|
on Insurance Economics |
|
Issue of 2018‒09‒17
23 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Diamond, Rebecca (Stanford University); Dickstein, Michael J. (New York University); McQuade, Timothy James (Stanford University); Persson, Petra |
| Abstract: | The Affordable Care Act (ACA) established health insurance marketplaces where consumers can buy individual coverage. Leveraging novel credit card and bank account micro-data, we identify new enrollees in the California marketplace and measure their health spending and premium payments. Following enrollment, we observe dramatic spikes in individuals' health care consumption. We also document widespread attrition, with more than half of all new enrollees dropping coverage before the end of the plan year. Enrollees who drop out re-time health spending to the months of insurance coverage. This drop-out behavior generates a new type of adverse selection: insurers face high costs relative to the premiums collected when they enroll strategic consumers. We show that the pattern of attrition undermines market stability and can drive insurers to exit, even absent differences in enrollees' underlying health risks. Further, using data on plan price increases, we show that insurers largely shift the costs of attrition to non-drop-out enrollees, whose inertia generates low price sensitivity. Our results suggest that campaigns to improve use of social insurance may be more efficient when they jointly target take-up and attrition. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3680&r=ias |
| By: | Gabriella Conti (Institute for Fiscal Studies and University College London); Rita Ginja (Institute for Fiscal Studies and University of Bergen); Renata Narita (Institute for Fiscal Studies) |
| Abstract: | Do households value access to free health insurance when making labor supply decisions? We answer this question using the introduction of universal health insurance in Mexico, the Seguro Popular (SP), in 2002. The SP targeted individuals not covered by Social Security and broke the link between access to health care and job contract. We start by using the rollout of SP across municipalities in a differences-indifferences approach, and find an increase in informality of 4% among low-educated families with children. We then develop and estimate a household search model that incorporates the pre-reform valuation of formal sector amenities relative to the alternatives (informal sector and non-employment) and the value of SP. The estimated value of the health insurance coverage provided by SP is below the government’s cost of the program, and the corresponding utility gain is, at most, 0.56 per each peso spent. |
| Keywords: | Search, Household behavior, Health insurance, Informality, Unemployment |
| Date: | 2018–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:18/20&r=ias |
| By: | KLIMAVICIUTE Justina, (Université de Liège); PESTIEAU Pierre, (Université de Liège, CORE and Paris School of Economics); SCHOENMAECKERS Jérôme, (Université de Liège) |
| Abstract: | The aim of this paper is to analyze long-term care (LTC) insurance purchase decisions when parents expect to receive assistance from altruistic children. We first propose a simple theoretical model in which we show that the effect of children's altruism on parents' insurance decision is ambiguous and depends on a number of factors: the degree of substitutability between informal and formal care, the degree of parental altruism and the concavity of the utility functions. We then run an empirical test using data from the US, France, Spain, Germany and Israel. We find that the effect of children's altruism is negative in the US and Israel, but not significant in France, Germany and Spain, which possibly suggests that the different forces identified in the theoretical model are offsetting each other. |
| Keywords: | long-term care insurance, altruism, informal care |
| JEL: | D64 I13 J14 |
| Date: | 2018–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2018017&r=ias |
| By: | KLIMAVICIUTE Justina, (Université de Liège); PESTIEAU Pierre, (Université de Liège, CORE, Université catholique de Louvain, and Paris School of Economics); SCHOENMAECKERS Jérôme, (Université de Liège) |
| Abstract: | This paper studies long-term care (LTC) insurance in the presence of family altruism. In the first, theoretical, part of the paper, we explore whether and how family solidarity affects the application to LTC of Arrow’s (1963) theorem of the deductible, which is shown to apply in models without family by a number of papers. We consider two tyes of family altruism, perfect and imperfect, and find that Arrow’s theorem generally holds, even though some departures from the standard model and some differences between the types of altruism exist. Oour analysis highlights a complex interplay between parents’ insurance and their children’s aid, which implies that a number of intuitive conjectures are not always verified. For instance, while one would expect the deductible to be increasing in the child’s degree of altruism, this is unambiguously verified only under certain conditions. Given the ambiguity of some results, in the second part of the paper, we resort, more generally, to an empirical test of the relation between LTC insurance and children’s altruism using the data from the Health and Retirement Study (HRS). Our findings suggest that children’s altruism has a negative impact on parents’ LTC insurance purchases, even though some results also point to this relationship being more complex than one might think. |
| Keywords: | long-term care insurance, deductible theorem, alturism, family aid |
| JEL: | D64 I13 J14 |
| Date: | 2018–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2018011&r=ias |
| By: | Lavorato, M.; Braga, M. |
