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on Insurance Economics |
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Issue of 2019‒04‒15
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Timothy J. Halliday (University of Hawaii at Manoa, UHERO, IZA); Randall Q. Akee (Brookings Institution and UCLA (on-leave), IZA, NBER); Tetine Sentell (University of Hawaii at Manoa); Megan Inada (Kokua Kalihi Valley Comprehensive Family Services); Jill Miyamura (Hawaii Health Information Corporation) |
| Abstract: | In March of 2015, the State of Hawaii stopped covering the vast majority of migrants from countries belonging to the Compact of Free Association (COFA) in the state Medicaid program. As a result COFA migrants were required to obtain private insurance in health insurance exchanges established under the Affordable Care Act. Using statewide administrative hospital discharge data, we show that Medicaid-funded hospitalizations and emergency room visits declined in this population by 69% and 42% after the expiration of Medicaid eligibility. Utilization funded by private insurance did increase but not enough to offset the declines in publicly-funded utilization. This resulted in a net decrease in utilization. In addition, we show that uninsured ER visits increased as a consequence of the expiration of Medicaid benefits. Paradoxically, we also find a substantial increase in Medicaid-funded ER visits by infants after the expiration of benefits which is consistent with a substitution of ER visits for ambulatory care for the very young. |
| Keywords: | Immigration, Health Insurance, Cost Sharing, Medicaid, Insurance Exchange |
| JEL: | I10 I14 J61 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2019-1&r=all |
| By: | KLIMAVICIUTE Justina, (Vilnius University); PESTIEAU Pierre, (Université de Liège, CORE, UCLouvain and Toulouse School of Economics) |
| Abstract: | Long-term care (LTC) is one of the largest uninsured risks facing the elderly. In this paper, we first survey the standard causes of what has been dubbed the LTC insurance puzzle and then suggest that a possible way out of this puzzle is to make the reimbursement formula less threatening for those who fear a too long period of dependence. We adopt a reimbursement formula resting on Arrow’s theorem of the deductible, i.e. that it is optimal to focus insurance coverage on the states with largest expenditures. It implies full self-insurance coverage on the states with largest expenditures. It implies full self-insurance for the first years of dependency followed by full insurance thereafter. We show that this result remains at work with ex post moral hazard. |
| Keywords: | long-term care insurance, deductible, Arrow’s theorem, reimbursement rule |
| JEL: | G22 I13 J14 |
| Date: | 2019–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2019002&r=all |
| By: | Rosalind Bell-Aldeghi (Université de Bourgogne Franche-Comté, CRESE; LIRAES (EA4470), Université de Paris Descartes) |
| Abstract: | As health expenditure and need for corresponding funding rises, resorting to topping up insurance can seem natural. Complementary and supplementary insurances are both topping up contracts and, as such, are treated as one in the theoretical literature on optimal insurance. We argue that distinguishing them is crucial, and should be considered carefully when defining policies impacting the structure of the health insurance system, as these two kinds of insurance can have opposite effects on social insurance coverage. In this model, the optimal social insurance rate is defined endogenously and varies according to redistribution and the ex-post moral hazard characteristics of the insurance. This game has three stages and is solved through backward induction. The optimal social insurance rate is chosen first, by maximising social welfare. Second, individuals choose their private complementary and supplementary contracts. In the third stage they decide on their level of labour and consumption of health and other goods. Results indicate that whereas the presence of complementary insurance decreases the optimal size of social insurance, the offset effects of supplementary insurance can improve welfare. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2019-01&r=all |
| By: | Randall S. Brown; Deborah Peikes; Greg Peterson; Jennifer Schore; Carol M. Razafindrakoto |
| Abstract: | This article identifies a high-risk subgroup of Medicare beneficiaries in the Medicare Coordinated Care Demonstration for which 4 of the 11 participating programs significantly reduced hospitalizations, and the distinguishing features of those successful programs. |
| Keywords: | Medicare Coordinated Care Demonstration , High-Risk Patients , Chronic Care, Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:d0bbf19d18064539b65f22a43b842bde&r=all |
| By: | FAN Simon, (Lingnan University, Hong Kong); PANG Yu, (Macau University of Science and Technology); PESTIEAU Pierre, (Université de Liège, CORE, UCLouvain and Toulouse School of Economics) |
