Experimental Proof That an IRS Letter Can Save Lives

We simply have to say this is cool. We say this because folks from the Treasury Department and Stanford have published the first experimental evidence that health insurance prevents premature deaths. In fact, by following the causal chain, we can say that an IRS letter can save lives.

Who knew that the IRS was conducting randomized controlled trials?

A Random Sample of 3.9 Million Americans

Jacob Goldin, Ithai Lurie, and Janet McCubbin published their analysis this month in the National Bureau of Economic Research. In early 2017, the IRS selected a random sample of 3.9 million American households that paid a tax penalty for not having health insurance. To those households, the agency sent a informational letter. That’s it. The letter told people that they paid a penalty for not having health insurance in 2015. In addition, it gave information about how to obtain coverage. One option was health insurance exchanges. The other was Medicaid.

The control group was about 600,000 households that paid a penalty but received no letter. The IRS only had enough money for 3.9 million letters. Assignment to the control group was random.

The Result: More Lives Insured, Fewer Lives Lost

The effect was not huge. However, it was real and it was clearly due to the intervention of the letter. In the two years following this IRS letter, more households in the test group signed up for health insurance. For every 87 letters from the IRS, the researchers found that one household got one more year of insurance. The effect was biggest in households that had no coverage whatsoever in the prior year. Also, it was bigger for older adults.

But the most important effect was the effect on mortality. For adults who were 45 to 64 years old, the researchers found a benefit. For every 1,648 households that got a letter, one less person died. All in all, those letters saved about 700 lives. In our estimation, that’s not a bad return for a simple, computer-generated IRS letter.

Despite all our quibbles with health insurance, it’s nice to know that it saves lives.

Click here for the paper, here for more from the New York Times, and here for more from Marketplace.

Letter of Red Cross, illustration by Léon Bakst / WikiArt

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December 14, 2019