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on Insurance Economics |
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Issue of 2019‒02‒25
29 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Philip Armour; Claire O’Hanlon |
| Abstract: | A substantial portion of the costs associated with, and the value to beneficiaries of, Social Security Disability Insurance is Medicare eligibility. However, the benefits of this eligibility can vary due to differences in state policies on supplemental Medicare coverage, also known as Medigap. Although Medigap policies are federally regulated to be issued to 65-and-over Medicare beneficiaries with specific restrictions over underwriting, these policies are left to states to regulate with regard to the under-65 SSDI population, generating substantial cross-state and temporal variation. This paper documents the variation in availability and generosity of under-65 Medigap eligibility for the SSDI population. Furthermore, it exploits this variation to provide initial estimates of how this eligibility affects the health status of non-Medicaid-eligible SSDI recipients. Our main finding is that requiring Medigap plans be offered for under-65 SSDI recipients substantially improves self-reported health of this population, with suggestive evidence that this improvement is stronger as underwriting restrictions increase and among SSDI beneficiaries with mental health conditions. The estimated effect is highly robust to alternative scaling or categorizations of self-reported health, choice of data set, inclusion of fixed effects, controls for local Medicare Advantage penetration, and falsification tests. This effect is nearly three times the size of the estimated increase in self-reported health in the Oregon Medicaid expansion. |
| JEL: | I13 H51 H55 J14 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25564&r=all |
| By: | Bernard Black; Alex Hollingsworth; Leticia Nunes; Kosali Simon |
| Abstract: | A large literature examines the effect of health insurance on mortality. We contribute by emphasizing two challenges in using the Affordable Care Act (ACA)’s quasi-experimental variation to study mortality. The first is non-parallel pretreatment trends. Rising mortality in Medicaid non-expansion relative to expansion states prior to Medicaid expansion makes it difficult to estimate the effect of insurance using difference-in-differences (DD). We use various DD, triple difference, age-discontinuity and synthetic control approaches, but are unable to satisfactorily address this concern. Our estimates are not statistically significant, but are imprecise enough to be consistent with both no effect and a large effect of insurance on amenable mortality over the first three post-ACA years. Thus, our results should not be interpreted as evidence that health insurance has no effect on mortality for this age group, especially in light of the literature documenting greater health care use as a result of the ACA. Second, we provide a simulation-based power analysis, showing that even the nationwide natural experiment provided by the ACA is underpowered to detect plausibly sized mortality effects in available datasets, and discuss data needs for the literature to advance. Our simulated pseudo-shocks power analysis approach is broadly applicable to other natural-experiment studies. |
| JEL: | I1 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25568&r=all |
| By: | Jason S. Anquandah; Leonid V. Bogachev |
| Abstract: | Managing unemployment is one of the key issues in social policies. Unemployment insurance schemes are designed to cushion the financial and morale blow of loss of job but also to encourage the unemployed to seek new jobs more pro-actively due to the continuous reduction of benefit payments. In the present paper, a simple model of unemployment insurance is proposed with a focus on optimality of the individual's entry to the scheme. The corresponding optimal stopping problem is solved, and its similarity and differences with the perpetual American call option are discussed. Beyond a purely financial point of view, we argue that in the actuarial context the optimal decisions should take into account other possible preferences through a suitable utility function. Some examples in this direction are worked out. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1902.06175&r=all |
| By: | Jason Scott; John B. Shoven; Sita Slavov; John G. Watson |
| Abstract: | We examine the implications of persistent low real interest rates and wage growth rates on individuals nearing retirement. We begin by reviewing the concept of r star – the long-term real, safe interest rate that is neither expansionary nor contractionary – and presenting recent estimates suggesting that this value has declined. We then examine the implications of low returns and low wage growth for individuals currently aged 45 and 55. We find that low returns and low wage growth have substantial welfare effects, with compensating variations that are often in the hundreds of thousands of dollars. Low returns increase optimal Social Security claiming ages and the marginal benefit of working longer, while low wage growth decreases the marginal benefit of working longer. Low economy-wide wage growth has a much larger welfare effect than low individual wage growth due to wage indexation of the initial benefit and the progressivity of the Social Security benefit formula. When individual wage growth alone is low, wage indexation is unchanged, and the progressivity of the benefit formula provides insurance. When economy-wide wage growth is low, wage indexation is less generous and there is no insurance benefit from progressivity as average wages fall along with individual wages. |
