Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
U.S. Healthcare Spending Trends
from Aggregated Monthly Claims Data
Richard W. Evans
Jeffrey Humpherys
March 2015
Not for publication
or citation
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
U.K. Border Agent
Asked me what I was doing in London?
“Teach people how to use healthcare”
$1,000 cut finger
Used to be an ER nurse
Main point
Describing healthcare spending is the first step toward
modeling it
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
U.K. Border Agent
Asked me what I was doing in London?
“Teach people how to use healthcare”
$1,000 cut finger
Used to be an ER nurse
Main point
Describing healthcare spending is the first step toward
modeling it
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Dataset
103,392 individuals: age and gender
24 months between 2008 and 2012
random sample of insured from Midwestern U.S.
Non-government payer
Claims data, allowable amounts plus copays
Household portion plus payers portion
We don’t have:
decomposition of household vs. payer
individual plan details
household affiliation
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Dataset
103,392 individuals: age and gender
24 months between 2008 and 2012
random sample of insured from Midwestern U.S.
Non-government payer
Claims data, allowable amounts plus copays
Household portion plus payers portion
We don’t have:
decomposition of household vs. payer
individual plan details
household affiliation
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Outline of talk
1
Demographics
2
Zero expenditure months
3
Lumpy positive expenditure spells
4
Time trend (growth) of expenditures
5
Overall distribution of expenditures
6
Expenditures over the life cycle
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Demographics summary
Match U.S. gender distribution well
Miss on age in a few key places
oversample children and middle age adults
undersample 19-25
undersample 60+
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Age distribution descriptive statistics
Data
Source
Total
obs.
Sample
U.S.a
103,392
307,888,565
a
Pct.
male
48.81%
49.02%
Pct.
female
51.19%
50.98%
Avg.
Age (years)
33.20
37.37
The U.S. population estimates are for June 2010 and come from U.S.
Census Bureau (2013).
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Age distribution: All
0
Fraction of individuals
.005
.01
.015
.02
Sample includes 103,392 individuals
0
10
20
30
40
50
Age
Data
Evans and Humpherys, Brigham Young University
60
70
80
90
100
U.S., June 2010
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Age distribution: Men
0
Fraction of individuals
.005
.01
.015
.02
Sample includes 50,467 male individuals (48.8%)
0
10
20
30
40
50
Age
Data
Evans and Humpherys, Brigham Young University
60
70
80
90
100
U.S., June 2010
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Age distribution: Women
0
Fraction of individuals
.005
.01
.015
.02
Sample includes 52,925 female individuals (51.2%)
0
10
20
30
40
50
Age
Data
Evans and Humpherys, Brigham Young University
60
70
80
90
100
U.S., June 2010
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Conclusion
Sample size distribution by age and gender bins
Age
group
0 to 11
12 to 20
21 to 35
36 to 45
46 to 55
56 to 65
66 and over
Male
Number Percent
8,993
7,432
8,682
9,683
9,418
5,486
773
8.7%
7.2%
8.4%
9.4%
9.1%
5.3%
0.7%
Evans and Humpherys, Brigham Young University
Female
Number Percent
8,857
7,306
10,118
10,195
10,465
5,432
552
8.6%
7.1%
9.8%
9.9%
10.1%
5.3%
0.5%
U.S. Healthcare Monthly Spending Trends
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Most salient feature of monthly data is...
57.4% of months have zero expenditure
health care expenditure is lumpy
13% of individuals have 24 zero months
Only 8% have no zero months
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Histogram of number of zero months: all
0
.02
Fraction of individuals
.04
.06
.08
.1
.12
.14
Sample includes 103,392 individuals
0
4
8
12
16
Number of months with zero expenditures
Evans and Humpherys, Brigham Young University
20
24
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Histogram of number of zero months: men
0
.02
Fraction of individuals
.04
.06
.08
.1
.12
.14
Sample includes 50,467 male individuals (48.8%)
0
4
8
12
16
Number of months with zero expenditures
Evans and Humpherys, Brigham Young University
20
24
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Histogram of number of zero months: women
0
.02
Fraction of individuals
.04
.06
.08
.1
.12
.14
Sample includes 52,925 female individuals (51.2%)
0
4
8
12
16
Number of months with zero expenditures
Evans and Humpherys, Brigham Young University
20
24
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Spell duration of positive expenditures
Multiple spells of varying length (show histogram)
Positive correlation between spell duration and
expenditures
Right tail fattens as spells lengthen
Suggests Markov modeling approach
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
0
fraction of individuals
.1
.2
.3
.4
Histogram of avg. exps. for short spells
0
5
10
15
Mean exp. bin ($100s)
histpos1
histpos3
histpos5
histpos7
histpos9
Evans and Humpherys, Brigham Young University
20
25
histpos2
histpos4
histpos6
histpos8
histpos10
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
0
fraction of individuals
.05
.1
.15
.2
Histogram of avg. exps. for long spells
0
5
10
15
Mean exp. bin ($100s)
histpos15
histpos17
histpos19
histpos21
histpos23
Evans and Humpherys, Brigham Young University
20
25
histpos16
histpos18
histpos20
histpos22
histpos24
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Trend summary
Healthcare expenditure growing fast
Men growing faster than women (11.5% vs. 8.5%)
Growth rates increase by age
Disparity between age 36 to 45 men and women
All age 12 to 20 are expensive
Age 12 to 20 men are expensive
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Conclusion
600
Avg. monthly expenditures
650
700
750
800
850
Trend in average monthly nonzero expenditures
0
4
8
12
Month
Total Avg. Exp.
