Intertemporal persistence in healthcare spending and utilization: the role of insurance

This paper develops a dynamic panel model of healthcare demand, with particular emphasis on the relationship between insurance and intertemporal persistence in demand. The model combines flexible marginal distributions for single-period demand with a tight intertemporal dynamic structure. The dynamic component follows a first-order nonlinear Markov process, which is constructed using copula functions. The model considers different insurance plans, including private plans with gatekeepers, private plans without gatekeepers, and public plans. Results indicate that individuals who lack insurance exhibit higher intertemporal persistence in medical spending compared to those with insurance coverage.