Health expenditure estimation and functional form: applications of the generalized gamma and extended estimating equations models
Health-care expenditure regressions are used in a wide variety of economic analyses including risk adjustment and program and treatment evaluations. Recent articles demonstrated that generalized gamma models (GGMs) and extended estimating equations (EEE) models provide flexible approaches to deal with a variety of data problems encountered in expenditure estimation. To date there have been few empirical applications of these models to expenditures. We use data from the US Medical Expenditure Panel Survey to compare the bias, predictive accuracy, and marginal effects of GGM and EEE models with other commonly used regression models in a cross-validation study design. Health-care expenditure distributions vary in the degree of heteroskedasticity, skewness, and kurtosis by type of service and population. To examine the ability of estimators to address a range of data problems, we estimate models of total health expenditures and prescription drug expenditures for two populations, the elderly and privately insured adults. Our findings illustrate the need for researchers to examine their assumptions about link functions: the appropriate link function varies across our four distributions. The EEE model, which has a flexible link function, is a robust estimator that performs as well, or better, than the other models in each distribution. Published in 2009 by John Wiley & Sons, Ltd.
Volume (Year): 19 (2010)
Issue (Month): 5 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Willard G. Manning & John Mullahy, 1999.
"Estimating Log Models: To Transform or Not to Transform?,"
NBER Technical Working Papers
0246, National Bureau of Economic Research, Inc.
- Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
- Willard G. Manning & Anirban Basu & John Mullahy, 2003.
"Generalized Modeling Approaches to Risk Adjustment of Skewed Outcomes Data,"
NBER Technical Working Papers
0293, National Bureau of Economic Research, Inc.
- Manning, Willard G. & Basu, Anirban & Mullahy, John, 2005. "Generalized modeling approaches to risk adjustment of skewed outcomes data," Journal of Health Economics, Elsevier, vol. 24(3), pages 465-488, May.
- Willard G. Manning & Anirban Basu & John Mullahy, 2003. "Generalized Modeling Approaches to Risk Adjustment of Skewed Outcomes Data," Working Papers 0313, Harris School of Public Policy Studies, University of Chicago.
- Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June.
- Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
- Manning, Willard G., 1998. "The logged dependent variable, heteroscedasticity, and the retransformation problem," Journal of Health Economics, Elsevier, vol. 17(3), pages 283-295, June.
- Blough, David K. & Madden, Carolyn W. & Hornbrook, Mark C., 1999. "Modeling risk using generalized linear models," Journal of Health Economics, Elsevier, vol. 18(2), pages 153-171, April.
- Partha Deb & James F. Burgess, Jr., 2003. "A Quasi-experimental Comparison of Econometric Models for Health Care Expenditures," Economics Working Paper Archive at Hunter College 212, Hunter College Department of Economics.
- Jean-Paul Chaze, 2005. "Assessing household health expenditure with Box-Cox censoring models," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 893-907.
- Anirban Basu & Bhakti V. Arondekar & Paul J. Rathouz, 2006. "Scale of interest versus scale of estimation: comparing alternative estimators for the incremental costs of a comorbidity," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1091-1107.
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:19:y:2010:i:5:p:608-627. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.