The Health Insurance Experiment: A Classic RAND Study that Remains Relevant Today

Previous Features » The Health Insurance Experiment: A Classic RAND Study that Remains Relevant Today

The RAND Health Insurance Experiment (HIE) is to date the largest health policy study in U.S. history and the only experimental study of how cost-sharing arrangements affect people's use of health services, the quality of care they receive, and their health status. The study found that:

• Cost sharing reduced spending for health care services (Figure 1).
• Participants with cost sharing made fewer medical visits and were admitted to hospitals less frequently (Figures 2 and 3).
• However, cost sharing reduced both effective and less effective services about equally.
• Cost sharing had no detrimental effects on participants' health, except for the sickest and poorest patients.

In conducting the HIE, RAND developed basic measures of health status and quality of care that are now used around the world.

The impact of the HIE can also be found in China, where RAND researchers conducted a study similar to the HIE in rural areas in the early 1990s. The RAND study contributed to the New Rural Cooperative Medical System, which was implemented across China in 2003 and affects approximately 800 million rural Chinese.

“Thirty years after the fact,” observes project leader Joseph P. Newhouse, PhD, now the John D. MacArthur Professor of Health Policy and Management at Harvard University, “the RAND Health Insurance Experiment is still widely cited as the gold standard for our knowledge of the effect of cost sharing on the use of services and health outcomes.”

Figure 1
Participants with Cost Sharing Spent Less on Health Care Services

Figure 2
Participants with Cost Sharing Visited the Doctor Less Frequently

Figure 3
. . . and Were Admitted to Hospitals Less Often

SOURCE: RAND Research Brief 9174 (2006). The Health Insurance Experiment: A Classic RAND Study Speaks to the Current Health Care Reform Debate

Learn more

Full DocumentResearch Brief

40 Years of RAND Health

More Features