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