nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒03‒15
eleven papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D By Robert Kaestner; Cuiping Long; G. Caleb Alexander
  2. Approaches to Reducing Federal Spending on Military Health Care By Congressional Budget Office
  3. Policy Options for the Social Security Disability Insurance Program By Congressional Budget Office
  4. Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision By Congressional Budget Office
  5. Modelling spatiotemporal variability of temperature By Xiaofeng Cao; Ostap Okhrin; Martin Odening; Matthias Ritter
  6. Unemployment and the Retirement Decisions of Older Workers By Paul Marmora; Moritz Ritter
  7. A Tale of Two Cities? The Heterogeneous Impact of Medicaid Managed Care By Marton, James; Yelowitz, Aaron; Talbert, Jeffrey
  8. Effects of Obesity and Physical Activity on Health Care Utilization and Costs By Jan Häußler
  9. The Effects of Medicare on Medical Expenditure Risk and Financial Strain By Silvia Helena Barcellos; Mireille Jacobson
  10. Optimal Price-Setting in Pay for Performance Schemes in Health Care By Søren Rud Kristensen; Luigi Siciliani; Matt Sutton
  11. Does federalism induce patients’ mobility across regions? Evidence from the Italian experience By Elenka Brenna; Federico Spandonaro

  1. By: Robert Kaestner; Cuiping Long; G. Caleb Alexander
    Abstract: We examine whether obtaining prescription drug insurance through the Medicare Part D program affected hospital admissions, expenditures associated with those admissions, and mortality. We use a large, geographically diverse sample of Medicare beneficiaries and exploit the natural experiment of Medicare Part D to obtain estimates of the effect of prescription drug insurance on hospitalizations and mortality. Results indicate that obtaining prescription drug insurance through Medicare Part D was associated with an 8% decrease in the number of hospital admissions, a 7% decrease in Medicare expenditures, and a 12% decrease in total resource use. Gaining prescription drug insurance through Medicare Part D was not significantly associated with mortality.
    JEL: I12 I13 I18
    Date: 2014–02
  2. By: Congressional Budget Office
    Abstract: The health care benefits provided to military service members, retirees, and their families are more generous than those generally provided through private or employment-based health insurance. Between 2000 and 2012, the cost of providing military health care increased by 130 percent (after adjusting for inflation). This report examines some options for constraining those costs. The largest savings would come from increasing cost sharing for military retirees.
    Date: 2014–01–16
  3. By: Congressional Budget Office
    Abstract: The Disability Insurance program provided benefits to 8.3 million disabled workers in 2011. By 2022, CBO projects, the program will provide benefits to over 10 million disabled workers and total spending on benefits to those workers will exceed $190 billion. The study provides estimates of the costs associated with several options to change the program that lawmakers might consider.
    Date: 2012–07–16
  4. By: Congressional Budget Office
    Abstract: On June 28, 2012, the Supreme Court issued a decision that essentially made the expansion of the Medicaid program under the Affordable Care Act (ACA) a state option. This report presents updated projections of the budgetary effects of the coverage provisions of the ACA to reflect the Supreme Court's decision.
    Date: 2012–07–24
  5. By: Xiaofeng Cao; Ostap Okhrin; Martin Odening; Matthias Ritter
    Abstract: Forecasting temperature in time and space is an important precondition for both the design of weather derivatives and the assessment of the hedging effectiveness of index based weather insur-ance. In this article, we show how this task can be accomplished by means of Kriging techniques. Moreover, we compare Kriging with a dynamic semiparametric factor model (DSFM) that has been recently developed for the analysis of high dimensional financial data. We apply both methods to comprehensive temperature data covering a large area of China and assess their performance in terms of predicting a temperature index at an unobserved location. The results show that the DSFM performs worse than standard Kriging techniques. Moreover, we show how geographic basis risk inherent to weather derivatives can be mitigated by regional diversification.
    Keywords: weather insurance, semiparametric model, factor model, Kriging, geographic basis risk
    JEL: C14 C53 G32
    Date: 2014–02
  6. By: Paul Marmora (Department of Economics, Temple University); Moritz Ritter (Department of Economics, Temple University)
    Abstract: This paper examines how unemployment late in workers' careers affects the timing of their retirement. Using data from the Survey of Income and Program Participation from 1996 to 2011, we document that unemployed workers permanently leave the labor force at a significantly higher rate than employed workers. This effect is stronger once workers become eligible for social security benefits and it is significantly dampened by the eligibility for unemployment insurance benefits. Unemployed workers, particularly those workers in households with below median wealth, also have a significantly higher social security uptake rate shortly after turning 62 than employed workers. We find little evidence for housing or stock market effects on the timing of retirement.
