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The Concentration and Persistence in the Level of 
Health Expenditures over Time: Estimates for the 
U.S. Population, 2008-2009
Steven B. Cohen, PhD and William Yu, MA
Agency for Healthcare Research
January 2012
http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.shtml

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Highlights

    In 2008, 1 percent of the population accounted for
    20.2 percent of total health care expenditures and
    20.0 percent of the population in the top 1 percent
    retained this ranking in 2009. The bottom half of
    the expenditure distribution accounted for 3.1
    percent of spending in 2008; about three out of four
    individuals in the bottom 50 percent retained this
    ranking in 2009.

    Those who were in the top decile of spenders in both
    2008 and 2009 differed by age, race/ethnicity, sex,
    health status, and insurance coverage (for those
    under 65) from those who were in the lower half in
    both years.

    Those in the bottom half of health care spenders
    were more likely to report excellent health status,
    while those in the top decile of spenders were more
    likely to be in fair or poor health relative to the
    overall population.

    While 15.5 percent of persons under age 65 were
    uninsured for all of 2009, the full-year uninsured
    comprised 25.9 percent of those in the bottom half
    of spenders for both 2008 and 2009. Only 3.6 percent
    of those under age 65 who remained in the top decile
    of spenders in both years were uninsured for all of
    2009.

    Relative to the overall population, those who
    remained in the top decile of spenders were more
    likely to be in fair or poor health, elderly,
    female, non-Hispanic whites and those with public-
    only coverage. Those who remained in the bottom half
    of spenders were more likely to be in excellent
    health, children and young adults, men, Hispanics,
    and the uninsured.

Introduction

Estimates of health care expenses for the U.S. civilian
noninstitutionalized (community) population are critical
to policymakers and others concerned with access to
medical care and the cost and sources of payment for
that care. In 2009, health care expenses among the U.S.
community population totaled $1.26 trillion. Medical
care expenses, however, are highly concentrated among a
relatively small proportion of individuals in the
community population. As reported previously in 1996,
the top 1 percent of the U.S. population accounted for
28 percent of the total health care expenditures and the
top 5 percent for more than half. More recent data have
revealed that over time there has been some decrease in
the extent of this concentration at the upper tail of
the expenditure distribution (Yu and Ezzati-Rice, 2005).

Using information from the Household Component of the
Medical Expenditure Panel Survey (MEPS-HC) for 2008 and
2009, this report provides detailed estimates of the
persistence in the level of health care expenditures
over time. Studies that examine the persistence of high
levels of expenditures over time are essential to help
discern the factors most likely to drive health care
spending and the characteristics of the individuals who
incur them. The MEPS-HC data are particularly well
suited for measuring trends in concentration and
persistence. All differences between estimates discussed
in the text are statistically significant at the 0.05
level unless otherwise noted.

Findings

In 2008, 1 percent of the population accounted for 20.2
percent of total health care expenditures, and in 2009,
the top 1 percent accounted for 21.8 percent of the
total expenditures with an annual mean expenditure of
$90,061. The lower 50 percent of the population ranked
by their expenditures accounted for only 3.1 percent and
2.9 percent of the total for 2008 and 2009 respectively.
Of those individuals ranked at the top 1 percent of the
health care expenditure distribution in 2008, 20 percent
maintained this ranking with respect to their 2009
health care expenditures (figure 1).

In both 2008 and 2009, the top 5 percent of the
population accounted for nearly 50 percent of health
care expenditures. Among those individuals ranked in the
top 5 percent of the health care expenditure
distribution in 2008 (with a mean expenditure of
$35,829), 38 percent retained this ranking with respect
to their 2009 health care expenditures (figure 1).
Similarly, the top 10 percent of the population
accounted for 63.6 percent of overall health care
expenditures in 2008 (with a mean expenditure of
$23,992), and 44.8 percent of this subgroup retained
this top decile ranking with respect to their 2009
health care expenditures. The data also indicate that a
small percentage of the individuals in the top
percentiles in 2008 had expenditures for only one year
because they died, were institutionalized, or were
otherwise ineligible for the survey in the subsequent
year. In both 2008 and 2009, the top 30 percent of the
population accounted for nearly 89 percent of health
care expenditures. Among those individuals ranked in the
top 30 percent of the health care expenditure
distribution in 2008, 63.1 percent retained this ranking
with respect to their 2009 health care expenditures
(figure 1). Furthermore, individuals ranked in the top
half of the health care expenditure distribution in 2008
accounted for 97 percent of all health care
expenditures. Among this population subgroup, 75.0
percent maintained this ranking in 2009. Alternatively,
individuals ranked in the bottom half of the health care
expenditure distribution accounted for only 3.1 percent
of medical expenditures (with a mean expenditure of $232
in 2008). Similar to the experience of the top half of
the population based on their medical expenditure
rankings, 73.9 percent of those in the lower half of the
expenditure distribution retained this classification in
2009.

