|
on Insurance Economics |
|
Issue of 2021‒08‒23
twenty-six papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Michael J. Gropper; Camelia M. Kuhnen |
| Abstract: | Theoretically, wealthier people should buy less insurance, and should self-insure through saving instead, as insurance entails monitoring costs. Here, we use administrative data for 63,000 individuals and, contrary to theory, find that the wealthier have better life and property insurance coverage. Wealth-related differences in background risk, legal risk, liquidity constraints, financial literacy, and pricing explain only a small fraction of the positive wealth-insurance correlation. This puzzling correlation persists in individual fixed-effects models estimated using 2,500,000 person-month observations. The fact that the less wealthy have less coverage, though intuitively they benefit more from insurance, might increase financial health disparities among households. |
| JEL: | D14 G22 G51 G52 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29069&r= |
| By: | Howard Kunreuther; Lynn Conell-Price; Paul Kovacs; Katsuichiro Goda |
| Abstract: | This paper describes the design and analysis of a web-based choice experiment that examines how the demand for earthquake protection in Quebec and British Columbia is influenced by the default option and the structure of the insurance plan. Homeowners in both provinces were given the opportunity to purchase protection against earthquake losses when presented with one of the following options: the current private insurance plan, a high deductible private insurance plan, and a proposed public-private risk pool. The default frame was changed so the homeowner could either opt-in by purchasing this coverage or opt-out of being given this protection and receiving a premium discount. Assigning participants to a public-private risk pool rather than the current private insurance plan increases the likelihood of purchasing earthquake protection by 151%. The opt-out frame leads to a likelihood greater than 1.6 of purchasing coverage relative to the opt-in frame when given the same plan structure. The policy implications of this finding are discussed. |
| JEL: | D81 G22 H12 H44 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29144&r= |
| By: | Ralph S. J. Koijen; Motohiro Yogo |
| Abstract: | Since the mid-1980s, the share of household net worth intermediated by US financial institutions has shifted from defined benefit plans to life insurers and defined contribution plans. Life insurers have primarily grown through variable annuities, which are mutual funds with longevity insurance, a potential tax advantage, and minimum return guarantees. The minimum return guarantees change the primary function of life insurers from traditional insurance to financial engineering. Variable annuity insurers are exposed to interest and equity risk mismatch and suffered especially low stock returns during the COVID-19 crisis. We consider regulatory changes, such as more detailed financial disclosure and standardized stress tests, to monitor potential risk mismatch and to ensure stability of the insurance sector. |
| JEL: | G22 G32 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29030&r= |
| By: | Michael Levere; David Mann; David Wittenburg |
| Abstract: | This brief contains a detailed comparison of POD and BOND that explains the benefit offset rules and recruitment processes, summarizes characteristics of beneficiaries who enrolled in the demonstrations, and analyzes early use of the benefit offset. |
| Keywords: | Social Security Disability Insurance (SSDI), demonstration project, comparison, work incentives, benefit offset |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:4d5cea0b0cf843c4845033ed11b4d2d0&r= |
| By: | Ariel Pakes; Jack R. Porter; Mark Shepard; Sophie Calder-Wang |
| Abstract: | We provide a new method to analyze discrete choice models with state dependence and individual-by-product fixed effects and use it to analyze consumer choices in a policy-relevant environment (a subsidized health insurance exchange). Moment inequalities are used to infer state dependence from consumers’ switching choices in response to changes in product attributes. We infer much smaller switching costs on the health insurance exchange than is inferred from standard logit and/or random effects methods. A counterfactual policy evaluation illustrates that the policy implications of this difference can be substantive. |
| JEL: | C13 D12 I11 L60 M31 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29025&r= |
| By: | Heinrich Hock; Michael Levere; Kenneth Fortson; David Wittenburg |
| Abstract: | This brief summarizes findings from a rapid-cycle experiment conducted during the recruitment pilot, which included mailings to 31,296 beneficiaries. |
