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on Insurance Economics |
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Issue of 2019‒12‒02
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Halliday, Timothy J. (University of Hawaii at Manoa); Akee, Randall K. Q. (Brookings Institution); Sentell, Tetine (University of Hawaii at Manoa); Inada, Megan (Kokua Kalihi Valley Comprehensive Family Services); Miyamura, Jill (Hawaii Health Information Corporation) |
| Abstract: | In March 2015, the State of Hawaii stopped covering the majority of migrants from countries belonging to the Compact of Free Association (COFA) in its Medicaid program. COFA migrants were required to obtain private insurance in the exchanges established under the Affordable Care Act. Using statewide hospital discharge data, we show that Medicaid-funded hospitalizations and emergency room visits declined in this population by 31% and 19%. Utilization funded by private insurance did increase, but not enough to offset the declines in Medicaid-funded utilization. Finally, the expiration of benefits increased uninsured ER visits. |
| Keywords: | immigration, health insurance, cost sharing, Medicaid, insurance exchange |
| JEL: | I10 I14 J61 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12779&r=all |
| By: | Michele Fioretti (Département d'économie); Hongming Wang (Hitotsubashi University (HIT-U)) |
| Abstract: | Pay-for-performance is commonly employed to improve the quality of social services contracted out to firms. We show that insurer responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the U.S. Medicare Advantage market, we find that high-quality insurance contracts responded to quality-linked payments by selecting healthier enrollees with premium differences across counties. The selection is profitable because the quality rating fails to adjust for pre-existing health differences of enrollees. As a result, quality improved mostly due to selection, and the supply of high-quality insurance shifted to the healthiest counties. Revising the quality rating could prevent these unintended consequences. |
| Keywords: | Pay-for-Performance; Quality Bonus Payment Demonstration; Medicare Advantage; Risk Selection; Supply-Side Selection; Quality Ratings; Health Inequality |
| JEL: | I13 I14 L15 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4bg68glinb8r8roh0akvprtu9u&r=all |
| By: | Michele Fioretti (Département d'économie); Hongming Wang (Hitotsubashi University (HIT-U)) |
| Abstract: | Pay-for-performance is commonly employed to improve the quality of social services contracted out to firms. We show that insurer responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the U.S. Medicare Advantage market, we find that high-quality insurance contracts responded to quality-linked payments by selecting healthier enrollees with premium differences across counties. The selection is profitable because the quality rating fails to adjust for pre-existing health differences of enrollees. As a result, quality improved mostly due to selection, and the supply of high-quality insurance shifted to the healthiest counties. Revising the quality rating could prevent these unintended consequences. |
| Keywords: | Pay-for-Performance; Quality Bonus Payment Demonstration; Medicare Advantage; Risk Selection; Supply-Side Selection; Quality Ratings; Health Inequality |
| JEL: | I13 I14 L15 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpecon:info:hdl:2441/4bg68glinb8r8roh0akvprtu9u&r=all |
| By: | Chunzan Wu; Dirk Krueger |
| Abstract: | We show that a calibrated life-cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri and Saporta-Eksten (2016) in U.S. data. In the model, 35% of male and 18% of female permanent wage shocks pass through to consumption, compared to the empirical estimates of 32% and 19%. Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply response of the female earner. Abstracting from this private intra-household income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the welfare gains from implementing the optimal system are cut roughly in half. |
| JEL: | E21 H21 H31 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26466&r=all |
| By: | Immanuel Lampe; Daniel Würtenberger |
| Abstract: | This work analyzes if reference dependence and loss aversion can explainthe puzzling low adoption rates of rainfall index insurance. We present a model that predicts the impact of loss aversion on index insurance demand to vary with different levels of insurance understanding. Index insurance demand of farmers who are unaware of the loss-hedging benefit that insurance provides decreases with loss aversion. In contrast, insurance demand of farmers who are aware of the loss-hedging benefit increases with loss aversion. The model further predicts that farmers who are unaware of the loss-hedging benefit will not demand an even highly subsidized index insurance. Using data from a randomized controlled trial involving a sample of Indian farmers we provide empirical support for our core conjecture that insurance understanding mitigates the negative impact of loss aversion on index insurance adoption. |
| Keywords: | Prospect Theory, Reference Dependence, Microinsurance, Farm Household |
| JEL: | D91 G22 Q12 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2019:07&r=all |
| By: | Romain Gauchon (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Jean-Pascal Hermet (ADDACTIS France) |
