Monthly Labor Review • February 2010 3

Health Care Expenditures

Out-of-pocket health care

expenditures: a comparison

Ann C. Foster

Ann C. Foster is an economist 

in the Division of Consumer 

Expenditure Surveys, Office of 

Prices and Living Conditions, 

Bureau of Labor Statistics. E-mail: 

foster.ann@bls.gov

An examination of aggregate out-of-pocket health care

expenditures from the CE, MEPS, and the NHEA for the 

1996–2006 period indicates that methodological differences 

account for the lack of agreement among estimates

Health care expenditure data 

produced by the Federal Government come from a variety 

of data sources, including the Bureau of 

Labor Statistics (BLS) Consumer Expenditure Survey (CE), the household component of the Medical Expenditure Panel 

Survey (MEPS-HC) of the Department 

of Health and Human Services (DHHS) 

Agency for Healthcare Research and 

Quality, the National Health Expenditure 

Accounts (NHEA) of the DHHS Centers 

for Medicare and Medicaid Services, and 

the Personal Consumption Expenditures 

(PCE) of the Bureau of Economic Analysis (BEA). The purpose of this article is to 

examine annual aggregate CE, MEPS, and 

NHEA out-of-pocket health care expenditures for comparable categories from 1996 

to 2006 to determine whether they are 

consistent across the three data sources.1

The CE collects information about outof-pocket spending on health care and other 

expenses from consumer units2 throughout 

the United States. The MEPS-HC collects 

nationwide data on the cost and use of 

health care and on health insurance coverage at the household and the individual 

level.3

 The NHEA are the official estimates 

of total health care spending in the United 

States. The NHEA measure aggregate annual expenditures for health care goods and 

services, public-health activities, program administration, and research and other investment 

related to health care, as well as the net cost of 

private insurance. The PCE measure the market 

value of health care and other goods and services 

purchased by the “personal sector” of the U.S. 

Census Bureau’s National Income and Product Accounts. Data for the NHEA and the PCE

are obtained from secondary sources. Although 

health insurance premiums are a major part of 

household health care spending, they will not be 

examined in this article because the MEPS data 

that were used did not provide the information 

needed for the research undertaken.

The first section of the article compares and 

contrasts the content and methodology of the 

CE, MEPS, and NHEA. The next section describes the methods to be used subsequently to 

carry out the comparison, including spending 

category alignment, population adjustment, 

and expenditure computation. Then, the relevant findings from the analysis are presented 

and examined, followed by conclusions and 

implications.4

Consumer Expenditure Survey 

Conducted continuously since 1980, the CE 

has two components: a quarterly Interview 

Survey and a weekly Diary Survey. Each com-
Health Care Expenditures

4 Monthly Labor Review • February 2010

ponent queries an independent sample of consumer units 

designed to be representative of the U.S. civilian noninstitutionalized population.5

 The CE collects information 

not just on health care expenditures, but on all spending 

components, including food, housing, apparel and services, transportation, and entertainment. Data are collected 

on an ongoing basis in 91 areas of the country.

CE data are used in various ways, one of which is in the 

periodic revision of the BLS Consumer Price Index (CPI). 

CE data form the basis of the selection of new market 

baskets of goods and services for the CPI, determine the 

relative importance of CPI components, and are used to 

derive new cost weights for the market baskets.6

CE data are collected by the U.S. Census Bureau under contract with the BLS. The Interview Survey is designed to collect spending information that usually can 

be remembered after 3 or more months. Included is information about fairly large expenditures, such as major 

appliances, and those which occur regularly, such as rent 

or health insurance premiums. Also included is information on expenses for reimbursements for medical care 

costs that are not collected in the Diary Survey. Interview 

Survey respondents are interviewed every 3 months for 

a total of five interviews. Information on spending (net 

of any reimbursements) is collected from respondents in 

the second through fifth interviews, by means of uniform 

questions. About 7,000 consumer units are interviewed 

each quarter. 

Although the Diary Survey is designed to obtain information about small, frequently purchased items, such as 

food and personal care products, that are hard to remember over long periods, it is not limited to these expenses. 

With few exceptions, all expenses a consumer unit incurs 

during a survey week are recorded in a self-administered 

diary. Health care expenditures collected only in the Diary 

Survey are repair of medical equipment, nonprescription 

drugs, nonprescription vitamins, and topicals and dressings. About 7,000 consumer units are sampled annually 

for the Diary Survey, with each consumer unit completing 

two consecutive 1-week diaries, yielding around 14,000 

diaries a year.7 

Data from the Diary and Interview Surveys are combined to provide a more complete picture of consumer 

expenditures and income that neither component alone is 

designed to do. Most of the published health care expenditures are obtained from the Interview Survey; however, 

there is considerable overlap in item coverage between 

the two surveys. Thus, the problem of determining the 

best survey component from which to select expenditure 

items must be addressed. When overlap occurs, the more 

reliable of the two estimates is determined by statistical 

methods.8

 Integrated CE data will be used in the analysis 

that follows, for a more complete picture of out-of-pocket 

health care spending.

Medical Expenditure Panel Survey 

The MEPS-HC, which began in 1996, is a householdbased survey that contains individual and household-level 

estimates of health care expenditures and use, health insurance coverage, and a wide range of other health-related 

and socioeconomic characteristics.9

MEPS data are used for policy-related and behavioral 

research on the determinants of health care use, spending, and insurance coverage. The Federal Government 

uses MEPS data to prepare national estimates of health 

care use and spending, private and public health insurance 

coverage, and the availability, cost, and scope of private 

health insurance benefits for the U.S. population and for 

subgroups of policy interest.10

With the use of an overlapping panel design, MEPSHC data are collected from a sample that is selected to 

be representative of the U.S. civilian noninstitutionalized 

population. Data are collected at the household and the 

individual level. In 2006, for example, data were collected 

from 12,811 families in order to obtain information on 

32,577 individuals. Each year, a new panel of households 

is selected from those that participated in the previous 

year’s National Health Interview Survey conducted by the 

National Center for Health Statistics of the DHHS. For 

each panel, 2 years of data are collected in five in-person 

interviews over 21⁄2 years.11

Each of the five interview rounds of the MEPS-HC contains core component questions that request information 

about demographic characteristics; charges and payments by 

source (household, private insurance, Medicare, Medicaid, 

and so forth); health status; medical conditions; utilization 

data for hospital visits, physicians’ services, home health care, 

and prescription drugs; public and private health insurance 

coverage; and employment status. Rounds 2 and 4 have 

supplemental sections to elicit information about access to 

care, child preventive health care, and satisfaction with health 

plans and providers. Rounds 3 and 5 have supplemental sections requesting information on income, preventative health 

care, and priority conditions, while information on assets is 

requested in round 5 only. Unlike the CE, which collects data 

on the consumer unit only, the MEPS-HC collects data on 

individual household members.12

The medical provider component of MEPS (MEPSMPC) supplements and validates information reported 
Monthly Labor Review • February 2010 5

in the MEPS-HC by means of telephone interviews with, 

and survey materials mailed to, medical providers and 

pharmacies reported by HC respondents. The MPC sample 

includes hospitals and hospital-based physicians, home 

health care agencies, office-based physicians, and pharmacies. Information about dates of visits, diagnosis and 

procedure codes, charges, and payments is collected from 

all medical providers. The MPC pharmacy component 

collects detailed information on drugs, including the National Drug Code, name of the medicine, date filled, and 

sources and amounts of payments. MPC data are used to 

replace expenditure data reported by HC respondents with 

data reported by their providers, because the latter data 

generally are more complete and less prone to reporting 

errors. MPC data also are used as an imputation source for 

item nonresponse in order to reduce the level of bias in 

survey estimates of medical expenditure.13

Methodological differences between the CE and MEPS

could produce low CE-MEPS ratios. One factor is that, as 

mentioned in the previous paragraph, the MEPS-MPC uses 

provider data to verify respondent data for hospital, physician, and prescription drug spending, while the CE relies 

on respondent data only. The nature of the MEPS interview 

also could play a part because respondents are asked about 

health conditions and associated treatments, as well as 

related expenses, for all household members. This format 

could increase respondents’ recall of expenditures, compared with the CE practice of asking about total consumer 

unit out-of-pocket expenses only. CE respondents provide 

information about outlays on food, housing, transportation, entertainment, and more, in addition to health care, 

further complicating their recall of expenditures.

