nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒04‒02
fifteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Optimal Progressive Income Taxation in a Bewley-Grossman Framework By Juergen Jung; Chung Tran
  2. Financial Markets and Fiscal Unions By Patrick J. Kehoe; Elena Pastorino
  3. Integrating Health Care for High-Need Medicaid Beneficiaries with Serious Mental Illness and Chronic Physical Health Conditions at Managed Care, Provider, and Consumer Levels By Jung Y. Kim; Tricia Collins Higgins; Dominick Esposito; Allison Hamblin
  4. A First Step to Helping California Workers Keep Their Jobs: Identifying Likely SSDI Entrants Using State Disability Claims By Frank Neuhauser; Yonatan Ben-Shalom; David Stapleton
  5. The Financial Vulnerability of Former Disability Beneficiaries in Retirement By Jody Schimmel Hyde; April Yanyuan Wu
  6. Voluntary Contributions to a Mutual Insurance Pool By Louis Lévy-Garboua; Claude Montmarquette; Jonathan Vaksmann; Marie-Claire Villeval
  7. An Analysis of Private Long-Term Disability Insurance Access, Cost, and Trends By Priyanka Anand; David Wittenburg
  8. CATalytic Insurance: The Case for Natural Disasters By Tito Cordella; Eduardo Levy Yeyati
  9. Russian Bank Database : Birth and Death, Location, Mergers, Deposit Insurance Participation, State and Foreign Ownership By A.O. Karas; Andrei Vernikov
  10. The Impact of Affordable Care Act Medicaid Expansions on Applications to Federal Disability Programs By Jody Schimmel Hyde; Priyanka Anand; Maggie Colby; Lauren Hula; Paul O'Leary
  11. How do unisex life care annuities embedded in a pay-as-you-go retirement system affect gender redistribution? By Javier Pla-Porcel; Manuel Ventura-Marco; Carlos Vidal-Meliá
  12. Does the More Educated Utilize More Health Care Services? Evidence from Vietnam Using a Regression Discontinuity Design By Dang, Thang
  13. State Strategies for Coordinating Medicaid and Housing Services By Rebecca Kleinman; Matthew Kehn; Allison Wishon Siegwarth; Jonathan Brown
  14. The politics of promoting social protection in Zambia By Kate Pruce; Wilson Prichard; Sam Hickey
  15. Who Is Covered and Who Underreports: An Empirical Analysis of Access to Social Insurance on the Egyptian Labor Market By Roushdy, Rania; Selwaness, Irène

  1. By: Juergen Jung (Department of Economics, Towson University); Chung Tran (Research School of Economics, The Australian National University)
    Abstract: We study the optimal progressivity of income taxation in a Bewley-Grossman model of health capital accumulation where individuals are exposed to earnings and health risks over the lifecycle. We impose the U.S. tax and transfer system and calibrate the model to match U.S. data. We then optimize the progressivity of the income tax code. The optimal income tax system is more progressive than current U.S. income taxes with zero taxes at the lower end of the income distribution and a marginal tax rate of over 50 percent for income earners above US$ 200,000. The Suits index—a Gini coefficient for the income tax contribution by income—is around 0.53 and much higher than 0.17 in the U.S. benchmark tax system. Welfare gains from switching to the optimal tax system amount to over 5 percent of compensating consumption. Moreover, we find that the structure of the health insurance system affects the degree of optimal progressivity of the income tax system. The introduction of Affordable Care Act in 2010—a program that redistributes wealth from high income and healthy types, to low income and sicker types—reduces the optimal progressivity level of the income tax system. Finally, we demonstrate that the optimal tax system is sensitive to the parametric specification of the income tax function and the transfer policy.
    Keywords: Health risk, inequality, tax progressivity, Suits index, social insurance, optimal tax, general equilibrium.
    JEL: E62 H24 I13 D52
    Date: 2017–03
  2. By: Patrick J. Kehoe; Elena Pastorino
    Abstract: Do sophisticated international financial markets obviate the need for an active union-wide authority to orchestrate fiscal transfers between countries to provide adequate insurance against country-specific economic fluctuations? We argue that they do. Specifically, we show that in a benchmark economy with no international financial markets, an activist union-wide authority is necessary to achieve desirable outcomes. With sophisticated financial markets, however, such an authority is unnecessary if its only goal is to provide cross-country insurance. Since restricting the set of policy instruments available to member countries does not create a fiscal externality across them, this result holds in a wide variety of settings. Finally, we establish that an activist union-wide authority concerned just with providing insurance across member countries is optimal only when individual countries are either unable or unwilling to pursue desirable policies.
