Three essays on insurance
Creators: name: Ghazal, Reza
Publisher: name: Université d'Ottawa / University of Ottawa
Year: 2008
Subjects: subject: Economics, General.

description: The thesis consists of three research projects on the insurance market, both health insurance and car insurance in Canadian economy. First essay, Effectiveness, Severity, Prevalence and the Scope of Public Health Insurance Coverage, focuses more on the breadth of coverage for health services and is motivated by the idea that some "medically necessary" services are covered 100% while other services are not covered at all by the public insurer: we ask where should this frontier between total coverage and no coverage lie. Interestingly, while attempting to address this latter concern we are able to provide further insight on the optimal depth of public coverage: it is not typically appropriate to have a fixed top-up rate, which is usually is the case. The appropriate amount of public coverage depends upon both the severity of conditions and the effectiveness of treatments. The model by dealing with both of the severity and effectiveness of any given condition is able to provide insights into issues concerning breadth and depth. First, we find that in the absence of horizontal equity restrictions on the taxation of personal income, a publicly-funded health care system replicates the pattern of spending that would be chosen by individuals if health care services were privately funded: in other words, if individuals were given an equivalent amount of cash, they would spend all of these dollars on health care. In this setting, if there is low therapeutic benefit to treatment, the public sector will redistribute cash to these individuals, rather than paying for treatment. Second, if redistribution is constrained by a horizontal equity requirement with respect to income taxation, then this has consequences for the design of the publicly-funded health care insurance system. This results in a situation where individuals who are relatively' healthy receive less care than under a privately-funded system whereas individuals who are in poor health receive more care than they would otherwise. If sick people were given an equivalent amount of cash, they would not choose to spend all of it on health care. This pattern is consistent with casual empiricism. An important implication of the result on the impact of horizontal equity on health-care coverage is that primary health care policies which deliver services---such as homecare---to sick people are likely to be highly efficient, particularly as compared to providing additional health care services to these individuals: they do not need yet another diagnostic examination or test, what they need is services-in-kind which increase the value of consumption thus relaxing the horizontal equity constraint. In second essay, The Effects of No-fault Insurance System on Accident Measures Across Canadian Provinces, we investigate whether or not switching from liability compensation systems to no-fault regime across four Canadian provinces, including Quebec, Manitoba, Saskatchewan and Ontario has had influenced three accident measures, fatality, personal injury and property-damage-only accidents, compared to three liability-based provinces, British Colombia, Alberta and New Brunswick. The results are consistent with the existing literature on this issue, implying that no-fault has actually led to more accidents for both fatality and property-damage-only accidents. Using Mills ratio and conventional IV to take into account the possibility of endogeneity of decision to switch to no-fault, we even get stronger effect, implying that the existing papers on this issues have under-estimated the actual effect. The effects, also, are different among various provinces with different regimes; Quebec and Manitoba with pure no-fault regime have had stronger adverse effect for all three measures of accidents, Saskatchewan with monetary no-fault in place has had the positive impacts of no-fault on fatal and property-damage-only accidents, while the effect for Ontario with verbal no-fault are not significant for fatal and property-damage-only accidents and negative for personal injury accidents. In third essay, The Effects of No-fault and Choice Systems on Severity in Saskatchewan: A Micro Level Data Analysis, I examine the possible impacts of two different compensation regimes on the severity of accidents. Grace to the daily detailed information on the characteristics of the drivers, the type of the vehicle, and the environmental factors influencing the severity of the accidents, I was able to disentangle the effects of choice and no-fault systems on five level of injuries, minor, moderate incapacitating, major capacitating, major unconsciousness and fatality. According to the results, no-fault has resulted in more serious injuries by shifting the distribution of the accidents from minor to major injuries. The result on choice is not significant for whole sample; however it showed the increasing impact on severity of accidents among male compared to female drivers.