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on Insurance Economics |
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Issue of 2018‒06‒25
fifteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Rebecca Diamond; Michael J. Dickstein; Timothy McQuade; Petra Persson |
| Abstract: | The Affordable Care Act (ACA) established health insurance marketplaces where consumers can buy individual coverage. Leveraging novel credit card and bank account micro-data, we identify new enrollees in the California marketplace and measure their health spending and premium payments. Following enrollment, we observe dramatic spikes in individuals' health care consumption. We also document widespread attrition, with more than half of all new enrollees dropping coverage before the end of the plan year. Enrollees who drop out re-time health spending to the months of insurance coverage. This drop-out behavior generates a new type of adverse selection: insurers face high costs relative to the premiums collected when they enroll strategic consumers. We show that the pattern of attrition undermines market stability and can drive insurers to exit, even absent differences in enrollees' underlying health risks. Further, using data on plan price increases, we show that insurers largely shift the costs of attrition to non-drop-out enrollees, whose inertia generates low price sensitivity. Our results suggest that campaigns to improve use of social insurance may be more efficient when they jointly target take-up and attrition. |
| JEL: | H4 H51 I13 L1 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24668&r=ias |
| By: | Michael Levere; Sean Orzol; Lindsey Leininger; Nancy Early |
| Abstract: | We assess how increased Medicaid generosity affects participation in SSI. In states where SSI recipients did not automatically receive Medicaid, expansions in public health insurance coverage significantly decreased applications and awards. In the long-term, increased Medicaid eligibility during childhood reduced young adult SSI applications. |
| Keywords: | SSI, CHIP, health insurance, substitution |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:92d140d1a39741c481c4630bb45ca916&r=ias |
| By: | Amanda E. Kowalski |
| Abstract: | I aim to shed light on why emergency room (ER) utilization increased following the Oregon Health Insurance Experiment but decreased following a Massachusetts policy. To do so, I unite the literatures on insurance and treatment effects. Under an MTE model that assumes no more than the LATE assumptions, comparisons across always takers, compliers, and never takers can inform the impact of polices that expand and contract coverage. Starting from the Oregon experiment as the "gold standard," I make comparisons within Oregon and extrapolate my findings to Massachusetts. Within Oregon, I find adverse selection and heterogeneous moral hazard. Although previous enrollees increased their ER utilization, evidence suggests that subsequent enrollees will be healthier, and they will decrease their ER utilization. Accordingly, I can reconcile the Oregon and Massachusetts results because the Massachusetts policy expanded coverage from a higher baseline, and new enrollees reported better health. |
| JEL: | C1 H75 I10 I13 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24647&r=ias |
| By: | Keith Kranker; Linda M. Barterian; Rumin Sarwar; G. Greg Peterson; Boyd Gilman; Laura Blue; Kate Allison Stewart; Sheila D. Hoag; Timothy J. Day; Lorenzo Moreno |
| Abstract: | A telephonic transitional care program at a rural hospital reduced postdischarge Medicare spending by 31% and reduced inpatient spending for Medicare fee-for-service beneficiaries. |
| Keywords: | telephonic transitional care program, rural hospital, Medicare spending, fee-for-service |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:1ad7a2facb844c648ac9606f14e7d83a&r=ias |
| By: | Ferran Camprubí i Baiges (Universitat de Barcelona, Spain); Manuela Bosch Príncep (Universitat de Barcelona, Spain) |
| Abstract: | The goal of this research is to analyse how the Spanish insurance companies have managed their investments from the moment the liberalization of the sector begins in view of the future integration in the EEC until the implementation of the Solvency II regime (1984 -2015). The structure of the investment portfolio has been characterized by instruments of conservative risk profile. The main conclusions are summarized as follows: The main asset in the period under review is Spanish public debt, accounting for 27% of the sector's investments. The performance of the portfolio has performed very similar to the average interest rate on Treasury debt. Contrary to what might be expected, the recent sovereign debt crisis in the Eurozone has had no impact on credit risk management, as the deterioration in the credit rating of the Kingdom of Spain has not led to a decline in investment in Spanish public bonds. The sector has redoubled its commitment to this asset, leaving out the dire economic consequences of a degradation of the rating of Spanish public debt to the category of junk bonds. |
