Average Annual Premium Research Articles

Health Benefits In 2012: Moderate Premium Increases For Employer-Sponsored Plans; Young Adults Gained Coverage Under ACA

Health care premiums rose moderately for single and family employer-sponsored coverage this year, the 2012 annual Kaiser Family Foundation/Health Research and Educational Trust (HRET) Survey of Employer Health Benefits found. Even with the lingering effects of the recession, cost-sharing levels remained relatively stable in 2012. Also remaining stable was the rate at which employers offered coverage, according to the survey, which was based on telephone interviews with 2,121 public and private employers contacted from January through May2012. The average annual premiums in 2012 were $5,615 for single coverage and $15,745 for family coverage, an increase of 3 and 4percent, respectively, from 2011. The percentage of firms offering health benefits, 61percent, was similar to last year's, as was the percentage of workers at offering firms who were covered by their firm's health benefits, 62percent. One noteworthy change, because of a provision of the Affordable Care Act, is that 2.9million young adults who would not otherwise have been enrolled in a parent's employer-sponsored health insurance were covered by that insurance in 2012.

The pricing of idiosyncratic risk: evidence from the implied volatility distribution

A recent strand in the literature has investigated the relationship between idiosyncratic risk and future stock returns. Although several authors have found significant predictive power of idiosyncratic volatility, the magnitude and direction of the dependence is still being debated. Using a sample of all S&P 100 constituents, we identify positive risk premia for option-implied idiosyncratic risk. Depending on the model used to identify unsystematic risk, we observe a statistically and economically significant average annual premium of 1.72 percent. To investigate whether this impact is driven by the definition of idiosyncratic risk, we extend the pricing kernel by implied skewness. Using a double-sorting procedure, we show that the compensation of unsystematic risk is mainly driven by firms with high positive implied skewness.

The Components of the Illiquidity Premium: An Empirical Analysis of U.S. Stocks 1927-2010

This paper estimates a conditional version of the liquidity adjusted CAPM by Acharya and Pedersen (2005) using NYSE and AMEX data from 1927 to 2010 to study the illiquidity premium and its variation over time. The components of the illiquidity premium is in this model derived as the level of expected illiquidity together with three types of illiquidity risks. We measure illiquidity of individual stocks by the efficient spread proxy developed in Holden (2009) and employ illiquidity sorted portfolios as test assets. The average annual illiquidity premium is estimated to 1.55%, the respective contributions from illiquidity level being 1.15% and from the three different illiquidity risks 0.40%. Results also indicate that commonality risk is the least important component in the illiquidity risk premium, while a component related to the hedging of wealth shocks is the most important. The illiquidity premium varies substantially over time, with peaks in downturns and crises, but with no general tendency to decrease over time.

Capturing Credit Spread Premium

Despite high spread volatility, investment-grade credit portfolios have generated an average annual spread premium (returns net of U.S. Treasury returns and defaults) of 48 bps over the past 20 years. The authors show that relaxing a common portfolio constraint that requires selling downgraded bonds would have allowed investors to capture an average annual spread premium of 86 bps, with similar risk. Thus, adopting a downgrade-tolerant credit benchmark could generate a higher credit spread premium.

Estimation Risk, Learning and the Equity Premium

We examine the effects of estimation risk and Bayesian learning on equilibrium asset prices when there is uncertainty about both the first and second moments of consumption and dividend growth rates. For the 1891-2007 period, our model generates a sizable average annual equity premium, relatively low average risk-free rate and a high mean Sharpe ratio that approximates the data average with (1) low risk aversion, (2) non-persistent (i.i.d.) growth rates, (3) power utility, (4) diffuse (or non-pessimistic) priors, and (5) finite posterior moments. Learning does not produce a monotonically declining equity premium and shocks to growth rates can induce sharp fluctuations in the market returns even after one hundred years of data. For reducing the discrepancy between the equilibrium outcomes and the data, variations in the prior estimation risk with respect to consumption --- but not dividend --- growth are at least as effective as variations in risk aversion, or in the inter-temporal elasticity of substitution, or in the persistence of growth rates.

Vital Signs: Average Annual Premiums for Single and Family Health Insurance Coverage

Vital Signs: Average Annual Premiums for Single and Family Health Insurance Coverage

Health Benefits In 2010: Premiums Rise Modestly, Workers Pay More Toward Coverage

Our annual analysis of health benefits contains findings from interviews of 2,046 public and private employers surveyed during January-May 2010. Average annual premiums in 2010 were $5,049 for single coverage and $13,770 for family coverage--up 5 percent and 3 percent from 2009, respectively. Workers paid more toward premiums in 2010, and more workers are in consumer-directed plans and plans with high deductibles than in 2009. Thirty percent of firms reported that they reduced the scope of benefits or increased cost sharing because of the recession. Surprisingly, the percentage of firms offering health benefits in 2010 increased to 69 percent, up from 60 percent in 2009. The change was largely driven by a thirteen-percentage-point increase in the number of firms with three to nine workers that offered benefits (up from 46 percent in 2009 to 59 percent in 2010). The reason for this increase is unclear.

Job-Based Health Insurance: Costs Climb At A Moderate Pace

Each year the Kaiser/HRET Survey of Employer Health Benefits takes a snapshot of the state of employee benefits in the United States, based on interviews with public and private employers. Our findings for 2009 show that families continue to face higher premiums, up about 5 percent from last year, and that cost sharing in the form of deductibles and copayments for office visits is greater as well. Average annual premiums in 2009 were $4,824 for single coverage and $13,375 for family coverage. Enrollment in high-deductible health plans held steady. We offer new insights about health risk assessments and how firms responded to the economic downturn.