Given the high concentration of medical expenditures
incurred by the top decile of the population ranked by
health care spending (63.6 percent), identifying the
characteristics of those individuals exhibiting
significant reductions in health care spending in a
subsequent year is also of interest. Among those ranked
in the top decile in 2008 based on their high level of
medical expenditures, 25.4 percent shifted to a ranking
in the lower 75 percent of the expenditure distribution
in 2009 (data not shown). Individuals ranked in the
lower 75 percent of health care spending accounted for
only 14.0 percent of all medical expenditures in 2009.

Individuals who were between the ages of 45 and 64 and
the elderly (65 and older) were disproportionately
represented among the population that remained in the
top decile of spenders for both 2008 and 2009. While the
elderly represented 13.2 percent of the overall
population, they represented 42.9 percent of those
individuals who remained in the top decile of spenders
(figure 2). For those individuals who remained in the
lower half of the distribution based on health care
expenditures over the two-year span, the elderly
represented only 2.8 percent of the population.
Alternatively, children (0-17) and young adults (18-29)
were disproportionately represented among the population
that remained in the bottom half of spenders (33.7
percent and 22.9 percent, respectively). In contrast,
children and young adults represented only 3.4 percent
and 3.1 percent, respectively, of those individuals who
remained in the top decile of spenders. Individuals in
the top decile ordered by medical expenditures in 2008
that shifted below the first quartile in 2009 were
predominantly between the ages of 30-64.

Individuals identified as Hispanic and black non-
Hispanic single race were disproportionately represented
among the population that remained in the lower half of
the distribution based on health care spending. While
Hispanics represented 16.0 percent of the overall
population in 2009, they represented 24.5 percent of
those individuals who remained in the bottom 50 percent
of spenders (figure 3). For those individuals who
remained in the top decile of spenders, Hispanics
represented only 6.7 percent of the population.
Individuals in the top decile ordered by medical
expenditures in 2008 that shifted below the first
quartile in 2009 were more likely to be non-Hispanic
whites and other races (77.6 percent) relative to their
representation in the overall population (67.2 percent).

Individuals who remained in the top decile of spenders
in 2008 and 2009 also differed significantly by sex,
compared with those who remained in the lower half of
the distribution ranked by medical care expenditures.
While females represented 50.9 percent of the overall
population, they represented 59.0 percent of those
individuals who remained in the top decile of spenders
(figure 4). For those individuals who remained in the
lower half of the distribution based on health care
expenditures over the two-year span, females represented
only 41.6 percent of the population. Alternatively,
males were disproportionately represented among the
population that remained in the bottom half of spenders
(58.4 percent). In contrast, males represented only 41.0
percent of those individuals who remained in the top
decile of spenders. Individuals in the top decile
ordered by medical expenditures in 2008 that shifted
below the first quartile in 2009 were predominantly
female (56.6 percent).

Health status was a particularly salient factor that
distinguished those individuals who remained in the top
decile of spenders. Overall, 2.8 percent of the
population was reported to be in poor health in 2009,
and another 8.0 percent was classified in fair health
(figure 5). In contrast, of those individuals who
remained in the top decile of spenders, 23.9 percent
were in poor health and another 29.6 percent were in
fair health. Furthermore, for those individuals
remaining in the bottom half of spenders, only 0.4
percent were reported to be in poor health and 4.3
percent in fair health. Individuals in excellent health
were disproportionately represented among those who
remained in the lower half of spenders both years (43.5
percent). Alternatively, for those individuals remaining
in the top decile of spenders, only 6.1 percent were
reported to be in excellent health and 13.2 percent in
very good health. Individuals in the top decile ordered
by medical expenditures in 2008 that shifted below the
first quartile in 2009 were predominantly in excellent,
very good or good health (24.8, 30.9, and 26.9 percent,
respectively).

