nep-ias New Economics Papers
on Insurance Economics
Issue of 2015‒12‒08
fourteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Assessing Early Implementation of State Autism Insurance Mandates By Julia Berlin Baller; Colleen L. Barry; Kathleen Shea; Megan M. Walker; Rachel Ouellette; David S. Mandell
  2. Health-care reform or labor market reform? A quantitative analysis of the affordable care act By Nakajima, Makoto; Tuzemen, Didem
  3. The Effect of Health Reform on Retirement By Helen Levy; Thomas Buchmueller; Sayeh Nikpay
  4. Who is screened out of social insurance programs by entry barriers? Evidence from consumer bankruptcies By Mikhed, Vyacheslav; Scholnick, Barry
  5. Subjective expectations of medical expenditures and insurance in rural Ethiopia By Debebe, Z.Y.; O'Donnell, O.A.; Mebratie, A.D.; Alemu, G.; Bedi, A.S.
  6. Singular Problems for Integro-Differential Equations in Dynamic Insurance Models By Tatiana Belkina; Nadezhda Konyukhova; Sergey Kurochkin
  7. Indirect Fiscal Effects of Long-Term Care Insurance By Johannes Geyer; Peter Haan; Thorben Korfhage
  8. A Credibility Approach of the Makeham Mortality Law By Yahia Salhi; Pierre-Emmanuel Thérond; Julien Tomas
  9. State Strategies for Improving Provider Collaboration and Care Coordination for Medicaid Beneficiaries with Behavioral Health Conditions By Allison Wishon Siegwarth; Matthew Kehn; Jonathan Brown; Rebecca Kleinman
  10. The Nordic Welfare Model in an Open European Labor Market By Bratsberg, Bernt; Røed, Knut
  11. State Strategies for Coordinating Medicaid Services and Housing for Adults with Behavioral Health Conditions By Rebecca Kleinman; Matthew Kehn; Allison Wishon Siegwarth; Jonathan Brown
  12. China's Seasonal Influenza Vaccination Policy in a Post-Health Care Reform Era By Ningzhen Ruan; Thao Nguyen; Kellynn Khor
  13. Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets By Handel, Benjamin R.; Kolstad, Jonathan; Spinnewijn, Johannes
  14. Improving the Coordination of Services for Adults with Mental Health and Substance Use Disorders: Profiles of Four State Medicaid Initiatives By Matthew Kehn; Rebecca Kleinman; Allison Wishon Siegwarth; Jonathan Brown

  1. By: Julia Berlin Baller; Colleen L. Barry; Kathleen Shea; Megan M. Walker; Rachel Ouellette; David S. Mandell
    Abstract: In the United States, health insurance coverage for autism spectrum disorder treatments has been historically limited. In response, as of 2015, 40 states and Washington, DC, have passed state autism insurance mandates requiring many health plans in the private insurance market to cover autism diagnostic and treatment services. This study examined five states’ experiences implementing autism insurance mandates.
    Keywords: autism spectrum disorders, health services, policy, qualitative research
    JEL: I
    Date: 2015–11–27
  2. By: Nakajima, Makoto (Federal Reserve Bank of Philadelphia); Tuzemen, Didem (Federal Reserve Bank of Kansas City)
    Abstract: An equilibrium model with firm and worker heterogeneity is constructed to analyze labor market and welfare implications of the Patient Protection and Affordable Care Act, commonly called the Affordable Care Act (ACA). The authors’ model implies a significant reduction in the uninsured rate from 22.6 percent to 5.6 percent. The model predicts a moderate positive welfare gain from the ACA because of the redistribution of income through health insurance subsidies at the exchange as well as the Medicaid expansion. About 2.1 million more part-time jobs are created under the ACA at the expense of 1.6 million full-time jobs, mainly because the link between full-time employment and health insurance is weakened. The model predicts a small negative effect on total hours worked (0.36 percent), partly because of the general equilibrium effect.
    Keywords: Health insurance; Health-care reform; Affordable care act; Labor market; Heterogeneous agents
    JEL: D91 E24 E65 I10
    Date: 2015–09–16
  3. By: Helen Levy (University of Michigan); Thomas Buchmueller (University of Michigan); Sayeh Nikpay (University of Michigan)
    Abstract: Many studies have shown that the availability of health insurance is an important determinant of the retirement decision. Beginning in January 2014, the Affordable Care Act (ACA) made affordable alternatives to employer-sponsored health insurance much more widely available than they had been previously through the establishment of health insurance exchanges and, in some states, the expansion of Medicaid eligibility to low-income, childless adults. We analyze whether these new health insurance options led to an increase in retirement or part-time work among individuals ages 55 through 64 during the first 18 months after the policy took effect. Using data from the basic monthly Current Population Survey from January 2005 through June 2015, we find that there was no increase in retirement in 2014 either overall or in Medicare expansion states relative to nonexpansion states. We also find no change in the fraction of older workers who are working part-time.
