RAND Health Insurance Experiment - Criticisms and Legacy

Criticisms and Legacy

The RAND HIE was criticized in several ways:

• Some authors questioned the generalizability of comparisons of HMO and FFS care since data on the former were based on a "single, relatively small but well-managed" HMO in Seattle.
• One 2007 article suggested that the "large number of participants who voluntarily dropped out of the costsharing arms of the experiment" could have invalidated the RAND HIE's findings. In response, Newhouse and colleagues described the argument as "implausible".
• The RAND HIE did not study people without health insurance, so it could not determine how the presence or absence of health insurance affects health.

Nevertheless, the study opened the way for increased cost-sharing for medical care in the 1980s and 1990s.

The RAND HIE is still referenced in the academic literature as a "gold standard" study in research on the effects of health insurance. For example, in 2007 RAND researchers reviewed the literature published between 1985 and 2006 on prescription drug cost sharing, which included co-payments, tiering, coinsurance, pharmacy benefit caps or monthly prescription limits, formulary restrictions, and reference pricing. In summarizing 132 articles, they found that the RAND HIE provided the only relevant experimental data; all other studies they reviewed were observational. They concluded:

Increased cost sharing is associated with lower rates of drug treatment, worse adherence among existing users, and more frequent discontinuation of therapy. For each 10% increase in cost sharing, prescription drug spending decreases by 2% to 6%, depending on class of drug and condition of the patient. The reduction in use associated with a benefit cap, which limits either the coverage amount or the number of covered prescriptions, is consistent with other cost-sharing features. For some chronic conditions, higher cost sharing is associated with increased use of medical services, at least for patients with congestive heart failure, lipid disorders, diabetes, and schizophrenia. While low-income groups may be more sensitive to increased cost sharing, there is little evidence to support this contention.

Furthermore, the RAND HIE is mentioned regularly in the newsmedia, for example:

• "Evidence from the RAND Experiment indicates that most of the expenditure-reducing effects of health-plan deductibles occur at low levels of deductibles."
• "A classic experiment by Rand researchers from 1974 to 1982 found that people who had to pay almost all of their own medical bills spent 30 percent less on health care than those whose insurance covered all their costs, with little or no difference in health outcomes. The one exception was low-income people in poor health, who went without care they needed."
• "...the Rand health insurance experiment found that patients cut back equally on both superfluous and necessary visits when asked for small co-payments."