nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒02‒26
seventeen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Unemployment Insurance Generosity and Aggregate Employment By Boone, Christopher; Dube, Arindrajit; Goodman, Lucas; Kaplan, Ethan
  2. Cost-sharing in health insurance and its impact in a developing country– Evidence from a quasi-natural experiment Abstract: Though the impact of cost-sharing on health care demand is well documented in developed countries, evidence from developing countries is rare. This paper’s contribution is to analyse the impact of increasing coinsurance in a developing nation -Vietnam – by exploiting a quasi-natural experiment in that country. In 2007, the Vietnam government reintroduced a 20 percent coinsurance for individuals who hold voluntary health insurance policies. As individuals with compulsory health insurance were exempt from this re-imposition of coinsurance, this policy change may be regarded as a quasi-natural experiment. To exploit this change, we use a difference-in-difference approach to examine whether the increase in coinsurance effectively reduced the demand for health care services among those affected. We find it has no statistically significant effect on the quantity of health care demanded. We however find that those who were under 18 or in low income households reduced their health care use after the increase in coinsurance. These findings hold – at least in the short-run, with a variety of different outcomes and estimators. By Ha Trong Nguyen; Luke B Connelly
  3. Using Administrative Data to Explore the Employment and Benefit Receipt Outcomes of Vocational Rehabilitation Applicants Years after Program Exit By David R. Mann; Todd Honeycutt; Michelle Stegman Bailey; John O’Neill
  4. Did Medicaid Expansion Reduce Medical Divorce? By David Slusky; Donna Ginther
  5. Maybe "Honor thy Father and thy Mother": Uncertain Family Aid and the Design of Social Long Term Care Insurance By Canta, Chiara; Cremer, Helmuth; Gahvari, Firouz
  6. Did life insurers benefit from TARP or regulatory forbearance during the financial crisis of 2008–2009? By Barnes, Michelle L.
  7. Disaster (over-)insurance: the long-term financial and socioeconomic consequences of Hurricane Katrina By Bleemer, Zachary; Van der Klaauw, Wilbert
  8. Econometric Evaluation of a Placement Coaching Program for Recipients of Disability Insurance Benefits in Switzerland By Hagen, Tobias
  9. Strengthening Enforcement in Unemployment Insurance. A Natural Experiment By Schiprowski, Amelie; Arni, Patrick
  10. Firm-Related Risk and Precautionary Saving Response By Andreas Fagereng; Luigi Guiso; Luigi Pistaferri
  11. Impact of Enroll America on the Number of Individuals Covered through the Federally Facilitated Marketplace By Sean Orzol; Lauren Hula
  12. Economic Development and Resilience to Natural Catastrophes – Insurance Penetration and Institutions By Breckner, Miriam; Englmaier, Florian; Stowasser, Till; Sunde, Uwe
  13. Camouflage and Ballooning in Health Insurance: Evidence from Abortion By Neumann, Julia Kathleen; Zweifel, Peter; Hofmann, Annette
  14. Health, Health Insurance, and Retirement: A Survey By French, Eric; Jones, John Bailey
  15. Malpractice Claim Fears and the Costs of Treating Medicare Patients: A New Approach to Estimating the Costs of Defensive Medicine By James D. Reschovsky; Cynthia B. Saiontz-Martinez
  16. Design of the CMS Medical Home Demonstration By Myles Maxfield; Deborah Peikes; Rachel Shapiro; Hongmai Pham; Ann O'Malley; Sarah Scholle; Phyllis Torda
  17. Improving the Outcomes of Youth with Medical Limitations Through Comprehensive Training and Employment Services: Evidence from the National Job Corps Study By Heinrich Hock; Dara Lee Luca; Tim Kautz; David Stapleton

  1. By: Boone, Christopher (Cornell University); Dube, Arindrajit (University of Massachusetts Amherst); Goodman, Lucas (University of Maryland at College Park); Kaplan, Ethan (University of Maryland at College Park)
    Abstract: This paper examines the impact of unemployment insurance (UI) on aggregate employment by exploiting cross-state variation in the maximum benefit duration during the Great Recession. Comparing adjacent counties located in neighboring states, we find no statistically significant impact of increasing UI generosity on aggregate employment. Our point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.32 percentage points from the UI extension. We show that a moderately sized fiscal multiplier can rationalize our findings with the small negative labor supply impact of UI typically found in the literature.
    Keywords: labor supply, unemployment insurance, fiscal multiplier
    JEL: J65 E62 E32
    Date: 2016–12
  2. By: Ha Trong Nguyen (Bankwest Curtin Economic Centre, Curtin University); Luke B Connelly (The University of Queensland)
    Keywords: Health insurance, Difference-in-difference, Cost-sharing, Developing country, Vietnam.
    JEL: G22 I11 I18
    Date: 2017–02
  3. By: David R. Mann; Todd Honeycutt; Michelle Stegman Bailey; John O’Neill
    Abstract: This study used linked administrative data from the Social Security Administration (SSA) and Rehabilitation Services Administration (RSA) to explore the employment, Supplemental Security Income (SSI) payment receipt, and Social Security Disability Insurance (SSDI) benefit receipt outcomes of VR applicants during the first seven calendar years after program exit.
