Cost-offsets of prescription drug expenditures: data analysis via a Copula-based Bivariate Dynamic Hurdle Model

Deb, Partha, Trivedi, Pravin K. and Zimmer, David M. (2013) Cost-offsets of prescription drug expenditures: data analysis via a Copula-based Bivariate Dynamic Hurdle Model. Health Economics, 23 10: 1242-1259. doi:10.1002/hec.2982

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Author Deb, Partha
Trivedi, Pravin K.
Zimmer, David M.
Title Cost-offsets of prescription drug expenditures: data analysis via a Copula-based Bivariate Dynamic Hurdle Model
Journal name Health Economics   Check publisher's open access policy
ISSN 1057-9230
1099-1050
Publication date 2013-08-18
Year available 2013
Sub-type Article (original research)
DOI 10.1002/hec.2982
Open Access Status Not Open Access
Volume 23
Issue 10
Start page 1242
End page 1259
Total pages 18
Place of publication West Sussex, United Kingdom
Publisher John Wiley & Sons
Language eng
Abstract In this paper, we estimate a copula-based bivariate dynamic hurdle model of prescription drug and nondrug expenditures to test the cost-offset hypothesis, which posits that increased expenditures on prescription drugs are offset by reductions in other nondrug expenditures. We apply the proposed methodology to data from the Medical Expenditure Panel Survey, which have the following features: (i) the observed bivariate outcomes are a mixture of zeros and continuously measured positives; (ii) both the zero and positive outcomes show state dependence and inter-temporal interdependence; and (iii) the zeros and the positives display contemporaneous association. The point mass at zero is accommodated using a hurdle or a two-part approach. The copula-based approach to generating joint distributions is appealing because the contemporaneous association involves asymmetric dependence. The paper studies samples categorized by four health conditions: arthritis, diabetes, heart disease, and mental illness. There is evidence of greater than dollar-for-dollar cost-offsets of expenditures on prescribed drugs for relatively low levels of spending on drugs and less than dollar-for-dollar cost-offsets at higher levels of drug expenditures.
Keyword Clayton copula
Hurdle model
Two-part model
Dynamic dependence
Medical Expenditure Panel Survey
Cost-offset
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Published online ahead of print 18 August 2013.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
School of Economics Publications
 
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Created: Wed, 08 Jan 2014, 20:45:19 EST by Alys Hohnen on behalf of School of Economics