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on Insurance Economics |
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Issue of 2016‒10‒23
seventeen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Laurence Baker; M. Kate Bundorf; Aileen Devlin; Daniel P. Kessler |
| Abstract: | One of the key terms in contracts between hospitals and insurers is how the parties apportion the financial risk of treating unexpectedly costly patients. “Prospective” payment contracts give hospitals a lump-sum amount, depending on the medical condition of the patient, with limited adjustment for the level of services provided. We use data from the Medicare Prospective Payment System and commercial insurance plans covering the nonelderly through the Health Care Cost Institute to measure the extent of prospective payment in 303 metropolitan statistical areas during 2008-12. We report three key findings. First, commercial insurance payments are less prospective than Medicare payments. Second, the extent of prospective payment in commercial insurance varies more than in Medicare, both across hospitals and geographic areas. Third, differences in prospective payment across hospitals are positively associated with the extent of hospital competition, the share of the hospital’s commercially insured patients covered by managed-care insurance, and the share of the hospital’s patients covered by Medicare’s Prospective Payment System. |
| JEL: | I1 I13 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22709&r=ias |
| By: | Victoria Peebles; Sheila Hoag; Michaella Morzuch; Linda Barterian; Debra Lipson |
| Abstract: | When the Patient Protection and Affordable Care Act (ACA) passed in 2010, about 6.2 million children were uninsured; of those, nearly 70 percent were already eligible for coverage through Medicaid or the Children’s Health Insurance Program (CHIP) but not enrolled (Kenney et al. 2012). Recognizing the many benefits for children from having health insurance and identifying the ACA as an opportunity to close the children’s coverage gap, in 2011 the Atlantic Philanthropies (Atlantic) created the KidsWell campaign. |
| Keywords: | Medicaid, CHIP, Advocacy, ACA, Uninsured, KidsWell |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:55d343b9a9cd42cf8cd557a701205615&r=ias |
| By: | Victoria Peebles; Sheila Hoag; Michaella Morzuch; Linda Barterian; Debra Lipson |
| Abstract: | The primary goal of the KidsWell Campaign was to ensure access to health insurance for all children, which in turn was expected to lead to improved health outcomes. KidsWell sought to achieve this aim through a two-fold strategy: by protecting and expanding children’s health insurance coverage and by building a lasting child advocacy infrastructure to maintain gains in children’s health care coverage. |
| Keywords: | Medicaid, CHIP, Advocacy, ACA, Uninsured, KidsWell |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:3362e3c075274b05b38d48d60ce4cb4f&r=ias |
| By: | Rangan Gupta (Department of Economics, University of Pretoria, South Africa); Amine Lahiani (LEO (UMR CNRS 7322), Université d’Orléans, Orléans, France and Montpellier Business School, Montpellier, France); Chi-Chuan Lee (School of Management, Beijing Normal University Zhuhai, Zhuhai, China); Chien-Chiang Lee (Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan) |
| Abstract: | This paper investigates the asymmetric and nonlinear transmission of real output and economic policy uncertainty to insurance premiums for the US economy over the annual period of 1980-2014. Using most up-to-date nonlinear autoregressive distributed lags (NARDL) framework developed by Shin et al. (2014), we simultaneously examine short- and long-run asymmetric responses of the insurance premiums through positive and negative partial sum decompositions of changes in the explanatory variables. Our empirical results reveal that real output and economic policy uncertainty affect insurance premiums in an asymmetric and nonlinear manner, but the transmission mechanism is not the same. As to the impact of real output, we find that an increase in real output leads to enhancing the insurance premiums, while a decrease in output has a greater impact causing insurance premiums to move down. For the impact of economic policy uncertainty, the results also suggest that total and non-life insurance premiums increase with uncertainty increases, while life insurance premiums decrease with uncertainty increases. These results have significant implications for insurance-related econometric analysis, investment decisions, forecasting, and policy-making. |
| Keywords: | Insurance premiums, Real output,Economic policy uncertainty,NARDL |
| JEL: | C32 F42 G22 O16 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201673&r=ias |
| By: | Pavel, Md Sadik; Chakrabarty, Sayan; Gow, Jeff |
| Abstract: | Background A central aim of Universal Health Coverage (UHC) is protection for all against the cost of illness. In a low income country like Bangladesh the cost burden of health care in tertiary facilities is likely to be significant for most citizens. This cost of an episode of illness is a relatively unexplored policy issue in Bangladesh. The objective of this study was to estimate an outpatient’s total cost of illness as result of treatment in private and public hospitals in Sylhet, Bangladesh. Methods The study used face to face interviews at three hospitals (one public and two private) to elicit cost data from presenting outpatients. Other socio-economic and demographic data was also collected. A sample of 252 outpatients were randomly selected and interviewed. The total cost of outpatients comprises direct medical costs, non-medical costs and the indirect costs of patients and caregivers. Indirect costs comprise travel and waiting times and income losses associated with treatment. Results The costs of illness are significant for many of Bangladesh citizens. The direct costs are relatively minor compared to the large indirect cost burden that illness places on households. These indirect costs are mainly the result of time off work and foregone wages. Private hospital patients have higher average direct costs than public hospital patients. However, average indirect costs are higher for public hospital patients than private hospital patients by a factor of almost two. Total costs of outpatients are higher in public hospitals compared to private hospitals regardless of patient’s income, gender, age or illness. Conclusion Overall, public hospital patients, who tend to be the poorest, bear a larger economic burden of illness and treatment than relatively wealthier private hospital patients. The large economic impacts of illness need a public policy response which at a minimum should include a national health insurance scheme as a matter of urgency. |
