nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒06‒25
fifteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Health Plan Payment in Medicaid Managed Care: A Hybrid Model of Regulated Competition By Timothy Layton; Alice K. Ndikumana; Mark Shepard
  2. Patterns of Employment and Allowances for Disability Insurance Applicants By Kara Contreary; Todd Honeycutt; Michelle Bailey; Joseph Mastrianni
  3. Characteristics of Adults with Psychiatric Disabilities Participating in the Federal Disability Programs By Gina A. Livermore; Maura Bardos
  4. Healthy to Work: The Impact of Free Public Healthcare on Health Status and Labor Supply in Jamaica By Diether Beuermann; Camilo Pecha
  5. Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits By Jesse Rothstein; Robert G. Valletta
  6. State and Health Plan Strategies to Grow Enrollment in Integrated Managed Care Plans for Dually Eligible Beneficiaries By James Verdier; Danielle Chelminsky
  7. Can Land Fragmentation Reduce the Exposure of Rural Households to Weather Variability? By Stefanija Veljanoska
  8. How do Doctors Respond to Incentives? Unintended Consequences of Paying Doctors to Reduce Costs By Alexander, Diane
  9. A viable and cost-effective weather index insurance for rice in Indonesia By Kusuma, Aditya; Noy, Ilan; Jackson, Bethanna
  10. A Review of Philippine Government Disaster Financing for Recovery and Reconstruction By Villacin, Deanna T.
  11. The unfortunate regressivity of public natural hazard insurance: A quantitative analysis of a New Zealand case By Owen, Sally; Noy, Ilan
  12. Description of main off-budget funds By Grishina Elena; Avksentiev Nikolay
  13. Evaluation of farm programmes in the 2014 US farm bill: A review of the literature By OECD
  14. Minnesota’s SGA Project Demonstration: An Interim Evaluation Report By Matthew Kehn; Liz Babalola; Todd Honeycutt; Gina Livermore; Annie Doubleday; David Stapleton; Purvi Sevak
  15. Just What the Nurse Practitioner Ordered: Independent Prescriptive Authority and Population Mental Health By Alexander, Diane; Schnell, Molly

  1. By: Timothy Layton; Alice K. Ndikumana; Mark Shepard
    Abstract: Medicaid, the government program for providing health insurance to low-income and disabled Americans, is the largest health insurer in the United States with more than 73 million enrollees. It is also the sector of the U.S. public health insurance system that relies most heavily on the tools of regulated competition with more than 60% of its enrollees enrolled in a private health plan in 2014. However, regulated competition in Medicaid differs from the typical model, emphasizing the tools of competitive procurement -- such as competitive bidding, the threat of exclusion from the market, and auto-assignment of enrollees to plans -- to attempt to improve efficiency, instead of relying primarily on the forces of consumer demand. In this paper, we discuss how Medicaid combines the tools of competitive procurement with the tools of regulated competition and some potential consequences of this hybrid model.
    JEL: I13 I18
    Date: 2017–06
  2. By: Kara Contreary; Todd Honeycutt; Michelle Bailey; Joseph Mastrianni
    Abstract: We examine employment and program participation patterns of Social Security Disability Insurance (DI) applicants up to 24 months before application for DI. We describe two types of applicants with differing work histories. Proposals that focus on applicants with recent workforce attachment are likely to miss about half of eventual DI applicants.
    Keywords: Social Security Disability Insurance, application, employment
    JEL: I J
  3. By: Gina A. Livermore; Maura Bardos
    Abstract: The authors use nationally representative data on working-age recipients of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) to profile beneficiaries with psychiatric disabilities and compare them with beneficiaries eligible for SSDI and SSI on the basis of other health conditions.
    Keywords: Working-age adults, Social Security Disability Insurance, SSDI, Supplemental Security Income, SSI, psychiatric disabilities
    JEL: I J
  4. By: Diether Beuermann; Camilo Pecha
    Abstract: This study examines whether Jamaica's free public healthcare policy affected health status and labor supply of adult individuals. It compares outcomes of adults without health insurance versus their insured counterparts, before and after policy implementation. The study finds that the policy reduced both the likelihood of suffering illnesses with associated lost work days and the number of lost days due to illnesses by 28.6 percent and 34 percent, respectively. Consistent with the absence of "employment lock", no effects are found on employment at the extensive margin. However, consistent with a reduced number of days lost due to illnesses, there is a positive effect of 2.15 additional weekly labor hours. This is primarily a labor supply effect as the study shows that both reported and imputed hourly wages decreased by 0.15 and 0.06 log-points respectively. Back-of-the-envelope calculations suggest that the policy added a yearly average of US$PPP 26.6 million worth of net real production to the economy during the period 2008-12.
