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on Insurance Economics |
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Issue of 2016‒12‒11
nineteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Andrew Goodman-Bacon |
| Abstract: | This paper exploits the original introduction of Medicaid (1966-1970) and the federal mandate that states cover all cash welfare recipients to estimate the effect of childhood Medicaid eligibility on adult health, labor supply, program participation, and income. Cohorts born closer to Medicaid implementation and in states with higher pre-existing welfare-based eligibility accumulated more Medicaid eligibility in childhood but did not differ on a range of other health, socioeconomic, and policy characteristics. Early childhood Medicaid eligibility reduces mortality and disability and, for whites, increases extensive margin labor supply, and reduces receipt of disability transfer programs and public health insurance up to 50 years later. Total income does not change because earnings replace disability benefits. The government earns a discounted annual return of between 2 and 7 percent on the original cost of childhood coverage for these cohorts, most of which comes from lower cash transfer payments. |
| JEL: | I13 J10 N32 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22899&r=ias |
| By: | Norma B. Coe; Wenliang Hou; Alicia H. Munnell; Patrick J. Purcell; Matthew S. Rutledge |
| Abstract: | This paper examines the impact of the Massachusetts Health Insurance reform of 2016 on job mobility and employment exit using administrative data from the Social Security Administration. The Massachusetts reform mandated that every resident have insurance coverage and facilitated this initiative by requiring employers to offer coverage, as well as expanding Medicaid and creating health insurance exchanges with subsidized premiums. These elements provided the basis for the Patient Protection and Affordable Care Act (ACA) passed nationwide in 2010, so the experience of workers in Massachusetts provides evidence for how the ACA may affect labor market efficiency. Of particular interest is the extent to which Massachusetts’ reform reduced “job lock” – the phenomenon in which workers stay with employers to maintain their health insurance coverage, rather than move to a more productive match at another employer (especially a small firm unlikely to offer coverage) or exit employment entirely. The project measures differential effects by age, gender, and firm size, and tries to disentangle the effects of the employer mandate and the individual mandate by identifying individuals who cross state lines between home and work. |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2016-16&r=ias |
| By: | Parkhomenko, Andrii |
| Abstract: | The unemployment insurance system in the U.S. does not provide incentives to look for jobs outside local labor markets. In this paper I introduce relocation subsidies as a supplement to unemployment benefits, and study their effects on unemployment, productivity and welfare. I build a job search model with heterogeneous workers and multiple locations, in which migration is impeded by moving expenses, cross-location search frictions, borrowing constraints, and utility costs. I calibrate the model to the U.S. economy, and then introduce a subsidy that reimburses a part of the moving expenses to the unemployed and is financed by labor income taxes. During the Great Recession, a relocation subsidy that pays half of the moving expenses would lower unemployment rate by 0.36 percentage points (or 4.8%) and increase productivity by 1%. Importantly, the subsidies cost nothing to the taxpayer: the additional spending on the subsidies is offset by the reduction in spending on unemployment benefits. Unemployment insurance which combines unemployment benefits with relocation subsidies appears to be more effective than the insurance based on the benefits only. |
| Keywords: | unemployment insurance, relocation subsidies and vouchers, local labor markets, moving costs, geographic mobility, internal migration |
| JEL: | E24 J61 J64 J65 R23 |
| Date: | 2016–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75256&r=ias |
| By: | Alan L. Gustman (Dartmouth College); Thomas L. Steinmeier (Texas Tech University); Nahid Tabatabai (Dartmouth College) |
| Abstract: | Using data from the Health and Retirement Study, we examine the effects of the Affordable Care Act (ACA) on retirement. We first calculate retirements (and in related analyses changes in expected ages of retirement and/or Social Security claiming) between 2010, before ACA, and 2014, after ACA, for those with health insurance at work but not in retirement. This group experienced the sharpest change in retirement incentives from ACA. We then compare retirement measures for those with health insurance at work but not in retirement with retirement measures for two other groups: those who, before ACA, had employer provided health insurance both at work and in retirement, and those who had no health insurance either at work or in retirement. To complete a difference-in-difference analysis, we make the same calculations for members of an older cohort over the same age span. We find no evidence that ACA increases the propensity to retire or changes the retirement expectations of those who, before ACA, had coverage when working, but not when retired. An analysis based on a structural retirement model suggests that eventually ACA will increase the probability of retirement by those who initially had health insurance on the job but did not have employer-provided retiree health insurance. But the retirement increase is quite small, only about half a percentage point at each year of age. The model also suggests that much of the effect of ACA on retirement will be realized within a few years of the change in the law. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp343&r=ias |
