U. S. Department of Health and Human Services

Agency for Healthcare Research and Quality

www.ahrq.gov

MEPS Chartbook No. 11

Medical Expenditure Panel Survey

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Health Care Expenses in the

Community Population, 1999

Demographics Health Insurance Payers
Suggested citation:

Olin GL, Machlin SR. Health care expenses in the community population, 1999. Rockville (MD):Agency for Healthcare Research and Quality;

2003. MEPS Chartbook No. 11.AHRQ Pub. No. 03-0038.

The estimates in this report are based on the most recent data available from MEPS at the time the report was written. However, selected

elements of MEPS data may be revised on the basis of additional analyses, which could result in slightly different estimates from those shown

here. Please check the MEPS Web site for the most current file releases—

www.meps.ahrq.gov

AHRQ is the lead Federal agency charged with supporting research designed to improve the quality of health care, reduce its cost, address

patient safety and medical errors, and broaden access to essential services.AHRQ sponsors and conducts research that provides evidence-based

information on health care outcomes; quality; and cost, use, and access.The information helps health care decisionmakers—patients and clinicians,

health system leaders, and policymakers—make more informed decisions and improve the quality of health care services.

MEPS Chartbook No. 11 by:

Gary L. Olin, Ph.D.

Steven R. Machlin, M.S.
Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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i

Half of the community population had

expenses of about $450 or less for the

year. This includes the 16% who had no

health care expenses.

In 1999, the civilian noninstitutionalized

population had health care expenses of

$596 billion. For the 84% with health

care expenses, the mean expense was

$2,557.

Inpatient hospital stays, ambulatory

medical care, and prescribed medicines

accounted for 83% of health care

spending for the community population.

In 1999, 83% of the non-elderly and 95%

of the elderly had health care expenses.

The mean expense per user was $1,939

for the non-elderly and $6,299 for the

elderly.

Private insurance paid 54% of health

care expenses for people under 65, while

Medicare paid 56% for people 65 and

over.

The average expense per uninsured

person was $684. The average expense

per Medicare beneficiary with

supplemental Medicaid coverage was

$8,069.

In 1999, 5% of the community

population accounted for slightly more

than half of the population’s total health

expenses. Conversely, the bottom 50%

accounted for only 3% of all health

expenses.

Uninsured people under 65 paid 46% of

their expenses out of pocket, while their

publicly insured counterparts paid only

10%.

The out-of-pocket share of spending by

people 65 and over ranged from 7% by

Medicare beneficiaries with other public

insurance to 19% by beneficiaries with

Medicare only.

executive summary

1 Introduction

3 Data in This Report

5 Section 1

Overview

13 Section 2

Non-Elderly vs. Elderly

19 Section 3

Demographics and Insurance

25 Section 4

Sources of Payment

33 Definitions of Terms

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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iii

content

s

This chartbook from the

Agency for Healthcare Research and

Quality (AHRQ) shows health care

spending for the civilian

noninstitutionalized (community)

population in 1999. It presents

data from the Medical Expenditure

Panel Survey (MEPS).

The chartbook is organized

into four sections. Section 1 is a

summary of national expenses for

the community population by

amount, type of service, and source

of payment. Section 2 presents

information on non-elderly (under

age 65) and elderly people living in

the community, two groups that

have quite different health care

expenses. Section 3 shows average

health care expenses for persons

categorized by age, insurance status,

income, and race/ethnicity. Section

4 shows the extent to which

selected populations rely on

different sources to pay for their

health care. 

AHRQ’s first chartbook on

health care spending for the

community population shows data

for 1996. 

This chartbook and other

MEPS publications are available

electronically on the MEPS Web site

at <http://www.meps.ahrq.gov/>.

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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1

int

roduction

Data in the chartbook are

derived from MEPS public use file

HC-038—the 1999 Full Year

Consolidated File. This file contains

information from the household

component of MEPS, which surveys

a nationally representative sample of

households for information on the

health status, health care use and

expenses, and health insurance

coverage of individuals and families

in the U.S. civilian noninstitutionalized population. The

utilization information is based on

medical events reported by

households, but the payment

information is based on data

collected from medical providers in

the Medical Provider Component of

the survey wherever possible.

