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on Insurance Economics |
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Issue of 2019‒09‒02
twenty-two papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Richard Domurat; Isaac Menashe; Wesley Yin |
| Abstract: | We experimentally varied information mailed to 87,000 households in California's health insurance marketplace to study the role of frictions in insurance take-up. Reminders about the enrollment deadline raised enrollment by 1.3 pp (16 percent), in this typically low take-up population. Heterogeneous effects of personalized subsidy information indicate systematic misperceptions about program benefits. Consistent with an adverse selection model with frictional enrollment costs, the intervention lowered average spending risk by 5.1 percent, implying that marginal respondents were 37 percent less costly than inframarginal consumers. We observe the largest positive selection among low income consumers, who exhibit the largest frictions in enrollment. Finally, the intervention raised average consumer WTP for insurance by $25 to $54 per month. These results suggest that frictions may partially explain low measured WTP for marketplace insurance, and that interventions reducing them can improve enrollment and market risk in exchanges. |
| JEL: | D03 I11 I13 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26153&r=all |
| By: | Thorben Korfhage |
| Abstract: | In this paper, I estimate a dynamic structural model of labor supply, retirement, and informal care supply, incorporating labor market frictions and the German tax and benefit system. I find that informal elderly care has adverse and persistent effects on labor market outcomes and therefore negatively affects lifetime earnings, future pension benefits, and individuals’ well-being. These consequences of caregiving are heterogeneous and depend on age, previous earnings, and institutional regulations. Policy simulations suggest that, even though fiscally costly, public long-term care insurance can offset the personal costs of caregiving to a large extent – in particular for low-income individuals. |
| Keywords: | long-term care; informal care; long-term care insurance; labor supply; retirement; pension benefits; structural model |
| JEL: | I18 I38 J14 J22 J26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1051&r=all |
| By: | Jang, Youngsoo |
| Abstract: | How do defaults and bankruptcies affect optimal health insurance policy? I answer this question using a life-cycle model of health investment with the option to default on emergency room (ER) bills and financial debts. I calibrate the model for the U.S. economy and compare the optimal health insurance in the baseline economy with that in an economy with no option to default. With no option to default, the optimal health insurance is similar to the health insurance system in the baseline economy. In contrast, with the option to default, the optimal health insurance system (i) expands the eligibility of Medicaid to 22 percent of the working-age population, (ii) replaces 72 percent of employer-based health insurance with a private individual health insurance plus a progressive subsidy, and (iii) reforms the private individual health insurance market by improving coverage rates and preventing price discrimination against people with pre-existing conditions. This result implies that with the option to default, households rely on bankruptcies and defaults on ER bills as implicit health insurance. More redistributive healthcare reforms can improve welfare by reducing the dependence on this implicit health insurance and changing households’ medical spending behavior to be more preventative. |
| Keywords: | Credit, Default, Bankruptcy, Optimal Health Insurance |
| JEL: | E21 H51 I13 K35 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95705&r=all |
| By: | Riley K. Acton; Scott A. Imberman; Michael F. Lovenheim |
| Abstract: | Social programs and mandates are usually studied in isolation, but interaction effects could create spillovers to other public goods. We examine how health insurance coverage affects the education of students with Autism Spectrum Disorder (ASD) in the context of state-mandated private therapy coverage. Since Medicaid benefits under the mandate were far weaker than under private insurance, we proxy for Medicaid ineligibility and estimate effects via triple-differences. While we find little change in ASD identification, the mandate crowds-out special education supports for students with ASD by shifting students to less restrictive environments and reducing the use of ASD specialized teacher consultants. A lack of short-run impact on achievement supports our interpretation of the service reductions as crowd-out and indicates that the shift does not academically harm students with ASD. |
| JEL: | H41 I13 I21 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26079&r=all |
| By: | LEBIHAN, Laetitia; MAO TAKONGMO, Charles Olivier |
| Abstract: | Little is known about the effects of paid parental leave (in particular fathers' quotas) on parental health and involvement. In this paper, we exploit a reform that took place in the Canadian province of Quebec to address that important topic. In 2006, Quebec opted out of the federal plan and established its own parental insurance plan, named the Quebec Parental Insurance Plan (QPIP). This program has lowered the eligibility criteria, increased income replacement and introduced fathers' quotas. Using three data sets, we investigate the impact of the QPIP on breastfeeding and parental health and behavior. Our results show that the reform increased breastfeeding duration and parental involvement. Results also suggest that the policy had limited positive effects on parental health. |
