nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒07‒28
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. The Price Sensitivity of Health Plan Choice: Evidence from Retirees in the German Social Health Insurance By Wuppermann, Amelie C.; Bauhoff, Sebastian; Grabka, Markus M.
  2. Deposit Insurance Database By Asli Demirgüç-Kunt; Edward Kane; Luc Laeven
  3. Adverse Selection, Moral Hazard and the Demand for Medigap Insurance By Michael P. Keane; Olean Stavrunova
  4. Online Appendix to "Unemployment Insurance and Optimal Taxation in a Search Model of the Labor Market" By Athanasios Geromichalos
  5. Health Insurance Generosity and Conditional Coverage: Evidence from Medicaid Managed Care in Kentucky By Marton, James; Yelowitz, Aaron
  6. Firms' Sickness Costs and Workers' Sickness Absences By René Böheim; Thomas Leoni

  1. By: Wuppermann, Amelie C.; Bauhoff, Sebastian; Grabka, Markus M.
    Abstract: We investigate two determinants of the price sensitivity of health plan demand: the size of the choice set and the salience of premium differences. Using variation in both features in the German Social Health Insurance (SHI) and information on health plan switches of retirees in the German Socio Economic Panel, augmented with information on individuals’ choice sets we find that retirees react less to potential savings from switching when they have more plans to choose from and when differences between premiums are less salient. Simplifying choices could save consumers money and improve the functioning of the health insurance market.
    Keywords: health plan choice; choice architecture; German social health insurance
    JEL: I11 D12 I18
    Date: 2014–07
  2. By: Asli Demirgüç-Kunt; Edward Kane; Luc Laeven
    Abstract: This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks’ assets and liabilities, including during the recent global financial crisis. We also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks’ balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.
    Date: 2014–07–03
  3. By: Michael P. Keane (Nuffield College, University of Oxford); Olean Stavrunova (University of Technology, Sydney, Australia)
    Abstract: The size of adverse selection and moral hazard eects in health insurance markets has important policy implications. For example, if adverse selection eects are small while moral hazard eects are large, conventional remedies for ineciencies created by adverse selection (e.g., mandatory insurance enrolment) may lead to substantial increases in health care spending. Unfortunately, there is no consensus on the mag- nitudes of adverse selection vs. moral hazard. This paper sheds new light on this important topic by studying the US Medigap (supplemental) health insurance market. While both adverse selection and moral hazard eects of Medigap have been studied separately, this is the rst paper to estimate both in a unied econometric framework. Our results suggest there is adverse selection into Medigap, but the eect is small. A one standard deviation increase in expenditure risk raises the probability of insur- ance purchase by 0.055. In contrast, our estimate of the moral hazard eect is much larger. On average, Medigap coverage increases health care expenditure by 24%.
    Keywords: Health insurance, adverse selection, moral hazard, health care expendi- ture
    JEL: I13 D82 C34 C35
    Date: 2014–07–08
  4. By: Athanasios Geromichalos (University of California Davis)
    Abstract: Online appendix for the Review of Economic Dynamics article
    Date: 2014
  5. By: Marton, James; Yelowitz, Aaron
    Abstract: This paper estimates the impact of the introduction of Medicaid managed care (MMC) on the formal Medicaid participation of children. We employ a quasi-experimental approach exploiting the location-specific timing of MMC implementation in Kentucky. Using data from the March Current Population Survey from 1995-2003, our findings suggest that the introduction of MMC increases the likelihood of being uninsured and decreases formal Medicaid participation. This finding is consistent with an increase in “conditional coverage” – waiting until medical care is needed to sign up or re-enroll in Medicaid. These effects are concentrated among low-income children and absent for high-income children. We find no evidence of “crowd-in” – substituting private coverage for Medicaid. These results are robust to multiple placebo tests and imply the potential for less formal participation (i.e. more conditional coverage) among the ACA Medicaid expansion population (which is likely to be primarily covered under MMC) than is typically predicted.
    Keywords: Medicaid; Managed Care; Child Health; Conditional Coverage
    JEL: I1 I18 I3 I38 J13
    Date: 2014–05
  6. By: René Böheim; Thomas Leoni
    Abstract: In many countries, social security insures firms against their workers' sickness absences. The insurance may create a moral hazard for firms, leading to inefficient monitoring of absences or to an underinvestment in the prevention of absences. We exploit an administrative threshold in the Austrian social security that defined whether a firm had to pay a deductible for its blue-collar workers sicknesses or not. The quasi-experimental situation around the threshold provides causal evidence on the extent of moral hazard induced by the deductible. We apply a regression discontinuity design to estimate the differences in the incidences and durations of sicknesses for firms that faced the deductible and those who did not. We find that the deductible did not lead to different sickness outcomes and conclude that relatively low deductibles have little impact on forms' management of sicknesses.
    JEL: H51 I18
    Date: 2014–07

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