    Keywords: Vocational rehabilitation, outcomes, employment, disability insurance, Supplemental Security Income
    JEL: I J
  4. By: David Slusky; Donna Ginther
    Abstract: Prior to the Affordable Care Act, many state Medicaid eligibility rules had maximum asset levels. This was a problem when one member of a couple was diagnosed with a degenerative disease requiring expensive care. Draining the couple’s assets so that the sick individual could qualify for Medicaid would leave no resources for the retirement of the other member; thus divorce and separating assets was often the only option. The ACA’s Medicaid expansion removed all asset tests. Using a difference-in-differences approach on states that did and did not expand Medicaid, we find that the expansion decreased the prevalence of divorce by 5.6% among those 50-64, strongly suggesting that it reduced medical divorce.
    JEL: I13 J12
    Date: 2017–02
  5. By: Canta, Chiara (Norwegian School of Economics); Cremer, Helmuth (Toulouse School of Economics); Gahvari, Firouz (University of Illinois at Urbana-Champaign)
    Abstract: We study the role and design of private and public insurance programs when informal care is uncertain. Children's degree of altruism is randomly distributed over some interval. Social insurance helps parents who receive a low level of care, but it comes at the cost of crowding out informal care. Crowding out occurs both at the intensive and the extensive margins. We consider three types of LTC policies: (i) a topping up (TU) scheme providing a transfer which is non exclusive and can be supplemented; (ii) an opting out (OO) scheme which is exclusive and cannot be topped up and (iii), a mixed policy combining these two schemes. TU will involve crowding out both at the intensive and the extensive margins, whereas OO will crowd out informal care solely at the extensive margin. However, OO is not necessarily the dominant policy as it may exacerbate crowding out at the extensive margin. The distortions of both policies can be mitigated by using an appropriately designed mixed policy.
    Keywords: long term care, uncertain altruism, private insurance, public insurance, topping up, opting out
    JEL: H2 H5
    Date: 2016–12
  6. By: Barnes, Michelle L. (Federal Reserve Bank of Boston)
    Abstract: Life insurers’ odds of being placed under regulatory control (for example, conservatorship or receivership) during the financial crisis years of 2008 and 2009 increased with deteriorating fundamentals at a much higher rate than during normal times or during the previous recession. However, no life insurer in the sample belonging to a life insurance holding company system (LIHCS) in receipt of TARP funds experienced such insolvency issues, and life insurers with poor and deteriorating performance that belonged to a LIHCS in receipt of TARP funds received increased capital inflows during the crisis years. In contrast, life insurance entities with poor and deteriorating performance but with no access to TARP funds received a smaller dollar amount of capital injections on average during the crisis. Evidence is presented of state-based regulatory forbearance due to prescribed and permitted accounting practices (P&P) during the crisis, and it is shown that such forms of state-based regulatory forbearance acted as a substitute for the receipt of TARP funds.
    Keywords: financial crises; financial institutions; life insurers; government policy and regulation; capital and ownership structure; solvency
    JEL: G01 G21 G22 G28 G32 G33
    Date: 2016–10–25
  7. By: Bleemer, Zachary (University of California, Berkeley); Van der Klaauw, Wilbert (Federal Reserve Bank of New York)
    Abstract: Federal disaster insurance–in the form of national flood insurance, the Federal Emergency Management Agency (FEMA), and other programs–is designed to nationally-distribute large geography-specific shocks like earthquakes and hurricanes. This study examines the local longrun net impact of Hurricane Katrina and the subsequent policy response on impacted residents. Using a unique fifteen-year panel of five percent of adult Americans’ credit reports, we find higher rates of insolvency and lower homeownership among inundated residents of New Orleans ten years after the storm, relative to their non-flooded neighbors. Residents of mostly-white and mostly-black neighborhoods obtain similar short- and long-term outcomes, though residents of white neighborhoods are more likely to migrate out of the city. Inundated New Orleans residents appear more likely to have migrated to neighboring states, but substantially less likely than nonflooded residents to have migrated north. However, we find that residents of the large Gulf Opportunity Zone surrounding New Orleans, who were also eligible for various federal programs, obtained net financial benefits in the years after Katrina; a decade later, those residents have higher rates of consumption and homeownership and lower rates of bankruptcy and foreclosure than residents outside the GO Zone. These net gains are found to be progressive–favoring young and low-income residents–and are broadly similar across black and white neighborhoods.
    Keywords: disaster insurance; household finances; homeownership; migration
    JEL: D14 H84 Q54 R11 R23
    Date: 2017–02–01
  8. By: Hagen, Tobias
    Abstract: This paper evaluates a placement coaching program carried out in Zurich during 2009–2013 that focused on the reemployment of persons drawing disability insurance (DI) benefits. A private company was commissioned with carrying out the program. Kernel-based matching and radius matching with bias adjustment (Lechner et al. 2011; Huber et al. 2015) estimators combined with difference-in-differences are applied to administrative panel data. The estimates indicate a successful project in terms of a reduction in DI benefits and an increase in income even in the medium-run. A simple cost-benefit analysis suggests that the project was a profitable investment for the government. Sensitivity analyses indicate that the results are robust to confounders. An interesting policy implication is that it seems possible to enhance the employment prospects of disabled persons with a relatively inexpensive placement coaching measure which does not include any explicit investments in human capital.
