nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒08‒25
nineteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Limited Deposit Insurance Coverage and Bank Competition By Shy, Oz; Stenbacka, Rune; Yankov, Vladimir
  2. Lebanon - The Insurance Sector : A Market and Risk Based Review By World Bank
  3. Malaysia - Insurance Core Principles : Detailed Assessment of Observance By World Bank
  4. Mexico : IAIS Insurance Core Principles - Detailed Assessment of Observance By International Monetary Fund; World Bank
  5. The Agricultural Insurance Market in the Caribbean By Diego Arias Carballo; Laura dos Reis
  6. Employment and Wage Insurance within firms - Worldwide Evidence By Andrew Ellul; Marco Pagano; Fabiano Schivardi
  7. Public Health Insurance Expansions and Hospital Technology Adoption By Seth Freedman; Haizhen Lin; Kosali Simon
  8. Health Effects of Containing Moral Hazard: Evidence from Disability Insurance Reform By Garcia-Gomez, Pilar; Gielen, Anne C.
  9. Determinants of Policy Response: The Case of the Partnership Long-Term Care Insurance Program By Haizhen Lin; Jeffrey T. Prince
  10. Building Morocco's Resilience : Inputs for an Integrated Risk Management Strategy By World Bank
  11. The Effects of Prescription Drug Cost Sharing: Evidence from the Medicare Modernization Act By Douglas Barthold
  12. A Diverse and Dynamic Region : Taking Stock of Social Assistance Performance in East Asia and the Pacific By World Bank
  13. Patterns of Older Americans' Health Care Utilization Over Time. By Richard J. Manski; John F. Moeller; Haiyan Chen; Jody Schimmel; Patricia A. St. Clair; John V. Pepper
  14. Examining the Number of Competitors and the Cost of Medicare Part D: Working Paper 2014-04 By Andrew Stocking; James Baumgardner; Melinda Buntin; Anna Cook
  15. Social Protection beyond the Bottom Billion By Murphy, Susan; Walsh, Patrick Paul
  16. Descriptive Study of Three Disability Competent Managed Care Plans for Medicaid Enrollees. By Vanessa Oddo; Angela Gerolamo; David R. Mann; Catherine DesRoches
  17. Competition and the Cost of Medicare’s Prescription Drug Program By Congressional Budget Office
  18. Cantonal Differences in Health Care Premium Subsidies in Switzerland By Gerritzen, Berit C.; Martínez, Isabel Z.; Ramsden, Alma
  19. Impacts of Waiting Periods for Home- and Community-Based Services on Consumers and Medicaid Long-Term Care Costs in Iowa. By Greg Peterson; Randy Brown; Allison Barrett; Beny Wu; Christal Stone Valenzano

  1. By: Shy, Oz (Federal Reserve Bank of Boston); Stenbacka, Rune (Hanken School of Economics); Yankov, Vladimir (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: Deposit insurance schemes in many countries place a limit on the coverage of deposits in each bank. However, no limits are placed on the number of accounts held with different banks. Therefore, under limited deposit insurance, some consumers open accounts with different banks to achieve higher or full deposit insurance coverage. We compare three regimes of deposit insurance: No deposit insurance, unlimited deposit insurance, and limited deposit insurance. We show that limited deposit insurance weakens competition among banks and reduces total welfare relative to no or unlimited deposit insurance.
