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Dynamic Estimation of Health Expenditure: A new approach for simulating individual expenditure

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Author Info

  • Valerie Albouy

    ()
    (INSEE Institut national de la statistique et des études économiques)

  • Laurent Davezies

    ()
    (INSEE Institut national de la statistique et des études économiques)

  • Thierry Debrand

    ()
    (IRDES institut for research and information in health economics)

Abstract

This study compares estimates of outpatient expenditure computed with different models. Our aim is to predict annual health expenditures. We use a French panel dataset over a six year period (2000-2006) for 7112 individuals. Our article is based on the estimations of five different models. The first model is a simple two part model estimated in cross section. The other models (models 2 to 5) are estimated with selection models (or generalized tobit models). Model 2 is a basic sample selection model in cross section. Model 3 is similar to model 2, but takes into account the panel dimension. It includes constant unobserved heterogeneity to deal with state dependency. Model 4 is a dynamic sample selection model (with lagged adjustement), while in model 5, we take into account the possible heteroskedasticity of residuals in the dynamic model. We find that all the models have the same properties in the cross section dimension (distribution, probability of health care use by gender and age, health expenditure by gender and age) but model 5 gives better results reflecting the temporal correlation with health expenditure. Indeed, the retransformation of predicted log transformed expenditures in homoscedastic models (models 1 to 4) generates very poor temporal correlation for " heavy consumers ", although the data show the contrary. Incorporation of heteroskedasticity gives better results in terms of temporal correlation.

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File URL: http://www.irdes.fr/EspaceAnglais/Publications/WorkingPapers/DT20DynamicEstimationOfHealthExpenditure.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by IRDES institut for research and information in health economics in its series Working Papers with number DT20.

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Length: 30 pages
Date of creation: Jan 2009
Date of revision: Jan 2009
Handle: RePEc:irh:wpaper:dt20

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Keywords: Health econometrics; expenditures; panel data; selection models;

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References

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Cited by:
  1. Thierry Debrand & Christine Sorasith, 2010. "Bouclier sanitaire : choisir entre égalité et équité ? Une analyse à partir du modèle ARAMMIS," Working Papers DT32, IRDES institut for research and information in health economics, revised Jun 2010.
  2. Thierry Debrand & Christine Sorasith, 2010. "Out-of-Pocket Maximum Rules under a Compulsatory Health Care Insurance Scheme: A Choice between Equality and Equity," Working Papers DT34, IRDES institut for research and information in health economics, revised Nov 2010.

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