The famous rand health insurance experiment rand hie deals with the question how health insurance affects medical spending. Rand health insurance experiment in metropolitan and non. 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. Jun 29, 20 the rand health insurance experiment is to date the largest health policy study in u. The health insurance experiment hie was conducted from 1974 to 1982 in six sites across the country. 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. Information about the rand health insurance experiment hie, a 15year, multimilliondollar effort that remains the largest health policy study in u. Elderly people were excluded as most already had access to free care. It is widely accepted, based on considerable evidence accumulated over decades of study, that higher cost sharing will lead to reduced healthcare expenditures. 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. The health insurance experiment a rand corporation. The rand health insurance experiment is to date the largest health policy study in u.
These findings help reconcile disparate estimates of the price elasticity of. Health plan switching and attrition bias in the rand. 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. 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. However, these estimates may fail to support todays. Economics of obesity of the university of california. Free for all lessons from the rand health insurance. 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. Journal of public economics science, health and medical. Pdf the rand health insurance experiment, three decades. Hie, although they come into a postmanaged care world. 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. 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. Rand health insurance experiment in metropolitan and nonmetropolitan areas of the united states, 19741982 icpsr 6439.
Elderly people were excluded as most already had access to free care through medicare. 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 gold standard of evidence supporting this conclusion is the rand health insurance experiment hie, which was a randomized. Dayton, ohio, seattle, washington, fitchburgleominster and franklin county, massachusetts, and.
We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. 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. 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. 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. 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. Between 1974 and 1981, the rand health insurance experiment provided health insura. For three or fiveyear periods the experiment measured both.
We develop a test for intertemporal substitution in health care demand. A brief summary of the rand health insurance experiment. 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. Jan 17, 2014 the intensity of arguments over social science issues often seems inversely correlated with the quantity of experimental evidence. Consumerdirected health plans and the rand health insurance. Rand designed and conducted one of the largest and most important studies of health insurance between 1974 and 1982. Pdf what does the rand health insurance experiment tell us. 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. But about the only takeaway for the layperson is that, except for certain chronically ill populations, when. 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. Lessons from the rand health insurance experiment and beyond. Simply comparing people with and without insurance, for example, or those.
Lessons from the rand health insurance experiment and beyond 3 trials, randomization assures that individuals are. The hie was a randomized, controlled trial specifically designed to study how costsharing arrangements affect the use and cost of health services as well as health. Lessons from the rand health insurance experiment and beyond 3 trials, randomization assures that individuals are, on average, the same across each. Evidence from the rand health insurance experiment haizhen lin and daniel w. Results from the rand health insurance experiment author. Free for all lessons from the rand health insurance experiment. 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. People respond much more to shortlasting price changes than to longlasting ones. Consumerdirectedhealth plansandtherandhealth insuranceexperiment higher cost sharing, the subject of the rand experiment, could strengthen the newer tools of managed care in controlling costs. Get access free for all lessons from the rand health insurance experiment pdf by joseph p. Newhouse and the insurance experiment group, free for all. 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.
Lessons from the rand health insurance experimentcambridge, mass. The rand health insurance experiment, three decades later aviva arondine, liran einav, amy finkelstein. We then examine potential threats to the validity of a causal. Pdf what does the rand health insurance experiment tell.
What does the rand health insurance experiment tell us about. The rand health insurance experiment, funded by the thenu. The study randomly assigned people in six areas in the united states to different health insurance plans for periods of three or five years. 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.
Published in volume 27, issue 1, pages 197222 of journal of economic perspectives, winter 20, abstract. 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. Program on the economics of aging, health care program, public economics program, industrial organization program. We find evidence of intertemporal substitution using data from the rand health insurance experiment. Consumerdirectedhealth plansandtherandhealth insuranceexperiment. 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. Price and income elasticity of the demand for health. The appropriate level of costsharing for patients remains a key issue in designing both private and public health insurance. 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. The rand health insurance experiment, three decades later by aviva arondine, liran einav and amy finkelstein. Tvarious he rand health insurance experiment is the most relevant and valuable research available concerning the effects of patient costsharing. 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.
The rand health insurance experiment, three decades later. 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. The intensity of arguments over social science issues often seems inversely correlated with the quantity of experimental evidence. 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. 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. 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. 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. Harvard university press, 1993 isbn 0674318463 volume 14 issue 1 rudolf klein. Results from the rand health insurance experiment author robert h. 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. 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.
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