    Date: 2015–09
  4. By: Mikhed, Vyacheslav (Federal Reserve Bank of Philadelphia); Scholnick, Barry (University of Alberta School of Business)
    Abstract: Entry barriers into social insurance programs will be effective screening devices if they cause only those individuals receiving higher benefits from a program to participate in that program. We find evidence for this by using plausibly exogenous variations in travel-related entry costs into the Canadian consumer bankruptcy system. Using detailed balance sheet and travel data, we find that higher travel-related entry costs reduce bankruptcies from individuals with lower financial benefits of bankruptcy (unsecured debt discharged, minus secured assets forgone). When compared across filers, each extra kilometer traveled to access the bankruptcy system requires approximately $11 more in financial benefits from bankruptcy. {{p}}Supersedes Working Paper 14-18
    Keywords: Social insurance; Consumer bankruptcy; Filing costs; Entry barriers
    JEL: D14 G23 G33 K35
    Date: 2015–10–22
  5. By: Debebe, Z.Y.; O'Donnell, O.A.; Mebratie, A.D.; Alemu, G.; Bedi, A.S.
    Abstract: Little is known about perceptions of medical expenditure risks despite their presumed relevance to health insurance demand. This paper reports on a unique elicitation of subjective probabilities of medical expenditures from rural Ethiopians who are offered the opportunity to purchase health insurance. We find that expectations are positively correlated with past expenses to a degree that exceeds the serial correlation in realized expenditures, suggesting overestimation of persistence and underestimation of the potential gains from insurance. Despite the fact that forecast expenditures do predict realized expenditures to some extent, there is no evidence that expectations influence the decision to take out health insurance, although plans to insure are positively related to the perceived dispersion of medical expenses.
    Keywords: subjective probability, medical expenditure, out-of-pocket payments, adverse selection, health insurance, Ethiopia
    JEL: D82 D84 O12
    Date: 2015–11–26
  6. By: Tatiana Belkina; Nadezhda Konyukhova; Sergey Kurochkin
    Abstract: A second order linear integro-differential equation with Volterra integral operator and strong singularities at the endpoints (zero and infinity) is considered. Under limit conditions at the singular points, and some natural assumptions, the problem is a singular initial problem with limit normalizing conditions at infinity. An existence and uniqueness theorem is proved and asymptotic representations of the solution are given. A numerical algorithm for evaluating the solution is proposed, calculations and their interpretation are discussed. The main singular problem under study describes the survival (non-ruin) probability of an insurance company on infinite time interval (as a function of initial surplus) in the Cramer-Lundberg dynamic insurance model with an exponential claim size distribution and certain company's strategy at the financial market assuming investment of a fixed part of the surplus (capital) into risky assets (shares) and the rest of it into a risk free asset (bank deposit). Accompanying "degenerate" problems are also considered that have an independent meaning in risk theory
    Date: 2015–11
  7. By: Johannes Geyer; Peter Haan; Thorben Korfhage
    Abstract: Informal care by close family members is the main pillar of most longterm care systems. However, due to demographic ageing the need for long-term care is expected to increase while the informal care potential is expected to decline. From a budgetary perspective, informal care is often viewed as a cost-saving alternative to subsidized formal care. This view, however neglects that many family carers are of working age and face the difficulty to reconcile care and paid work which might entail sizable indirect fiscal effects related to forgone tax revenues, lower social security contributions and higher transfer payments. In this paper we use a structural model of labor supply and the choice of care arrangement to quantify these indirect fiscal effects of informal care. Moreover based on the model we discuss the fiscal effects related to non-take up of formal care.
    Keywords: labor supply, long-term care, long-term care insurance, structural model
    JEL: J22 H31 I13
    Date: 2015
  8. By: Yahia Salhi (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Pierre-Emmanuel Thérond (Galea & Associés, SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Julien Tomas (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1)
    Abstract: The present article illustrates a credibility approach to mortality. Interest from life insurers to assess their portfolios' mortality risk has considerably increased. The new regulation and norms, Solvency II, shed light on the need of life tables that best reect the experience of insured portfolios in order to quantify reliably the underlying mortality risk. In this context and following the work of Bühlmann and Gisler (2005) and Hardy and Panjer (1998), we propose a credibility approach which consists on reviewing, as new observations arrive, the assumption on the mortality curve. Unlike the methodology considered in Hardy and Panjer (1998) that consists on updating the aggregate deaths we have chosen to add an age structure on these deaths. Formally, we use a Makeham graduation model. Such an adjustment allows to add a structure in the mortality pattern which is useful when portfolios are of limited size so as to ensure a good representation over the entire age bands considered. We investigate the divergences in the mortality forecasts generated by the classical credibility approaches of mortality including Hardy and Panjer (1998) and the Poisson-Gamma model on portfolios originating from various French insurance companies.
