nep-ias New Economics Papers
on Insurance Economics
Issue of 2021‒12‒13
thirteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Long-Term Care Partnership Effects on Medicaid and Private Insurance By Costa-Font, Joan; Raut, Nilesh
  2. Medicaid Expansion and the Mental Health of Spousal Caregivers By Costa-Font, Joan; Raut, Nilesh; Van Houtven, Courtney
  3. The Impact of Provider Payments on Health Care Utilization: Evidence from Medicare and Medicaid By Marika Cabral; Colleen Carey; Sarah Miller
  4. On the Risk Efficiency of a Weather Index Insurance Product for the Brazilian Semi-Arid Region By Lavorato, Mateus; Braga, Marcelo José
  5. Why Is Workplace Sexual Harassment Underreported? The Value of outside Options amid the Threat of Retaliation By Dahl, Gordon B.; Knepper, Matthew
  6. Misdiagnosing Bank Capital Problems By Bulow, Jeremy; Klemperer, Paul
  7. Evaluation of the Million Hearts® Cardiovascular Disease Risk Reduction Model: Third Annual Report By Laura Blue; Gregory Peterson; Keith Kranker; Tessa Huffman; Alli Steiner; Amanda Markovitz; Malcolm Williams; Kate Stewart; Julia Rollison; Jia Pu; Thomas Concannon; Liisa Hiatt; Nabeel Qureshi; Precious Ogbuefi; David Magid; Leslie Conwell; Nancy McCall; Michael Barna; Linda Barterian; Elizabeth Holland; Dan Kinber; Sandi Nelson; Lei Rao; Carol Razafindrakoto; Danielle Whicher
  8. Advancing Universal Health Coverage in the COVID-19 Era : An Assessment of Public Health Services Technical Efficiency and Applied Cost Allocation in Cambodia By Robert John Kolesar; Peter Bogetoft; Vanara Chea; Guido Erreygers; Sambo Pheakdey
  9. Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties By Klaus-Peter Hellwig
  10. The Impact of Financial Inclusion on Household Health Expenditures in Africa By Ofeh M. Edoh; Tii N. Nchofoung; Ofeh E. Anchi
  11. Unintended Effects From the Expansion of the Non-Contributory Health System in Peru By Jose Torres
  12. Volatility-reducing biodiversity conservation under strategic interactions By Emmanuelle Augeraud-Véron; Giorgio Fabbri; Katheline Schubert
  13. Hardship Financing, Productivity Loss, and the Economic Cost of Illness and Injury in Cambodia By Robert John Kolesar; Guido Erreygers; Wim van Dam; Vanara Chea; Theany Choeurng; Soklong Leng

  1. By: Costa-Font, Joan (London School of Economics); Raut, Nilesh (London School of Economics)
    Abstract: Can the expansion of Medicaid, a means-tested health and long-term care insurance, be slowed down by incentivising the purchase of private long-term care insurance (LTCI)? We study the implementation of the long-term care insurance partnership (LTCIP) program, a joint federal and state-level program that intended to promote LTCI coverage. Drawing on a difference-in-differences (DD) design we study the effect of the rollout of the LTCIP program between 2005 and 2016 on both LTCI uptake and Medicaid eligibility, and we estimate the effect on Medicaid savings. Drawing on a difference-in-differences (DD) design, we find that, unlike previous estimates, the introduction of the LTCIP does significantly increase LTCI coverage and reduce the uptake of Medicaid. The effects are driven by the introduction of LTCIP in states after 2010. We estimate that the adoption of LTCIP has given rise to an average Medicaid saving of $36 for every 65-year-old. This suggests scope for LTCI arrangements to reduce Medicaid spending.
