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December 18, 2019

How one simple letter from the IRS may have saved 700 lives

Daily Briefing

    In 2016, the Internal Revenue Service (IRS) began mailing 3.9 million letters to U.S. adults who'd paid the Affordable Care Act's (ACA) penalty for being uninsured and offered them tips on how to enroll in coverage—and a new working paper found that those mailings saved lives.

    Slide decks: Health Insurance 101

    Remember the individual mandate?

    The ACA's individual mandate required most U.S. residents to be enrolled in health insurance or pay a fine. The mandate was effectively eliminated under a tax bill President Trump signed in December 2017 that reduced the fine for remaining uninsured to $0.

    However, when the individual mandate penalty was still in effect, former President Barack Obama's administration in December 2016 had planned to send letters urging adults who were paying the penalty under the mandate to seek coverage. But there was one hitch: The administration lacked the budget to send the notices to all 4.5 million people who were due to receive them. So instead, IRS sent the notices to 3.9 million people, and 600,000 people were randomly left out of the mailing.

    The letters were sent in two batches in December 2016 and January 2017—two weeks before the end of the open enrollment period, Healthcare DIVE reports.

    An unintentional study

    The result of omitting mailing recipients, was the Treasury Department unintentionally created conditions for a randomized controlled trial into a pervasive question in health care economics: Can health insurance be shown to reduce mortality?

    Although previous studies have shown mortality rates declined in states that expanded Medicaid under the ACA, no research has been able to conclusively prove that the outcome was directly related to having coverage, according to the New York Times' "The Upshot."

    Some economists have been skeptical of health insurance's ability to reduce mortality, as people without health insurance are still able to access the health care system via hospital EDs.

    Sarah Miller, an assistant professor at the University of Michigan who researches the topic and was not involved with the Treasury research, said, "There has been a lot of skepticism, especially in economics, that health insurance has a mortality impact."

    However, because IRS was able to randomly select which adults received and did not receive mailing letters researchers in the new working paper were able to directly compare mortality outcomes among the people who received the Obama administration's notices and those who did not.

    Key findings 

    The researchers found adults who received the notices were more likely to obtain health care coverage, and that action of becoming insured was associated with a 12% reduction in mortality during the two-year study period.

    Overall, the researchers estimated that the notices saved 700 lives, particularly among older adults.

    When looking at individuals between the age of 45 and 64, the economists found that one fewer death occurred for every 1,648 people who received a letter when compared with those who did not received a letter. However, there was no evidence that the letters reduced mortality among children or young adults.


    The working paper raised questions about whether the impact of the individual mandate should be revisited, especially as uninsured rates increase under current law, according to Healthcare DIVE. The researchers wrote, "[S]ome have suggested that the dollar value of the federal mandate penalty may have been too small to influence behavior." They continued, "Our coverage results provide evidence against that view, at least with respect to the 2017 federal penalty."

    Separately, Miller noted the strength of the trial. "It's really important that this is a randomized controlled trial," Miller said. "It's a really high standard of evidence that you can't just dismiss" (Kliff, "The Upshot," New York Times, 12/10; Liss, Healthcare Dive, 12/10).

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