Should enrolling in public programs be easy or hard? Harvard Kennedy School Associate Professor Mark Shepard asks that question in a new research paper co-written with Harvard post-doctoral fellow Myles Wagner. While the authors note that some studies indicate making enrollment hard has led to low participation and high frustration with government services, many economists have argued that the hassles of bureaucracy and paperwork—what the authors call “ordeals”—may be useful ways to target assistance to those who need it most.

“We ask whether this is the right way to think about targeting in programs,” the authors write. Their research finds that even when a program is free, many people do not enroll when doing so is a hassle. This is found to be true in many public programs, especially safety nets designed to help struggling families.

Shepard’s earlier research examined how auto-enrollment in Medicaid can cover more Americans and help reduce costs. While that research suggests reaching universal health coverage in the United States may require automatic enrollment in some form, the findings could extend beyond insurance. “The findings have broader implications for how policymakers think about enrollment ordeals in social programs,” Shepard writes.

Mark Shepard

“The findings have broader implications for how policymakers think about enrollment ordeals in social programs.”

Mark Shepard

Key takeaways from studying insurance models and auto-enrollment include:

  • Adding even minor ordeals, or hassles, leads to a major reduction in health insurance enrollment—about 33% of eligible individuals;
  • Incremental incentives or nudges only marginally increase enrollment (typically by one 1-3%);
  • Ordeals screen out individuals who tend to be younger and healthier. They incur costs 44% below those of remaining enrollees. Therefore, including them in the insurance risk pool lowers average costs by about 15%.

While earlier research has shown how ordeals can help target public assistance to those who need it most, this recent work notes that adverse selection—where buyers and sellers have different information—tends to undermine the original targeting logic for including ordeals. “Our results suggest that the standard case for ordeals is less likely to work well in settings with adverse selection,” the researchers note, especially where value and costs are considered.

While clearly relevant to insurance, they note the findings can also relate to social programs that pay varying benefit amounts to different groups. “Enrollment hassles and ordeals are important in many social programs, especially those intended to help the poor,” Shepard writes. “Ordeals contribute to incomplete take-up of many programs like food stamps (SNAP), the Earned Income Tax Credit (EITC), and Pell Grants that support college tuition. Policymakers can use our results to better think about how a simpler system might close gaps and affect the targeting of who gets support.”

Banner image: A woman holding her daughter receives Health Care enrollment information from a patient care and outreach coordinator at an education and enrollment services center in Virginia. Photo by Jahi Chikwendiu/The Washington Post.

Faculty portrait by Martha Stewart.

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