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on Insurance Economics |
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Issue of 2016‒05‒08
fourteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Molly Frean; Jonathan Gruber; Benjamin D. Sommers |
| Abstract: | Using a combination of subsidized premiums for Marketplace coverage, an individual mandate, and expanded Medicaid eligibility, the Affordable Care Act (ACA) has significantly increased insurance coverage rates. We assessed the relative contributions to insurance changes of these different ACA provisions in the law’s first full year, using rating-area level premium data for all 50 states and microdata from the 2012-2014 American Community Survey. We employ a difference-in-difference-in-difference estimation strategy that relies on variation across income groups, areas, and years to causally identify the role of the ACA policy levers. We have four key findings. First, insurance coverage was only moderately responsive to price subsidies, but the subsidies were still large enough to raise coverage by almost one percent of the population; the coverage gains were larger in states that operated their own health insurance exchanges (as opposed to using the federal exchange). Second, the exemptions and tax penalty structure of the individual mandate had little impact on coverage decisions. Third, the law increased Medicaid coverage both among newly eligible populations and those who were previously eligible for Medicaid (the “woodwork” effect), with the latter driven predominantly by states that expanded their programs prior to 2014. Finally, there was no “crowdout” effect of expanded Medicaid on private insurance. Overall, we conclude that exchange premium subsidies produced roughly 40% of the ACA’s 2014 coverage gains, and Medicaid the other 60%, of which 2/3 occurred among previously-eligible individuals. |
| JEL: | H2 I13 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22213&r=ias |
| By: | Paulson, Anna L. (Federal Reserve Bank of Chicago); Rosen, Richard J. (Federal Reserve Bank of Chicago) |
| Abstract: | The 2008 financial crisis brought a focus on the potential for a large insurance firm to contribute to systemic risk. Among the concerns raised was that a negative shock to insurers could lead to a ‘fire sale’ of corporate bonds, a market where insurers are among the largest participants. This paper discusses the existing evidence on life insurance firms and systemic risk, with a focus on the investment grade corporate bond market. We provide some tentative evidence that life insurers tend to absorb liquidity risk by purchasing bonds when the bonds are less liquid than average. However, we do not find evidence that insurers increased bond purchases specifically during the financial crisis leaving open the question of whether insurers would play a stabilizing role in a future crisis. |
| Keywords: | Insurance; Bond; Over-the-Counter (OTC); Trading |
| JEL: | G12 G14 G22 G24 |
| Date: | 2016–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2016-04&r=ias |
| By: | Yehouenou, Lauriane S. M.; Barnett, Barry J.; Harri, Ardian; Coble, Keith H. |
| Abstract: | The Federal Crop Insurance Products offered for major field crops are either yield-based or revenue-based and offered at either the unit-level (farm or sub-farm) or county-level. The 2014 Farm Bill created the Supplemental Coverage Option (SCO) and Stacked Income Protection Plan (STAX) insurance products. These products provide county-level coverage against “shallow-losses” that can be added to the coverage provided by a unit-level yield or revenue insurance product. Historically, county-level insurance products have been based on National Agricultural Statistics Service (NASS) county yield estimates. However, in recent years NASS has reduced the number of counties for which it reports county yield estimates. As a result, the Risk Management Agency (RMA) is now basing all county-level insurance products (including SCO and STAX) on aggregated (to the county-level) farm-level yield data obtained from unit-level yield and revenue insurance policies sold. This paper analyzes how the performance of county-level insurance products might be impacted by this change. Specifically, the paper analyzes how differences across counties in factors such as unit-level insurance participation, the characteristics of producers purchasing unit-level insurance, and spatial yield correlation affect the performance of county-level insurance products based on aggregated unit-level insurance yield data. |
| Keywords: | crop insurance, estimated county yield, bias, Risk and Uncertainty, Q18, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:230081&r=ias |
| By: | Müller, Tobias; Boes, Stefan |
| Abstract: | This paper explores the effects of disability insurance (DI) benefits on the labor market decision of existing DI beneficiaries using a fuzzy regression discontinuity (RD) design. We identify the effect of DI benefits on the decision of working full-time, part-time or staying out of the labor force by exploiting a discontinuity in the DI benefit award rate above the age of 55. Overall, our results suggest that the Swiss DI system creates substantial lock-in effects which heavily influence the labor supply decision of existing beneficiaries: the benefit receipt increases the probability of working part-time by about 41%-points, decreases the probability of working full-time by about 42%-points but has little or no effects on the probability of staying out of the labor force for the average beneficiary. Therefore, DI benefits induce a shift in the labor supply of existing beneficiaries in the sense that they reduce their work intensity from working full-time to part-time which adds a possible explanation for the low DI outflow observed all across the OECD. |