| Keywords: | Total cost of outpatients, Direct cost, Indirect cost, Health care, Public vs private, Bangladesh |
| JEL: | I1 I11 I13 I18 |
| Date: | 2015–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74491&r=ias |
| By: | Michaella Morzuch; Sheila Hoag |
| Abstract: | The Cities Expanding Health Access for Children and Families (CEHACF) project was designed to capitalize on both cities’ responsibility for protecting the health and well-being of their residents and municipal leaders’ platform for engaging residents. The project’s overarching goal was to empower municipal leaders in competitively selected cities to partner with community stakeholders to find uninsured children already eligible for, but not enrolled in, public coverage available through Medicaid and CHIP—and, potentially, their adult parents who were newly eligible for Medicaid or marketplace coverage through ACA rules—and enroll them. Beginning in January 2013, CEHACF engaged selected cities on children’s coverage issues through a three-stage, competitive grant-making process. |
| Keywords: | Medicaid, CHIP, ACA, Cities, Outreach, Enrollment |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:85a98b0ecae54195aa7403f463843c1c&r=ias |
| By: | Michaella Morzuch; Sheila Hoag |
| Abstract: | The Cities Expanding Health Access for Children and Families (CEHACF) project was designed to capitalize on both cities’ responsibility for protecting the health and well-being of their residents and municipal leaders’ platform for engaging residents. The project’s overarching goal was to empower municipal leaders in competitively selected cities to partner with community stakeholders to find uninsured children already eligible for, but not enrolled in, public coverage available through Medicaid and CHIP—and, potentially, their adult parents who were newly eligible for Medicaid or marketplace coverage through ACA rules—and enroll them. Beginning in January 2013, CEHACF engaged selected cities on children’s coverage issues through a three-stage, competitive grant-making process. |
| Keywords: | Medicaid, CHIP, ACA, Cities, Enrollment, Outreach |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:30a38e08d9af443d8f568a1e91eda8d4&r=ias |
| By: | Pierre-Emmanuel Darpeix (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics) |
| Abstract: | The literature generally agrees that the traditional insurance sector is not a source of systemic risk, and insurers are often considered to be shock absorbers rather than shock amplifiers. Yet, the evolution of the industry both in terms of structure (concentration of the reinsurers, increased linkages with banks, especially through bancassurance conglomerates) and in terms of techniques (securitization, monolines, derivatives) increased the systemic relevance of the insurers. |
| Keywords: | Insurance,Systemic risk,International regulation |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01227969&r=ias |
| By: | Jean-Olivier Hairault (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); François Langot (PSE - 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 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01292095&r=ias |
| By: | John Ameriks; Joseph Briggs; Andrew Caplin; Matthew D. Shapiro; Christopher Tonetti |
| Abstract: | Individuals face significant late-in-life risks, including needing long-term care (LTC). Yet, they hold little long-term care insurance (LTCI). Using both “strategic survey questions,” which identify preferences, and stated demand questions, this paper investigates the degree to which a fundamental lack of interest and poor product features determine low LTCI holdings. It estimates a rich set of individual-level preferences and uses a life-cycle model to predict insurance demand, finding that better insurance would be far more widely held than are products in the market. Comparing stated and model-predicted demand shows that flaws in existing products provide a significant, but partial, explanation for this under-insurance puzzle. |
| JEL: | D14 D91 E21 G22 H31 I13 J14 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22726&r=ias |
| By: | Kremslehner, Daniela; Muermann, Alexander |
| Abstract: | Based on a unique data set of driving behavior we find direct evidence that private information has significant effects on contract choice and risk in automobile insurance. The number of car rides and the relative distance driven on weekends are significant risk factors. While the number of car rides and average speeding are negatively related to the level of liability coverage, the number of car rides and the relative distance driven at night are positively related to the level of first-party coverage. These results indicate multiple and counteracting effects of private information based on risk preferences and driving behavior. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:543&r=ias |
| By: | hector chade (arizona state university) |
| Abstract: | We introduce costly insurance provision into a standard monopoly insurance model with adverse selection, where the consumer has private information about the probability of suffering a loss. We obtain two main results that do not arise in the standard model. First, we derive a general comparative statics result about coverage denial only to those likely to be the worst risks. Second, we show that the optimal menu the insurer offers can entail complete pooling of all types. We also show that these results do not hold in a costly provision version of the competitive model of Rothschild-Stiglitz. Finally, we discuss the implications of these results for empirical work on insurance with adverse selection. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1097&r=ias |
