|
on Insurance Economics |
|
Issue of 2016‒02‒23
eleven papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Yuanyuan Deng (Stony Brook University); Hugo Benítez-Silva (Stony Brook University) |
| Abstract: | The changes to the Social Security Old Age benefits system introduced in the last decade, which will continue later this decade, have impacted individuals' labor supply and retirement decisions, and therefore their health insurance coverage. This paper provides an empirical analysis of the effects of the changes in the OA system, resulting from the 1983 Amendments, on Medicare costs. Using data from the Medicare Current Beneficiary Survey (MCBS), we empirically analyze the Medicare expenditures of individuals around retirement age as a function of their health insurance coverage and labor market attachment. Our results show a significant effect of employment measures as well as insurance coverage types, suggesting a sizable effect of employment and insurance on Medicare expenditures as well as on total health expenditures and on out-of-pocket health expenditures. Our findings allow us to compute the total savings to the Medicare system resulting from individuals' working while receiving health insurance coverage at older ages, and we estimate savings of 2.89 billion dollars a year, as well as another 333.67 million per year resulting from the delayed in enrollment into the Medicare system, given that some individuals do not enrolled in Medicare when first available, and this is more common among those who work and have insurance coverage. These results suggest that any future reform to the social insurance system will have to account for the effect on Medicare costs of policies that likely lead to increases in employment and employer provided health insurance coverage among populations eligible for Medicare. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp330&r=ias |
| By: | Yolanda F. Rebollo-Sanz; J. Ignacio García-Pérez |
| Abstract: | Unemployment insurance is usually found to show negative effects in the transition from unemployment to a new job. However, the extent to which workers’ careers might improve or deteriorate as a result of the unemployment insurance system is not immediately clear. This paper addresses the effects of certain aspects of this system on employment stability by jointly accounting for benefits endogeneity, dynamic selection issues and occurrence dependence. The analysis is undertaken for a dual labour market, such as the market in Spain, where temporary and permanent workers differ with respect to numerous individual and labour market characteristics. We find that non-insured unemployed workers experience a greater rate of transition to employment than insured workers. But we also find that benefits encourage job stability for temporary workers not only by increasing subsequent job tenure but also by increasing the probability of entering into a permanent contract. Finally, we get that shortening the duration of the benefit entitlement period does not seem to lead to significant gains in overall employment stability, which increases at most by 4.3%. |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2015-04&r=ias |
| By: | Wanat, Stanisław; Papież, Monika; Śmiech, Sławomir |
| Abstract: | The purpose of this paper is to investigate causal relations between the insurance market development and economic growth in ten transition European Union member countries in the period between 1993 and 2013. The analysis is conduced with the use of bootstrap panel causality approach proposed by Kónya (2006), which allows for simultaneous inclusion of both cross-sectional dependence and country-specific heterogeneity. Various types of dependencies between economic growth and the insurance market development (both in terms of the global insurance market and in the division into life insurance and non-life insurance) are identified in the study, and these findings confirm the results obtained in the majority of other papers, which report differences in the role of insurance and benefits various economies derive from the insurance market. |
| Keywords: | insurance market, economic growth, panel Granger causality test, transition EU member countries |
| JEL: | C33 G22 O16 |
| Date: | 2016–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69051&r=ias |
| By: | Cremer, Helmuth; Roeder, Kerstin |
| Abstract: | This paper considers an economy where individuals differ in productivity and in risk. Rochet (1991) has shown that when private insurance markets offer full coverage at fair rates, social insurance is desirable if and only if risk and productivity are negatively correlated. This condition is usually shown to be satisfied for many health risks, but it appears to be violated for the old age dependency risk (mainly because longevity in turn is positively correlated with productivity). We examine the role of uniform and nonuniform social insurance to supplement a general income tax when neither public nor private insurers can observe individual risk and when it is positively correlated with wages. Consequently, a Rothschild and Stiglitz (1971) equilibrium emerges in the private insurance market and low-wage/low-risk individuals are not fully insured. We show that even when social insurance provided to the poor has a negative incentive effect, it also increases their otherwise insuficient insurance coverage. Social insurance to the rich produces exactly the opposite effects. Whichever of these effects dominates, some social insurance is always desirable. Finally, we introduce risk misperception which exacerbates the failure of private markets. The insurance term now reflects the combined failure brought about by adverse selection and misperception. Now the low-risk individuals are not only underinsured, but also pay a higher than fair rate. However, and rather surprisingly, it turns out that this does not necessarily strengthen the case for public insurance. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:30011&r=ias |
| By: | Samuel GUERINEAU (Centre d'Etudes et de Recherches sur le Développement International(CERDI)); Relwende SAWADOGO |
| Abstract: | This paper investigates the impact of insurance premiums on stock market development in 37 developing countries over the period 1987-2011. By controlling for the potential endogeneity bias, using the System GMM estimator, we show that the insurance premiums significantly increase the stock market total value traded. This result is robust to the use of alternative measure of stock market development and control of the political and legal system quality. In addition, the results highlight that an improvement in property rights promotes the deepening of the financial market. Thus, the results argue for insurance policies promoting and an improvement of the legal environment to benefit from the financial market development. |
