Spillover effects of increased health insurance enrollment on workers’ compensation insurance

The Patient Protection and Affordable Care Act (ACA) was designed to increase the accessibility and affordability of health insurance. While the ACA did not contain direct provisions related to workers’ compensation (WC), because health‐related coverage is a significant portion of WC costs, the ACA could have unintentionally impacted the WC market. Specifically, expanded health insurance enrollment could reduce WC losses and result in higher performance among insurers participating in the WC market. Using insurer‐state level data, we consider the impact of increased health insurance enrollment on the performance of property‐casualty (PC) insurers. Utilizing multiple measures of performance, we find that the post‐ACA period is generally associated with greater profitability for PC insurers operating in the WC market, a positive unintended consequence of this federal regulation.     

Sell on the news: Differences of opinion,short-sales constraints,and returns around earnings announcements

Miller [1977. Risk, uncertainty, and divergence of opinion. Journal of Finance 32, 1151–1168] hypothesizes that prices of stocks subject to high differences of opinion and short-sales constraints are biased upward. We expect earnings announcements to reduce differences of opinion among investors, and consequently, these announcements should reduce overvaluation. Using five distinct proxies for differences of opinion, we find that high differences of opinion stocks earn significantly lower returns around earnings announcements than low differences of opinion stocks. In addition, the returns on high differences of opinion stocks are more negative within the subsample of stocks that are most difficult for investors to sell short. These results are robust when we control for the size effect and the market-to-book effect and when we examine alternative explanations such as financial leverage, earnings announcement premium, post-earnings announcement drift, return momentum, and potential biases in analysts’ forecasts. Also consistent with Miller's theory, we find that stocks subject to high differences of opinion and more binding short-sales constraints have a price run-up just prior to earnings announcements that is followed by an even larger decline after the announcements.     

Corporate Diversification and Credit Constraints: Real Effects across the Business Cycle

We study whether differences in access to credit cause focusedfirms to perform differently from diversified firms in the productmarket. Prior work has identified binding credit constraintsfor bank-dependent firms during recessions. We assess whethercorporate diversification alleviates these constraints. We findthat during recessions sales growth rates drop more for bank-dependentfocused firms than for rival segments of bank-dependent diversifiedfirms. We also find that during recessions inventory growthrates drop more for bank-dependent focused firms than for bank-dependentdiversified firms even after we control for contemporaneoussales growth. Consistent with a credit constraint explanation,we find no difference in the sensitivities to recessions ofbank-independent focused and bank-independent diversified firms.(JEL G30, G31, G32)     

Strategic responses of incumbents to new entry: the effect of ownership structure: capital structure, and focus

We examine how certain firm- and market-specific characteristicsaffect incumbent firms' responses to new entry into their localmarkets. Data comes from the discount department store industrywhere Wal-Mart entered a large number of markets in a shortperiod of time. Consistent with existing research, larger andmore profitable incumbents respond more aggressively to Wal-Mart'sentry, while more highly levered incumbents respond less aggressively.Also, there is evidence that incumbent managers fight harder(possibly overinvest) when their job is at greater risk andhigh managerial ownership appears to reduce this agency problem.Incumbent firms behave differently in markets under attack byWal-Mart than in markets not yet threatened, suggesting thatsome of the documented responses are specific to Wal-Mart'sentry.     

Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel Survey

In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random‐effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely.     

Comparing online and non‐online shoppers

A web‐based survey was completed by 130 faculty and staff from a university located in the south‐eastern United States. The purposes of this study were to investigate: (a) consumer characteristics related to online shopping; (b) benefits of online shopping as perceived by online shoppers; and (c) concerns about online shopping as perceived by non‐online shoppers. Responses were analysed using SPSS for tests of chi‐square. Findings suggest that the differences between online shoppers and non‐online shoppers correspond with Rogers’ 1 categories of adopters, and that the educational needs of consumers also differ based on their previous experience with online shopping.     

New post‐ACA insurance data highlights health insurer spending on health care quality

Following the Patient Protection and Affordable Care Act (ACA), annual financial reports by commercial health insurers include more detailed information on a Supplemental Health Care Exhibit. In this new exhibit, insurers illustrate spending on the provision of medical services and associated expenses. These expenses, which were commonly reported as “claims adjustment” and “general administrative” expenses, can now be allocated to several new categories of expenses associated with combatting fraud and improving patient health care quality. This article illustrates that quality improvement expenses have increased significantly in the individual, small group, and large group markets following implementation of the ACA. Of the five types of quality expenses reported, the greatest proportion of spending has been toward the improvement of health outcomes and the most pronounced increase from 2011 to 2017 has been spending toward increased wellness and health promotion activities, which include activities such as wellness assessments and coaching programs for patients with chronic diseases. Given that the ACA was designed not only to broaden access to health insurance but also to improve health, analysis of the allocations to various types of quality improvement activities highlights the private market's contribution to improving the health of the US population.     

Regret in health insurance post‐purchase behavior

Unlike other forms of insurance, individuals with health insurance generally expect to make claims through the policy period. Selecting an appropriate level of cost‐sharing is difficult and individuals may, ex‐post, regret the choice of a less‐than‐suitable coverage amount. Using a national health insurance survey of private market consumers from 2013 to 2017, we evaluate the potential for post‐purchase regret in the health plan purchasing decision. We employ an ordered logistic model and find that consumers whose plan choices were likely financially dominated by a foregone alternative are significantly more likely to express regret through reporting significantly lower likelihood of renewal, even when controlling for confounding considerations including affordability, self‐assessed risk, and satisfaction with the plan.