| Abstract: | We analyze the role of pay-as-you-go social security in intragenerational risk sharing in an overlapping-generations model with individual heterogeneity. Parents invest in their children’s education in exchange for old-age support financed by a fraction of their children’s future earnings. Due to random factors such as luck in the job market, children may have different earning capacities even if they receive the same education. Without social security, a parent receives a transfert payment from her own child, so the received amount is uncertain as it depends on the child’s earnings. The social security scheme of pooling transfer contributions from all children and then returning them equally to each parent insures parents against the riks of educational investments. Our models shows that social security stimulates educational spending, increases labor earnings, and improves social welfare (as measured by ex ante individual utility). However, it worsens ex post intragenerational income equality (as measured by the Gini coefficient for lifetime income). |
| Keywords: | old-age insurance, social security, public education, income inequality |
| JEL: | D81 H20 H55 I24 |
| Date: | 2019–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2019004&r=all |
| By: | Deborah Peikes; Greg Peterson; Randall S. Brown; Sandy Graff; John P. Lynch |
| Abstract: | This article analyzed the experiences of the School of Medicine’s care-management program as it took part in the Medicare Coordinated Care Demonstration, with the goal of reducing hospitalizations and Medicare spending or improving quality while remaining cost neutral. |
| Keywords: | Medicare Coordinated Care Demonstration , Washington University , Medicare , Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:d1a229afecd24c52becd5c756a7959f0&r=all |
| By: | Aniko Biro (“Lendület” Health and Population Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Peter Elek (Department of Economics, Eötvös Loránd University (ELTE) and “Lendület” Health and Population Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | We analyse the causal effect of job loss on disability insurance enrolment on a five-year horizon and the implications on health expenditures. Using individual level administrative panel data from Hungary, we follow individuals displaced due to a mass lay-off and compare their labour force status to non-laid-off individuals with similar employment and health history, chosen with propensity score matching. According to our estimates, being laid off increases the transition probability to disability by 50% (or 1.4% points) in four years, and half of the excess transitions occur within the first year. We find a greater than average effect among older individuals and those who were in worse health before. Outpatient, inpatient and pharmaceutical expenditure increases 3.5-4 times when a laid-off individual takes up disability benefit, and decreases slightly afterwards, but does not reach the pre-disability levels. This health expenditure pattern resembles that observed around the diagnosis of previously undetected chronic diseases, such as diabetes or hypertension, but genuine health shocks may also be present. The increase in health expenditure corresponds to 20-25% of the additional disability payments in the medium term. |
| Keywords: | administrative panel data, disability insurance, displacement, health expenditures |
| JEL: | C23 I12 I38 J63 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1908&r=all |
| By: | Gangopadhyaya, Anuj (Urban Institute); Blavin, Fredric (Urban Institute); Gates, Jason (Urban Institute); Braga, Breno (Urban Institute) |
| Abstract: | While Earned Income Tax Credit (EITC) expansions are typically associated with improvements in maternal mental health, little is known about the mechanisms through which the program affects this outcome. The EITC could affect mental health through direct tax credit, changes in labor supply and changes in health insurance coverage of participants. To disentangle these mechanisms, we assess the effects of state and federal EITC expansion on mental health, employment and health insurance by maternal marital status. We find that federal EITC expansions are associated with 1) large positive effects on employment for unmarried mothers and 2) improved self-reported mental health for all mothers. State EITC expansion, which generate smaller changes in the effective wage rate, are associated with improvements in mental health for married mothers only and have no effect on employment for married or unmarried mothers. We find no impact of EITC expansions on health insurance coverage for married or unmarried mothers. These findings suggest that while EITC expansions improved mental health for unmarried mothers through a combination of the credit and employment, for married mothers, improved mental health is driven through the direct credit alone. |
| Keywords: | earned income tax credit, state earned income tax credit, maternal mental health, labor supply, health insurance coverage |
| JEL: | H24 I12 I14 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12233&r=all |
