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"Insurance regulation"
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Changes in telepsychiatry regulations during the COVID-19 pandemic: 17 countries and regions' approaches to an evolving healthcare landscape
During the COVID-19 pandemic, the use of telemedicine as a way to reduce COVID-19 infections was noted and consequently deregulated. However, the degree of telemedicine regulation varies from country to country, which may alter the widespread use of telemedicine. This study aimed to clarify the telepsychiatry regulations for each collaborating country/region before and during the COVID-19 pandemic.
We used snowball sampling within a global network of international telepsychiatry experts. Thirty collaborators from 17 different countries/regions responded to a questionnaire on barriers to the use and implementation of telepsychiatric care, including policy factors such as regulations and reimbursement at the end of 2019 and as of May 2020.
Thirteen of 17 regions reported a relaxation of regulations due to the pandemic; consequently, all regions surveyed stated that telepsychiatry was now possible within their public healthcare systems. In some regions, restrictions on prescription medications allowed via telepsychiatry were eased, but in 11 of the 17 regions, there were still restrictions on prescribing medications via telepsychiatry. Lower insurance reimbursement amounts for telepsychiatry consultations
in-person consultations were reevaluated in four regions, and consequently, in 15 regions telepsychiatry services were reimbursed at the same rate (or higher) than in-person consultations during the COVID-19 pandemic.
Our results confirm that, due to COVID-19, the majority of countries surveyed are altering telemedicine regulations that had previously restricted the spread of telemedicine. These findings provide information that could guide future policy and regulatory decisions, which facilitate greater scale and spread of telepsychiatry globally.
Journal Article
Benefit-Cost Analysis for Financial Regulation
Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a crisis against loss of growth during good times. Second, we propose a framework quantifying the social value of price discovery, and highlighting which arbitrages are over- and under-supplied from a social perspective. Finally, we distinguish between insurance benefits and gambling-facilitation harms of market completion.
Journal Article
The Cost of Financial Frictions for Life Insurers
During the financial crisis, life insurers sold long-term policies at deep discounts relative to actuarial value. The average markup was as low as—19 percent for annuities and — 57 percent for life insurance. This extraordinary pricing behavior was due to financial and product market frictions, interacting with statutory reserve regulation that allowed life insurers to record far less than a dollar of reserve per dollar of future insurance liability. We identify the shadow cost of capital through exogenous variation in required reserves across different types of policies. The shadow cost was $0.96 per dollar of statutory capital for the average company in November 2008.
Journal Article
Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement
We examine the capital-market effects of changes in securities regulation in the European Union aimed at reducing market abuse and increasing transparency. To estimate causal effects for the population of E.U. firms, we exploit that for plausibly exogenous reasons, such as national legislative procedures, E.U. countries adopted these directives at different times. We find significant increases in market liquidity, but the effects are stronger in countries with stricter implementation and traditionally more stringent securities regulation. The findings suggest that countries with initially weaker regulation do not catch up with stronger countries, and that countries diverge more upon harmonizing regulation.
Journal Article
Frictions or Mental Gaps
Consumers suffer significant losses from not acting on available information. These losses stem from frictions such as search costs, switching costs, and rational inattention, as well as what we call mental gaps resulting from wrong priors/worldviews, or relevant features of a problem not being top of mind. Most research studying such losses does not empirically distinguish between these mechanisms. Instead, we show that most highly cited papers in this area presume one mechanism underlies consumer choices and assume away other potential explanations, or collapse many mechanisms together. We discuss the empirical difficulties that arise in distinguishing between different mechanisms, and some promising approaches for making progress in doing so. We also assess when it is more or less important for researchers to distinguish between these mechanisms. Approaches that seek to identify true value from demand, without specifying mechanisms behind this wedge, are most useful when researchers are interested in evaluating allocation policies that strongly steer consumers towards better options with regulation, traditional policy instruments, and defaults. On the other hand, understanding the precise mechanisms underlying consumer losses is essential to predicting the impact of mechanism policies aimed primarily at reducing specific frictions or mental gaps without otherwise steering consumers. We make the case that papers engaging with these questions empirically should be clear about whether their analyses distinguish between mechanisms behind poorly informed choices, and what that implies for the questions they can answer. We present examples from several empirical contexts to highlight these distinctions.
Journal Article
Selection in Health Insurance Markets and Its Policy Remedies
Selection (adverse or advantageous) is the central problem that inhibits the smooth, efficient functioning of competitive health insurance markets. Even—and perhaps especially—when consumers are well-informed decision makers and insurance markets are highly competitive and offer choice, such markets may function inefficiently due to risk selection. Selection can cause markets to unravel with skyrocketing premiums and can cause consumers to be under- or overinsured. In its simplest form, adverse selection arises due to the tendency of those who expect to incur high health care costs in the future to be the most motivated purchasers. The costlier enrollees are more likely to become insured rather than to remain uninsured, and conditional on having health insurance, the costlier enrollees sort themselves to the more generous plans in the choice set. These dual problems represent the primary concerns for policymakers designing regulations for health insurance markets. In this essay, we review the theory and evidence concerning selection in competitive health insurance markets and discuss the common policy tools used to address the problems it creates. We emphasize the two markets that seem especially likely to be targets of reform in the short and medium term: Medicare Advantage (the private plan option available under Medicare) and the state-level individual insurance markets.
Journal Article
EQUILIBRIA IN HEALTH EXCHANGES: ADVERSE SELECTION VERSUS RECLASSIFICATION RISK
This paper studies regulated health insurance markets known as exchanges, motivated by the increasingly important role they play in both public and private insurance provision. We develop a framework that combines data on health outcomes and insurance plan choices for a population of insured individuals with a model of a competitive insurance exchange to predict outcomes under different exchange designs. We apply this framework to examine the effects of regulations that govern insurers' ability to use health status information in pricing. We investigate the welfare implications of these regulations with an emphasis on two potential sources of inefficiency: (i) adverse selection and (ii) premium reclassification risk. We find substantial adverse selection leading to full unraveling of our simulated exchange, even when age can be priced. While the welfare cost of adverse selection is substantial when health status cannot be priced, that of reclassification risk is five times larger when insurers can price based on some health status information. We investigate several extensions including (i) contract design regulation, (ii) self-insurance through saving and borrowing, and (iii) insurer risk adjustment transfers.
Journal Article
Private voluntary health insurance in development : friend or foe?
Private voluntary health insurance already plays an important role in the health sector of many low and middle income countries.The book reviews the context under which private insurance could contribute to an improvement in the financial sustainability of the health sector, financial protection against the costs of illness, household income.
eBook
Credit Market Competition and Capital Regulation
Empirical evidence suggests that banks hold capital in excess of regulatory minimums. This did not prevent the financial crisis and underlines the importance of understanding bank capital determination. Market discipline is one of the forces that induces banks to hold positive capital. The literature has focused on the liability side. We develop a simple theory based on monitoring to show that discipline from the asset side can also be important. In perfectly competitive markets, banks can find it optimal to use costly capital rather than the interest rate on the loan to commit to monitoring because it allows higher borrower surplus.
Journal Article