    Keywords: long-term care partnerships, long-term care insurance, Medicaid, United States, difference-in-differences
    JEL: I18 H11 H24
    Date: 2021–09
  2. By: Costa-Font, Joan (London School of Economics); Raut, Nilesh (London School of Economics); Van Houtven, Courtney (Duke University)
    Abstract: Health insurance expansions can exert wellbeing effects on individuals who provide informal care to their loved ones, reducing their experience of depression. This study exploits evidence from the Affordable Care Act's (ACA) Medicaid expansion to examine the effects on the mental wellbeing of informal caregivers. Drawing on an event study and a Difference-in-Differences (DID) design we investigate the policy impact of ACA Medicaid expansion using longitudinal evidence (from the Health and Retirement Study, HRS) for 2010 to 2018 for low-income individuals aged 64 or below. We find that ACA's Medicaid expansion reduced depressive symptoms among caregivers, and specifically we estimate that exposure to ACA Medicaid expansion gives rise to a 0.38 points (equivalent to 4-5%) reduction in the CESD score (a negative scale in which the lowest scale indicates the best mental wellbeing). We also find that ACA Medicaid causes a spillover effect at the household level, improving the well-being of the spouse care recipient. Our results are robust to various specifications, and we identify several potential driving mechanisms for the findings: reductions in out-of-pocket expenses and labor supply and, as expected, increased Medicaid uptake. The evidence from falsification tests confirms that the estimated effects are purely due to ACA's Medicaid expansion and no other phenomena.
    Keywords: insurance expansion, Medicaid, mental wellbeing, ACA, spousal mental health, informal care
    JEL: I18
    Date: 2021–09
  3. By: Marika Cabral; Colleen Carey; Sarah Miller
    Abstract: Provider payments are the key determinant of insurance generosity within many health insurance programs covering low-income populations. This paper analyzes the effects of a large, federally-mandated provider payment increase for primary care services provided to low-income elderly and disabled individuals. Drawing upon comprehensive administrative payment and utilization data, we leverage variation across beneficiaries and across providers in the policy-induced payment increase in difference-in-differences and triple differences research designs. The estimates indicate that the provider payment reform led to a 6.3% increase in the targeted services provided to eligible beneficiaries, indicating an implied payment elasticity of 1.3. Further, the provider payment reform decreased the fraction of low-income beneficiaries with no primary care visit in a year by 9%, completely closing the gap relative to higher-income beneficiaries with the same observable characteristics. Additionally, the results indicate that the payment reform caused an increase in established patient visits, with no increase in new patient visits. Heterogeneity analysis indicates that the payment increase led to an expansion of utilization for many subgroups, with somewhat larger effects among beneficiaries who are younger, are white, and live in areas with many primary care providers per capita.
    JEL: I11 I14 I18
    Date: 2021–11
  4. By: Lavorato, Mateus; Braga, Marcelo José
    Keywords: Risk and Uncertainty
    Date: 2021–08
  5. By: Dahl, Gordon B. (University of California, San Diego); Knepper, Matthew (University of Georgia)
    Abstract: Why is workplace sexual harassment chronically underreported? We hypothesize that employers coerce victims into silence through the threat of a retaliatory firing, and test this theory by estimating whether external shocks that reduce the value of a worker's outside options exacerbate underreporting. Under mild assumptions, a rise in the severity of formal complaints is indicative of increased underreporting. Combining this insight with an objective measure of the quality of charges filed with the Equal Employment Opportunity Commission (EEOC), we perform two analyses. First, we assess whether workers report sexual harassment more selectively during recessions, when outside labor market options are limited. We estimate the fraction of sexual harassment charges deemed to have merit by the EEOC increases by 0.5-0.7% for each one percentage point increase in a state-industry's monthly unemployment rate. The effect is amplified in industries employing a larger fraction of men and in establishments with a higher share of male managers. Second, we test whether less generous UI benefits create economic incentives for victims of workplace sexual harassment to remain silent. We find the selectivity of sexual harassment charges increases by more than 30% in response to a 50% cut to North Carolina's Unemployment Insurance (UI) program following the Great Recession.
    Keywords: unemployment insurance, unemployment, sexual harassment
    JEL: J71 J78
    Date: 2021–09
  6. By: Bulow, Jeremy (Stanford University); Klemperer, Paul (Oxford University)
    Abstract: Banks' reluctance to repair their balance sheets, combined with deposit insurance and regulatory forbearance in recognizing greater risks and losses, can lead to solvency problems that look like liquidity (bank-run) crises. Regulatory forbearance incentivizes banks to both retain risky loans and reject new good opportunities. With suffcient regulatory forbearance, partially-insured banks act exactly as if they are fully insured. Stress tests certify that uninsured creditors will be paid, not solvency, and have ambiguous effects on the efficiency of investment.
