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on Insurance Economics |
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Issue of 2013‒06‒04
23 papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Dimopoulos, A. (Tilburg University, Tilburg Law and Economics Center) |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2012028&r=ias |
| By: | Bulent Guler; Temel Taskin |
| Abstract: | In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data of the U.S. The empirical results suggest that moving to a two times more generous state would decrease time spent on home production about 22% for the unemployed. Then, we pursue a quantitative assessment of this empirical finding using a dynamic competitive equilibrium model in which households do home production as well as market production. The model is able to generate the empirical facts regarding the unemployment benefits and home production. The fact that unemployment insurance benefits crowd out home production is interpreted as a substitution between the two insurance mechanisms against loss of earnings during unemployment spells. |
| Keywords: | Unemployment insurance, home production, public insurance, self insurance, heterogeneous-agents models |
| JEL: | D13 E21 J65 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1323&r=ias |
| By: | Rong Hai (Department of Economics, University of Pennsylvania) |
| Abstract: | I develop and structurally estimate a non-stationary overlapping generations equilibrium model of employment and workers' health insurance and wage compensation, to investigate the determinants of rising inequality in health insurance and wages in the U.S. over the last 30 years. I find that skill-biased technological change and the rising cost of medical care services are the two most important determinants, while the impact of Medicaid eligibility expansion is quantitatively small. I conduct counterfactual policy experiments to analyze key features of the 2010 Patient Protection and Affordable Care Act, including employer mandates and further Medicaid eligibility expansion. I find that (i) an employer mandate reduces both wage and health insurance coverage inequality, but also lowers the employment rate of less educated individuals; and (ii) further Medicaid eligibility expansion increases employment rate of less educated individuals, reduces health insurance coverage disparity, but also causes larger wage inequality. |
| Keywords: | Labor Market, Health Insurance, Health Care Policies, Inequality |
| JEL: | J2 J3 I1 I24 |
| Date: | 2013–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:13-019&r=ias |
| By: | Cole, Harold L.; Kim, Soojin; Krueger, Dirk |
| Abstract: | This paper constructs a dynamic model of health insurance to evaluate the short- and long run effects of policies that prevent firms from conditioning wages on health conditions of their workers, and that prevent health insurance companies from charging individuals with adverse health conditions higher insurance premia. Our study is motivated by recent US legislation that has tightened regulations on wage discrimination against workers with poorer health status (Americans with Disability Act of 2009, ADA, and ADA Amendments Act of 2008, ADAAA) and that will prohibit health insurance companies from charging different premiums for workers of different health status starting in 2014 (Patient Protection and Affordable Care Act, PPACA). In the model, a trade-off arises between the static gains from better insurance against poor health induced by these policies and their adverse dynamic incentive effects on household efforts to lead a healthy life. Using household panel data from the PSID we estimate and calibrate the model and then use it to evaluate the static and dynamic consequences of no-wage discrimination and no-prior conditions laws for the evolution of the cross-sectional health and consumption distribution of a cohort of households, as well as ex-ante lifetime utility of a typical member of this cohort. In our quantitative analysis we find that although a combination of both policies is effective in providing full consumption insurance period by period, it is suboptimal to introduce both policies jointly since such policy innovation induces a more rapid deterioration of the cohort health distribution over time. This is due to the fact that combination of both laws severely undermines the incentives to lead healthier lives. The resulting negative effects on health outcomes in society more than offset the static gains from better consumption insurance so that expected discounted lifetime utility is lower under both policies, relative to only implementing wage nondiscrimination legislation. -- |
| Keywords: | Health,Insurance,Incentive |
| JEL: | E61 H31 I18 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:201218&r=ias |
| By: | Dismukes, Robert; Coble, Keith H.; Miller, Corey; O'Donoghue, Erik |
| Abstract: | Producers’ increased reliance on crop insurance has led to concerns about losses producers could incur that are not covered by crop insurance. In the current farm bill debate, several proposals that would be based on area (county) revenue and are intended to cover a portion of producers’ crop insurance deductibles, referred to as “shallow loss” programs, have been advanced. We analyze, using an empirically-based simulation model and a certainty equivalent criterion, how shallow loss coverages might affect optimal coverage levels of farm-level revenue insurance for a moderately risk-averse producer. Our analysis suggests that area-based revenue insurance designs have some potential for causing producers to reduce coverage levels for farm-level revenue insurance, though the marginal differences in the certainty equivalents are often relatively small on a percentage basis. |
