Federal Insurance Research Articles

Changes in federal and state unemployment insurance legislation in 2013

Changes in federal and state unemployment insurance legislation in 2013

The Convergence of Insurance with Banking and Securities Industries, and the Limits of Regulatory Arbitrage in Finance

This article examines the regulatory challenges raised by recent, overlooked changes in insurance markets that have led to a functional convergence between insurance and the broader financial sector.The law literature on financial regulation last addressed the issue of convergence over a decade ago, before the latest generation of market innovation and at a time when concern over systemic stability was not at the forefront. This article revisits the convergence phenomenon in the context of insurance, and does so by applying an analytical framework that distinguishes between two “boundary problems” that accompany all financial regulation. One problem concerns jurisdictional boundaries: to what degree does market integration require that diverse regulations be harmonized across jurisdictions? The other relates to definitional boundaries: within a given jurisdiction, how should distinctions be drawn among financial products and firms that have come to perform similar economic functions? Two conclusions follow from applying this framework that are in tension with the current thrust of policy as well as the literature. First, the Federal Insurance Office established by Dodd-Frank is inappropriately structured to leverage international harmonization agreements into domestic reforms, whereas the reverse orientation would be more effective. Second, frequent calls for more “functional regulation” fail to appreciate the subtle advantages of retaining formalistic legal definitions, even in the face of increasing economic convergence.At bottom, both boundary problems are a product of the possibility for regulatory arbitrage across jurisdictions or industry definitions, and the potential for a loosely regulated shadow finance sector to arise. Here, insurance is used as a case study to demonstrate that regulatory arbitrage can occur along a surprising number of fronts and is difficult to reliably estimate ex ante when formulating financial regulation. For this reason, the Article argues, scholarship that has proposed a requirement for financial regulators to perform a quantitative cost-benefit analysis as part of their rulemaking overestimates the benefits that such a procedure would provide in practice.

Translating Access Into Utilization

With full implementation of the federal Affordable Care Act, millions of previously uninsured reproductive-aged women will have access to sexual and reproductive health (SRH) services. Cost and lack of insurance have been cited by young women as a primary reason for their poor utilization of contraception and other preventive SRH services. In addition to cost, another important barrier to uptake of these services is patient literacy. Women who cannot understand the newly available insurance products are unlikely to use them. It is estimated that one-third of the US adult population lack the literacy skills needed to use printed health information. The uninsured especially are likely to have low health literacy. Any benefit to women from expanded contraceptive access under the federal Affordable Care Act requires provision of educational resources that are easy to comprehend. Following Massachusetts’ state-level health care reform implementation in 2007 and availability of new health insurance products in that state, young women in need of SRH services expressed confusion over coverage of contraception. To address this need, a plain-language Web site titled “My Little Black Book for Sexual Health” was developed in 2010 to help young women and help them identify and use the newly available health insurance products. The aim of this study was to evaluate the health literacy demands and usability of the Web site among 8 women aged 18 to 26 years, with the goal of informing modifications to improve the site. The authors performed an evaluation of the literacy demands of the Web site’s content and tested the site’s accessibility and usability in a health communications laboratory. The participants were diverse with respect race/ethnicity, language spoken, education, and employment status. After examining the Web site, each was interviewed for 30 to 45 minutes. Participants found the Web site to be visually appealing and understood its overall design concept. However, the literacy demands were high (13th-grade reading level), and all participants had severe problems navigating through the Web site. Based on this assessment, the site was modified to make it more usable and understandable to women of all health literacy levels. To close the gap between access to and utilization of preventive SRH services now available under expanded federal health insurance coverage, customized educational resources must be developed that are culturally appropriate, visually appealing, easy to navigate, and written at an appropriate literacy level.

The Social Security Disability Insurance Program

The Social Security Disability Insurance (SSDI) was added to Social Security in the 1950s and has grown into a large and complex institution in its own right that interacts with several other government and employer-provided benefit programs. It provides income replacement to the 8.9 million disabled workers and their families. SSDI is currently funded by a 1.8% Federal Insurance Contributions Act payroll tax on earned income up to $117,000 per year (indexed). That has not been enough, and the Disability Insurance (DI) trust fund will be depleted in 2016. There are indications that the solution is at hand. A proposal within the Office of the Chief Actuary of the Social Security Administration would shunt money from the Old Age and Survivors Insurance to the DI trust funds, thus postponing the “day of reckoning” for the combined Old Age, Survivors, and Disability Insurance trust funds to 2033. It is imperative that Congress address this problem soon. The longer we wait, the harder it will be.

