nep-ias New Economics Papers
on Insurance Economics
Issue of 2009‒02‒14
eleven papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Cross-border purchases of health services : a case study on Austria and Hungary By Obermaier, Andreas J.
  2. Social Health Insurance vs. Tax-Financed Health Systems--Evidence from the OECD By Wagstaff, Adam
  3. An Insurance Approach to Risk Management in the Ethanol Industry By Paulson, Nicholas; Babcock, Bruce A.; Hart, Chad E.; Hayes, Dermot J.
  4. Do Firms ProvideWage Insurance Against Shocks? – Evidence from Hungary By Gábor Kátay
  5. Social Interaction and Sickness Absence By Lindbeck, Assar; Palme, Mårten; Persson, Mats
  6. The Effect of CSB Services on Hospitalization Rates By Tanya Wanchek
  7. At Risk of Social Exclusion: A Study of Care Leavers in UK By Jamal, Mayeda
  8. The effect of benefits on disability uptake By Christian N. Brinch
  9. Incentives and Targets in Hospital Care: Evidence from a Natural Experiment By Carol Propper; Matt Sutton; Carolyn Whitnall; Frank Windmeijer
  10. A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns By Kuegler, Alice
  11. Efficient Risk Sharing in the Presence of a Public Good By Christine Hauser

  1. By: Obermaier, Andreas J. (European Integration Research, Austrian Academy of Sciences)
    Abstract: This paper explores the structure of cross-border health purchasing between Austria and Hungary and determines the size of this phenomenon as well as the barriers to a further increase. Austrian patients may receive health care treatment in Hungary in three different ways. First, patients may receive benefits in the context of the European Community Regulations 1408/71 and 574/72 (Category I patients). Second, outside those regulatory structures, Austrian patients travel to Hungary to receive medical treatment, especially dental treatment, and then seek reimbursement from their Austrian insurance (Category II patients). Third, some patients receive medical treatment in Hungary outside both schemes (Category III patients). There are about 42,500 Category I patients per year; and 58,000 Category II patients world-wide per year. An unknown but supposedly greater number of patients travel to Hungary to receive mainly dental treatment and cosmetic surgery (Category III). Most health actors in both Austria and Hungary do not regard cross-border purchasing of health services as having cost-saving effects. They put forward major legal, institutional, political, and psychological barriers, which inhibit public and private Austrian providers, to facilitate trade in health care and which inhibit individual patients to realize cost savings through capitalizing on lower health care prices in Hungary. Therefore, for the time being, trade in health care and patient mobility between Austria and Hungary is a circumscribed phenomenon in terms of quantities, and it will most probably remain so in the near future.
    Keywords: access to health care; adequate resources; aid; beds; cataract surgery; clinics; Community hospitals; Consumer Protection; cost effectiveness; costs of treatment; dental care; dental treatment; dentists; Diagnosis; discrimination; disease; doctor; doctors; domestic law; employment; entitlement; expenditures; families; financial resources; fundamental principles; general practitioner; Health Affairs; health care; health care centers; health care costs; health care coverage; health care facilities; health care institutions; health care insurance; health care law; health care provider; health care providers; health care sector; health care services; health care standards; health care system; health care systems; Health Care Systems in Transition; health expenditure; health facilities; health insurance; health insurance companies; health insurance funds; health insurance system; health insurers; Health Organization; health organizations; health policy; health providers; health sector; health service; Health Services; health system; health systems; Health Systems in Transition; Healthcare; hospital care; hospital financing; Hospital Operator; hospital sector; hospital treatment; hospitals; hygiene; income; insurance; insurance coverage; insurance systems; Integration; judicial proceedings; legal provisions; marketing; Medical Association; medical associations; medical benefits; medical care; medical facilities; medical science; medical services; medical treatment; medicine; Migration; National Health; National Health Insurance; National Health Insurance Fund; national health policy; nurses; patient; patient care; patient treatment; patients; physician; physicians; Policy ReseaRch; Primary Care; private health insurance; private health insurers; private hospitals; private households; private insurance; private insurer; private insurers; private sector; provision of health care; provision of services; public health; public health care; public health insurance; public hospitals; public sector; quality control; quality of health; quality of health care; rehabilitation; reimbursement rates; right to health care; social health insurance; social insurance; Social Policy; social security; social security schemes; social security systems; surgery; therapy; treatments; Use of Health Care Services; visits; workers
    Date: 2009–01–01
  2. By: Wagstaff, Adam (The World Bank)
    Abstract: This paper exploits the transitions between tax-financed health care and social health insurance in the OECD countries over the period 1960-2006 to assess the effects of adopting social health insurance over tax finance on per capita health spending, amenable mortality, and labor market outcomes. The paper uses regression-based generalizations of difference-in-differences and instrumental variables to address the possible endogeneity of a country's health system. It finds that adopting social health insurance in preference to tax financing increases per capita health spending by 3-4 percent, reduces the formal sector share of employment by 8-10 percent, and reduces total employment by as much as 6 percent. For the most part, social health insurance adoption has no significant impact on amenable mortality, but for one cause--breast cancer among women--social health insurance systems perform significantly worse, with 5-6 percent more potential years of life lost.
