nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒06‒07
nine papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. The Effects of Access to Health Insurance for Informally Employed Individuals in Peru By Bernal, Noelia; Carpio, Miguel A.; Klein, Tobias J.
  2. The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions By Sarah Cohodes; Samuel Kleiner; Michael F. Lovenheim; Daniel Grossman
  3. A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence By Böckerman, Petri; Kanninen, Ohto; Suoniemi, Ilpo
  4. Inclusive Growth: What Future for the European Social Model? By Schmid, Günther
  5. Supply-Side Barriers to Maternity-Care Provision in India: A Facility-Based Analysis By Santosh Kumar; Emily Dansereau
  6. Dominated Choices and Medicare Advantage Enrollment By Christopher Afendulis; Anna Sinaiko; Richard Frank
  7. Recent extensions of U.S. unemployment benefits: search responses in alternative labor market states By Valletta, Robert G.
  8. Means-tested long term care and family transfers By Cremer, Helmuth; Pestieau, Pierre
  9. The Separation of Information and Lending and the Rise of Rating Agencies in the United States By Marc Flandreau; Gabriel Geisler Mesevage

  1. By: Bernal, Noelia (Universidad de Piura); Carpio, Miguel A. (Universidad de Piura); Klein, Tobias J. (Tilburg University)
    Abstract: Many developing countries have recently increased health insurance coverage at a large scale. While it is commonly believed that this has positive effects, to date, it is not well understood through which channels health insurance coverage contributes to the well-being of individuals. More generally, the effects are usually not quantified at the individual level. There are two main reasons for this. First, we lack detailed data on health care utilization and health outcomes, and second, it is not easy to control for selection into insurance. The second problem means that a regression of utilization or outcome measures on insurance coverage will yield biased results and will not estimate the causal effects of health insurance. In this paper, we make progress in both directions. We use rich survey data to evaluate the impact of access to the Peruvian Social Health Insurance called "Seguro Integral de Salud" for individuals outside the formal labor market on a variety of measures for health care utilization, preventive care, health expenditures, and health indicators. We address the second concern by exploiting a fuzzy regression discontinuity design. A household is eligible for the program if a welfare index that is calculated from a number of variables is below a specific threshold. We base our analysis on a natural experiment that is generated by variation in the index around the threshold. We interpret our results through the lens of a simple model. As expected, and in contrast to studies for a number of other countries, we find strong effects of insurance coverage on measures of health care utilization, such as visiting a doctor, receiving medication and medical analysis. The program does not strongly incentivice individuals or health care providers to invest into preventive care. In line with this, in general, we find no effects of insurance coverage on preventive care. The only exceptions to this are our findings that, controlling for selection into insurance coverage, women of fertile age with insurance are more likely to receive pregnancy care and that insured individuals are more likely to be vaccinated. This is in line with the stark decrease in maternal and child mortality that was observed after the program was introduced. As for health care expenditures, we generally find positive effects on the mean and the variability. We complement these findings with quantile treatment effect estimates that show increases at the high end of the distribution. Our interpretation is that insured individuals are encouraged by health care professionals to undertake important treatments and pay for this themselves. At the same time, we find no clear effects on health outcomes at the micro level.
    Keywords: public health insurance, informal sector, health care utilization, health, regression discontinuity design
    JEL: I13 O12 O17
    Date: 2014–05
  2. By: Sarah Cohodes; Samuel Kleiner; Michael F. Lovenheim; Daniel Grossman
    Abstract: Public health insurance programs comprise a large share of federal and state government expenditure, and these programs are due to be expanded as part of the 2010 Affordable Care Act. Despite a large literature on the effects of these programs on health care utilization and health outcomes, little prior work has examined the long-term effects of these programs and resultant health improvements on important outcomes, such as educational attainment. We contribute to filling this gap in the literature by examining the effects of the public insurance expansions among children in the 1980s and 1990s on their future educational attainment. Our findings indicate that expanding health insurance coverage for low-income children has large effects on high school completion, college attendance and college completion. These estimates are robust to only using federal Medicaid expansions, and they are mostly due to expansions that occur when the children are older (i.e., not newborns). We present suggestive evidence that better health is one of the mechanisms driving our results by showing that Medicaid eligibility when young translated into better teen health. Overall, our results indicate that the long-run benefits of public health insurance are substantial.
