We find evidence that Massachusetts’ individual mandate induces uninsured residents to conceal their true insurance status. Even setting that source of bias aside, we find the official estimate reported by the Commonwealth almost certainly overstates the law’s impact on insurance coverage, likely by 45 percent. In contrast to previous studies, we find evidence of substantial crowdout of private coverage among low‐income adults and children. The law appears to have compressed self‐reported health outcomes, without necessarily improving overall health. Our results suggest that more than 60 percent fewer young adults are relocating to Massachusetts as a result of the law. Finally, we conclude that leading estimates understate the law’s cost by at least one third, and likely more.
Our results hold important lessons for the legislation moving through Congress. As in Massachusetts, there has been no effort to estimate the cost of the private health insurance mandates that legislation would impose on individuals and employers. The costs may therefore be far greater than legislators and voters believe, while the benefits may be smaller than the conventional wisdom about Massachusetts suggests.
