June 2006

1% of population accounts for 22% of healthcare costs

Health care spending in the United States has remained heavily concentrated in a small portion of the total population, according to the Department of Health and Human Services’ Agency for Healthcare Research and Quality (AHRQ).

In addition, an increasing number of individuals remained in the highest-cost groups from one year to the next, according to data from 2002 and 2003.

One percent of the U.S. population accounted for 22 percent of total health care expenditures in 2002. In other words, one percent of a total civilian noninstitutionalized population of 288 million accounted for $180.8 billion in health care spending, out of a total $810.7 billion spent in 2002 on doctors, hospitals, prescription drugs, and other personal health care services. Overall health care expenditures increased in 2003 to $895.5 billion.

This concentration in the top percentile is lower than that found in 1996, when the top 1 percent of medical care users accounted for 28 percent of all expenditures.

More than a quarter (25.3 percent) of those individuals in the top percentile during 2002 remained there in 2003. This reflects a near doubling of the proportion of persons who remain in the top percentile from one year to the next, compared with 1996-1997.

The top 5 percent of medical care users accounted for 49 percent of health care expenditures in 2002, and 34 percent of those same individuals retained this ranking in 2003 (30.6 percent in 1996-97).

The top 10 percent users of medical care accounted for 64 percent of overall health care spending during 2002, and 41.8 percent of these individuals remained in the top decile in 2003 (38.1 percent in 1996-97).

At the opposite end of the spectrum, the half of the U.S. population that received the least amount of medical care and services (144 million persons) accounted for just 3 percent of overall health care expenditures ($27.6 billion, of the $810.7 billion total).

The Medical Expenditure Panel Survey (MEPS) collects information each year from a nationally representative sample of U.S. households among the civilian, non-institutionalized population on health care use, health care expenses, access to services, health status, and the quality of the health care obtained. MEPS is a unique government survey because of the degree of detail provided by its data, and by the way its data on health services spending and health insurance can be linked to demographic, employment, health status, and other characteristics of individuals and families.

This AHRQ News and Numbers summary is based on details in “The Persistence in the Level of Health Expenditures over Time: Estimates for the U.S. Population, 2002-2003,” available on AHRQ’s MEPS Web site at http://www.meps.ahrq.gov/papers/st124/stat124.pdf

Source: Agency for Healthcare Research and Quality, www.ahrq.gov

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