Agency for Healthcare 

Research and Qualit y 

STATISTICAL BRIEF #203 

Medical Expenditure Panel Survey 

May 2008 

Health Care Expenses for Adults with 

Chronic Conditions, 2005 

Steven Machlin, MS, Joel W. Cohen, PhD, and Karen 

Beauregard, MHA 

Introduction 

Previous research has shown that a small number of conditions, 

most of them chronic, account for a large proportion of overall 

medical expenses (Cohen and Krauss 2003; Soni 2007). This 

Statistical Brief focuses on overall expenditures among adults for 

chronic conditions, as well as acute care expenses for adults 

with chronic conditions and variations by age and type of 

service. Chronic conditions are defined as conditions that are 

expected to last at least one year and result in limitations in selfcare, independent living, and social interactions or in the need 

for ongoing medical intervention (Perrin et al. 1993; Hwang et al. 

2001). 

The estimates presented are for the adult population age 18 and 

over in the U.S. civilian noninstitutionalized population in 2005 

based on data collected in the Medical Expenditure Panel 

Survey Household Component (MEPS-HC) and Medical 

Provider Component (MEPS-MPC). Health care expenses 

represent payments to hospitals, physicians, and other health 

care providers for services reported by respondents in the 

MEPS-HC. These payments include amounts paid for various 

services by individuals, private insurance, Medicare, Medicaid, 

and other payment sources. Expenses for dental care and 

medical equipment and supplies are not included because these 

services are not linked to specific conditions in the survey. All 

differences between estimates discussed in the text are 

statistically significant at the 0.05 level or better. 

Findings 

In 2005, about 60 percent of the adult U.S. civilian 

noninstitutionalized population age 18 and over had at least one 

chronic condition (figure 1). The proportion of adults with at least 

one chronic condition increased dramatically with age, ranging 

from 36.4 percent of young adults age 18–34 to 91.5 percent of 

the elderly age 65 and over. The proportion of persons with two 

Highlights 

 

the adult U.S. civilian 

conditions increased 

 

) 

 

 

 

 

nearly 

In 2005, about 60 percent of 

noninstitutionalized population 

age 18 and over had at least 

one chronic condition, but the 

percentage with chronic 

dramatically with age. 

While just over half of total 

medical care expenses for 

adults in 2005 (excluding 

expenses for dental care and 

medical equipment and 

services were for treatment of 

chronic conditions, persons 

with chronic conditions 

accounted for about 90 

percent of health expenditures 

for all conditions (i.e., chronic 

and acute combined). 

Nearly three of every four 

dollars spent on prescription 

medications for adults age 18 

and over were for treatment of 

chronic conditions. 

Among adults with only one 

chronic condition, an average 

of $1,064 per person was 

spent on care for the condition 

in 2005. This average was 

about one-quarter of the per 

person average for adults with 

two or more conditions. 

Among the elderly age 65 and 

over with two or more chronic 

conditions, average expenses 

for those conditions were 

$6,000 per person. 

Adults with chronic conditions 

had higher average 

expenditures for acute 

conditions than adults without 

a chronic condition. 
or more chronic conditions also rose dramatically with age, ranging from only 14.4 percent among 

persons age 18–34 to 76.6 percent of the elderly age 65 and over. 

Overall, just over half of total expenses for medical care in 2005 for adults (excluding expenses for dental 

care and medical equipment and services) were for treatment of chronic conditions (figure 2). Only about 

one-quarter of expenses for emergency care (24.8 percent) were associated with chronic conditions. In 

contrast, over half of expenses for home health care (57.0 percent) and nearly three of every four dollars 

spent on prescribed medicines (72.9 percent) were for treatment of chronic conditions. The proportion of 

expenses for chronic conditions among the remaining service categories ranged from approximately 43– 

47 percent. 

About 29 percent of all expenses for medical care for persons age 18–34 were for treatment of chronic 

conditions versus about half for persons age 35–54 (figure 3). In contrast, more than half of medical 

expenses for the near elderly (55–64) and elderly (65 and over) populations were for treatment of chronic 

conditions (56.6 and 58.9 percent, respectively). 

While about 6 of every 10 persons age 18 and over had at least one chronic condition (see figure 1), 

these persons accounted for about 9 of every 10 dollars spent on care for chronic and acute conditions 

combined (figure 4). Persons with one or more chronic conditions accounted for the vast majority of 

expenses for most services—in particular prescribed medicines (96.5 percent) and home health care 

(98.9 percent), but accounted for a smaller proportion of expenses for emergency room services (79.3 

percent) compared to other service categories. 