| Keywords: | Agricultural Finance, Farm Management, |
| Date: | 2013–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149545&r=ias |
| By: | Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy); Laun, Tobias (Department of Economics, Uppsala University) |
| Abstract: | We propose a strategy for assessing how the inflow to the disability insurance program has been governed over time. We analyze the ex-ante health of individuals entering the program, compared to individuals not entering the program in the same year, by using ex-post mortality. Applying the strategy to Sweden, we find large variation in the relative health of new beneficiaries compared to non-beneficiaries over time. Some of the fluctuations correspond well to formal changes to screening stringency. However, we also find large variation in health during periods when no changes to formal eligibility criteria have been pursued. |
| Keywords: | Disability insurance; screening stringency; proportional hazard model |
| JEL: | C41 I18 J14 |
| Date: | 2013–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_010&r=ias |
| By: | DE DONDER, Philippe (Toulouse School of Economics (GREMAQ-CNRS and IDEI), France); LEROUX, Marie-Louise (UQAM, Canada; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium) |
| Abstract: | We develop a model where individuals all have the same probability of becoming dependent and vote over the social long term care insurance contribution rate before buying additional private insurance and saving. We study three types of behavioral biases, all having in common that agents under-weight their dependency probability when taking private decisions. Sophisticated procrastinators anticipate their mistake when voting, while optimistic and myopic agents have preferences that are consistent across choices. Optimists under-estimate their own probability of becoming dependent but know the average probability while myopics underestimate both. Sophisticated procrastinators attain the first-best allocation while myopics and optimists insure too little and save too much. Myopics and optimists more (resp., less) biased than the median are worse off (resp., better off), at the majority voting equilibrium, when private insurance is available than when it is not. |
| Keywords: | majority voting, myopia, optimism, sophisticated procrastinators, complementary private insurance, dependency linked annuity |
| JEL: | H55 D91 |
| Date: | 2013–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2013020&r=ias |
| By: | Sagiri Kitao (Hunter College; Hunter College) |
| Abstract: | The paper builds a life-cycle model of heterogeneous agents with search frictions, in which individuals choose a sequence of saving and labor supply faced with uncertainty in longevity, employment, health status and medical expenditures. Unemployed individuals decide search intensity and whether to apply for disability insurance (DI) benefits if eligible. We investigate, first, the effects of cash and Medicare benefits of the DI system on the life-cycle pattern of employment. Without in-kind benefits through Medicare, the DI coverage could fall by 30%. Second, the impact of a change in labor market conditions and roles of the DI are studied. A rise in exogenous job separation rates or a fall in job finding rates by 20% each can lead to a drop in employment rate by 1.7 and 2.1 percentage points, respectively. A model without the DI could underestimate the effect on employment by more than 30%. |
| Keywords: | Disability insurance, labor force participation, life-cycle, Medicare, unemployment insurance. |
| JEL: | E2 E6 J2 J6 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:htr:hcecon:442&r=ias |
| By: | Shen, Zhiwei; Odening, Martin; Okhrin, Ostap |
| Abstract: | Although there is an increasing interest in index-based insurances in many developing countries, crop data scarcity hinders its implementation by forcing insurers to charge higher premiums. Expert knowledge has been considered a valuable information source to augment limited data in insurance pricing. This article investigates whether the use of expert knowledge can mitigate model risk which arises from insufficient statistical data. We adopt the Bayesian framework that allows for the combination of scarce data and expert knowledge, to estimate the risk parameter and buffer load. In addition, a benchmark for the evaluation of expert information is created by using a richer dataset generated from resampling. We find that expert knowledge reduces the parameter uncertainty and changes the insurance premium in the correct direction, but that the effect of the correction is sensitive to different strike levels of insurance indemnity. |
| Keywords: | expert knowledge, data scarcity, crop insurance pricing, Bayesian estimation, Agricultural Finance, Farm Management, Research Methods/ Statistical Methods, Risk and Uncertainty, C14, Q19, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149431&r=ias |
