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Home  Healthcare Articles RAND Health Insurance Experiment
RAND Health Insurance Experiment
The RAND Health Insurance Experiment was a
comprehensive study of health care cost, utilitzation and outcome
in the U.S.. It has been regarded as one of the most rigorous
such studies, and is thought to provide the most persuasive
evidence to date on the relative effects of health maintenance
organizations and fee-for-service care on demand for health
care and health care outcomes.
In 1971, RAND established an insurance company
using funding from the then-United States Department of Health,
Education, and Welfare. The company insured 5809 people, randomly
assigned to insurance plans that either had no cost-sharing,
25, 50 or 95% copayment rates with a maximum annual payment
of $1000.
The study found higher copayment rates reduced
spending because people did not seek care as frequently. It
also found little deterioration of health, implying that people
seek unnecessary care when the charge per visit is free or low.
This remains a controversial point in health and health economics
literature.
Overconsumption of health services has been
cited as one of the main causes of the steadily increasing cost
of health care in most countries. The study has influenced insurance
companies and government health plans to shift costs from the
premium to the point of care; according to the experiment, this
should reduce excess demand.
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