| Abstract: | Background and objective: Classifying people according to their health profile is crucial in order to propose appropriate treatment. However, the medical diagnosis is sometimes not available. This is for example the case in health insurance, making the proposal of custom prevention plans difficult. When this is the case, an unsupervised clustering method is needed. This article aims to compare three different methods by adapting some text mining methods to the field of health insurance. Also, a new clustering stability measure is proposed in order to compare the stability of the tested processes. Methods : Nonnegative Matrix Factorization, the word2vec method, and marginalized Stacked Denoising Autoencoders are used and compared in order to create a high-quality input for a clustering method. A self-organizing map is then used to obtain the final clustering. A real health insurance database is used in order to test the methods. Results: the marginalized Stacked Denoising Autoencoder outperforms the other methods both in stability and result quality with our data. Conclusions: The use of text mining methods offers several possibilities to understand the context of any medical act. On a medical database, the process could reveal unexpected correlation between treatment, and thus, pathology. Moreover, this kind of method could exploit the refund dates contained in the data, but the tested method using temporality, word2vec, still needs to be improved since the results, even if satisfying, are not as better as the one offered by other methods. |
| Keywords: | unsupervised learning,clustering,health insurance,word embedding,Nonnegative Matrix Factorization,Self Organizing Map |
| Date: | 2019–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02356449&r=all |
| By: | Mark Shepard; Katherine Baicker; Jonathan S. Skinner |
| Abstract: | There is increasing interest in expanding Medicare health insurance coverage in the U.S., but it is not clear whether the current program is the right foundation on which to build. Traditional Medicare covers a uniform set of benefits for all income groups and provides more generous access to providers and new treatments than public programs in other developed countries. We develop an economic framework to assess the efficiency and equity tradeoffs involved with reforming this generous, uniform structure. We argue that three major shifts make a uniform design less efficient today than when Medicare began in 1965. First, rising income inequality makes it more difficult to design a single plan that serves the needs of both higher- and lower-income people. Second, the dramatic expansion of expensive medical technology means that a generous program increasingly crowds out other public programs valued by the poor and middle class. Finally, as medical spending rises, the tax-financing of the system creates mounting economic costs and increasingly untenable policy constraints. These forces motivate reforms that shift towards a more basic public benefit that individuals can “top-up” with private spending. If combined with an increase in other progressive transfers, such a reform could improve efficiency and reduce public spending while benefiting low income populations. |
| JEL: | H4 H51 I13 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26472&r=all |
| By: | Rolando Fuentes; Abhijit Sengupta (King Abdullah Petroleum Studies and Research Center) |
| Abstract: | Our results suggest that consumers would transfer some of the inherent risks of a blackout to the utility for a price lower than their willingness to pay to achieve their desired level of protection, creating economic value. The purchase of insurance would help most consumers avoid a complete loss of power. Our simulations show that of those households that would otherwise experience a complete loss of power, on average between 1% and 15% can fully cover their excess energy needs through insurance. Between 50% and 70% of these households are budget constrained but would still be able to partially cover their excess energy needs. |
| Keywords: | Agent based models, Distributed energy resources, New business models in electricity, Reliability Insurance, Utility death spiral |
| Date: | 2019–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:prc:dpaper:ks--2019-dp59&r=all |
| By: | Anna Godøy; Venke Furre Haaland; Ingrid Huitfeldt (Statistics Norway); Mark Votruba |
| Abstract: | We estimate the effects of wait time for orthopedic surgery on health and labor market outcomes of Norwegian workers. Our identification strategy exploits variation in wait times for surgery generated by the idiosyncratic variation in system congestion at the time of referral. While we find no significant evidence of lasting health effects, longer wait times have persistent negative effects on subsequent labor supply. For every 10 days spent waiting for surgery, we estimate health-related workplace absences increase 8.7 days over the five years following referral, and the likelihood of permanent disability insurance increases by 0.4 percentage point. Cost benefit calculations point to sizable fiscal savings from shorter wait times. |
| Keywords: | Wait time; queues; hospital treatment; health outcomes; labor market attachment; sickness absence |
| JEL: | I12 J32 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:919&r=all |
| By: | Godoey, Anna; Haaland, Venke Furre; Huitfeldt, Ingrid; Votruba, Mark |
| Abstract: | We estimate the effects of wait time for orthopedic surgery on health and labor market outcomes of Norwegian workers. Our identification strategy exploits variation in wait times for surgery generated by the idiosyncratic variation in system congestion at the time of referral. While we find no significant evidence of lasting health effects, longer wait times have persistent negative effects on subsequent labor supply. For every 10 days spent waiting for surgery, we estimate health-related workplace absences increase 8.7 days over the five years following referral, and the likelihood of permanent disability insurance increases by 0.4 percentage point. Cost benefit calculations point to sizable fiscal savings from shorter wait times |
| Keywords: | Social and Behavioral Sciences, Labor Markets |
| Date: | 2019–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt32d4g5xh&r=all |
| By: | Rolando Fuentes; Jorge Blazquez; Iqbal Adjali (King Abdullah Petroleum Studies and Research Center) |
| Abstract: | A market in which individuals pursue their own self-interest normally maximizes aggregate economic well-being. But households that install Distributed Energy Resources (DERs) in order to obtain savings in their electricity bill, impose an external cost on other customers. At scale, their actions can lead to higher electricity tariffs for utility customers and, in the extreme case, a utility death spiral. In this paper, we propose a market mechanism that may ameliorate this potential distortion based on the creation of a market for risk. Utilities would provide reliability insurance services to households to protect them against the failure of their own DER systems. Creating such an insurance market would allow customers to choose a premium according to their preference for reliability. It could also limit the potential utility death spiral efficiently, as the path would be driven by market mechanisms that arise after reassigning property rights and liabilities between utilities and their customers. |