The expenses discussed here

represent payments to hospitals,

physicians, and other health care

providers for services reported by

the survey respondents. They were

specifically defined as direct

payments by individuals, private

insurance, Medicaid, Medicare, and

other sources for care provided

during the year. The expenses do

not include indirect payments to

health care providers, such as

Medicaid Disproportionate Share

and Medicare Direct Medical

Education subsidies, nor do they

include payments for over-thecounter drugs, alternative care

services, or phone contacts with

medical providers. (See

“Definitions of Terms” for more

information on service categories,

sources of payment, and population

characteristics.) 

The detailed information

collected about individuals in MEPS

makes it possible to examine

spending levels and patterns by

population characteristics such as

the ones illustrated in this

chartbook. However, the MEPS

estimates of national medical

expenditures are substantially lower

than the expenditures for personal

health care typically cited from the

National Health Accounts (NHA).

The main reasons for the differences

are that the NHA include a wider

variety of expenses and also include 

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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3

data in this report
Agency for Healthcare Research and Quality

4

Medical Expenditure Panel Survey

expenses for people who are not

part of the community population. 

MEPS is based on a complex

sample design, so survey estimates

are subject to statistical sampling

error. In this chartbook, only

differences between groups that are

statistically significant at the 0.05

level (not likely to be attributable to

sampling error) are noted in the

text. 
Overview In recent years, health care

spending has accounted for about

13% of this Nation’s gross domestic

product. U.S. expenses for health

care—whether measured as a

percent of national income or per

capita—are greater than those of

any other major industrialized

country. 

This section contains

information on health care spending

for the community population in

1999. It highlights the level and

type of spending, sources of

payment, and distribution of

expenses among community

residents as a whole. 

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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5

section 1
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Agency for Healthcare Research and Quality

6

Medical Expenditure Panel Survey

What proportion of the community

population has medical expenses?

• In 1999, there were about 276

million people in the civilian

noninstitutionalized population

of the United States. 

• Approximately 84% of the

population had at least one health

care expense during the year, and

the average expense was $2,557

for persons with expenses (data

not shown).

• Not all people had health care

expenses in 1999. Of the 16% of

the population with no health

care spending, a very small

proportion received some health

care for which no payments were

made.

No expenses

15.7%

Expenses

84.3%

Population = 276 million
• Direct spending on health care

for the U.S. community

population was about $596

billion.

• Hospital inpatient stays

accounted for the largest amount

of spending on health care (36%

of the total), although the

inpatient share of total spending

has been declining since the early

1980s. 

• The second largest expense

category was ambulatory health

care (31% of the total). 

• Prescribed medicines were the

third largest type of health care

spending for the community

population in 1999 (16% of the 

total). These expenses have

approximately doubled as a

proportion of the total since

1987. 

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Agency for Healthcare Research and Quality

7

Medical Expenditure Panel Survey

How is the health care dollar spent?

Prescribed

medicines

15.8%

Inpatient

36.1%

Ambulatory

31.2%

Other 2.8%

Dental 8.8%

Home health

5.3%

Total = $596 billion
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• Third-party payers—anyone

except the individual or family—

made about 81% of the health

care payments for the civilian

noninstitutionalized population

in 1999. Individuals and family

members paid the remaining

19%. 

• Private medical insurance—the

largest third-party payer—

covered about 40% of total

payments. Public sources of

payment include Medicare and

Medicaid. These two public

programs combined paid 31% of

the total. 

• About 9% of the expenses were

paid for by other sources, such as

the Department of Veterans

Affairs, the Indian Health

Service, State and local programs,

and liability insurance for homes

and cars.

Agency for Healthcare Research and Quality

8

Medical Expenditure Panel Survey

What share of expenses do different

sources pay?

Out of pocket

19.2%

Private

insurance

40.2%

Medicare

22.6%

Medicaid

8.8%

Other

9.2%
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• About half of the community

population had health expenses

of $451 (the median expense) or

less, but the mean per capita

expense was $2,156 in 1999.

The gap between median and

mean expenses stems from large

spending by a small proportion

of the population. 

• Among people with expenses, the

mean was $2,557 and the

median was $674. These

estimates are higher than the per

capita estimates because 16% of

the community population did

not have health expenses in

1999. 

