Medical Consumption Over the Life Cycle: Facts from a U.S. Medical Expenditure Panel Survey

39 Pages Posted: 28 Feb 2010 Last revised: 28 Jun 2010

See all articles by Juergen Jung

Juergen Jung

Towson University - Department of Economics

Chung Tran

Australian National University (ANU) - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 24, 2010

Abstract

In this paper we construct life-cycle profiles of U.S. health care spending using data from the Medical Expenditure Panel Survey (MEPS). We separate pure age effects on health expenditure from time effects (i.e. productivity effects, business cycle effects, etc.) and cohort effects (i.e. initial condition effects) by estimating a seminonparametric partial linear model. After controlling for time and cohort effects, we find that medical expenditure-age profiles follow an upward trend. Time and cohort effects introduce a significant estimation bias into predictions of health expenditures per age group. It is demonstrated that failing to adequately control for time and cohort effects results in an overprediction of the effect of age on health expenditures, especially for agents older than 60. Cohort effect biases dominate time effect biases in estimates of health expenditures that do not adequately control for both effects. Estimation biases introduced by cohort effects increase monotonically with age while time effects are non-monotone.

Keywords: life-cycle profiles, time and cohort effects, partial linear seminonparametric models, pseudo panels, medical expenditure panel survey (MEPS)

JEL Classification: I10, I11, C14, C23, D12, D91, J10

Suggested Citation

Jung, Juergen and Tran, Chung, Medical Consumption Over the Life Cycle: Facts from a U.S. Medical Expenditure Panel Survey (June 24, 2010). Available at SSRN: https://ssrn.com/abstract=1560484 or http://dx.doi.org/10.2139/ssrn.1560484

Juergen Jung

Towson University - Department of Economics ( email )

Baltimore, MD
United States
812-345-9182 (Phone)

HOME PAGE: http://https://juejung.github.io/

Chung Tran (Contact Author)

Australian National University (ANU) - School of Economics ( email )

Arndt Building 25B
Canberra, Australian Capital Territory 0200
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
186
Abstract Views
1,281
rank
128,784
PlumX Metrics