Historic Home Mortgage Redlining in Chicago

THE POLICIES OF THE NEW DEAL DRAMATICALLY changed political economy of nations urban areas, initiating, as one urban historian aptly characterized, the overdevelopment of suburbs and underdevelopment of cities.1 In very quick succession, federal government adopted new and sweeping policies-regulation of financial industry, extensive public works programs building all manner of infrastructure, a dramatic increase in public employment, creation of nationally funded relief for unemployed, financial assistance to states and cities, a national industrial planning effort, an emergency program to refinance homes, development of a national housing program, and many others-each responding to one or more of host of daunting problems brought on by Depression.2 Many of these new federal programs became permanent fixtures in American administrative landscape, laying foundations for new (and different) patterns of economic development in future.Housing policy was especially important in creating basis for wide scale shifts of investments and population as well as dramatic changes in demography of urban core and its suburban rings. New Deal policies, designed to re-establish investment confidence in housing sector as well as to restore employment in home construction in depths of Depression3, achieved these objectives (sometimes, much later) but in so doing brought about large scale disinvestment from housing markets across urban cores of American metropolitan areas while at same time creating a powerful set of incentives for developers to construct, financial institutions to lend, realtors to sell, and large swaths of American social strata to purchase newly developed housing that were located in increasingly decentralized areas away from America's central cities.4One particularly important outcome of these policies is home mortgage redlining-the publicly created disinvestment of a surprisingly large portion of standing housing stock across wide swaths of central city neighborhoods. Historical redlining was geographic in character and resulted from public policies formulated at national level and actions of federal agencies that implemented these policies.5 Federal agencies established empirically based risk assessments of community housing markets based on both quality, amenities, basic structural features, and upkeep of housing stock as well as social class, ethnic, and racial makeup of residents of a neighborhood.6 On basis of these assessments, a large portion of nation's neighborhood housing markets were determined to pose too high a risk for newly established long term, fully amortized mortgages that were created by New Deal legislation. These areas were denied mortgage insurance and redlined. Relatively few neighborhoods, communities where housing at that time was relatively new, had a full complement of amenities and were in good repair, were deemed an acceptable risk. In these areas, mortgage insurance was granted and conventional mortgages were available to purchasers to facilitate exchange of real estate. Additionally, almost all newly constructed housing from this time forward-in suburban locations-would be beneficiaries of this federal insurance program.The New Deal Policy Sources of Mortgage RedliningTwo pieces of New Deal legislation transformed regulation of financial institutions and revolutionized housing financing in U.S. These were Banking Act (1933) and National Housing Act (1934) that respectively created a national system of deposit guaranty and mortgage insurance, and new agencies, Federal Deposit Insurance (FDIC) and Federal Housing Administration (FHA), to implement these programs. The FDIC (and later Federal Savings and Loan Insurance Corporation [FSLIC]) and FHA were established as public corporations that were financed not from appropriations from Congress but from fees these agencies were permitted to charge to financial institutions and mortgagees. …

Edward D. Berkowitz and Larry DeWitt. The Other Welfare: Supplemental Security Income and U.S. Social Policy.