• Regardless of whether expenses

are expressed as per capita or per

user, the mean expense was 4 to

5 times the size of the median

expense.

Agency for Healthcare Research and Quality

9

Medical Expenditure Panel Survey

What is the average medical expense of the

community population?

Mean Median Mean Median

0

500

1,000

1,500

2,000

2,500

3,000

$2,156

$451

$2,557

$674

Per capita Per user

Expense per person
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• In any given year, health care

spending for the U.S.

community population is highly

skewed, with no or few expenses

for many people and large

expenses for a small number of

people. 

• In 1999, 16% of the community

population had no health care

expenses and about half had

health care expenses of $1,000 or

less. At the other extreme, 5% of

the population had health care

expenses of more than $8,000. 

Agency for Healthcare Research and Quality

10

Medical Expenditure Panel Survey

How is spending distributed across the

population?

None $1-$1,000 $1,001–

$2,000

$2,001–

$3,000

$3,001–

$4,000

$4,001–

$5,000

$5,001–

$6,000

$6,001–

$7,000

$7,001–

$8,000

Over

$8,000

0

5

10

15

20

25

30

35

40

45

50

15.7%

49.9%

12.6%

6.2%

3.6% 2.6% 1.9% 1.3% 1.1%

5.2%

Percent of population

Level of expenses
• High-cost users (people with

exceptionally large expenses) are

responsible for much of the

health care spending in the

United States. Five percent of

the community population

accounted for more than half of

total health care spending in

1999.

• At the other extreme, the

bottom 50% of the population

had few or no health care

expenses. This group was

responsible for 3% of total

health care spending by the

community population. 

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Agency for Healthcare Research and Quality

11

Medical Expenditure Panel Survey

How is health care spending concentrated

in the population?

Top 5% Top 10% Top 15% Top 20% Top 50% Bottom 50%

0

10

20

30

40

50

60

70

80

90

100

Percent of total expenses

Population percentile

52.4%

66.7%

75.7%

81.8%

96.9%

3.1%

Non-Elderly

vs. Elderly

Health care expenses differ

substantially between the elderly

and non-elderly. For example, the

Medicare population, which consists

mostly of elderly people, accounts

for approximately 37% of all

personal health care spending in the

United States, even though it

comprises only 15% of the

population. This section provides

estimates of health care spending for

non-elderly (under age 65) and

elderly (age 65 and over)

community residents. 

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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13

section 2
• Non-elderly people who used

health care services had mean

and median expenses of $1,939

and $553, respectively, in 1999.

However, spending on different

types of services varied widely. 

• Hospital inpatient care was the

most expensive type of care, with

mean per-user expenses of

$8,895. Per-user expenses for

home health care were also high,

but less than 1% of the

population under 65 had home

health expenses in 1999. (See

page 18.)

• The median expense for most

other types of care was relatively

low, ranging from $251 for

ambulatory care to $124 for

prescribed medicines. 

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Agency for Healthcare Research and Quality

14

Medical Expenditure Panel Survey

What is the average expense of non-elderly

health care users?

Overall Inpatient Ambulatory Dental Prescribed

medicines

Home health

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Type of service

Expense per user

Median

Mean

$1,939

$553

$8,895

$4,238

$610 $251 $446 $153 $434 $124

$7,406

$1,617
Overall Inpatient Ambulatory Dental Prescribed

medicines

Home health

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Type of service

Expense per user

Median

Mean

$6,299

$2,323

$14,733

$8,687

$1,588

$649 $492 $187

$1,071 $682

$5,557

$1,542

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• People tend to use more health

care and more expensive services

as they age. In 1999, the overall

mean and median expenses of

elderly users of health care were

$6,299 and $2,323, or

approximately three to four times

the expenses of non-elderly

people who used health care

(previous chart). 

• Elderly users of inpatient hospital

services had mean and median

annual expenses of $14,733 and

$8,687, amounts approaching

twice the expenses for nonelderly users. Moreover, the

elderly were more than three

times as likely as the non-elderly

to have an inpatient hospital stay

(19% vs. 6%). 

• Home health care is relatively

common among the elderly, with

a mean expense per user of

$5,557 in 1999.

Agency for Healthcare Research and Quality

15

Medical Expenditure Panel Survey

What is the average expense of elderly

health care users?
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Agency for Healthcare Research and Quality

16

Medical Expenditure Panel Survey

How does the non-elderly population pay

for its health care?