| JEL: | D14 H55 J26 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25556&r=all |
| By: | Pradeep Dubey (SUNY); John Geanakoplos (Cowles Foundation, Yale University) |
| Abstract: | We consider the Rothschild-Stiglitz model of insurance but without the exclusivity constraint. It turns out that there always exists a unique equilibrium, in which the reliable and unreliable consumers take out a primary insurance up to its quantity limit, and the unreliable take out further secondary insurance at a higher premium. We provide a simple proof of this result (extended to multiple types of consumers) with the hope that it may be pedagogically useful. |
| Keywords: | Non-exclusive insurance, Free entry, Adverse selection, Primary-secondary insurance |
| JEL: | D43 D82 D86 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2167&r=all |
| By: | Nathan Foley-Fisher; Stefan Gissler; Stephane Verani |
| Abstract: | This paper studies how over-the-counter market liquidity is affected by securities lending. We combine micro-data on corporate bond market trades with securities lending transactions and individual corporate bond holdings by U.S. insurance companies. Applying a difference-in-differences empirical strategy, we show that the shutdown of AIG's securities lending program in 2008 caused a statistically and economically significant reduction in the market liquidity of corporate bonds predominantly held by AIG. We also show that an important mechanism behind the decrease in corporate bond liquidity was a shift towards relatively small trades among a greater number of dealers in the interdealer market. |
| Keywords: | Broker-dealers ; Corporate bonds ; Insurance companies ; Market liquidity ; Over-the-counter markets ; Securities lending |
| JEL: | G01 G12 G23 G22 |
| Date: | 2019–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2019-11&r=all |
| By: | Marsha Gold; David Helms; Stuart Guterman |
| Abstract: | This issue brief examines the mission of the Center for Medicare and Medicaid Innovation, as well as challenges in balancing relevance and rigor to learn how to improve payment and delivery. |
| Keywords: | Affordable Care Act , Rapid-Cycle Change, Health Care Financing |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:23499de43048438b9f4169287d319d33&r=all |
| By: | Shan Huang; Martin Salm |
| Abstract: | Starting from December 2012, insurers in the European Union were prohibited from charging gender-discriminatory prices. We examine the effect of this unisex mandate on risk segmentation in the German health insurance market. While gender used to be a pricing factor in Germany's private health insurance (PHI) sector, it was never used as a pricing factor in the social health insurance (SHI) sector. The unisex mandate makes PHI relatively more attractive for women and less attractive for men. Based on data from the SOEP we analyze how the unisex mandate affects the difference between women and men in switching rates between SHI and PHI. We find that the unisex mandate increases the probability of switching from SHI to PHI for women relative to men. This effect is strongest for self-employed individuals and mini-jobbers. On the other hand, the unisex mandate had no effect on the gender difference in switching rates from PHI to SHI. Because women have on average higher health care expenditures than men, our results imply a reduction of advantageous selection into PHI. Our results demonstrate that regulatory measures such as the unisex mandate can reduce risk selection between public and private health insurance sectors. |
| Keywords: | Unisex mandate, public and private health insurance, risk selection, Germany |
| JEL: | I13 D82 H51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1787&r=all |
| By: | Furtado, Delia (University of Connecticut); Papps, Kerry L. (University of Bath); Theodoropoulos, Nikolaos (University of Cyprus) |
| Abstract: | Social Security Disability Insurance (SSDI) take-up tends to increase during recessions. We exploit variation across immigrant groups in the non-pecuniary costs of participating in SSDI to examine the role that costs play in applicant decisions across the business cycle. We show that immigrants from country-of-origin groups that have lower participation costs are more sensitive to economic conditions than immigrants from high cost groups. These results do not seem to be driven by variation across groups in sensitivity to business cycles or eligibility for SSDI. Instead, they appear to be primarily driven by differences in work norms across origin countries. |
| Keywords: | disability insurance, immigrants, unemployment rates, ethnic networks |
| JEL: | E32 J61 H55 I18 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12097&r=all |
| By: | Nathan Foley-Fisher; Stefan Gissler; Stéphane Verani |
