nep-ias New Economics Papers
on Insurance Economics
Issue of 2021‒05‒31
nineteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Medicaid & CHIP and the COVID-19 Public Health Emergency By CMS
  2. Organizing insurance supply for new and undiversifiable risks By Alary, David; Bobtcheff, Catherine; Haritchabalet, Carole
  3. Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits? By Haller, Andreas; Staubli, Stefan; Zweimüller, Josef
  4. Financing the extension of social insurance to informal economy workers: The role of remittances By Alexandre Kolev; Justina La
  5. Risk Sharing within the Firm: A Primer By Pagano, Marco
  6. Who Goes on Disability when Times are Tough? The Role of Work Norms among Immigrants By Delia Furtado; Kerry L. Papps; Nikolaos Theodoropoulos
  7. Does Ambiguity Generate Demand for Options? By Takashi Nishiwaki
  8. Life-cycle inequality: Blacks and whites differentials in life expectancy, savings, income, and consumption By De Giorgi, Giacomo; Gambetti, Luca; Naguib, Costanza
  9. Assessing asset-liability risk with neural networks By Patrick Cheridito; John Ery; Mario V. W\"uthrich
  10. Stabilization vs. Redistribution: the Optimal Monetary-Fiscal Mix By Bilbiie, Florin Ovidiu; Monacelli, Tommaso
  11. За функциите на трудовото и осигурително право в условията на пандемия By Andreeva, Andriyana; Yolova, Galina
  12. Killing Prescriptions Softly: Low Emission Zones and Child Health from Birth to School By Klauber, Hannah; Holub, Felix; Koch, Nicolas; Pestel, Nico; Ritter, Nolan; Rohlf, Alexander
  13. The risk-adjusted carbon price By Rick van der Ploeg; Ton van den Bremer
  14. Initial Experiences of Youth With Autism Spectrum Disorder Participating the PROMISE Initiative By Ankita Patnaik; Jeffrey Hemmeter; Arif Mamun
  15. Interactions Between Federal and Provincial Cash Transfer Programs: The Effect of the Canada Emergency Response Benefit on Provincial Income Assistance Eligibility and Benefits By Petit, Gillian; Tedds, Lindsay M.
  16. Цифровата трансформация в здравеопазването в контекста на правото на достъп до медицинска помощ By Andreeva, Andriyana; Yolova, Galina
  17. Mental Health Treatment Need and Treatment System Capacity By Ellen Bouchery
  18. Gender Differences in Access to Health Care Among the Elderly: Evidence from Southeast Asia By van der Meulen Rodgers , Yana; Zveglich, Jr. , Joseph E.
  19. Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap? By Kunz, Johannes; Propper, Carol; Staub, Kevin; Winkelmann, Rainer

  1. By: CMS
    Abstract: This preliminary data snapshot provides information on the impact COVID-19 has had on Medicaid & Children’s Health Insurance Program beneficiaries and utilization of health services from March through October 2020.
    Keywords: COVID-19, public health, Medicaid, CHIP, treatment, testing, acute care, services, telehealth, mental health, substance use disorders
  2. By: Alary, David; Bobtcheff, Catherine; Haritchabalet, Carole
    Abstract: This paper explores how insurance companies can coordinate to extend their joint capacity for the coverage of new and undiversifiable risks. The undiversifiable nature of such risks causes a shortage of insurance capacity and their limited knowledge makes learning and information sharing necessary. We develop a unified theoretical model to analyse co-insurance agreements. We show that organizing this insurance supply amounts to sharing a common value divisible good between capacity constrained and privately informed insurers with a reserve price. Coinsurance via the creation of an insurance pool turns out to operate as a uniform price auction with an ``exit/re-entry'' option. We compare it to a discriminatory auction for which no specific agreements are needed. Both auction formats lead to different coverage/premium tradeoffs. If at least one insurer provides an optimistic expertise about the risk, the pool offers higher coverage. This result is reversed when all insurers are pessimistic about the risk. Static comparative results with respect to the severity of the capacity constraints and the reserve price are provided. In the case of completely new risks, a regulator aiming at maximizing the expected coverage should promote the pool when the reserve price is low enough or when competition is high enough.
    Keywords: Coinsurance; common value divisible goods auctions; Competition; reserve price; undiversifiable and new risks
    JEL: D44 D82 G22
    Date: 2020–08
  3. By: Haller, Andreas; Staubli, Stefan; Zweimüller, Josef
    Abstract: We study the welfare effects of disability insurance (DI) and derive social-optimality conditions for the two main DI policy parameters: (i) DI eligibility rules and (ii) DI benefits. Causal evidence from two DI reforms in Austria generate fiscal multipliers (total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibility rules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rules generate lower income losses (earnings + transfers), particularly at the lower end of the income distribution. Hence, to roll back the Austrian DI program, policy makers should implement tighter DI eligibility rules rather than lower DI benefits. An application of our framework to the DI system of the U.S. suggests that DI eligibility rules are too strict and DI benefits are too low.