Other

Medicaid

Medicare

Private insurance

Out of pocket

All services Prescribed medicines

0

10

20

30

40

50

60

Percent paid by source

20.7%

4.7%

54.2%

10.7% 9.7%

40.2%

44.8%

0.7%

12.3%

1.9%

• People under 65 rely heavily on

private insurance and their own

resources to pay for health care.

In 1999, 54% of their total

expense was paid by private

insurance and another 21% was

paid out of pocket. 

• Private insurance was the largest

payer for prescribed medicine

expenses (45%), but out-ofpocket expenses also were large

(40%). 
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• The elderly rely on Medicare to

the same extent that younger

people rely on private insurance

for coverage of their health care

expenses. In 1999, Medicare

paid 56% of the health care

expenses incurred by elderly

people living in the community.

• The Medicare share for

prescribed medicines (12%) was

relatively low. This spending was

for the small proportion of the

elderly who were in Medicare

managed care plans that covered

some expenses for prescribed

medicines. 

• Medicaid paid a relatively small

proportion of expenses incurred

by elderly community residents

(5%). The Medicaid proportion

is small because only about one

of eight Medicare beneficiaries in

the community is covered by

Medicaid, and Medicaid is the

payer of last resort for their

health care. 

Agency for Healthcare Research and Quality

17

Medical Expenditure Panel Survey

How does the elderly population pay for

its health care?

Other

Medicaid

Medicare

Private insurance

Out of pocket

All services Prescribed medicines

0

10

20

30

40

50

60

Percent paid by source

16.4%

56.0%

14.0%

5.3%

8.4%

57.4%

17.6%

12.1%

6.5% 6.4%
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• The elderly are more likely than

the non-elderly to use all types of

health care except dental services.

Differences in home health and

inpatient hospital use rates are

particularly large. The elderly are

more than 10 times as likely as

the non-elderly to have home

health care expenses (10% vs.

1%), and more than 3 times as

likely to have an inpatient

hospital stay (19% vs. 6%). 

• Regardless of age, most people

have at least one health care

expense during a year. In 1999,

83% of the population under 65

and 95% of the population 65

and over had health care

expenses.

Agency for Healthcare Research and Quality

18

Medical Expenditure Panel Survey

How much more likely are elderly people

to have expenses for different services?

65 and over

Under 65

Overall Inpatient Ambulatory Prescribed

medicines

Dental Home health

0

10

20

30

40

50

60

70

80

90

100

Type of service

Percent with an expense

82.8%

95.3%

5.6%

18.5%

69.8%

89.5%

58.7%

88.0%

41.8% 41.2%

0.7%

9.5%
Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

19

Demographics

and Insurance

Data on national health care

expenditures are used for a variety

of purposes, including measuring

the impact of health care spending

on the national economy and

monitoring access to care by

underserved populations. MEPS

data are of particular interest to

many researchers and policymakers

because the individual- and familylevel detail provides the foundation

for studies of numerous issues

related to the delivery and financing

of health care in the United States.

This section summarizes the average

level of spending for the community

population categorized by age,

insurance status, income, and

race/ethnicity. 

section 3
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• Mean and median health care

expenses of young children

(under age 6) and school-age

children (ages 6-17) were similar,

but spending on health care rose

with age. The largest jump in

mean expenses occurred between

the age groups 45-64 ($2,778)

and 65 and over ($6,003).

• The mean expense within each

age group is always higher than

the median expense because a

relatively small proportion of

individuals are responsible for a

disproportionate share of a

group’s total expenses.

Agency for Healthcare Research and Quality

20

Medical Expenditure Panel Survey

How do average health care expenses 

vary by age?

Under 6 6-17 18-44 45-64 65 and over

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Average expense

$874

$1,463

$197

$833

$227 $317

$2,778

$973

$6,003

$2,145

Median

Mean
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• Among the population under 65,

the uninsured receive less health

care than either the privately or

publicly insured. In 1999, the

mean expense of the uninsured

($684) was 72% less than that of

people with public insurance

($2,429) and 58% less than that

of people with private insurance

($1,633). 

