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on Insurance Economics |
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Issue of 2018‒12‒24
fourteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Deborah Peikes; Grace Anglin; Stacy Dale; Erin Fries Taylor; Ann O'Malley; Arkadipta Ghosh; Kaylyn Swankoski; Jesse Crosson; Rosalind Keith; Anne Mutti; Sheila Hoag; Pragya Singh; Ha Tu; Thomas Grannemann; Mariel Finucane; Aparajita Zutshi; Lauren Vollmer; Randall Brown |
| Abstract: | This is the appendix to the fourth and final report evaluating the four-year Comprehensive Primary Care (CPC) initiative, which was launched by the Center for Medicare & Medicaid Innovation (CMMI) of the Centers for Medicare & Medicaid Services (CMS) to improve primary care delivery, health care quality, and patient experience, and lower costs. |
| Keywords: | primary care, Comprehensive Primary Care initiative, primary care transformation, patient-centered medical home |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:a92d970cf2b24f59aadcffd69fa2153f&r=ias |
| By: | Nicole Maestas; Kathleen J. Mullen; Alexander Strand |
| Abstract: | We examine the effect of cyclical job displacement during the Great Recession on the Social Security Disability Insurance (SSDI) program. Exploiting variation in the severity and timing of the recession across states, we estimate the effect of unemployment on SSDI applications and awards. We find the Great Recession induced nearly one million SSDI applications that otherwise would not have been filed, of which 41.8 percent were awarded benefits, resulting in over 400,000 new beneficiaries who made up 8.9 percent of all SSDI entrants between 2008-2012. More than one-half of the recession-induced awards were made on appeal. The induced applicants had less severe impairments than the average applicant. Only 9 percent had the most severe, automatically-qualifying impairments, 33 percent had functional impairments and no transferable skills, and the rest were denied for having insufficiently severe impairments and/or transferable skills. Our estimates imply the Great Recession increased claims processing costs by $2.960 billion during 2008-2012, and SSDI benefit obligations by $55.730 billion in present value, or $97.365 billion including both SSDI and Medicare benefits. |
| JEL: | H51 H53 H55 J14 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25338&r=ias |
| By: | Ndiaye, Abdoulaye (Federal Reserve Bank of Chicago) |
| Abstract: | This paper studies optimal insurance against private idiosyncratic shocks in a life-cycle model with intensive labor supply and endogenous retirement. In this environment, the optimal labor tax is hump-shaped in age: insurance benefits of taxation push for increasing-in-age taxes while rising labor supply elasticities and optimal late retirement of highly productive workers push for lowering taxes for old workers. In calibrated numerical simulations, the optimum achieves sizable welfare gains that age-dependent taxes do not deliver under the status quo US Social Security. Nevertheless, an optimal combination of age-dependent linear taxes with increasing-in-age retirement benefits generates welfare gains close to optimal. |
| Keywords: | Retirement; Optimal Taxation; Social Security; Continuous- Time; Optimal Stopping |
| JEL: | H21 H55 J26 |
| Date: | 2017–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2018-18&r=ias |
| By: | Marianne Tenand (Erasmus University Rotterdam); Pieter Bakx (Erasmus University Rotterdam); Eddy (E.K.A.) van Doorslaer (Erasmus University Rotterdam) |
| Abstract: | The Netherlands is one of the few countries that offer generous universal coverage of long-term care (LTC). Does this ensure that the Dutch elderly with similar care needs receive similar LTC, irrespective of their income? In contrast with previous studies of inequity in care use that relied on a statistically derived variable of needs, our paper exploits a readily available, administrative measure of LTC needs, stemming from the eligibility assessment organized by the Dutch LTC assessment agency. Using exhaustive administrative register data on 616,934 individuals aged 60 and older eligible for public LTC, we find a substantial pro-poor concentration of LTC use that is only partially explained by poorer individuals’ greater needs. Among those eligible for institutional care, higher-income individuals are more likely to use – less costly – home care. This pattern may be explained by differences in preferences, but also by their higher copayments for nursing homes and by greater feasibility of home-based LTC arrangements for richer elderly. At face value, our findings suggest that the Dutch LTC insurance ‘overshoots’ its target to ensure that LTC is accessible to poorer elderly. Yet, the implications depend on the origins of the difference and one’s normative stance. |
