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on Insurance Economics |
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Issue of 2016‒05‒21
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Otto Lenhart (Department of Economics, Emory University); Vinish Shrestha (Department of Economics, Towson University) |
| Abstract: | The primary goal of the federal dependent coverage mandate was to increase health insurance coverage among young adults, the group with the lowest prevalence of health insurance coverage. To understand the full impacts of the federal dependent coverage mandate, it is important to evaluate how the mandate affects labor market activities and time spent away from work among young adults. Using data from the Consumer Population Survey (CPS) and the American Time Use Survey (ATUS) and implementing a difference-in-differences framework, we find: 1) Young adults substitute employer sponsored insurance for dependent coverage, 2) Affected individuals reduce their work time and switch from full- to part-time employment, and 3) The additional time from reduced labor market activity is reallocated towards more time spent on leisure activities. The effects of the mandate on labor market activities are stronger in later years. Furthermore, we show that young adults do not increase the time they spend on activities that could enhance their human capital such as education and health, which reemphasizes potential unintended consequences of the mandate. These findings suggest that future work is necessary to fully understand the overall welfare effects of the policy. |
| Keywords: | Dependent coverage mandate, labor market outcomes, time use. |
| JEL: | I13 J22 I12 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2016-10&r=ias |
| By: | Jeroen Hinloopen (Utrecht University, the Netherlands); Adriaan R. Soetevent (University of Groningen, the Netherlands) |
| Abstract: | The common view that buyer power of insurers may effectively counteract provider market power critically rests on the idea that consumers and insurers have a joint interest in extracting price concessions. However, in markets where the buyer is an insurer, the interests of insurers and consumers to reduce prices may be importantly misaligned. The positive dependence between loss size and the insurer's expected profits limits the insurer's incentives to reign in loss sizes; in markets with small initial loss sizes, insurers may try to raise these in order to create demand for insurance. After having defined insurance and non-insurance markets based on the initial loss size, we develop theory to show that insurers with buyer power have incentives to create insurance markets. Insurer competition will push their profits to zero but markets do not return to the initial non-insurance state. This constitutes a welfare loss. We design experimental insurance markets to test our theory and find support. Monopolistic insurer-subjects in non-insurance markets increase loss sizes to establish insurance markets. Insurer competition eliminates profits but not the loss size to uninsured consumers. This provides an additional reason to be careful in granting insurers buyer power. |
| Keywords: | insurance markets; risk elicitation; experiment; buyer power |
| JEL: | C92 D81 G22 I11 L13 |
| Date: | 2016–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160033&r=ias |
| By: | Jianjun Sun (School of Economics and Management, Hainan University and College of Tourism, Hainan University); Nobuyoshi Yamori (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan) |
| Abstract: | Existing papers analyzing the link between deposit insurance and bank market values have usually been confined to investigating incremental regulatory shifts in the banking sector. The latest case on the introduction of deposit insurance occurred in China, and therefore it gives us a chance to explore the stock market reaction to the major regulatory policy change in banking. Although the introduction of deposit insurance is usually expected to be favorable news for banks, our results show that the average abnormal returns of all listed banks in China are statistically significantly negative on the announcement day. They indicate that investors believe the introduction of deposit insurance has an adverse effect on the banking industry in China. We also find that among bank characteristics such as asset size, z-score, and ROE, only size has a statistically significant positive impact on the abnormal returns of the Chinese listed banks on the announcement day. These results mean that although compulsory deposit insurance certainly enhances small banks’ credibility, China’s capital markets think that the adverse influence is lower for big banks than for small banks. Our results, which are not fully consistent with those previously found in the United States and Denmark, indicates that the difference in the financial regulatory environment prior to the introduction of deposit insurance leads to differential wealth transfer. |
| Keywords: | Deposit insurance, Announcement, Wealth effect, Event study, China |
| JEL: | G18 G21 G28 G38 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2016-20&r=ias |
| By: | Congressional Budget Office |
| Abstract: | CBO and the staff of the Joint Committee on Taxation project that the federal subsidies, taxes, and penalties associated with health insurance coverage for the noninstitutionalized population under age 65 will result in a net subsidy from the federal government of $660 billion, or 3.6 percent of GDP, in 2016. For the entire 2017–2026 period, the projected net subsidy is $8.9 trillion. |
| JEL: | H30 I13 I18 |
| Date: | 2016–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:513851&r=ias |
| By: | Sherrick, Bruce; Schnitkey, Gary |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc016:233764&r=ias |
| By: | Swenja Surminski; Jillian Eldridge |