| By: | Christian Gouriéroux (Crest, University of Toronto); Yang Lu (SCOR and Crest) |
| Abstract: | We introduce new models for analyzing the mortality dependence between individuals in a couple. The mortality risk dependence is usually taken into account in the actuarial literature by introducing an Archimedean copula. This practice implies symmetric effects on the remaining lifetime of the surviving spouse. The new model allows for both asymmetric reactions by means of a Freund model, and risk dependence by means of an unobservable common risk factor (or frailty). These models allow for distinguishing in the lifetime dependence the component due to common lifetime (frailty) from the broken-heart syndrome (Freund model). The model is applied to insurance products such as joint life policy, last survivor insurance, or contracts with reversionary annuities |
| Keywords: | Life Insurance, Coupled Lives, Frailty, Freund Model, Broken-Heart, Copula, Last Survivor Insurance, Reversionary Annuities. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2013-09&r=ias |
| By: | Haroon Bhorat; Sumayya Goga; David Tseng (Development Policy Research Unit; Researcher) |
| Abstract: | This study, primarily descriptive in nature, is one of the first to examine the claiming behavior of unemployment benefit recipients within the South African Unemployment Insurance Fund (UIF) system. The design of the UIF system in South Africa is crucial in determining access to the system in terms of days of benefits, as well as determining benefit amounts. From the perspective that South Africa has one of the highest unemployment rates in the world, the UIF system is stringent in that the days of benefits are dependent on prior work history, though income replacement benefits are progressive with regard to previous income. The data shows that women, youth, poorer claimants and contract employees face the lowest potential claim days when claiming their benefits, while youth, poorer claimants and claimants with relatively short potential claim periods are eligible to claim a relatively larger proportion of their previous employment salaries as replacement benefits. Importantly, though, in the period between 2005 and 2011, those with the lowest potential claim periods were also subject, on average, to lower absolute benefits compared to their wealthier counterparts. We do find though that claimants represent a subsect of vulnerable potential contributors. Finally, we do not find evidence in this descriptive overview of moral hazard effects, though this would have to be investigated further through more thorough survival analysis techniques. |
| Keywords: | South Africa, unemployment, income distribution, Sub-Saharan Africa |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:13158&r=ias |
| By: | Nguyen Thi Lan Huong (Institute of Labour Science and Social Affairs (ILSSA), Hanoi, Vietnam); Luu Quan Tuan (Institute of Labour Science and Social Affairs (ILSSA), Hanoi, Vietnam); Meissner, Matthias; Bui Sy Tuan; Dang Do Quyen; Nguyen Hai Yen |
| Abstract: | In the last 20 years, Vietnam has been one of the fastest growing economies in Asia. But the coverage of social insurance is still low. Only around one in five workers is covered by the public social insurance scheme. Expanding the coverage of social insurance for informal sector workers and the informally employed is a key policy area as the role of traditional and informal security systems tends to get weaker. This paper provides a comprehensive literature and data review regarding informal sector research in Vietnam. Furthermore, it reflects the international understanding of the terms social protection, informal sector und informal employment. The impact of the informal sector on social protection and socio-economic development in Vietnam is evident. Nevertheless, in research, literature and data the picture is rather fragmented which indicates the necessity for further efforts. |
| Keywords: | Social protection; Social security; Social insurance; Informal sector; Informal economy; Literature review; Labour market; Social development; Vietnam |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bom:ieewps:199&r=ias |
| By: | Supon Limwattananon (International Health Policy Program, Ministry of Public Health, Thailand); Sven Neelsen (Institute of Health Policy and Management, Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam); Phusit Prakongsai (International Health Policy Program, Ministry of Public Health, Thailand); Viroj Tangcharoensathien (International Health Policy Program, Ministry of Public Health, Thailand); Eddy van Doorslaer (Erasmus University Rotterdam) |
| Abstract: | We estimate the impact on health care utilization and out-of-pocket (OOP) expenditures of a major reform in Thailand that extended health insurance to one-quarter of the population to achieve universal coverage while keeping health spending below 4% of GDP. Identification is through comparison of changes in outcomes of groups to whom coverage was extended with those of public sector employees and their dependents whose coverage was not affected. The reform is estimated to have reduced the probability that a sick person goes without formal treatment by 3.2 percentage points (11%). It increased the probability of receiving public ambulatory care by 2.7 ppt (5%) and of admission to a public hospital by 1 ppt (18%). OOP expenditures were reduced by one-third on average, as was the probability of spending more than 10% of the household budget on health care, while spending at the very top of the OOP distribution was reduced by one-half representing substantial reductio ns in exposure to medical expenditure risk. Supply-side measures implemented with the coverage extension are likely to have helped realize these effects from an increased, but still very tight, budget. |