    JEL: G10 G21 G28 G32
    Date: 2021–08
  7. By: Laura Blue; Gregory Peterson; Keith Kranker; Tessa Huffman; Alli Steiner; Amanda Markovitz; Malcolm Williams; Kate Stewart; Julia Rollison; Jia Pu; Thomas Concannon; Liisa Hiatt; Nabeel Qureshi; Precious Ogbuefi; David Magid; Leslie Conwell; Nancy McCall; Michael Barna; Linda Barterian; Elizabeth Holland; Dan Kinber; Sandi Nelson; Lei Rao; Carol Razafindrakoto; Danielle Whicher
    Abstract: In its first three years, the Million Hearts Model improved cardiovascular preventive care, but did not yet reduce observed heart attacks and strokes or lower Medicare spending.
    Keywords: Million Hearts Model, Million Hearts Cardiovascular Disease Risk Reduction Model, evaluation, cardiovascular disease, CVD, causal pathway, CVD risk assessment, CVD risk score, heart attack, stroke, Center for Medicare & Medicaid Innovation, Centers for Medicare & Medicaid Services
  8. By: Robert John Kolesar (Abt Associates, UA - University of Antwerp, Cambodian Ministry of Economy and Finance, CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Peter Bogetoft (CBS - Copenhagen Business School [Copenhagen]); Vanara Chea (Cambodian Ministry of Economy and Finance); Guido Erreygers (UA - University of Antwerp); Sambo Pheakdey (Cambodian Ministry of Economy and Finance)
    Abstract: COVID-19 is causing serious impacts on tax revenue and consequentially on public health budgets. This study assesses Cambodia's public health services technical efficiency, unit costs, and utilization rates to quantify the extent to which current health financing can accommodate the expansion of social health protection coverage. Overall, for the public health system to be fully efficient output would need to increase by 34 and 73 percent for hospitals and health centers, respectively. We find public sector service quality, private sector providers, and non-discretionary financing to be statistically significant factors affecting technical efficiency. This study pioneers the application of Data Envelopment Analysis-Aumann-Shapley applied cost allocation to the health sector, enabling unit cost estimation for the major social health insurance payment categories. We estimate there is potential supply-side 'service space' to expand population coverage to an additional 4.69 million social health insurance beneficiaries with existing financing if the public health system were fully efficient.
    Keywords: health service efficiency,social health protection,costing,cost allocation,Universal Health Coverage
    Date: 2021–08–20
  9. By: Klaus-Peter Hellwig
    Abstract: I use three decades of county-level data to estimate the effects of federal unemployment benefit extensions on economic activity. To overcome the reverse causality coming from the fact that benefit extensions are a function of state unemployment rates, I only use the within-state variation in outcomes to identify treatment effects. Identification rests on a differences-in-differences approach which exploits heterogeneity in county exposure to policy changes. To distinguish demand and supply-side channels, I estimate the model separately for tradable and non-tradable sectors. Finally I use benefit extensions as an instrument to estimate local fiscal multipliers of unemployment benefit transfers. I find (i) that the overall impact of benefit extensions on activity is positive, pointing to strong demand effects; (ii) that, even in tradable sectors, there are no negative supply-side effects from work disincentives; and (iii) a fiscal multiplier estimate of 1.92, similar to estimates in the literature for other types of spending.
    Keywords: Automatic stabilizers; Fiscal multiplier; Labor markets; benefit extension; State UI scheme; benefit duration; emergency unemployment compensation program; benefit transfer; state UI fund; Unemployment; Employment; Unemployment rate
    Date: 2021–03–12
  10. By: Ofeh M. Edoh (University of Dschang, Cameroon); Tii N. Nchofoung (University of Dschang, Cameroon); Ofeh E. Anchi (University of Bamenda, Cameroon)
    Abstract: This study examines the impact of financial inclusion on household health expenditure in 17 African countries. It argues that financial inclusion is an active influencer of individuals’ health demand and that Gross Domestic Product (GDP) per capita and voluntary health insurance schemes tend to be active transmission channels through which financial inclusion affects household health expenditures. The study used an instrumental variable (2SLS) technique for the analysis over a period from 2008 to 2017.Results from the study show that being financially included leads to increase household health expenditures. Suggestions for policy emerging from this study to governments in Africa are on the aspect of fostering financial inclusion to a wider population alongside enhancing the Universal Health Coverage (UHC) plan to ease the burden of out-of-pocket payments on households.