Edward D. Berkowitz and Larry DeWitt have spent their careers honing a portrait of the centerpiece of the New Deal welfare state—the Social Security Act. Together, they have pulled its previously unknown architects into the limelight, illuminated lesser-known elements of the system, drawn connections to insurance expansions like disability and Medicare, and provided scholars and students with access to primary sources crucial to its historical development. From DeWitt's position as chief historian of the Social Security Administration and Berkowitz's perch as professor of history and public policy and public administration at George Washington University in Washington, D.C., they have modeled generous, cooperative scholarship. In their second collaboration, they bring their knowledge and experience to bear on a distant relation of Social Security in a much later period—the Supplemental Security Income Program (SSI). In the last quarter of the twentieth century, SSI emerged as a large, vital component of the welfare state, but its history, nevertheless, has been little-understood. SSI is a means-tested income-support program for the elderly and disabled who are not otherwise eligible for the larger federal disability insurance program, Social Security Disability Insurance. Created in 1972, SSI has come to serve over nine million Americans and continues to grow annually. Its architects in the Social Security Administration and Congress intended to include elderly and disabled adults as part of a more respectable, federally controlled welfare program—one more generous and more uniform than the previous Old Age Assistance program or the despised Aid to Families with Dependent Children, serving single mothers. In practice, however, the program fell short of those goals. Berkowitz and DeWitt demonstrate how SSI quickly evolved into a system as variable, vulnerable, and unpopular as many of the other means-tested “welfare” programs. Though policymakers desired a truly national program, compromises in the legislative and administrative processes left SSI at the mercy of state and congressional meddling. SSI paid radically different benefits from state to state as a result. The authors also track how shifting target populations generated hostility from lawmakers and the media. Though SSI initially aimed to provide support to the “respectable” elderly and disabled, increasing numbers of mentally disabled, mentally ill, and addicted adults and children soon populated the program. None of them proved to be popular or politically influential clientele. From the moment of the program's birth through the 1990s, journalists and disgruntled members of Congress attacked SSI's recipients. Today, despite the aims of its architects, SSI hovers just above Temporary Assistance for Needy Families and the food stamp program in the eyes of its critics.

Bericht zur sozialpolitischen Entwicklung

MergersThe law on the reorganization of the direct federal accident insurers (BUK-NOG) provides the legal basis for further mergers within the statutory accident insurance sector. The merger process in the agricultural social insurance is now finished. Merger returns/costs and qualityThe merger returns of accident insurers expected by politics must include aspects of costs and quality. The benefits of an intensive control of the healing process have been confirmed by the largest benchmarking project in statutory accident insurance. Rehabilitation management by means of an individualized consulting and accompanying of insured persons is now a well-established unique characteristic of the statutory insurance in Germany, Austria and Switzerland. The chronification of mental disorders after an occupational accident or disease can be adequately and timely counteracted by the psychotherapist procedure.PerspectiveNo concrete changes are contemplated by the statutory accident insurance for the new legislative period.

How bipartisanship and incrementalism stitched the child health insurance safety net (1982-1997).

Today, 96.5 percent of children and adolescents either have health insurance or are uninsured but eligible for a public plan. This proportion far exceeds the most optimistic coverage projections for adults under the Patient Protection and Affordable Care Act. The child health insurance safety net was crafted from 1982 to 1997 through several incremental, bipartisan federal and state legislative actions. It began by offering and later mandating state Medicaid eligibility expansions and culminated with the enactment of the State Child Health Insurance Program. Two-thirds of the states leveraged these laws to expand coverage beyond federal requirements. As a senior executive with the American Academy of Pediatrics, the author was directly involved or closely monitored these federal and state child health insurance expansions. This case study is a participant-observer analysis of that period, an era that stands in stark contrast to today's highly partisan times. The successive expansions of publicly funded children's health insurance during this conservative period, when many other human services programs were slashed, are attributed to public sympathy for children, political acceptability by the right and the left, manageable costs, and the relative ease of state implementation as these changes came in incremental pieces over several years.

State vocational rehabilitation programs and federal disability insurance: an analysis of Virginia’s vocational rehabilitation program

Abstract We examine the association between the receipt of vocational rehabilitation (VR) services and Federal Disability Insurance using a unique panel data source on persons who applied for assistance from Virginia’s VR program in 2000. Three central findings emerge: first, VR services are associated with lower rates of participation in disability insurance programs-a nearly 2 point drop in SSDI receipt and 1 point drop in SSI receipt. Second, VR service receipt is associated with lower take-up rates of SSDI/SSI. Finally, among VR applicants on SSDI/SSI, those who receive substantive VR services are more likely to be employed. JEL codes H51, I13, J24

The impact of office-based care on hospitalizations for ambulatory care sensitive conditions.