| Keywords: | Social Security Disability Insurance (SSDI), demonstration project, study recruitment, outreach methods, randomized controlled trial, rapid-cycle test, effectiveness, efficiency |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:0c1207550f4f403185e3959d3ef15e80&r= |
| By: | Alois Pichler; Dana Uhlig |
| Abstract: | The Covid-19 pandemic still causes severe impacts on society and the economy. This paper studies excess mortality during the pandemic years 2020 and 2021 in Germany empirically with a special focus on the life insurer's perspective. Our conclusions are based on official counts of German governmental offices on the living and deaths of the entire population. Conclusions, relevant for actuaries and specific insurance business lines, including portfolios of pension, life, and health insurance contracts, are provided. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.12899&r= |
| By: | Heinrich Hock; Michael Levere; David Wittenburg |
| Abstract: | This brief summarizes findings from an experiment to assess messaging strategies for final reminder postcards sent to 146,548 beneficiaries. |
| Keywords: | Social Security Disability Insurance (SSDI), demonstration project, study recruitment, outreach methods, randomized controlled trial, rapid-cycle test, effectiveness, efficiency |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:badf9d170b124bc8abab052bc6156b6c&r= |
| By: | Arif Mamun; David Wittenburg; Noelle Denny-Brown; Michael Levere; David Mann; Rebecca Coughlin; Sarah Croake; Heather Gordon; Denise Hoffman; Rachel Holzwart; Rosalind Keith; Brittany McGill; Aleksandra Wec |
| Abstract: | This report presents interim process, participation, and impact findings for POD through 2019—the first year after enrollment activities were completed. We organized the analyses around five research questions. |
| Keywords: | Social Security Disability Insurance (SSDI), demonstration project, randomized controlled trial, impact analysis, process analysis, participation analysis, implementation, counseling services, benefit offset |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:caa99d38a8b14f968ea3438e5e498987&r= |
| By: | Michael Levere; David Wittenburg; Heinrich Hock; John T. Jones |
| Abstract: | This study presents evidence on using outreach motivated by behavioral research to encourage enrollment in a pilot initiative with the Social Security Administration that simplified Social Security Disability Insurance payment rules. |
| Keywords: | Messaging, Behavioral outreach, Program take-up, Randomized controlled trial, Disability employment |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:0c17d5c1847d453091eb6356c11829db&r= |
| By: | Benjamin R. Handel; Kate Ho |
| Abstract: | In this paper we outline the tools that have been developed to model and analyze competition and regulation in health care markets, and describe particular papers that apply them to policy-relevant questions. We focus particularly on the I.O. models and empirical methods and analyses that researchers have formulated to address policy-relevant questions, although we also provide an overview of the institutional facts and findings that inform them. We divide the chapter into two broad sections: (i) papers considering competition and price-setting among insurers and providers and (ii) papers focused specifically on insurance and market design. The former set of papers is largely concerned with models of oligopolistic competition; it is often focused on the US commercial insurance market where prices are market-determined rather than being set administratively. The latter focuses on insurance market design with an emphasis on issues raised by asymmetric information, leading to adverse selection and moral hazard. In addition, we discuss the literature on consumer choice frictions in this market and the significant implications of those frictions for I.O. questions. |
| JEL: | I11 L13 L2 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29137&r= |
| By: | Heinrich Hock; David Wittenburg; Michael Levere; Noelle Denny-Brown; Heather Gordon |
| Abstract: | This report provides a comprehensive assessment of the recruitment effort to identify, solicit, and enroll volunteers for POD. |
| Keywords: | Social Security Disability Insurance (SSDI), demonstration project, study recruitment, outreach methods, randomized controlled trial, baseline balance, withdrawals |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:a012f95df3d34407914ab411522af5cd&r= |
| By: | Gregory Peterson; Jia Pu; David J. Magid; Linda Barterian; Keith Kranker; Michael Barna; Leslie Conwell; Adam Rose; Laura Blue; Amanda Markovitz; Nancy McCall; Patricia Markovich |
| Abstract: | The Million Hearts Cardiovascular Disease (CVD) Risk Reduction Model pays provider organizations for measuring and reducing Medicare patients’ cardiovascular risk. |
