IDEAS home Printed from https://ideas.repec.org/a/eee/insuma/v62y2015icp173-183.html
   My bibliography  Save this article

Phase-type aging modeling for health dependent costs

Author

Listed:
  • Govorun, Maria
  • Latouche, Guy
  • Loisel, Stéphane

Abstract

In the present paper we develop recursive algorithms to evaluate the distribution of the net present value (abbreviated as “NPV”) of a health care contract. The duration of the program is a random variable representing the lifetime of an individual. We suggest a discrete time phase-type approach to model individual health care costs. In this approach, annual health care costs depend naturally on the health state of the individual. We also derive the distribution of the NPV assuming that annual health care costs are iid random variables. We demonstrate analytically that, under special parametrization, the model with iid costs gives a similar expectation of the NPV to the one of the model with health dependent costs. We propose techniques to evaluate the impact of health related events and demonstrate it on numerical examples. Based on Canadian government data on health expenditures, we study the impact on the NPV of the health cost structure by age.

Suggested Citation

  • Govorun, Maria & Latouche, Guy & Loisel, Stéphane, 2015. "Phase-type aging modeling for health dependent costs," Insurance: Mathematics and Economics, Elsevier, vol. 62(C), pages 173-183.
  • Handle: RePEc:eee:insuma:v:62:y:2015:i:c:p:173-183
    DOI: 10.1016/j.insmatheco.2015.03.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016766871500027X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.insmatheco.2015.03.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Drummond, Michael F. & Sculpher, Mark J. & Torrance, George W. & O'Brien, Bernie J. & Stoddart, Greg L., 2005. "Methods for the Economic Evaluation of Health Care Programmes," OUP Catalogue, Oxford University Press, edition 3, number 9780198529453.
    2. Zhao, Xiaobing & Zhou, Xian, 2012. "Estimation of medical costs by copula models with dynamic change of health status," Insurance: Mathematics and Economics, Elsevier, vol. 51(2), pages 480-491.
    3. Su, Shu & Sherris, Michael, 2012. "Heterogeneity of Australian population mortality and implications for a viable life annuity market," Insurance: Mathematics and Economics, Elsevier, vol. 51(2), pages 322-332.
    4. Eisele, Karl-Theodor, 2006. "Recursions for compound phase distributions," Insurance: Mathematics and Economics, Elsevier, vol. 38(1), pages 149-156, February.
    5. Panjer, Harry H., 1981. "Recursive Evaluation of a Family of Compound Distributions," ASTIN Bulletin, Cambridge University Press, vol. 12(1), pages 22-26, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fuino, Michel & Wagner, Joël, 2018. "Long-term care models and dependence probability tables by acuity level: New empirical evidence from Switzerland," Insurance: Mathematics and Economics, Elsevier, vol. 81(C), pages 51-70.
    2. Khouzeima Moutanabbir & Hassan Abdelrahman, 2022. "Bivariate Sarmanov Phase-Type Distributions for Joint Lifetimes Modeling," Methodology and Computing in Applied Probability, Springer, vol. 24(2), pages 1093-1118, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Franck Adékambi, 2019. "Moments Of Phase-Type Aging Modeling For Health Dependent Costs," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(2), pages 37-64, June.
    2. Govorun, Maria & Latouche, Guy & Loisel, Stéphane, 2015. "Phase-type aging modeling for health dependent costs," Insurance: Mathematics and Economics, Elsevier, vol. 62(C), pages 173-183.
    3. Vasileios M. Koutras & Markos V. Koutras & Spiros D. Dafnis, 2022. "A Family of Induced Distributions," Methodology and Computing in Applied Probability, Springer, vol. 24(3), pages 1833-1848, September.
    4. Vasileios M. Koutras & Markos V. Koutras, 2020. "Exact Distribution of Random Order Statistics and Applications in Risk Management," Methodology and Computing in Applied Probability, Springer, vol. 22(4), pages 1539-1558, December.
