What Drives the Cost of Healthcare for the Working-Age Population?

U.S. employers directly foot the bill for 20% of the 3.2 trillion dollars that our country spends each year on healthcare, and 85% of this money goes straight to their own employees’ costs, via workers’ compensation and insurance premium payments.1 This expenditure has been growing 5% annually for the past 20 years, and it has now become a significant pain point in many organizational budgets.

While there isn’t much to be done about some of the care costs that businesses face, such as the Medicare payroll tax, employers still have an important incentive to understand where their money is going. It’s no secret that American healthcare often delivers large bills that are only sometimes attended by similarly outsized quality and outcome results, and this mismatch is undeniably waste. Businesses that choose to tackle this issue head-on are in a great position to help their employees get the best care available while lowering costs for everybody involved, and this approach starts with understanding the true healthcare expenses of the working-age population.

What is the working-age population?

The Bureau of Labor Statistics reports a total employed population in the U.S. of about 153 million people, only 6% of whom are 65 years or older.2 This is a convenient division point for analysis because Medicare benefits for most people start at age 65, with only 16% of Medicare beneficiaries being younger than this, so the bulk of the working-age population ends up distinct from the Medicare population.3

Employers fund 20% of the $3.2 trillion that the U.S. spends on healthcare each year, and 85% of this goes directly to their own employees’ costs.

This group of working-age Americans, by virtue of their younger demographic distribution, will also be primarily responsible for the healthcare needs of their children, so any analysis of working-age care costs must consider pediatric expenses. This is especially true because children are likely to be covered as dependents on the company-sponsored private insurance plans that employees often have.

While the working-age population mostly does not include people older than 64, it is important to note that many businesses still end up paying directly for part of this demographic’s care, via employer-sponsored retiree coverage. Approximately one-third of Medicare beneficiaries have at least some supplemental coverage through such programs, but this is a fading trend: only one-fourth of large employers now offer this type of benefit, down from the two-thirds that did so in 1988.3 This coverage situation muddies the relationship between total employer healthcare expenditure and the care costs of specifically the working-age population, but the association is still strong, even if it’s not perfectly one-to-one.

What drives healthcare cost for the working-age population?

Data on Medicare spending and cost drivers are oft-studied and widely distributed, but corresponding figures for the younger population are harder to come by. This is mostly due to the fragmented nature of the healthcare system outside of Medicare, which, whether by intention or not, acts to keep relevant information siloed and privately owned. Fortuitously, a recent JAMA study undertook the large task of finding and aggregating this information, compiling data from 183 separate sources to develop estimates of the total cost of care in the United States for 155 different medical conditions, broken out by age and gender.4

The study authors helpfully provided tables with enough information to determine condition cost by age group, and one of their groups included everybody 65 years or older, so we can subtract this cohort out and determine costs for the younger-than-65 population that we’re interested in.

As a baseline for comparison, let’s look first at the conditions that drive cost for the population of Americans aged 65 and older. This will be a familiar list because it mirrors data from Medicare and because this group gets outsized attention for making up 38% of total “personal health care” costs (nearly 800 billion dollars of the full 2.1 billion identified in the study), despite comprising only 15% of the overall population.5 Out of the 155 tracked conditions, the top 30 account for 83% of the group’s total spending:

Rank Condition Cost ($ Billions) % of Total Group Cost
1. Ischemic heart disease $54 7%
2. Treatment of hypertension $45 6%
3. Diabetes mellitus $43 5%
4. Falls $37 5%
5. Alzheimer disease and other dementias $36 4%
6. COPD (chronic bronchitis, emphysema) $35 4%
7. Sense organ diseases $32 4%
8. Cerebrovascular disease $31 4%
9. Osteoarthritis $29 4%
10. Urinary diseases and male infertility $28 4%
11. Treatment of hyperlipidemia $25 3%
12. Low back and neck pain $25 3%
13. Septicemia $22 3%
14. Heart failure $22 3%
15. Lower respiratory tract infections $21 3%
16. Atrial fibrillation and flutter $19 2%
17. Other musculoskeletal disorders $18 2%
18. Other neurological disorders $17 2%
19. Skin and subcutaneous diseases $17 2%
20. Other cardiovascular and circulatory diseases $16 2%
21. Other digestive diseases $14 2%
22. Oral disorders $14 2%
23. Colon and rectum cancers $10 1%
24. Depressive disorders $9 1%
25. Acute renal failure $8 1%
26. Trachea, bronchus, and lung cancers $7 1%
27. Chronic kidney diseases $7 1%
28. Endocrine, metabolic, blood, and immune disorders $7 1%
29. Asthma $6 1%
30. Well dental (general examination and cleaning, x-rays, orthodontia) $6 1%
Table 1: Top 30 Conditions by Cost for Ages 65+

Ischemic heart disease, high blood pressure, COPD, stroke, osteoarthritis: the above list is full of unsurprising entities that we hear about regularly when medical spending is discussed.