| Keywords: | Stock market, Insurance Premiums, developing countries |
| JEL: | G22 G10 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1718&r=ias |
| By: | Rose, Jonathan D. (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | This paper explores the economic issues related to systemically important insurance companies, using an example from the Great Depression, the National Surety Company. National Surety was a large and diverse insurance company that experienced a major crisis in 1933 due to losses from its guarantees of mortgage-backed securities. A liquidity crisis ensued, as policyholders staged a massive run on the company, demanding the return of their unearned premiums. The New York State Insurance Commissioner stepped in with a reorganization plan that split the company in two, out of fear that a disorderly liquidation would have systemic consequences given the sheer number of the company's counterparties, scattered all across the United States. A key dynamic of the crisis was that policy holders at an insurance company have a dual role as holders of liabilities and as providers of income. |
| Keywords: | Insurance; great depression; surety; systemic importance |
| JEL: | G01 G22 H12 |
| Date: | 2016–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2016-05&r=ias |
| By: | Batty, Michael M. (Board of Governors of the Federal Reserve System (U.S.)); Ippolito, Benedic N. (American Enterprise Institute) |
| Abstract: | It is often assumed that financial incentives of healthcare providers affect the care they deliver, but this issue is surprisingly difficult to study. The recent enactment of state laws that limit how much hospitals can charge uninsured patients provide a unique opportunity. Using an event study framework and panel data from the Nationwide Inpatient Sample, we examine whether these regulations lead to reductions in the amount and quality of care given to uninsured patients. We find that the introduction of a fair pricing law leads to a seven to nine percent reduction in the average length of hospital stay for uninsured patients, with no corresponding change for insured patients. These care reductions are not accompanied by worsening quality of inpatient care. Overall, our results provide strong evidence that hospitals actively alter their behavior in response to financial incentives, and are consistent with the laws promoting a shift towards more efficient care delivery. The findings also add to the growing evidence that hospitals can, and do, treat patients differently based upon insurance status. |
| Keywords: | Health care; insurance; public economics |
| Date: | 2015–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2015-107&r=ias |
| By: | Benjamin R. Handel; Jonathan T. Kolstad; Johannes Spinnewijn |
| Abstract: | This paper develops and implements 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 unravelling, 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: | information frictions; adverse selection; policy interventions |
| JEL: | D80 I1 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:65011&r=ias |
| By: | Panda, P.; Chakraborty, A.; Raza, W.A.; Bedi, A.S. |
| Abstract: | Low renewal rate is a key challenge facing the sustainability of Community-based Health Insurance (CBHI) schemes. While there is a large literature on initial enrolment into such schemes, there is limited evidence on the factors that impede renewal. This paper uses longitudinal data to analyse what determines renewal, both one and two years after the introduction of three CBHI schemes, which have been operating in rural Bihar and Uttar Pradesh since 2011. We find that initial scheme uptake is about 23-24 % and that two years after scheme operation, only about 20 % of the initial enrolees maintain their membership. A household’s socio-economic status does not seem to play a large role in impeding renewal. In some instances, a greater understanding of the scheme boosts renewal. The link between health status and use of health care in maintaining renewal is mixed. The clearest effect is that individuals living in households that have received benefits from the scheme are substantially more likely to renew their contracts. We find that having access to a national health insurance scheme is not a substitute for the CBHI. We conclude that the low retention rates may be attributed to limited benefit packages, slow claims processing times and the gaps between the amounts claimed and amounts paid out by insurance. |
| Keywords: | community-based health insurance, renewing membership, rural India |
| Date: | 2015–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:77965&r=ias |
| By: | Rose, Jonathan D. (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | This paper characterizes the deposit runs that occurred in the commercial banking system during 2008 and compares them with deposit runs during the 1930s. The importance of withdrawals by large depositors is a strong source of continuity across the two eras and reflects the longstanding concentration of deposit holdings. Runs occurred during 2008 despite the presence of national deposit insurance, which does not fully cover large accounts and therefore has limited impact on the incentives of those account holders. Large depositors continue to represent a source of both market discipline and financial instability. |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2015-111&r=ias |
| By: | Gospodinov, Nikolay (Federal Reserve Bank of Atlanta) |
| Abstract: | This note documents a curious finding about the substantial forecast ability of a simple aggregator of three commodity futures prices for U.S. core inflation. The proposed aggregator reduces the out-of-sample root mean squared error for 12-month-ahead inflation forecasts of the benchmark AR(1) model by 28 percent (20 percent) for the PCE (CPI) measure of core inflation. To avoid obfuscation of the sources of forecast ability, the model is intentionally kept simple, although extensions for improving and increasing the robustness of the forecast procedure are also discussed. |
| Keywords: | core inflation; commodity futures; convenience yields; forecasting |
| JEL: | C53 E37 G12 |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2016-05&r=ias |