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on Insurance Economics |
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Issue of 2019‒11‒25
nineteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Tomas Pedro Sanguinetti |
| Abstract: | This research is the first economic study to investigate how couples make enrollment choices in individual insurance markets. I leverage administrative records for Medicare Part D enrollees to distinguish widows and divorcees from married couples. I estimate a stochastic choice model of household demand that takes into account risk aversion, expenditure risk, risk sharing and inertia. I use the model estimates to study how coordination within couples and interaction between couples and singles affects the way that markets adjust to policies designed to nudge individuals toward choosing higher value plans, particularly with respect to adverse selection. The data reveals striking facts about insurance choice. Strikingly, I find that 78% of couples decide to âpoolâ by buying the same plan. This figure remains constant even for couples with extremely different health risk. My estimates imply that monetary value of plan pooling to the average couple is approximately half their monetary value of inertia, $1,584 vs $3,152. I use the model estimates to conduct several counterfactual policy experiments and find that nudging consumers to choose the plans that maximize their expected utility in a hypothetical deregulated environment without risk adjustment and premium subsidies would increase couplesâ welfare by 11% and decrease singlesâ welfare by 2% on average. Adding the federal governmentâs current risk adjustment formula increases the disparity between welfare gains for couples and welfare losses for singles. Additionally adding the federal governmentâs current formula for subsidizing plan premiums causes the policy to generate average welfare gains among both couples and singles of 36% and 5% respectively. |
| JEL: | I13 D81 |
| Date: | 2019–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2019:psa1760&r=all |
| By: | LEROUX Marie-Louise, (UQAM); PESTIEAU Pierre, (Université de Liège); PONTHIERE Gregory, (Université Paris Est) |
| Abstract: | The study of the optimal long-term care (LTC) social insurance is generally carried out under the utilitarian social criterion, which penalizes individuals who have a lower capacity to convert resources into well-being, such as dependent elderly individuals or prematurely dead individuals. This paper revisits the design of optimal LTC Insurance while adopting the ex post egalitarian social criterion, which gives priority to the worst-off in realized terms (i.e. once the state of nature has been revealed). Using a lifecycle model with risk about the duration of life and risk about old-age dependence, it is shown that the optimal LTC social insurance is quite sensitive to the postulated social criterion. The optimal second-best social insurance under the ex post egalitarian criterion involves, in comparison to utilitarianism, higher LTC benefits, lower pension benefits, a higher tax rate on savings, as well as a lower tax rate on labor earnings. |
| Keywords: | long-term care, social insurance, fairness, mortality, compensation, egalitarianism |
| JEL: | J14 H55 |
| Date: | 2019–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2019008&r=all |
| By: | Julia Baller; Andres Arguello; Mary Allison Geibel; Brenda Natzke; Kimberly Proctor; Jessie Parker |
| Abstract: | This analysis focused on the 35 states and the District of Columbia that had beneficiaries enrolled in comprehensive managed care programs in 2017. Mississippi, Missouri, and Nebraska, which had comprehensive managed care programs, were excluded from the analysis due to a low volume of claims. |
| Keywords: | Medicaid data, TAF data quality, TAF DQ Brief, T-MSIS Analytic Files, TAF Research Identifiable Files (RIFs), volume of claims, Medicaid managed care, encounter records |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:41c8f011634f42259b824ed1de42c5db&r=all |
| By: | Joan Costa-Font; Ada Ferrer-i-Carbonell |
| Abstract: | This paper examines the effect of the decentralisation of the Spanish national health system on the demand for publicly funded health care. We find thatdecentralisation increased the demand for public health care, improved the perceptions of the well-functioning of the system and reduced the uptake of private health insurance amongrelatively high income individuals. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2019-41&r=all |
| By: | Yena Park; Yongsung Chang |
| Abstract: | We derive a fully nonlinear optimal income tax schedule in the presence of private insurance. As in the standard taxation literature without private insurance (e.g., Saez (2001)), the optimal tax formula can still be expressed in terms of sufficient statistics. With private insurance, however, the formula involves additional terms that reflect how the private market interacts with public insurance. For example, in our benchmark model-Huggett (1993)-the optimal tax formula should also consider pecuniary externalities as well as changes in the asset holdings of households. According to our analysis, the difference in optimal tax rates (with and without a private insurance market) can be as large as 11 percentage points. |
| Keywords: | Optimal Taxation; Private Insurance; Pecuniary Externalities; Variational Approach |
| JEL: | E62 H21 D52 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:snu:ioerwp:no117&r=all |
| By: | Sally Owen (Victoria University of Wellington); Ilan Noy (Victoria University of Wellington); Jacob Pástor-Paz (Motu Economic and Public Policy Research); David Fleming (Motu Economic and Public Policy Research) |