| By: | Roel Verbelen; Katrien Antonio; Gerda Claeskens |
| Abstract: | A data set from a Belgian telematics product aimed at young drivers is used to identify how car insurance premiums can be designed based on the telematics data collected by a black box installed in the vehicle. In traditional pricing models for car insurance, the premium depends on self-reported rating variables (e.g. age, postal code) which capture characteristics of the policy(holder) and the insured vehicle and are often only indirectly related to the accident risk. Using telematics technology enables tailor-made car insurance pricing based on the driving behavior of the policyholder. We develop a statistical modeling approach using generalized additive models and compositional predictors to quantify and interpret the effect of telematics variables on the expected claim frequency. We find that such variables increase the predictive power and render the use of gender as a discriminating rating variable redundant. |
| Keywords: | Pay-as-you-drive insurance, Usage-based insurance, Risk classification, Generalized additive models, Compositional predictors, Structural zeros |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:ete:afiper:552745&r=ias |
| By: | Roel Verbelen; Katrien Antonio; Gerda Claeskens |
| Abstract: | A data set from a Belgian telematics product aimed at young drivers is used to identify how car insurance premiums can be designed based on the telematics data collected by a black box installed in the vehicle. In traditional pricing models for car insurance, the premium depends on self-reported rating variables (e.g. age, postal code) which capture characteristics of the policy(holder) and the insured vehicle and are often only indirectly related to the accident risk. Using telematics technology enables tailor-made car insurance pricing based on the driving behavior of the policyholder. We develop a statistical modeling approach using generalized additive models and compositional predictors to quantify and interpret the effect of telematics variables on the expected claim frequency. We find that such variables increase the predictive power and render the use of gender as a discriminating rating variable redundant. |
| Keywords: | Pay-as-you-drive insurance, Usage-based insurance, Risk classification, Generalized additive models, Compositional predictors, Structural zeros |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:ete:kbiper:552745&r=ias |
| By: | Hsing-Wen Han (Department of Accounting, Tamkang University); Hsien-Ming Lien (Department of Public Finance, National Chengchi University); Tzu-Ting Yang (Institute of Economics, Academia Sinica, Taipei, Taiwan) |
| Abstract: | This paper exploits longitudinal insurance claims data and a cost-sharing subsidy that has exempted copayment and coinsurance of healthcare services for children under the age of 3 in Taiwan. We use a regression discontinuity design to estimate its effect on children’s healthcare utilization. Our results show that cost-sharing subsidy significantly increases the utilization of outpatient care, especially low-value care at high-cost hospitals. In contrast, the utilization of inpatient care is price insensitive. Finally, we find that a lower level of cost-sharing has little impact on children’s health. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:16-a011&r=ias |
| By: | Herr, Annika; Suppliet, Moritz (Tilburg University, Center For Economic Research) |
| Abstract: | Health insurances curb price insensitive behavior and moral hazard of insureds through different types of cost-sharing, such as tiered co-payments or reference pricing. This paper evaluates the effect of newly introduced price limits below which drugs are exempt from co-payments on the pricing strategies of drug manufacturers in reference price markets. We exploit quarterly data on all prescription drugs under reference pricing available in Germany from 2007 to 2010. To identify causal effects, we use instruments that proxy regulation intensity. A difference-in-differences approach exploits the fact that the exemption policy was introduced successively during this period. Our main results first show that the new policy led generic firms to decrease prices by 5 percent on average, while brand-name firms increase prices by 7 percent after the introduction. Second, sales increased for exempt products. Third, we find evidence that differentiated health insurance coverage (public versus private) explains the identifed market segmentation. |
| Keywords: | pharmaceutical prices; cost-sharing; co-payments; reference pricing; regulation; firm behavior; health insurance |
| JEL: | I1 L11 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:4d692f0e-8577-4392-b413-269be650c250&r=ias |
| By: | Jonathan D. Ketcham; Nicolai V. Kuminoff; Christopher A. Powers |
| Abstract: | We develop a structural model for bounding welfare effects of policies that alter the design of differentiated product markets when some consumers may be misinformed about product characteristics and inertia in consumer behavior reflects a mixture of latent preferences, information costs, switching costs and psychological biases. We use the model to analyze three proposals to redesign markets for Medicare prescription drug insurance: (1) reducing the number of plans, (2) providing personalized information, and (3) defaulting consumers to cheap plans. First we combine administrative and survey data to determine which consumers make informed enrollment decisions. Then we analyze the welfare effects of each proposal, using revealed preferences of informed consumers to proxy for concealed preferences of misinformed consumers. Results suggest that each policy produces large gains and losses for some consumers, but the menu reduction would unambiguously harm most consumers whereas personalized information would unambiguously benefit most consumers. |
| JEL: | D02 D61 D81 I11 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22732&r=ias |