nep-ias New Economics Papers
on Insurance Economics
Issue of 2007‒05‒19
three papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Older Workers' Access to Employer-Sponsored Retiree Health Insurance, 2000-2004 By Christine Eibner; Alice Zawacki; Elaine Zimmerman
  2. Variable Retirement and the Effects of Social Insurance on Savings, Wealth, and Welfare By Bruce, Neil; Turnovsky, Stephen J.
  3. Underfunding of Defined Benefit Pension Plans and Benefit Guarantee Insurance - An Overview of Theory and Empirics By Mario Jametti

  1. By: Christine Eibner; Alice Zawacki; Elaine Zimmerman
    Abstract: Using a multivariate framework, we analyze recent trends in employer provision of retiree health insurance (RHI), eligibility for new retirees, and retiree contribution requirements. We also explore whether local labor market characteristics such as the unemployment rate influence RHI provision. Finally, we examine whether the Medicare Modernization Act (MMA) was associated with diverging trends in RHI access for Medicare-eligible and early retirees. Data come for the Medical Expenditure Panel Survey—Insurance Component (MEPS-IC). We find that, while RHI provision to existing retirees remained stable, eligibility for new retirees declined, and contribution requirements increased between 2000 and 2004. The local labor market had no effect on RHI provision. While early retiree coverage was more common than coverage for Medicare-eligible retirees, we did not find a divergence subsequent to MMA. These results suggest growing financial instability for retirees, both because RHI contribution requirements increased, and because businesses dropped coverage for new retirees.
    Keywords: retiree health insurance, employers, Medicare, aging
    Date: 2007–04
  2. By: Bruce, Neil; Turnovsky, Stephen J.
    Abstract: We construct a Blanchard-style overlapping generations model consisting of long-lived individuals who have uninsurable idiosyncratic risk resulting from uncertain retirement periods and medical costs in retirement. Without social insurance, such individuals must save for these eventualities. We examine the impact of pay-as-you-go social insurance policies (public pensions and medicare coverage) on individual and aggregate consumption, saving, and wealth levels as well as wealth distribution. We also derive expressions for optimal (Pareto improving) social insurance policies.
    JEL: D91 E10 J20
    Date: 2007
  3. By: Mario Jametti (Department of Economics, York University)
    Abstract: We review the theoretical literature on defined benefit (DB) pension plans, particularly focusing on the issue of plan underfunding and benefit guarantee insurance schemes. The literature shows that underfunding can, under reasonable assumptions, be an equilibrium outcome even in the absence of benefit insurance. The introduction of benefit guarantee funds was a reaction to the problem of underfunding, and we summarize the ensuing standard problems of moral hazard and adverse selection. We briefly discuss the small empirical research on the subject and propose directions for future research.
    Keywords: Defined benefit pension plans, underfunding, pension benefit guarantee
    JEL: G23 G28
    Date: 2007–05

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