    JEL: E0 E5 E6 E62 F33 F36 F38 F42 F44
    Date: 2017–03
  3. By: Jung Y. Kim; Tricia Collins Higgins; Dominick Esposito; Allison Hamblin
    Abstract: The authors describe the early efforts of the HealthChoices HealthConnections pilot program for adult Medicaid beneficiaries with serious mental illness and co-occurring chronic conditions, which used a navigator model in 3 southeastern Pennsylvania counties.
    Keywords: healthchoices, healthconnections, medicaid beneficiaries, mental illness, managed care
    JEL: I J
  4. By: Frank Neuhauser; Yonatan Ben-Shalom; David Stapleton
    Abstract: We looked at California’s State Disability Insurance (SDI) and Workers’ Compensation (WC) claims to examine whether it is possible identify the bulk of a state’s likely Social Security Disability Insurance (SSDI) entrants based on disability claims they file before they apply for SSDI.
    Keywords: Social Security Disability Insurance, SSDI, workers’ compensation, WC
    JEL: I J
  5. By: Jody Schimmel Hyde; April Yanyuan Wu
    Abstract: This brief considers the post-retirement financial well-being of workers based on whether they received Social Security Disability Insurance (DI).
    Keywords: Disability, retirement, well-being, SSDI, Social Security
    JEL: I J
  6. By: Louis Lévy-Garboua (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal); Claude Montmarquette (CIRANO - Centre Interuniversitaire de Recherche en ANalyse des Organisations); Jonathan Vaksmann (UM - Université du Maine); Marie-Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Etienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We study mutual-aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the ag- gregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution-based coverage. The equal coverage mechanism leads to a unique no-insurance equilibrium while contribution-based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a \dual interior equilibrium". That dual equilibrium is consistent with the co-existence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a significant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.
    Keywords: mutual-aid games
    Date: 2017
  7. By: Priyanka Anand; David Wittenburg
    Abstract: The authors use data from the National Compensation Survey to examine private long-term disability insurance access, cost, and trends over time.
    Keywords: Private disability Insurance, employment benefits
    JEL: I J
  8. By: Tito Cordella; Eduardo Levy Yeyati
    Abstract: Why should developing countries buy expensive catastrophe (CAT) insurance? Abstracting from risk aversion or hedging motives, we find that insurance may have a catalytic role on external finance. Such effect is particularly strong in those low to middle income countries that face financial constraints when hit by a shock or in its anticipation. Insurance makes defaults less likely, thereby relaxing the country's borrowing constraint, and enhancing its access to capital markets. The presence of multilateral lenders that explicitly or implicitly provide inexpensive reconstruction funds in the aftermath of a natural disaster weakens but does not eliminate the demand for catalytic insurance
    Date: 2015–09
  9. By: A.O. Karas; Andrei Vernikov
    Abstract: For every Russian bank we collect records of its registration, license withdrawal, liquidation, location changes, mergers and acquisitions, entrance to and exit from the Deposit Insurance System as well as state and foreign ownership. We describe our sources and the resulting database.
    Keywords: Russia, banks, data, state ownership, foreign ownership
    Date: 2016–07
  10. By: Jody Schimmel Hyde; Priyanka Anand; Maggie Colby; Lauren Hula; Paul O'Leary
    Abstract: In this paper, we estimate the impact of Medicaid expansions via the Patient Protection and Affordable Care Act (ACA) on applications to federal disability programs in 15 states that expanded Medicaid in 2014.
    Keywords: Medicaid, Affordable Care Act, health reform, disability, SSDI, SSI
    JEL: I J
  11. By: Javier Pla-Porcel (Actuarial Department, SOS Seguros y Reaseguros, S.A., Madrid. (Spain).); Manuel Ventura-Marco (Department of Financial Economics and Actuarial Science, University of Valencia, Spain.); Carlos Vidal-Meliá (Department of Financial Economics and Actuarial Science, University of Valencia, Spain, and Instituto Complutense de Análisis Económico, Complutense University of Madrid, Spain.)
