nep-ias New Economics Papers
on Insurance Economics
Issue of 2015‒05‒16
eleven papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Health Insurance Mandates in a Model with Consumer Bankruptcy By Gilad Sorek; David Benjamin
  2. Reducing Avoidable Hospitalizations for Medicare-Medicaid Enrollees in Nursing Facilities: Issues and Options for States By Laura D. Kimmey; James M. Verdier
  3. Do Individuals Make Sensible Health Insurance Decisions? Evidence from a Menu with Dominated Options By Saurabh Bhargava; George Loewenstein; Justin Sydnor
  4. The Pros and Cons of Sick Pay Schemes: A Method to Test for Contagious Presenteeism and Shirking Behavior By Pichler, S,;; Ziebarth, N.R,;
  6. Does Extending Unemployment Benefits Improve Job Quality? By Nekoei, Arash; Weber, Andrea
  7. Universal health coverage in the Philippines : progress on financial protection goals By Bredenkamp,Caryn; Buisman,Leander Robert
  8. Law Firms and Export Insurance Companies By Fabian Sosa
  9. The population aging – a challenge for the sustainability of the Romanian social health insurance system By Eugenia Claudia Bratu; Dana Galieta Minc; Florentina Ligia Furtunescu
  10. The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program By David H. Autor; Mark Duggan; Kyle Greenberg; David S. Lyle
  11. How Health Plan Enrollees Value Prices Relative to Supplemental Benefits and Service Quality By Bunnings, C,;; Schmitz, H,;; Tauchmann, H,;; Ziebarth, N.R,;

  1. By: Gilad Sorek; David Benjamin
    Abstract: We study insurance take-up choices by consumers who face medical-expense and income risks, knowing they can default on medical bills by filing bankruptcy. For a given bankruptcy system we explore total and distributional welfare effects of health insurance mandates, compared with pre-mandates market equilibrium. We consider different combinations of premium-subsides and out-of-insurance penalties, confining attention to budgetary neutral policies. We show that when insurance mandates are enforced through penalties only, the efficient take-up level may be incomplete. However, if mandates are supported also with premium subsidies full insurance coverage is efficient and can be also Pareto improving. Such policies are consistent with the incentives structure set in the ACA for insurance take-up.
    Keywords: Consumer Bankruptcy; Health Insurance Mandates; Welfare
    Date: 2015–05
  2. By: Laura D. Kimmey; James M. Verdier
    Abstract: States that contract with health plans to provide comprehensive Medicare and Medicaid services for dually eligible enrollees in nursing facilities can work with these plans to reduce avoidable hospitalizations.
    Keywords: Hospitalizations, Medicare, Medicaid, Enrollees, Nursing Facilities, State Health
    JEL: I
    Date: 2015–04–30
  3. By: Saurabh Bhargava; George Loewenstein; Justin Sydnor
    Abstract: The recent expansion of health-plan choice has been touted as increasing competition and enabling people to choose plans that fit their needs. This study provides new evidence challenging these proposed benefits of expanded health-insurance choice. We examine health-insurance decisions of employees at a large U.S. firm where a new plan menu included a large share of financially dominated options. This menu offers a unique litmus test for evaluating choice quality since standard risk preferences and beliefs about one’s health cannot rationalize enrollment into the dominated plans. We find that a majority of employees – and in particular, older workers, women, and low earners – chose dominated options, resulting in substantial excess spending. Most employees would have fared better had they instead been enrolled in the single actuarially-best plan. In follow-up hypothetical-choice experiments, we observe similar choices despite far simpler menus. We find these choices reflect a severe deficit in health insurance literacy and naïve considerations of health risk and price, rather than a sensible comparison of plan value. Our results challenge the standard practice of inferring risk attitudes and assessing welfare from insurance choices, and raise doubts whether recent health reforms will deliver their promised benefits.
    JEL: D82 D89 I11 I13
    Date: 2015–05
  4. By: Pichler, S,;; Ziebarth, N.R,;
    Abstract: This paper proposes a test for the existence and the degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior. Then we derive testable conditions for reduced shirking, increased presenteeism, and the level of overall moral hazard when benefits are cut. We implement the test empirically exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. The labor supply adjustment for contagious diseases is significantly smaller than for non-contagious diseases, providing evidence for contagious presenteeism and negative externalities which arise in form of infections.