    Keywords: Credibility,Makeham law,Mortality,Life insurance,Graduation,Extrapolation
    Date: 2015–11–24
  9. By: Allison Wishon Siegwarth; Matthew Kehn; Jonathan Brown; Rebecca Kleinman
    Abstract: This Issue Brief highlights the efforts of four states—Illinois, Louisiana, Massachusetts, and Tennessee—to facilitate provider-level coordination for Medicaid beneficiaries with behavioral health disorders.
    Keywords: State strategies, provider collaboration, care coordination, Medicaid beneficiaries, behavioral health
    JEL: I
    Date: 2015–02–28
  10. By: Bratsberg, Bernt (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: Is it possible to sustain an ambitious and redistributive Nordic welfare state in a Europe with open borders? Drawing on longitudinal administrative records spanning four decades, we first present discouraging historical evidence showing that labor migrants from low‐income source countries tend to have unstable employment careers with marked overrepresentation in welfare programs. This pattern extends to post‐accession labor migrants from Eastern Europe, who quickly experience high rates of unemployment. The article discusses possible avenues for making the welfare state "migration robust." We argue that there are alternatives to reclosing borders and/or cutting down welfare state ambitions, and recommend policies based on strengthening of activity requirements in social insurance programs, raising minimum job standards, and substitution of work‐oriented services for cash‐based family allowances.
    Keywords: EU enlargement, social insurance, labor migration
    JEL: F22 H55 J22
    Date: 2015–11
  11. By: Rebecca Kleinman; Matthew Kehn; Allison Wishon Siegwarth; Jonathan Brown
    Abstract: This Issue Brief describes the strategies used by four states—Louisiana, Massachusetts, Tennessee, and Illinois—to improve the link between Medicaid and housing services for adult Medicaid beneficiaries with behavioral health conditions.
    Keywords: Medicaid services, state strategies, housing, behavioral health
    JEL: I
    Date: 2015–04–30
  12. By: Ningzhen Ruan; Thao Nguyen; Kellynn Khor
    Abstract: Vaccination is recognised as one of the most effective ways to combat seasonal influenza—a disease that exerts significant social and economic costs, yet is often neglected by policy-makers and the vaccine target population in developing countries. The situation in China is no exception with seasonal influenza vaccine remaining as a class II vaccine and being financed by citizens' out-of-pocket payments. The different cultural backgrounds, climate patterns and living standards across China further complicate the policymaking process of developing national level policy guidelines. Nevertheless, China's recent health care reform that focuses on preventive care, elderly care and equitable health care access has motivated policy-makers at the local level to formulate policies facilitating seasonal influenza vaccination provision. This article seeks to understand this process at the city level under China's current economic transition background, and aims to identify policy experiences that may be applicable for the larger Asia-Pacific region.
    Keywords: China;public health policy;health care reform;seasonal influenza;vaccination
    Date: 2015–05–28
  13. By: Handel, Benjamin R.; Kolstad, Jonathan; Spinnewijn, Johannes
    Abstract: A large literature has analyzed pricing inefficiencies in health insurance markets due to adverse selection, typically assuming informed, active consumers on the demand side of the market. However, recent evidence suggests that many consumers have information frictions that lead to suboptimal health plan choices. As a result, policies such as information provision, plan recommendations, and smart defaults to improve consumer choices are being implemented in many applied contexts. In this paper we develop a general framework to study insurance market equilibrium and evaluate policy interventions in the presence of choice frictions. Friction-reducing policies can increase welfare by facilitating better matches between consumers and plans, but can decrease welfare by increasing the correlation between willingness-to-pay and costs, exacerbating adverse selection. We identify relationships between the underlying distributions of consumer (i) costs (ii) surplus from risk protection and (iii) choice frictions that determine whether friction-reducing policies will be on net welfare increasing or reducing. We extend the analysis to study how policies to improve consumer choices interact with the supply-side policy of risk-adjustment transfers and show that the effectiveness of the latter policy can have important implications for the effectiveness of the former. We implement the model empirically using proprietary data on insurance choices, utilization, and consumer information from a large firm. We leverage structural estimates from prior work with these data and highlight how the model's micro-foundations can be estimated in practice. In our specific setting, we find that friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare. Risk-adjustment transfers are complementary, substantially mitigating the negative impact of friction-reducing policies, but having little effect in their absence.
    Keywords: Adverse Selection; Information Frictions; Policy Interventions
    JEL: D80 I13
    Date: 2015–11
  14. By: Matthew Kehn; Rebecca Kleinman; Allison Wishon Siegwarth; Jonathan Brown
    Keywords: Mental health, substance abuse, state medicaid initiatives
    JEL: I
    Date: 2015–02–27

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