Estimating Healthcare Demand for an Aging Population: A Flexible and Robust Bayesian Joint Model
Center for Public Policy, IIM Bangalore; Indian Institute of Management (IIMB), Bangalore
Indian Institute of Management (IIMB), Bangalore
affiliation not provided to SSRN
December 30, 2011
IIM Bangalore Research Paper No. 357
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.
Number of Pages in PDF File: 33
Keywords: Bayesian Methods, Joint Model, Healthcare Demand, Aging, Splines
JEL Classification: C11, C14, I10working papers series
Date posted: July 27, 2012
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