We study the role and design of private and public insurance programs when informal care is uncertain. Children’s degree of altruism is randomly distributed over some interval. Social insurance helps parents who receive a low level of care, but it comes at the cost of crowding out informal care. Crowding out occurs both at the intensive and the extensive margins. We consider three types of LTC policies: (i) a topping up (TU) scheme providing a transfer which is non exclusive and can be supplemented; (ii) an opting out (OO) scheme which is exclusive and cannot be topped up and (iii), a mixed policy combining these two schemes. TU will involve crowding out both at the intensive and the extensive margins, whereas OO will crowd out informal care solely at the extensive margin. However, OO is not necessarily the dominant policy as it may exacerbate crowding out at the extensive margin. The distortions of both policies can be mitigated by using an appropriately designed mixed policy.
Maybe ‘Honor Thy Father and Thy Mother’: Uncertain Family Aid and the Design of Social Long Term Care Insurance by Chiara Canta, Helmuth Cremer, Firouz Gahvari :: SSRNJanuary 18, 2017
The Effect of Mandatory Paid Sick Leave Laws on Labor Market Outcomes, Health Care Utilization, and Health Behaviors. by Kevin Callison, Michael F. Pesko :: SSRNJanuary 5, 2017
We evaluate the impact of paid sick leave (PSL) mandates on labor market outcomes, the utilization of health care services, and health behaviors for private sector workers in the United States. By exploiting geographic and temporal variation in PSL mandate adoption, we compare changes in outcomes for workers in counties affected by a PSL mandate to changes for those in counties with no mandate. Additionally, we rely on within-county variation in the propensity to gain PSL following a mandate to estimate policy effects for workers most likely to acquire coverage. Results indicate that PSL mandates lead to increased access to PSL benefits, especially for women without a college degree. We find that PSL laws reduce average weekly hours worked and private sector employment, but appear to have no effect on job tenure or labor force participation. PSL mandates are associated with sizable reductions in emergency department utilization and increases in general practitioner visits. Finally, we present suggestive evidence that PSL mandates lead to more days binge drinking.
The Labor‐Market Impact of San Francisco’s Employer‐Benefit Mandate by Carrie Colla, William Dow, Arindrajit Dube :: SSRNDecember 22, 2016
We evaluate a San Francisco policy requiring employers to provide health benefits or contribute to a public‐option health plan to better understand the incidence of employer mandates through their effects on wages, employment, and prices. We develop an individual case study approach combining border discontinuity in policies and permutation‐type inference using other metropolitan areas. Findings indicate that employment patterns did not change appreciably following the policy, and there is little evidence of significant negative earnings in highly impacted sectors. However, approximately half of the incidence of the mandate in the restaurant sector fell on consumers via surcharges.
U.S. federal and state governments rarely regulate healthcare price levels, but do regulate price changes for pharmaceuticals, hospitals, and health insurance. Previous research showed that limiting price increases can raise launch prices and reduce both profit and social welfare, assuming consumers are myopic. We show that with forward-looking consumers, limiting price increases can have the opposite effect, that is, launch prices fall while profit and social welfare rise. Ironically, inflation regulation can cause inflation to rise, but only because firms are reducing launch prices to make the regulation bind and credibly commit to future prices.
Improving the Quality of Choices in Health Insurance Markets by Jason Abaluck, Jonathan Gruber :: SSRNDecember 20, 2016
Insurance product choice is a central feature of health insurance markets in the United States, yet there is ongoing concern over whether consumers choose appropriately in such markets – and little evidence on solutions to any choice inconsistencies. This paper addresses these omissions from the literature using novel data and a series of policy interventions across school districts in the state of Oregon. Using data on enrollment and medical claims for school district employees, we first document large choice inconsistencies, with the typical employee foregoing savings of more than $600 in their insurance plan choice. We then consider three types of interventions designed to improve choice quality. We first show that interventions to promote more active choice are unlikely to improve choice quality based on existing patterns of plan switching. We then implement a randomized trial of decision support software to illustrate that it has little impact on plan choices, largely because of consumer avoidance of the recommendations. Finally, we show that restricting the choice set size facing individuals does significantly reduce their foregone saving and total costs. This is not because individuals choose worse with larger choice sets, but rather because larger choice sets feature worse choices on average that are not offset by individual re-optimization.
Does the Expansion of Public Long-Term Care Funding Affect Savings Behaviour? by Joan Costa-Font, Cristina Vilaplana :: SSRNDecember 14, 2016
We study the effect of further public caregiving subsidies (and insurance expansions to cover long-term care) on savings and saving behaviour. Specifically, weexamine the unique progressive introduction of a universal public long-term care subsidy (Sistema para la Autonomía y Atención a la Dependencia, SAAD) in Spain. We draw on a difference-in-difference strategy (DID) to show a contraction of savings after the policy intervention, but only among younguer elders who receive primarily cash benefits (unconditional caregiving allowance) as opposed to home help (ranging between 13% and 38% of the subsidy ammount). Saving reductions of individuals in the second and third quintile of income distribution, those without children and those residing in regions that implemented the reform earlier, drive the effect.
When Past Is Not Prologue: The Weakness of the Economic Evidence against Health Insurance Mergers by Geoffrey A. Manne, Ben Sperry :: SSRNDecember 13, 2016
The DOJ’s challenges of both the Aetna/Humana and Cigna/Anthem mergers in 2016 are fundamentally rooted in a timeworn structural analysis: More consolidation in the market (where “the market” is a hotly-contested issue, of course) means less competition and higher premiums for consumers. Following the traditional structural playbook, the DOJ argues that the mergers would result in presumptively anticompetitive levels of concentration, and that neither new entry not divestiture would suffice to introduce sufficient competition. It does not (in its pretrial brief, at least) consider other market dynamics (including especially the complex and evolving regulatory environment) that would constrain the firms’ ability to charge supracompetitive prices.
The parties contend that things are a bit more complicated than the government suggests, that the government defines the relevant market incorrectly, and that there is no correlation between the number of insurers in a given county and insurance premium pricing.The trials will, of course, feature expert economic evidence from both sides. But until we see that evidence, we are left to evaluate the basic outlines of the economic arguments based only on the existing literature.
A host of the mergers’ critics have determined that the literature condemns the mergers, based largely on a small set of papers purporting to demonstrate that an increase of premiums, without corresponding benefit, inexorably follows health insurance consolidation. In fact, virtually all of these critics base their claims on a 2012 case study of a 1999 merger (between Aetna and Prudential) by economists Leemore Dafny, Mark Duggan, and Subramaniam Ramanarayanan, “Paying a Premium on Your Premium? Consolidation in the U.S. Health Insurance Industry,” as well as associated testimony by Dafny, along with a small number of other papers by her (and a couple others).
This paper challenges the critics’ claims, taking a close analysis of the “Paying a Premium” paper as a jumping off point. While our analysis doesn’t necessarily undermine the paper’s limited, historical conclusions, it does counsel extreme caution for inferring the study’s applicability to today’s proposed mergers. That said, different markets and a changed regulatory environment alone aren’t the only things suggesting that past is not prologue. When we delve into the paper more closely we find even more significant limitations on the paper’s support for the claims made in its name, and its relevance to the current proposed mergers. In short: extrapolated, long-term, cumulative, average effects drawn from 17-year-old data may grab headlines, but they really don’t tell us much of anything about the likely effects of a particular merger today, or about the effects of increased concentration in any particular product or geographic market.