US Medical Expense Analysis Through Frequency and Severity Bootstrapping and Regression Model

Abstract

For the purpose of control health expenditures, there are some papers investigating the characteristics of patients who may incur high expenditures. However fewer papers are found which are based on the overall medical conditions, so this chapter was to find a relationship among the prevalence of medical conditions, utilization of healthcare services, and average expenses per person. The authors used bootstrapping simulation for data preprocessing and then used linear regression and random forest methods to train several models. The metrics root mean square error (RMSE), mean absolute percent error (MAPE), mean absolute error (MAE) all showed that the selected linear regression model performs slightly better than the selected random forest regression model, and the linear model used medical conditions, type of services, and their interaction terms as predictors.