| Abstract: | Climate change is predicted to make extreme weather events worse and more frequent in many places around the world. In New Zealand, the Earthquake Commission (EQC) was created to provide insurance for earthquakes. In some circumstances, however, homeowners affected by extreme weather events can also make claims to the EQC – for landslip, storm or flood events. In this paper, we explore the impact of this public natural hazard insurance on community recovery from weather-related events. We do this by using a proxy for short-term economic recovery: satellite imagery of average monthly night-time radiance. Linking these night-time light data to precipitation data records, we compare houses which experienced damage from extreme rainfall episodes to those that suffered no damage even though they experienced extreme rainfall. Using data from three recent intense storms, we find that households which experienced damage, and were paid in a timely manner by EQC, did not fare any worse than households that suffered no damage from these extreme events. This finding suggests that EQC insurance is serving its stated purpose by protecting households from the adverse impact of extreme weather events. |
| Keywords: | climate change, extreme weather, public insurance, recovery, New Zealand |
| JEL: | Q15 Q10 Q17 Q02 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:19_19&r=all |
| By: | Alex Azar II; Secretary of U.S. Department of Health Human Services |
| Abstract: | This first annual SUD Data Book reports the number of Medicaid beneficiaries with a SUD and the services they received during calendar year 2017, which is the most recent complete year of T-MSIS enrollment and claims data available when the analysis was conducted. |
| Keywords: | T-MSIS, Substance Use Disorder, Medicaid, SUPPORT Act |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:354c65f851414709a91c66a6c1fa3562&r=all |
| By: | Marcus C. Christiansen; Boualem Djehiche |
| Abstract: | Insurance cash flows become reserve dependent whenever contract conditions are modified during the contract term while maintaining actuarial equivalence. As a result, insurance cash flows and prospective reserves depend on each other in a circular way, and it is a non-trivial problem to solve that circularity and make cash flows and reserves well-defined. The literature offers answers to that question in case of one or two contract modifications under Markovian assumptions. This paper studies multiple contract modifications in a general non-Markovian framework. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1911.06159&r=all |
| By: | Irina B. Grafova; Alan C. Monheit; Rizie Kumar |
| Abstract: | We use data from the Medical Expenditure Panel Survey (MEPS) for the years 2004 - 2012 to examine the impact of economic shocks on the family’s out-of-pocket health care spending burden. We define this burden as the share of family income devoted to out-of-pocket health care spending. In contrast to static, cross-sectional analyses, our study examines how the within-family change in spending burden over the two-year MEPS observation period responds to losses in family income, insurance, and employment. We also consider the impact of such losses on single-mother and two-parent families. To do so, we apply fractional response and health expenditure models using the correlated random effects (CRE) method to control for time-invariant, unobserved heterogeneity across family units. We find evidence that the change in the out-of-pocket spending burden is sensitive to income shocks, and that income changes rather than changes in health spending per se appears to drive changes in the out-of-pocket burden. |
| JEL: | I1 I13 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26443&r=all |
| By: | Maurizio Trapanese (Bank of Italy) |
| Abstract: | Ten years after the 2007-08 global financial crisis, this paper examines the implementation of the G-20 financial reforms in the main regulatory areas and jurisdictions. The analysis includes banks, insurance companies, derivatives markets and non-bank financial intermediation. Notwithstanding the progress made, which has improved the resilience of the global financial system, some sources of concern remain: the implementation of reforms is still uneven across areas and jurisdictions; there are regulatory interventions still to be completed, above all in non-banking sectors, and others to be implemented at the domestic level. The global financial system may be exposed to risks, such as markets fragmentation, regulatory arbitrages and the volatility of cross-border financial flows. At international level there should be consensus on the need to complete the regulatory reforms in all sectors of financial intermediation and to implement them consistently and in a timely way. For these reasons, the implementation should increasingly become a priority for the G-20 and for the Italian Presidency in 2021. |
| Keywords: | financial crises, international regulation |
| JEL: | F53 G01 G20 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_529_19&r=all |
| By: | Emily J. Blanchard; Chad P. Bown; Davin Chor |
| Abstract: | We find that Republican candidates lost support in the 2018 congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war (respectively, health care) can account for five (eight) of Republicans' lost House seats. |
| JEL: | F13 F14 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26434&r=all |
| By: | Rita Hamad; Matthew J. Niedzwiecki |
| Abstract: | The authors conducted difference†in†differences analyses, comparing health care expenditures among EITC†eligible adults in February (immediately following EITC refund receipt) with expenditures during other months, using non†EITC†eligible individuals to difference out seasonal variation in health care expenditures. |
| Keywords: | determinants of health , observational data , population health , quasi†experiments , social determinants of health , socioeconomic causes of health |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9c207c5712394dd2a50cd75144996279&r=all |
| By: | Aurélien Baillon (Erasmus University Rotterdam); Joseph Capuno (University of the Philippines Diliman); Owen O'Donnell (Erasmus University Rotterdam); Carlos Tan (University of the Philippines Diliman); Kim van Wilgenburg (Erasmus University Rotterdam) |