| Keywords: | Health Insurance, Health Care, Medical Expenditures, Universal Coverage, Thailand |
| JEL: | H42 H51 I18 |
| Date: | 2013–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2013067&r=ias |
| By: | Jan Kregel |
| Abstract: | In March of this year, the government of Cyprus, in response to a banking crisis and as part of a negotiation to secure emergency financial support for its financial system from the European Union (EU) and International Monetary Fund (IMF), proposed the assessment of a tax on bank deposits, including a levy (later dropped from the final plan) on insured demand deposits below the 100,000 euro insurance threshold. An understanding of banks’ dual operations and of the relationship between two types of deposits—deposits of customers’ currency and coin, and deposit accounts created by bank loans—helps clarify some of the problems with the Cypriot deposit tax, while illuminating both the purposes and limitations of deposit insurance. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:13-04&r=ias |
| By: | OECD |
| Abstract: | This paper investigates policyholder protection schemes in OECD member countries and selected non-OECD countries. It is selective in its scope: it examines the rationale for a policyholder protection scheme; the relationship between certain design features and moral hazard; the role of a policyholder protection scheme within the overall resolution framework; and some cross-border features of these schemes. While the paper focuses on protection schemes for policyholders, it seeks to draw lessons from compensation schemes in the banking and occupational pension fund sectors, while recognising sectoral differences.<BR>Ce rapport étudie les régimes de protection des titulaires de polices d’assurance dans les pays Membres de l’OCDE et dans certains pays non Membres. Son champ d’étude est sélectif : il porte sur les raisons présidant à l’existence de ces régimes ; les relations entre certaines dispositions et l’aléa moral ; le rôle du régime de protection des assurés au sein du cadre globale de résolution des défaillances ; et certains aspects de ces régimes relatifs aux défaillances concernant plusieurs États. Tout en ciblant sa réflexion sur les régimes de protection des assurés, ce rapport tente de tirer des enseignements des mécanismes d’indemnisation existant dans le secteur bancaire et les plans de retraite professionnels, tout en mettant au jour les différences sectorielles. |
| Keywords: | moral hazard, insurance sector, insurer insolvency, policyholder protection, insurance guarantee, resolution, cross-border resolution, assurance, aléa moral, insolvabilité des entreprises d’assurance, protection des titulaires de police d’assurance, garantie d’assurance, résolution |
| JEL: | D02 F36 F42 G22 G28 H12 |
| Date: | 2013–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaad:31-en&r=ias |
| By: | Alexander Schied |
| Abstract: | We consider Constant Proportion Portfolio Insurance (CPPI) and its dynamic extension, which may be called Dynamic Proportion Portfolio Insurance (DPPI). It is shown that these investment strategies work within the setting of F\"ollmer's pathwise It\^o calculus, which makes no probabilistic assumptions whatsoever. This shows, on the one hand, that CPPI and DPPI are completely independent of any choice of a particular model for the dynamics of asset prices. They even make sense beyond the class of semimartingale sample paths and can be successfully defined for models admitting arbitrage, including some models based on fractional Brownian motion. On the other hand, the result can be seen as a case study for the general issue of robustness in the face of model uncertainty in finance. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1305.5915&r=ias |
| By: | Marsha Gold; Maria Cupples Hudson |
| Abstract: | The Affordable Care Act has altered payment policy for private Medicare Advantage (MA) plans, with the goal of lowering costs to bring them closer to the costs of traditional Medicare. Using new information on 2009 MA costs, an issue brief compares plans’ estimates of per capita costs for providing Parts A and B benefits to their enrollees, on a risk-adjusted basis, against government data on the same costs for traditional Medicare program beneficiaries in the same county. On average, risk-adjusted MA plan costs were 4 percent higher than traditional Medicare costs (104 percent). Among plan types, only HMOs had lower average costs than traditional Medicare. The wide variation in costs for MA plans relative to those for traditional Medicare suggests room for greater efficiency in care delivery. |
| Keywords: | Medicare Advantage, Efficiency, Variation, Health |
| JEL: | I |
| Date: | 2013–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7765&r=ias |
| By: | Katherine Baicker; Michael Chernew; Jacob Robbins |
