Medical Expenditure Panel Survey Agency for Healthcare 

Research and Quality

STATISTICAL BRIEF #148 

November 2006 

A Comparison of Person 

Characteristics and Reported 

Conditions for Adult Medicare 

Beneficiaries with High and Low 

Annual Prescription Medicine 

Expenditures, 2003 

Highlights 

 In 2003, the top 1 percent of 

the Medicare population age 18 

and older (that is the 1 percent

of the population with the highest prescription drug spending) 

accounted for nearly 10 percent 

of total prescribed drug spending (9.8 percent) by adult Medicare beneficiaries. 

 During 2003, adult Medicare 

beneficiaries who were poor 

accounted for a greater proportion in the top 10 percent of the 

prescribed drug expenditure 

distribution (18.9 percent) than

in the lower 50 percent (12.8 

percent). 

 Adult beneficiaries in fair or 

poor health accounted for a 

higher proportion in the top 10

percent of the prescribed drug

expenditure distribution than in

the lower 50 percent (55.5 percent versus 20.8 percent) in 

2003. 

 In 2003, a higher proportion of 

adult Medicare beneficiaries in

the top 10 percent of the 

prescribed drug expenditure 

distribution reported having 

diabetes (38.6 percent), heart 

disease (52.7 percent), high 

blood pressure (78.2 percent) 

and asthma (23.2 percent) than 

the proportion in the lower 50 

percent (7.1 percent, 16.7 

percent, 45.4 percent, and 6.0

percent); moreover, approximately four times the proportion 

in the top 10 percent than in the 

lower 50 percent reported 2 or

more of these conditions (65.5 

percent versus 14.9 percent), 

and approximately nine times 

the proportion in the top 10 

percent than in the lower 50

percent reported 3 or more of 

these conditions (27.7 percent

versus 2.9 percent). 

 

Marie N. Stagnitti, MPA 

Introduction 

This Statistical Brief presents 2003 data for the U.S. civilian 

noninstitutionalized (community) population from the Household 

Component of the Medical Expenditure Panel Survey (MEPS-HC). 

The brief compares selected sociodemographic person characteristics and reported chronic conditions for adult Medicare 

beneficiaries in the top 10 percent (the 10 percent of the population

with the highest prescription drug spending) with those in the lower 

50 percent (the 50 percent of the population with the lowest prescription drug spending) of the prescribed medicine expenditure 

distribution. 

Only prescribed medicines purchases in an outpatient setting are 

included in the estimates provided in this brief. Insulin and diabetic

supplies and equipment are included in MEPS prescribed medicines 

estimates. Over-the-counter medicines are excluded from these 

estimates as are prescription medicines administered in an inpatient 

setting or in a clinic or physician’s office. All differences discussed in

the text are statistically significant at the 0.05 level. 

Findings 

In 2003, the 41.2 million Medicare beneficiaries age 18 and older in

the U.S. civilian noninstitutionalized population had $74.9 billion in 

annual prescribed medicine expenditures. The top 1 percent (that is, 

the 1 percent of the population with the highest prescription drug

spending) accounted for approximately 10 percent (9.8 percent) of

annual prescription drug expenditures by the adult Medicare population. The top 5 percent accounted for just over one-quarter of all

prescription drug spending by adult Medicare beneficiaries (26.2 

percent), and the top 10 percent accounted for two-fifths of total 

drug spending (40.2 percent). The lower 50 percent (that is, the 50 

percent of the population with the lowest prescription drug spending) accounted for approximately 11 percent of all prescription 
medicine expenditures by adult Medicare beneficiaries (10.7 percent) while the top 50 percent accounted 

for nearly 90 percent (89.3 percent). (figure 1) 

During 2003, Medicare beneficiaries age 18–64 accounted for a higher proportion in the top 10 percent of 

the prescribed drug expenditure distribution (26.1 percent) than in the lower 50 percent of the distribution 

(10.3 percent). Medicare beneficiaries age 80 and older and age 65–79 accounted for higher proportions 

in the lower 50 percent (23.1 percent and 66.6 percent, respectively) than in the top 10 percent (18.0 

percent and 55.9 percent, respectively) of the distribution. (figure 2) 

For adult Medicare beneficiaries in 2003, white non-Hispanics (81.3 percent and 78.4 percent), black nonHispanics (11.2 percent and 10.1 percent), and other non-Hispanics (3.1 percent and 4.4 percent) did not 

have a significant difference in the proportion they represented in the top 10 percent or the lower 50 

percent of the prescribed drug expenditure distribution. Hispanics, however, accounted for a higher 

proportion in the lower 50 percent (7.1 percent) than in the top 10 percent (4.4 percent) of the expenditure 

distribution. (figure 3) 

