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on Insurance Economics |
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Issue of 2009‒09‒19
seven papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Sang Nguyen; Alice Zawacki |
| Abstract: | This paper examines the relationship between employer-sponsored offers of health insurance and establishments’ labor productivity. Our empirical work is based on unique plant level data that links the 1997 and 2002 Medical Expenditure Panel Survey-Insurance Component with the 1992, 1997, and 2002 Census of Manufactures. These linked data provide information on employer-provided insurance and productivity. We find that health insurance offers are positively associated with levels of establishments’ labor productivity. These findings hold for all manufacturers as well as those with fewer than 100 employees. Our preliminary results also show a drop in health care costs from the 75th to the 25th percentile would increase the probability of a plant offering insurance by 1.5-2.0 percent in both 1997 and 2002. The results from this paper provide encouraging and new empirical evidence on the benefits employers may reap by offering health insurance to workers. |
| Keywords: | Employer-provided health insurance, labor productivity, manufacturing industries |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-27&r=ias |
| By: | Johannes Schoder (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | This paper sheds light on some unexpected consequences of health insurance regulation that may pose a big challenge to insurers’ risk management. Because mandated uniform contributions to health insurance trigger risk selection efforts risk adjustment (RA) schemes become necessary. A good deal of research into the optimal RA formula has been performed (Ellis and Van de Ven [2000]). A recent proposal has been to add ”Hospitalization exceeding three days during the previous year” as an indicator of high risk (Beck et al. [2006]). Applying the new formula to an individual Swiss health insurer, its payments into the RA scheme are postdicted to explode, reaching up to 13 percent of premium income. Its mistake had been to successfully implement Managed Care, resulting in low rates of hospitalization. The predicted risk management response is to extend hospital stays beyond three days, contrary to stated policy objectives also of the United States. |
| Keywords: | Health insurance, regulation, risk adjustment, risk management |
| JEL: | I18 L51 H51 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0916&r=ias |
| By: | Rockerbie, Duane W.; Easton, Stephen T. |
| Abstract: | This paper discusses, in a very general way, a system of IMF insurance against sovereign default that could be offered to private lenders and banking groups. The system could overcome many of the current issues that plague the international private lending market, such as moral hazard on the part of private lenders, capital flight, and so on. How the insurance could be priced is also discussed in an appendix. Private lender membership in the IMF is also discussed. This would provide the IMF with some of the powers that central banks now have. |
| Keywords: | Sovereign debt,insurance,option value,IMF |
| JEL: | F33 F34 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200939&r=ias |
| By: | Darius Lakdawalla; Wesley Yin |
| Abstract: | A controversial feature of Medicare Part D is its reliance on private insurers to negotiate drug prices and rebates with retail pharmacies and drug manufacturers. Central to this controversy is whether increases in market power—an undesirable feature in most settings—confer benefits in health insurance markets, where larger buyers may obtain better prices for their members. We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer. Estimated enrollment effects are much larger for drugs with therapeutic substitutes, and virtually zero for branded drugs without therapeutic substitutes. We also present evidence that most insurer savings are, on the margin, passed on as lower premiums. Out-of-sample estimation suggests that modest insurer consolidation would generate significant savings to Medicare, along with premium reductions and enrollment increases. Finally, we find that greater enrollment leads to lower pharmacy prices negotiated by insurers for their non-Part D market—an external benefit to the commercially enrolled associated with administering Part D through private insurers. |
| JEL: | I1 I18 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15330&r=ias |
| By: | Patrick Eugster (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers’ incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, ”Hospitalization or living in a nursing home during the previous year” will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection. |
| Keywords: | Health insurance, regulation, risk adjustment, risk management |
| JEL: | I18 L51 H51 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0915&r=ias |
| By: | Michele Sennhauser (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | This study seeks to provide evidence for deciding whether or not a pharmaceutical innovation should be included in the benefit list of social health insurance. A discrete choice experiment (DCE) was conducted in Germany to measure preferences for modern insulin therapy. Of the 1,100 individuals interviewed in 2007, 200 suffered from type 1 diabetes, 150 from insulin-treated type 2 diabetes, and 150 from insulin-naive type 2 diabetes. The long-acting insulin analogue ”Insulin Detemir” is compared to human insulin as the status quo. The DCE contains two price attributes, copayment and increased contributions to health insurance. As one would expect, non-affected non-diabetics and insulin-naive diabetics exhibit higher willingness-to-pay (WTP) values through copayment (adjusted for probability of contracting diabetes), while affected type 1 and insulin-treated type 2 diabetics have higher WTP through increased contributions. However, WTP values exceed the extra treatment cost in both financing alternatives, justifying inclusion of the innovation in the benefit list from a cost-benefit point of view. |
| Keywords: | Health insurance, discrete-choice experiment, preferences, diabetes |
| JEL: | I11 H51 I18 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0914&r=ias |
| By: | Focht, Uwe; Richter, Andreas; Schiller, Jörg |
| Abstract: | This paper addresses the role of independent insurance intermediaries in markets where matching is important. A controversial matter in the discussion concerning insurance intermediation is the issue of compensation customs and how the latter affect prices, rents and advice quality in insurance markets. This work compares a fee-based with a commission-based system. We show that in a situation with a non-strategic intermediary both remuneration systems are payoff-equivalent. In a second step, allowing for strategic behavior, we discuss the impact of remuneration on the quality of advice. The analysis shows that the possibility of mismatching can provide the intermediary with substantial market power which however does not translate into mismatching as long as consumers have rational expectations. We offer a rationale for the use of contingent commissions. In addition, this paper addresses whether or not the recent ban of any commission payments as introduced in countries such as Denmark and Finland is an appropriate market intervention. |
| JEL: | G22 G24 L51 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:200904&r=ias |