National Health Expenditure Accounts 

Dating back to 1960, the NHEA are compiled to measure 

aggregate health care spending and to provide a way to 

examine the relationship between payers and providers of 

goods and services over time. The NHEA cover a larger 

population than the CE and MEPS, because all persons, 

military and civilian, living in the United States are considered part of the resident population.14

NHEA data provide valuable information on health care 

spending as a proportion of the gross domestic product 

(GDP), on changes over time in expenditures for types of 

goods and services and in sources of funds, and on health 

care spending projections. NHEA data also provide specialized historical estimates of spending by age and State, 

along with estimates by sponsor (businesses, households, 

and government) of health care.15

The NHEA use many secondary data sources. For hospital care, the basic data sources are the American Hospital Association’s Annual Survey and the Census Bureau’s 

Services Annual Survey (SAS); Federal hospital estimates 

are based on data from the Federal agencies that administer them. Data sources for physician and clinical services, 

dental services, and other professional services include the 

Census Bureau’s SAS and Census of Service Industries, as 

well as data from the BLS Current Employment Statistics, 

Consumer Price Index, and Producer Price Index programs. Data sources for the NHEA home health care component include SAS and the Census of Service Industries 

for private establishments; for government-owned home 

health care agencies, the NHEA derive their estimates 

from Medicare data.16

In the NHEA, the categories of prescription drugs, 

other nondurable medical products, and durable medical 

equipment include products purchased or leased from retail outlets or through mail order only. Expenditures made 

in connection with hospital care, nursing home care, or a 

professional visit are included in the estimates for those 

providers’ services. However, optical goods, such as eyeglasses and contact lenses, are included in durable medical 

equipment instead of with optometrists’ receipts.

Through 2002, the NHEA used detailed data from the 

Census Bureau’s Census of Retail Trade to estimate prescription drug spending. Estimates for subsequent years 

are prepared by extrapolating the 2002 levels with IMS 

Health, Inc., data on retail and wholesale purchases.17

Estimates for other nondurable medical products 

(nonprescription drugs and medical sundries) and for 

durable medical products (for example, eyeglasses, hearing aids, and medical equipment) are benchmarked to 

the national Input-Output (I-O) tables produced by the 

BEA in years ending in 2 and 7. The nonprescription drug 

estimate is interpolated between I-O years and extrapolated 

to recent periods on the basis of retail sales data from Kline 

& Company; for medical sundries, detailed Personal Consumption Expenditure data from the BEA’s National Income 

and Product Accounts are used. From 1987 through 2007, 

private (nongovernment) spending estimates for durable 

medical equipment were prepared by interpolating between, and extrapolating from, adjusted I-O levels, using CE

data, adjusted and distributed National Medical Expenditure 

Survey or MEPS data. For 2008, durable medical equipment 

expenditures were prepared by using the historical relationship of CPI for eyeglasses and eye care, real GDP, and current 

population data combined with public data sources.18

The NHEA estimate sources of payment as follows for 

a majority of the personal health expenditure sectors de-
Health Care Expenditures

6 Monthly Labor Review • February 2010

scribed in the preceding paragraphs: government spending 

for both Federal Government programs and State and local 

government programs is calculated. Private spending (outof-pocket spending; private health insurance; and other private sources, such as philanthropy) is calculated as personal 

health care expenditures minus government expenditures. 

The NHEA allocation of private expenditures across out-ofpocket, private health insurance, and other private sources is 

determined from numerous data sources.19 The way in which 

the NHEA allocate health care expenditures across categories 

will influence CE-NHEA ratios compared with ratios computed under alternative assumptions. The exact impact of the 

NHEA assumptions on these categories, however, cannot be 

determined from available data.

In the NHEA, out-of-pocket spending for health care 

consists of direct spending by consumers. This estimate 

includes the amount spent for health care goods and services not covered by insurance and for coinsurance and deductibles (including provider payments covered by Health 

Savings Accounts) required by private insurance and by 

public programs such as Medicare and Medicaid.20

Health care categories

Because each data source categorizes health care expenditures differently, a comparison of the categories helps in 

constructing research variables with the greatest possible 

alignment across the three sources. Exhibit 1 summarizes 

expenditure categories and other differences among them.

Inpatient hospital care. The CE collects information on 

spending for inpatient hospital rooms and services provided by facilities such as general-care hospitals, psychiatric hospitals, substance abuse hospitals, and birthing 

centers. MEPS also collects information on spending for 

inpatient hospital facilities, but excludes charges for hospital-based nursing home care, skilled nursing facilities, 

and intermediate care facilities for those with intellectual 

disabilities. Hospital stays of 45 or more days also are out 

of scope for MEPS, whereas hospital-based home health 

care is included in the home health care category.

In the NHEA, the type of product consumed or the type 

of establishment providing a service determines what is 

included in a spending category. Thus, hospital expenses 

cover all services provided by hospitals, including room 

and board, operating room fees, resident physician fees, 

prescription drugs, hospital-based nursing home care, 

and hospital-based home health care.21 In contrast to the 

CE and MEPS, the NHEA do not distinguish between inpatient, outpatient, and emergency room care. All U.S. 

hospitals are within the scope of the NHEA.

Laboratory tests and x rays. The CE collects information 

on laboratory tests and x rays received neither as a hospital inpatient nor in connection with eye and dental care. 

MEPS places these expenses into several categories, including emergency room facilities charges, outpatient facilities 

charges, and office visits. Medical laboratory services billed 

directly from medical and diagnostic laboratories are part of 

the “other professional services” category.

The NHEA include laboratory tests and x rays in with 

the charges of the establishment providing the service. 

Laboratory tests and x rays provided by hospitals on an 

inpatient, outpatient, or emergency room basis are part of 

the hospital care category. Charges for laboratory tests and 

x rays also are included in physician and clinical services 

spending. Establishments in this category include offices 

of physicians (NAICS 62111) and outpatient care centers, 

such as health maintenance organizations (NAICS 6214). 

Medical laboratory services billed directly from medical 

and diagnostic laboratories (NAICS 62151) also are included in the physician and clinical services category.

Other medical care services. In the CE, outpatient hospital care, emergency room services, and ambulance services 

are part of the “other medical services” category. MEPS has 

separate categories for outpatient and emergency room 

facilities charges, while ambulance services are part of 

the “other medical equipment and services” category. The 

NHEA include outpatient hospital care and emergency 

room services in the hospital care category. Ambulance 

services are not included in consumer outlays for health 

care, but ambulance services reimbursed by Medicare are 

included in “other professional services.”

Physicians’ services. CE respondents are asked to give 

information about all services provided and billed by physicians. Information about whether these services were 

related to hospital care, an office visit, or a home visit is 

not requested. MEPS classifies separately billed physician 

charges by whether they were made in connection with an 

inpatient hospital stay, outpatient hospital care, hospital 

emergency room treatment, or an office visit. Besides obtaining this information from respondents, MEPS requests 

additional verification from providers.

In the NHEA, spending on the services of physicians, 

dentists, and other medical professionals is categorized by 

the establishment providing the service. The NHEA physician and clinical services category covers spending on 

services provided by offices of physicians (NAICS 62111) 
Monthly Labor Review • February 2010 7

Comparison of the Consumer Expenditure Survey, Medical Expenditure Panel 

Survey, and National Health Expenditure Accounts

Category Consumer Expenditure 

Survey

Medical Expenditure 

Panel Survey

National Health Expenditure 

Accounts

Population 

represented

U.S. civilian noninstitutionalized 

population.

U.S. civilian noninstitutionalized 

population.

U.S. resident population plus net 

undercount.

Databases Data based on expenditures classified by type of service, regardless of 

medical event leading to expenditure.

Data based on event-level expenditures classified by type of service.Data based on estimates of revenues 

received by providers, classified by type 

of establishment.

Data sources Information from Interview and 

Diary Survey respondents. Information for each service is the total 

for all consumer unit members.

Information provided for each event 

leading to an expenditure. Survey 

estimates at individual and household 

level. Information obtained by interview, with information on hospital 

services, hospital-based physicians, 

home health agencies, office-based 

physicians, and pharmacies verified by 

providers.

Aggregate data from secondary sources. 

Includes information from Federal agencies administering public programs such 

as Medicare and Medicaid; the Annual 

Survey of the American Hospital Association; and the Census Bureau’s Service 

Annual Survey, Census of Service Industries, and Census of Retail Trade.

Inpatient hospital 

care

Includes spending for inpatient 

hospital rooms and services from 

facilities such as general-care 

hospitals, psychiatric hospitals, substance abuse hospitals, and

birthing centers.

Information on inpatient hospital 

facilities charges. Excludes charges for 

hospital-based nursing home care,

skilled-nursing facilities, and intermediate care facilities for those with 

intellectual disabilities. Hospital stays 

of 45 days or more are out of scope. 

Hospital-based home health care part 

of home health care category.

