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Free for All? Lessons from the RAND Health Insurance Experiment
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1995
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Health ReformHealth Care PolicyHealth PoliticsFinancial ProtectionHealth Care FinancePolicy AnalysisPrimary CareExperimental EconomicsHealth FinancingPublic HealthInsuranceHealth Services ResearchHealth Insurance ReformPublic PolicyHealth PolicyHealth InsuranceOutcomes ResearchNational Health InsuranceHealth ReimbursementEconomic EvaluationHealth Care FinancingHealth Care DeliveryRand CorporationHealth EconomicsHealth Care ReimbursementBusinessHealth Care CostLong-term Care Insurance
The RAND Health Insurance Experiment was designed to determine how free medical care affects utilization and health outcomes. The study followed representative urban and rural populations over three to five years, assigning them to insurance plans with copayments ranging from zero to 95% and systematically recording utilization and health outcomes. Higher copayment reductions increased service use—patients with no copay used 40 % more services—yet had no measurable health benefit, and HMO enrollment lowered hospital use without improving health.
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: how much more medical care will people use if it is provided free of charge, and what are the consequences for their health? For three- or five-year periods the experiment measured both use and health outcomes in populations carefully selected to be representative of both urban and rural regions throughout the United States. Participants were enrolled in a range of insurance plans requiring different levels of copayment for medical care, from zero to 95 percent. The researchers found that in plans that reimbursed a higher proportion of the bill, patients used substantially more services - indeed, those who paid nothing used 40 percent more services than those required to pay a high deductible - but the effect on the health of the average person was negligible. In addition, participants who were assigned at random to a well-established health maintenance organization used hospitals substantially less than those in the fee-for-service system, again with no measurable effect on the health of the average person. This book collects in one place for the first time results previously dispersed through many journals over many years. Drawing comprehensive, coherent conclusions from an immense amount of data, it is destined to be a classic work serving as an invaluable reference for all those concerned with health care policy - health service researchers, policymakers in both the public and the private sectors, and students.