A higher proportion of adult Medicare beneficiaries in the top 10 percent of prescribed medicine 

expenditure distribution were beneficiaries with Medicare and additional public insurance only (25.6 

percent) than the proportion in the lower 50 percent (14.0 percent) in 2003. In addition, there was a 

smaller proportion of beneficiaries in the top 10 percent of the prescribed drug expenditure distribution 

with Medicare only (24.5 percent) than in the lower 50 percent (32.1 percent). There was no significant 

difference in the proportion of Medicare beneficiaries in the top 10 percent and lower 50 percent of the 

prescribed drug expenditure distribution when looking at those with Medicare and private insurance. 

(figure 4) 

During 2003, a higher proportion of adult Medicare beneficiaries in the top 10 percent (18.9 percent) than 

in the lower 50 percent (12.8 percent) of the prescribed medicine expenditure distribution were poor. 

Medicare beneficiaries with medium and high incomes accounted for a lesser proportion in the top 10 

percent of the distribution (51.5 percent) than in the lower 50 percent (59.3 percent). (figure 5) 

In 2003, adult Medicare beneficiaries in excellent, very good, or good health accounted for a lower 

proportion in the top 10 percent of the prescribed medicine expenditure distribution than the lower 50 

percent (44.5 percent and 79.2 percent, respectively). Conversely, those adult beneficiaries in fair or poor 

health accounted for a higher proportion in the top 10 percent (55.5 percent) of the prescribed drug 

expenditure distribution than in the lower 50 percent (20.8 percent). (figure 6) 

In 2003, a higher proportion of Medicare beneficiaries age 18 and older in the top 10 percent of the 

prescribed drug expenditure distribution reported having diabetes (38.6 percent), heart disease (52.7 

percent), high blood pressure (78.2 percent), and asthma (23.2 percent) than in the lower 50 percent of 

the expenditure distribution (7.1 percent, 16.7 percent, 45.4 percent, and 6.0 percent, respectively). 

Furthermore, approximately four times the proportion in the top 10 percent than in the lower 50 percent 

reported two or more of these conditions (65.5 percent versus 14.9 percent) and approximately nine times 

the proportion in the top 10 percent than in the lower 50 percent reported three or more of these 

conditions (27.7 percent versus 2.9 percent). (figure 7) 

Definitions 

Medicare population 

People are considered Medicare beneficiaries if they ever report being covered by Medicare while in the 

survey. Only Medicare beneficiaries age 18 and older are included in this analysis. 

Age 

Age is the last available age for the sampled person. For most persons, this was their age at the end of 

the year. 

Racial and ethnic classifications 

Classification by race and ethnicity was based on information reported for each family member. 

Respondents were asked if each family member's race was best described as American Indian, Alaska 

Native, Asian or Pacific Islander, black, white, or other. They also were asked if each family member'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, were classified as Hispanic. 

Since the Hispanic grouping can include black Hispanic, white Hispanic, Asian and Pacific Islanders 

Hispanic, and other Hispanic, the race categories of black, white, Asian and Pacific Islanders, and other 

do not include Hispanic. Beginning in 2002, MEPS respondents who reported other single or multiple 

races were included in the other non-Hispanic category. 

Health insurance status 

Respondents were asked about health insurance coverage for themselves and all household members at 

each round of interviewing. The insurance variables reflect supplemental coverage, in addition to 

Medicare, that beneficiaries had for hospital and physician services. Persons categorized as having 

supplemental insurance coverage may or may not have coverage for prescription drugs. The insurance 

categories are mutually exclusive and hierarchical. Persons with more than one type of supplemental 

coverage were placed into an insurance category in the following order: 

– Medicare and private insurance: This category includes persons classified as Medicare beneficiaries 

and covered by Medicare and a supplementary private policy. 

– Medicare and other public insurance: This category includes persons classified as Medicare 

beneficiaries who met both of the following criteria: 1) they were not covered by private insurance at 

any point during the year, and 2) they were covered by one of the following public programs at any 

point during the year: Medicaid, other public hospital/physician coverage. 

– Medicare HMO/Medicare only: This category includes persons classified as Medicare beneficiaries but 

not classified as Medicare and private insurance or as Medicare and other public insurance. This group 

includes persons who were enrolled in Medicare HMOs and persons who had Medicare fee-for-service 

coverage only. 