Hospital care category includes charges 

for all services provided by hospitals, 

including inpatient, outpatient, and

emergency room services; prescription 

drugs; and hospital-based nursing home 

and home health care.

Laboratory tests 

and x rays

Spending for laboratory tests or 

x rays not received as a hospital 

inpatient or in connection with eye 

and dental care.

Included in outpatient facilities 

charges, emergency room facilities 

charges, and office-based visits categories. Medical laboratory services billed 

directly from medical and diagnostic 

laboratories are in the “other professional services” category.

Usually included in the charges of the 

establishment providing the service. Part 

of hospital care category if provided by 

hospitals on an inpatient, outpatient, or 

emergency room basis. Part of physician 

and clinical services category if billed by 

physician’s office or outpatient care center. 

Also in physician and clinical services 

category if billed directly by laboratory.

Other medical care 

services

Includes outpatient hospital care, 

emergency room services, and ambulance services.

Included in outpatient facilities charges 

and emergency room facilities charges. 

Ambulance services part of “other medical equipment and services” category.

Outpatient hospital care and emergency 

room services charges included in hospital care category. Out-of-pocket spending 

for ambulance services not included.

Physicians’ services Includes all services provided and 

billed by physicians.

Separately billed physicians’ charges 

collected for hospital inpatient, 

outpatient, and emergency room care 

and office visits.

Spending for physicians’ services 

categorized by the establishment 

providing the service. Physician and 

clinical services category includes 

services by physicians’ offices and 

freestanding outpatient care centers. 

Physicians’ charges also included in 

hospital care, nursing home care, and 

home health care categories.

Other professional 

services

Services provided by other medical 

professionals except physicians, 

dentists, and optometrists. Includes 

services provided both inside and 

outside the home.

Services by medical professionals 

except physicians and dentists. Information collected in connection 

with outpatient hospital care and 

office visits. In-home care included in 

home health care category. Independently billed lab tests also included in 

this category.

Services of professionals (other than 

physicians or dentists) in independent 

practice (NAICS 6213) included in “other 

professional services” category. Services 

of other professionals also included in 

hospital care, physicians and clinical 

services, home health care, nursing home 

care, and dental services categories.

Exhibit 1.
Health Care Expenditures

8 Monthly Labor Review • February 2010

Continued—Comparison of the Consumer Expenditure Survey, Medical 

Expenditure Panel Survey, and National Health Expenditure Accounts

Category Consumer Expenditure 

Survey

Medical Expenditure 

Panel Survey

National Health Expenditure 

Accounts

Dental services Dental care, such as examinations, 

cleaning, bridges, crowns, dentures, 

orthodontia, root canals, and x rays.

Includes services of general dentists, 

dental hygienists, technicians, and 

surgeons; orthodontists; endodontists; 

and periodontists.

Dental services category includes 

services provided by offices of dentists 

(NAICS 6212). Independently practicing 

denturists and dental hygienists included in “other professional services” 

category.

Eye care services Eye examinations, treatments, 

or surgery. Does not distinguish 

between optometrists, who perform 

eye examinations and basic 

treatments, and ophthalmologists, 

who perform surgery and may 

also prescribe eyeglasses or contact 

lenses.

Services of optometrists included in 

“other professional services.” Services 

of ophthalmologists included in physicians’ charges.

See “other professional services” 

category for treatment of optometrists’ 

charges and physicians’ services category 

for treatment of ophthalmologists’ 

charges.

Eyeglasses and 

contact lenses 

Spending for eyeglasses and 

contact lenses.

Included in “other medical equipment and services” category.Retail purchases of eyeglasses and contact lenses included in durable medical 

equipment category. Items obtained 

from other providers included in spending for those providers’ services.

Prescription drugs All prescribed medicines not 

connected with an inpatient 

hospital stay. Insulin included in 

prescription drugs; diabetic supplies 

in medical equipment for general 

use.

Prescribed medicines obtained from 

retail outlets, in health maintenance 

organization/clinic/hospital 

pharmacies, by mail order, and online. 

Includes diabetic supplies and insulin.

Limited to items obtained from retail 

outlets or by mail order. Insulin syringes 

included in “other nondurable medical 

products” category.

Other nondurable 

medical products

Separate categories for nonprescription drugs, nonprescription 

vitamins, and topicals and dressings. Collected from Diary Survey 

respondents only.

No estimates for nonprescription, 

nondurable goods.

Retail purchases of items in the three 

categories included in “other nondurable 

medical products” category. Items 

obtained from other providers included 

in spending for those providers’ services.

Repair of medical 

equipment

Classified as a medical service. 

Information obtained from Diary 

Survey respondents only.

All medical equipment spending 

included in “other medical equipment 

and services” category.

Included in durable medical equipment 

category. Services obtained from other 

providers included in spending for those 

providers’ services.

Hearing aids Purchase of hearing aids. Included in “other medical equipment 

and services” category.

Included in durable medical equipment 

category. Services obtained from other 

providers included in spending for those 

providers’ services.

Supportive or convalescent medical 

equipment

One category for purchase, one 

category for rental. Includes items 

such as crutches, wheelchairs, and 

Ace bandages.

All medical equipment included in “other 

medical equipment and services” category.

Some retail purchases and rentals 

included in durable medical equipment 

category; other retail purchases and 

rentals included in “other nondurable 

medical products” category. Items 

obtained from other providers included 

in spending for those providers’ services.

Medical equipment 

for general use

One category for purchase, one 

category for rental. Includes items 

such as ice bags, thermometers, 

heating pads, sun lamps, and 

insulin needles.

Diabetic supplies included in prescription drugs category; other items 

included in “other medical equipment 

and services” category.

Some retail purchases and rentals included in durable medical equipment 

category; other retail purchases and 

rentals included in “other nondurable 

medical products” category. Items obtained from other providers included in 

spending for those providers’ services.

Exhibit 1.
Monthly Labor Review • February 2010 9

and outpatient care centers (NAICS 6214). The category 

also includes medical laboratory services billed directly 

from medical and diagnostic laboratories (NAICS 62151).

Spending on the services of a professional whose salary is paid by a hospital, nursing home, or other health 

establishment is reported together with spending on the 

relevant establishment’s services. For example, services 

provided by hospital interns are categorized as hospital 

care and the services of nursing home staff nurses are included in nursing home care. However, doctors’ fees received from arrangements with hospitals are included in 

hospital care instead of physician and clinical services.

Dental services. CE respondents are asked to provide information about dental care expenses such as exams, cleaning, x rays, fillings, dentures, bridges, orthodontia, crowns, 

and root canals. The type of provider is not requested.

The MEPS dental services category includes services 

from any dental care provider, such as general dentists, 

dental hygienists, dental technicians, and orthodontists. 

In the NHEA, the dental services category includes services provided by offices of dentists (NAICS 6212). Services 

received from dentists working for other providers are included in the spending for those providers’ services.

Other professional services. In the CE, other professional 

services includes those provided by health professionals 

other than physicians, dentists, and optometrists. Among 

these professionals are chiropractors, acupuncturists, marriage counselors, nurse practitioners, podiatrists, physical 

therapists, psychologists, substance abuse professionals, and certified medical massage therapists. The “other 

professional services” category includes services provided 

both inside and outside the home. The services of optometrists are included in the eye care services category.

MEPS classifies separately billed charges from other 

medical professionals (that is, medical professionals other 

than physicians and dentists) by whether the charges were 

made in connection with outpatient hospital care or an 

office visit. Unlike the CE, MEPS includes optometrists’ 

services and independently billed laboratory charges in 

the category of “other professional services.” 

In the NHEA, the “other professional services” category 

covers spending for services provided by health professionals (other than physicians and dentists) in independent practice (NAICS 6213). The services of other professionals working for other providers are included in the 

spending for those providers’ services.22

Eye care services. In the CE, the eye care services category 

covers eye examinations, treatments, and surgery. There is 

no distinction between optometrists, who perform eye exContinued—Comparison of the Consumer Expenditure Survey, Medical 

Expenditure Panel Survey, and National Health Expenditure Accounts

Category Consumer Expenditure 

Survey

Medical Expenditure 

Panel Survey

National Health Expenditure 

Accounts

Nursing home care All services provided and billed by 

a convalescent or nursing home.

Not included. Services provided by freestanding 

nursing home facilities.

Home health care No specific category. Some 

charges might be included in other 

categories.

Care provided by home health care 

agencies and independent providers. 

Agency data verified by provider. 

Nonagency data collected once a year 

from households.

Medical care in the home provided by 

non-facility-based home health care 

agencies. Medical equipment sales or 

rentals not billed through agency and 

nonmedical care. (For example, chore 

worker or custodial services and Meals 

on Wheels are excluded.)

