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on Insurance Economics |
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Issue of 2018‒05‒21
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Frank, Richard G. (Harvard University); Zeckhauser, Richard J. (Harvard University) |
| Abstract: | Excess prices for drugs in the U.S. is a persistently vexing policy problem. While there is agreement among most policy analysts that supra competitive prices are necessary to promote innovation; significant disagreements arise over how much pricing discretion prescription drug manufacturers should be permitted, and what portion of the sum of producer plus consumer surplus in the prescription drug market should be claimed by manufacturers relative to consumers and other payers. This analysis first diagnoses the causes of the high costs in Medicare Part D. It then makes use of that diagnosis to provide a prescription for policy measures that have the potential to simultaneously reduce these costs without significantly sacrificing incentives to bring valuable new drugs to market. This paper focuses on an extremely costly component of the Medicare Part D program, the region of coverage that kicks in once a consumer has spent $4,950 on drugs in a calendar year (roughly $8,100 in total drug spending). At that point there are high levels of insurance for the consumer and reinsurance for the prescription drug plan. Consumers pay 5% of costs; plans pay 15% and the government 80%. That design generates serious inefficiencies. The significant subsidies to plans in the reinsurance region combined with the launch of unique high cost prescription drugs could be expected to lead to and has led to substantial departures from cost-effective outcomes in treatments delivered. As would be expected, spending has been growing rapidly in this so called “reinsurance region†. What is less well known is that a small number of very high-cost drugs account for almost all of this growth. Following this diagnosis, we present two, possibly complementary, prescriptions for reducing these inefficiencies. The first follows on the MedPac recommendation that the government reduce its share of risk bearing for the Part D reinsurance benefit. The second focuses on curbing price inefficiencies for those very high-cost drugs. That prescription has two components: eliminating monopolistic overpricing, and promoting the quality of drugs brought to market. It is grounded in the economics of two part tariffs, research on innovation prizes, performance-based contracts, and draws on the mechanism design literature. Such pricing could save substantially on costs without curtailing the most important R&D efforts for pharmaceuticals. Market conditions and political forces appear ripe for significant new approaches to pricing high cost drugs in Medicare Part D. We believe that the prescription discussion here, which draws on this paper’s diagnosis, identifies some promising approaches to a vexing problem. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-005&r=ias |
| By: | Steven Dieterle; Otavio Bartalott; Quentin Brummet |
| Abstract: | We document two potential biases in recent analyses of UI benefit extensions using boundary-based identification: from using county-level aggregates and from across-border policy spillovers. To examine the first bias, we use a regression discontinuity (RD) approach that accounts for measurement error in county-level aggregates. Our results suggest much smaller effects than previous studies, casting doubt on the applicability of border-based designs. We then document substantial spillover effects of UI benefit duration in the form of across-border work patterns that are consistent with increased tightness in high benefit states, providing evidence against a dominant vacancy reduction response to UI extensions. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:285&r=ias |
| By: | Julia Baller; Marian V. Wrobel; Natalya Verbitsky-Savitz; Mariel Finucane; Carol Irvin |
| Abstract: | This document is a supplement to the Medicaid 1115 Demonstration Evaluation Design Plan prepared by Mathematica Policy Research and submitted to the Centers for Medicare & Medicaid Services (CMS) in May 2015 (Irvin et al 2015). |
| Keywords: | 1115 demonstrations, delivery system reform incentive payments , DSRIP, premium assistance, healthy behaviors, managed long-term services and supports , MLTSS, program evaluation |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:eb02adad5541406997b13bcffcee5977&r=ias |
| By: | Emmanuelle Augeraud-Véron (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Fabbri Giorgio (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Katheline Schubert (PSE - Paris School of Economics) |
| Abstract: | This paper presents a benchmark stochastic endogenous growth model of an agricultural economy. Producing food requires land, and increasing the share of total land devoted to farming mechanically reduces the share of land devoted to biodiversity conservation. However, safeguarding a greater number of species guarantees, through spatial exchanges, better ecosystem services which, in turn, ensure lower volatility of agricultural productivity. The optimal conversion/conservation rule is explicitly characterized, as well as the total value of biodiversity in terms of the welfare gain from biodiversity conservation, and the marginal value of biodiversity in terms of risk premium reduction, namely its insurance value. The Epstein-Zin-Weil specification of preferences allows us to disentangle the effects of risk aversion and aversion to fluctuations. |
| Keywords: | Biodiversity, stochastic endogenous growth, insurance value, recursive preferences |
| Date: | 2018–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01779333&r=ias |
| By: | Gal Wettstein |
