nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒08‒27
seventeen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. The Affordable Care Act and Ambulance Response Times By Charles Courtemanche; Andrew Friedson; Andrew P. Koller; Daniel I. Rees
  2. What Does (Formal) Health Insurance Do, and For Whom? By Amy Finkelstein; Neale Mahoney; Matthew J. Notowidigdo
  3. Unemployment Risks and Intra-Household Insurance By Javier Fernandez-Blanco
  4. Health Insurance and the Boomerang Generation: Did the 2010 ACA Dependent Care Provision affect Geographic Mobility and Living Arrangements among Young Adults? By Pinka Chatterji; Xiangshi Liu; Baris K. Yoruk
  5. Long-term care reform and the labor supply of informal caregivers – evidence from a quasi-experiment By Geyer, J.; Korfhage, T.;
  6. Health insurance, a friend in need? Evidence from financial and health diaries in Kenya By Geng, Xin; Ide, Vera; Janssens, Wendy; Kramer, Berber; van der List, Marijn
  7. Unemployment Insurance and Reservation Wages: Evidence from Administrative Data By Barbanchon, Thomas Le; Rathelot, Roland; Roulet, Alexandra
  8. Bismarck's Health Insurance and the Mortality Decline By Bauernschuster, Stefan; Driva, Anastasia; Hornung, Erik
  9. Insurance structure, risk sharing, and investment decisions: An empirical investigation of the implications of individual and group weather index insurance By Munro, Laura
  10. The Effect of Interest Rates on Home Buying : Evidence from a Discontinuity in Mortgage Insurance Premiums By Neil Bhutta; Daniel R. Ringo
  11. Optimal Taxation with Private Insurance By Yongsung Chang; Yena Park
  12. God insures those who pay?Formal insurance and religious offerings in Ghana By Auriol, Emmanuelle; Lassebie, Julie; Panin, Amma; Raiber, Eva; Seabright, Paul
  13. Center on Health Care Effectiveness (About Us) By Mathematica Policy Research
  14. Evaluation of the Home Health Independence Demonstration: Barriers to a Successful Experiment Were Multifaceted and Difficult Policy Issues Remain By Valerie Cheh; Nancy Duda; Barbara Lepidus Carlson; Karen CyBulski; Amy Zambrowski; Andrew McGuirk
  15. The common sources of business cycles in Trans-Pacific countries and the U.S.? A comparison with NAFTA By Uluc Aysun; Takeshi Yagihashi
  16. Money, banking and financial markets By David Andolfatto; Aleksander Berentsen; Fernando M. Martin
  17. The Employment and Output Effects of Short-Time Work in Germany By Russell Cooper; Moritz Meyer; Immo Schott

  1. By: Charles Courtemanche; Andrew Friedson; Andrew P. Koller; Daniel I. Rees
    Abstract: This study contributes to the literature on supply-side adjustments to insurance expansions by examining the effect of the Affordable Care Act (ACA) on ambulance response times. Exploiting temporal and geographic variation in the implementation of the ACA as well as pre-treatment differences in uninsured rates, we estimate that the expansions of private and Medicaid coverage under the ACA combined to slow ambulance response times by an average of 19%. We conclude that, through extending coverage to individuals who, in its absence, would not have availed themselves of emergency medical services, the ACA added strain to emergency response systems.
    JEL: I11 I13 I18
    Date: 2017–08
  2. By: Amy Finkelstein; Neale Mahoney; Matthew J. Notowidigdo
    Abstract: Health insurance confers benefits to the previously uninsured, including improvements in health, reductions in out-of-pocket spending, and reduced medical debt. But because the nominally uninsured pay only a small share of their medical expenses, health insurance also provides substantial transfers to non-recipient parties who would otherwise bear the costs of providing uncompensated care to the uninsured. The prevalence of uncompensated care helps explain the limited take-up of heavily-subsidized public health insurance and the evidence that many recipients value formal health insurance at substantially less than the cost to insurers of providing that coverage. The distributional implications of public subsidies for health insurance depend critically on the ultimate economic incidence of the transfers they deliver to providers of uncompensated care.