| Abstract: | Following the well-succeed experience of developed countries such as Canada and the United States, Brazil implemented the Crop Insurance Program (PSR) in 2005 seeking to provide subsidies for the purchase of crop insurance policies by Brazilian farmers. Despite the importance of this public policy, there is no empirical investigation about the effects of premium subsidies on the quantity demanded for crop insurance in Brazil. This paper aimed to fill this gap through the investigation of the three grains – corn, soybeans and wheat – that are most cultivated in southern Brazil, the region where PSR is most developed. A fixed effects model was applied to an unbalanced panel data of municipalities of southern Brazil considering the years between 2006 and 2015. Three measures of crop insurance demand were considered: level of total premiums, level of total premiums per hectare and level of total liability per hectare. Results was in line with previous literature, suggesting the existence of a positive, although inelastic, effect of the subsidy level on the demand for crop insurance. |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:276025&r=ias |
| By: | Charles W. Calomiris; Sophia Chen |
| Abstract: | We construct a new measure of the changing generosity of deposit insurance for many countries, empirically model the international influences on the adoption and generosity of deposit insurance, and show that the expansion of deposit insurance generosity increased asset risk in banking systems. We consider three asset risk measures: higher loans-to-assets, a higher proportion of lending to households, and a higher proportion of mortgage lending. None of the observed increases in these indicators is offset by declines in banking system leverage. We show that increased asset risk explains at least part of the positive association between deposit insurance and the likelihood and severity of systemic banking crises. |
| JEL: | E32 F55 G01 G18 G21 G28 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24936&r=ias |
| By: | Carr, Chalmers |
| Keywords: | Crop Production/Industries |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao18:272607&r=ias |
| By: | Lanclos, Kent |
| Keywords: | Crop Production/Industries |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao18:272694&r=ias |
| By: | Benson, Dean |
| Keywords: | Agricultural Finance, Risk and Uncertainty |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao17:260505&r=ias |
| By: | Ifft, Jennifer; Jodlowski, Margaret |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy |
| Date: | 2018–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa166:276196&r=ias |
| By: | Jensen, Mark |
| Keywords: | Agricultural Finance, Risk and Uncertainty |
| Date: | 2017–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao17:260538&r=ias |
| By: | Porth, Lysa |
| Keywords: | Agricultural and Food Policy, Agricultural Finance, International Relations/Trade |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao18:272709&r=ias |
| By: | Edouard Challe (CREST & Ecole Polytechnique) |
| Abstract: | I study optimal monetary policy in a New Keynesian economy wherein house- holds precautionary-save against uninsured, endogenous unemployment risk. In this economy greater unemployment risk raises desired savings, causing aggregate demand to fall and ul- timately feed back to greater unemployment risk. I show this deationary feedback loop to be constrained-ine¢ cient and to call for an accommodative monetary policy response: after a contractionary aggregate shock the policy rate should be kept signi cantly lower and for longer than in the perfect-insurance benchmark. For example, the usual prescription obtained under perfect insurance of a hike in the policy rate in the face of a bad supply (i.e., productivity or cost-push) shock is easily overturned. If implemented, the optimal policy e¤ectively breaks the deflationary feedback loop and takes the dynamics of the imperfect-insurance economy close to that of the perfect-insurance benchmark. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:9&r=ias |
| By: | Brorsen, B. Wade; Niyibizi, Bart; Park, Eunchun |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc018:276151&r=ias |
| By: | Wang, Ke; Zhang, Qiao; Porth, Lysa; Boyd, Milton |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc018:276150&r=ias |
| By: | Orazio Attanasio (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Corina Mommaerts (Institute for Fiscal Studies) |
| Abstract: | We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each component is insured. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially insurable within extended family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks. |
| Date: | 2018–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:18/17&r=ias |
| By: | Marco Brianti (Boston College); Tzuo Hann Law (Boston College) |
| Abstract: | We study the effects of unemployment insurance (UI) and underemployment insurance (EI) in a general equilibrium model of search and matching featuring financial frictions and risk-averse workers. Equilibrium is inefficient because the market insures risk-averse workers through low-unemployment and low-wage jobs. Additionally, our model features underemployment risk which manifests in two ways. First, employed workers inefficiently separate because firms cannot retain workers due to financial frictions. Second, employed workers face wage uncertainty. Underemployment risk further lowers capital utilization. UI alleviates unemployment risk but exacerbates underemployment risk. EI is required to restore efficiency even when workers are risk neutral. UI and EI together restore efficiency when workers are risk averse. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1303&r=ias |
| By: | Ariel Mecikovsky (Universitaet Bonn); Felix Wellschmied (ITAM and Universidad Carlos III de Madrid) |