• Almost all elderly people have

Medicare, and a large proportion

have supplementary private or

other public (mostly Medicaid)

coverage as well. The mean

expense for beneficiaries with

other public insurance ($8,069)

was 36% higher than the expense

for Medicare beneficiaries with 

private insurance ($5,953) and

47% higher than the expense for

beneficiaries without

supplemental insurance ($5,490). 

Agency for Healthcare Research and Quality

21

Medical Expenditure Panel Survey

Do health care expenses vary by insurance

status?

Any private Public only Uninsured Medicare

only

Medicare/

private

Medicare/

other public

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Average expense

$1,633

$248 $452 $684

$50

$5,490

$2,181

$1,851

$5,953

$2,326

$8,069

$2,429

Under 65 65 and over

Median

Mean
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Agency for Healthcare Research and Quality

22

Medical Expenditure Panel Survey

How do average health care expenses vary

by income category?

• Differences between income

groups in mean health care

expenses were not statistically

significant for either the nonelderly or the elderly.

• Mean health care expenses for

the elderly were 3-4 times those

of the non-elderly in all income

groups.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Mean expense

$1,747 $1,609

$6,901

$5,973 $5,788

$1,403

Under 65 65 and over

Poor and

near poor

Low

income

Middle and

high income

Poor and

near poor

Low

income

Middle and

high income
• Health care expenses vary across

racial and ethnic groups, but the

differences are not consistent for

the non-elderly and the elderly.

For example, in the group under

65, Hispanics spent significantly

less than whites, but among the

elderly, Hispanics and whites had

about the same health care

expenses. 

• Among the non-elderly, the

average expense was highest

among whites ($1,785) and

lowest among Hispanics

($1,036).

• Among the elderly, other races

(non-Hispanics of any race

except black or white) had the

lowest average expense ($3,679).

Whites and Hispanics had

expenses of about $6,100 each.

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Agency for Healthcare Research and Quality

23

Medical Expenditure Panel Survey

Is race/ethnicity related to health care

expenses?

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Mean expense

$1,322 $1,261

$6,140

$5,190

$6,143

$1,036

Under 65 65 and over

White Black Hispanic Other

races

White Black Hispanic Other

races

$1,785

$3,679

Sources of

Payment

Health insurance is often

studied from the perspective of its

impact on access to and use of

health care. This section highlights

the contribution of third-party

payers—private insurance and public

programs—to health care

expenditures for selected segments

of the community population. It

also shows the share of expenditures

paid by individuals and families—the

aggregate out-of-pocket burden of

health care spending for the

community population.

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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25

section 4
Out of pocket Private insurance Medicare Medicaid Other

0

10

20

30

40

50

60

Percent paid by source

22.1%

Under 65

13.2%

19.3%

16.9%

57.3%

44.1% 44.5%

40.3%

4.3%

10.5%

2.5%

0.8%

7.8%

21.9% 21.9%

12.8%

8.5%

10.3%

11.7%

29.2%

Other races

Hispanic

Black

White

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• Private insurance, typically

acquired in the work place, is the

main payer for health care

expenses among the non-elderly

community population.

However, the share of total

expenses paid by private

insurance was higher for whites

(57%) than it was for other racial 

and ethnic groups (45% or less)

in 1999.

• Blacks paid the lowest share of

total expenses out of pocket in

1999 (13%). At the other

extreme, whites paid the largest

share out of pocket (22%). 

• Other races (non-Hispanics of

any race except black or white)

made proportionately the highest

use of miscellaneous Federal and

State programs and unclassified

sources of insurance (the “other”

category in the chart). In 1999,

these sources paid 29% of their

health care expenses. 

Agency for Healthcare Research and Quality

26

Medical Expenditure Panel Survey

How do sources of payment for non-elderly

people vary by race/ethnicity?
Out of pocket Private insurance Medicare Medicaid Other

0

10

20

30

40

50

60

Percent paid by source

17.0%

65 and over

13.5%

10.1%

16.5%

14.5%

10.9% 10.8%10.1%

56.4%57.9%

47.8%

54.7%

3.6%

9.2%

24.6%

14.2%

8.5%

6.8%

4.4%

Other races

Hispanic

Black

White

8.5%

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• Medicare provides acute health

care coverage for nearly everyone

age 65 and over, and it pays the

largest share of their health care

expenses. The share does vary

by race/ethnicity, however. In

1999, Medicare paid a smaller 

share of the total expense for

Hispanics (48%) than it did for

whites (56%) and blacks (58%). 