| Keywords: | Parental leave; family health; breastfeeding; parental behavior. |
| JEL: | I12 I18 I30 J18 |
| Date: | 2019–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95719&r=all |
| By: | J. Dustin Tracy, (Economic Science Institute, Chapman University); Hillard Kaplan (Economic Science Institute, Chapman University); Kevin A. James (Economic Science Institute, Chapman University); Stephen J. Rassenti (Economic Science Institute, Chapman University) |
| Abstract: | We examine the impacts of age, income and insurance plan on behavior in a virtual environment with cash-motivated subjects, who live multi-period lives in which they earn income and spend on enjoyment, insurance, and investments in health. Health shocks increase simulating aging. The 2x2 experimental has high and low income subjects, and offers employer-based or actuarial insurance. We find: 1) subject behavior approximated optimal responses; 2) in all treatments, subjects under-invested in health early in life and over-invested in health late in life; 3) subjects in the employerbased plan purchased insurance at higher rates; 4) the employer-based plan reduced differences due to income and age; 5) subjects in the actuarial plan engaged in more health-promoting behaviors, but still below optimal levels, and did save at the level required, so did realize the full benefits of the plan. Should these results generalize, they have clear implications for the health insurance policy. |
| Keywords: | Health insurance, Moral Hazard, Inter-generational, Subsidies, Actuarially fair, Employer-based |
| JEL: | I11 I12 I13 I14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:19-16&r=all |
| By: | Victoria Perez; Justin M. Ross; Kosali I. Simon |
| Abstract: | A mainstream motivation for decentralized government is to enable public service investments to better align with political preferences that may differ by geographical region. This paper examines how political preferences determine local government provision of hospital services. We find that local governments in areas more supportive of public insurance expansion responded to such state action by increasing expenditures on hospitals, whereas those in areas that voted against such expansions used the savings to reduce property taxes. This finding suggests that local government financial responses indeed align with political preferences. |
| JEL: | H71 H72 I1 I11 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26094&r=all |
| By: | Gina Livermore; Purvi Sevak; Marisa Shenk |
| Abstract: | This study examines changes in the characteristics and employment-related experiences of Supplemental Security Income (SSI) and Social Security Disability Insurance (DI) program participants from 2005 to 2015, focusing on beneficiaries with work-related goals and expectations. |
| Keywords: | Social security disability insurance, supplemental security income, employment, national beneficiary survey |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9a3bc96687354dfa811171a8c241918c&r=all |
| By: | Ifft, Jennifer E.; Jodlowski, Margaret C. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290912&r=all |
| By: | Diane Alexander; Molly Schnell |
| Abstract: | We examine how the amount a physician is paid influences who they are willing to see. Exploiting large, exogenous changes in Medicaid reimbursement rates, we find that increasing payments for new patient office visits reduces reports of providers turning away beneficiaries: closing the gap in payments between Medicaid and private insurers would reduce more than two-thirds of disparities in access among adults and would eliminate disparities among children. These improvements in access lead to more office visits, better self-reported health, and reduced school absenteeism. Our results demonstrate that financial incentives for physicians drive access to care and have important implications for patient health. |
| JEL: | H51 H75 I13 I14 I18 I24 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26095&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon) |
| Abstract: | This article examines the relevance of information and communication technology (ICT) in modulating the effect of education on life insurance and non-life insurance consumption in 48 African countries for the period 2004-2014. Education is measured with primary school, secondary school and tertiary school enrollments. ICT is measured with mobile phone, internet and broadband subscriptions. The empirical evidence is based on generalized method of moments. The following main findings are established. First, from the nexuses between education, ICT and life insurance, there are positive conditional effects from the interaction between: (i) broadband subscriptions and primary school enrollment; (ii) broadband subscriptions and secondary school enrollment and (iii) internet penetration and tertiary school enrollment. Second, from the nexuses between education, ICT and non-life insurance: (i) there is a negative net effect from the interactions between mobile phone penetration and primary education while positive net effects are apparent from the interactions between: mobile phone penetration and secondary school enrollment; secondary school enrollment and broadband subscriptions and; tertiary school enrollment and broadband subscriptions. |