| Keywords: | Disability insurance benefits; Labor market participation; Fuzzy regression discontinuity design Endogenous switching models; Maximum simulated likelihood |
| JEL: | C35 C36 J22 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70957&r=ias |
| By: | Ramirez, Octavio; Shonkwiler, J. Scott |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc016:233761&r=ias |
| By: | Zacharias, Tom |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc016:233759&r=ias |
| By: | Boyer, Christopher; Jensen, Kimberly; McLeod, Elizabeth; Larson, James |
| Abstract: | Changes in the 2014 Farm Bill have reconnected federally-subsidized crop insurance to conservation compliance and eliminated direct payments that were tied to conservation compliance. The net effects of these changes on producers’ incentives to comply with conservation standards and on the environment are uncertain, especially in regions such as the Mississippi Delta. We propose pilot crop insurance programs to improve the link between federally-subsidized crop insurance and conservation compliance in the southern United States and for crops such as cotton. The objective of this study was to determine Tennessee and North Central Mississippi cotton producers’ willingness to participate in hypothetical pilot programs that would incentivize use of cover cropping and no-till practices coupled with crop insurance via an additional cost share payment above current Environmental Quality Incentive Program cost share payments. Data were collected using a mail survey of Tennessee and North Central Mississippi cotton producers conducted in early 2015. A bivariate probit model was estimated to ascertain the factors that impact cotton producers’ willingness to participate in two pilot programs that link cover cropping or no-till with Stacked Income Protection Plan crop insurance. Results found that 35% of the cotton producers would be willing to participate in the cover cropping and Stacked Income Protection Plan pilot program, while 28% indicated they would participate in the no-till and Stacked Income Protection Plan pilot program. Results from the bivariate probit model showed that producers already planning to use Stacked Income Protection Plan in 2015 were more willing to participate in the pilot programs. A producers’ age, income, and debt-to-asset ratio influenced their willingness to participate in the pilot programs. More producers stated they used no-till production than cover crops; therefore, we made pairwise comparisons between producers’ ratings of potential outcomes from using cover cropping and no-till as well as between users and non-users of each of those practices. The results provide unique insight into producers’ perceptions of these practices. Overall, the proposed hypothetical pilot programs could improve the linkage between federally-subsidized crop insurance and conservation compliance; however, future research should consider the potential for these pilot programs for other crops and regions of the United States. |
| Keywords: | Cotton, Cover crops, Crop insurance, No-tillage, Agricultural and Food Policy, Crop Production/Industries, Farm Management, Q12, Q18, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:234975&r=ias |
| By: | Passmore, Wayne; Sherlund, Shane M. |
| Abstract: | The Great Recession provides an opportunity to test the proposition that government mortgage insurance programs mitigated the effects of the financial crisis and enhanced the economic recovery from 2009 to 2014. We find that government-sponsored mortgage insurance programs have been responsible for better economic outcomes in counties that participated heavily in these programs. In particular, counties with high levels of participation from government-sponsored enterprises and the Federal Housing Authority had relatively lower unemployment rates, higher home sales, higher home prices, lower mortgage delinquency rates, and less foreclosure activity, both in 2009 (soon after the peak of the financial crisis) and in 2014 (six years after the crisis) than did counties with lower levels of participation. The persistence of better outcomes in counties with heavy participation in federal government programs is consistent with a view that lower government liquidity premiums, lower government credit-risk premiums, and looser government mortgage-underwriting standards yield higher private-sector economic activity after a financial crisis. |
| Keywords: | Financial crisis ; Great Recession ; mortgages ; government policy |
| JEL: | G01 G21 G28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2016-31&r=ias |
| By: | Müller, Tobias; Boes, Stefan |
