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THE DYNAMICS OF MEDICAL CARE USE IN THE BRITISH HOUSEHOLD PANEL SURVEY
Author(s) -
Kohn Jennifer L.,
Liu Jing Shi
Publication year - 2013
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.2845
Subject(s) - unobservable , british household panel survey , health care , medical expenditure panel survey , panel survey , panel data , medical care , aggregate data , demographic economics , actuarial science , medicine , economics , public economics , family medicine , econometrics , health insurance , economic growth , pathology
We explore whether medical care use is persistent over a long panel using 18 waves of the British Household Panel Survey. Of particular interest is high medical care use because a few high users account for a disproportionate amount of use while many individuals use no medical care in a given year. If health is a primary driver of medical care demand, and we control for health, then past medical care use should be uninformative for future use. However, we find that conditional on health, other covariates and unobservable heterogeneity, medical care use remains significantly persistent. “No use” and “high use” are more strongly persistent, and persistence is generally stronger for women, those in poor health, and at older ages. We find that unobservable heterogeneity explains between 10% and 25% of the variation in medical care use. This heterogeneity is significantly correlated with both medical care use and health over our long panel. These findings have implications for the econometric modeling of medical care demand and suggest that policies aimed to reduce aggregate medical care spending by improving health, particularly the health of seniors, may be less effective than projected using static models. Copyright © 2012 John Wiley & Sons, Ltd.