Thousands will die as a consequence of this new tax bill

On Friday when it became clear that the tax bill would pass, I suggested that “thousands would die”. In light of my sharp criticisms of other economists’ claims regarding the tax bill, some have asked whether my statement is well grounded. I believe so, but this should be open to debate.

In reaching my judgement, I relied primarily on work by Kate Baicker, a former colleague now serving as dean of the University of Chicago’s Harris School of Public Policy. Ms Baicker served on the Council of Economic Advisers during a Republican administration, so I judged that any political bias would operate against the conclusions I drew.

Ms Baicker performed two studies in which she looked at the impact of being insured on mortality by looking at the effect of moving from being uninsured to insured. One peer-reviewed paper, co-authored with Benjamin Sommers at the Harvard TH Chan School of Public Health and Sharon Long at the Urban Institute, based on the Massachusetts experience estimated a reduction of one annual death per 830 people insured. Another, co-authored with Mr Sommers and Arnold Epstein, also at the Chan School of Public Health, and published in the New England Journal of Medicine looked at the experience of New York, Arizona and Maine and estimated a reduction of one annual death per 176 people.

The Congressional Budget Office estimated that the tax bill could reduce insurance coverage by 13m people, which to be conservative we can round down to 10m people. Recognising all the uncertainties — for example, the fact that the group becoming uninsured as a result of the individual mandate repeal is likely to be healthier than the group Sommers et al (2014) study in Massachusetts — if we treat the 176-830 range as implying that it is safe to assume that 1,000 more uninsured means one death, the conclusion would follow that the tax bill will result in 10,000 extra deaths per year.

Of course, there are many issues in the extrapolation. Do changes in private insurance from repealing the mandate have more or less potent impacts than changes in Medicaid coverage? How do the effects play out over time? Are there compelling contrary studies? My sense, relying on surveys of the literature, is that, if anything, experts believe that Medicaid coverage changes have smaller effects on mortality, that the impact grows over time, and that Ms Baicker and colleagues are certainly not overstating their estimates of mortality impacts.

Some may argue that any loss in healthcare resulting from the repeal of the mandate is voluntary, and families should have the freedom to make choices about optimal health coverage. I think this ignores two realities. One, for many the loss of health insurance will not be voluntary: they will lose coverage because premiums will increase, pricing them out of the market. Two, I take seriously the insights of behavioural economics, which suggest that irrational actors may make choices that will lead to worse health outcomes, and higher mortality.

So, my current judgement is that, if anything, my claim that over an unspecified horizon “thousands would die” takes too serene a view of the health consequences of the tax bill.