nep-ias New Economics Papers
on Insurance Economics
Issue of 2019‒05‒06
fifteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Expanding Health Insurance for the Elderly of the Philippines By Michael R.M. Abrigo; Timothy J. Halliday; Teresa Molina
  2. Targeting High-Need Beneficiaries in Medicare Advantage: Opportunities to Address Medical and Social Needs By Eva H. DuGoff; William Buckingham; Amy J. H. Kind; Sandra Chao; Gerard Anderson
  3. Making Ends Meet: How Low-Income DI Beneficiaries Meet Their Needs By Jack Gettens; Alexis Henry
  4. The introduction of formal insurance and its effect on redistribution By Dan Anderberg; Karlijn Marsink
  5. Opting out of Workers' Compensation: Non-Subscription in Texas and Its Effects By Jinks, Lu; Kniesner, Thomas J.; Leeth, John D.; Lo Sasso, Anthony T.
  6. More Hospital Choices, More C-Sections: Evidence from Chile By de Elejalde, Ramiro; Giolito, Eugenio P.
  7. What’s Driving High Disenrollment in Medicare Advantage? By Eva DuGoff; Sandra Chao
  8. Optimal Social Insurance and Rising Labor Market Risk By Krebs, Tom; Scheffel, Martin
  9. The Insurance is the Lemon: Failing to Index Contracts By Hartman-Glaser, Barney; Hebert, Benjamin
  10. Aggregating Claims Data Across Payers: Approaches, Challenges, and Lessons Learned from the Comprehensive Primary Care Initiative By Anne Mutti; Erin Fries Taylor; Deborah Peikes; Janel Jin; Kristie Liao; Ha Tu
  11. "Fiscal Stabilization in the United States: Lessons for Monetary Unions" By Plamen Nikolov; Paolo Pasimeni
  12. Cyclical income risk in Great Britain By Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
  13. Private financing of long-term care: income, savings and reverse mortgages By Carole Bonnet; Sandrine Juin; Anne Laferrère
  14. A Game Theoretic Setting of Capitation Versus Fee-For-Service Payment Systems By Allison Koenecke
  15. Multinational enterprises and social protection a case study of the L’Oréal Share & Care Program By Sekerler Richiardi, Pelin.; Arbo, Ma. Diyina Gem.

  1. By: Michael R.M. Abrigo (Philippines Institute for Development Studies); Timothy J. Halliday (University of Hawaii at Manoa UHERO, IZA); Teresa Molina (University of Hawaii at Manoa)
    Abstract: The Philippines expanded health insurance coverage of its senior citizens, aged 60 and older, in 2014. Employing data from two separate sources, we find that the expansion increased insurance coverage by approximately 16 percentage points. Instrumental variables estimates indicate that out-of-pocket medical expenditures more than doubled among the newly insured. We argue that this is most likely driven by an outward shift in the medical demand curve due to physician-induced demand. Quantile regression estimates indicate that these effects were the most pronounced among high utilizers. We show that the compliers, defined as those induced by the policy to obtain insurance, are disproportionately female and largely from the middle of the socioeconomic distribution. Finally, tests for selection indicate only moderate adverse selection into the treatment.
    Keywords: Immigration, Health Insurance, Cost Sharing, Medicaid, Insurance Exchange
    JEL: I10 I13 I14
    Date: 2019–05
  2. By: Eva H. DuGoff; William Buckingham; Amy J. H. Kind; Sandra Chao; Gerard Anderson
    Abstract: Serving Medicare beneficiaries with complex health care needs requires understanding both the medical and social factors that may affect their health.
    Keywords: high-need beneficiaries, Medicare Advantage, Health
    JEL: I
  3. By: Jack Gettens; Alexis Henry
    Abstract: This study assessed how low-income DI beneficiaries make ends meet.
