Three years ago, 3.9 million Americans received a plain-looking envelope from the Internal Revenue Service. Inside was a letter stating that they had recently paid a fine for not carrying health insurance and suggesting possible ways to enroll in coverage.
New research concludes that the bureaucratic mailing saved lives.
Three Treasury Department economists have published a working paper finding that these notices increased health insurance sign-ups. Obtaining insurance, they say, reduced premature deaths by an amount that exceeded any of their expectations. Americans between 45 and 64 benefited the most: For every 1,648 who received a letter, one fewer death occurred than among those who hadn’t received a letter.
In all, the researchers estimated that the letters may have wound up saving 700 lives.
The experiment, made possible by an accident of budgeting, is the first rigorous experiment to find that health coverage leads to fewer deaths, a claim that politicians and economists have fiercely debated in recent years as they assess the effects of the Affordable Care Act’s coverage expansion. The results also provide belated vindication for the much-despised individual mandate that was part of Obamacare until December 2017, when Congress did away with the fine for people who don’t carry health insurance.
“There has been a lot of skepticism, especially in economics, that health insurance has a mortality impact,” said Sarah Miller, an assistant professor at the University of Michigan who researches the topic and was not involved with the Treasury research. “It’s really important that this is a randomized controlled trial. It’s a really high standard of evidence that you can’t just dismiss.”
The uninsured rate for Americans is rising for the first time in a decade, as states tighten eligibility rules for Medicaid, and as the Trump administration cuts back on health care outreach.
“It’s an innovation to know that just sending a letter to people with information about what it means to be insured versus uninsured can substantially change coverage rates,” said Katherine Baicker, dean of the University of Chicago Harris School of Public Policy. “That is really important, new information.”
Previous research has found a link between expanded health insurance access and fewer deaths. Multiple studies showed a decline in mortality rates after states expanded Medicaid, but none could tie the outcome directly to the policy change, since states typically cannot randomly pick which residents do and don’t receive Medicaid. That makes the Treasury experiment, an unintended result of a budget shortfall, distinctively useful.
The most prominent similar study, the Oregon Health Experiment, was much smaller and more equivocal. There, Oregon ran a lottery for slots in a Medicaid expansion in 2008. Those who gained health coverage in the lottery reported feeling better and having fewer unpaid medical bills. They were more likely to fill their medication prescriptions for conditions like diabetes and cardiovascular disease.
But researchers did not produce evidence that Medicaid enrollees in Oregon had a lower risk of death, something they attribute to the fact death is a rare event (especially so for the under-65 population typically enrolled in Medicaid). Finding any change requires a very large sample to study.
“What we ended up producing had such wide confidence intervals, they were not really useful for policymaking,” said Ms. Baicker, one of the economists who closely studied the Oregon Health Experiment.
Some economists had cast doubt on the connection between health coverage and mortality, noting that even an uninsured person is not completely excluded from the health care system. Federal law requires emergency rooms to treat all patients regardless of their ability to pay. One recent study showed that hospitals spend an additional $900 on free care for each extra uninsured patient they treat. It describes hospitals as “the insurers of last resort.”
“It’s not clear that every person who gets new health insurance will cut their probability of dying by a large amount,” said Kosali Simon, a health economist at Indiana University.
The Obama administration had planned to send letters to all 4.5 million Americans paying tax fines for not carrying health coverage, only to learn the budget was not quite big enough. About 600,000 uninsured taxpayers were randomly left out of the mailing.
This created a randomized controlled trial, which researchers generally view as the gold standard for studying the results of a specific policy intervention — in this case, the effects of being nudged to get health coverage.
“I was definitely torn about it,” said Jacob Goldin, a co-author of the paper who worked as an economist at the Treasury Department and is now an associate professor at Stanford. “We were hoping the letters would be beneficial, and wanted them to go to everybody. But it was also an exciting research opportunity.”
The letters went out in two batches, in December 2016 and January 2017, in one of the Obama administration’s final efforts to increase awareness of the Affordable Care Act’s coverage options.
The subsequent research, published by Mr. Goldin with the Treasury economists Ithai Lurie and Janet McCubbin, found that gaining coverage was associated with a 12 percent decline in mortality over the two-year study period (the first months of coverage seemed to be most important, presumably because people could get caught up on various appointments and treatments they might have been missing).
Months later, in August 2017, the Trump administration cut the health law’s outreach budget by 72 percent.
And at the end of 2017, Congress passed legislation eliminating the health law’s fines for not carrying health insurance, a change that probably guarantees that the I.R.S. letters will remain a one-time experiment.