| Keywords: | Million Hearts Cardiovascular Disease, Medicare |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:3fb21f4c92344499a62d233a119adab3&r= |
| By: | Rachel Machta; Gregory Peterson; Jason Rotter; Kate Stewart; Shannon Heitkamp; Isabel Platt; Danielle Whicher; Keri Calkins; Keith Kranker; Linda Barterian; Nancy McCall |
| Abstract: | This is the first report for the independent evaluation of the Maryland Total Cost of Care (MD TCOC) Model. The report findings describe model implementation in the first two years and will serve as a foundation for interpreting future impact estimates and what aspects of the model might drive them. |
| Keywords: | Maryland, Maryland Total Cost of Care Model, Implementation Report, Total Cost of Care, MDTCOC, MD TCOC, TCOC, Maryland All-Payer Model, All-Payer Model, MDAPM, APM, hospitals, Maryland hospitals, health systems, hospital global budgets, global budgets, care partners, Care Redesign Program, Hospital Care Improvement Program, Episode Care Improvement Program, Care Transformation Initiatives, Health Services Cost Review Commission, HSCRC, Chesapeake Regional Information System for our Patients, CRISP, Care Transformation Organizations, primary care practices, Maryland Primary Care Program, MDPCP, care delivery requirements, care management, patient and family advisory council, Maryland Department of Health, MDH, Comprehensive Primary Care Payments, Statewide Integrated Health Improvement Strategy, preventable hospitalizations, diabetes, opioids, Regional Partnership Catalyst Grants, Screening Brief Intervention and Referral to Treatment, SBIRT, Value-based purchasing, payment reform, patient outcomes, patient experience, Quality Payment Program, Medicare fee-for-service, CAHPS, quality of care, impacts, effects, advanced primary care |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9b83004534474abcac2e291b6de5479e&r= |
| By: | Oeindrila Dube; Sendhil Mullainathan; Devin G. Pope |
| Abstract: | Many government services are provided at the state level such as unemployment insurance, Medicaid, and SNAP. Given the lack of competition, a natural worry is that customer support provided by states for these services is less than adequate. While there are many different measures of how a state can support beneficiaries, we focus on just one in this short and applied report: the ability to get a live representative on the phone to help with an application question. To do this, we take a “mystery shopping” approach and make 2,000 phone calls to state government offices. We find substantial heterogeneity in the availability of live phone representatives across states and types of service (UI, Medicaid, etc.). For example, live representatives in New Jersey and Georgia were reached less than 20% of the time while representatives in New Hampshire and Wisconsin were reached more than 80% of the time. We hope that this report provides a simple example for how academics, investigative reporters, and watch groups can help states be more accountable for their customer support systems. |
| JEL: | H0 I38 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29055&r= |
| By: | Liepmann, Hannah (ILO International Labour Organization); Pignatti, Clemente (ILO International Labour Organization) |
| Abstract: | We analyze for the first time the welfare effects of unemployment benefits (UBs) in a context of high informality, exploiting matched administrative and survey data with individual-level information on UB receipt, formal and informal employment, wages and consumption. Using a difference-in-differences approach, we find that dismissal from a formal job causes a large drop in consumption, which is between three to six times larger than estimates for developed economies. This is generated by a permanent shift of UB recipients towards informal employment, where they earn substantially lower wages. We then exploit a kink in benefits and show that more generous UBs delay program exit through a substitution of formal with informal employment. However, the disincentive effects are small and short-lived. Because of the high insurance value and the low efficiency costs, welfare effects from increasing UBs are positive for a range of values of the coefficient of relative risk aversion. |
| Keywords: | unemployment benefits, welfare effects, informal employment |
| JEL: | J46 J65 J68 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14601&r= |
| By: | Debra Lipson; Erin Weir-Lakhmani |
| Abstract: | David Meyers and colleagues (Feb 2021) examine the effects of Medicare Advantage (MA) star ratings on patient outcomes by studying what happens when enrollees are shifted to higher-rated plans via contract consolidation. |
| Keywords: | Medicare Advantage, star ratings, enrollees, higher rated plans |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:b54fbc00cda14b14b2cd3bab850f1e62&r= |