    JEL: H22 H42 H51 I11 I13
    Date: 2017–08
  3. By: Javier Fernandez-Blanco (Universitat Autonoma de Barcelona and Barcelona GSE)
    Abstract: We consider an economy with incomplete markets and intra-household risk sharing, where households are formed by a job-seeker and an employed spouse and differ by the productivity of the spouse. We study the constrained efficient private provision of insurance within the household through the labor supply of the spouse, and what unemployment risks should be publicly insured away. Unlike the spouse's total income, neither productivity nor labor supply is observed. We characterize the directed search equilibrium, and show that the spouse's labor supply is negatively affected by unemployment benets regardless of the search outcome of the worker in line with the empirical evidence. We also show that the optimal unemployment benefits are contingent on the household's total income as it affects the trade-off between consumption-smoothing and job search incentives. Moreover, we numerically explore the welfare gains of implementing a household-income-based unemployment insurance.
    Date: 2017
  4. By: Pinka Chatterji; Xiangshi Liu; Baris K. Yoruk
    Abstract: We test whether the ACA dependent care provision is associated with young adults’ propensity to live with/near parents and to receive food assistance. Data come from the 2008 Survey of Income and Program Participation. Findings indicate that the provision is associated with a 3.0 percentage point increase in young adults’ living with parents during the period in which the ACA had been passed but the provision was not effective, and a 6.0 percentage point increase during the time between the provision becoming effective and the end of 2013. In some specifications, the provision is associated with reduced use of food assistance.
    JEL: I0 I13 J1 J62
    Date: 2017–08
  5. By: Geyer, J.; Korfhage, T.;
    Abstract: Germany introduced a new insurance for long-term care in 1995 as part of its social security system. Benefits from the long-term care insurance are not means tested and only depend on the required level of care. The new scheme improved the situation for households wanting to organize informal care at home and it changed the incentives for potential informal caregivers. We exploit this reform as a quasi-experiment and examine its effect on the labor supply of caregivers who live in the same household as the care recipient. We find strong negative labor market effects for men but not for women.
    Keywords: labor supply; long-term care; long-term care insurance; quasi-experimental approach;
    JEL: J22 H31 I13
    Date: 2017–08
  6. By: Geng, Xin; Ide, Vera; Janssens, Wendy; Kramer, Berber; van der List, Marijn
    Abstract: Health insurance can protect consumption from health shocks, but it can also crowd out informal transfers. This paper examines whether health insurance improves consumption smoothing in the face of health shocks, and to what extent results depend on households’ access to informal transfers as a risk coping strategy. Using high-frequency panel data on health and finances collected in rural Kenya, we show that mobile money users have stronger access to informal transfers than nonusers. We further find that health shocks induce nonusers of mobile money to lower their nonhealth expenditures by approximately 25 percent in weeks when they are uninsured. These same households are able to smooth consumption in weeks with insurance coverage, due to lower out-of-pocket health expenditures. In contrast, mobile money users are able to smooth consumption when experiencing health shocks even in the absence of health insurance, due to an inflow of informal transfers. For this group, health insurance improves healthcare utilization and does not crowd out the inflow informal transfers during weeks with health shocks. These findings have implications for the design of health insurance and mobile health financing products.