Poverty status 

Each year, persons were classified according to their family’s income in terms of poverty status. In this 

report, poverty status is 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. The following classification of poverty 

status was used: 

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

reported negative income. 

– Near poor/low income: Persons in families with income of 100 percent of the poverty line through 200 

percent of the poverty line. 

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

Perceived health status 

During each round of interviewing, the household respondent was asked to rate the health of each person 

in the family according to the following categories: excellent, very good, good, fair, or poor. For this report, 

the response categories “excellent,” “very good,” and “good” were collapsed, as were “fair” and “poor.” 

Health status was missing for approximately 1 percent of adult Medicare beneficiaries. 

Condition data 

During rounds 3 and 5 of household interviewing for persons age 18 and older, the household respondent 

was asked: “Has person ever been told by a doctor or other health professional that person has 

<condition>?” Please note, heart disease includes people answering “yes” to at least one of the following 

conditions: coronary heart disease, angina (or angina pectoris), heart attack (or myocardial infarction or 

MI), or any other heart condition or heart disease, other than coronary heart disease, angina, or heart 

attack. The condition data included in this brief was missing for approximately 5 percent of the adult 

Medicare population, approximately 1 percent of the top 10 percent of the adult Medicare population, and 

approximately 7 percent of the lower 50 percent of the adult Medicare population. 

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 

Stagnitti, M. N. A Comparison of Person Characteristics and Reported Conditions for Adult Medicare 

Beneficiaries with High and Low Annual Prescription Medicine Expenditures, 2003. Statistical Brief #148. 

November 2006. Agency for Healthcare Research and Quality, Rockville, Md. http://www.meps.ahrq.gov/ 

mepsweb/data_files/publications/st148/stat148.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, 2003.

Figure 1. Concentration of prescribed drug expenditures 

for the adult Medicare population in the U.S. civilian 

noninstitutionalized population, 2003

26.2

40.2

59.2

72.6

89.3

10.7 9.8

0

20

40

60

80

100

Top 1% Top 5% Top 10% Top 20% Top 30% Top 50% Lower

50%

P

ercent

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 2. Concentration of prescribed drug expenditures 

for the adult Medicare population, by age, 2003

12.1

26.1

10.3

64.3

55.9

23.6 18.0 23.1

66.6

0

20

40

60

80

100

Total Medicare Top 10% Lower 50%

Age 18-64 Age 65-79 Age 80 and older

P

ercent
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 3. Concentration of prescribed drug expenditures 

for the adult Medicare population, by race/ethnicity, 2003

6.2 4.4 7.1

80.5 81.3 78.4

9.7 11.2 10.1

3.6 3.1 4.4

0

20

40

60

80

100

Total Medicare Top 10% Lower 50%

Hispanic White non-Hispanic Black non-Hispanic Other non-Hispanic

P

ercent

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 4. Concentration of prescribed drug expenditures for the 

adult Medicare population, by health insurance status, 2003

56.0 49.9 54.0

15.2 25.6 14.0

28.9 24.5 32.1

0

20

40

60

80

100

Total Medicare Top 10% Lower 50%

Medicare and private Medicare and public only Medicare only

P

ercent

Note: Percentages may not add to 100 because of rounding.
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 5. Concentration of prescribed drug expenditures 

for the adult Medicare population, by poverty status, 2003

13.4 18.9 12.8

28.6

29.6

27.8

58.0 51.5 59.3

0

20

40

60

80

100

Total Medicare Top 10% Lower 50%

Poor Near poor/low income Medium/high

P

ercent

Note: Percentages may not add to 100 because of rounding.

 

Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 6. Concentration of prescribed drug expenditures 

for the adult Medicare population, by health status, 2003

70.8

44.5

79.2

29.2

55.5

20.8

0

20

40

60

80

100

Total Medicare Top 10% Lower 50%

Excellent/very good/good Fair/poor

P

ercent
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.

Figure 7. Concentration of prescribed drug expenditures for 

the adult Medicare population, by selected conditions, 2003

P

ercent

30.1

59.1

9.6 9.0

38.6

52.7

78.2

23.2

65.5

27.7

7.1 6.0

14.9

2.9

31.7

17.0

45.4

16.7

0

20

40

60

80

% with

diabetes

% with heart

disease

% with high

blood

pressure

% with

asthma

% 2 or more

of these

conditions

% 3 or more

of these

conditions

Total Medicare Top 10% Lower 50%