| Abstract: | A big challenge facing retirees is how to draw down their nest egg in retirement. The main consideration is insuring against “longevity risk” – the possibility of outliving one’s savings – without unduly restricting spending. One solution is to buy an annuity, which converts wealth into an income stream that is guaranteed until death. Common annuities include Social Security and traditional employer pensions. However, Social Security is not intended to be the sole source of retirement income and pensions in the private sector are rapidly disappearing, so buying an additional annuity with savings is often a good idea. Yet few people actually do. Many reasons exist for the lack of annuitization. These include the complexity of the product and the fear of giving up one’s wealth and then dying too soon to “break even.” A simpler reason is price, since annuity prices include a premium to protect the insurer selling the policy against longevity risk.1 Given the lack of interest in annuities, some policy experts have begun advocating an alternative form of longevity insurance – a “tontine” – which would require insurers to assume less risk and, in turn, charge lower premiums. Tontines, which do not currently exist in the marketplace, are the topic of this brief. The discussion proceeds as follows. The first section describes a basic tontine and how it differs from an annuity. The second section discusses the legal status of tontines. The third section explores the central tradeoff of a tontine: lower cost for less insurance. The fourth section describes a way to eliminate a potential downside of the payout pattern of tontines. The final section concludes that some of the enthusiasm for tontines is well placed but drawbacks also exist. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2018-7&r=ias |
| By: | Jessica Heeringa; Debra Lipson; Rachel Machta; Keanan Lane; Rachel Vogt |
| Abstract: | This brief describes differences in incentive design features of six DSRIP demonstrations and assesses their strengths and limitations in promoting provider participation in delivery system reform and value-based payment (VBP) arrangements. |
| Keywords: | 1115 demonstrations, Medicaid, implementation, evaluation, delivery system reform incentive payments , DSRIP |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:46aa64dfeb5e4f84b5f7406b8a8a0a6f&r=ias |
| By: | Jessica Kasten; Debra Lipson; Paul Saucier; Jenna Libersky |
| Abstract: | This issue brief supports the national evaluation of Medicaid Section 1115 demonstrations by describing the diversity of the beneficiary groups enrolled in 35 MLTSS programs operating in 23 states as of July 2016. |
| Keywords: | 1115 demonstrations, Medicaid, evaluation, managed long-term services and supports , MLTSS |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:2e014091f67c47afa55209cf1552a55c&r=ias |
| By: | Julia B. Baller; James Woerheide; Keanan Lane; Natalya Verbitsky-Savitz; Marian V. Wrobel |
| Abstract: | This interim evaluation presents baseline trends and preliminary findings about the overall effect of DSRIP demonstrations on key outcomes related to delivery system transformation and clinical quality for Medicaid beneficiaries. |
| Keywords: | 1115 demonstrations, Medicaid, implementation, evaluation, delivery system reform incentive payments , DSRIP |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:e2b504b740264ba9be5b3ff5e99e6dc3&r=ias |
| By: | Maggie Colby; Katharine Bradley; Kara Contreary; Brenda Natzke |
| Abstract: | This document is a supplement to the Medicaid 1115 Demonstration Evaluation Design Plan prepared by Mathematica Policy Research and submitted to CMS in May 2015. |
| Keywords: | 1115 demonstrations, delivery system reform incentive payments, DSRIP, premium assistance, healthy behaviors, managed long-term services and supports , MLTSS, program evaluation |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:d16121eb4f59429f99df02ce8bf14c5a&r=ias |
| By: | Jonung, Christina; Jonung, Lars |
| Abstract: | Ingemar Ståhl was a productive and imaginative economist who was professor of economics at Lund University 1971–2005. His intellectual curiosity gave him a wealth of ideas that he applied to a wide range of issues, for example defense, social insurance, education, housing, labor markets, health, taxation, environment, finance, industrial policies and the political economy of the Swedish model. He became an academic pioneer who imported new theoretical developments, such as public choice and property rights, from abroad and applied them to Sweden. In addition to being a researcher he was also a keen participant in public debate and, at various times, a member of governmental and private policy commissions and a reformer of undergraduate teaching in economics in Lund. He exerted a profound influence on Swedish economic debate, arguing for market-oriented reforms and for more competition and freedom of choice in the public sector. His many contributions – published as well as unpublished – are listed in this bibliography. |
| Keywords: | Ingemar Ståhl, Sweden, political economy, the Swedish model, deregulation, public choice. |
| JEL: | B3 B31 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86512&r=ias |
| By: | Michael Levere; Jody Schimmel Hyde; Su Liu; Francoise Becker |
| Abstract: | In this paper, we document the extent to which SSDI and SSI beneficiaries had their monthly cash benefits suspended or terminated as a result of work activity in 2002–2014. We use measures included in the Social Security Administration’s Disability Analysis File (DAF). |
| Keywords: | SSDI, SSI, employment, return-to-work, benefits, suspense, termination, STW, BFW |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:896cf24cc3a543e1b924031956607fe6&r=ias |
| By: | Charlotte Bilo (IPC-IG); Anna Carolina Machado (IPC-IG) |
