nep-ias New Economics Papers
on Insurance Economics
Issue of 2020‒04‒20
eleven papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Household responses to disability shocks: Spousal labor supply, caregiving, and disability insurance By Lee, Siha
  2. Health Risk and the Welfare Effects of Social Security By Shantanu Bagchi; Juergen Jung
  3. Effects of the Affordable Care Act Dependent Coverage Mandate on Health Insurance Coverage for Individuals in Same-Sex Couples By Christopher S. Carpenter; Gilbert Gonzales; Tara McKay; Dario Sansone
  4. Application and Award Responses to Stricter Screening in Disability Insurance By Mathilde Godard; Pierre Koning; Maarten Lindeboom
  5. Corn and Cotton Producers' Prevented Planting Decision By Adkins, Kevin; Boyer, Christopher N.; Smith, S. Aaron; Griffith, Andrew P.; Muhammad, Andrew; McClure, Angela; Raper, Tyson
  6. Disability Insurance: Error Rates and Gender Differences By Hamish low; Luigi Pistaferri
  7. The Rise of For-Profit Experimental Medicine By Pierre Azoulay; Ariel Fishman
  8. Social Insurance and Public Assistance in the Twentieth-Century United States: 2019 Presidential Address for the Economic History Association By Price V. Fishback
  9. Inventory of State-Level Medicaid Policies, Programs, and Initiatives to Improve Maternity Care and Outcomes By Mathematica
  10. Higher-order income risk over the business cycle By Busch, Christopher; Ludwig, Alexander
  11. Measuring intra-generational redistribution in PAYG pension schemes By Klos, Jonas; Krieger, Tim; Stöwhase, Sven

  1. By: Lee, Siha
    Abstract: This paper examines married women's time allocation to market hours and spousal care in the event of their husbands' disability and its implications for evaluating the insurance value of the Social Security Disability Insurance (SSDI) program. First, I find that while spousal labor supply responses to husbands' disability are small, wives spend a sizable amount of time in spousal care after their husbands become disabled. Motivated by these facts, I develop a dynamic model of married households that incorporates husbands' disability status, wives' time allocation choices, health state dependent utility, and the institutional features of SSDI. Counterfactual experiments indicate that caregiving needs substantially attenuate spousal labor supply responses and increase the insurance value of SSDI relative to its costs. Furthermore, policy
    Keywords: disability,social security,spousal labor supply,caregiving
    JEL: D13 H53 H55 I38 J22
    Date: 2020
  2. By: Shantanu Bagchi (Department of Economics, Towson University); Juergen Jung (Department of Economics, Towson University)
    Abstract: We examine the welfare effects of Social Security in a general equilibrium environment with realistic labor income, mortality, and health risks. We construct an overlapping generations model with rational-expectations households facing idiosyncratic health risk, profit maximizing firms, incomplete insurance markets, and a government that provides pensions and health insurance. We calibrate this model to the U.S. economy and perform two sets of computational experiments: (i) modifying the progressivity of the Social Security's benefit-earnings rule, and (ii) cutting Social Security's payroll tax. We find that both experiments have a larger effect on overall welfare in the presence of health risk, because health risk increases the importance of short-term consumption smoothing, both within work-life and retirement. Increased progressivity allows households to better smooth old-age consumption risk, and the payroll tax cut increases disposable income and allows better self-insurance against early-life health risk. We also find that labor supply is an important self-insurance tool in the presence of health risk, as increasing Social Security's progressivity has a smaller effect on overall welfare and cutting the payroll tax has a larger effect on overall welfare when labor supply is fixed. Finally, low-income households experience larger welfare gains both from increasing Social Security's progressivity and cutting the payroll tax, because of their relatively low ability to self-insure against health risk in general.
    Keywords: Health risk, Social Security, benefit-earnings rule, consumption smoothing, general equilibrium.