    JEL: I38 J08 J14
    Date: 2016
  9. By: Schiprowski, Amelie; Arni, Patrick
    Abstract: Imposing benefit cuts to job seekers who do not comply with rules and requirements has become a commonly used enforcement device in unemployment insurance (UI) systems. This paper provides first estimates of how non-compliant job seekers react when confronted with a stricter enforcement regime. We exploit an administrative reform which induced a sharp and unanticipated increase in the probability of receiving a benefit cut in response to the failure of documenting job search effort. Our difference-in-difference framework uses as a control group job seekers with other types of non-compliances, whose enforcement rules stayed constant. We find that the probability of job finding within the three months following non-compliance detection increases by 5 p.p. in reaction to the reform. This effect is however purely driven by exits to unstable jobs. Increased enforcement strictness thus appears to pressure job seekers into accepting job matches of lower quality. Estimating the effects on post-unemployment earnings is work in progress.
    JEL: J65 J64 J58
    Date: 2016
  10. By: Andreas Fagereng; Luigi Guiso; Luigi Pistaferri
    Abstract: We propose a new approach to identify the strength of the precautionary motive and the extent of self-insurance in response to earnings risk based on Euler equation estimates. To address endogeneity problems, we use Norwegian administrative data and instrument consumption and earnings volatility with the variance of firm-specific shocks. The instrument is valid because firms pass some of their productivity shocks onto wages; moreover, for most workers firm shocks are hard to avoid. Our estimates suggest a coefficient of relative prudence of 2, in a very plausible range.
    JEL: D91 E21 J24
    Date: 2017–02
  11. By: Sean Orzol; Lauren Hula
    Abstract: We find evidence of a large, positive effect of Enroll America's field outreach on Marketplace enrollment in non-Medicaid expansion states.
    Keywords: Enroll America, Insurance coverage
    JEL: I
  12. By: Breckner, Miriam; Englmaier, Florian; Stowasser, Till; Sunde, Uwe
    Abstract: This paper provides new evidence on the negative effect of natural catastrophes on economic development. The findings indicate that private insurance markets accommodate the negative effects of natural catastrophes in developed countries, whereas they do not seem to be effective in developing countries. This pattern explains the heterogenous effects of natural disasters on income that have been found in previous studies. The results suggest that insurance and a stable, well-institutionalized environment complement each other in mediating the negative disaster shock. The analysis is based on novel data on natural disasters and global insurance penetration rates and contributes to the ongoing debate about the implications of natural catastrophes for development.
    JEL: Q54 Q56 O13
    Date: 2016
  13. By: Neumann, Julia Kathleen; Zweifel, Peter; Hofmann, Annette
    Abstract: This paper provides a microeconomic basis for simultaneously explaining two phenomena related to health insurance: camouflage and ballooning. We use abortions in Switzerland as an illustrative example. First, a significant share of abortions is camouflaged by contrived medical coding, and second, there is evidence of ballooning in that jurisdictions with strict enforcement of abortion regulation tend to export the problem to more liberal ones. The analysis differs from the existing literature in that we explicitly model the search effort of an individual seeking a health service, i.e., an abortion or camouflage. Using data provided by a major social health insurer, theoretical predictions are confirmed to a considerable degree. In particular, women who derive a particularly high benefit from an abortion (and even more so, from its camouflage) are less discouraged by strict enforcement than others.
    JEL: I18 J13 K42
    Date: 2016
  14. By: French, Eric; Jones, John Bailey (Federal Reserve Bank of Richmond)
    Abstract: The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment near retirement age. Health considerations nonetheless play an important role, especially in explaining cross-sectional variation in employment and other outcomes within countries. We review the mechanisms through which health affects retirement and discuss recent empirical analyses.
    Keywords: disability; elderly; health; retirement; Social Security
    Date: 2017–02–17
  15. By: James D. Reschovsky; Cynthia B. Saiontz-Martinez
    Abstract: Higher levels of the malpractice fear index were associated with higher patient spending.
    Keywords: Malpractice claim, Medicare
    JEL: I
  16. By: Myles Maxfield; Deborah Peikes; Rachel Shapiro; Hongmai Pham; Ann O'Malley; Sarah Scholle; Phyllis Torda
    Abstract: This report presents the design of the Centers for Medicare & Medicaid Services’ (CMS) Medical Home Demonstration.
    Keywords: Medicare , Medical Home Demonstration
    JEL: I
  17. By: Heinrich Hock; Dara Lee Luca; Tim Kautz; David Stapleton
    Abstract: Analysis of National Job Corps Study data shows larger earning impacts for youth with medical limitations compared to others, and a reduced reliance on disability benefits. The Job Corps program warrants greater attention as an option for improving the adult outcomes of youth with disabilities.
    Keywords: Youth with disabilities, job training, employment services, transition to work, Job Corps
    JEL: I J

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