    Keywords: Sickness Insurance; Sick Pay; Presenteeism; Contagious Diseases; Infections; Negative Externalities; Shirking
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2015–02
  5. By: Ahmad Abu Jrai (Al-Hussein Bin Talal University)
    Abstract: This study seeks to compare the utilization of health services and expenditures between two groups and to assess the effect of socioeconomic factors (income, age, gender education and family size) on utilization of medical care services among AHU university. The first one is the staff of Al-Hussein Bin Talal University ( under cost sharing plans) and the second one is the staff of Ministry of Education ( Under free care). Data on health care services utilization were collected for the periods (2009-2014). Utilization of health services for both groups was measured by several variable including, inpatient care, routine checkups, specialty care, dental care, laboratory tests, X-ray, prescription drugs, and hospital length of stay. In this investigation there were several sources for error. The main error is that some individuals in both samples may be covered through other health insurance plans such as public health insurance, military health insurance, and other private health insurance arrangements. Preliminary analysis of the current research show that employees' visits under the free care plans provided by the Ministry of Education were around 30% higher than the employees' visits covered by the cost sharing plans.
    Keywords: cost sharing insurance, health insurance, Jordan, heath services
  6. By: Nekoei, Arash (IIES, Stockholm University); Weber, Andrea (University of Mannheim)
    Abstract: Contrary to standard search model predictions, prior studies failed to estimate a positive effect of unemployment insurance (UI) on reemployment wages. This paper estimates a positive UI wage effect exploiting an age-based regression discontinuity in Austrian administrative data. A search model incorporating duration dependence determines the UI wage effect as the balance between two offsetting forces: UI causes agents to seek higher-wage jobs, but also reduces wages by lengthening unemployment. This implies a negative relationship between the UI unemployment duration and wage effects, which holds empirically both in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firms' quality and attenuating wage drops.
    Keywords: unemployment insurance, job-search, wages
    JEL: H5 J3 J6
    Date: 2015–04
  7. By: Bredenkamp,Caryn; Buisman,Leander Robert
    Abstract: Providing protection against the financial risk of high out-of-pocket health spending is one of the main goals of the Philippines? health strategy. Yet, as this paper shows using eight household surveys, health spending increased by 150 percent (real) from 2000 to 2012, with the sharpest increases occurring in recent years. The main driver of health spending is medicines, accounting for almost two-thirds of total health spending, and as much as three-quarters among the poor. The incidence of catastrophic payments has trebled since 2000, from 2.5 to 7.7 percent. The percentage of people impoverished by health spending has also increased and, in 2012, out-of-pocket spending on health added 1.5 percentage points to the poverty rate. In light of these findings, recent policies to enhance financial risk protection?such as the expansion of government-subsidized health insurance for the poor, a deepening of the benefit package, and provider payment reform aimed at cost-containment?are to be applauded. Between 2008 and 2013, self-reported health insurance coverage increased across all quintiles and its distribution became more pro-poor. To speed progress toward financial protection goals, possible quick wins could include issuing health insurance cards for the poor to increase awareness of coverage and introducing a fixed copayment for non-poor members. Over the medium term, complementary investments in supply-side readiness are essential. Finally, an in-depth analysis of the pharmaceutical sector would help to shed light on why medicines continue to place such a large financial burden on households.
    Keywords: Rural Poverty Reduction,Health Monitoring&Evaluation,Health Economics&Finance,Health Systems Development&Reform,Health Law
    Date: 2015–05–06
  8. By: Fabian Sosa
    Abstract: In the age of globalization the relevance of international trade has increased tremendously. As a consequence, many transactions go beyond the legal framework of the nation state. Mechanisms provided by the nation states are not anymore suitable to secure international transactions. The enforcement of cross-border claims is complicated by legal and practical problems. Arbitration has an increasing importance for cross-border conflict resolution, but it is not able to replace state court proceedings. The author analyses this topic from the perspective of international law-firms based on existing studies, statistics, and his experience as international lawyer. On the basis of 30 practical cases the author provides insight into the claim management in the export insurance industry, a sector where private actors (export insurance companies and law-firms) use litigation as central instrument for cross-border conflict resolution. The analysis shows that export insurance provides an important contribution in this context, in particular for small and midsized companies regarding their possibilities to reduce the payment default risk in international business relationships.