| Abstract: | "Zakat is one of the five pillars of Islam and considered a religious duty for wealthy people to support those in need. In Muslim-majority countries, zakat has a long tradition of providing income, goods for consumption and other basic services such as health care and education to poor and marginalised populations. A growing body of research has investigated the role of zakat in the provision of social protection and its importance as a poverty reduction mechanism. Although based on the same principles, countries vary significantly in the institutionalisation of zakat, ranging from obligatory to voluntary contributions. The institutional arrangements and benefit provision also differ greatly". (...) |
| Keywords: | Role, zakat, provision, social protection, comparison, Jordan, Palestine, Sudan |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:oparab:381&r=ias |
| By: | Christopher Busch; David Domeij; Fatih Guvenen; Rocio Madera |
| Abstract: | This paper studies the business-cycle variation in higher-order (labor) income risk—that is, risks that are captured by moments higher than the variance. We examine the extent to which such risks can be smoothed within households or with government social insurance and tax policies. We use panel data from three countries that differ in many aspects relevant for our analysis: the United States, Germany, and Sweden. Our analysis has three main results. First, using individual gross income, we document that skewness is procyclical and dispersion (variance) is flat and acyclical in Germany and Sweden, as was previously documented for the United States. The same patterns hold true for groups defined by education, gender, public- versus private-sector jobs, among others. Second, household-level income displays cyclical patterns that are very similar to individual income, indicating that within-household smoothing is not very effective at mitigating business cycle fluctuations in skewness. Third, government tax and transfer programs blunt some of the largest declines in incomes, reducing procyclical fluctuations in skewness, especially in Germany and Sweden. The resulting welfare gain—through the lens of a structural model—amounts to 1.3% in consumption-equivalent terms for Sweden (for which we are able to perform this calculation). However, the remaining risk (in household disposable income) is still substantial: households are willing to pay 4.6% of their consumption to completely eliminate procyclical fluctuations in skewness. |
| JEL: | D52 E32 J31 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24569&r=ias |
| By: | Hampson, G.; Towse, A.; Henshall, C. |
| Abstract: | The 2016 meeting of the HTAi Asia Policy Forum meeting was held in Kuala Lumpur, 17th -18th November 2016. The topic of the meeting was - Assessing Value, Budget Impact and Affordability to Inform Discussions on Access and Reimbursement - Principles and Practice, with Special Reference to High Cost Technologies. This report represents the background paper for the meeting, as developed by OHE. The paper begins with a discussion of how value can be defined, measured and factored into decisions on access and coverage. Next, the paper looks at how budget impact and affordability can be defined and measured - we explain how different countries have adopted different approaches to how and when budget impact has been included within the decision making process, and outline several different scenarios around affordability challenges. The final section considers whether high cost interventions call for new approaches to assessment and/or reimbursement, drawing on the recent high profile example of Sovaldi for the treatment of Hepatitis C. The background papers from the [2013]( https://www.ohe.org/publications/hta-and-decision-making-asia-how-can-available-resources-be-used-most-effectively#overlay-context=publications/transferability-hta), [2014]( https://www.ohe.org/publications/transferability-hta#overlay-context=publications) and [2015]( https://www.ohe.org/publications/how-can-hta-meet-needs-health-system-and-government-decision-makers) meeting are also available. Please note [a report of this meeting]( https://www.cambridge.org/core/journals/international-journal-of-technology-assessment-in-health-care/article/assessing-value-budget-impact-and-affordability-in-asia/4E4E7B24262B1A7D12CF3E63824D5EC6)has also been published in the International Journal of Technology Assessment in Health Care. |
| Keywords: | Economics of Health Technology Assessment |
| JEL: | I1 |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ohe:briefg:001835&r=ias |
| By: | Jordahl, Henrik (Research Institute of Industrial Economics (IFN)); Persson, Lovisa (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We measure labor productivity in home care using new data from the recent introduction of digital time measurement in Swedish municipalities. By measuring worker utilization (delivered hours as a share of worked hours) we avoid several problems that have plagued previous studies of public sector productivity. The time use measure exposes substantial variation in productivity between home care units, suggesting room for improvement. More productive units deliver a larger share of the hours approved by care managers and have equally satisfied users. |
| Keywords: | Public sector productivity; Digitalization; Time use; Choice reforms |
| JEL: | H42 H44 L33 |
| Date: | 2018–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1212&r=ias |
| By: | Denise Hoffman; Jeffrey Hemmeter; Michelle Stegman Bailey |
| Abstract: | This paper documents the employment and benefit outcomes of former child SSI recipients and estimates the association between vocational rehabilitation, vocational training, special education, and adult outcomes. Results suggest vocational rehabilitation may improve long-term outcomes. |
| Keywords: | vocational rehabilitation, SSI, youth, transition, disability |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:39a5f8fa7ee3429da737bf31002a5ca3&r=ias |