Rules rather than discretion: Lessons from Hurricane Katrina

This paper explores options for programs to be put in place prior to a disaster to avoid large and often poorly-managed expenditures following a catastrophe and to provide appropriate protection against the risk of those large losses which do occur. The lack of interest in insurance protection and mitigation by property owners and by public sector agencies prior to a disaster often creates major problems following a catastrophic event for victims and the government. Property owners who suffer severe damage may not have the financial resources easily at hand to rebuild their property and hence will demand relief. The government is then likely to respond with costly but poorly targeted disaster assistance. To avoid these large and often uneven ex post expenditures, we consider the option of mandatory comprehensive private disaster insurance with risk-based rates. It may be more efficient to have an ex ante public program to ensure coverage of catastrophic losses and to subsidize low income residents who cannot afford coverage rather than the current largely ex post public disaster relief program.     

Incentives and government relief for risk

Government relief is offered for a wide range of risks-natural disaster, economic dislocation, sickness, and injury. This article explores the effect of such relief on incentives and the allocation of risk in a model with private insurance. It is shown that government relief is inefficient, even when its level is less than the private insurance coverage that individuals would otherwise have purchased and even when private insurance coverage is incomplete due to problems of moral hazard.Harvard University and National Bureau of Economic Research (Cambridge, MA 02138; 617-495-4101). I am grateful for comments from Lucian Bebchuk, Martin Feldstein, John Parsons, Michael Rothschild, Steven Shavell, Lawrence Summers, and a referee, and for support from the John M. Olin Foundation.     

Development of Social Health Insurance in Mongolia: Successes, Challenges and Lessons

This paper examines the process of developing social health insurance in Mongolia, and its successes, challenges and lessons. The government of Mongolia introduced social health insurance in 1994, which is compulsory for all public and private sector employees and low-income and vulnerable population groups. The scheme also provided voluntary insurance for unemployed people of working age. About 95 per cent of the population was covered by health insurance within the first two years thanks to a high level of government subsidy for vulnerable population groups. The insurance benefit initially covered nearly all inpatient services except the treatment of some specified chronic and infectious diseases, which were directly funded by the government. The scheme not only had many successes but also faced challenges in maintaining universal coverage. The new financing arrangement has provided little financial incentive for healthcare providers to contain health expenditure, contributing to rapid health cost inflation. In addition to reforming the payment system for providers, there has been an increasing need to expand benefits into ambulatory care. The development of compulsory health insurance in Mongolia shows that a prepaid health insurance mechanism based on risk sharing and fund pooling is feasible in low-income countries given political commitment and government financial support for vulnerable population groups.     

Private Health Insurance in Chile: Basic or Complementary Insurance for Outpatient Services?

A private health insurance system has existed in Chile since 1981 and has covered over a quarter of the population of that country since 1995. This article examines that system in economic terms. The analysis focuses on the incentive effects of state regulations governing the formulation of private health insurance policies and the relationship with the state health service. The imbalance in policy termination rights and the unrestricted possibility to return to the state system emerge as central functional elements. The article postulates that the private system represents, for many, not a full coverage scheme but an additional policy for outpatient benefits, regardless of its officially stated aims.     

Excluded losses and the demand for insurance

The demand for insurance is examined when the insured asset can incur losses that are excluded from insurance coverage. These losses are negatively correlated with covered losses and hence cannot be treated as background risk. Excluded losses have strikingly different effects on the demand for insurance than does background risk and lead to a modification of many standard insurance demand results. A number of new theorems concerning the effects of excluded losses are also presented. Risk-averse and prudent decision makers reduce their demand for insurance when excluded losses increase in size or riskiness. Excluded losses are a possible explanation for why many decision makers fail to take up insurance when it is offered.     

Moral hazard,monitoring costs,and optimal government intervention

When insurance firms can monitor with non-prohibitive costs the consumption of risk-influencing goods by an insured, they have incentives to tax-subsidize the insured's consumption of the goods. If the government cannot monitor at a lower cost than private insurers, intervention is neither needed nor desirable. Where the government does have a monitoring-cost advantage, it cannot achieve a constrained optimum by commodity tax-subsidies alone. It must also augment the level of insurance and, in some cases, prohibit private tax-subsidies by insurers. Such “invasive” intervention can be avoided if the government regulates the consumption of the risk-influencing goods.     

Health insurance coverage of Hispanic adults: An assessment of subgroup difference and the impact of immigration

This research explores the health insurance coverage of various Hispanic subgroups in comparison to non-Hispanic whites and blacks. The impact of immigration status is also considered as we hypothesize that nativity, duration, and naturalization tap a possible process of structural acculturation that increases access to insurance coverage for Hispanic groups. We find that the immigration variables impact the type of insurance reported. However, race/ethnic disparities continue to exist, with the various Hispanic subgroups more likely to report miscellaneous government health insurance or no health insurance coverage as compared to non-Hispanic whites.     

