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The Risk and Duration of Catastrophic Health Care Expenditures

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  • Feenberg, Daniel
  • Skinner, Jonathan

Abstract

The authors measure the time-series property of catastrophic medical costs facing the elderly using information on medical deductions from a panel of tax returns. During the period of analysis, 1968-73, taxpayers could deduct medical expenses above 3 percent of income. They correct for the resulting censoring bias using multivariate tobit estimated with a variant of the smoothed simulated maximum likelihood method. The estimated coefficients imply a $1.00 increase in out-of-pocket medical spending is associated with $2.65 in future out-of-pocket spending. Copyright 1994 by MIT Press.

Suggested Citation

  • Feenberg, Daniel & Skinner, Jonathan, 1994. "The Risk and Duration of Catastrophic Health Care Expenditures," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 633-647, November.
  • Handle: RePEc:tpr:restat:v:76:y:1994:i:4:p:633-47
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    1. Venti, Steven F. & Wise, David A., 1991. "Aging and the income value of housing wealth," Journal of Public Economics, Elsevier, vol. 44(3), pages 371-397, April.
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