Harvard university press, 1993 isbn 0674318463 volume 14 issue 1 rudolf klein. The intensity of arguments over social science issues often seems inversely correlated with the quantity of experimental evidence. In the rand experiment, families were assigned to plans with one of six consumer coinsurance rates that is, the share of medical expenditures paid by the enrollee, and were covered by the assigned plan for three to five years. Sacks january, 2019 abstract nonlinear costsharing in health insurance encourages intertemporal substitution because patients can reduce their outofpocket costs by concentrating spending in years when they hit the. Health insurance experiment1 3 t various he rand health insurance experiment is the most relevant and valuable research available concerning the effects of patient costsharing. Hie, although they come into a postmanaged care world. One of the most influential lessons of the rand health insurance experiment hie is that cost sharing can reduce hospitalizations by about a quarter, with. Results from the rand health insurance experiment author. Consumerdirectedhealth plansandtherandhealth insuranceexperiment. Journal of public economics science, health and medical. Dayton, ohio, seattle, washington, fitchburgleominster and franklin county, massachusetts, and charleston and georgetown county, south carolina. Between 1974 and 1981, the rand health insurance experiment provided health insurance to more than 5,800 individuals from about 2,000 households in six different locations across the united states, a sample designed to be representative of families with adults under the age of 62.
Free for all lessons from the rand health insurance experiment. Tvarious he rand health insurance experiment is the most relevant and valuable research available concerning the effects of patient costsharing. Pdf on aug 1, 2008, michael e chernew and others published what does the rand health insurance experiment tell us about the impact of patient cost sharing on health outcomes. Rand designed and conducted one of the largest and most important studies of health insurance between 1974 and 1982. The price and income elasticities measured in the rand health insurance experiment hie of the 1970s remain a widely used source of elasticity estimates with respect to the demand for covered health care services.
In june 2016, rand hosted a twoday celebration to mark the 40th anniversary of the rand health insurance experiment hie, the largest, most comprehensive, evidencebased health policy study in u. The rand health insurance experiment, three decades later. Jul 15, 2008 the gold standard of evidence supporting this conclusion is the rand health insurance experiment hie, which was a randomized trial of higher cost sharing conducted in the 1970s. Rand research areas the arts child policy civil justice education energy and environment health and health care international affairs national security population and aging public safety science and technology substance abuse terrorism and homeland security transportation and infrastructure workforce and workplace the health insurance experiment a classic rand study speaks to the current. Newhouse and the insurance experiment group, free for all. The health insurance experiment a rand corporation.
Price and income elasticity of the demand for health. The study randomly assigned people in six areas in the united states to different health insurance plans for periods of three or five years. Jun 29, 20 the rand health insurance experiment is to date the largest health policy study in u. His argument is implausible because 1 families facing. The results of the rand health insurance experiment are important in the debates on access to and financing of health services, and direct charges to patients. Pdf what does the rand health insurance experiment tell us. Dayton, ohio, seattle, washington, fitchburgleominster and franklin county, massachusetts, and. However, these estimates may fail to support todays. We develop a test for intertemporal substitution in health care demand.
People respond much more to shortlasting price changes than to longlasting ones. What does the rand health insurance experiment tell us about. Jan, 2017 in june 2016, rand hosted a twoday celebration to mark the 40th anniversary of the rand health insurance experiment hie, the largest, most comprehensive, evidencebased health policy study in u. The gold standard of evidence supporting this conclusion is the rand health insurance experiment hie, which was a randomized. The famous rand health insurance experiment rand hie deals with the question how health insurance affects medical spending. For three or fiveyear periods the experiment measured both.
Jan 17, 2014 the intensity of arguments over social science issues often seems inversely correlated with the quantity of experimental evidence. It is widely accepted, based on considerable evidence accumulated over decades of study, that higher cost sharing will lead to reduced healthcare expenditures. Program on the economics of aging, health care program, public economics program, industrial organization program. We represent and reexamine the analysis from the famous rand health insurance experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending. The scientific essay the rand health insurance experiment, three decades later 20 by aviva arondine, liran einav, and amy finkelstein, extracted from the journal of economic perspective, forms the basis for this. In summary, i am persuaded that the rand health insurance experiment, a study involving thousands of people, randomly given various levels of health coverage from 1974 to 1982, made a valuable contribution to the subject of health care. We then examine potential threats to the validity of a causal. In a prior article in this journal, john nyman argues that the effect on health care use and spending found in the rand health insurance experiment is an artifact of greater voluntary attrition in the costsharing plans relative to the free care plan. In the most important health insurance study ever conducted researchers at the rand corporation devised all experiment to address two key questions in health care financing.
