ISSUES IN THE STATISTICAL ANALYSIS OF COST DATA Econometric Modeling of Health Care Costs and Expenditures A Survey of Analytical Issues and Related Policy Considerations

Background: Econometric modeling of healthcare costs and expen-ditures has become an important component of decision-making across a wide array of real-world settings. Objectives: The objective of this article is to provide a brief summary of important conceptual and analytical issues involved in econometric healthcare cost modeling. To this end, the article explores: outcome measures typically analyzed in such work; the decision maker’s perspective in econometric cost modeling exer-cises; specific analytical issues in econometric model specification; statistical goodness-of-fit testing; empirical implications of “upper tail ” (or “high cost”) phenomena; and issues relating to the reporting of findings. Data: Some of the concepts explored here are illustrated in light of samples drawn from the 2005 Medical Expenditure Panel Surve