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on Insurance Economics |
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Issue of 2018‒07‒23
nineteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Koijen, Ralph; van Nieuwerburgh, Stijn |
| Abstract: | We propose a new solutions to finance life-extending treatments and apply it to immunother- apy. These treatments promise to dramatically raise durable survival rates for a growing number of cancer patients but are often prohibitively expensive for patients and governments alike. Our main insight is that life insurance companies have a direct benefit from such treatments as they lower the insurer's liabilities by pushing the death benefit further into the future and raise future premium income. Using detailed survival data from clinical studies, we quantify the insurers' benefit from immunotherapy for melanoma patients. Extrapolating to 17 other cancer sites, we estimate that $6.8 billion a year could be freed up to pay for existing immunotherapies. We discuss various financing mechanisms that exploit this value creation, which differ depending on the relative bargaining power of insurers and consumers. Moreover, the large benefits that accrue to the life insurers, paid for by consumers and health insurers, call for new boundaries between insurance markets by combining life insurance and (catastrophic) health insurance. We discuss the broader implications of our insight for medical innovation and long-term care insurance markets. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12990&r=ias |
| By: | Carlos Vidal-Meliá (Department of Financial Economics and Actuarial Science, University of Valencia (Spain), and research affiliation with the Instituto Complutense de Análisis Económico (ICAE), Complutense University of Madrid (Spain), and the Centre of Excellence in Population Ageing Research (CEPAR), UNSW (Australia).); Manuel Ventura-Marco (Department of Financial Economics and Actuarial Science, University of Valencia, Avenida de los Naranjos s.n., 46022 Valencia. (Spain).); Juan Manuel Pérez-Salamero González (Department of Financial Economics and Actuarial Science, University of Valencia, Avenida de los Naranjos s.n., 46022 Valencia. (Spain).) |
| Abstract: | This paper develops a social insurance accounting model for a notional defined contribution (NDC) scheme combining retirement and long-term care (LTC) contingencies. The procedure relies on standard double-entry bookkeeping and enables us to compile a “Swedish” type actuarial balance sheet (ABS) following a framework equivalent to an open group approach. This methodology is suitable for reporting the system’s solvency status and can show periodical changes in the system’s financial position by means of an income statement. The information underpinning the actuarial valuation is based on events and transactions that are verifiable at the valuation date, without considering expected future trends. The paper also contains an illustrative example to make it easier for policymakers to understand the main advantages and difficulties of our proposal. The policy conclusions stress the need to properly report social insurance benefits to enhance transparency and sustainability and to improve decision-making because it is in the public interest to do so. |
| Keywords: | Life Care Annuities; Long-Term Care Insurance; Notional Defined Contribution; Pay-as-you-go; Pension Accounting; Retirement; Social Security; Sustainability. |
| JEL: | G22 H55 I13 J14 J26 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1816&r=ias |
| By: | Julie Stone |
| Abstract: | This brief identifies opportunities for states and their contracting plans that serve Medicare-Medicaid enrollees to align Medicare and Medicaid coverage of care management. |
| Keywords: | dual eligible, chronic care management, Medicare-Medicaid Plan |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9e78523da72b453f8e301c9134f51b33&r=ias |
| By: | Canta, Chiara; Cremer, Helmuth |
| Abstract: | We study the design of public long-term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non-linear policies where the LTC benefit depends on the level of informal care, which is assumed to be observable while children's altruism is not. The traditional topping up and opting out policies are special cases of ours. Both total and informal care should increase with the children's level of altruism. This obtains under full and asymmetric information. Social LTC, on the other hand, may be non-monotonic. Under asymmetric information, social LTC is lower than its full information level for the lowest level of altruism, while it is distorted upward for the higher level of altruism. This is explained by the need to provide incentives to high-altruism children. The implementing contract is always such that social care increases with formal care. |
| Keywords: | long term care; opting out; private insurance; public insurance; topping up; uncertain altruism |
| JEL: | H2 H5 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12993&r=ias |
| By: | Michelle Herman Soper; Rivka Weiser |
| Abstract: | This technical assistance brief provides an overview of Medicare and Medicaid managed care marketing requirements. |
| Keywords: | marketing materials, managed care, dual eligibles |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ec0f3059a5c94950bab3312c2b66d804&r=ias |
| By: | Pierre Martinon (Commands - Control, Optimization, Models, Methods and Applications for Nonlinear Dynamical Systems - CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique - Inria Saclay - Ile de France - Inria - Institut National de Recherche en Informatique et en Automatique - UMA - Unité de Mathématiques Appliquées - Univ. Paris-Saclay, ENSTA ParisTech - École Nationale Supérieure de Techniques Avancées - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique); Pierre Picard (Département d'Économie de l'École Polytechnique - X - École polytechnique); Anasuya Raj (Département d'Économie de l'École Polytechnique - X - École polytechnique) |