| Abstract: | This paper studies how over-the-counter market liquidity is affected by securities lending. We combine micro-data on corporate bond market trades with securities lending transactions and individual corporate bond holdings by U.S. insurance companies. Applying a difference-in-differences empirical strategy, we show that the shutdown of AIG's securities lending program in 2008 caused a statistically and economically significant reduction in the market liquidity of corporate bonds predominantly held by AIG. We also show that an important mechanism behind the decrease in corporate bond liquidity was a shift towards relatively small trades among a greater number of dealers in the interdealer market. |
| Keywords: | over-the-counter markets, corporate bonds, market liquidity, securities lending, insurance companies, broker-dealers |
| JEL: | G01 G12 G22 G23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:768&r=all |
| By: | Caroline Hillairet (ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique); Ying Jiao (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Anthony Réveillac (INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - INSA - Institut National des Sciences Appliquées, IMT - Institut de Mathématiques de Toulouse UMR5219 - UT1 - Université Toulouse 1 Capitole - UT2J - Université Toulouse - Jean Jaurès - UPS - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées - PRES Université de Toulouse - INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - INSA - Institut National des Sciences Appliquées - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In this paper we provide a valuation formula for different classes of actuarial and financial contracts which depend on a general loss process, by using the Malliavin calculus. In analogy with the celebrated Black-Scholes formula, we aim at expressing the expected cash flow in terms of a building block. The former is related to the loss process which is a cumulated sum indexed by a doubly stochastic Poisson process of claims allowed to be dependent on the intensity and the jump times of the counting process. For example, in the context of Stop-Loss contracts the building block is given by the distribution function of the terminal cumulated loss, taken at the Value at Risk when computing the Expected Shortfall risk measure. |
| Date: | 2018–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01561987&r=all |
| By: | Jonathan D. Brown; Morris Hamilton; Brenda Natzke; Henry T. Ireys; Matthew Gillingham |
| Abstract: | This study used Medicaid claims to examine patterns of out-of-home care—residential treatment, psychiatric hospitals, and general hospitals—and identify demographic and diagnostic characteristics associated with the sector of care used. |
| Keywords: | Medicaid , Residential Treatment Hospital , Mental Child , Youth , Out of Home |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:71756bbbf17a477fa179b5d62e89af7d&r=all |
| By: | Jäger, Simon (Massachusetts Institute of Technology); Schoefer, Benjamin (University of California, Berkeley); Zweimüller, Josef (University of Zurich) |
| Abstract: | We present a sharp test for the efficiency of job separations. First, we document a dramatic increase in the separation rate - 11.2ppt (28%) over five years - in response to a quasi-experimental extension of UI benefit duration for older workers. Second, after the abolition of the policy, the "job survivors" in the formerly treated group exhibit exactly the same separation behavior as the control group. Juxta-posed, these facts reject the "Coasean" prediction of efficient separations, whereby the UI extensions should have extracted marginal (low-surplus) jobs and thereby rendered the remaining (high-surplus) jobs more resilient after its abolition. Third, we show that a formal model of predicted efficient separations implies a piece-wise linear function of the actual control group separations beyond the missing mass of marginal matches. A structural estimation reveals point estimates of the share of efficient separations below 4%, with confidence intervals rejecting shares above 13%. Fourth, to characterize the marginal jobs in the data, we extend complier analysis to difference-indifference settings such as ours. The UI-indiced separators stemmed from declining firms, blue-collar jobs, with a high share of sick older workers, and firms more likely to have works councils - while their wages were similar to program survivors. The evidence is consistent with a "non-Coasean" framework building on wage frictions preventing efficient bargaining, and with formal or informal institutional constraints on selective separations. |
| Keywords: | efficient separations, unemployment insurance, job surplus, wage bargaining, complier analysis |
| JEL: | J63 J65 J30 C52 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12127&r=all |
| By: | Su Liu; David C. Stapleton |
| Abstract: | Using Social Security Administration data, this paper presents findings from a longitudinal analysis of the extent to which new Supplemental Security Income (SSI) disability beneficiaries return to work and use SSI work incentives. |
| Keywords: | Employment , SSDI , Disability Beneficiaries |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:fe4441401f1549fc8ef75bad7c7498ab&r=all |