    Keywords: Health Policy, Health Insurance, Labor supply, Health Insurance Coverage, health Care Services, Public Health System, Healthcare Access, Labor Market Outcomes, health insurance, health policy
    JEL: O54 O12 J22 I1 H51
    Date: 2016–11
  5. By: Jesse Rothstein; Robert G. Valletta
    Abstract: Many Unemployment Insurance (UI) recipients do not find new jobs before exhausting their benefits, even when benefits are extended during recessions. Using SIPP panel data covering the 2001 and 2007-09 recessions and their aftermaths, we identify individuals whose jobless spells outlasted their UI benefits (exhaustees) and examine household income, program participation, and health-related outcomes during the six months following UI exhaustion. For the average exhaustee, the loss of UI benefits is only slightly offset by increased participation in other safety net programs (e.g., food stamps), and family poverty rates rise substantially. Self-reported disability also rises following UI exhaustion. These patterns do not vary dramatically across the UI extension episodes, household demographic groups, or broad income level prior to job loss. The results highlight the unique, important role of UI in the U.S. social safety net.
    JEL: I38 J65
    Date: 2017–06
  6. By: James Verdier; Danielle Chelminsky
    Abstract: This brief outlines strategies that states and health plans can use to grow their enrollment in Integrated Managed Care Plans for Dually Eligible Beneficiaries.
    Keywords: enrollment, dually eligible beneficiaries, state, health plan
    JEL: I
  7. By: Stefanija Veljanoska (Paris School of Economics, UniversitŽ de Paris 1 PanthŽon-Sorbonne, UniversitŽ Paris-Sud)
    Abstract: Climate change continuously affects African farmers that operate in rain-fed environments. Coping with weather risk through credit and insurance markets is almost inexistent as these markets are imperfect in the African economies. Even though land fragmentation is often considered as a barrier to agricultural productivity, this article aims at analyzing whether land fragmentation, as an insurance alternative, is able to reduce farmers' exposure to weather variability. In order to address this research question, I use the Living Standards Measurement Study-Integrated Surveys on Agriculture (LSMS-ISA) data on Uganda. After dealing with the endogeneity of land fragmentation, I find that higher land fragmentation decreases the loss of crop yield when households experience rain deviations. Therefore, policy makers should be cautious with land consolidation programs.
    Keywords: climate change, land fragmentation, rainfall, yield, insurance
    JEL: Q12 Q15 Q54
    Date: 2017–05
  8. By: Alexander, Diane (Federal Reserve Bank of Chicago)
    Abstract: Billions of dollars have been spent on pilot programs searching for ways to reduce healthcare costs. I study one such program, where hospitals pay doctors bonuses for reducing the total hospital costs of admitted Medicare patients (a “bundled payment”). Doctors respond to the bonuses by becoming more likely to admit patients whose treatment can generate high bonuses, and sorting healthier patients into participating hospitals. Conditional on patient health, however, doctors do not reduce costs or change procedure use. These results highlight the ability of doctors to game incentive schemes, and the risks of basing nationwide healthcare reforms on pilot programs.
    Keywords: Health care reform; Medicare
    JEL: I10 I11 I13 I18
    Date: 2017–03–09
  9. By: Kusuma, Aditya; Noy, Ilan; Jackson, Bethanna
    Abstract: The potentially adverse effects of droughts on agricultural output are obvious. Indonesian rice farmers have no financial protection from climate risk via catastrophic weather risk transfer tools. Done well, a weather index insurance (WII) program can not only provide resources that enable recovery, but can also facilitate the adoption of prevention and adaptation measures and incentivise risk reduction. Here, we quantify the applicability, viability, and likely cost of introducing a WII for droughts for rice production in Indonesia. To reduce basis risk, we construct district specific indices that are based on the estimation of Panel Geographically Weighted Regressions models. With these spatial tools, and detailed district level data on past agricultural productivity and weather conditions, we present an algorithm that generates an effective and actuarially sound WII, and measure its effectiveness in reducing income volatility for farmers. We use data on annual paddy production in 428 Indonesian districts, reported over the period 1990-2013, and climate data from 1950-2015. We use the monthly Palmer Drought Severity Index and identify district-specific trigger and exit points for the insurance plan. We quantify the impact of this hypothetical insurance product using past production data to calculate an actuarially-robust and welfare-enhancing price for this scheme.
