Agency for Healthcare 

Medical Expenditure Panel Survey Research and Quality 

STATISTICAL BRIEF #86 

June 2005 

Trends in National Health Care 

Expenses in the U.S. Civilian 

Noninstitutionalized Population, 

1997 versus 2002 

David Kashihara and Kelly Carper 

Introduction 

Trends in health care expenditures are important to policymakers 

who are concerned about the rising cost of health care in the United 

States. This Statistical Brief compares national health care expenses 

in 1997 with those in 2002 for the overall U.S. civilian noninstitutionalized (community) population and by age, health insurance status, 

and income status. 

The estimates in the brief are derived from the Household Component of the Medical Expenditure Panel Survey (MEPS-HC) for 1997 

and 2002. The estimates of mean expenses presented are for those 

people who had at least some medical expenses during the year. 

Expenses for 1997 are adjusted to account for overall inflation (about 

12 percent) over the five-year period. All differences between estimates discussed in the text are statistically significant at the 0.05 

level unless otherwise noted. 

Findings 

Total population 

The percentage of the total U.S. community population who had 

medical expenses was similar in both 1997 and 2002 (84.1 percent 

and 85.2 percent, respectively). Total health care expenses increased from about $553.2 billion in 1997 to approximately $810.7 

billion in 2002 (data not shown), an increase of 46.5 percent. Only 

about one-quarter of this increase can be attributed to general 

inflation. (Estimates not shown in figures.) 

In 1997, the mean expense per person with a medical expense was 

$2,424 (figure 1). When expenditures for 1997 are expressed in 

2002 dollars, mean spending increased 21.5 percent from $2,717 in 

1997 to $3,302 in 2002. Median expenses are substantially lower 

than mean expenses because a small proportion of the population 

accounts for a disproportionate amount of medical expenses. The 

median expense of the total population also increased substantially 

when comparing 1997 and 2002, rising by nearly 50 percent from 

$643 (in 2002 dollars) to $960 (estimates not shown). 

Highlights 

� The mean expense for 

persons with an expense 

increased from $2,717 (in 

2002 dollars) in 1997 to 

$3,302 in 2002, a 21.5 

percent increase. 

� The mean expense for the 

non-elderly (under age 65) 

increased 24.1 percent from 

$2,060 (in 2002 dollars) in 

1997 to $2,557 in 2002 while 

the mean expense of those 

age 65 and older increased 

17.0 percent from $6,666 to 

$7,797. 

� The rate of increase in the 

mean expense between 1997 

and 2002 for the non-elderly 

with public only insurance 

(48.2 percent) was higher 

than for those with any private insurance (17.8 percent), reflecting an increase 

from $2,472 (in 2002 dollars) 

to $3,663 for those with 

public only health insurance 

and from $2,109 to $2,484 for 

those with any private health 

insurance. 

� For the elderly, the increase 

in the mean expense from 

1997 (in 2002 dollars) to 

2002 was significant only for 

those with Medicare and 

private insurance ($6,460 

versus $7,736). 

� The mean health care expenditures for low-income 

individuals increased from 

$3,004 (in 2002 dollars) in 

1997 to $3,830 in 2002 and 

for high-income individuals 

from $2,482 to $3,095. 
Age 

The elderly (persons age 65 and older) are more likely to have expenses for health care than the nonelderly (e.g., 96.3 percent versus 83.6 percent in 2002; estimate not shown), and their average expenses 

are also higher (e.g., $7,797 versus $2,557 in 2002; figure 2). 

