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Estimating Healthcare Demand for an Aging Population: A flexible and robust Bayesian Joint Model

Prof. Arnab Mukherji, Satrajit Roychowdhury & Pulak Ghosh
2011
Working Paper No
357
Body

We propose a joint model to combine models for hospital visits and out-of-pocket medical expenditures. It allows for the presence of non-linear effects of covariates using splines to capture the effects of aging on healthcare demand. Sample heterogeneity is modeled robustly with the random effects following Dirichlet process priors with explicit cross-part correlation. We validate our model using a simulation study. We apply this model to Health and Retirement Survey data and show that healthcare varies with age and gender and exhibits significant cross-part correlation that provides a richer understanding of how aging affects healthcare demand.     

Key words
Bayesian Methods, Joint Model, Healthcare Demand, Aging, Splines JEL Code: C11, C14, I10
WP_No._357.pdf (183.19 KB)

Estimating Healthcare Demand for an Aging Population: A flexible and robust Bayesian Joint Model

Author(s) Name: Prof. Arnab Mukherji, Satrajit Roychowdhury & Pulak Ghosh, 2011
Working Paper No : 357
Abstract:

We propose a joint model to combine models for hospital visits and out-of-pocket medical expenditures. It allows for the presence of non-linear effects of covariates using splines to capture the effects of aging on healthcare demand. Sample heterogeneity is modeled robustly with the random effects following Dirichlet process priors with explicit cross-part correlation. We validate our model using a simulation study. We apply this model to Health and Retirement Survey data and show that healthcare varies with age and gender and exhibits significant cross-part correlation that provides a richer understanding of how aging affects healthcare demand.     

Keywords: Bayesian Methods, Joint Model, Healthcare Demand, Aging, Splines JEL Code: C11, C14, I10
WP_No._357.pdf (183.19 KB)