Health insurance Premiums paid for private health 

insurance obtained individually 

or through a group plan. Premiums paid to the Medicare 

Supplementary Medical Insurance 

(SMI) Trust Fund (Part B, C, and 

D coverage). Amounts paid to the 

Medicare Hospital Insurance (HI) 

Trust Fund (Part A coverage) are 

treated as deductions from income 

for Social Security.

Premiums paid for private health 

insurance, excluding long-term care 

insurance, obtained individually or 

through a group plan. Data available 

for 2001–06 only. Information on 

premiums paid to the Medicare SMI

and HI Trust Funds is not requested.

Premiums paid for private health 

insurance, including long-term care 

insurance, obtained individually or 

through a group plan. Unlike the 

Consumer Expenditure Survey and the 

Medical Ependiture Panel Survey, the 

National Health Expenditure Accounts 

include the portion of property and 

casualty insurance premiums covering 

health care in private health insurance. 

Premiums paid to Medicare SMI and HI

Trust Funds.

Exhibit 1.
Health Care Expenditures

10 Monthly Labor Review • February 2010

aminations and basic treatments, and ophthalmologists, 

who perform surgery and also can prescribe eyeglasses 

and contact lenses. MEPS includes optometrists’ services in 

“other professional services” and ophthalmologists’ services among those provided by physicians.

In the NHEA, the services of independently practicing 

optometrists are classified into the “other professional services” category, while the services of independently practicing 

ophthalmologists are in the physician and clinical services 

category. If these eye care professionals work for other providers, their services are included in the spending for those 

providers’ services.

Prescription drugs. The CE requests spending information on prescription drugs, but not on the type of outlet 

where they were obtained. MEPS requests information 

about prescription drugs obtained from a retail outlet, 

from a health maintenance organization, clinic, or hospital, by mail order, or online. This information is then verified by pharmacies identified by respondents who have 

authorized the release of their pharmacy records. MEPS 

includes diabetic supplies, such as syringes and insulin, in 

the prescription drugs category, even though this spending information is requested in the “other medical supplies” section of the MEPS-HC survey. MEPS data in the 

latter section are obtained from households, but are not 

verified by pharmacies. In the CE, spending on syringes 

and insulin needles is in the category titled “medical 

equipment for general use.”

In the NHEA, the prescription drugs category is included 

under retail purchase of medical products. This expenditure 

class is limited to spending on items obtained from retail 

outlets or by mail order. The value of drugs and of other 

medical products such as nonprescription drugs and medical 

equipment provided to patients in hospitals (on an inpatient 

or outpatient basis), nursing homes, and other provider settings is implicit in the estimates of spending on those providers’ services. Optical goods are an exception because they 

are subtracted from optometrists’ receipts and placed in the 

durable medical products category.

Nonprescription drugs, nonprescription vitamins, and topicals 

and dressings. In the CE, spending information about 

nonprescription drugs, nonprescription vitamins, and 

topicals and dressings is collected from Diary Survey respondents only. MEPS estimates, however, do not include 

spending on nonprescription nondurable goods like those 

in the three CE categories.23 The NHEA place retail purchases of items from all three CE categories in the nondurable medical products category.

Repair of medical equipment. In the CE, information 

about spending on medical equipment repair, classified 

separately as a medical service, is requested from Diary 

Survey respondents only. In MEPS, all medical equipment 

spending is in the “other medical equipment and services” 

category. In the NHEA, the repair of medical equipment 

is not separated from the purchase or rental of durable 

medical equipment.

Medical supplies. Some of the products in the CE categories classified as medical supplies, such as hearing aids, and 

eyeglasses and contact lenses, would be considered durable medical products by the NHEA. Other categories—for 

example, the purchase or rental of medical equipment for 

general use—contain both durable and nondurable items.

In MEPS, the “other medical equipment and services” 

category includes durable medical products such as eyeglasses and contact lenses, hearing aids, and medical 

equipment. Spending on ambulance services; spending 

on home alterations and modifications, including ramps, 

handrails, and elevators; and spending on automobile 

modifications also are in the “other medical equipment 

and services” category. In the CE, spending on ambulance 

services is part of the “other medical care services” category, 

while home alterations and modifications are considered a 

capital improvement, not an expense. NHEA data do not 

include information on these two expenditures, except for 

ambulance services reimbursed by Medicare. MEPS collects spending information about eyeglasses and contact 

lenses every 6 months, but only once a year for hearing 

aids, medical equipment, ambulance services, home alterations and modifications, and automobile modifications.

In classifying retail purchases of medical products, 

the NHEA distinguish between durable and nondurable 

medical products. The former, which include items such as 

contact lenses, eyeglasses, and other ophthalmic products; 

surgical and orthopedic products; medical equipment; 

oxygen; and hearing aids, generally have a useful life of 

more than 3 years. Items purchased from other providers are included in the spending on those providers’ goods 

and services. 

Nondurable products, such as prescription and nonprescription drugs, needles, and thermometers, generally 

have a useful life of less than 3 years. 

Nursing home care. The CE requests information about 

all services provided and billed by a convalescent or nursing home, whereas nursing home care is out of scope in 

MEPS.

In the NHEA, the nursing home care category is for 
Monthly Labor Review • February 2010 11

services provided by freestanding nursing homes only: 

(1) private-sector establishments engaged primarily in 

providing inpatient nursing and rehabilitative services and 

continuous care to those requiring nursing care (NAICS 

6231), and (2) continuing-care retirement communities with onsite nursing care facilities (NAICS 623311). 

As mentioned earlier, hospital-based nursing home care 

outlays are included in the hospital care category (NAICS

622).

Home health care. The CE does not request specific information about home health care outlays. In MEPS, the 

home health care category includes services provided by 

home health care agencies and paid independent providers. Agencies include hospital-based home health care 

agencies, as well as freestanding home health care agencies such as visiting-nurse associations. In the NHEA, the 

home health care category is for freestanding home health 

care agencies only; hospital-based home health care is included in the hospital care category.

Health insurance. The CE collects information about premiums for both private health insurance and Medicare. Private 

insurance includes coverage obtained individually or through 

a group plan sponsored by an employer or other organization. 

Premiums for Medicare supplemental (Medigap) plans, longterm care insurance, and special-purpose plans (dental insurance, vision insurance, prescription drug insurance, and dreaddisease policies, among others) also are part of this category. The 

CE collects information about premiums paid to the Medicare 

Supplementary Medical Insurance (SMI) Trust Fund (Parts B, 

C, and D coverage); amounts paid to the Medicare Hospital 

Insurance (HI) Trust Fund for Part A coverage are treated as 

deductions from income that go to Social Security.

MEPS-HC respondents provide information about premiums for private health insurance, except for long-term 

care insurance, but this information is available only from 

2001 on. Information about amounts paid to the Medicare SMI and HI Trust Funds is not requested.24

In the NHEA, premiums paid by households for private 

health insurance are part of the private health insurance 

source of funds. Unlike the CE and MEPS, the NHEA include the portion of property and casualty insurance premiums that covers health care in with household spending 

for private insurance. In the CE, these amounts are part of 

the premiums paid for property and casualty coverage as 

a whole, while MEPS does not collect this information at 

all. In the NHEA, premiums that individuals pay to the 

Medicare SMI and HI Trust Funds are in the Federal Government source-of-funds category.25

Comparison methods

The CE data used in this research are unpublished integrated data showing the most detailed (least aggregated) 

breakdowns available. The MEPSnet/HC query tool was 

used to obtain expenditure data from the MEPS-HC public-use files. The NHEA data source was the file titled “National Health Expenditures by Type of Service and Source 

of Funds: Calendar Years 1960–2007.” Data for the years 

1996–2006 were examined because MEPS-HC data were 

available for that period only.26 Variables examined were 

out-of-pocket expenses for the following categories:

•	 Total health care

•	 Hospital care

•	 Physicians’ services

•	 Other professional services

•	 Dental services

•	 Prescription drugs

•	 Medical supplies

Exhibit 1 indicates many differences in scope and methodology among the CE, MEPS, and NHEA. Although data 

were adjusted to make the data source components as comparable as possible, perfect alignment is not attainable for 

a number of reasons, to be discussed shortly. At the outset, 

MEPS and NHEA estimates were adjusted so that they would 

refer to the CE population concept. A multiplier was computed for each year covered by the research. For MEPS, the 

multiplier was derived by finding the ratio of the population 

covered by the CE to the population covered by MEPS. The 

same procedure was used with NHEA data.27

Aggregate out-of-pocket expenses were obtained for all 

relevant variables for the survey years covered. CE-MEPS 

and CE-NHEA spending ratios were computed for all 

variables of interest. The discussion that follows describes 

these variables and any additional adjustments that were 

made.

