Who Are the Big Medical Care Spenders?
48 Pages Posted: 7 Jan 2015
Date Written: January 5, 2015
Abstract
The top 5 percent of medical care consumers account for 50 percent of medical care expenditures, which is 9 percent of annual U.S. GDP. We offer new theoretical and empirical evidence that not just poor health, but the path to poor health, can better predict big spenders. Modeling the full distribution of expenses using the Health and Retirement Survey, we find that a 10 percent decline in health increases the probability of participation in the top 5 percent by 22 percent. Focusing on health dynamics gives policy makers new avenues to address high medical care costs.
Keywords: Demand for Medical Care, Health Dynamics, Conditional Density Estimation, Reference Dependence
JEL Classification: C33, I12
Suggested Citation: Suggested Citation