    Keywords: Financial inclusion, Health expenditure, Out-of-pocket (OOP) payments, 2SLS
    JEL: G15 I13 C23
    Date: 2021–01
  11. By: Jose Torres
    Abstract: Over the last two decades, the Peruvian government has made great efforts to improve access to health care by significantly augmenting the coverage of the non-contributory public health care system Seguro Integral de Salud (SIS). This expansion has a positive impact on welfare and public health indicators, as it limits the risk of catastrophic health-related costs for previously uninsured individuals and allows for the appropriate treatment of illnesses. However, it also entails some unintended consequences for informality, tax revenues, and GDP, since a few formal agents are paying for a service that the majority of (informal) agents receive for free. In this paper, we use a general equilibrium model calibrated for Peru to simulate the expansion of SIS to quantify the unintended effects. We find that overall welfare increases, but informality rises by 2.7 percent, while tax revenues and output decrease by roughly 0.1 percent. Given the extent of the expansion in eligibility, the economic relevance of these results seems negligible. However, this occurs because the expansion of coverage was mostly funded by reducing the spending per-insured person. In fact, we find larger costs if public spending is increased to improve the quality of service given universal coverage.
    Keywords: care system Seguro Integral de Salud; IMF working paper Western Hemisphere department; unintended effect; health shock; health risk; avg. health spending; non-contributory health system SIS; Self-employment; Health care; Health care spending; Insurance; South America; Caribbean
    Date: 2021–04–23
  12. By: Emmanuelle Augeraud-Véron (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Giorgio Fabbri (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Katheline Schubert (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: How can decentralized individual decisions inefficiently reduce the ability of biodiversity to mitigate ecological and environmental variability and then its "natural insurance" role? In this article we present a simple theoretical setup to address this question and to evaluate some policy options. We study a model of strategic competition among farmers for the conversion of a natural forest to agricultural land. Unconverted forest land allows to conserve biodiversity, which contributes to reducing the volatility of agricultural production. Agents' utility is given in terms of a Kreps Porteus stochastic differential utility capable of disentangling risk aversion and aversion to fluctuations. We characterize the land used by each farmer and her welfare at the Nash equilibrium, we evaluate the overexploitation of the land and the agents' welfare loss compared to the socially optimal solution and we study the drivers of the inefficiencies of the decentralized equilibrium. After characterizing the value of biodiversity in the model, we use it to obtain a decomposition which helps to study the policy implications of the model by identifying in which cases the allocation of property rights is preferable to the introduction of a tax on land conversion. Our results suggest that enforcing property rights is more relevant in case of stagnant economies while taxing land conversion may be more suited for rapidly developing economies.
    Keywords: Stochastic differential games,Recursive preferences,Land conversion,Insurance value,Biodiversity
    Date: 2021–08–25
  13. By: Robert John Kolesar (Abt Associates, UA - University of Antwerp, Cambodian Ministry of Economy and Finance, CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Guido Erreygers (UA - University of Antwerp); Wim van Dam (ITM - Institute of Tropical Medicine [Antwerp]); Vanara Chea (Cambodian Ministry of Economy and Finance); Theany Choeurng (Cambodian Ministry of Economy and Finance); Soklong Leng (Cambodian Ministry of Economy and Finance)
    Abstract: Financial risk protection is a core dimension of Universal Health Coverage. Hardship financing, defined as borrowing and selling land or assets to pay for healthcare, is a measure of last recourse. To inform efforts to improve Cambodia's social health protection system we analyze 2019-2020 Cambodia Socioeconomic Survey data to assess hardship financing, illness and injury related productivity loss, and estimate related economic impacts. We apply two-stage Instrumental Variable multiple regression to address endogeneity relating to net income. More than 98,500 households or 2.7% of the total population resorted to hardship financing over the past year. Factors significantly increasing risk are having an Equity card, higher out-of-pocket healthcare expenditures, illness or injury related productivity loss, and spending of savings. The economic burden from annual lost productivity from illness or injury amounts to USD 459.9 million or 1.7% of GDP. The estimated household economic cost related to hardship financing is USD 250.8 million or 0.9% of GDP. Such losses can be mitigated with policy measures such as linking a catastrophic health coverage mechanism to the Health Equity Funds, capping interest rates on health-related loans, and using loan guarantees to incentivize microfinance institutions and banks to refinance health-related, high-interest loans from money lenders.
    Keywords: social health protection,poverty,financial risk protection,Universal Health Coverage,hardship financing
    Date: 2021–07–29

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