| Abstract: | Flooding is the largest natural disaster risk in England and it is expected to rise even further with a changing climate. Agreeing on how we pay for this now and in the future is a challenge, with competing drivers such as fairness, economic efficiency, political feasibility and public acceptance all playing their part. We investigate this in the context of recent efforts to reform the provision of flood insurance, which have been debated between government and industry over the last three years. Recognising the challenge of rising losses and increasing costs we are particularly interested in how the existing arrangement and the new flood insurance proposal (Flood Re) reflect on the need for physical risk reduction. By applying our analytical framework we find an absence of formal incentive mechanisms for risk reduction in the existing and proposed Flood Re scheme. We identify the barriers for applying insurance to risk reduction and point to some possible modifications in the Flood Re proposal to deliver a greater link between risk transfer and risk reduction. Our investigation offers some insights into the challenges of designing and implementing flood insurance schemes – a task that is currently being considered in a range of countries, including several developing countries, who hope to apply flood insurance as a tool to increase their climate resilience. |
| Keywords: | Flood insurance; flood risk; risk reduction |
| JEL: | G32 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66256&r=ias |
| By: | Edward Harris; Shannon Mok |
| Abstract: | This working paper describes the methods and calculations CBO used in its August 2015 baseline projections to estimate the effects of the Affordable Care Act on the labor market. |
| JEL: | I18 J08 |
| Date: | 2015–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:wpaper:51065&r=ias |
| By: | Norma B. Coe; Jing Guo; R. Tamara Konetzka; Courtney Harold Van Houtven |
| Abstract: | Research on informal and formal long-term care has centered almost solely on costs; to date, there has been very little attention paid to the benefits. This study exploits the randomization in the Cash and Counseling Demonstration and Evaluation program and instrumental variable techniques to gain causal estimates of the effect of family involvement in home-based care on health care utilization and health outcomes. We find that family involvement significantly decreases Medicaid utilization. Importantly, we find family involvement significantly lowers the likelihood of urinary tract infections, respiratory infections, and bedsores, suggesting that the lower utilization is due to better health outcomes. |
| JEL: | I1 I13 I28 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22249&r=ias |
| By: | James M. Verdier |
| Keywords: | Medicaid, Medicare, Long-term services and supports, LTSS |
| JEL: | I |
| Date: | 2016–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:2fdd68f1b18040608bb1cc34f42c881a&r=ias |
| By: | Ewa Marciniak; Zbigniew Palmowski |
| Abstract: | This paper concerns an optimal dividend distribution problem for an insurance company with surplus-dependent premium. In the absence of dividend payments, such a risk process is a particular case of so-called piecewise deterministic Markov processes. The control mechanism chooses the size of dividend payments. The objective consists in maximazing the sum of the expected cumulative discounted dividend payments received until the time of ruin and a penalty payment at the time of ruin, which is an increasing function of the size of the shortfall at ruin. A complete solution is presented to the corresponding stochastic control problem. We identify the associated Hamilton-Jacobi-Bellman equation and find necessary and sufficient conditions for optimality of a single dividend-band strategy, in terms of particular Gerber-Shiu functions. A number of concrete examples are analyzed. |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1604.06892&r=ias |
| By: | Simin Mozayeni (State University of New York at New Paltz); Simon Li (SUNY New Paltz) |
| Abstract: | The motivation for this research is to examine the debate about the effect of social insurance on private savings as suggested by Feldstein (1974) and Leimmer and Lesony (1982). The null hypothesis is whether expected social insurance benefits in retirement displace household private savings. We use a panel data comprised of most OECD countries (driven by data availability), incorporating 2004-2014. We also reconsider the G7 countries (Mozayeni, 2015) with the data currently available. In both cases, our dependent variable is the Household Saving Rate (HS), measured as the percentage of Disposable Income, as reported in the National Income Accounts. The dependent variables are: the Gross Replacement Rate (GRR) for retirement benefits, which had become available for 2004-2014; the Long Term Interest Rate, which is the daily average for ten year-governments’ bond rates, and two fixed-effect variables, which account for the specific effects of the countries and the years in the data. Overall, our models predicts the relationships well, with R2 =0.88 for the OECD panel and 0.94for G7. We first discuss our results for the OECD panel and then the G7. In the OECD regression, the sign for HS varies year to year and from county to country. The significant levels are high only for 11of 26 countries in the sample. With an F value of 26.94, compared to 4.052 for α=0.01, the ANOVA test strongly rejects the null hypothesis that between-groups and within-groups variations are the same. We therefore reject the null hypothesis that β1= β2 ,…, βj = 0 and accept the alternative hypothesis β≠0 for at least one value of the overall test. Our results show NO systematic dependence of household savings on retirement benefits. Our G7 regression produces an F test of 36.55, R2 = 0.94, and negative signs for all the years in the data and positive signs for the Country effect for some and negative for others--for Germany, Japan, United Kingdom and US, the signs are negative; whereas for France and Italy are positive. The Country significance levels are high only for Italy and UK. In conclusion, we reject the proposition that expected social security income in retirement displaces household savings for the OECD countries and G7 in our sample. We methodically consider any specific effect the period in our data may have on households’ saving behavior. |
