Is the Home Equity Conversion Mortgage in the United States sustainable? Evidence from pricing mortgage insurance premiums and non-recourse provisions using the conditional Esscher transform

2010 ◽  
Vol 46 (2) ◽  
pp. 371-384 ◽  
Author(s):  
Hua Chen ◽  
Samuel H. Cox ◽  
Shaun S. Wang
2010 ◽  
Vol 13 (2) ◽  
Author(s):  
John F Cogan ◽  
R. Glenn Hubbard ◽  
Daniel Kessler

In this paper, we use publicly available data from the Medical Expenditure Panel Survey - Insurance Component (MEPS-IC) to investigate the effect of Massachusetts' health reform plan on employer-sponsored insurance premiums. We tabulate premium growth for private-sector employers in Massachusetts and the United States as a whole for 2004 - 2008. We estimate the effect of the plan as the difference in premium growth between Massachusetts and the United States between 2006 and 2008—that is, before versus after the plan—over and above the difference in premium growth for 2004 to 2006. We find that health reform in Massachusetts increased single-coverage employer-sponsored insurance premiums by about 6 percent, or $262. Although our research design has important limitations, it does suggest that policy makers should be concerned about the consequences of health reform for the cost of private insurance.


2019 ◽  
Vol 22 (2) ◽  
pp. 169-196
Author(s):  
Shan Jiang ◽  
◽  
Chen L. Miller ◽  

Reverse mortgages generally have open maturity dates. The variability of the exact termination time of a mortgage is one of the most important risks faced by the lenders and mortgage insurers. This paper analyzes the termination experience of reverse mortgages in the United States (US). We find that reverse mortgages can be terminated by three distinct events: refinancing, mortality and mobility. Using the Federal Housing Administration (FHA) insured Home Equity Conversion Mortgage (HECM) loan data, we estimate the probability of the termination through individual events. The results show that refinance termination and other termination events are driven by different factors. Refinances are mainly driven by macroeconomic conditions, such as the appreciation of the house value and decline in interest rate, and usually done in the beginning years of the loan origination. Mortality terminations follow closely the US mortality tables, which are governed by age and gender. Mobility termination shares a similar pattern with mortality termination, especially in the later years of the loan life. Meanwhile, the initial cash drawdown pattern has significant but different impacts on each type of termination. By separating refinance termination from the two other types of terminations, we show that refinance termination slows down when the interest rate starts to rise. Without separating refinance termination, HECM investors could over-project the number of future HECM terminations in a rising interest rate scenario and result in loss of funds.


2019 ◽  
Vol 41 (6) ◽  
pp. 602-628
Author(s):  
Richard A. Hirth ◽  
Yubraj Acharya ◽  
Helen G. Levy ◽  
Kenneth M. Langa

Author(s):  
Stephen Y Wang ◽  
Javier Valero‐Elizondo ◽  
Hyeon‐Ju Ali ◽  
Ambarish Pandey ◽  
Miguel Cainzos‐Achirica ◽  
...  

Abstract Background Heart failure (HF) poses a major public health burden in the United States. We examined the burden of out‐of‐pocket healthcare costs on patients with HF and their families. Methods and Results In the Medical Expenditure Panel Survey (MEPS), we identified all families with ≥1 adult member with HF during 2014 – 2018. Total out‐of‐pocket healthcare expenditures included yearly care‐specific costs and insurance premiums. We evaluated two outcomes of financial toxicity: (1) high financial burden – total out‐of‐pocket healthcare expense to post‐subsistence income of >20%, and (2) catastrophic financial burden with the rate of >40% ‐ a bankrupting expense defined by the WHO. There were 788 families in MEPS with a member with HF representing 0.54% (95% CI, 0.48%–0.60%) of all families nationally. The overall mean annual out‐of‐pocket healthcare expenses were $4423 (95% CI, $3908–$4939), with medications and health insurance premiums representing the largest categories of cost. Overall, 14% (95% CI, 11%‐18%) of families experienced a high burden and 5% (95% CI, 3%‐6%) experienced a catastrophic burden. Among the two‐fifths of families considered low‐income, 24% (95% CI, 18%‐30%) experienced a high financial burden, while 10% (95% CI, 6%‐14%) experienced a catastrophic burden. Low‐income families had 4‐fold greater risk‐adjusted odds of high (OR=3.9, 95% CI, 2.3–6.6), and 14‐fold greater risk‐adjusted odds of catastrophic financial burden (OR=14.2, 95% CI, 5.1–39.5) compared with middle/high income families. Conclusions Patients with HF and their families experience large out‐of‐pocket healthcare expenses. A large proportion encounter financial toxicity, with a disproportionate effect on low‐income families.


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