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on Insurance Economics |
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Issue of 2005‒10‒29
five papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Carmelo Giaccotto (University of Connecticut); Rexford E. Santerre (University of Connecticut); Francis W. Ahking (University of Connecticut) |
| Abstract: | This paper estimates the aggregate demand for private health insurance coverage in the U.S. using an error-correction model and by recognizing that people are without private health insurance for voluntary, structural, frictional, and cyclical reasons and because of public alternatives. Insurance coverage is measured both by the percentage of the population enrolled in private health insurance plans and the completeness of the insurance coverage. Annual data for the period 1966-1999 are used and both short and long run price and income elasticities of demand are estimated. The empirical findings indicate that both private insurance enrollment and completeness are relatively inelastic with respect to changes in price and income in the short and long run. Moreover, private health insurance enrollment is found to be inversely related to the poverty rate, particularly in the short-run. Finally, our results suggest that an increase in the number cyclically uninsured generates less of a welfare loss than an increase in the structurally uninsured. |
| JEL: | I10 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-43&r=ias |
| By: | Pierre Koning |
| Abstract: | This paper examines the effects of experience rating on the inflow into disability insurance (DI) in the Netherlands, using unique longitudinal administrative data from the social benefit administration. We follow a difference-in-differences approach to identify the impact of changes in DI premiums. Due to unawareness of the experience rating system, employers seem to have been triggered to increase preventative activities, once they have experienced increases in DI premium. We find this impact to be substantial, amounting to a 15% reduction of the DI inflow. |
| Keywords: | experience rating, disability insurance, panel data |
| JEL: | H22 I12 C23 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0507&r=ias |
| By: | Leo Turcotte (West Chester University); John Robst (University of South Florida); Solomon Polachek (State University of New York at Binghamton and IZA Bonn) |
| Abstract: | We extend prior research on the effect of managed care on the receipt of four medical interventions for pregnant women: ultrasound, induction/stimulation of birth, electronic fetal monitor, and cesarean delivery. Propensity score methods are used to account for sample selection issues regarding insurance choice. Managed care enrollees are more likely to receive an ultrasound, which may be indicative of receiving better prenatal care. Managed care plans reduce the rate of cesarean deliveries, but such limitations may be beneficial given the substantial medical evidence that cesarean deliveries are over utilized. The results indicate that insurance coverage does influence treatment intensity, but that utilization controls and provider financial incentives do not adversely affect care for pregnant women. |
| Keywords: | health insurance, managed care, procedure utilization |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1803&r=ias |
| By: | Kugler, Maurice; Oppes, Rossella |
| Abstract: | Empirical research on group lending is extensive, but without allowance for collateral to mitigate strategic default. Indeed, lack of credit access has motivated microcredit in rural areas of developing countries, where agents with collateral are very rare. As rural communities have tight-knit hierarchical structures information about borrowers is accessible and enforcement of social sanctions makes collateral superfluous. First, we illustrate in a model how collateral mitigates group default. Second, we study a group lending program in Cotonou, the largest city in Benin with 1.1 million inhabitants. Results show diversification within groups facilitating risk pooling but also increasing expected default costs for safe borrowers. Risky borrowers offset group-default negative spillovers default with collateral, and facilitate credit access to safe borrowers. We find joint liability to be a mechanism for risk sharing in a setting where poor households lack resources for collateral and insurance markets are missing. |
| Keywords: | Group lending, mutual cosigners, collateral, risk sharing, strategic default, bailout costs. JEL Codes: O12, O17, G20, D82 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:stn:sotoec:0504&r=ias |
| By: | Dirk Krueger; Harald Uhlig |
| Abstract: | This paper analyzes dynamic equilibrium risk sharing contracts between profit-maximizing intermediaries and a large pool of ex-ante identical agents that face idiosyncratic income uncertainty that makes them heterogeneous ex-post. In any given period, after having observed her income, the agent can walk away from the contract, while the intermediary cannot, i.e. there is one-sided commitment. We consider the extreme scenario that the agents face no costs to walking away, and can sign up with any competing intermediary without any reputational losses. We demonstrate that not only autarky, but also partial and full insurance can obtain, depending on the relative patience of agents and financial intermediaries. Insurance can be provided because in an equilibrium contract an up-front payment effectively locks in the agent with an intermediary. We then show that our contract economy is equivalent to a consumption-savings economy with one-period Arrow securities and a short-sale constraint, similar to Bulow and Rogoff (1989). From this equivalence and our characterization of dynamic contracts it immediately follows that without cost of switching financial intermediaries debt contracts are not sustainable, even though a risk allocation superior to autarky can be achieved. |
| Keywords: | Long-term contracts, Risk Sharing, Limited Commitment, Competition |
| JEL: | G22 E21 D11 D91 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2005-003&r=ias |