Monday, February 13, 2017

Health Care Expenditure Patterns Across Age Groups

Health Care Use and Expenditure Shares Across Age Groups

This post looks at health expenditure spending patters for three age groups – minors and young adults, working-age adults, and Medicare-age people.  I look at number of people in different expenditure categories and share of total expenditures across expenditure levels.

Question:  Using data from the 2014 MEPS survey find the percent of people in each age group that had $0 in 2014.  What percent of people in each age group had relatively low health expenditures, modest health care expenditures, and high levels of health care expenditures?   How did the share of health care expenditures incurred by low-health care users, modest health care users and heavy health care users vary for the three age groups?

Results for Three Age Groups:

The chart below has detailed information on health expenditures for minors and young adults.

Health Utilization and Expenditures for Minors and Young Adults (26 and under)
Upper limit of Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
19.690
17.1%
$0.0
0.0%
$5,000
84.759
73.8%
$9.2
3.3%
$10,000
6.075
5.3%
$13.1
4.7%
$15,000
1.723
1.5%
$58.7
21.2%
$20,000
0.872
0.8%
$41.8
15.1%
$25,000
0.253
0.2%
$35.7
12.9%
$30,000
0.240
0.2%
$21.9
7.9%
$50,000
0.479
0.4%
$25.1
9.1%
$100,000
0.449
0.4%
$12.0
4.3%
$10,000,000
0.296
0.3%
$59.2
21.4%
Total
114.838
100.0%
$276.7
100.0%
Source: MEPS 2014 consolidated survey

The chart below has detailed information on health expenditures for the working-age population defined as people who are between the age of 26 and 64.  

Health Utilization and Total Expenditures for the
Working Age Population (27 to 64)
Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
26.110
16.6%
$0.0
0.0%
$5,000
99.292
63.2%
$7.7
1.0%
$10,000
13.714
8.7%
$13.6
1.8%
$15,000
6.311
4.0%
$116.0
15.6%
$20,000
3.866
2.5%
$96.6
13.0%
$25,000
1.953
1.2%
$143.0
19.2%
$30,000
1.283
0.8%
$133.0
17.9%
$50,000
2.528
1.6%
$66.7
9.0%
$100,000
1.361
0.9%
$69.7
9.4%
$10,000,000
0.620
0.4%
$98.5
13.2%
Total
157.037
100.0%
$744.8
100.0%
Source MEPS 2014 consolidated survey

The Chart below has information on health expenditure patters for people 65 and over.

Health Utilization and Total Expenditures for People
of Medicare Age (65 and over)
Health Expenditure Category
# of people (in millions)
% of people
Exp. ($ billions)
% Exp.
$0
1.575
3.4%
$0.0
0.0%
$5,000
23.264
50.0%
$0.9
0.2%
$10,000
8.356
17.9%
$2.5
0.5%
$15,000
4.368
9.4%
$47.0
9.8%
$20,000
2.644
5.7%
$60.0
12.5%
$25,000
1.692
3.6%
$99.6
20.8%
$30,000
0.979
2.1%
$110.0
23.0%
$50,000
2.154
4.6%
$68.8
14.4%
$100,000
1.280
2.7%
$55.2
11.5%
$10,000,000
0.255
0.5%
$34.6
7.2%
Total
46.565
100.0%
$478.5
100.0%
Source MEPS 2014 consolidated survey


Comparing Expenditure Patters for the Three Age Groups:

Let’s start our discussion with two low-expenditure groups:


The share of people with  $0 expenditures was -- 17.1 percent for children and young adults, 16.6 percent for the working-age population and 3.5 percent for older people.

The share of people with health expenditures in the $0 to $5,000 range was 73.8 percent for the young, 63.2 percent for the working-age group, and 50 percent for the older group.   The share of total health expenditures in this category was small for all three groups – 3.3 percent for the young, 1.0 percent for working-age and 0.3 percent for older people.


Let’s skip to the $25,000 to $30,000 expenditure interval:

The share of people with annual health expenses between $25,000 and $30,000 was 0.2 percent for younger people, 0.8 percent for working-age people, and 2.1 percent for older people.  The expenditure shares are 7.9 percent for the young, 17.9 percent for middle age and 23.0 percent for the old.

Let’s skip to the highest expenditure group:

The highest expenditure group – people with expenses over $100,000 – while small in number is a large share of total health expenditures.  The share of people with expenses over $100,000 is 0.3 percent for young people, 0.4 percent for working-age people, and 0.5 percent for older people.   However, the expenditure shares are really large – 21.4 percent for young people, 13.2 percent for working-age people, and 7.2 percent for the oldest Americans.

Concluding Remarks:  The statistics presented here confirm that a very small share of expensive health care cases is responsible for a large share of health expenditures.   The impact of the expensive cases is most pronounced for young people and least pronounced for old people.

The results presented here have important implications for a recent health care reform proposal written by Marian Hagler.



(Full disclosure is called for here.   I am married to Marian.)

Marian has created a bipartisan health care reform proposal that contains some features supported by Democrats and other features called for by Republicans.  One of the features in her proposal involves the establishment of a universal catastrophic health care plan, paid for by the government but administered by private firms. 

The results presented here suggest that such a catastrophic plan would substantially reduce premiums on private insurance.   Of course, a great deal of thought and research is needed in order to figure out the benefit threshold for the catastrophic plan.  The numbers presented in this post can help address this issue.













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