nep-ias New Economics Papers
on Insurance Economics
Issue of 2016‒04‒04
nine papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Analyses of enrolment, dropout and effectiveness of RSBY in northern rural India By Raza, Wameq; van de Poel, Ellen; Panda, Pradeep
  2. Riverside/San Bernardino: Despite Large Medi-Cal Expansion, Many Uninsured Remain By Laurie Felland; Cannon Warren; Dori Cross
  3. Argentina; Financial System Stability Assessment By International Monetary Fund. Monetary and Capital Markets Department
  4. Unemployment Insurance with Limited Commitment Wage Contracts and Savings By Rigas OIKONOMOU
  5. Progressive Universalism? The Impact of Targeted Coverage on Healthcare Access and Expenditures in Peru By Sven Neelsen; Owen O’Donnell
  6. Optimal unemployment insurance for older workers By Jean-Olivier Hairault; François Langot; Sébastien Ménard; Thepthida Sopraseuth
  7. Assessing Competition in the Bulgarian Insurance Industry: A Panzar-Rosse Approach By Aleksandar B. Todorov
  8. Argentina; Financial Sector Assessment Program-Financial Sector Stability-Technical Note By International Monetary Fund. Monetary and Capital Markets Department
  9. How Big a Burden Are State and Local OPEB Benefits? By Alicia H. Munnell; Jean-Pierre Aubry; Caroline V. Crawford

  1. By: Raza, Wameq; van de Poel, Ellen; Panda, Pradeep
    Abstract: In 2008, the Government of India initiated the Rashtriya Swasthya Bima Yojana (RSBY) to provide inpatient insurance coverage to all below-poverty-line (BPL) households in India. It is one of the most ambitious social protection programmes in the country. Using household level panel data from Uttar Pradesh and Bihar collected in 2012-2013, this paper investigates the determinants of enrolling in and dropping out of the scheme. In addition, we investigate whether participating in the RSBY is associated with a higher probability of using inpatient care and increased financial protection. We find that by the end of our survey period, close to half of our sample is enrolled in RSBY (41% in Bihar, 68% in UP). RSBY coverage is more concentrated among the poor in Bihar, as compared to UP. We find that the presence of chronic illnesses, lower socioeconomic status, belonging to scheduled-castes or tribes (SCST), insurance related awareness and proximity to healthcare facilities are positively correlated with enrolment. SCST households and households with members who have chronic conditions are less likely to drop out. The associations between RSBY membership and healthcare use and financial protection vary across the states. While we do not find that RSBY is associated with increased rates of utilization across the board, we do find insured households in Bihar experience lower out-of-pocket payments and debt following hospitalization. Nearly all hospitalizations among insured patients lead to positive OOP spending. Overall, we conclude that though the RSBY does appear to be pro-poor and is inclusive of disadvantaged minorities such as the SCST, the scheme suffers from adverse selection. The fact that drop-out rates are low might suggest good perceived value for the insured. The RSBY has the potential to play an important role in India’s move towards Universal Health Coverage. However, our analyses suggests that scheme awareness should be increased; that the targeting of the scheme could be improved, and that the programme is not yet providing cashless inpatient care. The differences in effectiveness between both states might be related to the recent development efforts made by the Bihar government, and suggestive of the need for addressing supply side constraints prior to launching an insurance scheme.
    Keywords: RSBY, health insurance, India, enrolment, dropout, renewal, impact, rural
    JEL: D71 I1 I13 I38
    Date: 2016–01
  2. By: Laurie Felland; Cannon Warren; Dori Cross
    Abstract: Riverside and San Bernardino Counties continue to recover from the devastating economic effects of the 2008 recession. Income levels in the region remain relatively low, and employment growth is characterized by lower-wage jobs with fewer health insurance benefits.
    Keywords: Medi-Cal, Riverside, San Bernardino, California, Uninsured
    JEL: I
    Date: 2016–03–18
  3. By: International Monetary Fund. Monetary and Capital Markets Department
    Abstract: The documents related to the Financial Sector Assessment Program for the Republic of Argentina were completed in 2013. The reports were prepared by an IMF team in spring of 2013 and were discussed and finalized by the IMF’s Executive Board on July 12, 2013. The assessment and recommendations included herein reflect the views of IMF staff at that time and do not apply to developments occurred since then.
    Keywords: Argentina;Western Hemisphere;financial system, insurance, monetary fund, liquidity, markets
    Date: 2016–02–29
  4. By: Rigas OIKONOMOU (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))
    Abstract: I present a model of optimal contracts between firms and workers, under limited commitment and with worker savings. In the model, firms provide insurance against unemployment through targeting a frontloaded path of wages which encourages wealth accumulation. I provide analytical results characterising the wage and savings schedules and the path of consumption during employment and unemployment. I then consider how unemployment benefits affect risk sharing through private markets. I find that benefits should be frontloaded; the government has the incentive to drive the allocation to the point where the firm's participation constraint binds. At this point wages are equal to productivity in every period, wealth exceeds the buffer stock level, and consumption and savings drop over time. The drop in the level of consumption during unemployment is mitigated. Finally, I compare the optimal contract model to the standard heterogeneous agent model whereby wealth is utilized for self-insurance purposes. I show that the two models are equivalent under the optimal UI policy.
