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on Insurance Economics |
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Issue of 2017‒09‒03
twelve papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Courtemanche, Charles (Georgia State University); Friedson, Andrew I. (University of Colorado Denver); Koller, Andrew P. (University of Colorado Denver); Rees, Daniel I. (University of Colorado Denver) |
| 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. |
| Keywords: | Affordable Care Act, ambulance, health insurance, health care capacity, health care workforce |
| JEL: | I11 I13 I18 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10951&r=ias |
| By: | Ontiveros, Darwin Ugarte; Platteau, Jean-Philippe |
| Abstract: | This paper is an attempt to understand the factors behind low contract renewal rates frequently observed in insurance programs in poor countries. This is done on the basis of the experience of a micro-insurance health program in India. We show that poor understanding of the insurance concept, compounded by a serious supply-side information failure, is a major cause of low contract renewal among households which had previously enrolled into the program. Controlling for the level of their information about how to collect the insurance payout, households that did not experience a health shock during the first year tended to pull out of the scheme when they are subject to a cognitive bias reflected in short-term framing. When they are classic expected utility maximizers, however, the absence of a health shock did not affect their contract renewal decision. The policy implication of our findings is considerable since they provide a strong justification for mandatory universal health insurance. |
| Keywords: | cognitive ability; health economics; information failure; Insurance; myopic behavior; non-governmental organizations |
| JEL: | D01 D03 I13 O12 O16 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12242&r=ias |
| By: | Shigute, Zemzem (ISS, Erasmus University Rotterdam); Strupat, Christoph (German Development Institute); Burchi, Francesco (German Development Institute); Alemu, Getnet (University of Addis Ababa, Ethiopia); Bedi, Arjun S. (ISS, Erasmus University Rotterdam) |
| Abstract: | Rural households in Ethiopia are exposed to a variety of covariate and idiosyncratic risks. In 2005, the Ethiopian government introduced the Productive Safety Net Program (PSNP) and in 2011 launched the Community Based Health Insurance Scheme (CBHI). This paper analyses the interaction between the two schemes and their joint effect on health care utilization, labor supply, asset accumulation and borrowing. The empirical analysis relies on three rounds of individual-level panel data collected in 2011, 2012 and 2013 and on several rounds of qualitative work. We find that individuals covered by both programs, as opposed to neither, are 5 percentage points more likely to use outpatient care and are 21 percentage points more likely to participate in off-farm work. Furthermore, participation in both programs is associated with a 5 percent increase in livestock, the main household asset, and a 27 percent decline in debt. These results suggest that at least in Ethiopia bundling of interventions enhances protection against multiple risks and shows the potential of linked social protection schemes. |
| Keywords: | Ethiopia, Productive Safety Net Program, Community Based Health Insurance Scheme, joint effect |
| JEL: | J22 I15 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10939&r=ias |
| By: | Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut) |
| Abstract: | In this paper, we show that a general equilibrium model that properly captures the risks in old age, the role of family insurance, changes in demographics, and the productivity growth rate is capable of generating changes in the national saving rate in China that mimic the data well. Our findings suggest that the combination of the risks faced by the elderly and the deterioration of family insurance due to the one-child policy may account for approximately half of the increase in the saving rate between 1980 and 2010. Changes in the productivity growth rate account for the fluctuations in the saving rate during this period. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-17&r=ias |
| By: | Kate Ho; Robin S. Lee |
| Abstract: | Why do insurers choose to exclude medical providers, and when would this be socially desirable? We examine network design from the perspective of a profit-maximizing insurer and a social planner to evaluate the welfare effects of narrow networks and restrictions on their use. An insurer may engage in exclusion to steer patients to less expensive providers, cream-skim enrollees, and negotiate lower reimbursement rates. Private incentives for exclusion may diverge from social incentives: in addition to the standard quality distortion arising from market power, there is a "pecuniary" distortion introduced when insurers commit to restricted networks in order to negotiate lower rates. We introduce a new bargaining solution concept for bilateral oligopoly, Nash-in-Nash with Threat of Replacement, that captures such bargaining incentives and rationalizes observed levels of exclusion. Pairing our framework with hospital and insurance demand estimates from Ho and Lee (2017), we compare social, consumer, and insurer-optimal hospital networks for the largest non-integrated HMO carrier in California across several geographic markets. We find that both an insurer and consumers prefer narrower networks than the social planner in most markets. The insurer benefits from lower negotiated reimbursement rates (up to 30% in some markets), and consumers benefit when savings are passed along in the form of lower premiums. A social planner may prefer a broader network if it encourages the utilization of more efficient insurers or providers. We predict that, on average, network regulation prohibiting exclusion has no significant effect on social surplus but increases hospital prices and premiums and lowers consumer surplus. However, there are distributional effects, and regulation may prevent harm to consumers living close to excluded hospitals. |