| Keywords: | Long-term care; Equity in care use; Horizontal equity; Socio-economic inequality |
| JEL: | J14 I14 D63 |
| Date: | 2018–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180098&r=ias |
| By: | Ai, Hengjie (University of Minnesota); Bhandari, Anmol (Federal Reserve Bank of Minneapolis) |
| Abstract: | This paper studies asset pricing in a setting in which idiosyncratic risk in human capital is not fully insurable. Firms use long-term contracts to provide insurance to workers, but neither side can commit to these contracts; furthermore, worker-firm relationships have endogenous durations owing to costly and unobservable effort. Uninsured tail risk in labor earnings arises as a part of an optimal risk-sharing scheme. In the general equilibrium, exposure to the resulting tail risk generates higher risk premia, more volatile returns, and variations in expected returns across firms. Model outcomes are consistent with the cyclicality of factor shares in the aggregate, and the heterogeneity in exposures to idiosyncratic and aggregate shocks in the cross section. |
| Keywords: | Equity premium puzzle; Dynamic contracting; Tail risk; Limited commitment |
| JEL: | E3 G1 |
| Date: | 2018–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:570&r=ias |
| By: | AnnaMaria McCutcheon; Karen Katz; Rebekah Selekman; Todd Honeycutt; Jacqueline Kauff; Joseph Mastrianni; Adele Rizzuto |
| Abstract: | This report presents findings on the implementation and operation of the New York State PROMISE program, which was designed to (1) provide educational, vocational, and other services to SSI youth and their families and (2) improve service coordination among state and local agencies serving that population. |
| Keywords: | disability, SSI, youth, employment, education, PROMISE |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:2c1171a793c94131af24444010778799&r=ias |
| By: | Park, Seonyoung; Shin, Donggyun |
| Abstract: | We investigate the welfare consequences of the increase in wage volatility in the United States from the early 1970s to the 2000s. Several important questions are jointly addressed to fully assess the welfare cost of the increase in the variance of wage shocks: whether the increased wage shocks resulted from heterogeneous workers’ risk choices, whether they were anticipated, and whether the affected individuals were insured against the changes. We provide a quantitative assessment of the welfare cost using a general equilibrium model with incomplete markets. Heterogeneous risk preferences, job heterogeneity in wage risk, and gender differences in wage dynamics constitute unique features of the model. The results show that the welfare cost is significantly overstated by neglecting heterogeneity in individual risk preferences and workers’ risk choices. The welfare cost remains substantial at 3.80 percent (in life-time consumption equivalent) even when increases in wage shocks are anticipated, heterogeneous workers self-select into risky jobs, and various insurance mechanisms are allowed in the model. Family labor supply adjustments reduce the welfare cost more effectively when borrowing and saving behavior is allowed. It is also found that wives increase their labor supply significantly in response to anticipated increases in the variance of husbands’ permanent wage shocks, and this ‘added-worker’ effect is mostly accounted for by wives’ labor supply adjustments on the extensive margin. |
| Keywords: | Heterogeneity, Insurance, Wage shock, Welfare costs, Labor supply, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:7967&r=ias |
| By: | Ricardas Zitikis; Ruodu Wang |
| Abstract: | The classical notion of comonotonicity has played a pivotal role when solving diverse problems in economics, finance, and insurance. In various practical problems, however, this notion of extreme positive dependence structure is overly restrictive and sometimes unrealistic. In the present paper, we put forward a notion of weak comonotonicity, which contains the classical notion of comonotonicity as a special case, and gives rise to necessary and sufficient conditions for a number of optimization problems, such as those arising in portfolio diversification, risk aggregation, and premium calculation. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1812.04827&r=ias |
| By: | Toshiaki Iizuka; Hitoshi Shigeoka |