Total health care expenditures. This variable is the sum of 

the following expenditures: 

•	 Hospital care

•	 Physicians’ services

•	 Other professional services

•	 Dental services

•	 Prescription drugs

•	 Medical supplies

Out-of-pocket expenses for nursing home care, other nondurable medical products (nonprescription drugs, medi-
Health Care Expenditures

12 Monthly Labor Review • February 2010

cal sundries, and others), and Medicare premiums were 

excluded because they are out of scope in the MEPS-HC. 

Premiums for private health insurance were not included 

because MEPS data were available only for a portion of the 

period covered by the study. Home health care expenses 

were excluded because the CE does not specifically request 

such information.28

Hospital care. Because the NHEA hospital care category 

covers all services provided by hospitals, some CE and MEPS

categories were combined to make them more comparable to 

the NHEA hospital care category. For the CE, the categories 

titled “inpatient hospital care,” “laboratory tests and x rays,” 

and “other medical services” were combined to form the hospital care category. For MEPS, hospital care was set to the 

sum of out-of-pocket spending for inpatient, outpatient, and 

emergency room facilities.

The CE hospital care category was not a perfect fit with 

either the MEPS or the NHEA category. Because the CE

category includes all laboratory tests and x rays, as well 

as ambulance services, it could overstate CE-MEPS ratios, 

given that MEPS includes separately billed laboratory tests 

and x rays in the “other professional services” category and 

ambulance charges in the “other medical equipment and 

services” category.

Because the NHEA hospital care category includes all 

services provided by hospitals, it is possible that hospitalbased prescription drug sales, home health and nursing 

care, and outpatient and emergency room physicians’ 

charges will reduce CE-NHEA ratios despite the inclusion 

of ambulance charges and the additional charges for laboratory tests and x rays in the CE category.

Physicians’ services. For the CE, the physicians’ services 

category was used without modification. For MEPS, physicians’ services comprised the combination of separately billed 

physicians’ charges for (1) hospital inpatient, outpatient, and 

emergency room care and (2) office visits. Although the CE

and MEPS data appeared to be fairly comparable, the choice 

of NHEA data was difficult because the NHEA categorize 

such data by the establishment providing the service. The 

physician and clinical services category was chosen because it 

was the closest match. Because the NHEA category includes 

items not found in the CE category (for example, separately 

billed laboratory charges and prescription drugs from health 

maintenance organization pharmacies), it was anticipated 

that CE-NHEA ratios would be lower than CE-MEPS ratios 

for comparable years.

Dental services. The dental services categories were used 

without additional adjustment in all three data sources. 

Although the three categories were fairly similar, CENHEA ratios could be higher than CE-MEPS ratios for 

comparable years. One reason is that the NHEA category 

covers services rendered by independently practicing dentists only. Charges made by dentists employed by other 

establishments would be reflected in the charges made 

by those establishments. Also, services rendered by dental hygienists in independent practice would be included 

in the “other professional services” category, not in dental 

services.

Other professional services. For the CE, the eye care services category was combined with the “other professional 

services” category to better align the data with the category in MEPS and the NHEA. However, it is possible that 

the combined category contains some spending on physicians’ services because some of the procedures captured in 

eye care services often are provided by ophthalmologists.

For MEPS, the “other professional services” category, 

which includes optometrists, was used. Although this category is the best fit possible, it also contains separately 

billed laboratory charges found elsewhere in the CE and 

the NHEA. Because MEPS data did not permit the removal 

of these charges, CE-MEPS ratios would likely be lower 

than ratios calculated without such charges. The amount 

of the reduction, however, cannot be determined from the 

data used in this research.

For the NHEA, the “other professional services” category was used. Because this NHEA category includes 

only those in independent practice, not all services of 

other professionals will be captured, possibly increasing 

CE-NHEA ratios.

Prescription drugs. The prescription drugs category was 

used without additional adjustment in all three data 

sources. For the CE and MEPS, this was a close alignment, 

because both surveys include prescriptions drugs received 

from retail outlets and by mail order, as well as from other 

outlets such as health maintenance organizations, clinics, 

and hospital pharmacies. Because the NHEA category includes only prescription drugs obtained from retail outlets 

and by mail order, CE-NHEA ratios are likely to be higher 

than CE-MEPS ratios for comparable years.

Medical supplies. For the CE, the following categories 

were combined to form the category of medical supplies: 

eyeglasses and contact lenses, hearing aids, repair of medical equipment, purchase or rental of supportive or convalescent medical equipment, and purchase or rental of 
Monthly Labor Review • February 2010 13

medical equipment for general use.

For MEPS, the “other medical equipment and services” 

category was used as the measure of medical supplies. This 

choice was not the best alignment, because the category 

also includes spending on ambulance services; home 

modifications, such as ramps, handrails, and elevators; and 

automobile modifications.

The durable medical products category was used for the 

NHEA because it was the closest to the CE medical supplies 

category. Because the NHEA category includes spending 

on durable items from retail outlets only, it was not an 

ideal fit with the CE category, which includes spending on 

durable and nondurable items from all outlets. 

Findings

Table 1 and charts 1 and 2 summarize the information 

discussed in this section.

Total health care. CE-MEPS ratios for total health care 

spending ranged from 0.68 to 0.93. The highest ratios 

were for hospital care, while the lowest were for prescription drugs. 

CE-NHEA ratios moved between 0.72 and 0.86 during 

the study period. The highest ratios were for prescription 

drugs, the lowest for physicians’ services.

Hospital care. CE-MEPS ratios for hospital care ranged 

from 0.98 to 1.82, higher than what might be expected, 

because MEPS is able to contact hospitals to verify data 

provided by respondents.

Breaking down CE and MEPS data by inpatient expenditures and outpatient/emergency room expenditures 

provides some insights into all three findings. The CEMEPS ratios for inpatient hospital care are the largest, 

ranging from 1.22 to 2.92. The inpatient hospital findings 

appear to reflect MEPS out-of-scope charges, which might 

have been picked up in the CE. Except for 1999, CE-MEPS 

ratios for outpatient/emergency room hospital care were 

less than 1.0, ranging from 0.55 to 0.95. These ratios appear to reflect the dissimilar nature of the items in the CE 

and MEPS categories.29

CE-NHEA hospital care ratios ranged from 0.76 to 1.27. 

Several factors could account for these relatively high 

ratios. One is that the CE outpatient/emergency room 

hospital category includes ambulance charges that are not 

tracked in the NHEA. Also, some of the CE laboratory tests 

or x-ray charges might be charges that the NHEA would 

consider separately billed and included in the physician 

and clinical services category. Because the NHEA hospital 

care data did not allow for additional breakdowns, it was 

not possible to obtain further insights into these findings. 

Physicians’ services. CE-MEPS ratios for these services 

ranged from 0.65 to 0.83. The fact that MEPS contacts 

many of these providers to verify respondents’ information could reduce underreporting, compared with the CE, 

which does not verify data through a third party.

Physicians’ services had the lowest CE-NHEA ratios, 

ranging from 0.42 to 0.58. One reason is that separately 

billed laboratory charges are part of the NHEA category. 

Another is that, in the NHEA, the establishment providing 

the service determines what is included in the spending 

category. For example, health maintenance organizations 

(part of NAICS 6214, outpatient care centers) often have 

their own pharmacies. Although these pharmacy charges 

would fall under the NHEA physician and clinical services 

category, they would be part of the CE prescription drugs 

category. 

Other professional services. CE-MEPS ratios for this category 

ranged from a low of 0.68 to a high of 1.32. Differences in 

items included in the CE and MEPS categories could have 

had an influence. For example, MEPS includes separately 

billed laboratory charges in the “other professional services” 

category, whereas these charges would be in the CE hospital 

care category. Also, the CE includes acupuncture and homeopathic therapy in “other professional services,” but MEPS does 

not include services provided by these alternative caregivers 

in its official estimates.

CE-NHEA ratios for the “other professional services” 

category were higher than those for physicians’ services, 

ranging from 0.67 to 0.84. One reason is that similar 

expenses are found in both categories. The less-thancomplete alignment could be due to methodological differences between the two data sources and possible underreporting by CE respondents.

Dental services. CE-MEPS ratios for dental services varied from 0.76 to 0.97. Although MEPS dental charges are 

not verified by providers, the more detailed nature of the 

MEPS interview process could have resulted in less underreporting of dental expenses compared with those reported in the CE.

CE-NHEA ratios for dental services were closely aligned 

at the beginning of the period, but were 0.72 by the end. 