| Keywords: | Education; Technology; Insurance |
| JEL: | I28 I20 I30 O16 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/048&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon) |
| Abstract: | This article examines the relevance of information and communication technology (ICT) in modulating the effect of education on life insurance and non-life insurance consumption in 48 African countries for the period 2004-2014. Education is measured with primary school, secondary school and tertiary school enrollments. ICT is measured with mobile phone, internet and broadband subscriptions. The empirical evidence is based on generalized method of moments. The following main findings are established. First, from the nexuses between education, ICT and life insurance, there are positive conditional effects from the interaction between: (i) broadband subscriptions and primary school enrollment; (ii) broadband subscriptions and secondary school enrollment and (iii) internet penetration and tertiary school enrollment. Second, from the nexuses between education, ICT and non-life insurance: (i) there is a negative net effect from the interactions between mobile phone penetration and primary education while positive net effects are apparent from the interactions between: mobile phone penetration and secondary school enrollment; secondary school enrollment and broadband subscriptions and; tertiary school enrollment and broadband subscriptions. |
| Keywords: | Education; Technology; Insurance |
| JEL: | I28 I20 I30 O16 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:19/048&r=all |
| By: | Damar, H. Evren; Gropp, Reint; Mordel, Adi |
| Abstract: | We study how an increase to the deposit insurance limit affects households' portfolio allocation by exogenously reducing uninsured deposit balances. Using unique data that identifies insured versus uninsured deposits, along with detailed information on Canadian households' portfolio holdings, we show that households respond by drawing down deposits and shifting towards mutual funds and stocks. These outflows amount to 2.8% of outstanding bank deposits. The empirical evidence, consistent with a standard portfolio choice model that is modified to accommodate uninsured deposits, indicates that more generous deposit insurance coverage results in nontrivial adjustments to household portfolios. |
| Keywords: | deposit insurance,banking,households,regulation |
| JEL: | D14 G21 G28 L51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:192019&r=all |
| By: | Imed Medhioub (Department of Finance and Investment, College of Economics and Administrative Sciences, Imam Muhammad Ibn Saud Islamic University); Mustapha Chaffai (Department of Management, High Business School, Sfax University) |
| Abstract: | This study examines herding behavior in four sectors of the Gulf Islamic stock markets. Based on the methodology of Chiang and Zheng (2010) and using daily prices for the GCC Islamic sectors from September 2013 to October 2018, results showed evidence of herding among investors in banking, insurance, hotels, restaurants, and foods sectors for the GCC Islamic stock market during the falling period when we consider a quantile regression analysis. In addition, we found that conventional return dispersions have a dominant influence on the Islamic GCC stock market during both falling and rising market periods in all sectors. We also found evidence of herd around the conventional sectors during down market period only in banking, hotel, restaurant, and food sectors. There is evidence of herd around the conventional sector during up market period for insurance and industrial sectors. |
| Date: | 2019–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1324&r=all |
| By: | Boris Verbrugge (HIVA, KU Leuven); Adeline Ajuaye (HIVA, KU Leuven); Jan Van Ongevalle (HIVA, KU Leuven) |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nam:befdpb:6&r=all |
| By: | Asongu, Simplice A; Odhiambo, Nicholas M |
| Abstract: | This study investigates the role of financial access in moderating the effect of governance oninsurance consumption in 42 Sub-Saharan African countries using data for the period 2004-2014.Two life insurance indicators are used, notably: life insurance and non-life insurance. Sixgovernance measurements are also used, namely: political stability, ?voice & accountability?,government effectiveness, regulation quality, corruption-control and the rule of law. The empiricalevidence is based on the Generalised Method of Moments (GMM) and Least Squares DummyVariable Corrected (LSDVC) estimators. Estimations from the LSDVC are not significant whilethe following main findings are established from the GMM. First, financial access promotes lifeinsurance through channels of political stability, ?voice & accountability?, governmenteffectiveness, the rule of law and corruption-control. Second, financial access also stimulates nonlifeinsurance via governance mechanisms of political stability, ?voice & accountability?,government effectiveness, regulation quality, the rule of law and corruption-control. This researchcomplements the sparse literature on insurance promotion in Africa by engaging the hithertounexplored role of financial access through governance channels. |
| Keywords: | Insurance; Finance; Governance; Sub-Saharan Africa |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:25709&r=all |
| By: | Delia Furtado (University of Connecticut); Kerry L. Papps (University of Bath); Nikolaos Theodoropoulos (University of Cyprus) |