The aim of the study was to quantify the impact of specific medical services in the ambulatory sector (SA) on hospitalizations for ambulatory care sensitive conditions (ACSCs), in order to be able to assess whether and under what conditions specific ambulatory treatments could serve to lower the hospitalization rate. The analysis is based on administrative data showing the complete provision of medical services in the ambulatory sector in Germany and data from other sources. The data were provided by the National Association of Statutory Health Insurance Physicians, the Federal Statistical Agency, the Federal Office of Construction and Regional Planning, and the Federal Insurance Agency. The impact of an increase in specific medical services on hospitalizations for ACSCs was estimated using linear spatial models at the level of the 413 German counties and county boroughs for the years 2007 and 2008. To allow for an undistorted estimation of the coefficients, SA and physician density were instrumented using a two-stage 'least squares' approach. The SA and the rate of hospitalizations for ACSCs were age-standardized. In the models, a well-defined set of covariates was controlled for. According to the models, an additional <euro> spent on ACSC treatment decreases the rate of hospitalizations for ACSCs for women and men up to an annual Uniform Value Scale For Doctors' Fees point value of approximately 6,891 and 5,735, respectively. The correlation is not linear but, as suspected, exhibits diminishing marginal returns. Our models suggest that additional medical services reduce the rate of hospitalizations for ACSCs but that this correlation depends on the absolute level of office-based services in a county, all covariates being held equal. Ceteris paribus counties with a very high volume of services exhibit 'flat-of-the-curve medicine', while counties with a very low current level of specific medical services benefit most from an increase in those specific services.

Regulating Systemic Risk in Insurance

As exemplified by the dramatic failure of AIG, insurance companies and their affiliates played a central role in the 2008 global financial crisis. It is therefore not surprising that the Dodd-Frank Act — the United States’ primary legislative response to the crisis — contained an entire title dedicated to insurance regulation, which has traditionally been the responsibility of individual states. The most important insurance-focused reforms in Dodd-Frank empower the Federal Reserve Bank to impose an additional layer of regulatory scrutiny on top of state insurance regulation for a small number of “systemically important” nonbank financial companies, such as AIG. This Article argues, however, that in focusing on the risk that an individual insurance-focused, nonbank financial company could become systemically significant, Dodd-Frank largely overlooked a second, and equally important, potential source of systemic risk in insurance: the prospect that correlations among individual insurance companies could contribute to or cause widespread financial instability. In fact, this Article argues that there are often substantial correlations among individual insurance companies with respect to both their interconnections with the larger financial system and their vulnerabilities to failure. As a result, the insurance industry as a whole can pose systemic risks that regulation should attempt to identify and manage. Traditional state-based insurance regulation, this Article contends, is poorly adapted to accomplishing this given the mismatch between state boundaries and systemic risks, as well as states’ limited oversight of noninsurance financial markets. As such, this Article suggests enhancing the power of the Federal Insurance Office — a federal entity primarily charged with monitoring the insurance industry — into supplement or preempt state law when states have failed to satisfactorily address gaps or deficiencies in insurance regulation that could contribute to systemic risk.

Empirical analyses for financial convergence of Russian insurance market

This paper analyses peculiarities of Russian insurance market development, the factors of convergence that lay behind the Russian insurance market. Concerns a brief review of financial convergence, its impact on the insurance business, development of Russian insurance market. The purpose of the paper is to find whether there is a diminution of dispersion of performance among Russian regional and federal insurance companies. Research methodology is based on testing the set of selected Russian insurance companies for Iƒ-convergence or divergence. Selected companies represent maximum regional coverage of Russian Federation. Authors study balance sheet data of chosen federal and regional insurance companies for sigma-convergence and conclude that there are regional disproportions in the development of Russian insurance market, centralization of administrative and financial recourses that causes the weakness of regional players. Ideas suggested in this paper can help regulator in the decision-making process for improving situation and formation of insurance services demand in the country.

