nep-ias New Economics Papers
on Insurance Economics
Issue of 2011‒05‒30
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Unemployment Benefits and Work Incentives: The U.S. Labor Market in the Great Recession By David Howell, Bert M. Azizoglu
  2. The Impact of Private Hospital Insurance on Utilization of Hospital Care in Australia: Evidence from the National Health Survey By Damien Eldridge; Catagay Koc; Ilke Onur; Malathi Velamuri
  3. Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010 By Chung Tran; Juergen Jung
  4. The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions By Craig L. Garthwaite
  5. How Well Does the U.S. Government Provide Health Insurance? By Manan Roy
  6. Identification of Insurance Models with Multidimensional Screening By Gaurab Aryal; Isabelle Perrigne; Quang Vuong

  1. By: David Howell, Bert M. Azizoglu (New School for Social Research, New York, NY)
    Keywords: Unemployment, Unemployment Insurance, Recession, Labor Market
    Date: 2011–04
  2. By: Damien Eldridge (Department of Economics, La Trobe University); Catagay Koc (University of Texas at Arlington, USA); Ilke Onur (University of South Australia, Australia); Malathi Velamuri (Victoria University of Wellington, New Zealand)
    Abstract: We use the 2004-'05 wave of the Australian National Health Survey to estimate the impact of private hospital insurance on the utilization of hospital care services in Australia. We employ the two-stage residual inclusion approach (2SRI) to account for the endogeneity of supplementary private hospital insurance purchases. Health care consumption is measured by two variables: hospitalization, and the number of nights spent in hospital. We apply a negative binomial type II model to estimate the utilization of hospital services. We calculate moral hazard based on a dierence-of-means estimator. Our three-stage estimation framework provides evidence of selection into private hospital insurance in Australia. We nd strong evidence of moral hazard when we treat private hospital insurance as exogenous. After controlling for the endogeneity of hospital insurance, we nd strong and robust evidence of substitution from public to private hospital care but no evidence of ex-post moral hazard in the number of nights spent in hospital.
    Keywords: Health Insurance, Health Care Consumption, Moral Hazard EDIRC Provider-Institution: RePEc:edi:sblatau
    JEL: I11 I18 C35
    Date: 2011–01
  3. By: Chung Tran; Juergen Jung
    Abstract: In this paper we develop a stochastic dynamic general equilibrium overlapping generations (OLG) model with endogenous health capital to study the macroeconomic effects of the Affordable Care Act of March 2010 also known as the Obama health care reform. We find that the insurance mandate enforced with fines and premium subsidies successfully reduces adverse selection in private health insurance markets and subsequently leads to almost universal coverage of the working age population. On other hand, spending on health care services increases by almost 6 percent due to moral hazard of the newly insured. Notably, this increase in health spending is partly financed by the larger pool of insured individuals and by government spending. In order to finance the subsidies the government needs to either introduce a 2.7 percent payroll tax on individuals with incomes over $200, 000, increase the consumption tax rate by about 1.1 percent, or cut government spending about 1 percent of GDP. A stable outcome across all simulated policies is that the reform triggers increases in health capital, decreases in labor supply, and decreases in the capital stock due to crowding out effects and tax distortions. As a consequence steady state output decreases by up to 2 percent. Overall, we find that the reform is socially beneficial as welfare gains are observed for most generations along the transition path to the new long-run equilibrium.
    JEL: H51 I18 I38 E21 E62
    Date: 2011–02
  4. By: Craig L. Garthwaite
    Abstract: In the United States, public health insurance programs cover over 90 million individuals. Changes in the scope of these programs, such as the Medicaid expansions under the recently passed Patient Protection and Affordable Care Act, may have large effects on physician behavior. This study finds that following the implementation of the State Children’s Health Insurance Program, physicians decreased the number of hours spent with patients, but increased their participation in the expanded program. Suggestive evidence is found that this decrease in hours was a result of shorter office visits. These findings are consistent with the predictions from a mixed-economy model of physician behavior with public and private payers and also provide evidence of crowd out resulting from the creation of SCHIP.
    JEL: H0 H4 I1 I18
    Date: 2011–05
  5. By: Manan Roy (Southern Methodist University)
    Abstract: The debate over universal health insurance (HI) in the U.S., as well as the proper role of the government in the HI market, has been quite heated. Fueling this debate is the uncertainty pertaining to the benefits of HI in general, and the relative benefits of private versus public HI in particular. This uncertainty stems from non-random selection into different types of HI (private, public, or none) in combination with the absence of experimental data. Moreover, the lack of typical exclusion restrictions complicates identification of the causal effects of different HI types. Here, the aim is to assess the causal impact of private HI, relative to public HI, on the insured infant's health. To that end, this study employs the methodology proposed in Altonji et al. (2005) which trades off what can be learned in exchange for not requiring an exclusion restriction. Nonetheless, the method remains quite informative in the present context. Specifically, using data from the Early Childhood Longitudinal Survey, Birth Cohort (ECLS-B), along with several measures of infant health, the results suggest that while private HI is {\it associated}\ with improved infant health, this association disappears once selection on observables and unobservables is considered. In fact, the estimated effects of private HI are predominantly {\it negative}\ once both types of selection are admitted. Further analysis reveals that the likely beneficial effects of public HI are due to greater coverage for infants at a much lower cost.
    Keywords: Health Insurance, Children, Treatment Effects
    JEL: C21 I12 I18
    Date: 2011–05
  6. By: Gaurab Aryal; Isabelle Perrigne; Quang Vuong
    Abstract: We study the identification of an insurance model with multidimensional screening, where insurees are characterized by risk and risk aversion. The model is solved using the concept of certainty equivalence under constant absolute risk aversion and an unspecified joint distribution of risk and risk aversion. The paper then analyzes how data availability constraints identification under four data scenarios from the ideal situation to a more realistic one. The observed number of accidents for each insuree plays a key role to identify the model. In a first part, we consider the case of a continuum of coverages offered to each insuree whether the damage distribution is fully observed or truncated. Truncation arises from that an insuree files a claim only when the accident involves a damage above the deductible. Despite bunching due to multidimensional screening, we show that the joint distribution of risk and risk aversion is identified. In a second part, we consider the case of a finite number of coverages offered to each insuree. When the full damage distribution is observed, we show that despite additional pooling due to the finite number of contracts, the joint distribution of risk and risk aversion is identified under a full support assumption and a conditional independence assumption involving the car characteristics. When the damage distribution is truncated, the joint distribution is identified up to the probability that the damage is above the deductible. In a third part, we derive the restrictions imposed by the model on observables for the fourth scenario. We also propose several identification strategies for the damage probability at the deductible. These identification results are further exploited in a companion paper developing an estimation method with an application to insurance data
    JEL: C14 L62 D82 D86
    Date: 2011–02

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