    Keywords: Social Security Disability Insurance, low-income populations, financial management
    JEL: I J
  4. By: Dan Anderberg; Karlijn Marsink
    Abstract: Transfers motivated by altruism, norms of giving, and guilt play an important role in supporting individuals who suffer losses due to risk. We present empirical evidence from an artefactual field experiment in Ethiopia in which we introduce formal insurance in a setting where donors make redistributive transfers to anonymously paired recipients. We find that donors reduce their transfers to recipients who don’t take-up insurance, and that this effect is larger for donors who hold the ex ante belief that the recipient is more likely to take-up insurance. The findings are consistent with a model of a norm of giving where donors feel guilty for deviating from the norm. The feelings of guilt decline with the expected social distance, that is revealed by the recipients’ observable insurance uptake decisions. The model highlights how the introduction of formal insurance may erode norms of giving and lead vulnerable groups to face more volatile consumption.
    Keywords: formal insurance, transfers, norms of giving, guilt, social distance
    JEL: D64 D91 G22 O16 O17
    Date: 2019
  5. By: Jinks, Lu (University of Illinois at Chicago); Kniesner, Thomas J. (Claremont Graduate University); Leeth, John D. (Bentley University); Lo Sasso, Anthony T. (University of Illinois at Chicago)
    Abstract: Texas is the only state that does not mandate that employers carry workers' compensation insurance (WC) coverage. We employ a quasi-experimental design paired with a novel machine learning approach to examine the effects of switching from traditional workers' compensation to a so-called non-subscription program in Texas. Specifically, we compare before and after effects of switching to non-subscription for employees in Texas to contemporaneously measured before and after differences for non-Texas-based employees. Importantly, we study large self-insured companies operating the same business in multiple states in the US; hence the non-Texas operations represent the control sites for the Texas treatment sites. The resulting difference-in-differences estimation technique allows us to control for any companywide factors that might be confounded with switching to non-subscription. Our empirical approach also controls for injury characteristics, employment characteristics, industry, and individual characteristics such as gender, age, number of dependents, and marital status. Outcomes include number of claims reported, medical expenditures, indemnity payments, time to return to work, likelihood of having permanent disability, likelihood of claim denial, and likelihood of litigation. The data include 25 switcher companies between the years 2004 and 2016, yielding 846,376 injury incidents. Regression findings suggest that indemnity, medical payments, and work-loss fall substantially. Claim denials increase and litigation falls.
    Keywords: workers' compensation insurance, non-subscription, difference-in-differences, triple differences, machine learning, PDS-LASSO
    JEL: C54 I13 J32 J38
    Date: 2019–04
  6. By: de Elejalde, Ramiro (Universidad Alberto Hurtado); Giolito, Eugenio P. (Universidad Alberto Hurtado)
    Abstract: In this paper, we study the effect on cesarean rates of a policy change in Chile that decreased the cost of delivery at private hospitals for women with public health insurance. Using a difference-in-differences (DID) approach based on the eligibility conditions for this benefit, we find that in the first three years after the policy took effect, deliveries in private hospitals increased by 8.7 percentage points, while the probability of a C-section being performed increased by 4.6 percentage points, with negative impacts on average newborn weight and size at birth. We show that the probability of an early term birth in hospitals participating in the program is an increasing function of expected hospital demand at the time of the full-term due date. This suggests that in the absence of price incentives, hospitals use C-sections to smooth out demand over time to optimize the use of their resources.
    Keywords: health care, provider incentives, labor and delivery
    JEL: I11 I13 I18
    Date: 2019–04
  7. By: Eva DuGoff; Sandra Chao
    Abstract: Disenrollment rates are one way that policy makers assess the performance of Medicare Advantage (MA) health plans.
    Keywords: Medicare Advantage, patient-reported outcomes, quality of care, Medicare, disenrollment
    JEL: I
  8. By: Krebs, Tom (Federal Reserve Bank of Minneapolis); Scheffel, Martin (Karlsruhe Institute of Technology)
    Abstract: This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of human capital shocks (moral hazard). We show that constrained optimal allocations are simple in the sense that they can be found by solving a static social planner problem. We further show that constrained optimal allocations are the equilibrium allocations of a market economy in which the government uses taxes and transfers that are linear in household wealth/income. We use the tractability result to show that an increase in labor market (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we provide a quantitative analysis of the secular rise in job displacement risk in the US and find that the welfare cost of not adjusting the social insurance system optimally can be substantial.