| Keywords: | Insurance Investment, Spanish Sovereign Debt Crisis, Credit Risk Management |
| JEL: | G11 G22 N24 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1804&r=ias |
| By: | Annette M. Bourbonniere; David R. Mann |
| Abstract: | Findings suggest that STDI claimants with certain characteristics are more likely to receive benefits for a long duration or not receive PRTW benefits, signaling that they might benefit from early Vocational Rehabilitation supports and services that would allow them to remain productive members of the workforce and avoid long term benefit receipt. |
| Keywords: | State temporary disability insurance , Return-to-work , Early intervention |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:28f24450d5c34de7a906a633bb38830b&r=ias |
| By: | Yahia Salhi (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Pierre-Emmanuel Thérond (Galea & Associés, SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon) |
| Abstract: | Recently, there has been an increasing interest from life insurers to assess their portfolios' mortality risks. The new European prudential regulation, namely Solvency II, emphasized the need to use mortality and life tables that best capture and reflect the experienced mortality, and thus policyholders' actual risk profiles, in order to adequately quantify the underlying risk. Therefore, building a mortality table based on the experience of the portfolio is highly recommended and, for this purpose, various approaches have been introduced into actuarial literature. Although such approaches succeed in capturing the main features, it remains difficult to assess the mortality when the underlying portfolio lacks sufficient exposure. In this paper, we propose graduating the mortality curve using an adaptive procedure based on the local likelihood. The latter has the ability to model the mortality patterns even in presence of complex structures and avoids relying on expert opinions. However, such a technique fails to offer a consistent yet regular structure for portfolios with limited deaths. Although the technique borrows the information from the adjacent ages, it is sometimes not sufficient to produce a robust life table. In the presence of such a bias, we propose adjusting the corresponding curve, at the age level, based on a credibility approach. This consists in reviewing the assumption of the mortality curve as new observations arrive. We derive the updating procedure and investigate its benefits of using the latter instead of a sole graduation based on real datasets. Moreover, we look at the divergences in the mortality forecasts generated by the classic credibility approaches including Hardy–Panjer, the Poisson–Gamma model and the Makeham framework on portfolios originating from various French insurance companies. |
| Keywords: | Prediction,Local Likelihood,Mortality,Credibility,Life Insurance,Graduation,Smoothing |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01391285&r=ias |
| By: | Kanninen, Ohto (Labour Institute for Economic Research); Böckerman, Petri (Labour Institute for Economic Research); Suoniemi, Ilpo (Labour Institute for Economic Research) |
| Abstract: | We develop a method to estimate domain-specific risk. We apply the method to sickness insurance by fitting a utility function at the individual level, using European survey data on life satisfaction. Three results stand out. First, relative risk aversion increases with income. Second, marginal utility is higher in the sick state conditional on income, due to an observed fixed cost of sickness. Third, the domain-specificity of risk shifts the focus on the smoothing of utility, not consumption. The optimal policy rule implies that the replacement rates should be non-linear and decrease with income. |
| Keywords: | risk, risk aversion, state-dependence, social insurance, sickness absence |
| JEL: | D02 H55 I13 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11539&r=ias |
| By: | Jeffrey Clemens; Lisa B. Kahn; Jonathan Meer |