The health and economic burden of haemophilia in Belgium: a rare, expensive and challenging disease

BackgroundHaemophilia is a rare hereditary haemorrhagic disease that requires regular intravenous injections of clotting factor (CF) concentrates. This study sought to estimate the health and economic burden of haemophilia in Belgium. This is the first study of its type to be conducted, and reflects the Belgian authorities’ growing interest for haemophilia as part of their priority planning for rare and chronic diseases.MethodsA probabilistic model was developed in order to estimate the lifetime haemophilia burden for the 2011 birth-year Belgian cohort. The health burden was initially expressed in terms of disability-adjusted life years (DALYs), the number of healthy life years lost due to living with disability and dying prematurely. An incidence perspective was used in line with World Health Organization recommendations. The economic burden calculated from direct and indirect haemophilia-related costs was expressed in euros. Data were drawn from the literature if none were available from federal institutions or health insurance. Disability weights for DALY calculation were derived using generic quality-of-life tools such as SF-6D from the SF-36 (36-item Short-Form Health Survey; for adults) and KINDL (generic quality-of-life instrument; for children) compared to population norms. Analyses were stratified according to haemophilia type and severity.ResultsIn Belgium, haemophilia resulted in 145 undiscounted and unweighted DALYs in total (95% credible interval [CrI] = 90-222), which represents an average of 11 DALYs per incident case with haemophilia (95% CrI = 8-15) during his life, varying according to haemophilia severity (17 DALYs for severe haemophilia, 12 DALYs for moderate, and 4 DALYs for mild). Mean total lifetime costs reached €7.8 million per people with haemophilia, 94.3% being direct costs and 5.7% indirect costs. Clotting factors accounted for 82.5% of direct costs.ConclusionsHaemophilia represents both an economic and health burden, especially regarding individual health on an individual patient level. Initiatives to counteract this burden should be clearly identified and given full support, as this burden is likely to increase in the future, especially from an economic perspective. Our study may also contribute towards a better global evaluation of haemophilia in the future.

Preventing Rodent Damage to Flood Control Facilities

Author(s): Lindsey, Pam | Abstract: In California, flood control facilities protect millions of people and critical infrastructure from flood events by containing water and debris behind engineered structures. Rodent burrow damage to flood control dams and levees results in failure to meet federal and state structural certification criteria. Non-certified structures pose substantial damage risks during flood events and are ineligible for federal flood insurance and reimbursement programs. Most dams and levees are compacted earth, faced with rock, and topped with gravel access roads. These facilities provide excellent habitat for ground squirrels; the rocks provide cover and the creeks, neighborhoods and nearby agricultural fields provide abundant food. Ground squirrels form the base of the food chain for raptors, coyotes, bobcats, and mountain lions, which routinely foraging along facilities. The Ventura County Watershed Protection District developed an Integrated Pest Management Program (IPMP) to prevent rodent damage to flood control facilities. We found that small amounts of anticoagulant (diphacinone) in bait stations along flood control facilities target ground squirrels with low risk to other fauna. The California Department of Fish and Wildlife, other conservation agencies, and members of the public have requested anticoagulant use be terminated to avoid secondary poisonings. Alternative controls do not provide the level of protection necessary to meet structural criteria. The current registered diphacinone label requires verification of pest infestations before application. However, infestation must be prevented at flood control facilities. Treating the few dispersing squirrels avoids treating an entire colony with anticoagulants, and therefore much less bait enters the food chain. Ventura County lobbied to change the label to allow some bait to be left in the bait stations to control dispersing squirrels. Discontinuing diphacinone is not yet an option, but we plan to conduct studies to further improve bait station design and bait application protocols, coordinate with neighboring landowners, and revise the IPMP to reduce bait use.

Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture

Tens of millions of people are currently choosing health coverage on a state or federal health insurance exchange as part of the Patient Protection and Affordable Care Act. We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most cost-effective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement. Without interventions, respondents perform at near chance levels and show a significant bias, overweighting out-of-pocket expenses and deductibles. Financial incentives do not improve performance, and decision-makers do not realize that they are performing poorly. However, performance can be improved quite markedly by providing calculation aids, and by choosing a “smart” default. Implementing these psychologically based principles could save purchasers of policies and taxpayers approximately 10 billion dollars every year.