Extension of social insurance coverage to informal economy workers in China: An administrative and institutional perspective

This article reviews administrative issues in the context of decentralized social protection in China. In particular, what are the main obstacles to expanding social insurance coverage for workers in the informal economy? Over the last two decades, China has achieved remarkable progress toward universal social protection when this target was set as a national policy priority. However, the social insurance enrolment of informal economy workers still lags significantly behind. This article reviews the application of the International Labour Organization’s definition of informality in the Chinese context and overviews existing pension and health insurances in China. This article discusses the impact of China’s inter‐governmental fiscal relations and decentralized social protection in the multilevel government system. The article highlights that under a system of decentralized managed social insurance many informal economy workers choose to opt out of the system because of low benefits and high compliance costs. This result in deficits in social insurance coverage amongst informal economy workers.     

The extension of healthcare coverage and protection in relation to the labour market: Problems and policies in Latin America

In the past 25 years almost all 20 countries of Latin America have reformed their healthcare systems, but coverage by social insurance averages 53 per cent of the total population (less than the ILO minimum standard), ranges from 7 to 26 per cent in ten countries and has stagnated or decreased in at least eight, and access is insufficient. This article (1) analyses the transformation of the labour market and its impact on social insurance coverage; describes legal coverage of various groups; estimates statistical coverage/access and its trends in the three typical sectors (public, social insurance and private); documents the differences in coverage by income, geographical area and ethnic group; examines the difficulties in the incorporation of the informal economy, the rural population, indigenous peoples and the poor, as well as the causes of low coverage, and touches problems of access;(2) summarizes recommendations from international organizations on coverage and access; suggests specific policies to expand protection in general and to vulnerable groups, and identifies themes that require more statistics and research; and (3) summarizes findings and recommendations. A preliminary version of this article was presented at the ISSA Regional Conference for the Americas held in Belize City, 28‐31 May 2006. Based on the author's book Las Reformas de Saluden América Latina y el Caribe: Su Impacto en los Principios de la Seguridad Social (Santiago, ECLAC/GTZ, 2006), the article summarizes and restructures all pertinent sections of that book, with numerous changes and new data. Useful comments were provided by two anonymous referees.     

Social Health Insurance: Key Factors Affecting the Transition Towards Universal Coverage

Several low- and middle-income countries are interested in extending their existing health insurance for specific groups to eventually cover their entire populations. For those countries interested in such an extension, it is important to understand the factors that affect the transition from incomplete to universal coverage. This paper analyses the experience of eight countries in the implementation of social health insurance. It highlights the importance of the socioeconomic and political context, particularly in relation to the level of income, structure of the economy, distribution of the population, ability to administer and level of solidarity within the country, but also stresses the important stewardship role government can play in facilitating the transition to universal coverage via social health insurance.     

Loss volatility,bankruptcy, and the demand for reinsurance

Insurers in our model reinsure to lower the risk of bankruptcy. In the conceptual part of the study, we show that given bankruptcy cost, reinsurance may be demanded even if the insurer is risk-neutral. The model allows us to assess how the insurer's surplus, size, and volatility of losses affect the amount of reinsurance the insurer purchases. As predicted by our comparative statics analysis, we find empirically that property/casualty and medical malpractice insurers with higher prereinsurance loss volatility, lower surplus-to-premium ratios, and smaller sizes demand more reinsurance.     

Party control, policy reforms, and the impact on health insurance coverage in the U.S. states

Objectives. One of the major policy concerns at the federal and state level is the rising number of individuals without health insurance. The purpose of this article is to investigate whether party control of government and various state reforms impact the percentage of the state population without health insurance.Methods. Using data from 1987–2007, I empirically examine whether party control and five state policy reforms reduce the uninsured population.Results. The results show that Republicans are more effective than Democrats at the state level at reducing insurance gaps and that three of five policy reforms explored appear to significantly expand insurance coverage.Conclusions. The results provide valuable insight into which components of health-care reform at the national level may help address the health insurance problem.     

Mitigating disaster losses through insurance

Losses from natural disasters have increased in recent years due to growth of population in hazard-prone areas and inadequate enforcement of building codes. This article first examines why homeowners have not voluntarily adopted cost-effective protective measures and have limited interest in purchasing insurance. It then proposes a disaster-management program which utilizes insurance coupled with well-enforced building codes to reduce future damage. Banks and financial institutions play a key role in this program by requiring inspections of homes as a condition for a mortgage. New forms of reinsurance coverage against catastrophic losses from natural disasters are necessary to protect insurers against potential insolvency from the next mega-disaster.     