    5. Saha, Sanjib & Gerdtham, Ulf-G. & Toresson, Håkan & Minthon, Lennart & Jarl, Johan, 2018. "Economic Evaluation of Interventions for Screening of Dementia," Working Papers 2018:20, Lund University, Department of Economics.
    6. Mark Oppe & Daniela Ortín-Sulbarán & Carlos Vila Silván & Anabel Estévez-Carrillo & Juan M. Ramos-Goñi, 2021. "Cost-effectiveness of adding Sativex® spray to spasticity care in Belgium: using bootstrapping instead of Monte Carlo simulation for probabilistic sensitivity analyses," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 711-721, July.
    7. Ties Hoomans & Johan Severens & Nicole Roer & Gepke Delwel, 2012. "Methodological Quality of Economic Evaluations of New Pharmaceuticals in the Netherlands," PharmacoEconomics, Springer, vol. 30(3), pages 219-227, March.
    8. Khan, Md. Tajuddin & Kishore, Avinash & Joshi, Pramod Kumar, 2016. "Gender dimensions on farmers’ preferences for direct-seeded rice with drum seeder in India:," IFPRI discussion papers 1550, International Food Policy Research Institute (IFPRI).
    9. Jose L Burgos & Thomas L Patterson & Joshua S Graff-Zivin & James G Kahn & M Gudelia Rangel & M Remedios Lozada & Hugo Staines & Steffanie A Strathdee, 2016. "Cost-Effectiveness of Combined Sexual and Injection Risk Reduction Interventions among Female Sex Workers Who Inject Drugs in Two Very Distinct Mexican Border Cities," PLOS ONE, Public Library of Science, vol. 11(2), pages 1-15, February.
    10. Najmiatul Fitria & Antoinette D. I. Asselt & Maarten J. Postma, 2019. "Cost-effectiveness of controlling gestational diabetes mellitus: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 407-417, April.
    11. Thomas Grochtdreis & Hans-Helmut König & Alexander Dobruschkin & Gunhild von Amsberg & Judith Dams, 2018. "Cost-effectiveness analyses and cost analyses in castration-resistant prostate cancer: A systematic review," PLOS ONE, Public Library of Science, vol. 13(12), pages 1-25, December.
    12. Venegas-Martínez, Francisco & Franco-Arbeláez, Luis Ceferino & Franco-Ceballos, Luis Eduardo & Murillo-Gómez, Juan Guillermo, 2015. "Riesgo operativo en el sector salud en Colombia: 2013," eseconomía, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(43), pages 7-36, segundo s.
    13. Kim Jeong & John Cairns, 2013. "Review of economic evidence in the prevention and early detection of colorectal cancer," Health Economics Review, Springer, vol. 3(1), pages 1-10, December.
    14. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    15. Boone, Jan, 2015. "Basic versus supplementary health insurance: Moral hazard and adverse selection," Journal of Public Economics, Elsevier, vol. 128(C), pages 50-58.
    16. Eleanor Heather & Katherine Payne & Mark Harrison & Deborah Symmons, 2014. "Including Adverse Drug Events in Economic Evaluations of Anti-Tumour Necrosis Factor-α Drugs for Adult Rheumatoid Arthritis: A Systematic Review of Economic Decision Analytic Models," PharmacoEconomics, Springer, vol. 32(2), pages 109-134, February.
    17. Manuel Gomes & Robert Aldridge & Peter Wylie & James Bell & Owen Epstein, 2013. "Cost-Effectiveness Analysis of 3-D Computerized Tomography Colonography Versus Optical Colonoscopy for Imaging Symptomatic Gastroenterology Patients," Applied Health Economics and Health Policy, Springer, vol. 11(2), pages 107-117, April.
    18. Dhaene, Jan & Vandebroek, Martina, 1995. "Recursions for the individual model," Insurance: Mathematics and Economics, Elsevier, vol. 16(1), pages 31-38, April.
    19. Annamaria Olivieri & Ermanno Pitacco, 2016. "Frailty and Risk Classification for Life Annuity Portfolios," Risks, MDPI, vol. 4(4), pages 1-23, October.
    20. Hareth Al-Janabi & Job van Exel & Werner Brouwer & Joanna Coast, 2016. "A Framework for Including Family Health Spillovers in Economic Evaluation," Medical Decision Making, , vol. 36(2), pages 176-186, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:insuma:v:62:y:2015:i:c:p:173-183. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505554 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.