Healthcare Economist

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Did the individual mandate work? Posted: 30 Apr 2021 09:16 AM PDT A paper by Lurie et al. (2021) provides the answer. They reach four conclusions from their analysis: First, the actual penalty paid per uninsured month is less than half the statutory amount. Second, nonetheless, we find visually clear and statistically significant responses to both extensive margin exposure to the mandate and to marginal increases in the mandate penalty. Third, we find substantial heterogeneity in who responds; men are especially responsive. Fourth, our estimates imply fairly small quantitative responses to the individual mandate, especially in the Health Insurance Exchanges. More specifically, the authors estimate that eliminating the insurance mandate financial penalties would reduce coverage by only 2.5%-5%. Part of the reason is that the actual penalties paid are fairly small. While the statutory penalty was $45 per month, in practice those who were penalized paid only $20 per uninsured month in 2016. The authors reach these conclusions using income tax returns from 2015 and 2016 (especially the 1095 forms about health insurance coverage and 1040 forms covering general income tax filings.) Demographic information come from linked information from the the Death Master File from the Social Security Administration. Econometric identification comes from a regression discontinuity design based on non-linearities in the mandate penalty. The first nonlinearity is that people are exempt from the penalty if their income is below 138 percent of the federal poverty line (FPL) and they live in a state that did not expand Medicaid. This creates a discontinuity in the mandate penalty. Second, the penalty amount is a kinked function of income, with a kink for single taxpayers at $26,550 in 2015 and $38,150 in 2016. Do read the full article here. Source: Lurie IZ, Sacks DW, Heim B. Does the individual mandate affect insurance coverage? Evidence from tax returns. American Economic Journal: Economic Policy. 2019 Sep.

Links Posted: 29 Apr 2021 06:28 PM PDT Disability and distress. COVID-19 vaccine showdown: California vs. Texas. Opioid trajectories. "beliefs…are insufficiently skeptical about nondisclosed information in the absence of repeated feedback" What is ARPA-H?

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