Wharton PPI publishes Issue Briefs tackling concerns that are varied but share one common thread: they are central to the economic health of the nation and the American people. These are nonpartisan, knowledge-driven documents written by Wharton and Penn faculty in their specific areas of expertise.
PublicationOptions Facing Congress in Renewing the Terrorism Risk Insurance Act(2014-07-01) Kunreuther, Howard; Michel-Kerjan, Erwann; Kunreuther, Howard; Michel-Kerjan, ErwannThe Terrorism Risk Insurance Act (TRIA) is set to expire at the end of 2014 and is currently under debate in Congress. Renewing TRIA may limit the amount of disaster relief the federal government would contribute after a terrorist attack, but the different options under which TRIA might be renewed carry implications for how losses from any attack would be spread between commercial policyholders, insurers, and taxpayers. PublicationIs There a Future for Employer- Sponsored Health Insurance?(2015-03-01) Pauly, Mark V; Pauly, Mark VOver the next five years, the effects of the ACA on employer-sponsored insurance will be modest. In the longer run, there is greater potential for disruption, depending on how firms respond to the subsidies available on the exchanges for low-wage workers. In all, only about 15% of the workforce likely will be affected. The impacts of the ACA on firms will vary widely based on three main factors: 1) the size of the firm, 2) the average compensation within the firm, and 3) the degree to which wages within the firm are homogenous or heterogeneous. Keeping in mind that employees pay for all their health insurance, group insurance is not intrinsically superior to private exchanges, and cost trumps choice for consumers, firms will choose the option that maximizes benefits to their workers, takes advantage of the best available subsidies while avoiding tax penalties, and results in the lowest administrative costs. Making all low-wage workers eligible for the same subsidies, whether they acquire coverage on the exchanges or in group plans, would be reasonable and involve less distortions. PublicationOptimizing Outcomes on the Health Insurance Exchanges(2013-11-01) Baker, Tom; Baker, Tom; Volpp, Kevin G; Starc, Amanda; Volpp, Kevin GThe success of the new health insurance exchanges will depend greatly on the quality of the enrollment decisions that consumers make. Choosing the wrong insurance product can translate into billions of dollars in wasteful spending at the national level. Faculty at the University of Pennsylvania have contributed to several studies outlining important ways that the exchanges can be made to work better for consumers—and for the larger economy. PublicationThe Economic Realities of Replacing the Affordable Care Act(2017-03-01) Fang, HanmingUsing simulations based on a new economic model, this brief empirically examines the pivotal mechanisms of the Affordable Care Act, such as the individual mandate, employer mandate, and premium subsidies, to inform the debate over repealing and replacing the Affordable Care Act. The research suggests that the ACA, if left intact, in the long run significantly reduces the uninsured rate. The simulations also suggest that the employer mandate is not a crucial pillar for the success of the ACA. The analysis indicates it is the premium subsidy, rather than the employer mandate or the individual mandate, that is crucial for the success of the ACA, in terms of expanded coverage. The brief concludes with a look at the key elements of the main legislative proposals Congressional Republicans have offered to replace the ACA, including the American Health Care Act. PublicationInsurance against Extreme Events: Pairing Short-Term Incentives with Long-Term Strategies(2016-10-01) Kunreuther, Howard; Kunreuther, HowardConsumers tend to purchase too little insurance or purchase it too late. Consequently, taxpayers wind up bearing substantial burdens for paying reconstruction costs from extreme events. The 2005 and 2012 hurricane seasons alone cost taxpayers nearly $150 billion. There is much that can be done to better facilitate the role that insurance can play in addressing losses from extreme events, both natural and man-made. PublicationImplementing the National Flood Insurance Reform Act in a New Era of Catastrophes(2013-10-01) Kunreuther, Howard; Michel-Kerjan, Erwann; Kunreuther, Howard; Michel-Kerjan, ErwannThe United States has entered a new era of catastrophes, of which floods have been the most devastating. Through its 2012 reform (Biggert-Waters Act), the 45-year old federally-run National Flood Insurance Program has an opportunity to highlight the role that risk-based premiums can play in encouraging individuals to undertake loss reduction measures. But the implementation of this reform is now being challenged due to concerns that residents cannot afford risk-based premiums. The authors of this brief propose that this can be overcome by successfully combining risk-based pricing, required insurance, means-tested insurance vouchers, and mitigation loans, so that individuals reduce their flood risk and are financially protected against future disaster losses, thus reducing the need for taxpayer money for disaster relief in the future. PublicationThe Urgency of Reforming Entitlement Programs: The Case of Social Security Disability Insurance(2013-08-01) Duggan, MarkEnrollment in the Social Security Disability Insurance program has risen significantly since the late 1980s; consequently, program expenditures have far outpaced revenues and the SSDI trust fund is projected to hit zero in 2016. Moreover, the SSDI program, as currently administered, discourages applicants and recipients of benefits from seeking and returning to work, thereby reducing federal tax revenues at a time when deficit reduction is critical. The SSDI program can and must be reformed. Reconsidering the medical eligibility criteria for benefits, promoting earlier medical interventions, allowing for SSA representation at appeal hearings on benefit decisions, enacting time limits for some benefit awards, and increasing the frequency of continuing disability reviews can help make the program more efficient, encourage individuals to return to work, and enhance economic growth. PublicationOnly Too Human: Understanding Health Insurance Markets When Consumers Lack Information(2014-09-01) Kolstad, Jonathan TWhen the state and federal health insurance exchanges were introduced in 2013, much attention was paid to the logistics of their launch. Nearly a year later, policymakers should now be looking at a different question: how can we collect and use data from the exchanges to understand how consumers think about insurance choice, so as to make the exchanges function better? PublicationSSDI Reform: Promoting Return to Work without Compromising Economic Security(2015-09-01) Gokhale, Jagadeesh; Gokhale, JagadeeshWith the Social Security Disability Insurance (SSDI) trust fund on the verge of depletion, Congress must enact structural reforms to the SSDI program that address and counter the rapid growth in SSDI enrollments in recent years. This brief details a work incentive program for SSDI beneficiaries, called the Generalized Benefit Offset (GBO), which would help get SSDI recipients back into the labor force, enhancing their own economic welfare while increasing economic output on a societal level.