    JEL: E62 E21 H31 H55 I14
    Date: 2020–04
  3. By: Christopher S. Carpenter; Gilbert Gonzales; Tara McKay; Dario Sansone
    Abstract: A large body of research documents that the 2010 dependent coverage mandate of the Affordable Care Act was responsible for significantly increasing health insurance coverage among young adults. No prior research has examined whether sexual minority young adults also benefitted from the dependent coverage mandate, despite previous studies showing lower health insurance coverage among sexual minorities and the fact that their higher likelihood of strained relationships with their parents might predict a lower ability to use parental coverage. Our estimates from the American Community Surveys using difference-in-differences and event study models show that men in same-sex couples age 21-25 were significantly more likely to have any health insurance after 2010 compared to the associated change for slightly older 27 to 31-year-old men in same-sex couples. This increase is concentrated among employer-sponsored insurance, and it is robust to permutations of time periods and age groups. Effects for women in same-sex couples and men in different-sex couples are smaller than the associated effects for men in same-sex couples. These findings confirm the broad effects of expanded dependent coverage and suggest that eliminating the federal dependent mandate could reduce health insurance coverage among young adult sexual minorities in same-sex couples.
    Date: 2020–04
  4. By: Mathilde Godard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Pierre Koning (Universiteit Leiden [Leiden]); Maarten Lindeboom (VU - Vrije Universiteit Amsterdam [Amsterdam])
    Abstract: We examine the targeting effects of stricter screening in the Dutch Disability Insurance (DI) program induced by a major nationwide reform. The drastic 2003 "Gatekeeper Protocol" raised DI application costs and revealed more information about individual true ability to work. Discontinuity-in-Time regressions on administrative data show substantial declines in DI application rates (a 40% decrease in one year), with the largest decline occurring in difficult-todiagnose impairments and less severe health disorders. This resulted in a more deserving pool of applicants. At the same time, those who stopped applying had worse health, worked less, and were more likely to be on UI and social assistance than workers who did not apply in the old system. There are no additional targeting gains at the point of the award decision, implying that changes in average health conditions of awardees were fully driven by self-screening and work resumption in the DI waiting period.
    Keywords: Disability Insurance,Screening,Targeting efficiency,Targeting efficiency JEL codes: H2,I3
    Date: 2020
  5. By: Adkins, Kevin; Boyer, Christopher N.; Smith, S. Aaron; Griffith, Andrew P.; Muhammad, Andrew; McClure, Angela; Raper, Tyson
    Abstract: Federal crop insurance programs have a prevented planting provision that can protect producers from the financial losses and risk associated with not being able to plant the intended crop within the planting period. Revenue protection, revenue protection with harvest price exclusion, yield protection, and area risk protection insurance policies pay indemnities if producers were unable to plant the insured crop by a designated final planting date or within any applicable late planting period due to natural causes, typically drought or excess moisture (USDA, Federal Crop Insurance Corporation, 2017). The final planting date is the W 820 Corn and Cotton Producers’ Prevented Planting Decision Kevin Adkins, Graduate Research Assistant Christopher N. Boyer, Associate Professor S. Aaron Smith, Assistant Professor Andrew P. Griffith, Associate Professor Andrew Muhammad, Professor and Blasingame Chair of Excellence Department of Agricultural and Resource Economics Angela McClure, Professor Tyson Raper, Assistant Professor Department of Plant Sciences 2 Corn and Cotton Producers’ Prevented Planting Decision last day a producer can plant the insured crop and receive full coverage from their crop insurance policy. The late planting period is generally a maximum of 25 days after the final planting date but can vary depending on the crop. Table 1 provides important dates for Tennessee corn and cotton producers when examining prevented planting decisions (USDA, Risk Management Agency, 2019).
    Keywords: Crop Production/Industries, Farm Management, Livestock Production/Industries, Production Economics, Risk and Uncertainty
    Date: 2019–05–01
  6. By: Hamish low (University of Oxford and Institute for Fiscal Studies); Luigi Pistaferri (Stanford University, SIEPR, NBER and CEPR)
    Abstract: We show the extent of errors made in the award of disability insurance using matched survey-administrative data. False rejections (Type I errors) are widespread, and there are large gender differences in these type I error rates. Women with a severe, work-limiting, permanent impairment are 20 percentage points more likely to be rejected than men, controlling for the type of health condition, occupation, and a host of demographic characteristics. We investigate whether these gender differences in Type I errors are due to women being in better health than men, to women having lower pain thresholds, or to women applying more readily for disability insurance. None of these explanations are consistent with the data. We use evidence from disability vignettes to suggest that there are different acceptance thresholds for men and women. The differences by gender arise because women are more likely to be assessed as being able to find other work than observationally equivalent men. Despite this, after rejection, women with a self-reported work limitation do not return to work, compared to rejected women without a work limitation.
