nep-ias New Economics Papers
on Insurance Economics
Issue of 2018‒01‒29
six papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. The Effect of the Risk Corridors Program on Marketplace Premiums and Participation By Daniel W. Sacks; Khoa Vu; Tsan-Yao Huang; Pinar Karaca-Mandic
  2. The European Deposit Insurance Scheme: Assessing risk absorption via SYMBOL By Lucia, Alessi; Giuseppina, Cannas; Sara, Maccaferri; Marco, Petracco Giudici
  3. Does Unemployment Insurance Affect Productivity? By Michal Soltes
  4. Optimal Taxation with Private Insurance By Yongsung Chang; Yena Park
  5. Insurance, Redistribution, and the Inequality of Lifetime Income By Peter Haan; Daniel Kemptner; Victoria Prowse
  6. Leveraging Diverse Data Sources to Identify and Describe U.S. Health Care Delivery Systems By Genna R. Cohen; David J. Jones; Jessica Heeringa; Kirsten Barrett; Michael F. Furukawa; Dan Miller; Anne Mutti; James D. Reschovsky; Rachel Machta; Stephen M. Shortell; Taressa Fraze; Eugene Rich

  1. By: Daniel W. Sacks; Khoa Vu; Tsan-Yao Huang; Pinar Karaca-Mandic
    Abstract: We investigate the effect of the Risk Corridors (RC) program on premiums and insurer participation in the Affordable Care Act (ACA)’s Health Insurance Marketplaces. The RC program, which was defunded ahead of coverage year 2016, and ended in 2017, is a risk sharing mechanism: it makes payments to insurers whose costs are high relative to their revenue, and collects payments from insurers whose costs are relatively low. We show theoretically that the RC program creates strong incentives to lower premiums for some insurers. Empirically, we find that insurers who claimed RC payments in 2015, before defunding, had greater premium increases in 2017, after the program ended. Insurance markets in which more insurers made RC claims experienced larger premium increases after the program ended, reflecting equilibrium effects. We do not find any evidence that insurers with larger RC claims in 2015 were less likely to participate in the ACA Marketplaces in 2016 and 2017. Overall we find that the end of the RC program significantly contributed to premium growth.
    JEL: I13
    Date: 2017–12
  2. By: Lucia, Alessi (European Commission – JRC); Giuseppina, Cannas (European Commission - JRC); Sara, Maccaferri (European Commission - JRC); Marco, Petracco Giudici (European Commission - JRC)
    Abstract: In November 2015, the European Commission adopted a legislative proposal to set up a European Deposit Insurance Scheme (EDIS), a single deposit insurance system for all bank deposits in the Banking Union. JRC was requested to quantitatively assess the effectiveness of introducing a single deposit insurance scheme and to compare it with other alternative options for the set-up of such insurance at European level. JRC compared national Deposit Guarantee Schemes and EDIS based on their respective ability to cover insured deposits in the face of a banking crisis. Analyses are based upon the results of the SYMBOL model simulation of banks’ failures.
    Keywords: banking regulation; banking crisis; deposit insurance
    JEL: C15 G01 G21 G28
    Date: 2017–12
  3. By: Michal Soltes (CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences, Politickych veznu 7, 111 21 Prague, Czech Republic)
    Abstract: This study provides evidence that more generous unemployment insurance system is associated with faster growth of productivity. The results are consistent with the theory that higher social insurance allows workers to search for more suited jobs and as a result, the worker-job match is more productive (e.g. Acemoglu and Shimer (1999)). This study also discusses reasons why the observed relationship is unlikely to be explained by the fact that richer countries provide more generous unemployment insurance. Our results extend the previous literature on generosity of unemployment insurance and quality of post-unemployment worker-job match by studying the effect on aggregate productivity.
    Keywords: Unemployment Insurance, TFP Growth, Generosity of Unemployment Insurance, Productivity
    JEL: J65 O43
    Date: 2017–09
  4. By: Yongsung Chang (University of Rochester / Yonsei Univ.); Yena Park (University of Rochester)
    Abstract: We derive a fully-nonlinear optimal income tax schedule in the presence of private insurance market. The optimal tax formula is expressed in terms of sufficient statistics—such as 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 private market, the standard sufficient statistics are no longer sufficient to determine the exact shape of optimal tax schedule. The optimal tax rates 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 that is calibrated to reproduce the U.S. income distribution.
    Date: 2017
  5. By: Peter Haan; Daniel Kemptner; Victoria Prowse
    Abstract: In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and-transfer system offsets around half of the inequality in lifetime earnings that is due to differences in skill endowments. At the same time, taxes and transfers mitigate around 60% of the inequality in lifetime earnings that is attributable to employment and health risk. Progressive taxation of annual earnings provides little insurance against lifetime earnings risk. The lifetime insurance effects of taxation may be improved by moving to a progressive tax on lifetime earnings. Similarly, the lifetime insurance and redistributive effects of social assistance may be improved by requiring wealthy individuals to repay any social assistance received when younger.
    Keywords: Lifetime earnings; lifetime income; tax-and-transfer system; taxation; unemployment insurance; disability benefits; social assistance; inequality; redistribution; insurance; endowments; risk; dynamic life-cycle models
    JEL: D63 H23 I24 I38 J22 J31
    Date: 2017
  6. By: Genna R. Cohen; David J. Jones; Jessica Heeringa; Kirsten Barrett; Michael F. Furukawa; Dan Miller; Anne Mutti; James D. Reschovsky; Rachel Machta; Stephen M. Shortell; Taressa Fraze; Eugene Rich
    Abstract: Researchers assess available data sources to identify and describe health care delivery systems, including system members and their relationships. They summarize strengths and limitations for identifying and describing systems due to varied content, linkages across data sources, and data collection.
    Keywords: healthcare delivery systems, survey data, federal data, healthcare organizations, physicians, hospitals
    JEL: I

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