国家政权建设与民国时期广州城市土地产权变迁(1911-1935)

本文从国家政权建设视角探讨民国时期广州城市土地产权的变迁。辛亥革命后,广东军政府通过政权更迭取得了承袭公有土地的合法性,并用法律规章明确划分出官产,以区别于私有产权。广州市政厅成立后,为了明确省、市政府在税收中的权限范围,提出“市产”之名,在市区范围的公有和共有性质的产业随之都被纳入“市产”的范围。通过铺底登记,市政府在一定程度上间接实现了对双重产权的管理。最后,政府通过设立土地局进行土地登记,以实现私有土地的产权确认,进而征收土地税。至此,现代国家政府与民众在土地事务上重新确立了契约关系,城市土地产权管理体系初步确立。     

Moral hazard,risk seeking,and free riding

This article reports on a laboratory study of moral hazard in insurance markets. The experimental literature on the provision of public goods suggests that agents often sacrifice their narrowly defined self-interest for the good of the group. However, in those experiments, losses are deterministic. We find cooperation in experiments with stochastic losses to be much lower than in otherwise identical experiments with deterministic losses. We argue that the combination of risk seeking and free riding under stochastic returns to investment in loss control makes moral hazard particularly problematic for insurance markets.     

China's health insurance system in transformation: Preliminary assessment, and policy suggestions

As long ago as the 1980s, in tandem with its gradual implementation of market economy reforms, the Chinese central government also began to introduce changes in the field of social security as part of a move away from the dominant principle of state provision towards a greater espousal of the insurance principle. For demographic reasons, but also in an effort to get the private sector to pay a greater share of the cost, the intention was that future social security should be shaped in a way which combined universal, pay-as-you-go basic provision with individually funded supplementary provision. While the first half of the 1990s saw the establishment of a broadly uniform system of basic pensions, the 1998 attempt to introduce a general system of basic health insurance has not yet proved comprehensively successful, even for the population of the towns and cities, despite the success of pilot projects. This article, based on wide-ranging field studies, seeks to assess progress to date and future prospects for success, from a Chinese and an international perspective. Consideration is given to the situation of both the urban and rural populations.     

Long-term care reform in Korea: lessons from the introduction of Asia's second long-term care insurance system

Korea was the second Asian country to introduce universal long-term care insurance in an attempt to meet the challenges posed by its ageing population. This article presents an overview of the key issues that were involved in designing and implementing the new Korean system and the lessons that have been learned. Although the government reformed the long-term care system, a number of new challenges have emerged, such as its limited coverage and the unethical behavior of service providers. These problems appear to be closely associated with the scheme's initial design flaws and the government's passive responses to these problems.     

Externalities,Prospect Theory,and Social Construction: When Will Government Act,What Will Government Do?*

Objectives. Political theories of agenda setting and policy choice are still limited in predicting when an issue will become salient and, once it has, what policy option will be used to address it. This article illustrates that for a large class of externality problems, perspectives from three other social science disciplines can refine those predictions. Methods. A synthesis of implications from economics on assignment of property rights, loss aversion from prospect theory, and image of the policy target from social construction is used to determine the conditions under which issues gain attention and the likely policy solutions. Results. Assignment of property rights establishes a baseline used to assess any further government actions, with losses from that base more likely to generate political attention. The assignment of rights also determines if a problem is defined as a negative or positive externality, which restricts the type of policies used to address the problem. This initial allocation of rights is in turn affected both by the political power and social construction of the groups involved. Conclusions. The result is a bias in policy attention and outcomes strongly influenced by the norms used in assignment of property rights, which typically favor those generating the negative externality.     

Longevity insurance annuities: China adopts a benefit innovation from the past

Longevity insurance annuities are deferred annuities that begin payment at advanced older ages, such as at age 80. Such annuities would benefit some older retirees who have drawn down their savings, but the private sector has problems in providing them. Originally, social insurance old‐age benefits programmes in some countries were structured as longevity insurance programmes, with 50 per cent or less of those entering the workforce surviving to receive the benefits. Over time, however, as life expectancy has improved, the benefits these programmes provide have slowly transformed into benefits that most people entering the workforce ultimately receive. This article argues that the reintroduction of longevity insurance benefits as part of social insurance old‐age benefit programmes could be an important policy innovation, in particular because this benefit is generally not provided by the private sector. China has introduced longevity insurance benefits as part of its social insurance system, offering a model for other countries, particularly those providing modest social insurance old‐age benefits.     

养老社会保险私营化的产权分析

养老社会保险私营化,是近些年来国际上较为盛行的养老模式。这一发展趋势显现了传统中主要体现公平原则的养老社会保险制度对效率原则的追求。从产权的五个基本功能,即外部内在化、激励约束、资源配置、收益分配和减少不确定性,呈现私营化对提高养老社会保险制度效率的作用,是养老社会保险私营化的效率源泉。我国养老社会保险制度更有效率,必须做到养老保险基金产权明晰、被赋予有效的产权主体、能够交易和得到法律保障。