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Specification and Simulated Likelihood Estimation of a Non-normal Outcome Model with Selection: Application to Health Care Utilization

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Abstract

We develop a model specification and estimation framework that is applicable to many microeconometric models which fall into a treatment-outcome framework. We apply our methodology to examine the causal effect of man-aged care on the utilization of health care services. Specifically, we jointly model multinomial choice of insurance plans (treatment) and counts and binary choices of utilization (outcome) using a latent factor structure, enabling a distinction between selection on unobservables and observables. We apply maximum simulated likelihood techniques to estimate the parameters of our model and find that there are significant unobserved self-selection effects and that these effects substantially change the effects of insurance on utilization.

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Bibliographic Info

Paper provided by Hunter College Department of Economics in its series Economics Working Paper Archive at Hunter College with number 02/5.

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Length: 35 pages
Date of creation: 2002
Date of revision: 2004
Handle: RePEc:htr:hcecon:02/5

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  7. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
  8. Dowd, Bryan, et al, 1991. "Health Plan Choice and the Utilization of Health Care Services," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 85-93, February.
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  13. Glied, Sherry, 2000. "Managed care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 13, pages 707-753 Elsevier.
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  15. Ettner, Susan L., 1997. "Adverse selection and the purchase of Medigap insurance by the elderly," Journal of Health Economics, Elsevier, vol. 16(5), pages 543-562, October.
  16. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, April.
  17. van Ophem, Hans, 2000. "Modeling Selectivity in Count-Data Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(4), pages 503-11, October.
  18. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
  19. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March.
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  21. Michelle M. Mello & Sally C. Stearns & Edward C. Norton, 2002. "Do Medicare HMOs still reduce health services use after controlling for selection bias?," Health Economics, John Wiley & Sons, Ltd., vol. 11(4), pages 323-340.
  22. Goldman, Dana P. & Hosek, Susan D. & Dixon, Lloyd S. & Sloss, Elizabeth M., 1995. "The effects of benefit design and managed care on health care costs," Journal of Health Economics, Elsevier, vol. 14(4), pages 401-418, October.
  23. Keane, Michael P, 1992. "A Note on Identification in the Multinomial Probit Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(2), pages 193-200, April.
  24. Edward Vytlacil & James J. Heckman, 2001. "Policy-Relevant Treatment Effects," American Economic Review, American Economic Association, vol. 91(2), pages 107-111, May.
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Cited by:
  1. Andrés Ramírez Hassan & Johnatan Cardona Jimenez & Ramiro Cadavid Montoya, 2011. "The impact of subsidized health insurance on the poor in Colombia: Evaluating the case of Medellin," DOCUMENTOS DE TRABAJO CIEF 010602, UNIVERSIDAD EAFIT.

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