Male linear prediction
Feale linear prediction
Evans and Humpherys, Brigham Young University
16
20
24
Male Avg. Exp.
Female Avg. Exp.
U.S. Healthcare Monthly Spending Trends
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Growth rates of exp. by age and gender
Age
category
0 to 11
12 to 20
21 to 35
36 to 45
46 to 55
56 to 65
66 and over
Male annual
Female annual
growth rate (%)
6.4%
16.7%
5.8%
15.0%
12.7%
17.4%
-11.9%
growth rate (%)
2.6%
12.0%
2.8%
7.9%
12.0%
8.6%
4.6%
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Avg. monthly expenditures
500
1000
1500
2000
Trend in avg. exp.: men and age
0
4
8
12
Month
Age 0 to 11
Age 21 to 35
Age 46 to 55
Age 66 and over
Evans and Humpherys, Brigham Young University
16
20
24
Age 11 to 20
Age 36 to 45
Age 56 yo 65
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
200
Avg. monthly expenditures
400
600
800 1000 1200
Trend in avg. exp.: women and age
0
4
8
12
Month
Age 0 to 11
Age 21 to 35
Age 46 to 55
Age 66 and over
Evans and Humpherys, Brigham Young University
16
20
24
Age 11 to 20
Age 36 to 45
Age 56 yo 65
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Distribution summary
Fat long right tail
Women spend less than men, on average (caution)
even at 90th percentile (and higher)
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
0
.001
Fraction of individuals
.002
.003
.004
Histogram of positive expenditures
0
300
600
900
Monthly expenditures
Evans and Humpherys, Brigham Young University
1200
1500
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Growth rates of exp. by age and gender
Mean
50th percentile
90th percentile
95th percentile
99th percentile
Std. Deviation
Maximum
Full
sample
Male
Female
$715
$173
$1,217
$2,389
$10,128
3,371
$425,309
$750
$174
$1,257
$2,365
$10,476
3,941
$425,309
$689
$173
$1,185
$2,409
$9,921
2,868
$353,679
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Mean and 90th percentile of expenditures
Age
group
0 to 11
12 to 20
21 to 35
36 to 45
46 to 55
56 to 65
66 and over
Male
Mean 90th pctl.
$412
$693
$635
$668
$824
$1,078
$1,235
$589
$1,011
$1,126
$1,286
$1,434
$1,689
$1,895
Evans and Humpherys, Brigham Young University
Female
Mean 90th pctl.
$361
$515
$623
$698
$826
$897
$872
$534
$870
$1,046
$1,251
$1,463
$1,500
$1,484
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Life cycle summary
Age 20 to 50: women cost more than men
Age 60 +: men cost more than women
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
0
Avg. monthly expenditure
500
1000
1500
2000
2500
Average monthly expenditures by age
0
10
20
30
40
50
Age
Total Avg. Exp.
Female Avg. Exp.
Evans and Humpherys, Brigham Young University
60
70
80
90 95
Male Avg. Exp.
U.S. Healthcare Monthly Spending Trends
Conclusion
Intro
Demographics
Zeros
Lumpiness
Trend
Distribution
Life Cycle
Summary
Zeros important
Spells within year are heterogeneous
Growth rates are large, heterogeneous
Must have fat-tailed distribution
Key differences over the life cycle
Evans and Humpherys, Brigham Young University
U.S. Healthcare Monthly Spending Trends
Conclusion