| JEL: | I11 L10 L14 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23742&r=ias |
| By: | Alexis Louaas (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique); Pierre Picard (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper analyzes the optimal insurance for low probability - high severity accidents, such as nuclear catastrophes, both from theoretical and applied standpoints. We show that the risk premium of such catastrophic events may be a non-negligible proportion of individuals’ wealth when the index of absolute risk aversion is sufficiently large in the accident state, and we characterize the optimal asymptotic insurance coverage when the probability of the accident tends to zero. In the case of the limited liability of an industrial firm that may cause large scale damage, the limit corporate insurance contract corresponds to a straight deductible indemnification rule, in which victims are ranked according to the severity of their losses. As an application of these general principles, we consider the optimal corporate liability insurance for nuclear risk, in a setting where the risk is transferred to financial markets through catastrophe bonds. A model calibrated with French data allows us to estimate the optimal liability of a nuclear energy producer. This leads us to the conclusion that the lower limit adopted in 2004 through the revision of the Paris Convention is probably inferior to the socially optimal level. |
| Keywords: | risk aversion, liability insurance, catastrophic risk,nuclear accident |
| Date: | 2017–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01527478&r=ias |
| By: | Jose M. Yorobe, Jr.; Pilipinas M. Luis; Bessie M. Burgos |
| Abstract: | With climatic shifts becoming more prominent and extreme climatic events becoming more frequent, Southeast Asia (SEA) is considered one of world’s most vulnerable to climate change because of its heavy reliance on agriculture (ADB 2009). In 2013, around 40 million people in SEA were affected by natural calamities, many of whom are dependent on agriculture. Loss due to floods amounted to USD 10.7 billion in 2010 (ADB 2014). Super Typhoon Haiyan, the powerful tropical cyclone that hit Southeast Asia on 8 November 2013, is the worst ever recorded, with an economic cost amounting to USD 13 billion (International Business Times 2015). Agricultural interests are fundamental in managing food security. Local governments are major stakeholders in agriculture as well as the best contenders to partake in a robust finance-based solution, such as insurance. Of the 11 countries in SEA, only six (Indonesia, Malaysia, Philippines, Singapore, Thailand [pilot stage], and Vietnam [pilot stage]) have agricultural insurance programs (World Bank 2010). Several countries have already adopted index insurance program in the region. Basis risk is one of the serious obstacles to the effectiveness of index insurance. However this can be reduced in two ways (Miranda and Farrin 2012): (1) to offer a wider array of index insurance products tailored to different risk exposures; and (2) by constructing indemnity schedules that correlates maximally with policy holder losses. To achieve both requires sound and accurate information, and data from which the index was based. Weather index-based crop insurance that will incorporate historical weather and crop production data is more costeffective and efficient than traditional agricultural insurance. It will reduce farmlevel monitoring and transaction costs (ADB 2013). The promotion of market-based agricultural insurance is proven to be critical for the emergence of sustainable agricultural insurance program (Mahul and Stutley 2010). The public-private partnership (PPP) can be viewed as an initial step in providing the direction towards the emergence of private led agricultural insurance programs. The role of the government is confined in correcting market and regulatory imperfections for a competitive insurance market to emerge. The SEA countries collaboration in the areas of research and training, institution and capacity building, information sharing and knowledge management, and awareness raising can provide a less costly support service mechanism in the development of a more competitive insurance market. Pooling research funds by governments for insurance purposes will be effective in addressing the information and data needs for a more viable risk and cost assessments. The pan-ASEAN agriculture pool is a collective scheme that can ease the risks associated with agricultural production and food security in the region. The ASEAN Member States (AMS) contribute underwriting capacity based on the relative importance of agriculture trade to their economies (Corona 2013). The AMS which are net consumers of agricultural products will subsidize the insurance premiums of those countries which are net producers, as a result fostering food security and political stability across the region. The main goal of the insurance scheme is to encourage farmers to continue food production despite risks. |
| Keywords: | agri-insurance, Southeast Asia |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:sag:seadps:2016:328&r=ias |
| By: | Audra T. Wenzlow; Dan Finkelstein; Ben Le Cook; Kathy Shepperson; Christine Yip; David Baugh |
| Abstract: | Developed for state Medicaid directors, policymakers, researchers, and others interested in the Medicaid program, the chartbook is a research tool and reference guide on Medicaid enrollees and their Medicaid experience in 2002. |