• Hispanics in the community

population rely on Medicaid to a

larger extent than any other

group of elderly people. In

1999, Medicaid paid about 25%

of their health care expenses.

• Out-of-pocket spending on

health care is noteworthy, even

though many of the elderly have

supplemental private or public

insurance. In 1999, out-ofpocket spending relative to total

spending varied from 17% by

whites and other races to 10% by

Hispanics. 

Agency for Healthcare Research and Quality

27

Medical Expenditure Panel Survey

How do sources of payment for elderly

people vary by race/ethnicity?
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• The share of payments by

individuals, private insurers, and

public programs varies by

income. In 1999, private

insurance paid for 64% of the

health care expenses for middleand high-income people under

age 65, as opposed to only 21%

for poor and near poor people.

• Medicaid paid about one-third of

health care expenses for nonelderly people in the lowest

income category. 

• Even though Medicare does not

include many people under 65, it

covered 12% of the health care

expenses of poor and near poor

non-elderly people. Medicare

covered only 2% of the expenses

of middle- and high-income

people under 65. 

Agency for Healthcare Research and Quality

28

Medical Expenditure Panel Survey

Do sources of payment vary by income for

non-elderly people?

Out of pocket Private insurance Medicare Medicaid Other

0

10

20

30

40

50

60

70

Percent paid by source

15.0%

Under 65

17.5%

22.7% 21.3%

43.5%

64.3%

12.4%

8.2%

2.1%

35.0%

19.6%

3.1%

16.2%

11.2%

7.8%

Middle and high income

Low income

Poor and near poor
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• Medicare is the primary source

of payment for the elderly

regardless of income. In 1999,

the Medicare share of health care

expenses for the elderly ranged

from 54% for the middle- and

high-income group to 60% for

the low-income group, but the

differences were not statistically

significant. 

• The share elderly people in the

middle- and high-income group

paid out of pocket was equal to

the share paid by their private

insurance (about 18% each). 

• In 1999, poor and near poor

elderly people living in the

community paid about 13% of

their expenses out of pocket—an

amount about equal to the 14%

paid by Medicaid. 

Agency for Healthcare Research and Quality

29

Medical Expenditure Panel Survey

Do sources of payment vary by income for

elderly people?

Out of pocket Private insurance Medicare Medicaid Other

0

10

20

30

40

50

60

70

Percent paid by source

12.7%

65 and over

14.5%

18.1%

6.2% 7.5%

18.5%

56.8%

60.0%

54.4%

14.2%

9.2%

1.3%

10.2% 8.8% 7.7%

Middle and high income

Low income

Poor and near poor
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• In 1999, private insurance was

the largest payer of health care

for the non-elderly (54% of the

total), while Medicare paid an

equally large share of expenses

for the elderly (56% of the total).

• Both age groups relied fairly

extensively on their own

resources to pay amounts not

covered by insurance. Out-ofpocket payments by the nonelderly and the elderly made up

21% and 16% of their total health

care payments, respectively. 

• As a proportion of total expenses,

Medicaid paid about twice as

much for the non-elderly as it did

for the elderly (11% versus 5%).

Agency for Healthcare Research and Quality

30

Medical Expenditure Panel Survey

How do sources of payment vary between

elderly and non-elderly people?

Out of pocket Private insurance Medicare Medicaid Other

0

10

20

30

40

50

60

Percent paid by source

20.7%

16.4%

54.2%

14.0%

4.7%

56.0%

10.7%

5.3%

9.7% 8.4%

65 and over

Under 65
Any private Public only Uninsured Medicare

only

Medicare/

private

Medicare/

other public

0

10

20

30

40

50

Percent out of pocket

21.4%

10.0%

45.7%

19.2%

17.4%

7.0%

Under 65 65 and over

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• Out-of-pocket spending is one

measure of the financial burden

of health care on individuals and

families. In 1999, the

community population paid 19%

of its health care expenses out of

pocket (Section 1), but that share

varies widely depending on

insurance status.