    Keywords: Disability Insurance, Gender Differences.
    JEL: I38 J16
    Date: 2019–11–21
  7. By: Pierre Azoulay; Ariel Fishman
    Abstract: Beginning around 1990, academic medical centers have ceased to be the primary locus of industry-sponsored clinical trial activity. Instead, clinical trials have increasingly been conducted in private practices and for-profit, dedicated study sites. We examine the underlying causes of this startling evolution. On the demand side, the greater availability of non-academic investigators has enabled pharmaceutical firms to better match physicians' skills with specific projects. On the supply side, we argue that the growth of managed care health insurance has contributed to a rise in the number of non-academic physicians performing clinical research. We find evidence consistent with these claims using a unique data set containing information about 85,919 site contracts for 7,735 clinical trials between 1991 and 2003. Furthermore, we examine the gap in prevailing prices for comparable procedures conducted for clinical trials versus conventional medical care, and conclude that the effect of managed care on entry is consistent with non-academic physicians “inducing demand” so as to resist downward pressures on their income.
    JEL: I13 I23 O31
    Date: 2020–03
  8. By: Price V. Fishback
    Abstract: The growth of American governments in the twentieth century included large increases in funds for social insurance and public assistance. Social insurance has increased far more than public assistance, so “rise in the social insurance state” is a far better description of the century than “rise in the welfare state.” The United States has increased total spending in these areas as much or more as have European countries, but the U.S. spending has relied less heavily on government programs. The U.S. really has 51 different social welfare systems, and I develop estimates of these benefits across time and place and compare them to the poverty line, manufacturing earnings and benefits, state per capita incomes in the US, as well as GDP per capita in countries throughout the world.
    JEL: H53 H75 N32
    Date: 2020–04
  9. By: Mathematica
    Abstract: Mathematica was contracted by Medicaid and CHIP Payment and Access Commission (MACPAC) to create an updated inventory of state- and territory-level Medicaid policies, programs, or initiatives that are designed to improve the access to, quality of, and outcomes of maternity care services.
    Keywords: Medicaid, Maternity Care and Outcomes, State Policies
  10. By: Busch, Christopher; Ludwig, Alexander
    Abstract: We extend the canonical income process with persistent and transitory risk to shock distributions with left-skewness and excess kurtosis, to which we refer as higherorder risk. We estimate our extended income process by GMM for household data from the United States. We find countercyclical variance and procyclical skewness of persistent shocks. All shock distributions are highly leptokurtic. The existing tax and transfer system reduces dispersion and left-skewness of shocks. We then show that in a standard incomplete-markets life-cycle model, first, higher-order risk has sizable welfare implications, which depend crucially on risk attitudes of households; second, higher-order risk matters quantitatively for the welfare costs of cyclical idiosyncratic risk; third, higher-order risk has non-trivial implications for the degree of self-insurance against both transitory and persistent shocks.
    Keywords: Labor Income Risk,Business Cycle,GMM Estimation,Skewness,Persistent and Transitory Income Shocks,Risk Attitudes,Life-Cycle Model
    JEL: D31 E24 E32 H31 J31
    Date: 2020
  11. By: Klos, Jonas; Krieger, Tim; Stöwhase, Sven
    Abstract: In this paper, we propose a novel index for measuring intra-generational redistribution in pay-as-you-go pension schemes. Our index solely requires information on contributions and pension benefits of retirees, enabling us to measure intra-generational redistribution isolated from possible inter-generational redistribution. We use contribution records of approx. 100,000 German individuals, who progressed into retirement in 2007-2015, to measure the level of intra-generational redistribution in the German statutory pension scheme (GRV). A recent reform of childcare benefit provision, which became effective in 2014, confirms the predictions of our index. The reform introduced additional benefits for a subgroup of substantial size of German mothers, due to which the index value for women, but not for men jumps up. Our findings suggests that GRV fulfils the ideal of a Bismarckian pension system without intra-generational redistribution for men, while women benefit from intra-generational redistribution.
    Keywords: PAYG pension systems,intra-generational redistribution,Beveridge vs. Bismarck,index,microdata,Germany
    JEL: H55 D31 C55
    Date: 2020

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