Government Insurers Flashcards
reasons for government participation in insurance (5)
[SUCCEss]
- social purposes
- unmet insurance needs
- compulsory purchase of insurance
- convenience
- greater efficiency
three levels of government involvement with state and federal examples
- exclusive insurer, e.g. monopolistic state workers comp funds and Social Security
- partner with private insurers, e.g. FAIR plans, windstorm plans, residual auto plans and NFIP, TRIA, crop insurance
- competitor to private insurers, e.g. state workers comp funds and flood insurance
criteria for evaluating government insurance programs (5)
[W/I-SEAN]
- is it welfare or is it insurance?
- does it serve a social purpose?
- is it efficient?
- is it accepted by the public?
- is it necessary?
origin of federal crop insurance
- created in 1938 after the Great Depression and Dust Bowl to protect farmers against low yields for certain crops in certain regions
- unsuccessful due to high costs and low participation
crop insurance protections (2)
- yields fall below a certain level
* prices fall below a certain level
mechanisms to reduce risk and adverse selection in crop insurance (3)
- must elect to purchase coverage prior to planting
- must insure all fields growing a given crop in the same county
- not eligible for federal disaster relief programs for crop loss if insurance is not purchased
describe public-private partnership of crop insurance
- Federal Risk Management Agency (RMA) sets rates
- private insurers market, write, and service crop insurance policies
- government reimburses private insurers for expenses
impacts of subsidization of crop insurance (3)
- farmers purchase more coverage than they would if paying full premium
- better protection for farmers may reduce requests for disaster assistance
- costs are increased for taxpayers
arguments for and against federal crop insurance
- for: it is necessary to bring stability to a volatile sector of the economy
- against: programs encourage overproduction and farming in riskier areas
three federal workers comp insurance programs
- Federal Employee Compensation Act (FECA) - provides benefits to federal employees, excluding military
- Longshore and Harbor Workers’ Compensation Act - employers required to provide workers comp for longshore, harbor, and maritime workers injured while working on or near navigable water in the U.S.; necessary since sometimes no state coverage applies
- Black Lung Benefits Act (BLBA) - benefits provided to miners totally disabled from black lung disease, paid through a federal excise tax with one-time contributions from Congress
types of residual market mechanisms for workers comp (4)
- state funds
- assigned risk plans
- reinsurance pools
- JUAs
interaction between workers comp and Medicare
- ongoing concerns about overlap
* workers comp and liability insurance are primary to Medicare
describe conditional payment by Medicare
- eligibility concerns can delay payments
- Medicare makes conditional payments to providers
- Medicare must be reimbursed later if a primary insurer is determined
describe Medicare Set-Aside Allocations (MSAs)
- parties in a workers comp settlement are required to set aside money for medical expenses
- MSA should be sufficient to offer primary coverage when the claimant is Medicare eligible
initial problems with MSA implementation (3)
- Medicare administrators did not know if parties were collecting workers comp or liability payments
- parties had little incentive to agree to MSAs
- aggressive collections did not exist