    Abstract: This paper aims to assess gender redistribution when using unisex conversion factors to compute the initial benefit of life care annuities (LCAs) embedded in a pay-as-you-go (PAYG) pension system. We use a method based on actuarial factors to disentangle the hidden redistribution of LCAs with graded benefits. The value of the actuarial factor relies on a multistate framework in which transitions are modeled from the initial health state to the absorbing state. According to our calculations for Australia and the US, the amount of gender redistribution is by no means irrelevant. In spite of the very different biometric data, the results are surprisingly similar for both countries. Risk equalization based on the “equal treatment” of men and women may not be fair, given that age, gender and health state are very significant risk factors in computing the initial benefit in a system covering retirement and long-term care.
    Keywords: Gender, Life Care Annuities, Long-Term Care Insurance, Multistate model, Redistribution, Retirement.
    JEL: G22 H55 I13 J14 J26
    Date: 2017–02
  12. By: Dang, Thang
    Abstract: In 1991 Vietnam implemented a compulsory schooling reform that provides this paper a natural experiment to estimate the causal effect of education on health care utilization measured by the probability of doctor visit, the frequency of doctor visit and per visit out-of-pocket expenditure with a regression discontinuity design. The paper finds that schooling induces considerable impacts on health care utilization although the signs of the impacts changes with specific types of health care service examined. In particular, increased education aggrandizes inpatient utilization whereas it reduces outpatient health care utilization for both public and private health sectors. The estimates are strongly robust to various windows of the sample choice. The paper also discovers that the links between education and health insurance or income play very essential roles as potential mechanisms to explain the causal impacts of education on health care utilization in Vietnam.
    Keywords: Education; health care utilization; regression discontinuity design; Vietnam
    JEL: I12 I21 J13
    Date: 2017–03–18
  13. By: Rebecca Kleinman; Matthew Kehn; Allison Wishon Siegwarth; Jonathan Brown
    Abstract: This article reports findings from case studies of 4 states (Illinois, Louisiana, Massachusetts, and Tennessee) that used different approaches to coordinate Medicaid services with temporary or permanent housing supports for individuals with psychiatric disabilities.
    Keywords: Medicaid, Housing services, Illinois, Louisiana, Massachusetts, Tennessee
    JEL: I
  14. By: Kate Pruce; Wilson Prichard; Sam Hickey
    Abstract: This paper examines the rise of the social protection agenda in Zambia, and demonstrates that this has two alternative drivers: shifting dynamics within Zambia’s political settlement and the promotional efforts of a transnational policy coalition. We compare the cases of social cash transfers and social health insurance to investigate how the interplay of these drivers has shaped the uneven commitment to the respective policies. Social protection has yet to displace existing interests, ideas, and rent-allocation practices. However, cash transfers are gaining localized support. What matters now is the way in which such transfers become integrated within Zambia’s distributional regime.
    Keywords: cash transfers, ideas, political settlements, social health insurance, social protection, Zambia
    Date: 2016
  15. By: Roushdy, Rania; Selwaness, Irène
    Abstract: This paper investigates the dynamics and determinants of having access to social insurance coverage on the Egyptian labor market among wage and non-wage workers. The paper explores two issues: the worker- and enterprise- level determinants of having access to social insurance and the risk of underreporting insurable wage to the social security authority. Using data from the Egyptian Labor Market Panel Survey for 1998 and 2006, the likelihood of having access to social insurance coverage is estimated by a probit regression model for all workers, for wage and non-wage workers, separately. Given the potential endogeneity between the type of work and social insurance access, instrumental variable technique is applied. Results show that men, older, married, better educated and white collar highly skilled workers are more likely to be socially insured. Underreporting insurable wages is negatively correlated with education and work experience. High contribution rates requested from both the employer and employee, combined with basing benefits on wages level of the last few years of service, and the weak capacity of law enforcement encourage employers and employees to either not participate in the social insurance system or contribute on amounts that are lower than their actual wage. The paper is one of the few studies that focus on the phenomenon of coverage gap and underreporting salaries to the social security administration.
    Keywords: Social Security,Social Insurance,Informality,Endogeneity,Instrumental variables
    JEL: J46 H55 C36
    Date: 2017

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