One reason for the relatively high ratios is that most, if 

not all, expenditures for dental services fall under the 

same classification in both the CE and the NHEA. Underreporting by CE respondents or the NHEA methodology 
Health Care Expenditures

14 Monthly Labor Review • February 2010

(or both) might account for the less-than-complete alignment exhibited in recent years.

Prescription drugs. CE-MEPS ratios in the prescription 

drugs category ranged from a low of 0.51 to a high of 

0.77. Spending on prescription drugs is verified by pharmacies in the MPC component of the MEPS-HC, most 

likely increasing accuracy and reducing underreporting 

among MEPS, compared with CE, respondents.

Although underreporting is a problem in interview surveys, accurate reporting of prescription drug spending is 

even more difficult than it is for many other expenditures, 

because respondents must provide details of often numerous purchases for all household members. MEPS handles 

this problem by relieving the respondent of the burden 

of reporting detailed spending information for every drug 

purchase. Instead, computerized printouts or completed 

survey forms are obtained from respondents’ pharmacies. 

To improve accuracy, MEPS respondents are asked about 

medications prescribed in connection with other medical 

events, such as emergency room and office visits.

MEPS research has found that, among respondents 

with at least one purchase of a prescribed medicine, the 

average annual number of purchases increased from 11.1 

prescriptions per person in 1997 to 16.0 prescriptions 

in 2004.30 If CE respondents have had similar experiences, 

Comparison of aggregate out-of-pocket health care expenditures: Consumer Expenditure Survey (CES), Medical 

Expenditure Panel Survey (MEPS), and National Health Expenditure Accounts (NHEA)

[Aggregate expenditures, in millions]

Expenditure 

catgory

1996 1997 1998

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

Health care, total1.... 82,949 0.93 0.86 85,814 0.86 0.83 89,366 0.86 0.80

 Hospital care ........... 12,639 1.82 1.27 12,228 1.20 1.15 12,350 1.21 1.06

 Inpatient care ....... 8,973 2.92 (

2

) 9,212 2.17 (

2

) 8,918 1.87 (

2

)

 Outpatient/emer-

 gency room care.. 3,666 .95 (

2

) 3,016 .64 (

2

) 3,432 .63 (

2

)

 Physicians’ services. 14,821 .79 .58 14,104 .75 .52 14,772 .83 .51

 Dental services....... 20,130 .93 1.04 21,491 .97 1.01 22,824 .92 .99

 Other professional 

 services.................. 5,845 .96 .77 6,775 1.12 .79 6,453 1.13 .69

 Prescription drugs... 21,799 .77 .94 22,866 .69 .93 24,792 .68 .93

 Medical supplies.... 7,715 .97 .75 8,351 .92 .76 8,176 .99 .69

Expenditure 

catgory

1999 2000 2001

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

Health care, total1.... 96,362 .88 .82 100,443 .87 .80 105,290 .78 .79

 Hospital care ........... 11,087 1.29 .89 11,785 1.29 .89 12,843 1.38 .93

 Inpatient care ....... 6,693 1.42 (

2

) 8,430 2.17 (

2

) 9,694 2.76 (

2

)

 Outpatient/emer-

 gency room care . 4,394 1.12 (

2

) 3,355 .64 (

2

) 3,149 .55 (

2

)

 Physicians’ services. 14,552 .81 .49 14,700 .82 .47 14,580 .71 .45

 Dental services....... 24,199 .94 .99 24,147 .90 .90 24,346 .85 .86

 Other professional 

 services.................. 8,532 1.28 .84 7,877 1.32 .74 7,837 .91 .70

 Prescription drugs... 28,075 .66 .95 33,376 .72 1.03 35,572 .62 1.02

 Medical supplies.... 8,919 1.08 .75 8,569 .91 .72 8,110 .82 .69

See footnotes at end of table.

Table 1.
Monthly Labor Review • February 2010 15

underreporting could have increased because of a recall 

problem associated with an increase in the number of 

prescribed drugs.

Although there is no consistent pattern, CE-NHEA 

ratios for prescription drugs were among the highest, 

ranging from 0.89 to 1.07. One reason, mentioned earlier, 

is the fact that the NHEA prescription drug category includes spending on items obtained from retail outlets and 

mail-order pharmacies only, while the CE also includes 

items obtained from other sources, such as health maintenance organization pharmacies.

Medical supplies. CE-MEPS ratios for medical supplies 

ranged from 0.76 to 1.08. Because the MEPS category includes ambulance charges and remodeling and alteration 

expenses, whereas the CE category does not, it is difficult 

to determine the influence of these expenses on CE-MEPS 

ratios. The effect of underreporting also is hard to determine. Except for eyeglasses and contact lenses, MEPS 

collects information on the remaining items in the medical supplies category only once a year. MEPS respondents 

could be less likely to recall spending on these items, compared with CE respondents, who more frequently report 

spending on items in this category.

CE-NHEA ratios for medical supplies moved between 

0.66 and 0.78 during the 1996–2006 period. Underreporting by CE respondents or the NHEA methodology (or both) 

might account for the less-than-complete alignment. 

AGGREGATE OUT-OF-POCKET HEALTH CARE expenditures from the Consumer Expenditure Survey (CE), the 

Medical Expenditure Panel Survey (MEPS), and the National Health Expenditure Accounts (NHEA) were examined for the years 1996–2006. CE-MEPS and CE-NHEA

ratios were computed for total health care spending and 

for selected health care spending categories. Although 

some alignment of the three data sets was possible, differences in methodology appear to be responsible for the 

lack of agreement among the estimates.

Methodological differences affect the magnitude of the 

CE-MEPS and CE-NHEA ratios, but they fail to explain 

the fact that these ratios were generally lower at the end of 

the period than at the beginning. Data, however, indicate 

that, for most categories, the greatest declines were during 

the 1996–2003 period. Since 2003, both ratios have been 

fairly constant.

CE-MEPS ratios. The CE-MEPS ratios may reflect the fact 

that the MEPS-MPC verifies respondent data for hospital, 

physician, and prescription drug spending, whereas the 

CE relies on respondent data only. The nature of the MEPS 

interview also could play a part, because respondents are 

asked about health conditions and associated treatments, 

as well as related expenses, for all household members. 

This format could increase respondents’ recall of expenditures, compared with the CE practice of asking only about 

the consumer unit’s total expenditures. 

Continued—Comparison of aggregate out-of-pocket health care expenditures: Consumer Expenditure Survey (CES), 

Medical Expenditure Panel Survey (MEPS), and National Health Expenditure Accounts (NHEA)

[Aggregate expenditures, in millions]

Expenditure 

category

2002 2003 2004

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

Health care, total1............. 115,358 0.78 0.80 113,458 0.68 0.72 120,789 0.69 0.75

 Hospital care .................... 13,938 1.35 .92 13,004 1.10 .76 16,445 1.49 .89

 Inpatient care ................ 9,874 2.27 (

2

) 8,006 1.64 (

2

) 10,606 2.31 (

2

)

 Outpatient/emergency

 room care....................... 4,064 .68 (

2

) 4,998 .72 (

2

) 5,839 .90 (

2

)

 Physicians’ services............ 16,539 .70 .48 16,569 .73 .45 17,045 .68 .43

 Dental services................ 25,477 .83 .81 26,213 .82 .77 27,977 .82 .78

 Other professional

 services........................... 8,628 .78 .75 8,437 .74 .67 9,120 .68 .68

 Prescription drugs......... 41,909 .68 1.07 40,205 .51 .92 40,630 .51 .89

 Medical supplies............ 8,897 .89 .74 9,028 .81 .70 9,570 .79 .73

See footnotes at end of table.

Table 1.
Health Care Expenditures

16 Monthly Labor Review • February 2010

The CE is designed to collect information on household expenditures on goods and services used in day-today living. Because the survey encompasses more than just 

health care, it would not be feasible to query respondents 

in as detailed a manner for all expenses and to verify expenses with third parties, as MEPS does. For this reason, it 

is likely that the CE will lag MEPS in many of the health 

care items reported.

Clearly, a more detailed examination of CE and MEPS 

health care expenses is needed. Additional research using 

CE public-use microdata and MEPS household-component full-year public-use data files could result in better 

data alignment and provide further insights into how 

consistent the results are.

CE-NHEA ratios. NHEA expenditures are based on secondary data sources, whereas CE information is collected directly 

from households. NHEA estimates are made for business, 

government, and consumer sources of payment, CE estimates 

for consumer unit payments only. When NHEA spending 

by source of payment is estimated, government sources of 

payment (Medicare, Medicaid, and so forth) are estimated, 

and then private expenditures (out-of-pocket payments and 

private health insurance expenditures) are calculated as the 

residual of total expenditures less government expenditures. 

