Publication Date

December 2007

Abstract

Over the 20-year period from 1986 to 2005, health care accounted for 5.4% of consumer spending, on average. According to data from the Consumer Expenditure Survey (CES), health care accounted for 5.7% of consumer spending in 2005, slightly higher than the 20-year average but lower than the 2004 share of 5.9%.

In the CES, consumer spending for health care includes spending for health insurance and spending for other health care (medical services, medical supplies, and drugs). In 2005, health insurance accounted for 2.9% of consumer spending. Other health care accounted for 2.8% of spending.

Consumers spent less on health care than on housing or transportation or food, both in 2005 and in every year since 1986. In 2005, housing accounted for 32.7% of consumer spending; transportation, 18.0%; and food, 12.0%. Average spending in these categories exceeded spending on health care in part because some consumers spend little or nothing on health care and health insurance. Those who spend relatively little on health may do so because they are healthy, because they have generous employer-sponsored or government health benefits, or because they are uninsured and lack access to care.

Health care accounts for a higher share of spending, on average, for lower-income people. In 2005, health care accounted for 7.6% of spending by consumers in the lowest income quintile, compared with 4.4% of spending by those in the highest income quintile. Housing and food also account for a higher share of spending for lower-income people. In 2005, housing accounted for 39.4% of spending by those in the lowest income quintile, compared with 31.0% for those in the highest quintile. The spending shares for food were 15.9% and 11.1% for the lowest and highest income quintiles, respectively.

As people age, they spend more on health care. In 2005, health care accounted for 2.5% of spending by consumers younger than 25, compared with 15.6% of spending by those 75 or older. Health care is different from other spending categories in its consistent pattern of increasing spending with increasing age. It accounted for 3.4% of consumer spending for those in the 25-to-34 age group, 4.1% of spending for those 35 to 44, 4.8% of spending for those 45 to 54, 6.9% of spending for those 55 to 64, and 10.8% of spending for those 65 to 74. Within the health care category, as people age, they spend more, on average, on both health insurance and other health care.

The data in this report reflect direct spending by consumers on health care. They do not include spending by employers for employee health benefits, even though consumers may pay indirectly for such benefits through lower wages. Similarly, the data presented here do not include government spending for health care programs, even though consumers help pay for government benefits through income and employment taxes.

This report will be updated.

Comments

Suggested Citation
Jenson, J. (2007). Spending by consumers on health care and health insurance: A data brief (RL34295). Washington, DC: Congressional Research Service. http://digitalcommons.ilr.cornell.edu/key_workplace/478/

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