| By: | Matteo Brachetta; Claudia Ceci |
| Abstract: | We study the optimal excess-of-loss reinsurance problem when both the intensity of the claims arrival process and the claim size distribution are influenced by an exogenous stochastic factor. We assume that the insurer's surplus is governed by a marked point process with dual-predictable projection affected by an environmental factor and that the insurance company can borrow and invest money at a constant real-valued risk-free interest rate $r$. Our model allows for stochastic risk premia, which take into account risk fluctuations. Using stochastic control theory based on the Hamilton-Jacobi-Bellman equation, we analyze the optimal reinsurance strategy under the criterion of maximizing the expected exponential utility of the terminal wealth. A verification theorem for the value function in terms of classical solutions of a backward partial differential equation is provided. Finally, some numerical results are discussed. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1904.05422&r=all |
| By: | Bullard, James B. (Federal Reserve Bank of St. Louis) |
| Abstract: | St. Louis Fed President James Bullard welcomed community bankers, regulators and researchers to the Community Banking in the 21st Century research and policy conference. He also welcomed a third sponsor for the conference: The Federal Deposit Insurance Corp. has joined the Federal Reserve System and the Conference of State Bank Supervisors in presenting this sixth annual conference. Bullard also discussed a handful of topics related to technology, including “fintech,” artificial intelligence and innovation hubs. “The changing landscape of financial services is an important reason for this conference,” he said. |
| Date: | 2018–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlps:322&r=all |
| By: | Matthew S. Rutledge; Alice Zulkarnain; Sara Ellen King |
| Abstract: | Some studies have found that contingent workers – including independent contractors, consultants, and those in temporary, on-call, and “gig economy” jobs – make up an increasing share of the labor force. How does this group of workers interact with Social Security Disability Insurance (SSDI)? This project uses the Health and Retirement Study linked to administrative data on SSDI applications and earnings to answer this question. Specifically, the paper examines how SSDI application, receipt, potential benefits, and insurance status differ for workers who hold contingent arrangements in their 50s and early 60s, compared to those who work in more traditional jobs at those ages. This study is among the first to examine how contingent work is likely to affect participation in a public program, specifically disability benefits. The study finds that SSDI application rates are about one-quarter smaller for older eligible contingent workers than for traditional workers of the same ages. Contingent workers are also about one-third less likely to be awarded disability benefits. The lower application and award rates are likely due in part to contingent workers’ lower eligibility rates and lower potential benefits. The application and award rates are also lower for contingent workers who have a chronic condition, work limitation, or limitation in their Activities of Daily Living. These results suggest that contingent workers would benefit from a greater availability of information and assistance in navigating the SSDI application process. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2019-4&r=all |
| By: | Góra, Marek (Warsaw School of Economics); Palmer, Edward (Uppsala University) |
| Abstract: | This chapter defines a universal public pension scheme (UPPS) as a government-mandated lifecycle longevity insurance scheme that transfers individual consumption from the working years to the retirement phase of the lifecycle. It discusses the differences in four UPPS designs defined with regard to whether they are defined contribution (DC) or defined benefit (DB), and financial (F) or nonfinancial (N). Generally speaking, DC schemes are distinguished from DB schemes by their basic building block of individual accounts. This ensures the important design feature of transparency, the "enabler" of economic efficiency - through the effects on marginal decisions to choose formal work over informal work or leisure and to postpone retirement marginally toward the end of the working life. The chapter examines additional criteria (fairness, financial sustainability, affordability, and adequacy), plus some other design characteristics of interest in a comparative assessment. The conclusion is that the two UPPS-DC designs are superior to the two UPPS-DB designs. The difference in the relative rates of return of NDC versus FDC designs, together with uncertain demographic effects on future investment needs, speak in favor of a UPPS portfolio with both. UPPS-FDC involves additional risks and costs, but also provides positive effects through returns for individuals and the economy. |