| By: | Jäger, Simon; Schoefer, Benjamin; Zweimüller, Josef |
| Abstract: | We present a sharp test for the efficiency of job separations. First, we document a dramatic increase in the separation rate - 11.2ppt (28%) over five years - in response to a quasi-experimental extension of UI benefit duration for older workers. Second, after the abolition of the policy, the "job survivors" in the formerly treated group exhibit exactly the same separation behavior as the control group. Juxtaposed, these facts reject the "Coasean" prediction of efficient separations, whereby the UI extensions should have extracted marginal (low-surplus) jobs and thereby rendered the remaining (high-surplus) jobs more resilient after its abolition. Third, we show that a formal model of predicted efficient separations implies a piece-wise linear function of the actual control group separations beyond the missing mass of marginal matches. A structural estimation reveals point estimates of the share of efficient separations below 4%, with confidence intervals rejecting shares above 13%. Fourth, to characterize the marginal jobs in the data, we extend complier analysis to difference-in-difference settings such as ours. The UI-indiced separators stemmed from declining firms, blue-collar jobs, with a high share of sick older workers, and firms more likely to have works councils - while their wages were similar to program survivors. The evidence is consistent with a "non-Coasean" framework building on wage frictions preventing efficient bargaining, and with formal or informal institutional constraints on selective separations. |
| Keywords: | complier analysis; Efficient separations; job surplus; Unemployment insurance; wage bargaining |
| JEL: | C52 J30 J63 J65 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13473&r=all |
| By: | Krebs, Tom (University of Mannheim); Scheffel, Martin (University of Cologne) |
| Abstract: | This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of human capital shocks (moral hazard). We show that constrained optimal allocations are simple in the sense that they can be found by solving a static social planner problem. We further show that constrained optimal allocations are the equilibrium allocations of a market economy in which the government uses taxes and transfers that are linear in household wealth/income. We use the tractability result to show that an increase in labor market (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we provide a quantitative analysis of the secular rise in job displacement risk in the US and find that the welfare cost of not adjusting the social insurance system optimally can be substantial. |
| Keywords: | labor market risk, social insurance, moral hazard |
| JEL: | E21 H21 J24 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12128&r=all |
| By: | Leslie Jackson Conwell; Dominick Esposito; Susan Garavaglia; Eric S. Meadows; Margaret Colby; Vivian Herrara; Seth Goldfarb; Martin Marciniak |
| Abstract: | The Medicare Part D coverage gap has been associated with lower adherence and drug utilization and higher discontinuation. |
| Keywords: | coverage gap , Medicare Part D , osteoporosis , prescription drugs |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:78a05cc0add84320a758931b4f69f34a&r=all |
| By: | Eugene C. Rich; Ann C. Bonham; Darrell G. Kirch |
| Abstract: | This article examines the central role academic medicine can play in the growth of comparative effectiveness research, the implications of this research for comprehensive health care reform, and opportunities to use evidence-based medicine to address high costs and suboptimal outcomes in the U.S. health care system. |
| Keywords: | Comparative Effectiveness , Health Care Reform , CER |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:1469da870e4d471cbc4326923c482f6f&r=all |
| By: | Carrie Au-Yeung; John Czajka |
| Abstract: | This brief discusses the complexities that MAGI implementation will raise for state Medicaid eligibility systems and how these issues might be addressed. |
| Keywords: | MAGI , Modified Adjusted Gross Income , Medicaid Eligibility Systems, ACA, Affordable Care Act |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:5f194175752543d4b9e8dc20e90757fe&r=all |
| By: | Bridget Bernick |
| Abstract: | The Payment Rate Comparison Tool is an Excel-based tool that can help states compare their Medicaid payment rates to those of Medicare and commercial payers. |
| Keywords: | AMRP, access, Medicaid, fee-for-service, measures, methods |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:6a07b54c63d1422f82f0e7bab8712588&r=all |
| By: | Bridget Bernick |
| Abstract: | This document accompanies the Payment Rate Comparison tool, which helps states compare Medicaid’s payment rates to those of Medicare and commercial payers. |
| Keywords: | AMRP, access, Medicaid, fee-for-service, measures, methods |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:08d3d0470e784eca8e88d1298e5b9aac&r=all |
| By: | Ojo, Marianne |
