Who Are the Big Medical Care Spenders?

48 Pages Posted: 7 Jan 2015

See all articles by Matthew Harris

Matthew Harris

University of Tennessee, Knoxville - College of Business Administration

Jennifer Kohn

affiliation not provided to SSRN

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

Harris, Matthew and Kohn, Jennifer Leigh, Who Are the Big Medical Care Spenders? (January 5, 2015). Available at SSRN: https://ssrn.com/abstract=2545591 or http://dx.doi.org/10.2139/ssrn.2545591

Matthew Harris

University of Tennessee, Knoxville - College of Business Administration ( email )

TN
United States

Jennifer Leigh Kohn (Contact Author)

affiliation not provided to SSRN

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