    Keywords: Labor market risk; Social insurance; Moral hazard
    JEL: E21 H21 J24
    Date: 2019–02–01
  9. By: Hartman-Glaser, Barney (UCLA); Hebert, Benjamin (Stanford University and NBER)
    Abstract: We model the widespread failure of contracts to share risk using available indices. A borrower and lender can share risk by conditioning repayments on an index. The lender has private information about the ability of this index to measure the true state the borrower would like to hedge. The lender is risk averse, and thus requires a premium to insure the borrower. The borrower, however, might be paying something for nothing, if the index is a poor measure of the true state. We provide sufficient conditions for this effect to cause the borrower to choose a non-indexed contract instead.
    Date: 2019–01
  10. By: Anne Mutti; Erin Fries Taylor; Deborah Peikes; Janel Jin; Kristie Liao; Ha Tu
    Abstract: The Comprehensive Primary Care (CPC) initiative fueled the emergence of new organizational alliances and financial commitments among payers and primary care practices to use data for performance improvement.
    Keywords: data feedback, quality improvement, primary care transformation, Medicare payment reform
    JEL: I
  11. By: Plamen Nikolov; Paolo Pasimeni
    Abstract: The debate about the use of fiscal instruments for macroeconomic stabilization has regained prominence in the aftermath of the Great Recession, and the experience of a monetary union equipped with fiscal shock absorbers, such as the United States, has often been a reference. This paper enhances our knowledge about the degree of macroeconomic stabilization achieved in the United States through the federal budget, providing a detailed breakdown of the different channels. In particular, we investigate the relative importance and stabilization impact of the federal system of unemployment benefits and of its extension as a response to the Great Recession. The analysis shows that in the United States, corporate income taxes collected at the federal level are the single most efficient instrument for providing stabilization, given that even with a smaller size than other instruments they can provide important effects, mainly against common shocks. On the other hand, Social Security benefits and personal income taxes have a greater role in stabilizing asymmetric shocks. A federal system of unemployment insurance, then, can play an important stabilization role, in particular when enhanced by a discretionary program of extended benefits in the event of a large shock, like the Great Recession.
    Keywords: China; Monetary Union; Macroeconomic Stabilization; Fiscal Policy; Monetary Policy
    JEL: E63 F36 F41
    Date: 2019–04
  12. By: Konstantinos Angelopoulos; Spyridon Lazarakis; Jim Malley
    Abstract: This paper establishes new evidence on the cyclical behaviour of household income risk in Great Britain and assesses the role of social insurance policy in mitigating against this risk. We address these issues using the British Household Panel Survey (1991-2008) by decomposing stochastic idiosyncratic income into its transitory, persistent and fixed components. We then estimate how income risk, measured by the variance and the skewness of the probability distribution of shocks to the persistent component, varies between expansions and contractions of the aggregate economy. We first find that the volatility and left-skewness of these shocks is a-cyclical and counter-cyclical respectively. The latter implies a higher probability of receiving large negative income shocks in contractions. We also find that while social insurance (tax-benefits) policy reduces the levels of both measures of risk as well as the counter-cyclicality of the asymmetry measure, the mitigation effects work mainly via benefits.
    Keywords: household income risk, social insurance policy, aggregate fluctuations
    JEL: D31 E24 J31
    Date: 2019
  13. By: Carole Bonnet; Sandrine Juin; Anne Laferrère
    Date: 2019
  14. By: Allison Koenecke
    Abstract: We aim to determine whether a game-theoretic model between an insurer and a healthcare practice yields a predictive equilibrium that incentivizes either player to deviate from a fee-for-service to capitation payment system. Using United States data from various primary care surveys, we find that non-extreme equilibria (i.e., shares of patients, or shares of patient visits, seen under a fee-for-service payment system) can be derived from a Stackelberg game if insurers award a non-linear bonus to practices based on performance. Overall, both insurers and practices can be incentivized to embrace capitation payments somewhat, but potentially at the expense of practice performance.
    Date: 2019–04
  15. By: Sekerler Richiardi, Pelin.; Arbo, Ma. Diyina Gem.
    Keywords: 1, 2, 3, 4
    Date: 2019

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