    JEL: H51 H52 I13 I21 I28
    Date: 2014–05
  3. By: Böckerman, Petri (Labour Institute for Economic Research); Kanninen, Ohto (Labour Institute for Economic Research); Suoniemi, Ilpo (Labour Institute for Economic Research)
    Abstract: This paper examines the effect of the replacement rule of the Finnish sickness insurance system on the duration of sickness absence. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the effect using a regression kink design. We find a substantial and robust behavioral response. The statistically significant point estimate of the elasticity of the duration of sickness absence with respect to the replacement rate is on the order of 1.4.
    Keywords: sick pay, labor supply, sickness absence, paid sick leave, regression kink design
    JEL: I13 I18 J22
    Date: 2014–05
  4. By: Schmid, Günther (WZB - Social Science Research Center Berlin)
    Abstract: This essay starts, after a short introduction on the importance and dimensions of “inclusive growth”, with a brief empirical sketch on to what extent Europe has already succeeded with respect to this ambitious goal. The result is quite sobering and gives rise to the question: why is it so? The main part of this paper is devoted to answering this question by presenting a model based on the trade-off between comparable productive capacity (CPC) and flexibility. After the introduction of the monetary union, this trade-off sharpened for many EU member states whose CPC now falls below the fair level playing field. To compensate for the lack of comparable productive capacities, flexibility measures would be necessary (e.g. downward wage flexibility, regional mobility and cuts in social expenditures) to an extent which is unrealistic or would erode social cohesion and democracy. As alternative, the possible future role of the European Social Model could consist of the implementation of four strategies: First, investive social transfers, in particular by establishing a European Fund for Employment and Income Security (EIS) to strengthen the inclusive function and stabilisation impact of national unemployment insurance systems; second, protected flexibility, in particular the promotion of an internal functional flexibility through work sharing; third, investing in people, in particular by strengthening dual learning systems and by inducing mobility chains (making transitions pay); and fourth, efficient labour market regulation for better utilising existing capacities and restraining inefficient forms of flexibility. Examples for each strategy are presented to illustrate and stimulate the debate.
    Keywords: Europe, social policy, labour market policy, growth, inclusion, unemployment insurance
    JEL: E24 I31 J65 J83 O43 P16
    Date: 2014–05
  5. By: Santosh Kumar (Department of Economics and International Business, Sam Houston State University); Emily Dansereau (University of Washington)
    Abstract: Background: Health facilities in many low- and middle-income countries face several types of barriers in delivering quality health services. Availability of resources at the facility may significantly affect the volume and quality of services. We aim to investigate the effect of supply-side determinants of delivery care in India. Methods: Facility data from the District-Level Household Survey (DLHS-3) collected in 2007-2008 were analyzed to explore the effect of supply-side factors on the volume of delivery care at Indian health facilities. A Negative Binomial regression model was fit to the data due to the count and over-dispersion property of the outcome variable (number of deliveries performed at the facility). Results: Availability of a labor room (Incidence Rate Ratio [IRR]: 1.81; 95% Confidence Interval [CI]: 1.68-1.95) and facility opening hours (IRR: 1.43; CI: 1.35-1.51) were the most significant predictors of the volume of delivery care at the health facilities. Implementation of quality measures was not associated with more deliveries. Statistically significant but very small increases in the IRR were associated with increases in the types of medical (IRR: 1.05; 95% CI: 1.01-1.08) and paramedical (IRR: 1.06; CI: 1.04-1.08) staff available, and relevant staff trainings (IRR: 1.05; CI: 1.00-1.11). The volume of deliveries was also higher if adequate beds, essential obstetric drugs, medical equipment, communications infrastructure, and electricity were available at the clinic. Findings were robust to the inclusion of a catchment area population size, and district-level controls for education, insurance, religion, wealth, and fertility. Conclusions: Our study highlights the importance of supply-side barriers to health services utilization. To meet the Millennium Development Goal of reducing maternal mortality, policymakers should make additional investment in improving the availability of infrastructure at the primary-care level, including labor rooms and hours of operation.