| Abstract: | Temporary incentives are offered in anticipation of persistent effects, but these are seldom estimated. We use a nationwide randomized experiment in the Philippines to estimate effects three years after the withdrawal of two incentives for health insurance. A premium subsidy had a persistent effect on enrollment that is more than four fifths of the immediate effect. Application assistance had a much larger immediate impact, but less than a fifth of this effect persisted. The subsidy persuaded those with higher initial willingness to pay to enroll and keep enrolling, while application assistance achieved a larger immediate effect by drawing in those who valued insurance less and were less likely to re-enroll. |
| Keywords: | incentives, persistence, health insurance, subsidy, randomized experiment |
| JEL: | I13 C93 |
| Date: | 2019–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190078&r=all |
| By: | Michael Anderson; Yonatan Ben-Shalom; David Stapleton; Emily Roessel |
| Abstract: | We use state variation in the experience of the Great Recession and subsequent recovery to explain the deviation of Social Security Disability Insurance awards from historical trends in the period from 2008 through 2014. |
| Keywords: | Social Security Disability Insurance, SSDI, business cycle, recession, employment, Great Recession |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:83cb127d5a104e99b753ce01ccca75f9&r=all |
| By: | Clint Eisenhower |
| Abstract: | This fact sheet details Mathematica’s state Medicaid consulting and advisory services. |
| Keywords: | Mathematica's State Medicaid Consulting and Advisory Services |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:e7e4cccdc1404578ba4b4b2089a0d40c&r=all |
| By: | Riley; Jones; Adriana Ocejo |
| Abstract: | A variable annuity is an equity-linked financial product typically offered by insurance companies. The policyholder makes an upfront payment to the insurance company and, in return, the insurer is required to make a series of payments starting at an agreed upon date. For a higher premium, many insurance companies offer additional guarantees or options which protect policyholders from various market risks. This research is centered around two of these options: the guaranteed minimum income benefit (GMIB) and the reset option. The sensitivity of various parameters on the value of the GMIB is explored, particularly the guaranteed payment rate set by the insurer. Additionally, a critical value for future interest rates is calculated to determine the rationality of exercising the reset option. This will be able to provide insight to both the policyholder and policy writer on how their future projections on the performance of the stock market and interest rates should guide their respective actions of exercising and pricing variable annuity options. This can help provide details into the value of adding options to a variable annuity for companies that are looking to make variable annuity policies more attractive in a competitive market. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1911.06123&r=all |
| By: | Jetson Leder-Luis |
| Abstract: | This paper studies the effects of litigation by whistleblowers against healthcare providers for misreporting claims for payment to the Medicare program. Under the U.S. False Claims Act, whistleblowers bring lawsuits on behalf of the government in exchange for a share of recovered payments. I combine a new dataset on whistleblower cases from the Department of Justice with the universe of Medicare Fee- for-Service claims from 1999-2016. First, I measure the deterrence effects of successful whistleblowing lawsuits using a synthetic control design. I find that whistleblower settlements totaling to $1.9 billion in recovery generated future cost savings of more than $18 billion over 5 years. Next, I examine how whistleblowing impacts care decisions by providers. Using a case study of spine procedures for osteoporotic patients, I find that after a whistleblower settlement, care shifted from inpatient to less-expensive outpatient treatment and towards patients with the greatest expected benefit. |
| JEL: | H51 D73 M48 |
| Date: | 2019–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2019:ple1069&r=all |
| By: | Laura Nolan; Allison Barrett; Mary Allison Geibel; Kimberly Proctor; Jessie Parker |
| Abstract: | This analysis focused on the 46 states, the District of Columbia, and Puerto Rico. Mississippi, Missouri, Montana, and Nebraska were excluded from the analysis. |
| Keywords: | Medicaid data, TAF data quality, TAF DQ Brief, T-MSIS Analytic Files, TAF Research Identifiable Files (RIFs), comprehensive benefits, restricted benefits code, TAF Demographic & Eligibility (DE) file |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:4ac2ddde6c814089bb06b35de91b2963&r=all |
| By: | Pierre Koning (Vrije Universiteit Amsterdam); Heike Vethaak (Leiden University) |
| Abstract: | Many OECD countries are facing decreases in the employment rates of disabled workers. To uncover the driving forces of these trends, this paper estimates Age-Period-Cohort (APC) models on administrative data of Disability Insurance (DI) application cohorts for the Netherlands between 1999 and 2013. Our main finding is that the substantial decrease in employment rates of applicant cohorts in this time period is almost fully explained by cohort effects - equalling about 30 percentage points - and that the impact of period effects is only small. In turn, cohort effects stem from changes in the observed composition of applicants, with increasing shares of workers without (permanent) contracts in the year before the application. These changes are largely confined to years following two major DI reforms that increased self-screening among potential applicants. We also expand the APC model by allowing for distinct effects for awarded and rejected DI applicants. Assuming common compositional cohort effects for these two groups, difference-in-difference estimates of cohort effects indicate that the effect of changes in benefit conditions (`incentive effects') is limited. Disability reforms thus predominantly affected the stringency of the DI system and induced substantial self-screening in the sickness period before the DI decision, rather than changing individual employment rates. |
| Keywords: | Disability Insurance, employment, age-period-cohort model |
| JEL: | H75 J21 C23 |
| Date: | 2019–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20190079&r=all |