| By: | Zvezdov, Ivelin |
| Abstract: | Today's advances in big data technologies readily allow for storing large inter-dependent data sets of historical and modeled natural hazard and financial data and unifying their granularity and accuracy with common geo-spatial and risk-type record identifiers. This is a significant component at both single insurance account, and even more so at the larger multi-policy portfolio scale for enabling optimal and socially responsible insurance underwriting practices. This supports insurance risk transfers by creating more accurate and all-uncertainty encompassing pricing techniques, and exposes these techniques and methodologies to all market players, including insurance policy holders via transparent statistical and actuarial principles. |
| Keywords: | Big Data, (Re)Insurance Premium Pricing, Sustainable (Re)Insurance Principles |
| JEL: | D0 D01 G0 O3 O30 |
| Date: | 2016–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75312&r=ias |
| By: | Shen, Zhiwei |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249984&r=ias |
| By: | Simon Dietz; Oliver Walker |
| Abstract: | Many insurance contracts are contingent on events such as hurricanes, terrorist attacks or political upheavals, whose probabilities are ambiguous. This paper offers a theory to underpin the large body of empirical evidence showing that higher premiums are charged under ambiguity. We model a (re)insurer who maximises profit subject to a survival constraint that is sensitive to the range of estimates of the probability of ruin, as well as the insurer’s attitude towards this ambiguity. We characterise when one book of insurance is more ambiguous than another and general circumstances in which a more ambiguous book requires at least as large a capital holding. We subsequently derive several explicit formulae for the price of insurance contracts under ambiguity, each of which identifies the extra ambiguity load. |
| Keywords: | ambiguity; ambiguity aversion; ambiguity load; capital requirement; catastrophe risk; insolvency; insurance; more ambiguous; reinsurance; ruin; uncertainty; Solvency II |
| JEL: | D81 G22 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68469&r=ias |
| By: | Jonathan Gruber; Johanna Catherine Maclean; Bill J. Wright; Eric S. Wilkinson; Kevin Volpp |
| Abstract: | In this study we examine the impact of a value-based insurance design (V-BID) program implemented between 2010 and 2013 at a large public employer in the state of Oregon. The program substantially increased cost-sharing, specifically copayments and coinsurance, for several healthcare services believed to be of low value and overused (sleep studies, endoscopies, advanced imaging, and surgeries). Using a differences-in-differences design coupled with granular, administrative health insurance claims data, we estimate the change in low value healthcare service utilization among beneficiaries before and after program implementation relative to a comparison group of beneficiaries who were not exposed to the V-BID. Our findings suggest that the V-BID significantly reduced utilization of targeted services. These findings have important implications for both public and private healthcare policies as V-BID principles are rapidly proliferating in healthcare markets. |
| JEL: | I1 I11 I13 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22875&r=ias |
| By: | Myyrä, Sami |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249986&r=ias |
| By: | Plotka, Hanna |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249987&r=ias |
| By: | Yamada, Hiroyuki; VU, Manh Tien |
| Abstract: | In literature, there is limited direct evidence regarding the effect of health insurance coverage on firm performance and worker productivity. In this paper, we study the impacts of health insurance on medium and large-scale domestic private firms’ performance and productivity in Vietnam, using a large firm level census dataset. We deploy propensity-score matching methods, and find statistically positive health insurance effects on both aggregate profit and profit per worker for both complying and non-complying medium and large-scale firms. Given the full sample results, we recommend an improvement in government monitoring as one of the important policy options to induce medium and large-scale firms to contribute to health insurance premiums for their employees. |
| Keywords: | Health insurance, Medium and large-scale firms, Propensity-score matching, Vietnam, Health insurance, Medium and large-scale firms, Propensity-score matching, Vietnam, D22, I13, I15, I18, O25 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000116&r=ias |
| By: | Soliwoda, Michal |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249991&r=ias |
| By: | Nurmet, Maire |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–09–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249989&r=ias |
| By: | Meier, Mario; Obermeier, Tim |