    Keywords: benefits; Disability insurance; Policy Reform; screening
    JEL: H53 H55 J14 J21 J65
    Date: 2020–08
  4. By: Alexandre Kolev; Justina La
    Abstract: Informal employment, defined through the lack of employment-based social protection, constitutes the bulk of employment in developing countries, and entails a level of vulnerability to poverty and other risks that are borne by all who are dependent on informal work income. Results from the Key Indicators of Informality based on Individuals and their Households database (KIIbIH) show that a disproportionately large number of middle‑class informal economy workers receive remittances. Such results confirm that risk management strategies, such as migration, play a part in minimising the potential risks of informal work for middle‑class informal households who may not be eligible to social assistance. They further suggest that middle‑class informal workers may have a solvent demand for social insurance so that, if informality-robust social insurance schemes were made available to them, remittances could potentially be channelled to finance the extension of social insurance to the informal economy. L'emploi informel, défini par l'absence de protection sociale basée sur l'emploi, constitue la majeure partie de l'emploi dans les pays en développement, et entraîne un niveau de vulnérabilité à la pauvreté et à d'autres risques qui sont supportés par tous ceux qui dépendent des revenus du travail informel. Les résultats de la base de données des Indicateurs clés de l'informalité en fonction des individus et leurs ménages (KIIbIH) montrent qu'un nombre disproportionné de travailleurs de l'économie informelle de la classe moyenne reçoivent des transferts de fonds. Ces résultats confirment que les stratégies de gestion des risques, telles que la migration, jouent un rôle dans la minimisation des risques potentiels du travail informel pour les ménages informels de la classe moyenne qui peuvent ne pas être éligibles à l'aide sociale. Ils suggèrent en outre que les travailleurs informels de classe moyenne peuvent avoir une demande solvable d'assurance sociale, de sorte que, si des régimes d'assurance sociale respectueux de l'informalité leur étaient accessibles, les transferts de fonds pourraient potentiellement être canalisés pour financer l'extension de l'assurance sociale à l'économie informelle.
    Keywords: development, informal workers, middle class workers, migrant workers, migration, poverty, remittances, risk-pooling, savings, social insurance, social protection
    JEL: E26 F22 F24 G52 H55 I38
    Date: 2021–05–26
  5. By: Pagano, Marco
    Abstract: Labor income risk is key to the welfare of most people. This risk is mainly insured "within the firm" and by public institutions, rather than by financial markets. This paper starts by asking why such insurance is provided within the firm, and what determines its boundaries. It identifies four main constraining factors: availability of a public safety net, moral hazard on the employees' side, moral hazard on the firms' side, and workers' wage bargaining power. These factors explain three empirical regularities: (i) family firms provide more employment insurance than nonfamily firms; (ii) the former pay lower real wages, and (iii) firms provide less employment insurance where public unemployment benefits are more generous. The paper also explores the connection between risk sharing and firms' capital structure: greater leverage calls for high wages to compensate employees for greater job risk; nevertheless, firms may want to lever up strategically in order to offset the bargaining power of labor unions. Hence, the distributional conflict between shareholders and workers may limit risk sharing within the firm. By contrast, bondholders and workers are not necessarily in conflict, as both are harmed by firms' risk-taking. In principle, firms may also insure employees against uncertainty about their own talent, but their capacity to do so is constrained by workers' inability to commit to their employer: in the presence of labor market competition, high-talent employees will leave unless paid in line with their high productivity, making uncertainty about talent uninsurable. The paper concludes by showing that risk sharing within firms has declined steadily in the last three decades, and by discussing the financial, competitive, technological and institutional developments that may have conjured this outcome.
    Keywords: family firms; Implicit Contracts; Insurance; Risk Sharing; Safety net; unemployment
    JEL: D21 D22 D80 G32 G39 H55 J63 J65 M51 M52
    Date: 2020–07
  6. By: Delia Furtado; Kerry L. Papps; Nikolaos Theodoropoulos
    Abstract: We examine how work norms affect Social Security Disability Insurance (SSDI) take-up rates in response to worsening economic conditions. By focusing on immigrants in the US, we can consider the influence of work norms in a person’s home country, which we argue are exogenous to labor market prospects in the US. We find that the probability of receiving SSDI is more sensitive to economic downturns among immigrants from countries where people place less importance on work. We also provide evidence that this result is not driven by differential sensitivities to the business cycle or differences in SSDI eligibility.
    Keywords: Disability Insurance; Social Norms; Unemployment Rates; Immigrants
    JEL: H55 J61 I18 J15
    Date: 2021–03
  7. By: Takashi Nishiwaki (Graduate School of Economics,Waseda University. 1-6-1, Nishi-Waseda, Shinjukuku, Tokyo 169-8050, Japan.)