Integrating ecosystem services and local government finances into land use planning: A case study from coastal Georgia

This work presents a novel approach to assessing the impact of future growth in rural regions faced with rapid growth. We investigate one of the most rural counties on the eastern coast of the U.S. (McIntosh County, Georgia) from the dual perspective of (1) ecosystem services and (2) costs assumed by local government. As land cover in our focal locality is overwhelmingly forest or wetland, we compiled estimates from multiple sources to map the value per ha/year of (1) timber sales and recreational leases to private landowners and (2) a suite of non-market public amenities: rare species habitat, carbon sequestration, flood control, pollution treatment, water supply, and storm protection. We then quantified, based on county budgets, expenditures and revenues deriving from major land use categories (residential, commercial/industrial, agricultural/open-space). Results indicate that (1) forested wetlands generate relatively little revenue to either private landowners or in taxes to the county from extractive uses, but have very high value relative other land cover types in the provision of ecosystem services, (2) forest lands contribute much more in revenue than they receive in services, whereas residential properties cost more in services, than they generate in revenue, and (3) significant gains in both ecosystem service preservation, hazard reduction, and in lower costs to the county in municipal services could be achieved by restricting new development from within the Federal Insurance Rate Map (FIRM)-determined 500 year floodplain.

Change, Challenge, and Opportunity: Psychiatry in the Age of Health Care Reform

Change, Challenge, and Opportunity: Psychiatry in the Age of Health Care Reform

Survey Of High-Risk Pool Enrollees Suggests That Targeted Transition Education And Outreach Should Begin Soon

Several provisions of the Affordable Care Act make state and federal high-risk pools unnecessary beginning in January 2014. As a result, thousands of enrollees in those pools will be transferred to Medicaid and the new state and federal insurance exchanges. Our study analyzed new survey data collected from enrollees in the country's oldest and largest state-based high-risk pool, the Minnesota Comprehensive Health Association. We estimate that approximately half of the enrollees in that pool will qualify for Medicaid or premium subsidies in the exchange. More than 60 percent of the enrollees reported being somewhat or very unfamiliar with health care reform and the resulting changes to their current coverage. Their concerns about the expected impact of health reform varied by income, geography, and level of deductible. Targeting education and outreach information to address these concerns will be critical for this population's smooth transition to new coverage.

Medicare Covers The Majority Of FDA-Approved Devices And Part B Drugs, But Restrictions And Discrepancies Remain

The Food and Drug Administration (FDA) and Medicare use different standards to determine, first, whether a new drug or medical device can be marketed to the public and, second, if the federal health insurance program will pay for use of the drug or device. This discrepancy creates hurdles and uncertainty for drug and device manufacturers. We analyzed discrepancies between FDA approval and Medicare national coverage determinations for sixty-nine devices and Part B drugs approved during 1999-2011. We found that Medicare covered FDA-approved drugs or devices 80 percent of the time. However, Medicare often added conditions beyond FDA approval, particularly for devices and most often restricting coverage to patients with the most severe disease. In some instances, Medicare was less restrictive than the FDA. Our findings highlight the importance for drug and device makers of anticipating Medicare's needs when conducting clinical studies to support their products. Our findings also provide important insights for the FDA's and Medicare's pilot parallel review program.

Improving Recording Accuracy, Transparency, and Performance for Obstetric Quality Measures in a Community Hospital–Based Obstetrics Department

The obstetric arena has been typically ignored in the race to determine hospital quality measures due primarily to the fact that a large majority of patients do not have Medicare federal insurance, which has been the focus of hospital measures of quality. With "normal vaginal delivery" being the number one hospital discharge diagnosis and cesarean sections rates varying greatly between hospitals, national organizations are taking greater interest in determining differences in quality. Sutter Medical Center, Sacramento (California) chartered a multidisciplinary Perinatal Data Committee to improve and simplify data capture for six obstetric quality measures. All six quality measures showed significantly improved trends from 2010 through 2012, with elective delivery < 39 weeks decreasing (15.3% to 2.3%, p < .001), nulliparous term singleton vertex cesarean (NTSV) delivery rate decreasing (31.3% to 24.7%, p < .001), episiotomy rates decreasing (4.7% to 2.3%, p < .001), antenatal steroid documentation increasing (80.0% to 100%, p <.01), exclusive breastfeeding at hospital discharge increasing (57.9% to 69.9%, p <.001), and deep vein prophylaxis at cesarean increasing (95.4% to 98.2%,p < .001). That performance on all six quality measures improved suggests that the improvement approach was effective and perhaps reproducible in other clinical situations to improve hospital quality outcomes. A key contributor to success was that the dashboard of results was shared with the department's physicians and the hospital administration on a monthly basis. Reinforcement of good results helped keep the project front and center with the hospital, particularly more recently, given that data reporting for four of the six measures is soon to be required.