| Abstract: | This paper studies how firms’ screening behavior and crowding out among applicants affect the optimal design of unemployment policies. In our model, firms face a pool of applicants and observe unemployment duration and a signal about productivity. Firms screen the applicants with the highest expected productivity first. The probability of being hired declines with duration due to declining beliefs about productivity and competition by other job seekers. We estimate the model using German administrative employment records and information on job search behavior, vacancies and applications. The model matches the observed decline in search effort and job finding rates and the implied decline of callback rates is in line with recent evidence from audit studies. Optimal policy takes into account that unemployment benefits can affect hiring probabilities by making unemployment duration more or less informative and by changing the applications-per-vacancy ratio due to search effort or vacancy responses. The equilibrium elasticity of unemployment duration to benefits can be larger or smaller than the standard micro elasticity. Our findings suggest that benefit levels should be more generous, especially after the first year of unemployment. We also find that extended benefits do not increase the duration of unemployment as much as suggested by a model without employer screening. |
| Keywords: | Unemployment,Optimal Unemployment Insurance,Job Search,Employer Screening |
| JEL: | H20 J64 J65 J7 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:148303&r=ias |
| By: | Sowmya Dhanaraj (Madras School of Economics) |
| Abstract: | The objectives of the study are three-fold: to investigate who are vulnerable to welfare loss from health shocks, what are the household responses to cope with the economic burden of health shocks and if policy responses like state health insurance schemes are effective in reducing the economic vulnerability. Existing literature have investigated the impact of state health insurance schemes in reducing the vulnerability to financials risks of medical care using catastrophic health expenditure (CHE) measure. This has several limitations like setting arbitrary threshold levels, exclusion of those that did not seek medical care due to inability to pay and non-accounting for risks posed by different sources of financing. So we use self-reported measure of reduction in economic well-being of households due to serious illness or death of one or more members from the recent Young Lives longitudinal study in Andhra Pradesh, India. Three-level random intercept logistic regression analysis that accounts for role of contextual or environmental factors like access to healthcare is used to determine the characteristics of vulnerable population and effectiveness of the state insurance scheme. |
| Keywords: | Health shocks, coping strategies, state health insurance scheme, three-level random intercept modelClassification-JEL: I10, I13 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2015-120&r=ias |
| By: | Andreas Fagereng; Luigi Guiso; Luigi Pistaferri |
| Abstract: | Assessing the importance of uninsurable wage risk for individual financial choices faces two challenges. First, the identification of the marginal effect requires a measure of at least one component of risk that cannot be diversified or avoided. Moreover, measures of uninsurable wage risk must vary over time to eliminate unobserved heterogeneity. Second, evaluating the economic significance of risk requires knowledge of the size of all the wage risk actually faced. Existing estimates are problematic because measures of wage risk fail to satisfy the ”non-avoidability” requirement. This creates a downward bias which is at the root of the small estimated effect of wage risk on portfolio choices. To tackle this problem we match panel data of workers and firms and use the variability in the profitability of the firm that is passed over to workers to obtain a measure of uninsurable risk. Using this measure to instrument total variability in individual earnings, we find that the marginal effect of uninsurable wage risk is much larger than estimates that ignore endogeneity. We bound the economic impact of risk and find that its overall effect is contained, not because its marginal effect is small but because its size is small. And the size of uninsurable wage risk is small because firms provide substantial wage insurance. |
| JEL: | D14 D91 G11 J3 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22883&r=ias |
| By: | Heinola, Katriina |
| Keywords: | Farm Management, Risk and Uncertainty, |
| Date: | 2016–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa156:249985&r=ias |
| By: | François Gerard; Miikka Rokkanen; Christoph Rothe |
| Abstract: | A key assumption in regression discontinuity analysis is that units cannot affect the value of their running variable through strategic behavior, or manipulation, in a way that leads to sorting on unobservable characteristics around the cutoff. Standard identification arguments break down if this condition is violated. This paper shows that treatment effects remain partially identified under weak assumptions on individuals' behavior in this case. We derive sharp bounds on causal parameters for both sharp and fuzzy designs, and show how additional structure can be used to further narrow the bounds. We use our methods to study the disincentive effect of unemployment insurance on (formal) reemployment in Brazil, where we find evidence of manipulation at an eligibility cutoff. Our bounds remain informative, despite the fact that manipulation has a sizable effect on our estimates of causal parameters. |
| JEL: | C14 C21 C31 J65 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22892&r=ias |
| By: | Francesco Decarolis; Andrea Guglielmo |
| Abstract: | Evidence on insurers behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at anytime. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions. |
| JEL: | I1 I13 I18 L22 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22876&r=ias |