| Abstract: | This paper explores the relationship between the minimum wage, the structure of employee compensation, and worker welfare. We advance a conceptual framework that describes the conditions under which a minimum wage increase will alter the provision of fringe benefits, alter employment outcomes, and either increase or decrease worker welfare. Using American Community Survey data from 2011-2016, we find robust evidence that state-level minimum wage changes decreased the likelihood that individuals report having employer-sponsored health insurance. Effects are largest among workers in very low-paying occupations, for whom coverage declines offset 9 percent of the wage gains associated with minimum wage hikes. We find evidence that both insurance coverage and wage effects exhibit spillovers into occupations moderately higher up the wage distribution. For these groups, reductions in coverage offset a more substantial share of the wage gains we estimate. |
| JEL: | I13 J23 J32 J33 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24635&r=ias |
| By: | Umar Farooq عمر فاروق (Rizvi Institute of Management Studies and Research Mumbai, India معهد رزفي للدراسات والبحوث الإدارية في مومباي ، الهند) |
| Abstract: | The Geneva Association, an international think tank of insurance in its November 2014 report “The Global Insurance Protection Gap: Assessment and Recommendations” highlights the extent of global underinsurance and the root causes for the same. According to the report, approximately four billion people or nearly 55 percent of the global population is still uninsured owing to multiple factors including low levels of risk awareness and risk culture, affordability for lower income households and small and medium enterprises, immature regulatory and legal framework especially in developing and emerging economies, cultural and religious reservations towards the concept of insurance (especially among the followers of Islam) among others. Tak?ful (insurance based on Islamic Shar??ah principles) and Islamic cooperative finance, based upon the principles of mutuality and risk sharing, has the potential to play a pivotal role in providing insurance cover to both un-served and underserved sections of the society. The book titled “Takaful and Islamic Cooperative Finance: Challenges and Opportunities” provides a critical assessment of various tak?ful models and the current practices of Islamic cooperative finance. It further touches upon the key role cooperative finance can play in efficiency and stability of the broader financial system. تبرز جمعية جنيف ، وهي مؤسسة بحثية دولية متخصصة في مجال التأمين في تقريرها الصادر في نوفمبر 2014 بعنوان "الفجوة العالمية في حماية التأمين: التقييم والتوصيات" ، مدى التأمين الشامل والأسباب الجذرية لنفسه. وفقا للتقرير ، ما يقرب من أربعة مليارات شخص أو ما يقرب من 55 في المئة من سكان العالم لا يزال غير مؤمن بسبب عوامل متعددة بما في ذلك مستويات منخفضة من الوعي بالمخاطر وثقافة المخاطر ، والقدرة على تحمل تكاليف الأسر ذات الدخل المنخفض والمؤسسات الصغيرة والمتوسطة ، والإطار القانوني والتنظيمي غير الناضج وخاصة في الاقتصادات النامية والناشئة ، التحفظات الثقافية والدينية تجاه مفهوم التأمين (خاصة بين أتباع الإسلام) وغيرها. إن التكافل (التأمين المستند إلى مبادئ الشريعة الإسلامية) والتمويل التعاوني الإسلامي ، المبني على مبادئ التبادل وتقاسم المخاطر ، لديه القدرة على لعب دور محوري في توفير تغطية تأمينية لكل من قطاعات المجتمع غير المخدومة والمحرومة. يقدم الكتاب الذي يحمل عنوان "التكافل والتمويل التعاوني الإسلامي: التحديات والفرص" تقييماً نقدياً لمختلف النماذج التكميلية والممارسات الحالية للتمويل التعاوني الإسلامي. كما يتطرق إلى الدور الرئيسي الذي يمكن أن يلعبه التمويل التعاوني في كفاءة واستقرار النظام المالي الأوسع |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:abd:jkaubr:105&r=ias |
| By: | David Prentice (Infrastructure Victoria); Melek Cigdem-Bayram (RMIT) |
| Abstract: | In this paper we take first steps in providing parameters capturing some wider impacts of crime on individuals for the cost benefit analysis of investments in justice infrastructure. Statistical matching methods are applied to the HILDA dataset in the first broad economic analysis of how individuals respond to living in an acutely high crime environment and the consequences. Compared with individuals living in a postcode with a moderately high crime rate, the matching analysis shows individuals living in postcodes with acutely high crime rates are more likely to be a victim of a violent crime and spend less on insurance. They are also more likely to have a family member incarcerated even if they are no more likely to be incarcerated themselves. There are no significant differences in household incomes or full-time employment rates though those living in an acutely high crime rate postcode are more likely to be unemployed. Finally, although there are no significant differences in measures of mental health, individuals in acutely high crime rate areas spend less on health. This could be because they are less likely to have a long term health condition but could also reflect underinvesting in health care which may have negative consequences for health in the long term. Creation Date: 2018-05-18 |
