An examination of skewed health expenditure data from the Medical Expenditure Panel Survey (MEPS)

Abstract

The Medical Expenditure Panel Survey Household Component (MEPS-HC) is designed to provide nationally representative annual estimates of health care use, expenditures, sources of payment, and insurance coverage for the US civilian noninstitutionalized population. The expenditure data from MEPS have been shown to exhibit a marked positive skewness, with a few high expenditure respondents and many low or zero expenditure respondents. As a consequence of this departure from the normal distribution, the frequency with which a conventional confidence interval for a MEPS expenditure estimate will not capture the true population parameter may be higher than the probability stated for the confidence interval. Based on repeated sample simulations using data from the 1996 to 2001 MEPS-HC, this paper evaluates and compares the actual probability achieved for confidence intervals derived from expenditure data by types of expenditure and varying sample sizes. The results are also compared to estimated confidence probabilities obtained from repeated sample simulations for other types of variables that do not exhibit as marked a positive skewness as health care expenditures.