| Keywords: | MAX Chartbook , Medicaid Analytic Extract |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:a47b09224976454fafcfdc0c59dd5ae4&r=ias |
| By: | Kathrin Ellieroth (Indiana University) |
| Abstract: | I document that married women's hours worked are significantly less cyclical than hours worked by married men and singles and argue that spousal insurance contributes to the low cyclicality. Analyzing volatility, transition rates, and household behavior, I show that (i) mar- ried women experience the lowest cyclical volatility; (ii) their volatility depends more on past than current fluctuations of business cycle indicators; (iii) married women are less likely to be- come unemployed or leave the labor force during recessions, but not more likely to join the labor force; and (iv) unemployment of the husband is associated with more hours worked by the wife, particularly during recessions. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2017009&r=ias |
| By: | Heathcote, Jonathan (Federal Reserve Bank of Minneapolis); Storesletten, Kjetil (University of Oslo); Violante, Giovanni L. (Princeton University) |
| Abstract: | This paper studies optimal taxation of labor earnings when the degree of tax progressivity is allowed to vary with age. We analyze this question in a tractable equilibrium overlapping-generations model that incorporates a number of salient trade-offs in tax design. Tax progressivity provides insurance against ex-ante heterogeneity and earnings uncertainty that missing markets fail to deliver. However, taxes distort labor supply and human capital investments. Uninsurable risk cumulates over the life cycle, and thus the welfare gains from income compression via progressive taxation increase with age. On the other hand, average labor productivity rises with age, and thus the welfare losses from progressive taxation's distortionary impact on labor supply also increase with age. The optimal age-varying system balances these distortions. In a calibrated version of the economy, we quantify the welfare gains of moving from the optimal age-invariant to the optimal age-dependent system and find that they are negligible. |
| Keywords: | Tax progressivity; Tagging; Income distribution; Skill investment; Labor supply; Partial insurance; Government expenditures; Welfare |
| JEL: | D30 E20 H20 H40 J22 J24 |
| Date: | 2017–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:551&r=ias |
| By: | Caroline Hillairet (ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique); Ying Jiao (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1); Anthony Réveillac (INSA Toulouse - Institut National des Sciences Appliquées - Toulouse, IMT - Institut de Mathématiques de Toulouse UMR5219 - UT1 - Université Toulouse 1 Capitole - UT2 - Université Toulouse 2 - UPS - Université Paul Sabatier - Toulouse 3 - PRES Université de Toulouse - INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In this paper we provide a valuation formula for different classes of actuarial and financial contracts which depend on a general loss process, by using the Malliavin calculus. In analogy with the celebrated Black-Scholes formula, we aim at expressing the expected cash flow in terms of a building block. The former is related to the loss process which is a cumulated sum indexed by a doubly stochastic Poisson process of claims allowed to be dependent on the intensity and the jump times of the counting process. For example, in the context of Stop-Loss contracts the building block is given by the distribution function of the terminal cumulated loss, taken at the Value at Risk when computing the Expected Shortfall risk measure. |
| Date: | 2017–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01561987&r=ias |
| By: | Georges Karna Kone (HFG - Health finance and government Project - Health finance and government Project); Martine Audibert (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Richard Lalou (IRD - Laboratoire Population–Environnement–Développement, IRD - Aix-Marseille Université); Hervé Lafarge (CERDI - Centre d'études et de recherches sur le développement international - Université Clermont Auvergne); Jean-Yves Le Hesran (IRD - Laboratoire de parasitologie - IRD [IRD]) |
| Abstract: | Senegal opted for an antimalarial drug policy (artemisinin-based combination therapy) of partial and then full exemption from health care costs for the whole population respectively in 2008 and 2010. Has this policy reduced access inequalities in children’s health care between rich and poor households? Data were collected in Dakar between 2008 and 2009 as part of a research program on urban malaria. A survey was conducted among the population of the Dakar metropolitan area. The sample was based on a two-stage sampling. The three questionnaires used for the survey were based on validated data collection tools. Indicators were built to characterize individuals, households and neighborhoods. Bivariate analysis (chi2 test) revealed social gradients within the Dakar agglomeration and characterized health care behaviors of the poorest and richest households. Data have therefore been adjusted by a double zero-inflated Poisson model. Results show that the policy of subsidizing antimalarial drugs in Senegal has reduced health care costs, including for the poor, but without improving its distributive equity. In contrast, this policy has benefited more the richest than the poorest, without mitigating social and financial inequalities. In light of the lessons learnt by the subsidy policy for antimalarial drugs, our study recommends that universal health coverage, currently implemented in Senegal, should seek to mitigate economic inequalities in access to health care for the poorest as well as to improve the health outcomes for the whole population. |
| Keywords: | Poverty,Universal health coverage,Equity,Malaria,Health financing,Urban area,Dakar. |
| Date: | 2017–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01535112&r=ias |