nep-ias New Economics Papers
on Insurance Economics
Issue of 2015‒07‒04
nine papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment By Amy Finkelstein; Nathaniel Hendren; Erzo F.P. Luttmer
  2. Return-to-Work Outcomes Among Social Security Disability Insurance Program Beneficiaries (Journal Article) By Yonatan Ben-Shalom; Arif A. Mamun
  3. Return to Work of Disability Insurance Beneficiaries Who Do and Do Not Access State Vocational Rehabilitation Agency Services By John O'Neill; Arif A. Mamun; Elizabeth Potamites; Fong Chan; Elizabeth da Silva Cordoso
  4. Does health insurance encourage the rise in medical prices? A test on balance billing in France By Dormont, Brigitte; Péron, Mathilde
  5. Health Care Utilization Among Children Enrolled in Medicaid and CHIP via Express Lane Eligibility By Margaret Colby; Brenda Natzke
  6. Risk Theory and Reinsurance By Griselda Deelstra; Guillaume Plantin
  7. Coordinating Contracts in Value-Based Healthcare Delivery: Integration and Dynamic Incentives By Tannaz Mahtoochi; Ignacio Castillo; Logan McLeod
  8. The Welfare Cost of Inflation Risk Under Imperfect Insurance By Olivier Allais; Yann Algan; Edouard Challe; Xavier Ragot
  9. Luxembourg - addressing new challenges in a major financial sector By Eckhard Wurzel; Damien Azzopardi

  1. By: Amy Finkelstein; Nathaniel Hendren; Erzo F.P. Luttmer
    Abstract: We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.
    JEL: H51 I13
    Date: 2015–06
  2. By: Yonatan Ben-Shalom; Arif A. Mamun
    Abstract: We followed a sample of working-age Social Security Disability Insurance (DI) program beneficiaries for 5 years after their first benefit award to learn how certain factors are associated with achievement of four return-to-work milestones: enrollment for employment services provided by a state vocational rehabilitation agency or employment network, start of a trial work period (TWP), completion of TWP, and suspension or termination of benefits because of work.
    Keywords: Social Security Disability Insurance, employment, vocational rehabilitation
    JEL: I J
    Date: 2015–05–20
  3. By: John O'Neill; Arif A. Mamun; Elizabeth Potamites; Fong Chan; Elizabeth da Silva Cordoso
    Abstract: This study examines the relationship between services provided by state vocational rehabilitation agencies (SVRAs) and return-to-work outcomes of Social Security Disability Insurance (DI) beneficiaries.
    Keywords: economics, social security, employment, vocational rehabilitation
    JEL: I J
    Date: 2015–05–20
  4. By: Dormont, Brigitte; Péron, Mathilde
    Abstract: In this paper, we estimate the causal impact of a positive shock on supplementary health insurance coverage on the use of specialists who balance bill. For that purpose, we evaluate the impact on patients' behavior of a shock consisting of better coverage of balance billing, while controlling for supply side drivers, i.e. proportions of physicians who balance bill and physicians who do not. We use a panel dataset of 58,336 individuals observed between January 2010 and December 2012, which provides information, at the individual level, on health care claims and reimbursements provided by basic and supplementary insurance. Our data makes it possible to observe enrollees that are heterogeneous in their propensity to use physicians who balance bill. We observe them when they are all covered by the same supplementary insurer, with no coverage for balance billing, and after 5,134 of them switched to other supplementary insurers which offer better coverage. Our estimations show that better coverage contributes to a rise in medical prices by increasing the demand for specialists who balance bill. On the whole sample, we find that better coverage leads individuals to raise their proportion of consultations of specialists who balance bill by 9 %, which results in a 34 % increase in the amount of balance billing per consultation. However, the effect of supplementary health insurance clearly depends on the local supply side organization. The inflationary impact arises when specialists who balance bill are numerous and specialists who do not are relatively scarce. When people have a real choice between physicians, a coverage shock has no impact on the use of specialists who balance bill. When the number of specialists who charge the regulated fee is sufficiently high, there is no evidence of limits in access to health care, nor of an inflationary effect of supplementary coverage.
