• Journal Article

Use of econometric models to estimate expenditure shares

Citation

Trogdon, J., Finkelstein, E., & Hoerger, T. (2008). Use of econometric models to estimate expenditure shares. Health Services Research, 43(4), 1442-1452. DOI: 10.1111/j.1475-6773.2007.00827.x

Abstract

OBJECTIVE: To investigate the use of regression models to calculate disease-specific shares of medical expenditures. DATA SOURCES/STUDY SETTING: Medical Expenditure Panel Survey (MEPS), 2000-2003. STUDY DESIGN: Theoretical investigation and secondary data analysis. DATA COLLECTION/EXTRACTION METHODS: Condition files used to define the presence of 10 medical conditions. PRINCIPAL FINDINGS: Incremental effects of conditions on expenditures, expressed as a fraction of total expenditures, cannot generally be interpreted as shares. When the presence of one condition increases treatment costs for another condition, summing condition-specific shares leads to double-counting of expenditures. CONCLUSIONS: Condition-specific shares generated from multiplicative models should not be summed. We provide an algorithm that allows estimates based on these models to be interpreted as shares and summed across conditions.