    Keywords: Indonesia, Weather index insurance, Droughts,
    Date: 2017
  10. By: Villacin, Deanna T.
    Abstract: The study provides an assessment of the disaster risk financing mechanisms in the Philippines. It looks at the sources and levels of disaster financing specifically for recovery and reconstruction. It also looks at the adequacy and execution of the current disaster risk finance and insurance mechanisms. Case studies are presented showcasing detailed analysis at the sectoral level. The study notes that the government has been mainly relying on budget allocations to fund recovery and reconstruction. The uncertainties in terms of annual budget allocations and the protracted funds flow processes slow down reconstruction/rebuilding thus, adversely affecting economic recovery of disaster areas. To mitigate the impact of disaster, the government has to improve its overall disaster risk financing and insurance (DRFI) program. DRFI has to be anchored on an adequate, effective (in terms of implementation or execution), and efficient (i.e., cost efficient and timely) strategy. It requires government to combine the use of various financing and insurance instruments considering risk profile, fiscal position, and market conditions.
    Keywords: Philippines, disaster recovery and reconstruction, disaster financing, disaster risk finance and insurance
    Date: 2017
  11. By: Owen, Sally; Noy, Ilan
    Abstract: Natural hazard insurance is almost always provided through public-private partnerships. Given the dominant role of the public sector, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. As in other cases, this can be remedied with modifications to the program’s structure.
    Keywords: Natural hazard insurance, Canterbury earthquakes 2011, New Zealand, Hazard insurance,
    Date: 2017
  12. By: Grishina Elena (RANEPA); Avksentiev Nikolay (Financial Research Institute)
    Abstract: In the following, we analyze the budget execution of the two main (in terms of size and value for the budget system) public off-budget funds: The Pension Fund of Russia (hereinafter – PFR) and The Federal Compulsory Medical Insurance Fund
    Keywords: Russian economy, pension fund, medical insurance fund
    JEL: D6
    Date: 2017
  13. By: OECD
    Abstract: Main changes to US farm programmes under the 2014 Farm Bill aim to strengthen instruments for risk management, both in commodity and in crop insurance programmes. In addition, the 2014 Farm Bill consolidated voluntary conservation programmes supporting agricultural land preservation and the adoption of environmentally friendly production practices. In the literature reviewed, analysts generally acknowledge the reinforced capacity of farm programmes to reduce farm revenue losses and the diversity of options offered to farmers to manage risk. They also discuss farmers' choices of participation in programmes and coverage level in terms of optimisation of their benefits. They also outline the scope for higher budget costs if prices keep falling, but note that some provisions limit the increase. Regarding the impact of programmes on land and markets, the consensus is that by design, the two new crop commodity programmes do not influence current planting decisions, but they could generate small wealth and risk effects. Similarly the new dairy programme could affect the decisions of risk adverse farmers. Support to crop insurance on the other hand is based on current parameters, and unlimited, thus it is expected to encourage higher input use to maximise profit, in addition to the wealth and risk effects. Empirical analyses find very small effects of crop insurance subsidies on total land use, but some suggest a non-negligible impact on crop rotation, and variable input use. Overall, the literature finds that conservation payments seem to have had a positive impact on the environment. In particular, they have encouraged farmers to adopt more environmentally-friendly practices and address a broader set of environmental objectives. Some experts note, however, that some programmes may not necessarily bring additional benefits. Experts consider that cross-compliance mechanisms have partly contributed to reduce soil erosion by encouraging farmers to use less erosive cropping practices (e.g. conservation tillage, conservation crop rotations) and to retire particularly erodible land.
    Keywords: Agricultural policy, conservation programmes, crop insurance, risk management
    JEL: Q18
    Date: 2017–06–21
  14. By: Matthew Kehn; Liz Babalola; Todd Honeycutt; Gina Livermore; Annie Doubleday; David Stapleton; Purvi Sevak
    Abstract: This report presents findings on Minnesota’s experience implementing the Substantial Gainful Activity (SGA) Project demonstration during the first nine months of operation. The SGA Project targets vocational rehabilitation clients who receive only SSDI, and includes enhanced services designed to improve their employment outcomes.
    Keywords: Vocational rehabilitation, Social Security Disability Insurance, disability, employment, random assignment demonstration, Rehabilitation Services Administration
    JEL: I J
  15. By: Alexander, Diane (Federal Reserve Bank of Chicago); Schnell, Molly (Princeton University)
    Abstract: We examine whether relaxing occupational licensing to allow nurse practitioners (NPs)—registered nurses with advanced degrees—to prescribe medication without physician oversight is associated with improved population mental health. Exploiting time-series variation in independent prescriptive authority for NPs from 1990–2014, we find that broadening prescriptive authority is associated with improvements in self-reported mental health and decreases in mental-health-related mortality, including suicides. These improvements are concentrated in areas underserved by psychiatrists and among populations traditionally underserved by mental health providers. Our results demonstrate that extending prescriptive authority to NPs can help mitigate physician shortages and extend care to disadvantaged populations.
    Keywords: C-sections; Disability insurance; Medically underserved areas; Mental health; Nurse practitioner; Population
    JEL: I12 I13 I14
    Date: 2016–12–20

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