| Abstract: | More than a quarter of Medicare beneficiaries are enrolled in Medicare Advantage, which was created in large part to improve the efficiency of health care delivery by promoting competition among private managed care plans. This paper explores the spillover effects of the Medicare Advantage program on the traditional Medicare program and other patients, taking advantage of changes in Medicare Advantage payment policy to isolate exogenous increases in Medicare Advantage enrollment and trace out the effects of greater managed care penetration on hospital utilization and spending throughout the health care system. We find that when more seniors enroll in Medicare managed care, hospital costs decline for all seniors and for commercially insured younger populations. Greater managed care penetration is not associated with fewer hospitalizations, but is associated with lower costs and shorter stays per hospitalization. These spillovers are substantial – offsetting more than 10% of increased payments to Medicare Advantage plans. |
| JEL: | I1 I18 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19070&r=ias |
| By: | Carol V. Irvin; Rosemary Borck; Wilfredo Lim |
| Keywords: | Medicare, Medicaid Enrollees, Medicaid Coverage, Medicare Beneficiaries |
| JEL: | I J |
| Date: | 2013–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7777&r=ias |
| By: | Yonatan Ben-Shalom; David Stapleton |
| Keywords: | Medicare Beneficiaries, Disability, Claims-Based Algorithms, CEDR |
| JEL: | I J |
| Date: | 2013–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7767&r=ias |
| By: | Lawrence L Kreicher; Robert N McCauley; Patrick McGuire |
| Abstract: | The global financial crisis led to discussion of corrective bank taxes to promote financial stability. This paper interprets the widening of the FDIC assessment base from deposits to assets less equity for US-chartered banks in April 2011 as such a corrective or Pigovian tax. In terms of yields, banks shifted its cost to wholesale funders, benefiting floating-rate borrowers, while the linkage between onshore and offshore dollar money markets weakened. In terms of quantities, US-chartered banks shifted funding to more stable deposits. At the same time, the US branches of non-US banks, which were unaffected by the widened assessment base, increased US assets, funding their take-up of most of the Fed's reserve injection of $600 billion offshore. Thus, a new internationally uncoordinated policy had the expected effect on US banks' funding structure, but also redistributed dollar intermediation to non-US banks that continue to rely on wholesale funding. The implication for global financial stability is at best ambiguous. |
| Keywords: | Deposit insurance, reserve balances, money markets, federal funds, repo, eurodollars, wholesale funding, flow of funds, large-scale asset purchases, Dodd-Frank |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:413&r=ias |
| By: | Jelena Zurovac; Randy Brown; Bob Schmitz |
| Keywords: | Care Coordination, Medicare, Dual Eligibles, Special Needs Plans |
| JEL: | I J |
| Date: | 2013–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7775&r=ias |
| By: | Dormont, Brigitte; Geoffard, Pierre-Yves; Lamiraud, Karine |
| Abstract: | De nombreux pays ont introduit des mécanismes concurrentiels en assurance maladie, tout en instaurant une régulation pour éviter la sélection des risques et garantir une solidarité entre malades et bien portants. Le modèle de la « concurrence régulée » est ainsi appliqué pour l'assurance maladie de base en Suisse, aux Pays-Bas, en Allemagne, en Israël. Il inspire la réforme de l'assurance maladie aux États-Unis. Cet article analyse le fonctionnement d'un tel système en considérant le cas de la Suisse, où l'on s'intéresse aux interférences potentielles entre le marché des assurances supplémentaires et celui de l'assurance de base. L'organisation actuelle de l'assurance maladie en France diffère de celle du système suisse. Mais la question d'une régulation du marché des assurances complémentaires pourrait être posée à terme. Douze ans après l'introduction de la concurrence régulée, les résultats observés en Suisse sont décevants. Bien que les écarts de primes constatés entre les compagnies d'assurance soient très importants, la proportion d'assurés qui changent de caisse reste faible. Tout se passe comme si les assurés ne faisaient pas jouer la concurrence. Notre analyse montre que la faible mobilité des assurés résulte de la coexistence de deux marchés d'assurance maladie soumis à des règles différentes : le marché de l'assurance de base, où la sélection des risques est interdite, et celui de l'assurance supplémentaire, où elle est autorisée. Les estimations montrent que la propension à changer de caisse est beaucoup plus faible chez les détenteurs d'une assurance supplémentaire qui estiment que leur santé n'est pas excellente. Comme il est préférable pour des raisons pratiques d'avoir son assurance de base et son assurance supplémentaire dans la même caisse, il existe un lien de fait entre les deux marchés. Le droit de sélectionner les candidats à la souscription pour l'assurance supplémentaire nuit à la concurrence sur l'assurance de base. |
| Keywords: | Économie de la santé; Assurance-maladie complémentaire; Assurance maladie; |
| JEL: | I38 I18 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/11294&r=ias |