Among persons age 35 and over, those with one or more chronic conditions accounted for the 

overwhelming majority of total medical expenses for all conditions (figure 5)—88.4 percent for those 

age 35–54, 95.8 percent for the near elderly age 55–64, and 98.8 percent for the elderly age 65 and 

over. In contrast, 63.3 percent of total medical expenses for young adults age 18–34 were attributable to 

persons with chronic conditions. 

Among adults age 18 and over with one chronic condition in 2005, an average of $1,064 per person was 

spent on care for the condition (figure 6). Per capita expenses for chronic conditions were substantially 

higher for persons with two or more chronic conditions ($4,571). Regardless of age, per capita expenses 

for chronic conditions were generally about three to four times as high for those with two or more chronic 

conditions as for those with only one chronic condition. Per capita expenses for chronic conditions were 

highest for the elderly with two or more conditions ($5,966). 

In 2005, persons age 18 and over with chronic conditions had higher expenditures for acute conditions 

than persons without a chronic condition (overall averages of $2,467 and $900 per person, respectively) 

(figure 7). In all age groups, persons with chronic conditions had higher expenditures for acute conditions 

than persons without a chronic condition. Among persons with one or more chronic conditions, expenses 

per person for treatment of acute conditions increased with age, rising from an average of $1,481 for 

young adults age 18–34 to $3,615 for the elderly age 65 and over. 

Data Source 

The estimates in this Statistical Brief are based on data from the 2005 Full-Year Consolidated Data File 

(HC-097) and 2005 Event Level Files (HC-094A, HC-094D–H) that can be linked to condition data. The 

definition of chronic conditions (see below) is based on 5 digit ICD-9 codes which are not available on 

public use files but can be accessed in the AHRQ Data Center. 
Definitions 

Age 

Most sample persons were classified according to their age on December 31, 2005. However, age for a 

small proportion of persons was based on the date earlier in the year when they were last considered to 

be in-scope for the survey (e.g., before death, entering the military, or moving to an institution). 

Expenditures 

Expenditures are defined as payments from all sources for hospital inpatient care, ambulatory care 

provided in offices and hospital outpatient departments, care provided in emergency departments, as well 

as prescribed medicine purchases reported by respondents in the MEPS-HC. Sources include direct 

payments from individuals, private insurance, Medicare, Medicaid, Workers’ Compensation, and 

miscellaneous other sources. The MEPS estimate of total expenditures for the civilian noninstitutionalized 

population in 2005 is $1.02 trillion. However, the total expenditures used in calculating estimates in this 

brief are equal to $929.9 billion because dental care ($72.5 billion) and other medical equipment and 

supplies ($21.3 billion) are excluded. These services cannot be linked to specific conditions in the survey. 

Chronic Condition Expenditures 

Conditions were classified as chronic or not chronic based on the AHRQ Healthcare Utilization Project 

Chronic Condition Indicator (see http://www.hcup-us.ahrq.gov/toolssoftware/chronic/chronic.jsp#overview 

for details). Expenditures for medical events that were linked to both types of conditions were included in 

the chronic category. 

Type of service 

– 	 Office-based: Includes expenses for visits to both physician and non-physician medical providers 

seen in office settings. 

– 	 Hospital inpatient: Includes room and board and all hospital diagnostic and laboratory expenses 

associated with the basic facility charge, payments for separately billed physician inpatient services, 

and some emergency room expenses incurred immediately prior to inpatient stays. 

– 	 Hospital outpatient: Includes expenses for visits to both physicians and other medical providers seen 

in hospital outpatient departments, including payments for services covered under the basic facility 

charge and those for separately billed physician services. 

– 	 Hospital emergency room: Includes payments for services covered under the basic facility charge and 

those for separately billed physician services, but excludes expenses for emergency room services 

that are included in a hospital inpatient admission. 

– 	 Prescribed medicines: Includes expenses for all prescribed medications that were initially purchased 

or refilled during the year, as well as expenses for diabetic supplies. 

– 	 Home health: Includes expenses for care provided by home health agencies (vast majority) and 

independent home health providers. 

About MEPS-HC and MEPS-MPC 

The MEPS Household Component (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. 

The MEPS Medical Provider Component (MPC) collects information on dates of visit, diagnoses and 

procedures, and charges and payments from a sample of medical providers who provided care to 

persons in the survey. The MPC is not designed to yield national estimates. It is primarily used as an 

imputation source to supplement household reported expenditure information. 

For more information about MEPS, call the MEPS information coordinator at AHRQ (301-427-1406) or 

visit the MEPS Web site at http://www.meps.ahrq.gov/. 
References 

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 Healthcare Policy and 

Research, 1997. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr1/mr1.shtml 

Cohen, J., Krauss, N. “Spending and Service Use among People with the Fifteen Most Costly Medical 

Conditions, 1997,” Health Affairs, March/April 2003. 