The allocation between out-of-pocket expenses and private 

health insurance expenditures depends on the assumptions 

that are made by the NHEA. These assumptions ultimately 

influence CE-NHEA ratios.31

Continued—Comparison of aggregate out-of-pocket health care expenditures: Consumer Expenditure Survey 

(CES), Medical Expenditure Panel Survey (MEPS), and National Health Expenditure Accounts (NHEA)

[Aggregate expenditures, in millions]

Expenditure 

category

2005 2006

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

CE

aggregate

expenditure

CE-MEPS

ratio

CE-NHEA

ratio

Health care, total1 ................... 132,718 0.71 0.75 134,456 0.71 0.74

 Hospital care ......................... 17,854 1.06 .91 18,235 .98 .86

 Inpatient care..................... 11,100 1.22 (

2

) 11,149 1.23 (

2

)

 Outpatient/emergency

 room care......................... 6,754 .87 (

2

) 7,087 .74 (

2

)

 Physicians’ services............. 18,058 .65 .42 19,954 .65 .43

 Dental services..................... 29,847 .85 .79 28,399 .76 .72

 Other professional

 services............................... 10,350 .73 .73 10,452 .75 .70

 Prescription drugs.............. 47,551 .58 .99 46,702 .61 1.01

 Medical supplies................. 9,054 .76 .66 10,714 .87 .78

1

 Excludes health insurance premiums, nursing home care, nonprescription 

drugs, nonprescription vitamins, and topicals and dressings.

2 Data not available.

Table 1.
Monthly Labor Review • February 2010 17

Total health care

Hospital care

Physicians’ services

Dental services

Other professional services

Prescription drugs

Medical supplies

 Chart 1. Consumer Expenditure Survey–Medical Expenditure Panel Survey ratios, 1996–2006

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

Percent Percent

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

 Chart 2. Consumer Expenditure Survey–National Health Expenditure Accounts ratios, 1996–2006

Percent Percent

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

Total health care

Hospital care

Physicians’ services

Dental services

Other professional services

Prescription drugs

Medical supplies

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4
Health Care Expenditures

18 Monthly Labor Review • February 2010

Notes

ACKNOWLEDGMENT: The author wishes to thank James M. Branscome of the Center for Financing, Access and Cost Trends, Agency for 

Healthcare Research and Quality; and Cathy A. Cowan of the Office of 

the Actuary, Centers for Medicare and Medicaid Services, for their helpful 

comments.

1 CE data have been regularly compared with estimates from other 

sources to check for consistency. Because the PCE have been a major 

source of independent data for comparison, PCE data are not used in 

this article. For more information, see “Consumer Expenditure Survey 

compared with Personal Consumption Expenditures,” in Consumer 

Expenditure Survey, 2004–2005, Report 1008 (Bureau of Labor Statistics, October 2008), pp. 6–11, on the Internet at www.bls.gov/cex/

twoyear/200405/csxtwoyr.pdf (visited Feb. 22, 2010); Thesia I. Garner, George Janini, William Passero, Laura Paszkiewicz, and Mark 

Vendemia, “The CE and the PCE: a comparison,” Monthly Labor Review, September 2006, pp. 20–46, on the Internet at www.bls.gov/

opub/mlr/2006/09/art3full.pdf (visited Feb. 22, 2010); and Clinton 

P. McCully, Brian C. Moyer, and Kenneth J. Stewart, “A Reconciliation 

between the Consumer Price Index and the Personal Consumption 

Expenditures Price Index” (Bureau of Economic Analysis, September 

2007), on the Internet at www.bea.gov/papers/pdf/cpi_pce.pdf (visited Feb. 22, 2010).

2 A consumer unit is defined as (1) all members of a particular 

household who are related by blood, marriage, adoption, or some other 

legal arrangement, such as foster children; (2) a financially independent person living alone, sharing a housing unit with others, or living 

as a roomer in a private home, lodging house, or permanently in a hotel 

or motel; or (3) two or more persons living together who pool their 

incomes to make joint expenditures. For more information, see BLS 

Handbook of Methods (Bureau of Labor Statistics, April 2007), chapter 

16, “Consumer Expenditures and Income,” on the Internet at www.bls.

gov/opub/hom/pdf/homch16.pdf (visited Feb. 22, 2010).

3 MEPS also has an insurance component (MEPS-IC), which is a separate survey of employers that provides data on employer-based health 

insurance. For more information, see “Medical Expenditure Panel Survey: Insurance/Employer Component” (U.S. Department of Health and 

Human Services, Agency for Healthcare Research and Quality, Oct. 17, 

2008), on the Internet at www.meps.ahrq.gov/mepsweb/survey_comp/

Insurance.jsp (visited Feb. 22, 2010).

4 CE-NHEA data comparisons have been less extensive than CEPCE comparisons. For more information, see “Consumer Expenditure Survey Comparisons,” pp. 19–21; and E. Raphael Branch, “The 

Consumer Expenditure Survey: a comparative analysis,” Monthly Labor Review, December 1994, pp. 47–55, on the Internet at www.bls.

gov/opub/mlr/1994/12/art6full.pdf (visited Feb. 22, 2010). Research 

attempting to reconcile MEPS with NHEA data has examined outof-pocket expenses, insurance reimbursement, and public-program 

(Medicare, Medicaid, and so forth) spending on health care. (See 

Thomas M. Selden, Katharine R. Levit, Joel W. Cohen, Samuel H. 

Zuvekas, John F. Moeller, David McKusick, and Ross H. Arnett, III, 

“Reconciling Medical Expenditure Estimates from the MEPS and the 

NHA, 1996,” Health Care Financing Review, fall 2001, pp. 161–78, on 

the Internet at www.cms.hhs.gov/HealthCareFinancingReview/

Downloads/01fallpg161.pdf (visited Feb. 22, 2010); Merrile Sing, 

Jessica S. Banthin, Thomas M. Selden, Cathy A. Cowan, and Sean P. 

Keehan, “Reconciling Medical Expenditure Estimates from the MEPS 

and NHEA, 2002,” Health Care Financing Review, fall 2006, pp. 25–40, 

on the Internet at www.cms.hhs.gov/HealthCareFinancingReview/

downloads/06Fallpg25.pdf (visited Feb. 23, 2010); and Thomas M. 

Selden and Merrile Sing, Aligning the Medical Expenditure Panel 

Survey to Aggregate U.S. Benchmarks, Working Paper No. 08006 (U.S. 

Department of Health and Human Services, Agency for Healthcare 

Research and Quality, July 2008), on the Internet at www.gold.ahrq.

gov/pdf/110pdf (visited Feb. 23, 2010).)

5 Excluded are members of the active-duty military and persons 

residing in institutions such as nursing homes, mental hospitals, jails, 

prisons, and juvenile correctional facilities. For more information, see

BLS Handbook of Methods, chapter 16.

6 For more information, see BLS Handbook of Methods, chapter 16. 

7 For more information, see Consumer Expenditures in 2007, Report 

1016 (Bureau of Labor Statistics, October 2008), on the Internet at www.

bls.gov/cex/csxann07.pdf (visited Feb. 23, 2010); and BLS Handbook of 

Methods, chapter 16.

8 The selection of the survey source is evaluated periodically. For 

more information, see BLS Handbook of Methods, chapter 16.

9 MEPS is the third in a series of national medical expenditure 

surveys conducted by the Agency for Healthcare Research and Quality, formerly the Agency for Health Care Policy and Research. The 

first of these surveys, the National Medical Care Expenditure Surveys 

(NMCES) was conducted in 1977, the second, the National Medical 

Expenditure Survey (NMES), in 1987. For more information about 

these earlier surveys, see “Medical Expenditure Panel Survey: Survey 

Background” (U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Sept. 5, 2006), on the Internet at www.meps.ahrq.gov/mepsweb/about_meps/survey_back.jsp 

(visited Feb. 23, 2010).

10 Additional information about the uses of MEPS data may be 

found in “Medical Expenditure Panel Survey” (U.S. Department of 

Health and Human Services, Agency for Healthcare Research and 

Quality, no date), on the Internet at www.meps.ahrq.gov/mepsweb

(visited Feb. 23, 2010).

