• Print
  • Email

Working Papers, No. 2002-21, 2002
On the Distribution and Dynamics of Health Care Costs
Using data from the Health and Retirement Survey and the Assets and Health Dynamics of the Oldest Old survey, this paper presents estimates of 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.
Having trouble accessing something on this page? Please send us an email and we will get back to you as quickly as we can.

Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

Copyright © 2024. All rights reserved.

Please review our Privacy Policy | Legal Notices