Assessing Racial Disparities in Healthcare Expenditures Using Causal Path-Specific Effects

Abstract: Racial disparities in healthcare expenditures are well-documented, yet the underlying drivers remain complex and require further investigation. This study employs causal and counterfactual path-specific effects to quantify how various factors, including socioeconomic status, insurance access, health behaviors, and health status, mediate these disparities. Using data from the Medical Expenditures Panel Survey, we estimate how expenditures would differ under counterfactual scenarios in which the values of specific mediators were aligned across racial groups along selected causal pathways. A key challenge in this analysis is ensuring robustness against model misspecification while addressing the zero-inflation and right-skewness of healthcare expenditures. For reliable inference, we derive asymptotically linear estimators by integrating influence function-based techniques with flexible machine learning methods, including super learners and a two-part model tailored to the zero-inflated, right-skewed nature of healthcare expenditures.