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. http://www.meps.ahrq.gov/mepsweb/data_files/publications/mr2/mr2.shtml 

Cohen, S. Design Strategies and Innovations in the Medical Expenditure Panel Survey. Medical Care, 

July 2003: 41(7) Supplement: III-5–III-12. 

Hwang, W., Weller, W., Ireys, H., Anderson, G. "Out-Of-Pocket Medical Spending for Care of Chronic 

Conditions," Health Affairs, November/December 2001. 

Perrin E.C., Newacheck P., Pless I.B., Drotar D., Gortmaker S.L., Leventhal J., Perrin J.M., Stein R.E., 

Walker D.K., Weitzman M. "Issues Involved in the Definition and Classification of Chronic Health 

Conditions," Pediatrics. 1993; 91: 787−793. 

Soni, A. The Five Most Costly Conditions, 2000 and 2004: Estimates for the U.S. Civilian 

Noninstitutionalized Population. Statistical Brief #167. March 2007. Agency for Healthcare Research and 

Quality, Rockville, MD. http://www.meps.ahrq.gov/mepsweb/data_files/publications/st167/stat167.pdf 

Suggested Citation 

Machlin, S., Cohen J. and Beauregard, K. Health Care Expenses for Adults with Chronic Conditions, 

2005. Statistical Brief #203. May 2008. Agency for Healthcare Research and Quality, Rockville, MD. 

http://www.meps.ahrq.gov/mepsweb/data_files/publications/st203/stat203.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, 2005

Figure 1. Distributions of persons age 18 and

over according to number of chronic

conditions, by age, 2005

40.1

63.6

41.8

22.7

8.5

20.3

14.9

57.0

76.6

22.0

24.8 21.6

38.2

14.4

33.4

0%

20%

40%

60%

80%

100%

18 & over 18-34 35-54 55-64 65 and older

No Chronic Condition 1 Chronic Condition 2+ Chronic Conditions

Percentage

Age Group

Statistical Brief #203: Health Care Expenses for Adults with Chronic Conditions, 2005 
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 2. Expenditures on chronic conditions

as a percentage of total expenses for adults

age 18 & over, by type of service, 2005

51.8

45.4 46.5 42.6

24.8

72.9

57.0

0

20

40

60

80

100

All services

(Total)

Office-based Inpatient hospital Outpatient

hospital

 Emergency

room

Prescription

medicines

Home health

care

Percentage

Note: Estimates do not include expenses for dental care and other medical equipment and services. 

Type of Service

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 3. Expenditures on chronic conditions

as a percentage of total expenses for adults

age 18 & over, by age, 2005

51.8

29.2

49.6

56.6 58.9

0

20

40

60

80

100

18 & over 18-34 35-54 55-64 65 and older

Percentage

Note: Estimates do not include expenses for dental care and other medical equipment and services.

Age Group

 

Statistical Brief #203: Health Care Expenses for Adults with Chronic Conditions, 2005 
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 4. Percentage of total expenses for adults age 

18 and over attributable to persons with chronic 

conditions, by type of service, 2005

90.5 87.1 89.8 87.0

79.3

96.5 98.9

0

20

40

60

80

100

All services

(Total)

Office-based Inpatient hospital Outpatient

hospital

Emergency room Prescription

medicines

Home health

care

Percentage

Note: Estimates do not include expenses for dental care and other medical equipment and services.

Type of Service

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 5. Percentage of total expenses for adults

age 18 and over attributable to persons

with chronic conditions, by age, 2005

90.5

63.3

88.4

95.8 98.8

0

20

40

60

80

100

18 & over 18-34 35-54 55-64 65 and older

Percentage

Note: Estimates do not include expenses for dental care and other medical equipment and services.

Age Group

 

Statistical Brief #203: Health Care Expenses for Adults with Chronic Conditions, 2005 
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 6. Average expenditures for treatment of

chronic conditions, by number of conditions and

age, adults age 18 and over, 2005

1,064

591

1,056 1,331

2,052

4,571

2,300

3,717

4,926

5,966

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

18 & over 18-34 35-54 55-64 65 and older

Age group

Expenses per person

1 chronic

2+ chronic

Note: Estimates do not include expenses for dental care and other medical equipment and services.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2005

Figure 7. Average expenditures for treatment of 

acute conditions, by chronic condition status

and age, adults age 18 and over, 2005

900 911 842 1,007 1,156

2,467

1,481

2,019

2,763

3,615

$0

$1,000

$2,000

$3,000

$4,000

18 & over 18-34 35-54 55-64 65 and older

Age group

Expenses per person

no chronic

1+ chronic

Note: Estimates do not include expenses for dental care and other medical equipment and services.

Statistical Brief #203: Health Care Expenses for Adults with Chronic Conditions, 2005