    Keywords: Older Workers, Retirement, Social Security, Unemployment
    JEL: H55 J14 J26 J64 J65
    Date: 2014–01
  7. By: Marton, James; Yelowitz, Aaron; Talbert, Jeffrey
    Abstract: Evaluating Accountable Care Organizations is difficult because there is a great deal of heterogeneity in terms of their reimbursement incentives and other programmatic features. We examine how variation in reimbursement incentives and administration among two Medicaid managed care plans impacts utilization and spending. We use a quasi-experimental approach exploiting the timing and county-specific implementation of Medicaid managed care mandates in two contiguous regions of Kentucky. We find large differences in the relative success of each plan in reducing utilization and spending that are likely driven by important differences in plan design. The plan that capitated primary care physicians and contracted out many administrative responsibilities to an experienced managed care organization achieved significant reductions in outpatient and professional utilization. The plan that opted for a fee-for-service reimbursement scheme with a group withhold and handled administration internally saw a much more modest reduction in outpatient utilization and an increase in professional utilization.
    Keywords: Medicaid; Managed Care; Child Health
    JEL: I18 I38 J13
    Date: 2014
  8. By: Jan Häußler (Department of Economics, University of Konstanz, Germany)
    Abstract: The study analyses the combined influence of obesity and lifestyle behaviors on health care utilization and health care costs. Therefore I analyze the interaction of obesity, nutrition and physical activity based on a community level dataset from a German city. In addition to the expected convex effects of age and chronic diseases for utilization, the results indicate that BMI and physical inactivity have an independent influence on G.P. visits as well as for hospitalization. The key finding of the cost analysis is that health care costs increase in consequence of a completely sedentary lifestyle by 505 € independent of the individual’s BMI level. The results also confirm that compared to individuals of normal weight, the medical costs of the group of overweight people (by 377 €) and the group of obese people (by 565 €) are significantly increased. Even without significant weight reductions public programs against a sedentary lifestyle can be a way to reduce health care spending, and thus a sole focus on weight reduction might underestimate the additional benefits of changes in lifestyle behaviors.
    Keywords: Health Care Costs, Costs of obesity, Physical Activity
    JEL: I12 H51
    Date: 2014–03–06
  9. By: Silvia Helena Barcellos; Mireille Jacobson
    Abstract: We estimate the current impact of Medicare on medical expenditure risk and financial strain. At age 65, out-of-pocket expenditures drop by 33% at the mean and 53% among the top 5% of spenders. The fraction of the population with out- of-pocket medical expenditures above income drops by more than half. Medical- related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18% of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.
    JEL: I13
    Date: 2014–03
  10. By: Søren Rud Kristensen; Luigi Siciliani; Matt Sutton
    Abstract: The increased availability of process measures implies that quality of care is in some areas de facto verifiable. Optimal price-setting for verifiable quality is well-described in the incentive-design literature. We seek to narrow the large gap between actual price-setting behaviour in Pay-For-Performance schemes and the incentive literature. We present a model for setting prices for process measures of quality and show that optimal prices should reflect the marginal benefit of health gains, providers’ altruism and the opportunity cost of public funds. We derive optimal prices for processes incentivised in the Best Practice Tariffs for emergency stroke care in the English National Health Service. Based on published estimates, we compare these to the prices set by the English Department of Health. We find that actual tariffs were lower than optimal, relied on an implausibly high level of altruism, or implied a lower social value of health gains than previously used.
    Keywords: Pay For Performance; provider behaviour; optimal price-setting
    JEL: D82 I11 I18 L51
    Date: 2014–02
  11. By: Elenka Brenna (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Federico Spandonaro (Università degli Studi di Roma "Tor Vergata")
    Abstract: In recent years, the accreditation of private hospitals followed by the decentralisation of the Italian NHS into 21 regional health systems, has furnished a good empirical ground for investigating the "voting with their feet" Tiebout principle. We consider the competition between public and private hospitals - and the rules supervising the financial agreements between regional authorities and providers of hospital care - as a potential determinant factor for cross border mobility in the Italian NHS. The model we propose considers an institutional variable set at a regional level that, ceteris paribus, succeeds in driving CBM flows towards accredited private hospitals. We assume that some northern and central regions accredited private providers not only to meet the internal need of hospital care, but also with the aim of attracting patients' inflows from other regions, particularly from the South of Italy, where the services supplied do not cover such a broad range of hospital specialization and/or do not guarantee the same perceived quality of care. The geographical gradient in this context is considerable: in 2011 the southern regions show a negative balance of - 1.046 billion euro for patients' migration, while the northern ones report a surplus of 863 million euro. Evidence, both from the normative inspection and the statistical analysis, suggests the presence of strategic incentives provided by some regions with the twofold objective of accrediting a good quality health system and contextually overcoming the risk of production excess by driving financial resources from patients' inflows.
    Keywords: patient choice, hospital accreditation, competition, cross border mobility, federal NHS.
    JEL: I11 I18 H3
    Date: 2014–02

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