Medical Expenditure Panel Survey Agency for Healthcare 

Research and Quality

STATISTICAL BRIEF #159 

January 2007 

Out-of-Pocket Expenditures on Health 

Care among the Nonelderly Population, 

2004 

Highlights 

 In 2004, mean out-of-pocket 

expenses were $592 among 

the nonelderly population with

some health care expenses. 

Half had annual out-of-pocket 

expenses equal to or more than

$199 while the top 10 percent 

had expenses equal to or more

than $1,469. 

 For those with some expense, 

median and 90th percentile outof-pocket expenditures were 

lowest among those with public

insurance. The median was 

$255 among the privately insured, $8 among those with

public insurance, and $225 

among the uninsured. The 90th 

percentile was $1,516 among 

the privately insured, $631 

among those with public insurance, and $1,872 among the 

uninsured.

 Out-of-pocket expenses increased significantly with age.

For those with some expense, 

median expenses were $59 

among children, $179 among

adults age 18 to 34, $310 

among adults age 35 to 54, and 

$636 among adults age 55 to

64. The 90th percentile expenses were $611 among 

children, $1,089 among adults

age 18 to 34, $1,735 among 

adults age 35 to 54, and $2,810 

among adults age 55 to 64. 

 The share of expenses paid out 

of pocket was highest among

the uninsured and lowest 

among the publicly insured. 

Among those with some out-ofpocket expense, the uninsured

paid 70.6 percent, the publicly

insured paid 19.0 percent, and 

the privately insured paid 33.9 

percent out of pocket. 

Didem Bernard, PhD 

Introduction 

Health care costs continue to rise faster than the overall rate of 

inflation and are consuming a larger share of family budgets. By 

2003, there were 48.8 million individuals living in families who spent

more than 10 percent of family income on medical care, an increase 

of 11.7 million persons since 1996.* 

Using data from the Household Component of the Medical 

Expenditure Panel Survey (MEPS-HC), this Statistical Brief 

presents data on out-of-pocket health care expenditures among 

nonelderly individuals (age below 65) in 2004, and examines how 

out-of-pocket spending varies by health insurance status, poverty 

status, and age. The distribution of health care expenditures is 

highly skewed (i.e., a small proportion of persons have extremely 

large expenses); as a consequence, the emphasis of this analysis is 

on the expenditure distribution. All differences between estimates 

discussed in the text are statistically significant at the 0.05 level. 

Findings 

In 2004, there were approximately 256 million individuals under age 

65 in the United States civilian noninstitutionalized population. 

Among nonelderly individuals 17.1 percent had no health care 

expenses. Among the 82.9 percent with some health care 

expenses, mean out-of-pocket expenses were $592. Among those

with some expense, half had out-of-pocket expenditures of less than 

$199 (median) and half had expenses equal to or more than $199 

(figure 1). The top10 percent in terms of out-of-pocket spending

(90th percentile) had out-of-pocket expenses equal to or more than

$1,469. 

Out-of-pocket health-related spending by insurance status 

In 2004, among the nonelderly population, 67.4 percent had private

insurance coverage (173.0 million), 14.5 percent had public 

*Banthin, J. and D. Bernard. Changes in Financial Burdens for Health Care, National 

Estimates for the Population under Age 65, 1996 to 2003. JAMA, 2006: 296 

(22):2712-2719. 
coverage (37.3 million), and 18.0 percent were uninsured (46.2 million). Among the privately insured, 88.6 

percent had some health care expenses, among those with public insurance, 85.5 percent, and among 

the uninsured, 59.3 percent. 

For those with some expense, median and 90th percentile out-of-pocket expenditures were lowest among 

those with public insurance. Median out-of-pocket spending was $255 among the privately insured, $8 

among those with public insurance, and $225 among the uninsured (figure 1). The 90th percentile out-ofpocket spending was $1,516 among the privately insured, $631 among those with public insurance, and 

$1,872 among the uninsured. 

Out-of-pocket health-related spending by poverty status 

Out-of-pocket expenditures were positively correlated with income. Among those with some expense, 

median out-of-pocket spending was $41 among poor individuals, $105 among near poor and low income 

individuals, $200 among middle income individuals, and $302 among high income individuals (figure 2). 

