Stationarity Tests on Medical Net Discount Rates
AbstractMedical net discount rates (MNDRs) are formulated for the post-1980 era using the various available Treasury instruments of between 3-month and 10-year duration. Net discount rate series for the medical care CPI and each of its two main subcategories (medical care commodities and medical care services) are constructed and their time series properties are examined. Stronger stationarity evidence exists for subsets of the data compared to the entire sample frame. Using a diagnostic technique to identify potentially stationary subsets, MNDRs for overall medical care costs and medical care services are found to possess strong stationary properties for series beginning in middle or late 2000 depending on the particular series. For MNDRs using medical care commodities, there are strong stationary properties for data sets beginning in late 2008. Total offset, which posits offsetting influences of the medical cost growth and discounting factors in MNDRs, is tested and yields mixed results.
JEL Code: K13 Forensic Economics.