    Keywords: Limited deposit insurance coverage; deposit rates; bank competition
    JEL: G21
    Date: 2014–08–06
  2. By: World Bank
    Keywords: Insurance and Risk Mitigation Law and Development - Insurance Law Private Sector Development - Emerging Markets Finance and Financial Sector Development - Non Bank Financial Institutions Finance and Financial Sector Development - Debt Markets
    Date: 2013–12
  3. By: World Bank
    Keywords: Insurance and Risk Mitigation Banks and Banking Reform Private Sector Development - Emerging Markets Finance and Financial Sector Development - Debt Markets Law and Development - Insurance Law
    Date: 2013–02
  4. By: International Monetary Fund; World Bank
    Keywords: Insurance and Risk Mitigation Law and Development - Insurance Law Private Sector Development - Emerging Markets Finance and Financial Sector Development - Non Bank Financial Institutions Finance and Financial Sector Development - Debt Markets
    Date: 2013–03
  5. By: Diego Arias Carballo; Laura dos Reis
    Keywords: Law and Development - Insurance Law Insurance and Risk Mitigation Urban Development - Hazard Risk Management Banks and Banking Reform Macroeconomics and Economic Growth - Climate Change Economics Finance and Financial Sector Development
    Date: 2013–03
  6. By: Andrew Ellul (Kelley School of Business, Indiana University, CSEF and ECGI); Marco Pagano (University of Naples "Federico II", CSEF, EIEF, CEPR and ECGI); Fabiano Schivardi (LUISS, EIEF and CEPR)
    Abstract: We investigate the determinants of firms’ implicit employment and wage insurance to employees against industry-level and idiosyncratic shocks. We rely on differences between family and nonfamily firms to identify the supply of insurance, and between national public insurance programs to gauge workers’ demand for insurance. Using firm-level data from 41 countries, we find that family firms provide greater employment protection but less wage stability. Employment protection comes at a price: family firms pay 5 percent lower wages, controlling for country, industry and time effects. The additional protection afforded by family firms is greater, and the wage discount larger, the less generous the public unemployment insurance program, indicating that firm and government employment insurance are substitutes. The cross-country evidence is broadly confirmed by Italian employee-employer matched data, which also show that in family firms the adjustment to shocks occurs mostly through the hiring margin, while separations are not responsive to shocks.
    Date: 2014
  7. By: Seth Freedman (School of Public and Environmental Affairs, Indiana University); Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Kosali Simon (School of Public and Environmental Affairs, Indiana University)
    Abstract: This paper explores the effects of public health insurance expansions on hospitals’ decisions to adopt medical technology. Specifically, we test whether the expansion of Medicaid eligibility for pregnant women during the 1980s and 1990s affects hospitals’ decisions to adopt neonatal intensive care units (NICUs). While the Medicaid expansion provided new insurance to a substantial number of pregnant women, prior literature also finds that some newly insured women would otherwise have been covered by more generously reimbursed private sources. This leads to a theoretically ambiguous net effect of Medicaid expansion on a hospital’s incentive to invest in technology. Using American Hospital Association data, we find that on average, Medicaid expansion has no statistically significant effect on NICU adoption. However, we find that in geographic areas where more of the newly Medicaid-insured may have come from the privately insured population, Medicaid expansion slows NICU adoption. This holds true particularly when Medicaid payment rates are very low relative to private payment rates. This finding is consistent with prior evidence on reduced NICU adoption from increased managed-care penetration. We conclude by providing suggestive evidence on the health impacts of this deceleration of NICU diffusion, and by discussing the policy implications of our work for insurance expansions associated with the Affordable Care Act.
    JEL: I11 I13 I18
    Date: 2014–05
  8. By: Garcia-Gomez, Pilar (Erasmus University Rotterdam); Gielen, Anne C. (Erasmus University Rotterdam)
    Abstract: We exploit an age discontinuity in a Dutch disability insurance (DI) reform to identify the health impact of stricter eligibility criteria and reduced generosity. Women subject to the more stringent rule experience greater rates of hospitalization and mortality. A €1,000 reduction in annual benefits leads to a rise of 4.2 percentage points in the probability of being hospitalized and a 2.6 percentage point higher probability of death more than 10 years after the reform. There are no effects on the hospitalization of men subject to stricter rules but their mortality rate is reduced by 1.2 percentage points. The negative health effect on females is restricted to women with low pre-disability earnings. We hypothesize that the gender difference in the effect is due to the reform tightening eligibility particularly with respect to mental health conditions, which are more prevalent among female DI claimants. A simple back-of-the-envelope calculation shows that every dollar reduction in DI is almost completely offset by additional health care costs. This implies that policy makers considering a DI reform should carefully balance the welfare gains from reduced moral hazard against losses not only from less coverage of income risks but also from deteriorated health.
