Challenges and Solutions in Constructing a Microsimulation Model of the Use and Costs of Medical Services in Australia

This paper describes the development of a microsimulation model =HealthMod‘ which simulates the use and costs of medical and related services by Australian families. Australia has a universal social insurance scheme known as =Medicare‘ which provides all Australians with access to free or low-cost essential medical services. These services are provided primarily by general practitioners as well as specialist doctors but also include diagnostic and imaging services. Individuals may pay a direct out-of pocket contribution if fees charged for services are higher than the reimbursement schedule set by government. HealthMod is based on the Australian 2001 National Health Survey. This survey had a number of deficiencies in terms of modelling the national medical benefits scheme. The article outlines three major methodological steps that had to be taken in the model construction: the imputation of synthetic families, the imputation of short-term health conditions, and the annualisation of doctor visits and costs. Some preliminary results on the use of doctor services subsidised through Australia‘s Medicare are presented.