Estimating Healthcare Demand for an Aging Population: A Flexible and Robust Bayesian Joint Model

33 Pages Posted: 27 Jul 2012

See all articles by Arnab Mukherji

Arnab Mukherji

Center for Public Policy, IIM Bangalore

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore

Satrajit Roychowdhury

affiliation not provided to SSRN

Date Written: December 30, 2011

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 Classification: C11, C14, I10

Suggested Citation

Mukherji, Arnab and Ghosh, Pulak and Roychowdhury, Satrajit, Estimating Healthcare Demand for an Aging Population: A Flexible and Robust Bayesian Joint Model (December 30, 2011). IIM Bangalore Research Paper No. 357. Available at SSRN: https://ssrn.com/abstract=2117681 or http://dx.doi.org/10.2139/ssrn.2117681

Arnab Mukherji (Contact Author)

Center for Public Policy, IIM Bangalore ( email )

Bannerghata Road
Bangalore, Karnataka 560076
India

HOME PAGE: http://www342.pair.com/mukherji/arnab

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Satrajit Roychowdhury

affiliation not provided to SSRN

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