| Abstract: | Social Security Disability Insurance (SSDI) take-up tends to increase during recessions despite the fact that the program is intended to insure against the possibility of a work-preventing disability, not job loss. We examine the role that social costs—such as taboos against receiving government benefits or the difficulty of obtaining information about the program within one’s social circle—play in the decision to apply for SSDI in response to changes in economic conditions. We show that immigrants from country-of-origin groups that have lower social costs to participation, as measured by past SSDI participation rates for their origin group, are more sensitive to economic downturns than immigrants from high cost groups. We present evidence that this is mainly driven by differences across origin countries in norms regarding the importance of work, rather than by information sharing or taboos against cheating the government. |
| Keywords: | Disability Insurance, Immigrants, Unemployment Rates, Ethnic Networks |
| JEL: | H55 J61 I18 J15 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1908&r=all |
| By: | Mulungu, Kelvin H.; Manning, Dale |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291113&r=all |
| By: | Sarah Miller; Sean Altekruse; Norman Johnson; Laura R. Wherry |
| Abstract: | We use large-scale federal survey data linked to administrative death records to investigate the relationship between Medicaid enrollment and mortality. Our analysis compares changes in mortality for near-elderly adults in states with and without Affordable Care Act Medicaid expansions. We identify adults most likely to benefit using survey information on socioeconomic and citizenship status, and public program participation. We find a 0.13 percentage point decline in annual mortality, a 9.3 percent reduction over the sample mean, associated with Medicaid expansion for this population. The effect is driven by a reduction in disease-related deaths and grows over time. We find no evidence of differential pre-treatment trends in outcomes and no effects among placebo groups. |
| JEL: | I1 I13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26081&r=all |
| By: | Pamela Giustinelli; Charles F. Manski; Francesca Molinari |
| Abstract: | We elicit numerical expectations for late-onset dementia in the Health and Retirement Study. Our elicitation distinguishes between precise and imprecise probabilities, while accounting for rounding of reports. Respondents quantify imprecision using probability intervals. Nearly half of respondents hold imprecise dementia probabilities, while almost a third of precise-probability respondents round their reports. We provide the first empirical evidence on dementia-risk perceptions among dementia-free older Americans and novel evidence about imprecise probabilities in a nationally-representative sample. We show, in a specific framework, that failing to account for imprecise or rounded probabilities can yield incorrect predictions of long-term care insurance purchase decisions. |
| JEL: | D80 D84 I0 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26125&r=all |
| By: | Christian Ewerhart; Robertas Zubrickas |
| Abstract: | We model the financial cooperative as an optimal institution sharing liquidity risks among agents with social preference and group identity. Stronger social concerns imply objectively better (worse) conditions for borrowers (depositors). Testing the model, we find that, indeed, deposit and loan rates offered by U.S. credit unions between 1995 and 2014 co-moved with (i) the number of members, and (ii) the common bond. Our theory explains how cooperatives coexist with banks, and why they have tended to be more resilient. However, the analysis also suggests that financial inclusion and advantages in resilience might quickly evaporate as membership requirements get diluted. |
| Keywords: | Social preferences, group identity, liquidity insurance, cooperative banking, credit union, common bond, bank competition, resilience |
| JEL: | G21 D91 L31 G28 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:332&r=all |
| By: | Boris Verbrugge (HIVA, KU Leuven); Adeline Ajuaye (HIVA, KU Leuven); Jan Van Ongevalle (HIVA, KU Leuven) |
| Abstract: | Social protection occupies an important place on the international agenda. A growing number of low- and middle-income countries are in the midst of a ‘quiet revolution’, whereby they are integrating social protection into national development strategies (Barrientos & Hulme, 2009). This evolution is supported by international institutions like the World Bank and the ILO, who, in 2015, launched a global partnership for universal social protection (Zelenev, 2015). Yet in many of these countries, the achievement of universal social protection remains a massive challenge. According to the ILO (2017), only 29 percent of the global population enjoys access to comprehensive social protection, while the remaining 71 percent are not or only partially covered. In addition to being underfinanced and fragmented, existing systems of social protection continue to focus on those in formal employment, while excluding the majority that depends on the informal economy (Alfers et al., 2017). This coverage gap is highly worrisome, because people in the informal economy are disproportionately at risk from employment-related health- and income shocks (Chen, 2008)... |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nam:befdwp:0126&r=all |