In the winter of 2017, the IRS engaged in a massive randomized control experiment. 4.5 million people had to pay the individual mandate. The IRS randomly selected 3.9 million people to send letters to remind people to enroll. The researchers found two major things:
Beginning with the effect on coverage, we and that among individuals who were uninsured for some portion of the prior year, those in the treatment group were 1.3 percentage points more likely to enroll in coverage in the year following the intervention than those in the control group, a 2.8% relative increase. On average, each letter increased coverage among this group by 0.14 months during 2017, or one additional year of coverage per 87 letters sent. We document larger effects among individuals who lacked any coverage during the prior year and among older nonelderly adults. The effect appears to operate through new enrollments in the individual marketplace as well as through Medicaid take-up. Although there is some attenuation, coverage rates remains higher in the treatment group than in the control group in the two years following the intervention.
finding #1. The letters were a cheap and effective outreach effort. 87 letters to generate one enrollment is inexpensive. There is also enrollment inertia as once people sign up once, they are more likely to sign up and maintain coverage in the future. Coverage could be in either the individual market or Medicaid.
The more important finding is that health insurance buys health as well as financial insurance:
We present evidence that it did. In the two years following the intervention, the rate of mortality among previously uninsured 45-64 year-olds was lower in the treatment group than in the control by approximately 0.06 percentage points, or one fewer death for every 1,648 individuals in this population who were sent a letter…
Exploiting treatment group assignment as an instrument for coverage, we estimate that the average per-month effect of the coverage induced by the intervention on two-year mortality was approximately -0.17 percentage points… With these caveats, our results provide the first experimental evidence that health insurance reduces mortality
That is an incredibly important finding. In some ways it is intuitive. Being able to pay for health care leads to better health. But there has been no good randomized control work to show that is the case. And there has been a cottage industry arguing that the public paying for health care is buying no health. This won’t stop that argument but it renders it incoherent.