    Keywords: Commercial law, cross-border transactions, global trade, contract enforcement, private ordering, international arbitration, international contracts, national courts, international law-firms, claim management, export insurance
    JEL: A14 F14 F15 F23 K12 K K41 K42 L22 L14
    Date: 2015–05
  9. By: Eugenia Claudia Bratu (University of Medicine and Pharmacy ”Carol Davila” Bucharest, Romania. Faculty of Medicine, Preclinical Department III – Complementary Sciences, Discipline of Public Health and Management); Dana Galieta Minc (University of Medicine and Pharmacy ”Carol Davila” Bucharest, Romania. Faculty of Medicine, Preclinical Department III – Complementary Sciences, Discipline of Public Health and Management); Florentina Ligia Furtunescu (University of Medicine and Pharmacy ”Carol Davila” Bucharest, Romania. Faculty of Medicine, Preclinical Department III – Complementary Sciences, Discipline of Public Health and Management)
    Abstract: Global population ageing in Romania is a challenge for ensuring the sustainability, and for maintaining the bioethical principle of distributive justice for the social health insurance system. This study aims to examine and to highlight the theoretical influence and the practical impact of the current demographic evolution on the Romanian health system financial sustainability. Along with the presentation of a demographic forecasting for the demographic quota of working age and after the age of 65 years by 2025, using the age specific fertility and mortality model for Romania 2014, the potential consequences regarding the sustainability and ethics of this demographic development are compared and analyzed, taking into acount the source of financing for the Romanian health system. Also, an analysis of the health status of the population over 65 years is performed, using health status and health interventions indicators.In 2013, Romanian population coverage with health insurance was 83.8%. Only 47% of the health insured persons have financially contributed to the system, 76% of the contributors being employees. Thus, given that 66% of the Unique National Health Insurance Fund's income are based on the contribution of employers and employees, the decreasing by more than 1 million people from working age quota and the rising with approximately 50 000 persons of the population over 65 years, can cause major disruptions in the functionality of the social health insurance system. Meantime, the health status of the over 65 population is characterized by indicators that are worsening.There are two possibilities of future evolution, cost restraints situation, in which the sustainability of the health insurance system is preserved, or negative situation of inability to cover the costs associated with the disease burden of an older population. The health system sustainability can be ensured, only if the onset for the first disability (in the length of life) may be delayed as much as possible towards the time of death, for the entire population. That means to upgrade and to enhance public health as a major policy for sustainability of the healthcare system.
    Keywords: population aging, health system sustainability, distributive justice
    JEL: I14 I18
  10. By: David H. Autor; Mark Duggan; Kyle Greenberg; David S. Lyle
    Abstract: Combining administrative data from the U.S. Army, Department of Veterans Affairs (VA) and the U.S. Social Security Administration, we analyze the effect of the VA’s Disability Compensation (DC) program on veterans’ labor force participation and earnings. The largely unstudied Disability Compensation program currently provides income and health insurance to almost four million veterans of military service who suffer service-connected disabilities. We study a unique policy change, the 2001 Agent Orange decision, which expanded DC eligibility for Vietnam veterans who had served in-theatre to a broader set of conditions such as type 2 diabetes. Exploiting the fact that the Agent Orange policy excluded Vietnam era veterans who did not serve in-theatre, we assess the causal effects of DC eligibility by contrasting the outcomes of these two Vietnam-era veteran groups. The Agent Orange policy catalyzed a sharp increase in DC enrollment among veterans who served in-theatre, raising the share receiving benefits by five percentage points over five years. Disability ratings and payments rose rapidly among those newly enrolled, with average annual non-taxed federal transfer payments increasing to $17K within five years. We estimate that benefits receipt reduced labor force participation by 18 percentage points among veterans enrolled due to the policy, though measured income net of transfer benefits rose on average. Consistent with the relatively advanced age and diminished health of Vietnam era veterans in this period, we estimate labor force participation elasticities that are somewhat higher than among the general population.
    JEL: J22
    Date: 2015–05
  11. By: Bunnings, C,;; Schmitz, H,;; Tauchmann, H,;; Ziebarth, N.R,;
    Abstract: This paper empirically assesses the relative role of health plan prices, service quality and optional benefits in the decision to choose a health plan. We link representative German SOEP panel data from 2007 to 2010 to (i) health plan service quality indicators, (ii) measures of voluntary benefit provision on top of federally mandated benefits, and (iii) health plan prices for almost all German health plans. Mixed logit models incorporatea total of 1,700 health plan choices with more than 50 choice sets for each individual. The findings suggest that, compared to prices, health plan service quality and supplemental benefits play a minor role in making a health plan choice.
    Keywords: service quality; non-essential benefits; prices; health plan switching; German sickness funds; SOEP
    JEL: D12 H51 I11 I13 I18
    Date: 2015–02

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