Published in volume 27, issue 1, pages 197222 of journal of economic perspectives, winter 20, abstract. Consumerdirectedhealth plansandtherandhealth insuranceexperiment higher cost sharing, the subject of the rand experiment, could strengthen the newer tools of managed care in controlling costs. Pdf on aug 1, 2008, michael e chernew and others published what does the rand health insurance experiment tell us about the impact of patient cost. The health insurance experiment a classic rand study speaks to the current health care reform debate a fter decades of evolution and experiment, the u. We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. Simply comparing people with and without insurance, for example, or those. The rand health insurance experiment, funded by the thenu. The health insurance experiment hie was conducted from 1974 to 1982 in six sites across the country. Lessons from the rand health insurance experiment and beyond 3 trials, randomization assures that individuals are. Apr 01, 2008 in a prior article in this journal, john nyman argues that the effect on health care use and spending found in the rand health insurance experiment is an artifact of greater voluntary attrition in the costsharing plans relative to the free care plan.
The rand health insurance experiment, three decades later aviva arondine, liran einav, amy finkelstein. Results from the rand health insurance experiment author robert h. Lessons from the rand health insurance experimentcambridge, mass. Evidence from the rand health insurance experiment haizhen lin and daniel w. These findings help reconcile disparate estimates of the price elasticity of. Free for all lessons from the rand health insurance. What does the rand health insurance experiment tell us. Consumerdirected health plans and the rand health insurance. Elderly people were excluded as most already had access to free care. A brief summary of the rand health insurance experiment. Pdf the rand health insurance experiment, three decades. Lessons from the rand health insurance experiment and beyond.
The appropriate level of costsharing for patients remains a key issue in designing both private and public health insurance. Get access free for all lessons from the rand health insurance experiment pdf by joseph p. But about the only takeaway for the layperson is that, except for certain chronically ill populations, when. Program on the economics of aging, health care program, public economics program, industrial organization program we represent and reexamine the analysis from the famous rand. Elderly people were excluded as most already had access to free care through medicare. The rand health insurance experiment is to date the largest health policy study in u. A brief summary of the rand health insurance experiment in the rand experiment, families were assigned to plans with one of six consumer coinsurance rates that is, the share of medical expenditures paid by the enrollee, and were covered by the assigned plan for three to five years. Cost sharing reduced spending for health care services. Between 1974 and 1981, the rand health insurance experiment provided health insura. Health plan switching and attrition bias in the rand. Rand health insurance experiment plans in the predicted probability of an episode of care 28 33 medical effectiveness groupings used in the rand health insurance experiment 30 appendixes a overview of technology, insurance, and the health care system37 b method of the study40 c acknowledgements41 d selected additional research on the effects of. Todays consumerdirected health plans, with their high deductibles, bear a strong resemblance to the highdeductible plan of the rand health insurance experiment hie, although they come into. The rand health insurance experiment rand hie was an experimental study from 1974 to 1982 of health care costs, utilization and outcomes in the united states, which assigned people randomly to different kinds of plans and followed their behavior. Department of health, education and welfare, established an insurance corporation to compare demand for health services with their cost to the patient.
The rand health insurance experiment hie provides the most persuasive evidence to date on the relative effects of health maintenance organization hmo and feeforservice care on utilization, costs, client satisfaction, and health care outcomes. Todays consumerdirected health plans, with their high deductibles, bear a strong resemblance to the highdeductible plan of the rand health insurance experiment hie, although they. The rand health insurance experiment rand hie was an experimental study from 1974 to 1982 of health care costs, utilization and outcomes in the united. The rand health insurance experiment from the 1970s was designed to investigate the marginal impact of varying insurance costsharing features among approximately 6,000 insured individuals, not the effect of insurance coverage itself manning et al. Economics of obesity of the university of california.
Rand health insurance experiment in metropolitan and non. Rand health insurance experiment in metropolitan and nonmetropolitan areas of the united states, 19741982 icpsr 6439. We find evidence of intertemporal substitution using data from the rand health insurance experiment. Lessons from the rand health insurance experiment and beyond 3 trials, randomization assures that individuals are, on average, the same across each. Specifically, he speculates that those in the costsharing plans, when faced with a hospitalization, withdrew. Information about the rand health insurance experiment hie, a 15year, multimilliondollar effort that remains the largest health policy study in u.
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