The mean expense of $7,797 for the population over age 65 in 2002 was 17.0 percent higher than in 

1997 ($6,666 in 2002 dollars). Similarly, the mean expense for the population under age 65 of $2,557 in 

2002 was 24.1 percent higher than in 1997 ($2,060 in 2002 dollars). (figure 2) 

Health insurance status 

Between 1997 and 2002, the mean health care expense for the non-elderly with any private health 

insurance increased 17.8 percent from $2,109 (in 2002 dollars) to $2,484. However, the increase for 

those with public only health insurance was much higher, at 48.2 percent ($2,472 versus $3,663, in 

constant dollars). (figure 3) 

For the elderly, only the mean expense for those with Medicare and private insurance showed a significant increase from 1997 to 2002 from $6,460 to $7,736, which represented a 19.7 percent increase 

(figure 4). 

Income level 

The lowest and highest income categories exhibited similar increases in mean expenses from 1997 to 

2002. For the low-income category, the mean expense in 1997 (in 2002 dollars) was $3,004 while the 

mean expense in 2002 was $3,830, a 27.5 percent increase. The mean expense for the high-income 

group increased 24.7 percent ($2,482 to $3,095, in constant dollars). (figure 5) 

Data Source 

The estimates in this Statistical Brief are based upon data from the MEPS 1997 and 2002 Full Year 

Consolidated Data Files, HC-020 and 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, private insurance, Medicare, Medicaid, and miscellaneous other sources. Expenditures for hospital-based services include those for both facility and 

separately billed physician services. Expenditures for 1997 were adjusted to 2002 dollars (an increase of 

12.1 percent) based on the Consumer Price Index for All Urban Consumers (CPI-U) for all items 

averaged across all U.S. cities. 

Health insurance status 

– 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. 

Income level 

Each sample person is classified according to the total annual income of his or her family. Within a 

household, all individuals related by blood, marriage, or adoption are considered to be a family. Personal 

income from all family members is summed to create family income. Poverty status is the ratio of family 

income to the Federal poverty thresholds, which control for family size and age of the head of family. 

Categories are defined as follows: 
– Low income: Persons in families with income below the Federal poverty line through 200 percent of the 

poverty line. 

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

– High income: Persons in families with income over 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-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 

Kashihara, D. and Carper, K. Trends in National Health Care Expenses in the U.S. Civilian 

Noninstitutionalized Population, 1997 versus 2002. Statistical Brief #86. June 2005. Agency for 

Healthcare Research and Quality, Rockville, Md. http://www.meps.ahrq.gov/papers/st86/stat86.pdf 
1997 and 2002 Full Year Consolidated Data Files 

Figure 1. Mean expense for persons with an expense, 

1997 and 2002 

2,717 

3,302 

2,424 

0 

2,000 

4,000 

1997 1997 in 2002 dollars 2002 

Dollars 

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

1997 and 2002 Full Year Consolidated Data Files 

Figure 2. Mean expense for persons with an expense, 

by age, 1997 and 2002 

2,060 

6,666 

2,557 

7,797 

0 

2,000 

4,000 

6,000 

8,000 

<65 years of age 65+ years of age 

In 2002 dollars 

1997 2002 

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 
1997 and 2002 Full Year Consolidated Data Files 

1997 and 2002 

2,109 

2,472 

1,231 

2,484 

3,663 

1,491 

0 

2,000 

4,000 

Any private Public only Uninsured 

In 2002 dollars 

1997 2002 

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

Figure 3. Mean expense for persons <65 years of age 

with an expense, by health insurance status, 

1997 and 2002 Full Year Consolidated Data Files 

Figure 4. Mean expense for persons >65 years of age 

1997 and 2002 

9,509 

6,460 6,019 

10,222 

7,736 

7,090 

0 

2,000 

4,000 

6,000 

8,000 

10,000 

Medicare Only Medicare and Private Medicare and Other 

Public 

In 2002 dollars 

1997 2002 

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

with an expense, by health insurance status, 
1997 and 2002 Full Year Consolidated Data Files 

Figure 5. Mean expense for persons with an expense, 

by income status, 1997 and 2002 

3,004 

2,718 2,482 

3,830 

3,089 3,095 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

Low income High income 

In 2002 dollars 

1997 2002 

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

Middle income