    Keywords: Unemployment Insurance, Incomplete Markets, Optimal Contracts, Limited Commitment, Household Self-Insurance
    JEL: D52 E21 H31 H53 J41
    Date: 2016–02–29
  5. By: Sven Neelsen (Erasmus University Rotterdam, the Netherlands); Owen O’Donnell (Erasmus University Rotterdam, the Netherlands; University of Lausanne, Switzerland; University of Macedonia, Greece)
    Abstract: Like other countries seeking a progressive path to universalism, Peru has attempted to reduce inequalities in access to healthcare by granting the poor entitlement to tax-financed basic care without charge. We identify the impact of this policy by comparing the target population’s change in healthcare utilization with that of poor adults already covered through employment-based insurance. There are positive effects on receipt of ambulatory care and medication that are largest among the elderly and the poorest. The probability of getting formal healthcare when sick is increased by almost two fifths, while the likelihood of being unable to afford treatment is reduced by more than a quarter. Consistent with the shallow cover offered, there is no impact on use of inpatient care. Mean out-of-pocket (OOP) expenditure on healthcare is unaffected but spending is reduced by up to one quarter at some points of the distribution. Among healthcare users, medical spending is reduced across much of the distribution and in relative terms falls most at lower quantiles, which is consistent with limited nominal and effective coverage of expensive treatments.
    Keywords: Health insurance; health financing; healthcare; Universal Coverage; Peru
    JEL: H42 H51 I18
    Date: 2016–03–16
  6. By: Jean-Olivier Hairault (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); François Langot (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Sébastien Ménard (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Université du Maine); Thepthida Sopraseuth (CEPREMAP - Centre pour la recherche économique et ses applications, THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique)
    Abstract: At the end of working life, as well as reducing unemployment benefits, the unemployment-insurance agency could apply pension tax instead of wage tax. First, the pension tax provides greater incentives as the value of re-employment is tax-free. Second, the short job duration before retirement implies that the budgetary return and search incentives associated with the pension tax are considerable. By way of contrast, younger workers have greater search intensity and their future pension taxes are more remote and therefore more heavily-discounted: for them the wage tax is more efficient than is the pension tax. Finally, even in the special case where search intensity is zero close to retirement, perfect risk-sharing across unemployment and retirement is welfare-improving thanks to the pension tax.
    Keywords: Unemployment insurance, Retirement, Recursive contracts, Moral Hazard
    Date: 2016–03–22
  7. By: Aleksandar B. Todorov (Department of Economics, University of Economics - Varna)
    Abstract: The study assesses the competitive behavior in the Bulgarian general insurance industry by applying an empirical methodology developed by Panzar & Rosse (1987). Based on company data from insurers' balance sheets and profit and loss accounts for the period between 2005 and 2014 a reduced-form revenue equation is estimated. The information about the insurers' competitive behavior is provided by the sum of the estimated factor price elasticities, which constitute the so called H-statistic. The fixed effects panel estimation suggests that the hypotheses of monopoly or collusive behavior cannot be rejected. These findings suggest that the Bulgarian insurance market is far from being perfectly competitive and may require further actions to promote its competitive development.
    Keywords: Market Structure, General Insurance, Panzar-Rosse Model
    JEL: G22 L13 L41
    Date: 2016–03
  8. By: International Monetary Fund. Monetary and Capital Markets Department
    Abstract: The documents related to the Financial Sector Assessment Program for the Republic of Argentina were completed in 2013. The reports were prepared by an IMF team in spring of 2013 and were discussed and finalized by the IMF’s Executive Board on July 12, 2013. The assessment and recommendations included herein reflect the views of IMF staff at that time and do not apply to developments occurred since then.
    Keywords: Western Hemisphere;Argentina;solvency, monetary fund, insurance, liquidity, banking system
    Date: 2016–02–29
  9. By: Alicia H. Munnell; Jean-Pierre Aubry; Caroline V. Crawford
    Abstract: In addition to pensions, most state and local governments provide other post-employment benefits (OPEBs), the largest of which is retiree health insurance. Retiree health plans have received increased attention in recent years due to rapidly rising health costs and new reporting guidelines from the Governmental Accounting Standards Board (GASB). These guidelines, which were released in 2004 and became effective in 2007, require states and localities to change the way they account for the cost of retiree health plans from a cash to an accrual basis, essentially applying to OPEB plans the standards used for pensions. This brief provides an updated accounting of OPEB commitments, with data for 2012 or 2013. These data cover virtually all OPEB plans administered at the state level as well as a large sample of plans administered by counties, cities, and school districts. The analysis also looks beyond the sample of local governments to estimate aggregate OPEB liabilities for all local governments excluded from our sample. The discussion proceeds as follows. The first section describes the evolution of the new reporting framework. The second section discusses the OPEB sample and introduces our methodology for capturing OPEB liabilities for entities not in our sample. The third section compares OPEB and pension liabilities in the aggregate and discusses the need to use the same discount rate when comparing these liabilities. The fourth section puts the OPEB liabilities in perspective. The final section concludes that: 1) aggregate unfunded OPEB liabilities are estimated to be $862 billion – nearly two thirds of which is held at the local level; 2) these liabilities are equivalent to 28 percent of unfunded pension liabilities – when pension liabilities are calculated with an interest rate comparable to OPEBs; and 3) while OPEB liabilities are large, several factors limit their potential drain on state and local resources.
    Date: 2016–03

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