The 90th percentile for out-of-pocket expenditures was significantly higher among high income individuals 

compared to those with lower incomes. The 90th percentile was $1,102 among poor individuals, $1,170 

among near poor and low income individuals, $1,319 among middle income individuals, and $1,713 

among high income individuals. 

Health-related spending by age group 

Out-of-pocket expenses increased significantly with age. For those with some expense, median expenses 

were $59 among children (those under age 18), $179 among adults age 18 to 34, $310 among adults age 

35 to 54, and $636 among adults age 55 to 64 (figure 3). The 90th percentile for expenses was $611 

among children, $1,089 among adults age 18 to 34, $1,735 among adults age 35 to 54, and $2,810 

among adults age 55 to 64. 

Out-of-pocket health-related spending by poverty and insurance status 

Since health care expenditures are positively correlated with income level, it is important to examine how 

expenditures vary by insurance status within poverty status. Across all income levels, those with public 

insurance had significantly lower out-of-pocket expenses compared with those with private insurance and 

the uninsured, while the difference in expenses between the privately insured and the uninsured was not 

statistically significant. 

Among the poor with some expense, median out-of-pocket spending was $3 for the publicly insured 

versus $210 for the privately insured and $200 for the uninsured. Among near poor and low income 

individuals with some expense, median spending was $9 for the publicly insured versus $147 for the 

privately insured and $205 for the uninsured (figure 4). Among middle income individuals with some 

expense, median spending was $23 for the publicly insured versus $219 for the privately insured and 

$236 for the uninsured. Among high income individuals with some expense, median spending was $309 

for the privately insured and $260 for the uninsured. 

Health-related spending by age group and insurance status 

Since health care expenditures are positively correlated with age, it is important to examine how out-ofpocket expenditures vary by insurance status within age groups. Among children, adults age 18 to 34, 

and adults age 35 to 54, those with public insurance had significantly lower expenses compared with 

those with private insurance and the uninsured. Among adults age 55 to 64, those with public insurance 

had significantly lower expenses compared with those with private insurance. 

For those with some expense, median out-of-pocket expenses were $0 among the publicly insured 

children versus $103 among the uninsured and $107 among the privately insured children (figure 5). For 

adults age 18 to 34, median expenses were $26 among the publicly insured versus $213 among the 

privately insured and $168 among the uninsured. For adults age 34 to 54, median expenses were $140 

among the publicly insured versus $331 among the privately insured and $309 among the uninsured. For 

adults age 55 to 64, median expenses were $486 among the publicly insured versus $653 among the 

privately insured and $580 among the uninsured. 

Share of total health care expenses paid out of pocket by insurance status 

Among nonelderly persons with some health care expense in 2004, 10.0 percent paid nothing out of 

pocket for their health care. For those with some health care expenses, 4.4 percent among the privately 
insured, 7.1 percent among the uninsured, and 39.3 percent among those with public insurance had no 

out-of-pocket expenses. 

Figure 6 presents the mean share of expenses paid out of pocket by insurance status for those with some 

out-of-pocket expenses. The share of expenses paid out of pocket was highest among the uninsured. On 

average, the uninsured paid 70.6 percent of their health care expenses out of pocket.† The share of 

expenses paid out of pocket was lowest among the publicly insured. On average, the publicly insured 

paid 19.0 percent of their health care expenses out of pocket. The mean share of expenses paid out of 

pocket was 33.9 percent among those with private insurance. 

Data Source

The estimates in this Statistical Brief are based upon data from the MEPS 2004 Full-Year Consolidated 

Data file (HC-089). 

Definitions 

Family 

The definition of family used in this brief is based on the U.S. Census Bureau’s Current Population 

Survey–defined family unit, which includes adults, their spouses, and their unmarried natural/adoptive 

children age 18 and under as well as children under age 24 who are full-time students. These families do 

not include non-married partners, foster children, and in-laws. Persons under 65 who live in families 

including members over and under 65 are included in this analysis. In these instances, health care 

expenses for all family members are included in the totals. 

