Budgetary Consequences of High Medical Spending across Age and Social Status: Evidence from the Consumer Expenditure Surveys

Background and Objectives: This study examines high medical spending among younger, midlife, and older households. Research Design and Methods: We investigate high medical spending using data from the 2010 through March 2018 Consumer Expenditures Surveys (n = 92,951). We classify and describe high medical spenders relative to others within three age groups (household heads age 25-44, 45-64, and 65+) using finite mixture models and multinomial logistic regression, respectively. We then use hierarchical linear models to estimate the effects of high medical spending on nonmedical spending. Results: Among younger households, high medical spending is positively associated with higher education and increased spending on housing and food. Among older households, high medical spending is associated with lower education and decreased nonmedical spending. Discussion and Implications: Earlier in the life course, high medical spending is more likely to indicate an investment in future household well-being, while at older ages, high medical spending is likely to indicate medical consumption.