| Abstract: | This paper explores the effects of disability insurance (DI) benefits on the labor market decision of existing DI beneficiaries using data from the Swiss Household Panel. We use a fuzzy regression discontinuity (RD) design to identify the effect of DI benefits on the decision of working full-time, part-time or staying out of the labor force by exploiting a discontinuity in the DI benefit award rate. Overall, our results suggest that the Swiss DI system creates substantial lock-in effects which heavily influence the working decision of existing beneficiaries: the benefit receipt increases the probability of working part-time by about 41%-points, decreases the probability of working full-time by about 42%-points but has little or no effects on the probability of staying out of the labor force for the average beneficiary. Therefore, DI benefits induce a shift in the labor supply of existing beneficiaries in the sense that they reduce their work intensity from working full-time to part-time adding a possible explanation for the low DI outflow across the OECD. |
| Keywords: | Disability insurance benefits, Fuzzy regression discontinuity design, Labor market participation, Endogenous switching models, Maximum simulated likelihood |
| JEL: | C35 J20 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70840&r=ias |
| By: | Danial Asmat (Economic Analysis Group, U.S. Department of Justice); Sharon Tennyson (Cornell University, Department of Policy Analysis & Management) |
| Abstract: | This paper empirically tests the predictions of the Priest-Klein model of pre-trial bargaining. It exploits variation in tort liability for bad faith insurance law across states and time during two decades of evolving law from the 1970s to the 1990s. Using repeated cross-sectional datasets of auto insurance claims from the Insurance Research Council, it nds evidence consistent with the hypothesis that variance in parties' subjective estimates of trial outcomes drove the likelihood of settlement. The likelihood of trial for an average claim is estimated to have risen by over 20% in the initial years following reform among the rst group of states to enact the tort remedy. Trial rates among tort states thereafter declined through the sample, dropping over 10% below control states by 1997. A similar relationship is estimated for the likelihood of a lawsuit being led, and characteristics of litigated claims are consistent with a di erent subset of claims being disputed following regime change. Results are robust to sample selection bias, endogeneity in settlement time, and other state-level legislation on punitive damages limits and prejudg- ment interest. While there is limited evidence for the predictions of asymmetric information models of settlement, we conclude that policyholders and insurers negotiated in a manner consistent with divergent expectations. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:doj:eagpap:201601&r=ias |
| By: | Sproul, Thomas; Michaud, Clayton; Turvey, Calum |
| Keywords: | Agricultural and Food Policy, |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc016:233765&r=ias |
| By: | Margarita Vilar-Rodríguez (Universidad de A Coruña, Spain); Jerònia Pons-Pons (Universidad de Sevilla, Spain) |
| Abstract: | This paper aims to analyze the historical construction of the network of health infrastructures in Spain from very different areas both public and private. The first part provides a first statistical progress of the major infrastructure before approving the compulsory insurance. The second part of the paper analyzes the implementation of compulsory insurance in a context where the state lacked a basic network of public health infrastructure. Within this context, concerts with the private sector were essential. Later, the Plan Nacional de Instalaciones Sanitarias was approved. It was an ambitious and expensive project launched in a country with serious economic problems. From here, several questions arise: How did the dictatorship manage to fund and build the plan?; What role did private health infrastructure play after the approval of this plan?; Did this plan achieve convergence between Spain and Europe in provision of health infrastructure? The paper ends with some conclusions and a future research agenda. |
| Keywords: | Health Insurance, Health Infrastructures, Hospitals, Spain, XIXth-XXth centuries |
| JEL: | I18 I38 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1609&r=ias |
| By: | Truong Cong Thanh Nghi (School of Economics, University of Economics Ho Chi Minh City) |
| Keywords: | Insurance, Vietnam, Flood |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eep:report:rr2016036&r=ias |
| By: | Karabarbounis, Loukas (Federal Reserve Bank of Minneapolis); Chodorow-Reich, Gabriel (Harvard University) |
| Abstract: | By how much does an extension of unemployment benefits affect macroeconomic outcomes such as unemployment? Answering this question is challenging because U.S. law extends benefits for states experiencing high unemployment. We use data revisions to decompose the variation in the duration of benefits into the part coming from actual differences in economic conditions and the part coming from measurement error in the real-time data used to determine benefit extensions. Using only the variation coming from measurement error, we find that benefit extensions have a limited influence on state-level macroeconomic outcomes. We use our estimates to quantify the effects of the increase in the duration of benefits during the Great Recession and find that they increased the unemployment rate by at most 0.3 percentage point. |
| Keywords: | Unemployment insurance; Measurement error; Unemployment |
| JEL: | E24 E62 J64 J65 |
| Date: | 2016–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:733&r=ias |