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on Insurance Economics |
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Issue of 2017‒08‒06
ten papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | L. Randall Wray |
| Abstract: | The growing political momentum for a universal single-payer healthcare program in the United States is due in part to Republican attempts to repeal and replace the Affordable Care Act (Obamacare). However, according to Senior Scholar L. Randall Wray, it is Obamacare's successes and its failures that have boosted support for a single-payer system. Even after Obamacare, the US healthcare system still has significant gaps in coverage--all while facing the highest healthcare bill in the world. In this policy note, Wray argues that the underlying challenge for a system based on private, for-profit insurance is that basic healthcare is not an insurable expense. It is time to abandon the current, overly complex and expensive payments system and reconsider single payer for all. Social Security and Medicare provide a model for reform. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:17-3&r=ias |
| By: | Benjamin R. Handel; Igal Hendel; Michael D. Whinston |
| Abstract: | Reclassification risk is a major concern in health insurance. We use a rich dataset with individual-level information on health risk to empirically study one possible solution: dynamic contracts. Empirically, dynamic contracts with one-sided commitment substantially reduce the reclassification risk present with spot contracting, achieving close to the first-best for consumers with flat net income paths. Gains are smaller for consumers with net income growth, and these consumers prefer ACA-like community rating over dynamic contracts. However, lower risk aversion, sufficient switching costs, or government insurance of pre-age-25 health risks can raise welfare with dynamic contracts above the level in ACA-like markets. |
| JEL: | G22 I13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23624&r=ias |
| By: | Tim Worrall (University of Edinburgh); Alessia Russo (University of Oslo); Francesco Lancia (University of Vienna) |
| Abstract: | This paper studies the dynamic and steady state properties of optimal intergenerational insurance when enforcement is limited. It considers a pure exchange and stochastic overlapping generations economy. The optimal allocation is chosen by a benevolent government whose welfare function values the initial old and places a positive, but vanishing weight on the welfare of future generations. The optimal allocation is constrained to be self-enforceable. That is, generations must have no incentive to default on the consumption allocation at any history of states. We show that the optimal intergenerational insurance when enforcement is limited takes the form of a history-dependent pension plan payable by the young to the old generation. In a simple two-state example we show how the degree of insurance depends on the history of states, in particular, insurance falls with more consecutive good states for the young but reverts whenever the bad state occurs. Finally, we solve for the optimal time-dependent and stationary contracts and numerically compare the welfare loss of these schemes relative to the fully optimal history-dependent scheme. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:319&r=ias |
| By: | Marcus Dillender (W.E. Upjohn Institute for Employment Research) |
| Keywords: | language skills, immigrants, health insurance, Medicaid |
| JEL: | J15 I13 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:md17-2&r=ias |
| By: | G. Greg Peterson; Kristin Lowe Geonnotti; Lauren Hula; Timothy Day; Laura Blue; Keith Kranker; Boyd Gilman; Kate Stewart; Sheila Hoag; Lorenzo Moreno |
| Abstract: | CareFirst, the largest commercial insurer in the mid-Atlantic Region of the United States, runs a medical home program focusing on financial incentives for primary care practices and care coordination for high-risk patients. |
| Keywords: | CareFirst, Medical Home, Medicare Patients, Quality of Care, Utilization, Spending |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ab370f14420b4a6ea15080b7558c035b&r=ias |
| By: | Fengming CHEN; Hiroshi YOSHIDA |
| Abstract: | This study examines the effects of the number of preventive care programs on the number of certified less disabled recipients for long-term care insurance. By constituting a municipality-level two-period panel data, we find that the total number of preventive care programs significantly decreases the number of certified less disabled recipients. When looking at the details of preventive care programs, we find the number of physical activities and dining party activities has a negative effect. And we also examine the combination of preventive care activities and find the effects of physical activities and dining party activities are relatively robust. We conclude that the design of preventive care programs should be considered the characteristics of objects, especially the elderly. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:toh:tergaa:368&r=ias |
| By: | Sergi Jiménez-Martín; Arnau Juanmarti Mestres; Judit Vall Castelló |
| Abstract: | In this paper, we exploit the strong incidence of the Great Recession in Spain to estimate the effect of economic conditions on participation in Disability Insurance (DI). Using individual panel data, we show that increases in the local unemployment rate are associated with a reduction in the individual probability to enter the DI program during the Great Recession in Spain. Using aggregate data on applications, we show that this procyclical behavior of DI awards comes from an increase in the proportion of applications that are denied. Thus, contrary to the previous literature that has extensively reported a countercyclical behavior of DI participation, our results provide new evidence that, in periods of extremely recessionary conditions, DI participation may turn procyclical. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2017-08&r=ias |
| By: | Alicia H. Munnell |
| Abstract: | The 2017 Trustees Report repeats the drumbeat that the Social Security program faces a deficit over the next 75 years and that its Old-Age, Survivors and Disability Insurance (OASDI) trust fund is scheduled for exhaustion in the early 2030s. The size of the deficit and the timing of the exhaustion date changed very little from last year’s report. The 75-year deficit increased slightly from 2.66 percent to 2.83 percent of taxable payrolls, and the exhaustion date remained at 2034. This brief updates the numbers for 2017 and puts the current report in perspective. It also briefly summarizes two very different approaches to restoring balance to the program over the next 75 years, offered by Representatives Sam Johnson and John Larson. In addition, it looks at the implications of early versus later action. Finally, it discusses the continuing absence of replacement rate data from the Trustees Report. The bottom line remains the same. Social Security faces a manageable financing shortfall over the next 75 years, which should be addressed soon to share the burden more equitably across cohorts, restore confidence in the nation’s major retirement program, and give people time to adjust to needed changes. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2017-13&r=ias |
| By: | Tiziano De Angelis; Gabriele Stabile |
| Abstract: | It is known that the decision to purchase an annuity may be associated to an optimal stopping problem. However, little is known about optimal strategies, if the mortality force is a generic function of time and if the `subjective' life expectancy of the investor differs from the `objective' one adopted by insurance companies to price annuities. In this paper we address this problem considering an individual who invests in a fund and has the option to convert the fund's value into an annuity at any time. We formulate the problem as a real option and perform a detailed probabilistic study of the optimal stopping boundary. Due to the generic time-dependence of the mortality force, our optimal stopping problem requires new solution methods to deal with non-monotonic optimal boundaries. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1707.09494&r=ias |
| By: | Marco Pagano (University of Naples "Federico II", CSEF and EIEF); Luca Picariello (Norwegian School of Economics) |
| Abstract: | In talent-intensive jobs, workers’ performance reveals their quality. This enhances productivity and wages, but also increases layoff risk. If workers cannot resign from their jobs, firms can insure them via severance pay. If instead workers can resign, private insurance cannot be provided, and more risk-averse workers will choose less informative jobs. This lowers expected productivity and wages. Public unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries and investment in education by employees. The prediction that the generosity of unemployment insurance is positively correlated with the share of workers in talent-sensitive industries is consistent with international and U.S. evidence. |
| Keywords: | talent, learning, layoff risk, unemployment insurance |
| JEL: | D61 D62 D83 J24 J65 |
| Date: | 2017–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:480&r=ias |