    Keywords: disability insurance, moral hazard, health, mortality, regression discontinuity
    JEL: I14 H53 I38
    Date: 2014–08
  9. By: Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Jeffrey T. Prince (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Building on the findings of Lin and Prince (2013), we analyze several additional potential determinants of response to the partnership long-term care (PLTC) program, in addition to wealth. The determinants we consider are bequest motives, financial literacy, and program awareness. We find mild evidence that intent to bequest influences individual purchases of the partnership program. However, we find strong evidence that program awareness is necessary for response while financial literacy notably increases responsiveness. We also find that, even with these additional controls, a difference in response across wealth levels persists, suggesting that Medicaid crowd-out is still important in determining uptake of this program. These findings suggest that increasing response to the program among the middle class (the stated target group) requires increased education about the program’s benefits and increased efforts to create awareness of the program existence, at least among the middle class.
    Keywords: private long-term care insurance, partnership long-term care program, policy response
    JEL: I13 I18 I38
    Date: 2014–07
  10. By: World Bank
    Keywords: Insurance and Risk Mitigation Banks and Banking Reform Social Protections and Labor - Labor Policies Finance and Financial Sector Development - Currencies and Exchange Rates Urban Development - Hazard Risk Management
    Date: 2014–01
  11. By: Douglas Barthold
    Abstract: This paper assesses the impact of health insurance cost sharing on enrollees' preventable hospitalizations and preventive care utilization, among the elderly in the United States. Cost sharing has an important role in health insurance, where it is designed to mitigate moral hazard consumption of medical services. Such overconsumption is detrimental to the pool of enrollees, who finance the care of fellow enrollees, and to society overall, due to allocative inefficiency. A possible consequence of dissuading utilization is that individuals may choose to forego services that are perceived to be nonessential, such as preventive care. In order to evaluate this possibility, I analyze the effects of varying patient cost sharing for prescription drugs on hospitalizations from Ambulatory Care Sensitive Conditions (ACSC), which can represent a failure of preventive and outpatient care. To address endogeneity from selection and sorting of individuals into insurance plans, I aggregate data to the region-year level, and use an instrumental variables strategy. The analysis exploits exogenous variation in prescription drug cost sharing that occurred as a result of the Medicare Modernization Act of 2003, and therefore identifies causal effects of cost sharing. Results show that for the elderly in the United States, reductions in prescription drug cost sharing do not have an effect on hospitalizations related to ambulatory care sensitive conditions, or on specific types of preventive care utilization.
    Keywords: cost sharing, prescription drugs, Medicare Part D, preventive care, ambulatory care sensitive conditions
    JEL: I12
    Date: 2014–07
  12. By: World Bank
    Keywords: Poverty Reduction - Rural Poverty Reduction Insurance and Risk Mitigation Services and Transfers to Poor Social Development - Social Risk Management Public Sector Expenditure Policy Finance and Financial Sector Development Public Sector Development
    Date: 2013
  13. By: Richard J. Manski; John F. Moeller; Haiyan Chen; Jody Schimmel; Patricia A. St. Clair; John V. Pepper
    Abstract: This study examined the use of physician, inpatient hospital, home health, and outpatient surgery for Americans more than 50 years of age. The study found that overall health and changes in health are more strongly correlated with seeking and using health care over time than financial status or changes to one’s financial status.
    Keywords: Health Care Utilization, Older Americans, Health Insurance Coverage, Health
    JEL: I
    Date: 2013–07–30
  14. By: Andrew Stocking; James Baumgardner; Melinda Buntin; Anna Cook
    Abstract: Most beneficiaries of Medicare's Part D prescription drug insurance choose among private drug plans to receive their coverage. This paper is the first to examine the relationship between the number of competing plan sponsors and the cost of Part D during the program's first five years. Over the period from 2006 to 2010, regional Part D markets contained between 16 and 22 plan sponsors offering stand-alone plans. Consistent with economic theory, we find that increases in the number of plan sponsors within a market were associated with lower bids and lower overhead and profits of plans in that market. For example, among stand-alone plans that were not eligible to be assigned low-income beneficiaries, we find that each additional plan sponsor entering an 18-firm market was associated with a reduction in bids for a month of basic coverage to a beneficiary of average health of 0.4 percent—or $0.33 for a plan that bid $85—which corresponds to an elasticity of -0.071. (That result is an arithmetic average across six specifications in which estimates range from $0.20 to $0.50.) Because bids are used to directly determine government spending, we estimate that an additional plan sponsor nationwide was associated with a reduction in government spending of $7 million to $17 million each year.
