Health Insurance Outreach to Taxpayers and Labor Supply

A randomized pilot study in which the IRS sent informational letters to 3.9 million taxpayers who paid a tax penalty for lacking health insurance coverage under the Affordable Care Act.

2016-11-25

2017-01-15

Labor market outcomes

The pilot intervention we study took the form of an informational letter sent to taxpayers from the IRS. The letter informed recipients that they had paid a penalty in 2015; provided information about the penalty and plan costs for 2017; and provided instructions for recipients to investigate the availability of Exchange and Medicaid coverage through healthcare.gov. Individuals in the sample were randomly assigned to receive a letter (86%) or to a control group (14%). One letter, addressed to the taxpayer(s), was sent per return. Hence, randomization was conducted at the household level. Households were block-randomized based on age and gender of primary filer, marital status, number of dependents, income, the presence of self-employment income, 2014 penalty status, and whether the taxpayer's state expanded Medicaid and/or participated in the federal marketplace during 2017.

The treatment arms varied in either the content or the timing of the intervention. Households selected to receive a letter were randomly assigned across several treatment arms. The baseline treatment contained a personalized estimate of the taxpayer’s potential 2017 penalty (based on 2015 income and household composition) and was mailed in mid-January 2017, approximately two weeks before the close of the open enrollment period. A “non-personalized” treatment variant was identical to the baseline treatment except that the letter provided generic information about the 2017 penalty formula rather than a personalized estimate. An “exemption information” treatment variant was identical to the baseline treatment, but included additional information about penalty exemptions for which the taxpayer might apply. An “early mailing” treatment variant was identical in content to the baseline treatment but was mailed in late November 2016, near the start of the open enrollment period. Based on operational considerations, approximately 21 percent of the treatment sample was assigned to the early mailing variant. The remainder of the treatment sample was randomly divided among the baseline treatment and the other two variants in equal proportions. Finally, the baseline treatment and each of the three variants were randomly divided into two even-size groups, one of which had a Spanish-language translation printed on the reverse side of the letter and one of which did not.

By Treasury using a computer

tax return

Yes

4.5 million taxpayer units

4.5 million taxpayers, 8.9 million individuals. We expect to focus on a subset of this sample, as described in the analysis plan document.

Approximately 86% of individuals were assigned to the treatment, as described above.