nep-ias New Economics Papers
on Insurance Economics
Issue of 2007‒09‒02
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Contingent, Temporary Unemployment Insurance’s Impacts on Employment and Unemployment Durations By Kailing Shen
  2. The influence of supplementary health insurance on switching behaviour : evidence on Swiss data By Brigitte Dormont; Pierre-Yves Geoffard; Karine Lamiraud
  3. Health insurance as a strategy for access: By Jairo Restrepo; Andrés Zambrano; Mauricio Velez; Manuel Ramirez
  5. Price Variation in Markets with Homogeneous Goods: The Case of Medigap By Nicole Maestas; Mathis Schroeder; Dana P. Goldman
  6. The Value of Life Near its End and Terminal Care By Gary Becker; Kevin Murphy; Tomas Philipson

  1. By: Kailing Shen (Xiamen University and IZA)
    Abstract: This paper studies contingent, temporary unemployment insurance (UI) coverage’s impacts on employment and unemployment durations using a duration model extended with heaping considerations and a recent Canadian panel data. A unique source of identification here is the Employment Insurance (EI) reform of Canada in the 1996. Based on the estimated coefficients from the duration models, the simulations suggest that UI increases unemployment rates by 2% and 5% in the non-seasonal and seasonal sectors respectively.
    Keywords: unemployment insurance, unemployment durations, employment durations, heaping effect
    JEL: J65 J64
    Date: 2007–07
  2. By: Brigitte Dormont; Pierre-Yves Geoffard; Karine Lamiraud
    Abstract: This paper focuses on the switching behaviour of sickness fund enrollees in the Swiss health insurance system. Even though the new Federal Law on Social Health Insurance (LAMal) was implemented in 1996 to promote competition among health insurers, there still remains large premium variations within cantons. This indicates that competition has not been able so far to lead to a single price, and reveals some inertia among consumers who seem reluctant to switch to less expensive funds. We investigate one possible barrier to switching behaviour, namely the influence of the supplementary insurance on the choice for basic insurance plan in Switzerland, which has not been studied so far. Our aim is to analyse the two decisions (choice of health plan, subscription to supplementary insurance contracts). We use the data of the OFAS survey conducted in 2000 on health plan choice and import some additional data on the sickness funds (number of enrollees, premiums). The decision to switch is estimated by both logit and a fixed-effects logit models; two main explanatory variables are studied: premiums (for basic insurance contracts) and supplementary insurance. The results suggest that holding a supplementary insurance contract substantially decreases the propensity to switch. The switching decision is positively influenced by the expected gain of switching, measured by the premium differential. The expected gain of switching is higher for switchers with no supplementary insurance (CHF 19.44) than for switchers with supplementary insurance (CHF 13.06). The income level has a direct positive influence on the propensity to buy a supplementary insurance. This finding suggests that the purchase of supplementary insurance is influenced, not only by risk aversion, but also by the willingness to pay for the goods covered by the supplementary insurance, which would be higher for rich people. Bad health has a negative influence on the subscription to a supplementary contract, but is no longer significant when the income is introduced into the specification. All the information about health is captured by the income level, a low income being strongly correlated with a bad health status. Income and a supplementary insurance contract are observable by the insurance company, and can be used as tools for selection.
    Keywords: Health Insurance, Private Sector
    JEL: I18
    Date: 2007–05
  3. By: Jairo Restrepo; Andrés Zambrano; Mauricio Velez; Manuel Ramirez
    Abstract: The Colombian reform to the health system (Law 100 of 1993) established, as strategy to facilitate the access, the universality of a health insurance that is acquired by means of the quotation in the contributive regime or by means of the gratuitous affiliation to the subsidized regime, in order to cover all the population with a unique plan of benefits that includes services in all levels of complexity. In this paper we intend to cover the main streamlined facts of the reform as far as coverage and access of the insurance, by means of logit models, the determinants of the enrollment and the access are considered, using data from the Living Standards Surveys of 1997 and 2003. It stands out that the coverage rose from 20% of the population in 1993 to 60% in 2003, although it seems very difficult to reach the universality; the structure and evolution of the coverage show that both regimes complement each other, while the contributive one has greater presence in the cities and among the population with formal employment, the subsidized one has greater weight among the rural population and in those with low levels of income; on the other hand, the insurance has advantages for the subsidized population, with a greater probability for use of the services, although the plan offers less benefits than the contributive one there are some barriers for the access.
    Date: 2007–03–01
  4. By: Ramón Castaño; Andrés Zambrano
    Abstract: Financial protection is one of the objectives of health systems, which protects poor households from falling into poverty as a result of health care related expenses. Expanding prepayment schemes to the poor is difficult in developing countries because labor is largely informal. Providing health care free-at-point-of-service does not adequately target spending on the poorest, but occupation- or community-based schemes have also inherent limitations to achieve universal coverage. Colombia adopted a government-subsidized health insurance scheme (SHI) strategy. The political debate about increasing SHI enrollment needs evidence about the effectiveness of this scheme regarding financial protection. This study runs a four-part model to estimate the effect of SHI on out-of-pocket expenses by the poor that are currently uninsured, if they were enrolled in the SHI. The results show a 43% and 50% reduction in expenses at Bogotá and national level respectively, which confirms the effectiveness of SHI as a financial protection tool.
    Date: 2007–03–01
  5. By: Nicole Maestas; Mathis Schroeder; Dana P. Goldman
    Abstract: About one-third of elderly Americans age 65 and older supplements their Medicare health insurance in a private insurance market known as the ÒMedigapÓ market. Prices for Medigap policies vary widely, despite the fact that regulations enacted in 1992 standardized all Medigap policies, thereby creating a market with homogenous insurance products. Economic theory suggests that consumer search costs can lead to a non-degenerate price distribution within a market for otherwise homogenous goods. Using a structural model of equilibrium search costs first posed by Carlson and McAfee (1983), the authors find that nearly all consumers face search costs high enough to prevent them from searching until they find the lowest priced Medigap policy. They estimate average search costs to be $249, substantially higher than has been found in other markets, but plausible given the complex nature of the Medigap market and its elderly consumer population. The implied aggregate welfare loss is approximately $798 million or $484 per policyholder.
    Keywords: health insurance, medigap, elderly
    JEL: G22 I11
    Date: 2006–07
  6. By: Gary Becker; Kevin Murphy; Tomas Philipson
    Date: 2007–08–24

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