Health insurance claim amount prediction using statistical methods

Healthcare can be costly in the United States. In 2021, the average cost of health insurance for a family of four was $22,221 per year. The average cost of health insurance for an individual was $7,739 per year (Keiser Family Foundation). With the aim of helping the public know more about what factors contribute the most to the expensive cost of their health insurance, this study conducted the analysis to identify the top contributing factors that increase health insurance claim amounts. Various statistical and machine learning tools were used to answer the proposed question: data conversion, correlation, partial correlation, k-means clustering, principal component analysis, multiple regression, lasso regression, support vector machine, and random forest. Consistent results that BMI (Body Mass Index), blood pressure, and smoking are the three variables that contribute the most to the increase in health insurance claim amount were found.