| Abstract: | We analyze the design of optimal medical insurance under ex post moral haz- ard, i.e., when illness severity cannot be observed by insurers and policyholders decide for themselves on their health expenditures. The trade-o¤ between ex ante risk sharing and ex post incentive compatibility is analyzed in an optimal revelation mechanism under hidden information and risk aversion. The optimal contract provides partial insurance at the margin, with a deductible when in- surers' rates are affected by a positive loading, and it may also include an upper limit on coverage. The potential to audit the health state leads to an upper limit on out-of-pocket expenses. |
| Keywords: | optimal control,health insurance, ex post moral hazard, audit, background risk |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01348551&r=ias |
| By: | Laurie Felland; Peter Cunningham; Annie Doubleday |
| Abstract: | This brief presents the results of a qualitative study of 10 safety net hospitals and their early experiences with the 2014 insurance coverage expansions under the ACA. |
| Keywords: | ACA, Affordable Care Act, Patient volumes, patient finances, safety net hospitals |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:45cab1f8469d41bf9bea1dc701915879&r=ias |
| By: | Erin Weir Lakhmani; Alexandra Kruse |
| Abstract: | States are increasingly seeking ways to better integrate care for people dually eligible for Medicare and Medicaid, who are among the highest need and most expensive populations in either program due to a high prevalence of multiple chronic conditions, physical and behavioral health disabilities, and need for long-term services and supports. |
| Keywords: | dually eligible beneficiaries, state, D-SNP, aligned enrollment, Medicaid managed care plans |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:bd66b643cbd0475dacc84339334c3eeb&r=ias |
| By: | Julie Stone; Danielle Chelminsky |
| Abstract: | Many states implementing capitated model financial alignment demonstrations rely on their Medicaid enrollment brokers to provide information to potential enrollees in the demonstrations’ Medicare-Medicaid Plans. |
| Keywords: | Medicare-Medicaid Plan, enrollment, staff training |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:39d43e4e729a4951bb40733bc4a0cc9c&r=ias |
| By: | Gretchen Jacobson; Anthony Damico; Tricia Neuman; Marsha Gold |
| Abstract: | This Data Spotlight reviews national and state-level Medicare Advantage enrollment trends as of March 2017 and examines variations in enrollment by plan type and firm. It analyzes the most recent data on premiums, out-of-pocket limits, and quality ratings. |
| Keywords: | Medicare Advantage, Spotlight, Enrollment Market Update |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:26591c8eba9c4b719df846205f767375&r=ias |
| By: | Paul Montebello |
| Abstract: | Beneficiaries who are dually eligible for Medicare and Medicaid often experience difficulties accessing durable medical equipment (DME), such as wheelchairs, in a timely manner. |
| Keywords: | Durable Medical Equipment, Medicaid, Medicare, Dual Eligible, Fee-for-Service |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:19628eb6163541da9bceccb3ca075d88&r=ias |
| By: | Sung Soo Lim (American University in Dubai) |
| Abstract: | In many developing countries, the burden of morbidity of prime-age adults is greater than in developed countries. Morbidity is distinct from other types of negative demographic shocks such as a loss of family members or dissolution of the family. Since the duration of illness and the possibility of recovery are generally difficult to anticipate, households may be more burdened in adjusting to the crisis caused by adult morbidity than they are to other types of demographic shocks or income shocks. Households with health shocks may use various coping strategies according to the nature of the costs imposed by those shocks. Among others, intra-household labor substitution may be an important coping strategy for households with limited access to other coping strategies. Moreover, the use of labor as insurance may have a negative impact on children?s educational attainment, which has serious implications for the future welfare of the poor in developing countries. Yet, studies on this link between adult morbidity and child labor are rare. Using two waves (2007, 2014) of Indonesian Family Life Survey data, this study investigates the effects of prime-age morbidity on work hours of children under 16 years old. This study is distinguished from few existing studies in the literature in that it controls for duration and severity of morbidity in the estimation of morbidity effects. Employing both self-reported health measures and measures of individuals? physical abilities to perform activities of daily living (ADLs), this study finds that work hours of children increase significantly when spouses of household heads suffer from long and severe illnesses. The effects are found to be greater for households where the spouses are not covered by any health insurance. Moreover, this study sheds light on gender roles within households coping with health shocks. In particular, it shows that work hours of male and female children increase more when household heads and their spouses suffer from health shocks, respectively. Again, the effects are found to be greater for households with no health insurance. This study is of special interests to policy makers trying to identify households and individuals who are more vulnerable to unexpected health shocks. The results imply that benefits of government expenditures on healthcare may be greater when the Indonesian government, with its limited resources, targets subsidies towards households suffering severe and long-term morbidity shocks. |
| Keywords: | morbidity, child labor, intra-household labor substitution, Indonesia |
| JEL: | I00 O12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5407710&r=ias |
| By: | Gaillard, Alexandre; Kankanamge, Sumudu |
| Abstract: | This paper introduces a quantitative general equilibrium model with risky entrepreneurship and search frictions designed to endogenously match the magnitude of the occupational flows between entrepreneurship, paid-employment and unemployment. The model also accounts for the general shape of these flows as well as key entrepreneurial and labor market features in the US, based mostly on micro CPS and SCF data. We use this model to examine the mitigation of the bias created by most current unemployment insurance programs in favor of paid-employment and at the expense of self-employment. We show that an entrepreneurial insurance program can significantly reduce this bias and we decompose the elements that most contribute to this reduction. Comparing this policy to an entrepreneurial subsidy, we find that entrepreneurial insurance selects more talented, wealthier, faster growing and longer lasting entrepreneurs from the unemployment pool. Finally, we find that UI system attributes have a significant impact on entrepreneurship, which might be an important additional concern for optimal UI design. |