    Abstract: This study examines the optimal investment strategies for risk-and-ambiguityaverse investors and characterizes conditions under which ambiguity induces investors to buy or sell options. Under identical hyperbolic absolute risk aversion (HARA) utility functions, we illustrate that ambiguity-averse investors should sell portfolio insurance if their preferences exhibit constant relative risk aversion (CRRA). In particular, when investors f relative risk aversion is less than or equal to two, ambiguity-averse investors should sell options at any realization values of a reference asset. Further, if the relative risk aversion is greater than two, we demonstrate that ambiguity-averse investors should sell and buy options at smaller and higher realization values of the reference asset, respectively. Furthermore, if the utility functions display constant absolute risk aversion (CARA), then an ambiguity-averse investor should buy options at any realization values of the reference asset.
    Keywords: Ambiguity; Multiple prior model; Options demand; Kullback? Leibler divergence
    JEL: G11 G12
    Date: 2021–04
  8. By: De Giorgi, Giacomo; Gambetti, Luca; Naguib, Costanza
    Abstract: Life expectancy for Blacks is about 8 year shorter than for Whites. A shorter life expectancy, in line with the theoretical prediction of a simple model, determines a much lower amount of savings and wealth accumulation and therefore a lower degree of insurance. This, in turn, contributes to persistent racial differentials in life-cycle consumption. Starting from the same position in the consumption distribution Blacks end up in a lower percentile than Whites after a few decades. This is particularly marked for those Blacks who start at the top of the consumption distribution, where Whites are much more persistent. We document these facts using 40 years of PSID data (1981-2017).
    Keywords: Consumption; health; Income; inequality; Persistence
    JEL: C3 D12 E21 E63
    Date: 2020–08
  9. By: Patrick Cheridito; John Ery; Mario V. W\"uthrich
    Abstract: We introduce a neural network approach for assessing the risk of a portfolio of assets and liabilities over a given time period. This requires a conditional valuation of the portfolio given the state of the world at a later time, a problem that is particularly challenging if the portfolio contains structured products or complex insurance contracts which do not admit closed form valuation formulas. We illustrate the method on different examples from banking and insurance. We focus on value-at-risk and expected shortfall, but the approach also works for other risk measures.
    Date: 2021–05
  10. By: Bilbiie, Florin Ovidiu; Monacelli, Tommaso
    Abstract: Stabilization and redistribution are intertwined in a model with heterogeneity, imperfect insurance, and nominal rigidity---making fiscal and monetary policy inextricably linked. Changes in government spending that are associated with changes in the distribution of taxes (progressive vs. regressive) induce a tradeoff for monetary policy: the central bank cannot stabilize real activity at its efficient level (including insurance) and simultaneously avoid inflation. Fiscal policy can be used in conjunction to monetary policy to strike the optimal balance between stabilization and insurance (redistribution) motives.
    Keywords: aggregate demand; inequality; Optimal Monetary-Fiscal Policy; redistribution; TANK
    JEL: D91 E21 E62
    Date: 2020–08
  11. By: Andreeva, Andriyana; Yolova, Galina
    Abstract: The paper examines typical for the Labour and Social Security Law functions, in the aspect of their interrelationship, essence, and specificities in the circumstances of pandemic and the connected to it consequences on the respective category of public relations. The accent is put on both the traditional understanding of the nature of the functions of both law branches as well as their refraction through the prism of their development in emergency situations, imposing stronger commitment of the legislative mechanism for protection of basic and existential rights of the persons – the right to work, the right of social security and social protection. Based on the research the authors systematize conclusions and make proposals with specific theoretical and practical orientation.
    Keywords: functions of the Labour Law, protection function, social function of the Social Security Law, social protection, social security
    JEL: K31
    Date: 2021
  12. By: Klauber, Hannah (Mercator Research Institute on Global Commons and Climate Change (MCC)); Holub, Felix (University of Mannheim); Koch, Nicolas (Mercator Research Institute on Global Commons and Climate Change (MCC)); Pestel, Nico (IZA); Ritter, Nolan (Mercator Research Institute on Global Commons and Climate Change (MCC)); Rohlf, Alexander (Mercator Research Institute on Global Commons and Climate Change (MCC))
    Abstract: We examine the persistence of the impact of early-life exposure to air pollution on children's health from birth to school enrollment using administrative public health insurance records covering one third of all children in Germany. For identification, we exploit air quality improvements caused by the implementation of Low Emission Zones, a policy imposing driving restrictions on high-emission vehicles. Our results indicate that children exposed to cleaner air around birth require less medication for at least five years. The initially latent health response materializes only gradually in lower medication usage, leaving important but subtle health benefits undetected in common measures of infant health.
