This paper proposes a practical way for ex-post indexing of level premiums in lifelong medical insurance contracts, in order to take into account observed medical inflation. We show that ex-post indexing can be achieved by considering only premiums, without explicit reference to reserves. This appears to be relevant in practice as reserving mechanisms may not be transparent to policyholders and as some insurers do not compute contract-specific reserves, managing the whole portfolio in a collective way. The present study originates from a proposal for indexing lifelong medical insurance level premiums in Belgium. As an application, we study the impact of various indexing mechanisms on a typical medical insurance portfolio on the Belgian market.
Updating Mechanism for Lifelong Insurance Contracts Subject to Medical Inflation by Michel Denuit, Jan Dhaene, Hamza Hanbali, Nathalie Lucas, Julien Trufin :: SSRNDecember 7, 2016
The Healthcare Openness and Access Project (HOAP) is a set of tools providing state-by-state measures of the flexibility and discretion that patients and providers have in managing health and health care. In other words, how open are each state’s laws and regulations to institutional variation in the delivery of care, and how much access to varying modes of care does this confer on the state’s patients and providers?
The Evolution of Health Insurer Costs in Massachusetts, 2010-12 by Katherine Ho, Ariel Pakes, Mark Shepard :: SSRNDecember 2, 2016
We analyze the evolution of health insurer costs in Massachusetts between 2010-2012, a period in which the use of physician cost control incentives spread among insurers. We show that the growth of costs and its relationship to the introduction of cost control incentives cannot be understood without accounting for (i) consumers’ switching between plans, and (ii) differences in cost characteristics between new entrants and those leaving the market. New entrants are markedly less costly than those leaving (and their costs fall after their entering year), so cost growth of those who stay in a plan is significantly higher than average per-member cost growth. Cost control incentives were used by Health Maintenance Organizations (HMOs). Relatively high-cost HMO members switched to Preferred Provider Organizations (PPOs) while low-cost PPO members switched to HMOs. As a result, the impact of cost control incentives on HMO costs is likely different from their impact on market-wide insurer costs.
Is a Minimum Wage an Appropriate Instrument for Redistribution? by Aart Gerritsen, Bas Jacobs :: SSRNDecember 2, 2016
We analyze the redistributional (dis)advantages of a minimum wage over income taxation in competitive labor markets, without imposing assumptions on the (in)efficiency of labor rationing. Compared to a distributionally equivalent tax change, a minimum-wage increase raises involuntary unemployment, but also raises skill formation as some individuals avoid unemployment. A minimum wage is an appropriate instrument for redistribution if and only if the public revenue gains from additional skill formation outweigh both the public revenue losses from additional unemployment and the utility losses of inefficient labor rationing. We show that this critically depends on how labor rationing is distributed among workers. A necessary condition for the desirability of a minimum-wage increase is that the public revenue gains from higher skill formation outweigh the revenue losses from higher unemployment. We write this condition in terms of measurable sufficient statistics. Our empirical analysis suggests that a minimum-wage increase is undesirable in nearly all OECD countries. A reduction in the minimum wage, along with tax adjustments that keep net incomes constant, would yield a Pareto improvement.
‘No Imbecile at All’: How California Won the Autism Insurance Reform Battle, and Why Its Model Should Be Replicated in Other States by Ariana Cernius :: SSRNNovember 24, 2016
Autism is the fastest growing developmental disability in the United States today, with the CDC reporting the incidence of autism at 1 in 68 children. The cause and cure of autism remain unknown, and because autism affects each person at different levels of severity, a large number of symptom presentations are possible, making treatment difficult and costly. Despite the existence of effective, evidence-based early intervention treatments such as “Applied Behavioral Analysis (ABA)” therapy, which has lasting, long-term benefits and has been shown to improve functioning while reducing lifetime costs, the growing prevalence of autism has been declared a public health crisis by many states because those with autism who don’t receive enough or any treatment are more dependent on society and have been recently estimated to cost $236 billion in care from childhood through adulthood.
Due to receding state budgets, many states are not able to adequately address the autism population’s early intervention treatment needs through state-funded programs, and since health insurance did not cover treatment for autism until the Autism Insurance Reform Mandates which are the subject of this Note, families could not get treatment for their children with autism unless they were able to pay out-of-pocket. To provide a secure means of accessing treatment for people with autism, as of October 2015, 43 states and Washington D.C. have enacted “Autism Insurance Reform Mandates” requiring health insurance coverage of treatment for autism. While widespread existence of these mandates is surely progress and an acknowledgement of the problem, there is great legislative inconsistency among the mandates, which has created an imbalanced state of affairs for people with autism in the United States in that there are now some states that are better for autism families to live in than others. If the mandates are to accomplish their job of reducing the cost of the autism population to society in the long-term, it matters equally as much that the appropriate evidence-based treatments are covered, and that the length of coverage is measured not by arbitrary criteria like age, but by the continued efficacy of treatment, even if this means continued coverage through adulthood. Thus, there is still much work ahead to instill in society the notion that investing in the present to maximize the potential of this population will pay off in the long term for everyone in the country.
This Note traces the issues that lead to the ongoing national autism insurance reform, and offers insight as to how different modes of advocacy contributed to improving the lives of autism families in California, deemed one of the best states to live in for autism families. The goal of this Note is to compare how those strategies did or did not work in North Carolina, the most recent state to adopt a mandate, and to extend these lessons in social, political, and legal change in these successful states to the remaining states that lack coverage and to improving coverage in the states that currently provide coverage.
Since 2006, several cities and states have implemented paid sick leave mandates. We examine the effects of paid sick leave mandates in Washington, D.C. (2008) and Connecticut (2011) on leave-taking behavior. After these policies are implemented, there are significant decreases in the aggregate rate of illness-related leave taking, relative to control groups, for both those directly affected and those not directly affected by the policy. Our results suggest that such policies can provide large positive public health externalities by allowing sick workers to stay home rather than coming to work and spreading their illness to customers and coworkers.
Network Formation and Bargaining in Vertical Markets: The Case of Narrow Networks in Health Insurance by Soheil Ghili :: SSRNNovember 4, 2016
“Network adequacy regulations” expand patients’ access to hospitals by mandating a lower bound on the number of hospitals that health insurers must include in their networks. Such regulations, however, compromise insurers’ bargaining position with hospitals, which may increase hospital reimbursement rates, and may consequently be passed through to consumers in the form of higher premiums. In this paper, I quantify this effect by developing a model that endogenously captures:
(i) how insurers form hospital-networks,
(ii) how they bargain with hospitals over rates by threatening to drop them out of network or to replace them with an out of network hospital, and
(iii) how they set premiums in an imperfectly competitive market. I estimate this model using detailed data from a Massachusetts health insurance market, and I simulate the effects of a range of regulations. I find that “tighter” regulations, which force insurers to include more than 85% of the hospital-systems in the market, raise the average reimbursement rates paid by some insurers by at least 28%. More moderate regulations, however, can expand the hospital networks without leading to large hikes in reimbursement-rates.