    Keywords: health insurance,
    Date: 2017
  7. By: Barbanchon, Thomas Le (Bocconi University and CEPR); Rathelot, Roland (University of Warwick and CEPR); Roulet, Alexandra (Harvard University and INSEAD)
    Abstract: Although the reservation wage plays a central role in job search models, empirical evidence on the determinants of reservation wages, including key policy variables such as unemployment insurance (UI), is scarce. In France, unemployed people must declare their reservation wage to the Public Employment Service when they register to claim UI benefits. We take advantage of these rich French administrative data and of a reform of UI rules to estimate the effect of the potential benefit duration (PBD) on reservation wages and on other dimensions of job selectivity, using a difference-in-difference strategy. We cannot reject that the elasticity of the reservation wage with respect to PBD is zero. Our results are precise and we can rule out elasticities larger than 0.006. Furthermore, we do not find any significant effects of PBD on the desired number of hours, duration of labor contract and commuting time/distance. The estimated elasticity of actual benefit duration with respect to PBD of 0.3 is in line with the consensus in the literature. Exploiting a regression discontinuity design as an alternative identification strategy, we find similar results.Keywords: unemployment insurance, reservation wage. JEL Classification: J64 J65
    Date: 2017
  8. By: Bauernschuster, Stefan (University of Passau); Driva, Anastasia (LMU Munich); Hornung, Erik (University of Bayreuth)
    Abstract: We investigate the impact on mortality of the world’s first compulsory health insurance, established by Otto von Bismarck, Chancellor of the German Empire, in 1884. Employing a multi-layered empirical setup, we draw on international comparisons and difference-in-differences strategies using Prussian administrative panel data to exploit differences in eligibility for insurance across occupations. All approaches yield a consistent pattern suggesting that Bismarck’s Health Insurance generated a significant mortality reduction. The results are largely driven by a decline of deaths from infectious diseases. We present prima facie evidence that diffusion of new hygiene knowledge through physicians was an important channel.Keywords: health insurance, mortality, demographic transition, Prussia JEL Classification: : I13, I18, N33, J11
    Date: 2017
  9. By: Munro, Laura
    Abstract: Recognition of take-up and transaction cost challenges in individual microinsurance has led to a surge of interest in group microinsurance. Yet few studies have considered the effect of group insurance on the investment decisions of the insured. In the case of weather index insurance, this is an important omission. Analogous to group microcredit, group weather insurance may exacerbate two key challenges depending on the information environment: moral hazard and group pressure. Experimental results from a framed field experiment in Gujarat, India, confirm that group pressure leads to an 8 percent reduction in risk taking in contexts with perfect information and group insurance (relative to individual insurance). The effects of moral hazard are more limited, however. As higher risk taking is associated with higher average agricultural productivity—and thus, development—these findings put a premium on greater attention to group selection, the information environment, and the regulation of payout distribution.
    Keywords: finance, insurance, group insurance, weather index insurance, group pressure, investment decisions, farmer decision making,
    Date: 2017
  10. By: Neil Bhutta; Daniel R. Ringo
    Abstract: We study the effect of interest rates on the housing market by taking advantage of a sudden and unexpected price change in a large government mortgage program. The Federal Housing Administration (FHA) insures most mortgages to lower-downpayment, lower credit score borrowers, including a majority of first-time homebuyers. The FHA charges borrowers an annual mortgage insurance premium (MIP), and in January, 2015 the FHA abruptly reduced the MIP, and thus FHA borrowers’ effective interest rate, by 50 basis points. Using a regression discontinuity design, we find that the MIP reduction increased the number of home purchase originations among the FHA-reliant population by nearly 14 percent. The response to the premium cut was negatively correlated with borrower income, with no observable response among relatively high income borrowers. We trace part of the jump in home buying to the MIP reduction helping ease binding debt payment-to-income ratio limits thus allowing more applications to be approved. Finally, we find no evidence that the MIP reduction increased house prices.
    Keywords: Interest rates ; Mortgages and credit ; Residential real estate
    JEL: R21 R28 E52 G18
    Date: 2017–08–17
  11. By: Yongsung Chang (University of Rochester, Yonsei University); Yena Park (University of Rochester)
    Abstract: We derive a fully nonlinear optimal income tax schedule in the presence of a private insurance market. The optimal tax formula is expressed in terms of sufficient statistics?such as the Frisch elasticity of labor supply, social preferences, and hazard rates of the income distributions?as in the standard Mirrleesian taxation without private insurance (e.g., Saez (2001)). However, in the presence of a private market, the standard sufficient statistics are no longer sufficient. The optimal tax rate also depends on how private savings interact with public insurance? through substitution and crowding in/out. Based on our formula, we compute the optimal tax schedule using a quantitative general equilibrium model calibrated to reproduce the U.S. income distribution.