| Keywords: | Crime, Matching Methods, Cost-Benefit Analysis, Employment, Education, Health, Insurance, Australia, Victoria |
| JEL: | C21 D61 D62 R00 |
| URL: | http://d.repec.org/n?u=RePEc:inv:tpaper:201803&r=ias |
| By: | B. A. Surya |
| Abstract: | This paper presents some new results on Parisian ruin under Levy insurance risk process, where ruin occurs when the process has gone below a fixed level from the last record maximum, also known as the high-water mark or drawdown, for a fixed consecutive periods of time. The law of ruin-time and the position at ruin is given in terms of their joint Laplace transforms. Identities are presented semi-explicitly in terms of the scale function and the law of the Levy process. They are established using recent developments on fluctuation theory of drawdown of spectrally negative Levy process. In contrast to the Parisian ruin of Levy process below a fixed level, ruin under drawdown occurs in finite time with probability one. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1806.02083&r=ias |
| By: | Robin Greenwood (Harvard Business School, Finance Unit); Annette Vissing-Jorgensen (University of California Berkeley) |
| Abstract: | We document a strong effect of pension and insurance company (P&I) assets on the long end of the yield curve. Using data from 26 countries, the yield spread between 30-year and 10-year government bond yields is negatively related to the ratio of pension assets (in funded and private pension and life insurance arrangements) to GDP, suggesting that preferred-habitat demand by the P&I sector for long-dated assets drives the long end of the yield curve. We draw on changes in regulations in several European countries between 2008 and 2013 to provide well-identified evidence on the effect of the P&I sector on yields and to show that P&I demand is in part driven by hedging linked to the regulatory discount curve. When regulators reduce the dependence of the regulatory discount curve on a particular security, P&I demand for the security falls and its yield increases. We describe settings in which pension discount rules can have a destabilizing impact on bond markets. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:18-109&r=ias |
| By: | Flora Myamba (IPC-IG) |
| Abstract: | "The report by the Organisation for Economic co-Operation and Development (OECD) entitled 'Social Protection in East Africa: Harnessing the Future' (OECD 2017), recently produced by the European Union Social Protection Systems (EU-SPS) project, points to the low coverage rates of social protection in the informal sector in East Africa as one of seven great challenges that will need to be addressed in the next 50 years. For years now, many developing countries in sub-Saharan Africa have been poor and vulnerable, with high rates of informality in their labour markets: the majority of both rural populations involved in agriculture and the urban poor work in the informal sector. Public-sector social protection mechanisms have remained weak or even non-existent; therefore, the burden to protect the population from risks and social and economic shocks has been placed on the families and communities themselves?and mainly on women. This is the essence of traditional (and informal) social protection in sub-Saharan Africa, the perception of which has been used to justify the low resources allocated to this sector in government-led policies and programmes". (...) |
| Keywords: | Workers, informal sector, contributory, social insurance, schemes, case, Tanzania |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:363&r=ias |
| By: | Melanie Au; Matthew Kehn; Henry Ireys; Crystal Blyler; Jonathan Brown |
| Abstract: | This study examined burnout risk and job satisfaction reported by care coordinators in three programs integrating physical and behavioral health care; it also assessed the relationship between job support and burnout and the organizational supports helpful to care coordinators. |
| Keywords: | burnout risk, job satisfaction, behavioral health care |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:852db90fb533499d86d943eed86ad1cc&r=ias |