    Keywords: Health insurance; Balance billing; Health care access;
    JEL: I13 I18 C23
    Date: 2015–06
  5. By: Margaret Colby; Brenda Natzke
    Abstract: We compared health care utilization among children enrolled via ELE and nondisabled children who enrolled through standard pathways in each state. We used a two-step estimation approach, examining the likelihood of utilization and then the volume and cost of services among users. Regression adjustment corrected for demographic differences.
    Keywords: Medicaid, health care utilization, express lane eligibility, enrollment simplification
    JEL: I
    Date: 2015–06–01
  6. By: Griselda Deelstra (Université Libre de Bruxelles (ULB)); Guillaume Plantin (Université Toulouse 1 Capitole)
    Abstract: Reinsurance is an important production factor of non-life insurance. The efficiency and the capacity of the reinsurance market directly regulate those of insurance markets. The purpose of this book is to provide a concise introduction to risk theory, as well as to its main application procedures to reinsurance. The first part of the book covers risk theory. It presents the most prevalent model of ruin theory, as well as a discussion on insurance premium calculation principles and the mathematical tools that enable portfolios to be ordered according to their risk levels. The second part describes the institutional context of reinsurance. It first strives to clarify the legal nature of reinsurance transactions. It describes the structure of the reinsurance market and then the different legal and technical features of reinsurance contracts, known as reinsurance ‘treaties’ by practitioners. The third part creates a link between the theories presented in the first part and the practice described in the second one. Indeed, it sets out, mostly through examples, some methods for pricing and optimizing reinsurance. The authors aim is to apply the formalism presented in the first part to the institutional framework given in the second part. It is reassuring to find such a relationship between approaches seemingly abstract and solutions adopted by practitioners. Risk Theory and Reinsurance is mainly aimed at master's students in actuarial science but will also be useful for practitioners wishing to revive their knowledge of risk theory or to quickly learn about the main mechanisms of reinsurance.
    Keywords: Reinsurance; Risk Theory; Reinsurance market; Actuarial Science
    Date: 2014
  7. By: Tannaz Mahtoochi; Ignacio Castillo; Logan McLeod
    Abstract: We study a value-based healthcare delivery system with two non-cooperative parties: a purchaser of medical services and an Integrated Practice Unit (IPU). The IPU is capable of providing all healthcare needs of patients with a specific medical condition (homogeneous patient population), is comprised of a multi-disciplinary team of providers, and is responsible for the health outcomes of the patients over the care cycle. The IPU chooses the treatment strategy, incurs the associated cost, and is paid by the healthcare purchaser. The treatment strategy critically determines the health outcomes of the patients. Assuming the existence of universal health insurance for the patient population, the healthcare purchaser’s problem is to determine a payment scheme that will induce social welfare maximizing choices to the IPU. We use a dynamic continuous-time principal-agent model to capture the relationship between the purchaser and the IPU, and determine the optimal payment scheme, referred to as dynamic outcome-adjusted payment. The model characterizes the optimal payment scheme with a single variable. Previous value-based healthcare delivery principles suggest that the IPU should be reimbursed according to a “bundled payment.†Our results suggest payment should depend on the history of health outcomes over the care cycle. The proposed payment scheme combines a bundled payment with a bonus payment for consistently producing superior outcomes. Our results suggest value could be improved by paying for health outcomes over the care cycle; thus supporting the value-based healthcare delivery objective of achieving healthier patients over time. Unlike other performance-based payment schemes, this scheme could result in a single-variable implementation.