    JEL: I10 I11 I13 I18 I38
    Date: 2014–07–30
  15. By: Murphy, Susan (Trinity College Dublin); Walsh, Patrick Paul (University College Dublin)
    Abstract: Most conceptualisations of the bottom billion assume that "the poor" are a minority group in a state of continuous dependency, identifiable by region and demographic. Using a flow analysis (inflow and outflow) of poverty, rather than a stock analysis, we explain why poverty is more appropriately understood as a dynamic, with the majority of people flowing in and out of poverty for short durations. Distinguishing between structural and transitory poverty gives rise to a focus on the identification of multiple constituencies in the wider population including the permanently poor; sometimes poor; and non-poor. External shocks, including economic and environmental shifts, and risks such as ill-health, can affect any individual, household, or population in a non-predictable way, and can lead to loss of livelihood and a descent into poverty for various durations. At any point in time the bottom billion is made up of a blend of both transitory and structural elements with the former reflecting poverty as a risk for a much wider population than is often assumed. Using this analysis, the total stock of poverty potentially entails up to 5.1 billion people who do not have access to comprehensive social protection systems and are therefore vulnerable to spells in poverty. To protect against shared risks and mutual vulnerabilities, this paper argues that global insurance instruments, regulated through domestic institutions, would provide an efficient solution to transitory poverty. Further, it argues that these instruments could provide a foundation for investment in more equitable and extensive social protection measures that could target the multiple dimensions of structural poverty thereby seeking to ensure that no one is left behind.
    Keywords: social protection, social security, social insurance, social transfers, social justice, transitory poverty, structural poverty, Pareto efficiency, equity
    JEL: J65 J68
    Date: 2014–08
  16. By: Vanessa Oddo; Angela Gerolamo; David R. Mann; Catherine DesRoches
    Keywords: Managed Care Plans, Medicaid Enrollees, Disability, Health
    JEL: I J I
    Date: 2014–01–30
  17. By: Congressional Budget Office
    Abstract: Spending for Medicare's prescription drug program (Part D) was $50 billion in 2013—about 50 percent less than CBO projected when the program was created. Lower growth rates in national drug spending and lower-than-expected enrollment primarily account for the difference. The competitive design of Part D has also constrained spending. CBO found that spending was lower in years when, and in areas of the country where, more plan sponsors competed for beneficiaries.
    JEL: I10 I11 I13 I18 I38
    Date: 2014–07–30
  18. By: Gerritzen, Berit C.; Martínez, Isabel Z.; Ramsden, Alma
    Abstract: We study health care premium subsidies in the Swiss cantons in order to understand the reasons behind the substantial cross-cantonal variation in households' premium load, i.e., the share of disposable income that is spent on premiums after the subsidy. Cantons' financial situation is of particular interest in this regard, because the premium subsidies aim at reducing the premium load for lower income groups in order to ensure universal access to health care at affordable costs. Thus, variation in premium load is meant to reflect underlying differences between cantons in health care and overall living costs, or different preferences of the electorate with regards to social policy, but not budgetary considerations of cantons. We develop a premium subsidy calculation model based on cantonal regulations and apply it to households in the Swiss Household Panel to assess the effect of cantonal budget tightness on households' premium load from 2004-2012. Our analysis is based on panel regression methods and a difference-in- differences model in order to take into account unobserved heterogeneity and simultaneity concerns. The results indicate that there is a significant and negative relationship between the budget of a canton and the premium load of households
    Keywords: Health care premium subsidies, equity, health care financing, fiscal federalism, budget constraint, Switzerland.
    JEL: H51 H72 H75 I14 I18
    Date: 2014–07
  19. By: Greg Peterson; Randy Brown; Allison Barrett; Beny Wu; Christal Stone Valenzano
    Keywords: Home and Community Based Services, Medicaid, Long-Term Care, Iowa
    JEL: I
    Date: 2014–01–30

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