| Abstract: | This study exploits over 5,000 variations in subsidy generosity across ages and municipalities in Japan to examine how children respond to healthcare prices. We find that free care significantly increases outpatient spending, with price elasticities considerably smaller than for adults. Price responses are substantially larger when small copayments are introduced, indicating more elastic demand around a zero price. We also find that increased utilization primarily reflects low-value and costly care: increased outpatient spending neither reduces subsequent hospitalization by “avoidable” conditions nor improves short- or medium-term health outcomes. By contrast, inappropriate use of antibiotics and costly after-hours visits increase. |
| JEL: | I11 I13 I18 J13 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25306&r=ias |
| By: | Giupponi, Giulia; Landais, Camille |
| Abstract: | The Great Recession has seen a revival of interest in policies encouraging labor hoarding by firms. Short time work (STW) policies, which consist in offering subsidies for hours reductions to workers in firms experiencing temporary shocks, are the most emblematic of these policies, and have been used aggressively during the recession. Yet, very little is known about their employment and welfare consequences. This paper leverages unique administrative social security data from Italy and quasi-experimental variation in STW policy rules to offer compelling evidence of the effects of STW on firms' and workers' outcomes, and on reallocation in the labor market. Our results show large and significant negative effects of STW treatment on hours, but large and positive effects on headcount employment. Results also show that employment effects disappear when the program stops, and that STW offers no long term insurance to workers. Finally, we identify the presence of significant negative reallocation effects of STW on employment growth of untreated firms in the same local labor market. We develop a simple conceptual framework to rationalize this empirical evidence, from which we derive a general formula for the optimal STW subsidy that clarifies the welfare trade-offs of STW policies. Calibrating the model to our empirical evidence, we conduct counterfactual policy analysis and show that STW stabilized employment during the Great Recession in Italy, and brought (small) positive welfare gains. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13310&r=ias |
| By: | Maja Parnardzieva-Zmejkova; Vladimir Dimkovski |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ftm:policy:2018-12/21&r=ias |
| By: | Dominika Kolcunova; Tomas Havranek |
| Abstract: | This paper focuses on the estimation of the effective lower bound on the Czech National Bank's policy rate. The effective lower bound is determined by the value below which holding and using cash would be preferable to holding deposits with negative yields. This bound is approximated on the basis of the storage, insurance and transport costs of cash and the loss of convenience associated with cashless payments. This estimate is complemented by a calculation based on interest charges reflecting the impact of negative rates on banks' profitability. Overall, we get a mean of slightly below -1%, approximately in the interval (-2.0%, -0.4%). In addition, by means of a vector autoregression we show that the potential of negative rates is not sufficient to deliver monetary policy easing similar in its effects to the impact of the Czech National Bank's exchange rate commitment during the years 2013-2017. |
| Keywords: | Costs of cash, effective lower bound, negative interest rates, transmission of monetary policy, zero lower bound |
| JEL: | E43 E44 E52 E58 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2018/9&r=ias |
| By: | Kate Summers |
| Keywords: | Universal Credit, benefits, working-age, unemployment, stigma, social security |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticab:casebrief/35&r=ias |
| By: | Peter K. Lindenauer; Susannah M. Bernheim; Jacqueline N. Grady; Zhenqiu Lin; Yun Wang; Yongfei Wang; Angela R. Merrill; Lein F. Han; Michael T. Rapp; Elizabeth E. Drye; Sharon-Lise T. Normand; Harlan M. Krumholz |
| Abstract: | Using hospital and outpatient Medicare claims between 2006 and 2009, this cross-sectional study describes patterns of hospital and regional performance in the outcomes of elderly patients with pneumonia, a leading cause of hospitalization and death in this population. |
| Keywords: | Community-Acquired and Nosocomial Pneumonia , Quality Improvement , Outcomes Measurement , Patient Safety, Geriatric Patient |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:29025ac87e7e4038ae36e51135b2286a&r=ias |