| Keywords: | Household Savings, Private Savings Displacement, Gross Replacement Rates and Private Saving |
| JEL: | D69 E21 H55 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:3606129&r=ias |
| By: | Jody Schimmel Hyde; Joseph Mastrianni; Yong Choi; Jae Song |
| Keywords: | obesity, social security, disability, applicants |
| JEL: | I J |
| Date: | 2016–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:746d36e0403f44b387d74ed518fe208e&r=ias |
| By: | So O'Neil; Keith Kranker; George Kafkas; Margo Rosenbach |
| Abstract: | Launched in 2014, the three-year Pilot Mobile Health Program is an innovative approach to engaging pregnant and postpartum women enrolled in Medicaid. |
| Keywords: | Maternal and infant health, Centers for Medicare & Medicaid Services, CMS, Centers for Medicaid and CHIP Services, CMCS, Medicaid, Pilot Mobile Health Program, mHealth, perinatal health, postpartum health, health text-messaging, Text4baby |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:45ff613d943242e692c0943bfda31751&r=ias |
| By: | Shafii, Zurina (Universiti Sains Islam Malaysia, Nilai, Malaysia.); Abidin, Ahmad Zainal (RHB Investment Bank); Salleh, Supiah (Universiti Sains Islam Malaysia, Nilai, Malaysia.) |
| Abstract: | Shariah Governance and audit is one of the vital elements of corporation as it promotes principles of accountability, transparency and Shariah assurance of IFIs to the stakeholders. In addition to the clear structure of the organs of Shariah governance namely the Board of Directors, Shariah Committee and the Management, an Islamic Financial Institution (IFI) must ensure the Shariah compliance function to be carried out through the Shariah review and Shariah audit functions. The studies conducted on the practice of Shariah review and audit in the jurisdictions adopting Islamic finance revealed that both functions are conducted inconsistently. Many jurisdictions are yet to offer independent Shariah assurance as they only managed to perform Shariah review function. Shariah review serves as compliance function that provide review to the management on the state of IFIs’ Shariah compliance. Shariah audit, on the other hand, is an independent exercise that aims to examine the effectiveness of the internal control for Shariah compliance within the organization. Both of the functions serve as the Shariah assurance mechanisms that ensure robust practice of Shariah-compliant activities. This study identifies the practice of Shariah audit among GCC countries, namely Bahrain, Saudi Arabia, Kuwait, UAE and Qatar and in Islamic Development Bank’s member countries where Islamic finance is adopted as part of the mainstream finance, i.e. Sudan, Pakistan, Indonesia and Malaysia. Upon identifying the practice of Shariah assurance mechanisms, this study develops a model for Shariah audit that integrates the internal and external Shariah audit function. This study identifies the scope of Shariah audit that is to be performed by internal Shariah auditors and external Shariah auditors. In order to formulate the integrated internalexternal Shariah audit model, this study qualitatively analyses the arguably the most comprehensive guideline on Shariah governance Framework issued by Bank Negara Malaysia in 2010 and other guidelines issued in jurisdictions practicing Islamic finance that forms guiding principles for Shariah audit conduct. For the external Shariah audit function, the study refers to the standards that are applicable to Islamic financial transactions issued by the International Financial Reporting Standard (IFRS). This study is useful for policymaking in the jurisdictions that offer Islamic finance, with relation to Shariah assurance mechanisms, especially on policies related to Shariah audit conduct. The integrated model of internal-external Shariah audit will promote efficiency and effectiveness of Shariah audit practice in IFIs. |
| Keywords: | Shariah assurance; Shariah audit; Integrated Shariah audit model |
| JEL: | M41 M42 |
| Date: | 2015–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:irtiwp:1436_007&r=ias |
| By: | Pawel Pisany (Warsaw School of Economics) |
| Abstract: | The aim of this article is to present Single Supervisory Mechanism in the context of challenges in the post-crisis economy. One analyzed the topic from the perspective of non-euro area EU member state. The article consists of three main parts. Firstly, the short literature review related to banking crisis as a background for institutional reforms, was conducted. The second part refers to the legal base of SSM and its impact on the final shape of this institution. In the last part, the negative recommendation in terms of accession of Poland to SSM through OPT-IN procedure, was presented and justified by a simple economic game. |
| Keywords: | Single Supervisory Mechanism; banking regulations; banking crisis |
| JEL: | E61 G28 G21 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:pes:wpaper:2016:no13&r=ias |
| By: | Kollmann, Robert; Leeper, Eric; Roeger, Werner |
| Abstract: | The global financial crisis of 2007-09 triggered a sharp fall in output growth that was followed by a persistent slump in Europe and other advanced economies. Almost a decade after the outbreak of the global financial crisis, the recovery remains very weak in many major advanced economies. This special issue of the European Economic Review consists of eleven papers that offer novel empirical and theoretical perspectives on the persistent post-crisis slump and on resulting challenges for global monetary and fiscal policies. All papers were presented at a conference at the European Commission in Brussels on 1-2 October 2015, organized by the European Economic Review, the European Commission, CAEPR, Indiana University and ECARES. |
| Keywords: | Global financial crisis, post-crisis slump, monetary and fiscal policy, secular stagnation. |
| JEL: | E2 E3 E4 E5 E6 F2 F3 F4 F6 G1 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71291&r=ias |