-of-pocket 

expenses in excess of 20 percent. 

Persons in the highest 5 percent of the distribution of medical expenditures were much more likely to be 

in fair or poor health than persons in the bottom half of that distribution, 45 percent versus 4 percent. 

Similarly, 21 percent of persons in the top 5 percent of the expenditure distribution were in fair or poor 

mental health compared with 3 percent of persons in the bottom 50 percent (figure 5). 

Of those in the top 5 percent of the expenditure distribution, 26 percent needed help with at least one 

activity of daily living (ADL), such as bathing and dressing, or instrumental activity of daily living (IADL), 

such as doing housework and paying bills, compared with only 1 percent of those in the bottom half of the 

distribution (figure 6). Conversely, almost no one in the bottom 50 percent of the medical expenditure 

distribution (99 percent) had an IADL or ADL limitation. 

Data Source 

The estimates in this Statistical Brief are derived from the MEPS 2002 Full Year Consolidated Data File: 

HC-070. 

Definitions 

Expenditures 

Expenditures include the total 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. 

Health insurance status 

Health insurance was defined as follows for individuals under age 65: 

– Any private health insurance: Having insurance at any time during the year that provided 

coverage for hospital and physician care from a nonpublic source. Coverage only by private 

single-service plans (e.g., coverage for dental or vision care only or coverage for accidents or 

specific diseases) was not defined as private health insurance. 

– Public coverage only: Having Insurance at any time during the year that provided coverage for 

hospital and physician care through Medicare, Medicaid, or some other public program, combined 

with no coverage for hospital and physician care through a private source. Coverage only through 

noncomprehensive State-specific programs (e.g., the Maryland Kidney Disease Program, the 

Colorado Child Health Plan) was not defined as public coverage. 

– Uninsured: Having no private or public coverage of hospital and physician care at any time during 

the year. 
Individuals age 65 and over were classified into the following three insurance categories: 

– Medicare only: Having coverage only through the Medicare program. 

– Medicare and private: Having coverage through Medicare and a private source. 

– Medicare and public: Having coverage through Medicare and some other public source. 

Out-of-pocket expenses 

This category includes only payments to providers by users and their families. Insurance premiums are 

not included. 

Perceived health status 

The MEPS respondent was asked to rate the health of each person in the family according to the 

following categories: excellent, very good, good, fair, and poor. 

Limitations 

ADLs are activities of daily living, including personal care activities such as bathing, dressing, and eating. 

IADLs are instrumental activities of daily living, such as using the telephone, paying bills, taking medications, preparing light meals, doing laundry, or going shopping. The measure "any limitations" is a 

combined measure that indicates whether an individual had one or more limitations, including ADLs/ 

IADLs, physical activity limitations (such as difficulty walking, bending, or stooping), or work/housework/ 

school limitations. 

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 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 

Conwell, L. J. and Cohen, J. W. Characteristics of Persons with High Medical Expenditures in the U.S. 

Civilian Noninstitutionalized Population, 2002. Statistical Brief #73. March 2005. Agency for Healthcare 

Research and Quality, Rockville, Md. http://www.meps.ahrq.gov/papers/st73/stat73.pdf
Expenditure Panel Survey, 2002 

Figure 1. Concentration of expenditures, 2002 

3 

97 

80 

64 

49 

22 

0 

20 

40 

60 

80 

100 

Top 1% 

(>=$35,543) 

Top 5% 

(>=$11,487) 

Top 10% 

(>=$6,444) 

Top 20% 

(>=$3,219) 

Top 50% 

(>=$664) 

Bottom 50% 

(<$664) 

Percent of total

expenditures 

Percent of population 

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

Expenditure Panel Survey, 2002 

14 

29 

18 

15 

10 9 

5 

1 

3 

5 

11 

16 

27 

37 

0 

5 

10 

15 

20 

25 

30 

35 

40 

0-18 19-34 35-44 45-54 55-64 65-79 80+ 

Top 5% 

Age 

Percent 

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

Figure 2. Distribution by age, 2002 

Bottom 50% 
Expenditure Panel Survey, 2002 

Figure 3. Insurance status, 2002 

Under age 65 Age 65+ 

26 

39 

4 

19 

15 

71 66 

11 15 

50 

59 

25 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

Bottom 

50% 

Top 5% Bottom 

50% 

Uninsured (<65) 

Medicare and private (65+) 

Medicare and public (65+)

Percent 

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

Top 5% 

Any private (<65) 

Public only (<65) 

Medicare only (65+) 

Expenditure Panel Survey, 2002 

34 

18 

5 

3 

0 

5 

10 

15 

20 

25 

30 

35 

>10% >20% 

Top 5% Bottom 50% 

Percent 

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

Figure 4. Out-of-pocket expenses as a percentage 

of family income, 2002 
Expenditure Panel Survey, 2002 

Figure 5. Perceived health status, 2002 

79 

21 

55 

45 

97 

3 

96 

4 

0 

10 

20 

30 

40 

50 

60 

70 

80 

90 

100 

Fair/Poor Good/VeryGd/Exc Fair/Poor Good/Very Gd/Exc 

Top 5% Bottom 50% 

Physical Mental 

Percent 

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

Expenditure Panel Survey, 2002 

74 

26 

99 

1 

0 

10 

20 

30 

40 

50 

60 

70 

80 

90 

100 

Yes No 

Top 5% 

Percent 

Any ADL or IADL Limitation 

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

Figure 6. Activity limitations, 2002 

Bottom 50%