| Keywords: | non-financial defined contribution (NDC), income allocation, retirement, externalities, transparency, fairness, universal public pension scheme (UPPS) |
| JEL: | D6 D62 D81 E62 G22 G28 H23 H55 J14 J18 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12221&r=all |
| By: | Lynch, John (University of Adelaide); Meunier, Aurélie; Pilkington, Rhiannon (University of Adelaide); Schurer, Stefanie (University of Sydney) |
| Abstract: | We use administrative data from South Australia to study the impact of an unconditional cash transfer on child health. We use the unanticipated introduction of the Australian Baby Bonus (ABB), a one-off payment of AU$3,000 (US$2,400) made to families with a newborn, to isolate its causal effect. The ABB reduces the number of potentially preventable hospitalizations and emergency department presentations for respiratory problems in the first year of life. Findings from survey data suggest that households spent the windfall income on electricity and private health insurance. There is no robust evidence that the ABB increased accidents or non-essential good consumption. |
| Keywords: | unconditional cash transfers, baby bonus, child respiratory health, health care utilization, regression discontinuity design, natural experiment, linked administrative data |
| JEL: | I14 I38 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12230&r=all |
| By: | Center for Health Care Strategies; Mathematica Policy Research |
| Abstract: | This technical assistance tool provides guidance on considerations related to National Committee for Quality Assurance (NCQA) health plan accreditation, particularly when non-health plan entities are designated as health home providers and health home services are provided outside of the health plans. |
| Keywords: | Health , Homes , NCQA Health Plan Accreditation , Health |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:d5ba61d06c5b4e74b7b86a0cce460354&r=all |
| By: | Wei, Xiahai (Huaqiao University); Fang, Tony (Memorial University of Newfoundland); Jiao, Yang (Fort Hays State University); Li, Jiahui (Peking University) |
| Abstract: | Using unique matched employer-employee data from China, we discover that migrant workers in the manufacturing industry who are proficient in the local dialect earn lower wages than those who are not. We also find that workers with better dialect skills are more likely to settle for lower wages in exchange for social insurance. We hypothesize that they are doing so in the hope of obtaining permanent residency and household registration status (hukou) in the host city where they work. Further tests show that the phenomenon of "exchanging wages for social insurance participation" is more pronounced among workers employed in smaller enterprises. Moreover, migrant workers with better language skills have a stronger desire to stay in the host city. Our conclusions are robust to different specifications, even after addressing the endogeneity issue for language acquisition. The present study provides a new perspective on the impact of language fluency on social integration among migrants, one of the most disadvantaged groups in developing countries. |
| Keywords: | wages, language ability, dialect, social insurance, migrants, China |
| JEL: | J32 J61 R23 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12248&r=all |
| By: | Matthew S. Rutledge; Alice Zulkarnain; Sara Ellen King |
| Abstract: | Evaluations of Social Security Disability Insurance (SSDI) applications are based not just on poor health, but in most cases consider the vocational factors of age, education and work experience to determine whether individuals can work. These criteria indicate that SSDI applicants must not only be in poor health, but in poor health that actually conflicts with the requirements of their occupation (and other occupations). Yet little is known about the relationship between SSDI activity and the ability to meet occupational requirements. This study devises a Health Mismatch Index, which is the share of workers in an occupation citing health-related difficulties in the Survey of Income and Program Participation that would prevent them from performing at least one requirement marked as essential for their occupation in the Occupational Requirement Survey. The results show that the most common difficulties in required abilities that result in health mismatch are lifting 25 lbs., standing for one hour, or hearing well in a conversational setting. Furthermore, occupations with a high Index have lower earnings, are more exposed to hazardous environments, and place less emphasis on high performance and problem-solving. Jobs with higher rates of workers who experience at least one difficulty with a job requirement have a higher share of workers receiving SSDI benefits within a 16-month period. Although the share of the population receiving SSDI increased from 1997 to 2010, the Index fell from 7.4 to 6.1 percent, suggesting that the increase could have been higher if not for the decline in health mismatch. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2019-5&r=all |