    Keywords: value-based healthcare delivery, integrated healthcare delivery, universal health insurance, payment systems, coordinating contracts, dynamic incentives
    JEL: I12 I30 J44 C73
    Date: 2015–06
  8. By: Olivier Allais (Laboratoire de Recherche sur la Consommation); Yann Algan (Département d'économie); Edouard Challe (Department of Economics, Ecole Polytechnique); Xavier Ragot (OFCE)
    Abstract: What are the costs of inflation fluctuations and who bears those costs? In this paper, we investigate this question by means of a quantitative incomplete-market, heterogenous-agent model wherein households hold real and nominal assets and are subject to both idiosyncratic labor income shocks and aggregate inflation risk. A key feature of our analysis is a nonhomothetic specification for households' preferences towards money and consumption goods. Unlike traditional specifications, ours allows the model to reproduce the broad features of the distribution of monetary assets (in addition to being consistent with the distribution of nonmonetary assets). Inflation risk is found to generate significant welfare losses for most households, i.e., between 1 and 1.5 percent of permanent consumption. The loss is small or even negative for households at the very top of the productivity and/or wealth distribution.
    Keywords: Money-in-the-utility; Incomplete Markets; Inflation Risks; Welfare
    JEL: E21 E32 E41
    Date: 2015–05
  9. By: Eckhard Wurzel; Damien Azzopardi
    Abstract: Over the last two and a half decades, Luxembourg’s financial sector emerged as a leading international hub for asset management and investment funds and became a key contributor to growth. Diversification into new areas of financial asset management is continuing. However, changing financial market regulation in Europe, increased international transparency requirements for banking and heightened international competition pose challenges. Moreover, the financial sector has reached a size where its contribution to the economy’s overall growth might diminish. Maintaining sound framework conditions is important for further diversification in the financial sector, building on Luxembourg’s existing comparative advantage and investors’ trust in its economic stability. Regulators should ensure financial intermediaries maintain strong capital ratios to address potential financial market shocks from abroad and real estate risks in the domestic economy. Assessment of systemic risks should be based on a framework that accounts for the various linkages between the banks and the other relevant financial market actors, notably investment funds. Given that the bulk of the banks in Luxembourg are affiliates of foreign bank groups, the authorities should seek clear procedures that govern the (cross-border) resolution of large banks in bad times. Moreover, implementation of the remaining steps in upgrading the tax transparency regulations Luxembourg has committed to can increase incentives for banks to further refine their business models, benefitting Luxembourg’s financial sector in the medium term. This Working Paper relates to the 2015 OECD Economic Survey of Luxembourg (<P>Luxembourg - adresser des nouveaux défis d'un majeur secteur financier<BR>Pendant les vingt-cinq dernières années, le secteur financier luxembourgeois est devenu une plateforme internationale de premier plan pour la gestion d’actifs et les fonds de placement, ce qui a grandement contribué à la croissance. La diversification dans de nouveaux domaines de la gestion d’actifs financiers se poursuit. Toutefois, l’évolution de la réglementation des marchés financiers en Europe, les obligations accrues de transparence internationale en matière bancaire et l’intensification de la concurrence constituent des défis. En outre, le secteur financier a atteint une dimension telle que sa contribution à la croissance globale de l’économie risque de s’amenuiser. Le maintien d’un cadre sain conditionne la poursuite de la diversification du secteur financier, à partir de l’avantage comparatif actuel du Luxembourg et de la confiance des investisseurs en sa stabilité économique. Les régulateurs doivent veiller à ce que les intermédiaires financiers aient des ratios de fonds propres élevés pour qu’ils puissent faire face à l’éventualité de chocs d’origine étrangère et aux risques liés au secteur immobilier national. L’évaluation des risques systémiques doit prendre en compte les divers liens qui existent entre les banques et les autres acteurs des marchés financiers, notamment les fonds de placement. La plupart des banques opérant au Luxembourg étant liées à des groupes étrangers, il incombe aux autorités de chercher à établir des procédures claires pour organiser la résolution (transfrontalière) de grandes banques en période de crise. En outre, l’application des dernières mesures d’amélioration de la transparence fiscale auxquelles le Luxembourg s’est engagé peut inciter les banques à affiner encore leurs modèles économiques, ce qui favorisera à moyen terme le secteur financier luxembourgeois. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de Luxembourg, 2015 ( ique-luxembourg.htm).
    Keywords: taxation, financial markets, risk, bank, financial regulation, insurance, assurance, marchés financiers, taxation, banques, risque, réglementation financière
    JEL: G15 G18 G21 G22 G23 G28 H24 H25
    Date: 2015–06–30

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