    Keywords: Optimal Taxation, Private Insurance, Crowding Out, Mirrelsian Tax
    JEL: H21 H23 D51
    Date: 2017–08
  12. By: Auriol, Emmanuelle; Lassebie, Julie; Panin, Amma; Raiber, Eva; Seabright, Paul
    Abstract: This paper presents experimental evidence exploring how insurance might be a motive for religious donations by members of a Pentecostal church in Ghana. We ran- domize enrollment into a commercially available funeral insurance policy and let church members allocate money between themselves and a set of religious goods in a series of dictator games with significant stakes. Members enrolled in insurance give significantly less money to their own churches. At the same time, enrollment in insurance reduces giving towards other spiritual goods. We set up a model exploring different channels of religious based insurance. The implications of the model and the results of the dictator games suggest that adherents perceive the church as a source of insurance and that this insurance is derived from beliefs in an interventionist God. Survey results suggest that community-based material insurance is also important and we hypothesize that these two insurance channels exist in parallel.
    Keywords: economics of religion; informal insurance; charitable giving
    JEL: D14 G22 O12 O17
    Date: 2017–07
  13. By: Mathematica Policy Research
    Abstract: Today’s complex health care environment demands high quality, effective care.
    Keywords: CHCE, Center on Health Care Effectiveness, About Us
    JEL: I
  14. By: Valerie Cheh; Nancy Duda; Barbara Lepidus Carlson; Karen CyBulski; Amy Zambrowski; Andrew McGuirk
    Abstract: The Medicare home health benefit was originally designed to meet an individual’s post-hospitalization needs.
    Keywords: home health , disabled , Medicare
    JEL: I
  15. By: Uluc Aysun (University of Central Florida, Orlando, FL); Takeshi Yagihashi (Old Dominion University)
    Abstract: This paper uses both a nonstructural and a structural analysis to investigate the drivers of the business cycles in the US and 15 Trans-Pacific (TP) countries. Our nonstructural approach, based on a principal component methodology, helps us measure the share of the variation in macroeconomic variables that is explained by factors that are common to both the US and the TP region. We carry out a similar exercise after estimating a large scale, two country dynamic stochastic general equilibrium model that allows for common and correlated shocks across the two regions. The clear and common finding from our analyses is that common shocks explain a substantial amount of macroeconomic variation. Comparison with the NAFTA region, along this dimension, reveals that the US economy is more similar to the TP region than it is with Mexico and Canada.
    Keywords: Principal component analysis, DSGE, Bayesian estimation, Trans-Pacific, NAFTA
    JEL: E32 F15 F42 F44
    Date: 2017–08
  16. By: David Andolfatto; Aleksander Berentsen; Fernando M. Martin
    Abstract: The fact that money, banking, and financial markets interact in important ways seems self-evident. The theoretical nature of this interaction, however, has not been fully explored. To this end, we integrate the Diamond (1997) model of banking and financial markets with the Lagos and Wright (2005) dynamic model of monetary exchange – a union that bears a framework in which fractional reserve banks emerge in equilibrium, where bank assets are funded with liabilities made demandable for government money, where the terms of bank deposit contracts are constrained by the liquidity insurance available in financial markets, where banks are subject to runs, and where a central bank has a meaningful role to play, both in terms of inflation policy and as a lender of last resort. The model provides a rationale for nominal deposit contracts combined with a central bank lender-of-last-resort facility to promote efficient liquidity insurance and a panic-free banking system.
    Keywords: Money, banking, financial markets, monetary policy
    JEL: E50 E60 D53 D02 G21
    Date: 2017–08
  17. By: Russell Cooper; Moritz Meyer; Immo Schott
    Abstract: We study the employment and output effects of the short-time work (STW) policy in Germany between 2009 and 2010. This intervention facilitated reductions in hours worked per employee with the goal of preventing layoffs. Using confidential German micro-level data we estimate a search model with heterogeneous multi-worker firms as a basis for policy analysis. Our findings suggest that STW can prevent increases in unemployment during a recession. However, the policy leads to a decrease in the allocative efficiency of the labor market, resulting in significant output losses. These effects arise from a reduction in the vacancy filling rate resulting from the policy intervention.
    JEL: E24 E32 E65
    Date: 2017–08

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