    Keywords: Social health insurance; labor markets; health finance; health sector reform.
    Date: 2009–01–01
  3. By: Paulson, Nicholas; Babcock, Bruce A.; Hart, Chad E.; Hayes, Dermot J.
    Date: 2008–05–15
  4. By: Gábor Kátay (Magyar Nemzeti Bank)
    Abstract: In this paper I address the question to what extent wages are affected by product market uncertainty. Implicit contract models imply that it is Pareto optimal for risk neutral firms to provide insurance to risk averse workers against shocks. Using matched employer-employee dataset, I adopted the estimation strategy proposed by Guiso et al. (2005) to evaluate wage responses to both permanent and transitory shocks in Hungary and compared my results to similar studies on Italian and Portuguese datasets. I found that firms do insure workers against product market uncertainties, but the magnitude of the wage response differs depending on the nature of the shock. Broadly speaking, the wage response to permanent shocks is twice as high as the response to transitory shocks. Comparing my results to the two other studies, the main difference lies in the elasticity of wages to transitory shocks. Unlike these previous findings, my results show that full insurance to transitory shocks is rejected.
    Keywords: product market uncertainty, risk sharing, wage insurance, optimal wage contract, matched employer-employee data.
    JEL: C33 D21 J33 J41
    Date: 2008
  5. By: Lindbeck, Assar (Institute for International Economic Studies); Palme, Mårten (Dept. of Economics, Stockholm University); Persson, Mats (Institute for International Economic Studies)
    Abstract: Is the sickness absence of an individual affected by the sickness absence behavior of the neighbors? Well-known methodological problems, in particular the so-called reflection problem, arise when trying to answer such questions about group effects. Based on data from Sweden, we adopt several different approaches to solve these problems. Regardless of the approach chosen, we obtain statistically significant estimates indicating that group effects are important for individual sickness absence behavior.
    Keywords: Sick-pay insurance; work absence; moral hazard; reflection problem; social norms
    JEL: H56 I38 J22 Z13
    Date: 2009–01–30
  6. By: Tanya Wanchek (Center for Economic and Policy Studies)
    Abstract: In Virginia, Community Service Boards (CSBs) serve as a single point of entry into publicly funded mental health, mental retardation, and substance abuse services. CSBs are part of a move toward an integrated system of care, which focuses on establishing community services and making more efficient and effective use of state facilities. Today there are 40 CSBs throughout Virginia offering varying combinations of nine core services: emergency, local inpatient care, outpatient care, case management, day support, employment, residential, prevention and early intervention, and limited other services. Only emergency services and, subject to the availability of funds appropriated, case management services are mandated by the Code of Virginia. While the type and quantity of services at each CSB vary significantly, how this variation influences the health of the population is unclear. Our study outlines some of the major differences among CSBs and, using an instrumental variable (IV) approach, estimates how the availability and use of outpatient mental health services affects hospitalization rates among Medicaid recipients. The results are consistent with 1) individuals obtaining more outpatient services in localities that offers more services and 2) higher levels of outpatient services reducing the number of nights spent in a hospital. Understanding how the extensiveness of outpatient services provided to individuals with mentally illness influences hospitalization rates has important implications for health, as well as for the state’s budget and the criminal justice system.
