Healthcare Spending by Age Group

Health Care Spending by Age Group

Since my previous attempt to break down health-care costs demographically was a failure, I thought I’d try it again. Here’s what I came up with.

Age Group 1990 Total 2006 Total
Under 25 $1,057 $3,016
25 to 34 $2,081 $4,576
35 to 44 $2,768 $5,713
45 to 54 $3,059 $6,463
55 to 64 $3,213 $7,703
65 to 74 $7,619 $21,116
75 and over $7,486 $20,965



At about $20,000 a year, healthcare spending by the 65 and over set is pretty staggering really.

2006 Health Care Spending by Age Group

The details for 2006.

Age Group Revised CEX Medicare Medicaid Other Total
Under 25 $1,096 $0 $1,096 $824 $3,016
25 to 34 $2,566 $0 $765 $1,245 $4,576
35 to 44 $3,501 $0 $765 $1,447 $5,713
45 to 54 $4,282 $0 $765 $1,416 $6,463
55 to 64 $5,522 $0 $765 $1,416 $7,703
65 to 74 $6,801 $10,787 $2,502 $1,026 $21,116
75 and over $6,650 $10,787 $2,502 $1,026 $20,965



1990 Health Care Spending by Age Group
Age Group Revised CEX Medicare Medicaid Other Total
Under 25 $467 $0 $311 $279 $1,057
25 to 34 $1,336 $0 $226 $519 $2,081
35 to 44 $1,929 $0 $226 $613 $2,768
45 to 54 $2,241 $0 $226 $592 $3,059
55 to 64 $2,395 $0 $226 $592 $3,213
65 to 74 $2,984 $3,532 $730 $373 $7,619
75 and over $2,851 $3,532 $730 $373 $7,486




Here’s the math I used to get these numbers.

Consumer Expenditure Survey

The numbers I was using last time were from the Bureau of Labor Statistics Consumer Expenditure Survey. Those numbers covered only consumer expenditures on health insurance, medical services and drugs and supplies and totaled only $285 billion. In 1990, consumers actually spent $233.7 billion on Private Insurance and $136.1 billion on out of pocket expenses, for a total of $369.8 billion.

Let’s adjust the survey numbers to reflect what Census says was the actual expenditures in 1990.

Age Group CEX Survey Revised CEX
Under 25 $360 $467
25 to 34 $1,030 $1,336
35 to 44 $1,487 $1,929
45 to 54 $1,727 $2,241
55 to 64 $1,846 $2,395
65 to 74 $2,300 $2,984
75 and over $2,197 $2,851

Source

Let’s see if we can allocate the remainder of healthcare spending for 1990 to a specific age demographic. Total health care spending in 1990 was $714 billion. If we subtract out $46.3 billion in research and facilities construction we are left with $667.7 billion spent by consumers.

Medicare

After we take out the $369.8 billion of personal expenditures detailed above, we are left with $297.9 billion in unallocated healthcare spending. $109.5 billion of that amount was spent on Medicare. That’s an additional $3,532 per person over the age of 65.

Medicaid

That leaves us with $188.4 billion in unallocated healthcare spending. $78.7 billion of that amount was spent primarily on Medicaid. I was unable to find a breakdown of Medicaid spending in 1990 so we’ll just have to use 2006 allocations.

In 2006, Medicaid spending was allocated as follows: Elderly 23%, Adults 13%, Children 19% and Disabled 46%. Using that breakdown, we’ll allocate 1990 Medicaid spending demographically.

Classification % of Spending $ of Spending $ of Spending
per person
Elderly 23% $18.1 billion $584
Adults 13% $10.2 billion $80
Children 19% $15.0 billion $165
Blind and Disabled 46% $36.2 billion $146



Sidebar One: Although the elderly and the disabled account for 25 percent of the individuals enrolled in Medicaid, they are responsible for 69 percent of Medicaid spending. More…) and

Medicaid accounts for 40% of all long-term care services delivered and almost half of all nursing home expenditures in the U.S., making Medicaid the nation’s largest single payer of long-term care services.

Among Medicaid enrollees using long-term care services, just over half (55%) were elderly, 34% were individuals under age 65 classified as disabled, and 11% were adults and children who qualified for Medicaid based on income or other eligibility pathways.More…)

Other Healthcare Spending

That leaves us with $109.7 billion in healthcare spending unallocated (with who I’m allocating it to in parenthesis):

  • Workers’ compensation $17.4 billion (Adults 25 to 64);
  • Defense Dept. hospital $10.4 billion (Adults 25 to 64);
  • Veterans’ hospital, medical care $10.8 billion (Adults 35 and over);
  • Maternal, child health programs $1.7 billion (Adults 25 to 44);
  • Public health activities $20.0 billion (All);
  • State and local hospitals $7 billion (All);
  • Other $42.4 billion (All).
Age Group Workers’ Comp/
Defense
Vet Maternal Public/Hosp./Other
Under 25 $279
25 to 34 $219 $21 $279
35 to 44 $219 $94 $21 $279
45 to 54 $219 $94 $279
55 to 64 $219 $94 $279
65 to 74 $94 $279
75 and over $94 $279



3 Comments

  1. Looks like pretty good work. I couldn’t find your reference(s) for dollar amounts you used for calculations. Would you add them?

  2. Figure 3 shows that, five years before the year of death, annual health cost is virtually the same as all annual Medicare costs per capita. By the second year before death the cost has risen by about 60 percent, and in the year of death the annual cost exceeds the average by more than four times. Indeed, expenditure on persons during their last two years of life account for 40 percent of all Medicare expenditures.

    The pattern portrayed in Figure 3 has not changed significantly over the past two decades. The relative constancy in healthcare costs by years before death supports Case B in Figure 2 because it implies that no matter how far to the right the healthcare curve shifts, age-specific costs will eventually rise sharply as the proportion of persons who die in any given age category increases. This line of reasoning implies that healthcare costs may continue to increase even if the age of onset of chronic diseases is delayed, because the proportion of a cohort living to late ages will increase.(More…)

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