• Among the non-elderly, people

with public insurance (primarily

Medicaid) paid the lowest

proportion of their total expenses

out of pocket (10%). In contrast,

the uninsured paid about half of

their total expenses out of pocket

(46%). The remaining expenses

for uninsured individuals were

paid by other sources, such as the

Department of Veterans Affairs,

public clinics, and other public

and private sources. 

• Medicare beneficiaries with

supplemental public insurance

had the lowest out-of-pocket

spending (7%) relative to their

total expenses. In contrast,

elderly people with only 

Medicare paid 19%, and those

with Medicare plus supplemental

private insurance paid 17%. 

Agency for Healthcare Research and Quality

31

Medical Expenditure Panel Survey

How does out-of-pocket spending for

medical care vary by insurance status?

Type-of-Service Categories

Health care services are categorized

according to reports by survey

respondents. The six categories used here

are inpatient, ambulatory, prescribed

medicines, dental, home health, and other.

Expenses for these services are defined as

follows: 

Inpatient service expenses cover room and

board and all hospital diagnostic and

laboratory services, separately billed

physician inpatient services, and emergency

room services incurred immediately prior

to admission to the hospital. 

Ambulatory service expenses cover visits to

medical providers seen in office-based

settings or clinics, hospital outpatient

departments, emergency rooms (except

visits resulting in an overnight hospital

stay), and clinics owned and operated by

hospitals. 

Prescribed medicine expenses cover all

prescribed medications that were initially

purchased or refilled during 1999, as well

as diabetic supplies (some of which may

have been purchased without a

prescription). 

Dental service expenses cover any type of

dental care, including services provided by

general dentists, dental hygienists, dental

technicians, dental surgeons, orthodontists,

endodontists, and periodontists. 

Home health service expenses cover care

provided by home health agencies and

independent home health providers.

Agency providers accounted for most of

the expenses in this category. 

Other service expenses cover eyeglasses,

contact lenses, ambulance services,

orthopedic items, hearing devices,

prostheses, bathroom aids, medical

equipment, disposable supplies, and other

miscellaneous items or services that were

obtained, purchased, or rented during the

year. About half the expenses in this

category were for vision items.

Health Care Users

Health care users are persons with some

health care expenses during the year. 

Sources of Payment 

Health care providers are reimbursed for

their services by individuals and by thirdparty payers such as private insurance and

public programs. Sources of payment in

the chartbook are defined as follows:

Out of pocket means paid by the user or

family.

Private insurance refers to major medical

plans covering hospital and physician care

(excluding Medicare, Medicaid, and other

public sources). It includes Medigap plans

for Medicare beneficiaries, CHAMPUS

(the military health care system, now called

TRICARE), and CHAMPVA (for military

veterans), but excludes single-service plans

such as dental or vision insurance. 

Medicare is a federally financed health

insurance plan for the elderly, persons

receiving Social Security disability

payments, and most persons with endstage renal disease. Medicare Part A, which

provides hospital insurance, is

automatically given to those who are

Medical Expenditure Panel Survey Agency for Healthcare Research and Quality

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33

definitions of terms
eligible for Social Security. Medicare Part B

provides supplementary medical insurance

that pays for medical expenses and can be

purchased for a monthly premium.

Medicaid is a means-tested government

program jointly financed by Federal and

State funds that provides health care to

those who are eligible. Program eligibility

criteria vary significantly by State, but the

program is designed to provide health

coverage to families and individuals who are

unable to afford necessary medical care.

Other sources include the Department of

Veterans Affairs (excluding CHAMPVA);

other Federal sources (Indian Health

Service, military treatment facilities, and

other care provided by the Federal

Government); various State and local

sources (community and neighborhood

clinics, State and local health departments,

and State programs other than Medicaid);

Medicaid payments reported for people who

were not enrolled in the Medicaid program

at any time during the year; Worker’s

Compensation; unclassified sources

(automobile, homeowner’s, or liability

insurance, and other miscellaneous or

unknown sources); and any type of private

insurance payments reported for people

without private health insurance coverage

during the year.

Population Characteristics

In general, population characteristics were

measured as of December 31, 1999, or the

last date that the sample person was part of

the civilian noninstitutionalized population

living in the United States prior to

December 31, 1999.