    Keywords: mental health, outpatient services, hospitalization, Medicaid
    JEL: I11 I12 I18
    Date: 2009–01–29
  7. By: Jamal, Mayeda (Dept. of Business Administration, Stockholm School of Economics)
    Abstract: This paper examines the experiences of socially marginalized/ excluded individuals in society when they re-enter the society after a period of being “looked after”1 by the State (by placement in either foster care or residential care homes, referred to as “Care Leavers” in UK). This group was selected for the study because “socialization” of care leavers is a major problem for the UK Government. The aim is to explore their psychological states, and in turn, examine possible link between their psychological states and socialization process after leaving care. Successful socialization is defined here as resulting in a capacity to make personally and socially beneficial decisions and judgments. The findings suggest that being in care may have a negative impact on identity development, with care leavers exhibiting low self esteem, stigmatization, low trust and low self-confidence. Negative psychological states impede socialization and enhance the risks of care-leavers becoming socially excluded.
    Keywords: Social Exclusion; Socialization; Care Leavers; Identity; Stigma
    Date: 2009–01–28
  8. By: Christian N. Brinch (Statistics Norway)
    Abstract: I study the effects of the level of disability benefits on disability uptake. Estimation of such effects is difficult because individual levels of disability pension benefits are closely related to individual characteristics that may also affect disability uptake through other mechanisms. I exploit variation in disability benefits related to individual characteristics only through birth cohort, due to special rules of the phasing in of the Norwegian National insurance scheme. These rules imply a nonlinear relationship between birth cohort and disability benefit level, which allows me to estimate the effects of benefits based on between-cohort differences, while controlling for age and year effects and hence implicitly linear trends in birth cohorts. The results show a statistically significant and strong positive effect of benefits on transitions to disability. The robustness of the results is studied in a number of tests based on sample partitions and other groups that are not exposed to the nonlinear relationship between birth cohort and disability benefit level.
    Keywords: Disability benefits; disability uptake; instrumental variables.
    JEL: I38 J22 J26
    Date: 2009–01
  9. By: Carol Propper; Matt Sutton; Carolyn Whitnall; Frank Windmeijer
    Abstract: Performance targets are commonly used in the public sector, despite their well known problems when organisations have multiple objectives and performance is difficult to measure. It is possible that such targets may work where there is considerable consensus that performance needs to be improved. We investigate this possibility by examining the response of the English National Health Service (NHS) to waiting time targets. Long waiting times have been a key issue for the NHS for many years. Using a natural policy experiment exploiting differences between countries of the UK, supplemented with a panel of data on English hospitals, we examine whether high profile targets to reduce waiting times met their goals of reducing waiting times without diverting activity from other less well monitored aspects of health care. Using this robust design, we find that targets led to a fall in waiting times without apparent reductions in other aspects of patient care.
    Keywords: health care, waiting times, targets, incentives
    JEL: I18 L32
    Date: 2008–10
  10. By: Kuegler, Alice (The World Bank)
    Abstract: This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a reference point for new sample data from Venezuela. Having greater perceived income than one's siblings is found to be positively linked to individual life satisfaction. This evidence supplements the scarce economic research on reference groups, supporting the hypothesis that individuals with proximate characteristics and resembling opportunities in life serve as points of comparison.
    Keywords: reference groups; relative income; life satisfaction
    JEL: D01 D12 D31
    Date: 2009–01–01
  11. By: Christine Hauser
    Abstract: This paper studies the provision of a public good between two agents under lack of commitment and applies it to the problem of children's consumption in separated couples, where children are considered to be public goods. The custodial mother controls the child's consumption, whereas the father can contribute indirectly by making monetary transfers to the mother, but has no control over how the mother spends them. Using minmax punishments, I look for the Pareto frontier of the Subgame Perfect Equilibrium payoffs, and characterize the equilibrium and long term implications of the model. As in the previous literature, agents' consumptions and continuation values covary positively with their income levels. In the case where the constraint for the public good provision binds, both agents' private consumptions increase relative to the public good provision. In the long run, if some first best allocation is sustainable, the long-term equilibrium will converge to a first best allocation. Otherwise, agents' utilities oscillate over a finite set of values. I then study the theoretical implications of one-sided enforcement when the public good provider has the authority to enforce transfers from the second agent. This is motivated by the wave of US policy reforms to enforce child support payments from fathers. The model predicts an increase in the ratio of the mother's consumption to the child's.
    Keywords: insurance, lack of commitment, optimal dynamic contract, public good
    JEL: C72 C73 D90 E21
    Date: 2008

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