    Date: 2014–06
  6. By: Christopher Afendulis; Anna Sinaiko; Richard Frank
    Abstract: Research in behavioral economics suggests that certain circumstances, such as large numbers of complex options or revisiting prior choices, can lead to decision errors. This paper explores the enrollment decisions of Medicare beneficiaries in the Medicare Advantage (MA) program. During the time period we study (2007-2010), private fee-for-service (PFFS) plans offered enhanced benefits beyond those of traditional Medicare (TM) without any restrictions on physician networks or additional cost, making TM a dominated choice relative to PFFS. Yet more than three quarters of Medicare beneficiaries remained in TM during our study period. We explore two possible explanations for this behavior: status quo bias and choice overload. Our results suggest that status quo bias plays an important role; the rate of MA enrollment was significantly higher among new Medicare beneficiaries than among incumbents. Our results also provide some evidence of choice overload; while the MA enrollment rate did not decline with an increase in the number of plans, among incumbent beneficiaries it failed to increase. Our results illustrate the importance of the choice environment that is in place when enrollees first enter the Medicare program.
    JEL: I13
    Date: 2014–05
  7. By: Valletta, Robert G. (Federal Reserve Bank of San Francisco)
    Abstract: In response to the 2007-09 “Great Recession,” the maximum duration of U.S. unemployment benefits was increased from the normal level of 26 weeks to an unprecedented 99 weeks. I estimate the impact of these extensions on job search, comparing them with the more limited extensions associated with the milder 2001 recession. The analyses rely on monthly matched microdata from the Current Population Survey. I find that a 10-week extension of UI benefits raises unemployment duration by about 1.5 weeks, with little variation across the two episodes. This estimate lies in the middle-to-upper end of the range of past estimates.
    Keywords: unemployment benefits; job search
    Date: 2014–05
  8. By: Cremer, Helmuth; Pestieau, Pierre
    Abstract: One of the pervasive problems with means-tested public long term care (LTC) programs is their inability to prevent individuals who could a¤ord private long term services from taking advantage of public care. They often manage to elude the means-test net through strategic impoverishment. We show in a simple model how this problem comes about, how it a¤ects welfare and how it can be mitigated.
    Keywords: Long term care, means-testing, strategic impoverishment, opting out, public insurance, altruism.
    JEL: H2 H5
    Date: 2014–05
  9. By: Marc Flandreau; Gabriel Geisler Mesevage (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper provides a new interpretation of the early rise of rating agencies in the United States (initially known as ‘Mercantile Agencies’). We explain this American exceptionality through an inductive approach that revisits the conventional parallel with the UK. In contrast with earlier narratives that have emphasized the role of Common Law and the greater understanding of American judges that would have supported the rise of an ethos of ‘transparency’, we argue that Mercantile Agencies prospered as a remedy to deficient bankruptcy law and weak protection of creditor rights in the US. The result was to raise the value of the nation-wide registry of defaulters which the Mercantile Agencies managed. This ensured the Agencies’ profitability and endowed them with resources to buy their survival in a legal environment that remained stubbornly hostile.
    Keywords: Rating, Mercantile Agencies, Information, Credit Insurance, Comparative Economic History, Libel, Business Law
    JEL: P5 G2 N2 K2
    Date: 2014–05–27

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