Hospital inpatients costs dynamics at older ages: A frequency-severity approach

Hervé Avalosse, Michel Denuit () and Nathalie Lucas
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Michel Denuit: Université catholique de Louvain, LIDAM/ISBA, Belgium
Nathalie Lucas: Université catholique de Louvain, LIDAM/ISBA, Belgium

No 2020027, LIDAM Discussion Papers ISBA from Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA)

Abstract: This paper studies the dynamics in end-of-life inpatients hospital expenses. A new model is proposed for hospital care expenditures based on a frequency-severity decomposition including age, calendar time, longevity dynamics, and time-to-death. These features are treated as continuous explanatory variables in nonlinear regression models with Poisson, Gamma and Tweedie error structures. Proximity to death is controlled for, as well as longevity improvements by including projected life tables into the proposed model. This allows the analyst to isolate the different effects impacting late-life hospital costs. A detailed case study performed on Belgian data illustrates the modeling strategy proposed in this paper. A comparison with the alternative model targeting total costs, not distinguishing between frequency and severity components, demonstrates the superior explanatory power of the proposed approach, revealing that total costs are mainly driven by their frequency component for the data under consideration.

Keywords: health insurance; projected life tables; time-to-death model; Generalized Additive Model (GAM) (search for similar items in EconPapers)
Pages: 24
Date: 2020-01-01
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:aiz:louvad:2020027

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