Health Benefits In 2008: Premiums Moderately Higher, While Enrollment In Consumer-Directed Plans Rises In Small Firms

Our annual Employer Health Benefits Survey contains findings from interviews with 1,927 public and private employers surveyed during the first five months of 2008. Average annual premiums in 2008 are $4,704 for single coverage and $12,680 for family coverage. These amounts are about 5 percent higher than premiums were last year. Enrollment in high-deductible health plans with a savings option increased to 8 percent of covered workers, up from 5 percent in 2007. Deductibles in preferred provider organizations, the plan type with the largest enrollment, increased from 2007 levels. This paper also provides new insights into firms' offering wellness programs and retiree health benefits.

The South African Equity Risk Premium

This report estimates the expected equity risk premium for South African by comparing the historical realised risk premium between 1900 and 2004 against results for two fundamental models that use dividend and earnings growth as unbiased estimators of long term equity price growth. The dividend model result of 6.6% based on data for the 1960-2004 period is proposed as the best unbiased estimate of the expected average annual equity premium over the risk free rate. The evidence provided suggests a decline in the expected South African equity risk premium, and a lower expected premium for the future than in the past.

The Uninsured: A Forgotten Population

Since the 1980s, the number of uninsured individuals in this country has continued to grow. It is estimated that over 43 million people in the United States do not have health insurance, or 15.2 percent of the total population (Mitka, 2004). Of those people without health insurance, about 53 percent of uninsured individuals were estimated to be uninsured for at least nine months (McLellan, 2003). More recent studies dispute these findings and indicate that a ranch higher number of people, or 75 million people, lacked health insurance. Of these uninsured individuals, two-thirds were without health insurance for six months or longer, and 71 percent were employed either full-time or part-time (McLellan, 2003). It is difficult to obtain an accurate account of exactly how many Americans are uninsured. Due to sampling and methodological difficulties, various studies produce different statistics (Haley & Zuckerman, 2003; McLellan, 2003). However, there is one consistent theme that emerges throughout all of these studies. The population of uninsured is getting larger with not a glimmer of hope that this situation will improve in the near future. Who are these people without insurance? About 80 percent of the uninsured were in working families, families that labor to support themselves on meager wages, in jobs that offer no benefits. Of this employed group, 20 million people who were uninsured had full-time jobs and 6 million had part-time jobs (Mitka, 2002). Looking at ethnic composition, 52 percent of the uninsured were non-Hispanic white people. However, Hispanics and African Americans were more likely to be uninsured than non-Hispanic white individuals. Four of five uninsured people are U.S. citizens. Statistics for the uninsured according to age groups, indicate that the nonelderly age group was the most likely to experience being uninsured with 49.6 percent of the 18 to 24 year olds in this category and 32.7 percent of the 25 to 44 year olds having no insurance (McLellan, 2003). However, more than 3 million adults ages 55 to 64 lack health insurance. Our youngest population group is vulnerable too, with 8.5 million children in the United States, or 12 percent of all children under the age of 18, being uninsured. CONDITIONS THAT LEAD TO UNINSURANCE There are many reasons why so many Americans are finding themselves uninsured. The decline in the economy over the past few years has resulted in more individuals finding themselves in positions of unemployment or underemployment. Each change in employment circumstances has the potential to affect health insurance benefits. Even if employed, individuals may find that health care benefits are beyond their reach. In poor economic times, employers drop health insurance coverage as a benefit or shift costs to their employees. Furthermore, only two-thirds of U.S. workers are offered health insurance by their employers (National Center for Health Statistics, 2004). If health insurance is offered as a benefit, it can be cost prohibitive to purchase. It is estimated that 20 percent of the workers who are unemployed cannot afford health insurance offered by employers. In 2003 the average annual premium for employer-sponsored group insurance was $9,068 for family coverage, with 73 percent of this cost contributed by the employer (Mitka, 2004). The self-employed face similar financial obstacles in obtaining health coverage. Just 7 percent of Americans purchase non-group health insurance policies for themselves or their families. People are also at risk of becoming uninsured during life transitions. Circumstances such as no longer being considered a dependent on a parent's policy, transition from student to employer, retiring before age 65, losing a spouse through divorce or death, or losing or changing jobs places people at risk. All of these situations leave people vulnerable to losing their insurance coverage. For those individuals dependent on government-sponsored health insurance such as Medicaid, budget deficits at the federal, state, and local levels have resulted in reductions in coverage, and removal of some from the Medicaid rolls. …

Evidence to support the four-factor pricing model from the Canadian stock market

This paper tests the Fama-French three-factor pricing model augmented by a momentum factor on the Canadian stock market. Using Fama-French’s methodology to construct the risk factors, the average annual premium obtained for the market, size, book-to-market and momentum risk factors are, respectively, equal to 4.52, 5.08, 5.09 and 16.07%, over the July 1960–April 2001 period. The results relative to the three zero-investment portfolios are in line with those obtained by Liew and Vassalou [Journal of Financial Economics 57 (2000) 221] for the 1976–1996 period, even though the authors use sequential sorts to construct the risk factors. The main evidence of regularities in factors’ behavior are as follows: the size factor returns are substantially greater in January than in other months, whereas the momentum factor returns are always significant, except in January. Book-to-market factor returns are positive (negative) and highly (barely) significant in down-markets (up-markets). Lastly, regarding conditioning on the monetary policy environment, we find that the SMB and HML premiums are only significant in an expansive environment.