Now for the fun part; let’s take a look at the data specifically for the under-age-65 cohort and compare it to the list above. In this chart, there’s now a “rank change” heat index, which shows how many positions a condition moved up (green) or down (red) compared to its ranking for people aged 65 or older:

Rank Condition Rank Change Cost ($ Billions) % of Total Group Cost
1. Low back and neck pain +11 $62 5%
2. Depressive disorders +22 $62 5%
3. Diabetes mellitus 0 $58 4%
4. Pregnancy and postpartum care +128 $56 4%
5. Oral disorders +17 $53 4%
6. Well dental (general examination and cleaning, x-rays, orthodontia) +24 $42 3%
7. Falls -3 $40 3%
8. Treatment of hypertension -6 $39 3%
9. Skin and subcutaneous diseases +10 $39 3%
10. Ischemic heart disease -9 $34 3%
11. Other chronic respiratory diseases +28 $30 2%
12. Exposure to mechanical forces +41 $28 2%
13. Well newborn +120 $28 2%
14. Anxiety disorders +36 $27 2%
15. Sense organ diseases -8 $27 2%
16. Other neurological disorders +2 $27 2%
17. Urinary diseases and male infertility -7 $27 2%
18. Other musculoskeletal disorders -1 $27 2%
19. Treatment of hyperlipidemia -8 $27 2%
20. Asthma +9 $26 2%
21. Other digestive diseases 0 $25 2%
22. Attention-deficit/hyperactivity disorder +94 $23 2%
23. Other unintentional injuries (overexertion, other accidents) +23 $23 2%
24. Osteoarthritis -15 $19 1%
25. COPD (chronic bronchitis, emphysema) -19 $19 1%
26. Gynecological diseases +31 $18 1%
27. Road injuries (auto, cycle, motorcycle, and pedestrian) +20 $17 1%
28. Lower respiratory tract infections -13 $16 1%
29. Well person +34 $14 1%
30. Upper respiratory tract infections +47 $14 1%
Table 2: Top 30 Conditions by Cost for Ages <65
Note: “Rank change” is as compared to the condition cost listing for ages 65+ (Table 1 above)

These 30 conditions in Table 2 make up 73% of the total care cost for Americans younger than 65, and there are some notable ranking changes, compared to the top-30 list for the older demographic. In fact, many of the changes were so dramatic that the two lists have only 19 total conditions in common.

Key insights for healthcare cost drivers in the working-age population

Relative to the more commonly assessed demographic of Americans aged 65 or older, there are some key differences in the primary healthcare cost drivers for the working-age population. Notable results from Table 2 above:

1) Pregnancy and pediatric issues are prominent

  • Pregnancy and postpartum care jump from basically nonexistent to 4% of total healthcare spend for the working-age group.
  • Well-newborn and well-child checks also make the list.
  • Common diseases of childhood gain prominence in the rankings: colds, ADHD, dental issues, asthma.

2) Mental health issues are very important and costly

  • Depression alone jumps 22 spots up the list and gains 4 absolute percentage points of overall spend.
  • Anxiety disorders and ADHD now make the top 30.

3) Minor, “urgent care” conditions add up

  • “Low back and neck pain” is, overall, the most costly condition for the cohort younger than 65, despite not even being in the top 10 for people 65 or older.
  • Rashes and other skin issues, dental problems, colds, and injuries also make notable appearances.

4) Serious chronic disease is somewhat less of a burden but still notable

  • Ischemic heart disease (heart attacks and the like) drops from #1 in cost to #10, when looking only at people younger than 65.
  • Similar drops are also present for the total costs of high blood pressure, high cholesterol, osteoarthritis, and COPD in the young. Many conditions fell out of the top 30 entirely, including heart failure and atrial fibrillation.
  • Diabetes is still present at #3 on the list, highlighting the importance of this condition across basically all age groups. For the population at large, it is the #1 cost driver.

5) Accidents and injuries rank highly

  • Roadway injuries and injuries from other “mechanical forces” both now make the top 30.
  • Falls are still an issue for those younger than 65, even if they are less of a problem than in those 65 or older.

Taking care of the working-age population

We clearly have a problem in America with the cost of our healthcare and the results that we get from it. It’s generally accepted that addressing this issue will require approaches that improve quality while reducing expense, but it’s perhaps less obvious that such approaches will have to be tailored heavily by age. Strategies that work for the Medicare population are unlikely to be successful if applied blindly to the working-age population and their children, and this can be predicted easily from the tables above and the quite dissimilar costs of care that they demonstrate between these two major groups.

Employers in America are already spending a significant amount of money on healthcare, and much of it is going toward the care of the working-age population and their minor dependents. As long as this remains the case, our society will benefit greatly from these organizations finding approaches to healthcare that deliver high-quality, efficient results for this cohort, and recognizing the impact of age on medical need is a critical starting point for this.


  1. Wilson, K. B. Health Care Costs 101: Spending Rose with More Coverage and Care, 2017. (California Health Care Foundation (CHCF), 2017).
  2. Bureau of Census. Labor Force Statistics from the Current Population Survey (CPS): Table 18b. Employed persons by detailed industry and age. (U.S. Department of Labor, Bureau of Labor Statistics, 2018).
  3. Cubanski, J. et al. A Primer on Medicare: Key Facts About the Medicare Program and the People it Covers. (Kaiser Family Foundation, 2015).
  4. Dieleman, J. L. et al. US Spending on Personal Health Care and Public Health, 1996-2013. JAMA 316, 2627–2646 (2016).
  5. U.S. Census Bureau QuickFacts: UNITED STATES. Census Bureau QuickFacts Available at: https://www.census.gov/quickfacts/fact/table/US/PST045216. (Accessed: 15th June 2018)