| Keywords: | entrepreneurship; labor market mobility; unemployment; insurance; |
| JEL: | E24 E61 J68 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32738&r=ias |
| By: | Danielle Chelminsky |
| Abstract: | This technical assistance tool presents an overview of the various data sources available on the CMS Medicare-Medicaid Coordination Office website that may be useful to states in designing, developing, and refining programs that serve dually eligible beneficiaries. |
| Keywords: | Dual Eligibles, Beneficiaries, CMS Data Resources |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ec1b331d38a24c45b5dd3ca2563427e7&r=ias |
| By: | Luis Cabezas; José De Gregorio |
| Abstract: | Motivated by the significant increases in international reserves during the 2000s, this paper analyzes the reasons why emerging and developing countries choose to accumulate them. In addition to a traditional measure of mercantilism, we add the terms of trade, and the speculation-deterrent motive. The results show that the mercantilist motive was a significant factor behind the massive accumulation of reserves before the global financial crisis, and it was almost as important as the precautionary motive. It is shown that commodity-exporting countries increased reserves for a fundamentally mercantilist motive. Finally, the speculationdeterrent motive was also an important factor during the 2000s. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp467&r=ias |
| By: | LEBIHAN, Laetitia; MAO TAKONGMO, Charles Olivier |
| Abstract: | In 2006, the Universal Child Care Benefit was introduced in Canada for all children aged less than 6 years. This program aims to help cover the cost of children and to provide financial assistance to families with young children in their choice of childcare. We exploit this policy change to estimate the effects of unconditional family cash transfers on the health and behaviours of two-parent families and their children. Using a difference-in-differences model, we find no evidence that the program improved child and parental outcomes in aggregate. A modest but fragile beneficial effect is found for low-education families and for girls. |
| Keywords: | Universal child benefits, health, well-being, behaviour. |
| JEL: | I10 J13 J18 |
| Date: | 2018–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87480&r=ias |
| By: | Paul Montebello |
| Abstract: | This document describes a tool developed in Microsoft Access that states can use to help reconcile enrollment in the Medicare Advantage and Prescription Drug system with comparable information found in their own systems. |
| Keywords: | Microsoft access tool, daily transaction record, ICRC, Integrated Care Resource Center |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:748aaf3c2d1542a4b7579285776c8634&r=ias |
| By: | Luc Arrondel (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Jérôme Coffinet (Banque de France - Banque de France) |
| Abstract: | In this paper, we assess how the factors explaining the holdings of stocks have evolved through the financial crisis. We rely on the data collected in surveys conducted among French households during the period 2004-2014. There are three main modes for investing in stocks: buying shares directly; purchasing them through mutual funds; and finally taking out unitlinked life insurance. Obviously, these three ways to invest in stocks do not involve the same investment behaviours since, besides the risk and return characteristics, they differ in their transaction costs, management fees and taxation. As a result, there is no a priori reason to consider that portfolio choice decisions by households on these modes of stockownership are equivalent and correspond to the same individuals' characteristics. We show that the holding of risky assets and of individual direct shares decreased during the period, and especially between 2009 and 2014. At the end of the period, the profile of direct equity holders was refocused towards profiles with greater risk tolerance. Other factors of direct stockholdings include: better education, gifts and inheritances, parents holding securities, singles, high-wealth households and high-income groups. Conditionally on holdings, the proportion of risky assets increases with risk tolerance and the holding of securities by parents. It also decreases at the end of the period. Our paper also shows that shareholders have gradually moved towards preferential ownership of shares in life insurance rather than direct share ownership, especially between 2009 and 2014. The estimation of a simultaneous model shows the specific characteristics of stockholders depending on the chosen support (direct, indirect or on life insurance): those who invest directly in stocks are richer, more educated and less risk averse; those who hold mutual funds are a little richer but more risk averse and do not appear the most educated; finally, for ownership in stocks on life insurance contracts, the position in the life cycle plays an important role as well as the social category. |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01785324&r=ias |
| By: | HU, Baoyuan; TAWIL, Dima; LIU, Xiyang |
| Abstract: | Economic globalization and financial market integration have increased fluctuation in financial markets. Investors expect an investment and wealth management product that can maintain the minimum protection when the price decreases, while it brings profits when the market grows. So the portfolio insurance strategy just meets the investors' requirements. The research analyzes the operation mechanism of CPPI, and then empirically tests the performance and risk of CPPI strategy based on the back-testing method. |
| Keywords: | CPPI; operating mechanism; investment and wealth management |
| JEL: | G23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87056&r=ias |