In the U.S., the answer is largely the government. An NBER paper by Mariacristina De Nardi, Eric French, John Bailey Jones, and Jeremy McCauley provide some helpful statistics using data from 1996 to 2010 waves of the Medicare Current Beneficiary Survey (MCBS).
The government pays for two-thirds of health care spending by the elderly, with Medicare accounting for 55 percent, Medicaid for 10 percent, and other government programs for 3 percent…Nearly 20 percent of the medical spending of the elderly is financed out-of-pocket, while 13 percent is covered by private insurance.
However, wealthier individuals have a higher share of their cost covered by private insurance and out-of-pocket sources:
By income, those in the bottom income quintile spend about $5,000 more per year than those in the top quintile. Again, nursing home expenditures are key — excluding these, those in the bottom quintile spend only $1,000 more per year. The financing of health care varies also dramatically by income. In the bottom quintile, Medicare pays $9,500 a year and Medicaid $3,900, while private insurance covers just $900 and out-of-pocket spending is $2,500. In the top quintile, Medicare pays $6,300 and Medicaid only $300, while private insurance pays $2,400 and out-of-pocket spending is $3,000.
You would not be surprised to learn that the highest cost patients make up a disproportionate share of overall costs:
Medical spending by the elderly is highly concentrated. Individuals in the top 5 percent of the distribution of total expenditures spend about $98,000 per year, nearly seven times the overall average of $14,000 and accounting for 35 percent of all medical spending. Out-of-pocket expenditures are even more skewed, with almost half of expenditures made by the top 5 percent of spenders. As the authors note, “even with public and private insurance, out-of-pocket medical expenditure risk is significant.”
Further, high (and low) health care spending is relatively persistent over time.
Those in the top quintile of spending in one year, for example, have a 54 percent chance of being in the top quintile in the next year and a 48 percent chance of being in the top quintile in two years. The chances that an individual in the lowest quintile of spending will remain a low spender one or two years later are 62 and 58 percent, respectively.