A flexible model for correlated medical costs, with application to medical expenditure panel survey data

We propose a flexible model for correlated medical cost data with several appealing features. First, the mean function is partially linear. Second, the distributional form for the response is not specified. Third, the covariance structure of correlated medical costs has a semiparametric form. We use extended generalized estimating equations to simultaneously estimate all parameters of interest. B-splines are used to estimate unknown functions, and a modification to Akaike information criterion is proposed for selecting knots in spline bases. We apply the model to correlated medical costs in the Medical Expenditure Panel Survey dataset. Simulation studies are conducted to assess the performance of our method.