| By: | Gopi Shah Goda; Emilie Jackson; Lauren Hersch Nicholas; Sarah See Stith |
| Abstract: | The COVID-19 pandemic and associated mitigation strategies exacted a large economic toll on large portions of the United States population. For older and disabled workers, the effects could be more persistent and fiscally costly than the impacts experienced by young, healthy workers due to the spillovers onto Social Security. We use Current Population Survey, Social Security administrative data on applications for retirement and disability benefits, and Google Trends data to assess the impact of COVID-19 on older adults age 50-70. We find that employment for this group dropped substantially more than would have been predicted prior to the pandemic: employment for 50-61 year olds was 5.7 pp (8.3 percent) lower, while employment for 62-70-year- olds was 3.9 pp (10.7 percent) lower. For people aged 50-61, unemployment and labor force exits due to reasons other than disability and retirement represented 63 and 30 percent of the employment decline, respectively. For those aged 62-70, the two largest components of the reduction were unemployment (50 percent) and retirement-driven labor force exits (30 percent). We find evidence of declines in reporting a labor force exit due to disability (4-5 percent), applications for disability insurance (15 percent), and Google search intensity for disability (7 percent). Retirement benefit claiming remains largely unchanged overall, though we find evidence that applicants substituted towards filing for benefits via the internet. We explore potential mechanisms and find evidence for both supply- and demand-side explanations. |
| JEL: | H53 H55 J22 J23 J26 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29083&r= |
| By: | Embry M. Howell; Justin W. Morgan; Caitlin Cross-Barnet; Elizabeth Potamites; Keith Kranker |
| Abstract: | Birth certificate data, collected for every birth in the United States, are frequently used for public health research. |
| Keywords: | birth certificate, variables, Medicaid, public health |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:5f06b4e579f44a688c4ce2671a5ca1ce&r= |
| By: | Tamara Bischof; Michael Gerfin; Tobias Mueller |
| Abstract: | We study the role of inattention as a key source of inertia in health plan choices. Our structural model shows that more than 90% of the elderly in Switzerland are inattentive and thus stick to their previous plan. We estimate sizeable switching costs even conditional on attention explaining part of the observed choice persistence. Inattention leads to overspending and generates considerable welfare losses for most consumers. A policy simulation shows that eliminating financially dominated plans from the choice set yields welfare gains for two thirds of individuals. |
| Keywords: | health plan choice, inertia, attention, switching costs, managed competition, elderly |
| JEL: | D12 G22 I13 D90 J14 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp2111&r= |
| By: | Jeffrey Clemens; Michael J. Wither |
| Abstract: | Interactions between redistributive policies can confront low-income households with complicated choices. We study one such interaction, namely the relationship between Medicaid eligibility thresholds and the minimum wage. A minimum wage increase reduces the number of hours a low-skilled individual can work while retaining Medicaid eligibility. We show that the empirical and welfare implications of this interaction can depend crucially on the relevance of labor market frictions. Absent frictions, affected workers may maintain Medicaid eligibility through small reductions in hours of work. With frictions, affected workers may lose Medicaid eligibility unless they leave their initial job. Empirically, we find that workers facing this scenario became less likely to participate in Medicaid, less likely to work, and more likely to spend time looking for new jobs, including search while employed. The observed outcomes suggest that low-skilled workers face substantial labor market frictions. Because adjustment is costly, tinkering with safety net program parameters that determine the location of program eligibility notches can be harmful to beneficiaries. |
| JEL: | H75 I38 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29028&r= |
| By: | Brewer, Mike; Tasseva, Iva |