    Keywords: policy evaluation, cohort study, air pollution, health, children, Low Emission Zone
    JEL: I18 Q51 Q53 Q58
    Date: 2021–05
  13. By: Rick van der Ploeg (University of Oxford); Ton van den Bremer (University of Oxford)
    Abstract: The social cost of carbon is the expected present value of damages from emitting one ton of carbon today. We use perturbation theory to derive an approximate tractable expression for this cost adjusted for climatic and economic risk. We allow for different aversion to risk and intertemporal fluctuations, skewness and dynamics in the risk distributions of climate sensitivity and the damage ratio, and correlated shocks. We identify prudence, insurance, and exposure effects, reproduce earlier analytical results, and offer analytical insights into numerical results on the effects of economic and damage ratio uncertainty and convex damages on the optimal carbon price.
    Keywords: precaution, insurance, exposure, economic and climatic and damage uncertainties, skewness, mean reversion, correlated risks, risk aversion, intergenerational inequality aversion, convex damages
    JEL: H21 Q51 Q54
    Date: 2021–05–24
  14. By: Ankita Patnaik; Jeffrey Hemmeter; Arif Mamun
    Abstract: This brief summarizes the results of a study exploring the initial experiences and outcomes of youth with Autism Spectrum Disorder participating in the Promoting Readiness of Minors in Supplemental Security Income (PROMISE) initiative.
    Keywords: disability, autism, PROMISE, supplemental security income
  15. By: Petit, Gillian; Tedds, Lindsay M.
    Abstract: The Canada Emergency Response Benefit (CERB) was a temporary cash transfer program for workers who had reduced earnings due to the COVID-19 pandemic over the period of March 15 and October 2, 2020. While the benefits of getting the CERB out the door as quickly as possible should not be understated, the speed with which the CERB was rolled out led to the program being implemented without clear objectives, the nature of the benefit not defined, and no time for detailed negotiations within and across governments as to how the CERB would be treated not only related to eligibility for other programs, but also the benefit levels delivered by these programs. There are three possible ways in which the CERB could be treated by these various programs: as an employment insurance benefit, as working income, or as a benefit payment. Each of these different ways of treating the CERB has different implications for eligibility and for the level of benefit from other government programs. The purpose of this chapter is to examine how the failure to provide a universal definition of the CERB led to it being treated differently, not only across governments, but also differently by various programs within a given government. We will show that what might have appeared to be a minor technical administrative oversight led to confusion by CERB beneficiaries who were also collecting other government benefits over program interaction effects that differed depending on which jurisdiction the CERB beneficiary lived.
    Keywords: Federalism, COVID-19, Social Assistance, Canada Emergency Response Benefit, Program Interactions, Welfare Wall
    JEL: H39 H53 H77 I38
    Date: 2021–05–18
  16. By: Andreeva, Andriyana; Yolova, Galina
    Abstract: This paper examinessome actual questions related to the digital transformation in healthcare in the context of the right of access to health care. The authors have focused the research on problems in a particularly sensitive area, namely health care viewed through the prism of modern transformations in the digital age. The aimofthe paperisto outline the tendencies, characterizing the digitalization in healthcare in their respective normative aspects and the way o f influencing the legal relations in the sphere of healthcare and especially in establishing unconditional, legally protected and guaranteed access to healthcare. I n conclusion, specific conclusions and summaries are formulated.
    Keywords: health care, access to health care, digital transformation
    JEL: K32
    Date: 2021
  17. By: Ellen Bouchery
    Abstract: This brief discusses trends in the capacity for the mental health treatment system to meet current need.
    Keywords: mental health, treatment, capacity, system
  18. By: van der Meulen Rodgers , Yana (Rutgers University); Zveglich, Jr. , Joseph E. (Asian Development Bank)
    Abstract: Populations become increasingly feminized with age. Since older women are more vulnerable to poverty, they may find it more difficult than men to access health care. This study examines factors that may constrain older persons in Southeast Asia from meeting their health-care needs when sick. Our analysis of household survey data from Cambodia, the Philippines, and Viet Nam shows that women are more likely to have reported sickness or injury than men, a difference that is meaningful and statistically significant. While women in Cambodia and the Philippines are more likely to seek treatment than men, the gender difference is reversed in Viet Nam where stigma and discrimination associated with some diseases may more strongly deter women. The probability of seeking treatment rises with age more sharply for women than men in all countries. However, for the subsample of elders, the gender difference is not significant.
    Keywords: elderly; gender; health; health care; women
    JEL: I14 J16 O53
    Date: 2021–02–12
  19. By: Kunz, Johannes; Propper, Carol; Staub, Kevin; Winkelmann, Rainer
    Abstract: We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals.
    Keywords: A ordable Care Act; Competition; Hospital quality
    JEL: H51 I1 I11 I18
    Date: 2020–07

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