| Abstract: | We study trends in US male labor market risk over the last three decades accounting for workers’ endogenous employment and job mobility decisions. The risk stemming from permanent shocks to idiosyncratic productivity and heterogeneity in pay across offered jobs has increased for most workers. These increases explain 75 percent of the increase in residual wage inequality. On-the-job search decisions of high skilled workers and labor market participation decisions of low skilled workers provide effective insurance mechanisms leading to moderate welfare changes. Unemployment benefits and disability insurance have become more valuable, but scaling back their generosity would still be welfare improving. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:52&r=ias |
| By: | Ellen E. Bouchery; Michael Barna; Elizabeth Babalola; Daniel Friend; Jonathan D. Brown; Crystal Blyler; Henry T. Ireys |
| Abstract: | This study assessed whether a peer-staffed crisis respite program implemented in New York City in 2013 reduced emergency department visits, hospitalizations, and Medicaid expenditures for individuals enrolled in Medicaid. |
| Keywords: | hospitalization, Medicaid, crisis respite center, psychiatric crisis, behavioral health disorder |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:176627b21204414abd9ccef6f51952d2&r=ias |
| By: | Doms, Juliane; Gerstmann, Henning; Möller, Markus |
| Abstract: | A key challenge for the design of weather index insurances (WII) is the presence of basis risk, i.e. the actual loss of the insured farm is not fully covered by the insurance payment. Basis risk can occur dependent on the distance between the point of measurement of a specific weather event and the farm’s location (spatial basis risk). The present study aimed to derive spatial data sets and use them for the design of test site- and phenological phasespecific precipitation indexes. We studied for 20 German crop farms the hedging efficiency of WII, i.e. how the variability of farm specific total gross margins would have changed if farmers had purchased the designed WII. The hedging efficiency is different from farm to farm and not always a risk reduction (positive HE) results. Although these might be not the best results, a new methodology to minimize spatial basis risk could be introduced by designing highly dynamic indexes, which are flexible and precise in terms of time and space. The contribution of the present study to the WII research is the analysis of the HE of WII based on these indexes. |
| Keywords: | Agricultural Finance, Risk and Uncertainty |
| Date: | 2017–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae17:260821&r=ias |
| By: | Mike Waugh (New York University) |
| Abstract: | Should a nation’s tax system become more progressive as it opens to trade? Does opening to trade change the benefits of a progressive tax system? We answer these question within a standard incomplete markets model with frictional labor markets and Ricardian trade. Consistent with empirical evidence, adverse shocks to comparative advantage lead to labor income loses for import-competition-exposed workers; with incomplete markets, these workers are imperfectly insured and experience welfare losses. A progressive tax system is valuable as it substitutes for imperfect insurance and redistributes the gains from trade. However, it also reduces the incentives to work and for labor to reallocate away from comparatively disadvantaged locations. We find that progressivity should increase with openness to trade and that progressivity is an important tool to mitigate the negative consequences of globalization. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1210&r=ias |
| By: | Liran Einav; Amy Finkelstein; Neale Mahoney |
| Abstract: | There is substantial waste in U.S. healthcare, but little consensus on how to identify or combat it. We identify one specific source of waste: long-term care hospitals (LTCHs). These post-acute care facilities began as a regulatory carve-out for a few dozen specialty hospitals, but have expanded into an industry with over 400 hospitals and $5.4 billion in annual Medicare spending in 2014. We use the entry of LTCHs into local hospital markets and an event study design to estimate LTCHs’ impact. We find that most LTCH patients would have counterfactually received care at Skilled Nursing Facilities (SNFs) – post-acute care facilities that provide medically similar care to LTCHs but are paid significantly less – and that substitution to LTCHs leaves patients unaffected or worse off on all measurable dimensions. Our results imply that Medicare could save about $4.6 billion per year – with no harm to patients – by not allowing for discharge to LTCHs. |
| JEL: | H51 I11 I18 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24946&r=ias |
| By: | Kenneth W. Abbott (Arizona State University); Céline Kauffmann (OECD); Jeong-Rim Lee (Asian Harmonization Working Party) |
| Abstract: | This study takes stock of the membership, governance structure, operational mode and regulatory power of trans-governmental networks of regulators (TGNs). It contributes to a greater OECD project aimed at building greater understanding of the benefits and pitfalls of various approaches to international regulatory co-operation (IRC) as identified in OECD (2013), International Regulatory Co-operation: Addressing Global Challenges.In order to fill the knowledge gap, this study provides a working definition of TGNs, maps existing cases, and analyses their key features. It relies on information gathered for this study on 144 TGNs. It analyses the substantive fields in which TGNs operate as well as differences in membership and other structural features. It discusses the range of regulatory activities in which TGNs engage and analyses the advantages and the disadvantages of TGNs as mechanisms for IRC, based on a review of the large and growing scholarly literature. It provides a new database on the topic, as well short case studies of three significant but structurally dissimilar TGNs: the Asian Harmonization Working Party (AHWP) on medical devices, the International Association of Insurance Supervisors (IAIS), and the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH). |
| JEL: | F5 F53 F55 F59 H7 K2 K33 |
| Date: | 2018–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaah:10-en&r=ias |