| Keywords: | Distributed energy resources (DER), Electric power, Power markets, Utilities |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:prc:dpaper:ks-2018-dp45&r=all |
| By: | Danilo Liberati (Bank of Italy); Francesco Vercelli (Bank of Italy) |
| Abstract: | We investigate the retail distribution of financial products by the Italian banking system between 2010 and 2017. We focus on mutual fund shares, insurance contracts and individually managed portfolios, analysing the characteristics of the banks that distribute these instruments the most and the contribution of each product to bank profitability. We find that banks with larger amounts of bad loans relative to equity distribute more asset management instruments, an activity that does not absorb equity. When liquidity constraints are less binding, banks that are financed more through deposits increase their distribution activity. Moreover, banks with stronger lending specialization are less involved in distributing financial products. Finally, fees from the distribution of individually managed portfolios contribute to bank profitability more than those from the distribution of mutual fund shares. |
| Keywords: | Banks, Distribution fees, Non-interest income |
| JEL: | D14 G21 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_510_19&r=all |
| By: | Ellen Bouchery; Sandra Chao; Mary Allison Geibel; Claire Brindley; Christine O'Malley; Kara Zivin; Crystal Blyler |
| Abstract: | Since the enactment of the Medicaid statute in 1965, payment for services for beneficiaries ages 21 to 64 who are patients in institutions for mental diseases (IMDs) has been prohibited; this is known as the IMD exclusion. |
| Keywords: | Medicaid Emergency Psychiatric Services Demonstration Cures Act Report to Congress, Medicaid Emergency Psychiatric Services Demonstration, Medicaid Emergency Psychiatric Demonstration, MEPD, institutions for mental diseases, IMD, IMD exclusion, psychiatry, inpatient beds, Medicaid, emergency department, costs, expenditures, serious mental illness, funding, disproportionate share hospital, forensic, length of stay, payment rates, evaluation, research, emergency room, emergency services, cures Act, Inpatient, Psychiatric, report to congress |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ad8d75d5bcd7494880526aaaa39774f1&r=all |
| By: | Anatoli Segura (Banca d’Italia); Javier Suarez (Center for Monetary and Financial Studies (Cemfi)) |
| Abstract: | We characterize policy interventions directed to minimize the cost to the deposit guarantee scheme and the taxpayers of banks with legacy problems. Non-performing loans (NPLs) with low and risky returns create a debt overhang that induces bank owners to forego profitable lending opportunities. NPL disposal requirements can restore the incentives to undertake new lending but, as they force bank owners to absorb losses, can also make them prefer the bank being resolved. For severe legacy problems, combining NPL disposal requirements with positive transfers is optimal and involves no conflict between minimizing the cost to the authority and maximizing overall surplus. |
| Keywords: | non performing loans, deposit insurance, debt overhang, optimal intervention, state aid. |
| JEL: | G01 G20 G28 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1227_19&r=all |
| By: | Koning, Pierre (Leiden University); Vethaak, Heike (University of Leiden) |
| Abstract: | Many OECD countries are facing decreases in the employment rates of disabled workers. To uncover the driving forces of these trends, this paper estimates Age-Period- Cohort (APC) models on administrative data of Disability Insurance (DI) application cohorts for the Netherlands between 1999 and 2013. Our main finding is that the substantial decrease in employment rates of applicant cohorts in this time period is almost fully explained by cohort effects – equalling about 30 percentage points – and that the impact of period effects is only small. In turn, cohort effects stem from changes in the observed composition of applicants, with increasing shares of workers without (permanent) contracts in the year before the application. These changes are largely confined to years following two major DI reforms that increased self-screening among potential applicants. We also expand the APC model by allowing for distinct effects for awarded and rejected DI applicants. Assuming common compositional cohort effects for these two groups, difference-in-difference estimates of cohort effects indicate that the effect of changes in benefit conditions ('incentive effects') is limited. Disability reforms thus predominantly affected the stringency of the DI system and induced substantial self-screening in the sickness period before the DI decision, rather than changing individual employment rates. |
| Keywords: | disability insurance, employment, age-period-cohort models |
| JEL: | H75 J21 C23 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12775&r=all |
| By: | Ellen Bouchery; Sandra Chao; Mary Allison Geibel; Claire Brindley; Christine O'Malley; Kara Zivin; Crystal Blyler |
| Keywords: | Medicaid Emergency Psychiatric Services Demonstration Cures Act Report to Congress, Medicaid Emergency Psychiatric Services Demonstration, Medicaid Emergency Psychiatric Demonstration, MEPD, institutions for mental diseases, IMD, IMD exclusion, psychiatry, inpatient beds, Medicaid, emergency department, costs, expenditures, serious mental illness, funding, disproportionate share hospital, forensic, length of stay, payment rates, evaluation, research, emergency room, emergency services, Cures Act, Inpatient, Psychiatric, report to congress |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:29b6621865b44a1eaf034dc638f36a62&r=all |