| Abstract: | We analyse the UK policy response to Covid-19 and its impact on household incomes in the UK in April and May 2020, using microsimulation methods. We estimate that households lost a substantial share of their net income of 6.9% on average. But policies protected household incomes to a substantial degree: compared to the drop in net income, GDP per capita fell by 18.9% between the first and second quarter of 2020. Earnings subsidies (the Coronavirus Job Retention Scheme) protected household finances and provided the main insurance mechanism during the crisis. Besides subsidies, Covid-related increases to state benefits, as well as the automatic stabilisers in the tax and benefit system, played an important role in mitigating the income losses. However, analysing the impact of a near-decade of austerity on the UK safety net, we find that, compared to 2011 policies, the 2020 pre-Covid tax-benefit policies would have been less effective in insuring incomes against the shocks. We also assess the potential distributional impact of introducing a Universal Basic Income (UBI) instead of the Covid emergency measures and find that a UBI would have supported the incomes of different vulnerable groups but would have provided less protection to those hit hardest by the labour market shocks. |
| Keywords: | Covid-19; coronavirus; earnings subsidies and tax-benefit policies; income distribution; Springer deal |
| JEL: | D31 E24 H24 |
| Date: | 2021–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:110512&r= |
| By: | Giancarlo Corsetti; Anna Lipínska; Giovanni Lombardo |
| Abstract: | Crises and tail events have asymmetric effects across borders, raising the value of arrangements improving insurance of macroeconomic risk. Using a two-country DSGE model, we provide an analytical and quantitative analysis of the channels through which countries gain from sharing (tail) risk. Riskier countries gain in smoother consumption but lose in relative wealth and average consumption. Safer countries benefit from higher wealth and better average terms of trade. Calibrated using the empirical distribution of moments of GDP-growth across countries, the model suggests significant quantitative effects. We offer an algorithm for the correct solution of the equilibrium using DSGE models under complete markets, at higher order of approximation. |
| Keywords: | international risk sharing, asymmetry, fat tails, welfare |
| JEL: | F15 F41 G15 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:958&r= |
| By: | Kumar Sur, Pramod |
| Abstract: | Can a domestic policy implemented by the government in the past help explain the puzzling practice of health care usage today? I study this question in the context of India, where households' use of primary health care services presents a paradox. A significant fraction of Indian households uses fee-charging private health care services even though most providers have no formal medical qualifications. The private share of health care use is even higher in markets where qualified doctors offer free care through public clinics. Combining contemporary household-level data with archival records, I examine the aggressive family planning program implemented during the emergency rule in the 1970s and explore whether the coercion, disinformation, and carelessness involved in implementing the program could partly explain the puzzle. Exploiting the timing of the emergency rule, state-level variation in the number of sterilizations, and an instrumental variable approach, I show that the states heavily affected by the sterilization policy have a lower level of public health care usage today. I demonstrate the mechanism for this practice by showing that the states heavily affected by forced sterilizations have a lower level of confidence in government hospitals and doctors and a higher level of confidence in private hospitals and doctors in providing good treatment. |
| Keywords: | Health care market, health care usage, confidence in institutions, sterilization, persistence, India, I11, N35, I12, J13 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000186&r= |
| By: | Tal Gross; Adam Sacarny; Maggie Shi; David Silver |
| Abstract: | We study a 2008 policy reform in which Medicare revised its hospital payment system to better reflect patients’ severity of illness. We construct a simulated instrument that predicts a hospital’s policy-induced change in reimbursement using pre-reform patients and post-reform rules. The reform led to large persistent changes in Medicare payment rates across hospitals. Hospitals that faced larger gains in Medicare reimbursement increased the volume of Medicare patients they treated. The estimates imply a volume elasticity of approximately unity. To accommodate greater volume, hospitals increased nurse employment, but also lowered length of stay, with ambiguous effects on quality. |
| JEL: | I18 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29023&r= |
| By: | Jeffrey Hemmeter; Michael Levere; Pragya Singh; David Wittenburg |
| Abstract: | This article provides new evidence of the changing role of the Supplemental Security Income (SSI) program for low-income children since 1997. |
| Keywords: | Supplemental Security Income, low-income children |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:f8fc6e53cb6b4185bc79b22545a90a28&r= |