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Tuesday, November 12, 2002 |
"Truck-School Loans Hit Rough Spot", WSJ November 12, 2002.
Securitized school loans for truck-driving school have unprecedented default rates of 70%. Why? (a) Adverse selection among truck-driving students? (b) Perverse incentives on part of truck-driving schools? and/or (c) Perverse incentives on the part of the loan consolidator (SFC)?
[Categories: Adverse Selection, Insurance, Moral Hazard]
3:32:22 PM 
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"After Managed Care: 'Consumer-driven' insurance plans promise to unleash the power of the market on health care", WSJ November 11, 2002.
Consumer-driven insurance clearly seems designed to mitigate the moral hazard problem, that insurees will get more health care than they need. What about the adverse selection problem, that only the sickest insurees will be attracted to the plans with the most benefits?
"Other consumer-driven insurance plans give the insurers more money for sick enrollees." Will this policy align patients incentives to reveal their true health? Would you suggest corporate adoption of such a health plan?
[Categories: Adverse selection, Insurance, Moral hazard]
3:22:48 PM
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Friday, November 08, 2002 |
"Drug Cost-Control Plans Push Many to Do Without", WSJ October 29, 2002.
Doubling a uniform co-payment from $5 to $10 per prescription lowered per person drug costs from $725 to $563, a 22% drop. But doubling co-payment using a two-tiered system of (cheaper) preferred drugs and non-preferred drugs led to a 33% drop in per person costs. Explain why one would expect this result, that a two-tiered system will reduce spending by more.
[Categories: Insurance, Moral Hazard]
1:35:26 PM
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Thursday, October 31, 2002 |
"Chubb Extends Family Protection: Coverage for Kidnapping, Carjacking, Other Crimes To Be Rolled Out Nationally", WSJ October 23, 2002.
What would adverse selection and moral hazard mean with respect to family protection insurance? Who buys this insurance? Is there a significant adverse selection of families who purchase family protection?
This policy is only sold bundled with premium home owner's insurance. Is this important?
Why doesn't Chubb's policy cover ransoms? Explain why this would lead to an incentives / moral hazard problem that could make this coverage less profitable.
[Categories: Adverse Selection, Insurance, Moral Hazard, Price Discrimination (Bundling)]
3:45:32 PM
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Monday, September 16, 2002 |
"Insurance Issues Threaten Satellite Industry", WSJ September 10, 2002.
Among these three factors, which does the article suggest are the most and the least important in understanding the challenges facing the satellite insurance industry: (1) economies of scale, i.e. financial pooling; (2) adverse selection of insurees; (3) moral hazard / incentives of insurees.
[Categories: Adverse Selection, Costs, Insurance, Moral hazard]
3:04:11 PM
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© Copyright 2002 David McAdams.
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