11 For more information, see T. M. Ezzati-Rice, F. Rohde, and J. 

Greenblatt, Sample Design of the Medical Expenditure Survey Household 

Component, 1998–2007, Methodology Report No. 22 (U.S. Department of Health and Human Services, Agency for Healthcare Research 

and Quality, March 2008), on the Internet at www.meps.ahrq.gov/

mepsweb/data_files/publications/mr22/mr22.pdf (visited Feb. 23, 

2010). Tables providing detailed information about MEPS-HC sample 

sizes from 1996 to 2006 may be found in “Medical Expenditure Panel 

Survey: MEPS-HC Sample Sizes ” (U.S. Department of Health and 

Human Services, Agency for Healthcare Research and Quality, May 

1, 2007), on the Internet at www.meps.ahrq.gov/mepsweb/survey_

comp/hc_sample_size.jsp (visited Feb. 23, 2010).

12 For a more detailed explanation, see “Medical Expenditure 

Panel Survey: MEPS Online Workbook” (U.S. Department of Health 

and Human Services, Agency for Healthcare Research and Quality, no 

date), on the Internet at www.meps.ahrq.gov/mepsweb/about_meps/

online_workbook.jsp (visited Feb. 23, 2010).

13 The MPC is not designed as an independent survey of nationwide 

medical expenditures. One reason is that it does not cover all types of 

health care providers. Another is that the MPC sample is generated 

from responses to the MEPS-HC and only providers for whom there 

is a signed respondent permission form are contacted. (For more 

information, see Marie N. Stagnitti, Karen Beauregard, and Amy Solis, 

Design, Methods, and Field Results of the Medical Expenditure Panel 

Survey Medical Provider Component (MEPS-MPC)—2006 Calendar 

Year Data, Methodology Report No. 23 (U.S. Department of Health 

and Human Services, Agency for Healthcare Research and Quality, 
Monthly Labor Review • February 2010 19

November 2008), on the Internet at www.meps.ahrq.gov/mepsweb/

data_files/publications/mr23/mr23.pdf (visited Feb. 23, 2010); and 

Steven R. Machlin and Amy K. Taylor, Design, Methods, and Field 

Results of the 1996 MEPS Medical Provider Component, Methodology 

Report No. 9 (U.S. Department of Health and Human Services, Agency 

for Healthcare Research and Quality, May 2000), on the Internet at 

www.meps.ahrq.gov/mepsweb/data_files/publications/mr9/mr9.pdf

(visited Feb. 23, 2010).)

14 The NHEA define the population used in their data tables as 

the U.S. Census resident population plus the net undercount. The 

resident population includes all residents (both civilian and in the 

Armed Forces) living in the United States. The geographic universe 

for the resident population is the 50 States and the District of 

Columbia. (For more information, see “Population Estimates: Terms 

& Definitions” (U.S. Census Bureau, Dec. 22, 2009), on the Internet 

at www.census.gov/popest/topics/terms/national.html (visited Feb. 

23, 2010); and “Category Definitions: National Health Expenditures” 

(U.S. Department of Health and Human Services, Centers for Medicare 

and Medicaid Services, no date), on the Internet at www.cms.hhs.gov/

NationalHealthExpendData/downloads/quickref.pdf (visited Feb. 

23, 2010).) 

15 For more information, see “National Health Expenditures Accounts: Definitions, Sources, and Methods, 2008” (Centers for Medicare and Medicare Services, 2008) on the Internet at www.cms.hhs.

gov/NationalHealthExpendData/downloads/dsm-08.pdf (visited 

Feb. 23, 2010).

16 Ibid. 

17 Ibid. 

18 Ibid. 

19 Ibid. 

20 Ibid. Consumer outlays for private insurance and Medicare premiums are not included in this source of funds because payment is 

made to a third-party insurer, which the NHEA classify as a separate 

source of funds. 

21 In the NHEA, services are categorized according to the framework provided by the North American Industrial Classification System (NAICS). (For more information about NAICS, see North American 

Industrial Classification System (Washington, DC, Executive Office of 

the President, Office of Management and Budget, 2007), on the Internet at www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2007

(visited Feb. 23, 2010).)

22 For more information, see “National Health Expenditure Accounts.” 

23 At one time, MEPS collected a limited amount of information 

on nonprescription, nondurable goods, but the information was 

not included in official MEPS estimates. Questions requesting this 

information were omitted from the questionnaire beginning in 

2002 (Panel 6, Round 3; and Panel 7, Round 1). (See Selden and 

others, “Reconciling Medical Expenditure Estimates”; and “Survey 

Questionnaires—Household Component” (U.S. Department of 

Health and Human Services, Agency for Healthcare Research and 

Quality, Nov. 1, 2006), on the Internet at www.meps.ahrq.gov/

mepsweb/survey_comp/survey_questionnaires.jsp (visited Feb. 23, 

2010).)

24 Ibid.

25 Ibid. (For more information, see “Sponsors of Health Care 

Costs: Business, Households and Government, 1987–2008” (U.S. 

Department of Health and Human Services, Centers for Medicare 

and Medicaid Services, Jan. 4, 2010), on the Internet at www.cms.

hhs.gov/NationalHealthExpendData/downloads/bhg08.pdf 

(visited Feb. 23, 2010); and “2009 Annual Report of the Boards of 

Trustees of the Federal Hospital Insurance and the Federal Supplementary Medical Insurance Trust Fund” (Centers for Medicare and 

Medicaid Services, May 12, 2009), on the Internet at www.cms.hhs.

gov/ReportsTrustFunds (visited Feb. 23, 2010).)

26 The MEPS data used in this research were accessed on February 24, 2009. The MEPSnet/HC query tool has since been updated to 

include 2007 MEPS data. (For more information about the MEPSnet/

HC query tool, see “Medical Expenditure Panel Survey” (U.S. Department of Health and Human Services, Agency for Healthcare Research 

and Quality, Dec. 31, 2009), on the Internet at www.meps.ahrq.gov/

mepsweb/data_stats/MEPSnetHC.jsp (visited Feb. 23, 2010).

Note that when the Centers for Medicare and Medicaid Services 

publish data for subsequent years, data from previous years often 

are revised. The NHEA data used in this article were those released 

with the 2007 estimates and accessed February 24, 2009. NHEA

data for 2008 were released on January 5, 2010, and the earlier data 

were replaced with newer data titled “National Health Expenditures by Type of Service and Source of Funds: Calendar Years 

1960–2008” (U.S. Department of Health and Human Services, 

Centers for Medicare and Medicaid Services, Jan. 4, 2010), on the 

Internet at www.cms.hhs.gov/NationalHealthExpendData/02_

NationalHealthAccountsHistorical.asp (visited Feb. 23, 2010).)

27 This was the method employed by Garner and colleagues, “The 

CE and the PCE,” in comparing expenditures reported in those two 

data sources. 

28 MEPS data were available for 2001–06 only. In addition, MEPSHC information about private insurance premium payments was not 

available from the MEPSnet/HC query tool. Also, despite adjustments, it 

was not possible to remove all nursing home and home health care expenses from the data, because the NHEA includes hospital-based nursing home and home health care in its hospital care category. Finally, 

nondurable medical products obtained from nonretail outlets, such as 

hospital or health maintenance organization pharmacies, also would be 

included in NHEA out-of-pocket expenses for those nondurable medical products obtained from nonretail outlets.

29 The CE outpatient/emergency room category was formed as the 

combination of the laboratory tests and x-rays category and the “other 

medical services” category. The MEPS category includes only charges 

for hospital outpatient and emergency room facilities. The CE category 

comprises both spending on laboratory tests and x rays not rendered on 

an outpatient or emergency room basis and ambulance charges, neither 

of which is included in the MEPS category.

30 MEPS data indicate that in 2006 there were 16.5 prescription 

purchases among those with at least 1 purchase during the year. (For 

more information, see Marie N. Stagnitti, “Trends in Outpatient 

Prescription Drug Utilization and Expenditures, 1997 and 2004,” 

Statistical Brief no. 168 (U.S. Department of Health and Human 

Services, Agency for Healthcare Research and Quality, April 2007), 

on the Internet at www.meps.ahrq.gov/mepsweb/data_files/

publications/st168/stat168.pdf (visited Feb. 23, 2010); and “Average 

number of Total (Including Refills) and Unique Prescriptions by 

Select Person Characteristics, 2006,” Statistical Brief no. 245 (U.S. 

Department of Health and Human Services, Agency for Healthcare 

Research and Quality, May 2009), on the Internet at www.meps.

ahrq.gov/mepsweb/data_stats/Pub_ProdResults_Details.

jsp?pt=Statistical%20Brief&opt=2&id=906 (visited Feb. 23, 2010).)

31 Research attempting to align MEPS data with NHEA data found 

that estimated out-of pocket spending was 12 percent greater in MEPS

than in the NHEA. However, estimates of spending on personal health 

insurance, Medicare, and Medicaid were lower than those of the NHEA. 

(For more information, see Sing and colleagues, “Reconciling Medical 

Expenditure Estimates.”)