| Abstract: | It appears the United States Senate may have been trying to make the points that renegotiating or enacting new legislations require more energy, efforts and time than many would appreciate – particularly in the processes and attempts involved in dismantling the Affordable Care Act – an attempt which ultimately proved unsuccessful – even though certain key elements were eventually replaced through the Tax Reform Bill which was approved in December 2017 – the first major legislative success of the Trump Administration. However the Affordable Care Act remains a testimony of efforts which had been invested in designing a legislation – which although not the ultimate legislation for some, still partially addresses certain concerns of the medical system. Certain other agreements have not had it so easy during the first twelve months of the new administration. Notably, the Trans Pacific Partnership, the Paris Global Climate Agreement – and even the North American Free Trade Area (still being re negotiated) – which have either been withdrawn from, or face the threat of being withdrawn from. So which alliances appear to have been understated, dismantled or being re considered, during and following the first year marking the inauguration of the 45th President of the United States? |
| Keywords: | Brexit; Trans Pacific Partnership; North American Free Trade Area; African Union; European Union; trade agreements; environmental agreements; Affordable Care Act; Deferred Action for Childhood Arrivals Program |
| JEL: | E3 E31 E32 E4 E44 G2 G28 K23 M4 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84050&r=all |
| By: | Arif Mamun; Paul O'Leary; David C. Wittenburg; Jesse Gregory |
| Abstract: | Summarizes 2007 employment rates at the national and state levels. |
| Keywords: | Employment Rates , Social Security , Disability , Beneficiaries |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:8dc9f0dfbb5c4b61ba1ea525a90719c7&r=all |
| By: | Bellés-Obrero, Cristina; Cabrales, Antonio; Jimenez-Martin, Sergi; Vall-Castello, Judit |
| Abstract: | We explore the effects of a child labor regulation that changed the legal working age from 14 to 16 over the health of their offspring. We show that the reform was detrimental for the health of the son's of affected parents at delivery. Yet, in the medium run, the effects of the reform are insignificant for both male and female children. The sons of treated mothers are perceived as still having worse health at older ages, even if their objective health status has recovered. These boys are also more likely to have private health insurance, which suggests more concerned mothers. |
| Keywords: | child health; education; Gender; minimum working age |
| JEL: | I12 I25 J13 J81 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13451&r=all |
| By: | Bridget Bernick |
| Abstract: | We created a draft Medicaid Access Tool in Microsoft Access. The tool allows states to report data related to monitoring access and potentially could be used to create an AMRP. |
| Keywords: | AMRP, access, Medicaid, fee-for-service, measures, methods |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:f4dc34ffd5e04e2e9b2a7c0df0bff2b6&r=all |
| By: | L. Di Persio; I. Oliva. K. Wallbaum |
| Abstract: | In the present paper we provide a two-step principal protection strategy obtained by combining a modification of the Constant Proportion Portfolio Insurance (CPPI) algorithm and a classical Option Based Portfolio Insurance (OBPI) mechanism. Such a novel approach consists in assuming that the percentage of wealth invested in stocks cannot go under a fixed level, called guaranteed minimum equity exposure, and using such an adjusted CPPI portfolio as the underlying of an option. The first stage ensures to overcome the so called cash-in risk, typically related to a standard CPPI technique, while the second one guarantees the equity market participation. To show the effectiveness of our proposal we provide a detailed computational analysis within the Heston-Vasicek framework, numerically comparing the evaluation of the price of European plain vanilla options when the underlying is either a purely risky asset, a standard CPPI portfolio and a CPPI with guaranteed minimum equity exposure. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1902.06505&r=all |
| By: | Leslie Jackson Conwell; Dominick Esposito; Margaret Colby; Daniel Ball; Eric S. Meadows; Martin Marciniak |
| Abstract: | Researchers interviewed oncology social workers and nurse practitioners in an effort to understand how the Medicare Part D doughnut hole affects beneficiaries’ financial access to oral anticancer targeted therapies. |
| Keywords: | Prohibitive Costs, Medicare Part D, Cancer Medications, Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:c72da8f9bbe34fd99d96e77bf5b318b2&r=all |
| By: | Jonathan D. Brown; Lawrence S. Wissow |
| Abstract: | Health care reform may provide opportunities to enhance the mental health treatment capacity of primary care, but capitalizing on these opportunities might require bolstering the clinical skills of the primary care team. |
| Keywords: | Primary Care , Training Skills , Mental Health |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:1fb5d18309d6492b9ff25f2cbc71ea0d&r=all |
| By: | Catherine McLaughlin; Margaret Colby; Gregory Bee; Jenna Libersky |
| Abstract: | Using a variety of data sources, this paper examines health care utilization patterns of Healthy San Francisco enrollees. |
| Keywords: | San Francisco , Health Care , Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:6e97cccd9bb2497ca58747a1fc8f3684&r=all |