Nearly half of all health spending in U.S. comes from 5% of population

A new KFF analysis found that 5% of the U.S. population accounted for nearly half of all health spending in 2023—spending an average of $72,918 annually. People with health spending in the top 1% spent an average of $150,467 per year.

“In a given year, a small portion of the population is responsible for a very large percentage of total health spending,” according to the report, which evaluates how health expenditures vary across the population. “We tend to focus on averages when discussing health spending, but individuals’ health status—and thus their need to access and utilize health care—varies over the course of their lifetimes. In fact, very few people have spending around the average.”

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KFF’s analysis examined spending variation by age, gender, race, insurance coverage status and presence of certain health conditions. Adults diagnosed with a serious or chronic disease have significantly higher out-of-pocket spending. Data is based on the 2023 Medical Expenditure Panel Survey (MEPS) Household Component, a nationally representative survey of the U.S. civilian non-institutionalized population. Health spending includes individual out-of-pocket payments and payments made by payers for care provided during the year.

People 55 and older accounted for more than half of health spending

Here are five other highlights of the KFF report:

• People age 55 and older accounted for 57% of total health spending in 2023, despite making up only 30% of the population. By contrast, people under 35 make up 44% of the population and were responsible for 21% of health spending.
• The 50% of the population with the lowest total health spending accounted for only 3% of all health spending—averaging just $433. Approximately 14% of the population had zero health expenditures in 2023.
• Women have higher health spending than men in their 20s, 30s and early 40s—thanks in part to pregnancy and delivery-related care. In older age groups, spending differences are not that different between men and women.
• White people have significantly higher average total health spending than individuals in other race or ethnic groups—particularly Asian and Hispanic adults. Additionally, more Asian and white people are enrolled in private health plans at some point in a given year than Black and Hispanic people.
• Immigrants, primarily Hispanics and Asians, have lower health spending on average than individuals born in the United States.

This article was originally published on BenefitsPRO, a sister site of HR Executive. For more content like this delivered to your inbox, sign up for BenefitsPRO newsletters here.

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