Out-of-pocket health-related expenditures 

MEPS total expenses include payments from all sources (including third-party payers and other 

miscellaneous sources) to hospitals, physicians, other health care providers, and pharmacies for services 

reported by respondents in the MEPS-HC. Out-of-pocket expenses comprise the portion of payments

made by individuals and families for services received during the year. Health insurance premiums are 

not included in this analysis. 

Insurance status 

Health insurance status is person-level. For people with a change in their insurance status during the 

year, insurance status was hierarchically assigned. Using the monthly insurance status variables, we 

constructed the number of months with private and public coverage during the year. First, individuals 

without any private or public health insurance coverage during the year were assigned to the uninsured 

category. Next, people with both private and public coverage were assigned the type of coverage with the 

longer duration. For example, a person with four months of private and eight months of public coverage

was assigned to the public insurance category. 

Poverty status

Family income is defined in terms of poverty status, the ratio of the family’s income to the Federal poverty 

thresholds, which control for the size of the family and the age of the head of the family (see the 2004 

U.S. Department of Health and Human Services Poverty Guidelines at http://aspe.hhs.gov/poverty/ 

04poverty.shtml for more details). The following classification is used: 

– Poor: Persons in families with income less than 100 percent of the poverty line, including those whose 

losses exceeded their earnings, resulting in negative income. 

– Near poor and low income: Persons in families with income from 100 to less than 200 percent of the 

poverty line. 

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

– High income: Persons in families with income at or above 400 percent of the poverty line. 

†

The remaining portion of expenses for uninsured persons was likely paid by various miscellaneous sources that are not classified 

as health insurance coverage in MEPS, such as the Indian Health Service, Veteran’s Administration, community and neighborhood 

clinics, State and local health departments, Worker’s Compensation, as well as automobile, homeowner’s, and liability insurance. 
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 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 

Bernard, D. Out-of-Pocket Expenditures on Health Care among the Nonelderly Population, 2004. Statistical 

Brief #159. January 2007. Agency for Healthcare Research and Quality, Rockville, Md. http://www.meps. 

ahrq.gov/mepsweb/data_files/publications/st159/stat159.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, 2004

631

1,872

225

8

255 199

1,469 1,516

0

500

1,000

1,500

2,000

Total population Primarily private Primarily public Uninsured

Median 90th percentile

Dollars

Figure 1. Out-of-pocket expenditures on health care*

among nonelderly individuals, by insurance status, 2004

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2004

1,319

1,713

302

200

105 41

1,102 1,170

0

500

1000

1500

Poor Near poor and low

income

Middle income High income

Median 90th percentile

Dollars

Figure 2. Out-of-pocket expenditures on health care*

among nonelderly individuals, by poverty status, 2004

*Among persons with some health care expenses.
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2004

1,735

2,810

636

310

179

59

611

1,089

0

500

1,000

1,500

2,000

2,500

3,000

Age 0-17 Age 18-34 Age 35-54 Age 55-64

Median 90th percentile

Dollars

Figure 3. Out-of-pocket expenditures on health

care* among nonelderly individuals, by age group, 2004

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2004

23

210

147

219

309

3 9

200

236

260

205

0

50

100

150

200

250

300

350

Poor Near poor and low

income

Middle income High income

Primarily private Primarily public Uninsured

Dollars

Figure 4. Median out-of-pocket expenditures on health care* among

nonelderly individuals, by poverty and insurance status, 2004

*Among persons with some health care expenses.
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2004

140

486

168

309

580

653

331

213

107

0 26

103

0

100

200

300

400

500

600

700

Age 0-17 Age 18-34 Age 35-54 Age 55-64

Primarily private Primarily public Uninsured

Dollars

Figure 5. Median out-of-pocket expenditures on health care* among

nonelderly individuals, by age group and insurance status, 2004

*Among persons with some health care expenses.

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2004

70.6

19.0

33.9

37.3

0

20

40

60

80

100

Total population Primarily private Primarily public Uninsured

Perc

ent

Figure 6. Percentage of total health care expenses* paid out

of pocket among nonelderly individuals, by insurance status, 2004

*Among persons with some out-of-pocket expenses.