On the Distribution and Dynamics of Health Costs

TitleOn the Distribution and Dynamics of Health Costs
Publication TypeJournal Article
Year of Publication2004
AuthorsFrench, E, Jones, JBailey
JournalJournal of Applied Econometrics
Call Numberpubs_2004_French-Jones_JAE.pdf
KeywordsHealth Conditions and Status, Healthcare

Using data from the Health and Retirement Survey and the Assets and Health Dynamics of the Oldest Old survey, we estimate the stochastic process that determines both the distribution and dynamics of health care costs. We find that the data-generating process for log health costs is well represented as the sum of a white noise process and a highly persistent AR(1) process. We also find that the innovations to this process can be modelled with a normal distribution that has been adjusted to capture the risk of catastrophic health care costs. Simulating this model, we find that in any given year 0.1 of households receive a health cost shock with a present value of at least 125,000. Copyright 2004 John Wiley and Sons, Ltd.


US Social Security Administration (SSA) // Center for Retirement Research at Boston College

Endnote Keywords

Health Shocks/Health Care Costs

Endnote ID


Citation Key6909