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on Insurance Economics |
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Issue of 2006‒11‒04
six papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Mario Jametti (Department of Economics, York University) |
| Keywords: | Risk selection, property insurance, reinsurance, Franc |
| JEL: | G22 L11 Q54 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2006_1&r=ias |
| By: | Demyanyk, Yuliya; Ostergaard, Charlotte; Sorensen, Bent E |
| Abstract: | We estimate the effects of deregulation of U.S. banking restrictions on the amount of interstate personal income insurance during the period 1970--2001. Interstate income insurance occurs when personal income reacts less than one-to-one to state-specific shocks to output. We find that income insurance improved after banking deregulation, and that this effect is larger in states where small businesses are more important. We further show that the impact of deregulation is stronger for proprietors' income than other components of personal income. Our explanation of this result centers on the role of banks as a prime source of small business finance and on the close intertwining of the personal and business finances of small business owners. Our analysis casts light on the real effects of bank deregulation, on the risk sharing function of banks, and on the integration of bank markets. |
| Keywords: | financial deregulation; integration of bank markets; interstate risk sharing; small business finance |
| JEL: | G21 G28 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5863&r=ias |
| By: | Ching-Yi Chung; Gary Richardson |
| Abstract: | Eight states established deposit insurance systems between 1908 and 1917. All abandoned the systems between 1921 and 1930. Scholars debate the costs and benefits of these policy experiments. New data drawn from the archives of the Federal Reserve Board of Governors demonstrate that deposit insurance influenced the composition of bank suspensions in these states. In typical years, suspensions due to runs fell. Suspensions due to mismanagement rose. During the penultimate year of each system, the bank failure rate rose to an unsustainable height and the system ceased operations. |
| JEL: | E42 E65 L1 N1 N14 O16 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12594&r=ias |
| By: | Robert Shimer; Ivan Werning |
| Abstract: | This paper argues that a risk-averse worker's after-tax reservation wage encodes all the relevant information about her welfare. This insight leads to a novel test for the optimality of unemployment insurance based on the responsiveness of reservation wages to unemployment benefits. Some existing estimates imply significant gains to raising the current level of unemployment benefits in the United States, but highlight the need for more research on the determinants of reservation wages. Our approach complements those based on Baily's (1978) test. |
| JEL: | J6 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12618&r=ias |
| By: | Kosali I. Simon; Claudio Lucarelli |
| Abstract: | Medicare's Part D offers heavily subsidized new drug coverage to 22.5 million seniors to date, of whom 16.5 million are in stand-alone drug plans (Department of Health and Human Services, 2006). The government delegated the delivery of the benefit to private insurance companies arguing that market incentives would lead them to provide coverage at the lowest price possible. The massive entry of plans and the large variety of actuarial designs and formularies offered make it complicated to assess how insurers set premiums during this first year of the program. This paper presents the first econometric evidence on whether premiums in the stand-alone drug plan markets are driven by the relevant factors predicted by insurance theory. Using data gathered from the Centers for Medicare and Medicaid Services, we measure a plan's generosity as the simulated out of pocket payments for different sets of drugs. We also identify the listed full drug prices by each insurer and merge these with other plan and geographical characteristics to test predictions about how insurers set premiums. We find evidence that a) the number of insurers in a market is big enough such that it does not appear to influence premiums, b) the full drug prices listed appear to be reflected to some degree in the premiums charged c) plan characteristics such as the provision of extra coverage are reflected in higher premiums, but overall there is a weak relationship between premiums and simulated out of pocket payments for different sets of drugs d) the institutional setting and regional market characteristics affect the firms' bidding behavior and their resulting premiums. Insurers appear to have responded strongly to program incentives such as the automatic enrollment of dual Medicaid-Medicare beneficiaries into low cost plans. As data for 2007 are made available, it will be important to see if plans follow similar pricing strategies in subsequent years of this program. |
| JEL: | I11 I18 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12595&r=ias |
| By: | Karen Smith Conway; Andrea Kutinova (University of Canterbury) |
| Abstract: | This paper contributes to evidence regarding the effectiveness of the Medicaid expansions by focusing on a key beneficiary - the mother - who has previously been overlooked. Using the Natality Detail Files for 1989-96, we estimate the relationship between Medicaid eligibility and maternal health outcomes for several treatment groups and a control group. Potential biases caused by improved reporting are addressed by using a 'straw man' maternal complication not preventable with prenatal care. Our results suggest that increased Medicaid eligibility lead to fewer preventable maternal complications among women most likely to have benefited from the Medicaid expansions. |
| Keywords: | Maternal health; Medicaid; Prenatal care |
| JEL: | I18 |
| Date: | 2006–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:06/11&r=ias |