RAND Health Insurance Experiment
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The RAND Health Insurance Experiment (RAND HIE) was a comprehensive study of health care cost, utilization and outcome in the United States. It is the only randomized study of health insurance, and the only study which can give definitive evidence as to the causal effects of different health insurance plans. Most health economics studies are observational, and can only give associational evidence. Although the fieldwork of the study was conducted between 1974 and 1982, the results are still highly relevant, since RAND HIE is the only study which can make causal statements.
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Conclusions
Newhouse, in summarizing the RAND study, reported that visits to doctors and hospitals decline with higher cost sharing "although for low income families such cutbacks reduced their use of beneficial as well as unnecessary services and was estimated to have increased rates of death from preventable illness."<ref>Newhouse JP, Consumer-directed health plans and the RAND health insurance experiment, Health Affairs 2004;23:107-13 (Cited in BMJ 334:238)</ref> In the general study group, there was no measurable difference in health states between the groups, but for subgroups such as the chronically ill, chronic illnesses such as diabetes and high blood pressure were not as well controlled among the high cost-sharing group than among the low cost-sharing groups.
History
In 1971, the RAND group, led by health economist Joe Newhouse and including statistician Carl Morris, set out to answer the question (among others): "Does free medical care lead to better health than insurance plans that require the patient to shoulder part of the cost?". The team established an insurance company using funding from the then-United States Department of Health, Education, and Welfare. The company insured 5809 people, randomly assigned to insurance plans that either had no cost-sharing, 25, 50 or 95% copayment rates with a maximum annual payment of $1000.
The study opened the way for increased cost-sharing for medical care in the 1980s and 1990s.
Notes
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References
Online
- Keeler, E.B., "Effects of Cost Sharing on Use of Medical Services and Health" in Medical Practice Management 1992;8:317-321 (Summer) Summarizes major findings of the RAND Health Insurance Experiment. Accessed at [1][2] February 6, 2006
- Robert H. Brook et al. (1984) The Effect of Coinsurance on the Health of Adults: Results from the RAND Health Insurance Experiment, Rand Corporation ISBN 0-8330-0614-2 Findings in detail. Accessed at [3] August 3, 2006
- Normand, C. Views and reviews - "Free for All: Lessons from the RAND Health Insurance Experiment" in British Medical Journal 1994;308:1724-1725 (25 June) accessed at [4] August 3, 2006. Book review. "The important issue" is that the reduction in use of health services makes no differnece to health. "An important exception to this general finding is that the reduced use by poorer people did have a measurable and harmful effect on health."
Hard Copy
- Joseph P. Newhouse, Free for All?: Lessons from the RAND Health Insurance Experiment, Harvard University Press, reprint 1996 ISBN 0-674-31914-1