Focusing on the under age 65 population, health
insurance coverage status also distinguished individuals
who remained in the top decile of spenders from their
counterparts in the lower half of the distribution.
Individuals who were uninsured for all of calendar year
2009 were disproportionately represented among the
population that remained in the lower half of the
distribution based on health care spending. While 15.5
percent of the overall population under age 65 was
uninsured for all of 2009, the full-year uninsured
comprised 25.9 percent of all individuals remaining in
the bottom half of spenders (figure 6). Alternatively,
only 3.6 percent of those under age 65 who remained in
the top decile of spenders were uninsured. In addition,
while 16.6 percent of the overall population under age
65 had public-only coverage for all of 2009, 31.0
percent of those who remained in the top decile of
spenders had public-only coverage (figure 6).

With respect to poverty status classifications, 36.2
percent of the overall population resided in families or
single-person households with high incomes in 2009
(figure 7). A lower representation of high income
individuals (26.5 percent) was observed among those who
remained in the lower half of spenders in both 2008 to
2009.

Data Source

The estimates shown in this Statistical Brief are drawn
from analyses conducted by the MEPS staff from the
following public use files: MEPS HC-121 and HC-129, 2008
and 2009 Full Year Consolidated Data Files, and MEPS
HC-130: Panel 13 Longitudinal Data File.

Definitions

Expenditures MEPS-HC defines total expense as the sum of
payments from all sources to hospitals, physicians,
other health care providers (including dental care), and
pharmacies for services reported by respondents in the
MEPS-HC. Sources include direct payments from
individuals and families, private insurance, Medicare,
Medicaid, and miscellaneous other sources.

Uninsured Individuals who were not covered by any
comprehensive private or public health plan during the
year were defined as uninsured. People who were covered
only by noncomprehensive State-specific programs (e.g.,
Maryland Kidney Disease Program) or private single
service plans (e.g., coverage for dental or vision care
only, coverage for accidents or specific diseases) were
also considered to be uninsured. Insurance status was
defined for calendar year 2009.

Age

Age was defined as age at the end of the year 2009.

Race/ethnicity

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
only include non-Hispanics for the race/ethnicity
classifications. MEPS respondents who reported other
single or multiple races and were non-Hispanic were
included in the other category. For this analysis, the
following classification by race and ethnicity was used:
Hispanic (of any race), non-Hispanic blacks single race,
non-Hispanic whites single race, and others, and non-
Hispanic Asian and Pacific Islanders single race.

Poverty status

Sample persons were classified according to the total
yearly income of their family. Within a household, all
people related by blood, marriage, or adoption were
considered to be a family. Poverty status categories are
defined by the ratio of family income to the federal
income thresholds, which control for family size and age
of the head of family. Poverty status was based on
annual income in 2009.

Poverty status categories are defined as follows:

    Poor: Persons in families with income less than or
    equal to the poverty line; includes those who had
    negative income. Near poor: Persons in families with
    income over the poverty line through 125 percent of
    the poverty line. Low income: Persons in families
    with income over 125 percent through 200 percent of
    the poverty line. Middle income: Persons in families
    with income over 200 percent through 400 percent of
    the poverty line. High income: Persons in families
    with income over 400 percent of the poverty line.

Health status

In every round, the respondent is asked to rate the
health of every member of the family. The exact wording
of the question is: "In general, compared to other
people of (PERSON)'s age, would you say that (PERSON)'s
health is excellent, very good, good, fair, or poor?"
The health status classification in Round 3 was used for
this report, and the small percentage of missing (~1
percent) responses were classified in the good health
status category.

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 U.S.
civilian noninstitutionalized population. It is
cosponsored by the Agency for Healthcare Research and
Quality and the National Center for Health Statistics.

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