Race/Ethnicity 

Classification by race and ethnicity is based

on information reported in MEPS for each

family member. Respondents were asked if

the race of the sample person was best

described as American Indian, Alaska

Native, Asian or Pacific Islander, black,

white, or other. They also were asked if the

sample person’s main national origin or

ancestry was Puerto Rican; Cuban;

Mexican, Mexicano, Mexican American, or

Chicano; other Latin American; or other

Spanish. All persons whose main national

origin or ancestry was reported in one of

these Hispanic groups, regardless of racial

background, are classified as Hispanic. The

other race categories do not include

Hispanic persons. 

Comparisons by race/ethnicity in this

chartbook are based on the following four

race/ethnicity groups: non-Hispanic white,

non-Hispanic black, non-Hispanic other

races, and Hispanic (of any race). The

“other races” category includes American

Indians, Aleutian Islanders and Eskimos,

Asians and Pacific Islanders, and unspecified

races. 

Health Insurance Status

The health insurance categories in this

chartbook are based on age and insurance

coverage at any time during 1999.

Individuals under age 65 were classified as

follows: 

Any private health insurance includes

individuals with insurance that provides

coverage for hospital and physician care

(other than Medicare, Medicaid, or other

public hospital/physician coverage) at any

time in the year. Persons with Armed

Forces-related coverage—

CHAMPUS/CHAMPVA—are also

included because the number of sample

persons in this group is small, and the

coverage is similar to private insurance.

Individuals who have only single-service

coverage for services such as dental and

vision care are not included in this category.

Public coverage only includes individuals who

met both of the following criteria: 

• They were not covered by private

insurance at any time during the year. 

• They were covered by one of the

following public programs at any

point during the year: Medicare,

Medicaid, or other public

hospital/physician coverage. 

Uninsured includes individuals who were

not covered by Medicare,

CHAMPUS/CHAMPVA, Medicaid, other

public hospital/physician programs, or

private hospital/physician insurance at any

time during 1999. Individuals covered only

by noncomprehensive State-specific

programs (e.g., Maryland Kidney Disease

Program, Colorado Child Health Plan) or

private single-service plans (e.g., coverage

for dental or vision care only, coverage for

accidents or specific diseases) are not

considered to be insured. 

Individuals age 65 and over were classified

as follows: 

Medicare only includes individuals who were

covered by Medicare but did not have

Agency for Healthcare Research and Quality

34

Medical Expenditure Panel Survey
private insurance or any other public

insurance. 

Medicare and private insurance includes

individuals who had supplementary private

insurance in addition to Medicare.

Medicare and other public insurance includes

individuals who had Medicaid or other

public insurance in addition to Medicare

but no private supplemental insurance.

Income Category

Each person was classified according to the

total 1999 income of his or her family.

Within a household, all individuals related

by blood, marriage, or adoption were

considered to be a family. Personal income

from all family members was summed to

create family income. Possible sources of

income included annual earnings from

wages, salaries, bonuses, tips, and

commissions; business and farm gains and

losses; unemployment and Worker’s

Compensation; interest and dividends;

alimony, child support, and other private

cash transfers; private pensions, IRA

withdrawals, Social Security, and veterans’

payments; Supplemental Security Income

and cash welfare payments from public

assistance, Aid to Families with Dependent

Children, and Aid to Dependent Children;

gains or losses from estates, trusts,

partnerships, S corporations, rent, and

royalties; and a small amount of other

income. 

Income category was determined by the

ratio of family income to the 1999 Federal

poverty thresholds, which vary by family

size and age of the head of the family. The

three income categories in the chartbook

are defined as follows:

Poor and near poor includes persons in

families with income less than or equal to

125 percent of the poverty line. (Some of

these persons reported negative income.)

Low income includes persons in families with

incomes over 125% through 200% of the

poverty line.

Middle and high income includes persons in

families with income over 200% of the

poverty line.

Agency for Healthcare Research and Quality

35

Medical Expenditure Panel Survey
www.ahrq.gov

AHRQ Publication No. 03-0038

August 2003

ISBN 1-58763-092-3

ISSN 1531-5649

U.S. Department of Health and Human Services

Public Health Service

Agency for Healthcare Research and Quality

540 Gaither Road

Rockville, MD 20850

Official Business

Penalty for Private Use $300