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Impact of Cost-Sharing on Medical Care Demand for Adults: RAND HIE Field Experiment

Study from 1997 explores cost-sharing effects on healthcare demand. Enrolled adults aged 21-64 in 6 cities for 3-5 years.

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Impact of Cost-Sharing on Medical Care Demand for Adults: RAND HIE Field Experiment

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  1. 2-part models

  2. Adults, aged 21-64, 1997 (nominal dollars)

  3. RAND HIE • Field experiment designed to identify the impact of cost-sharing on demand for medical care • Enrollment 11/74 – 2/77; non-aged • 6 cities • Dayton; Seattle; Bitchburg, MA; Franklin county, MA; Charleston, Georgetown Co, KY • One of 14 plans or a prepaid group plan

  4. Cost sharing • Coinsurance: 0, 25, 50, 95% • Stop loss: 5, 10, 15% of family income, up to a max of $1000 • Coverage: all medical expenses • 95% coinsirance plan had $450 stop/loss for family ($150/person) – inpatient services were free

  5. 70% enrolled for 3 years, rest for 5 years • 1st rule of RACT: do no harm • Had to pay people to participate in plan • Hope that income effect from payments is small • Varied icome effect midway through experiment to see whethe this is true

  6. Funded by HHS (the HEW) • Enrollment • 5800 in FFS • 1800 in manged care • Costs of $136 million in 1984 dollars ($265 in today’s dollars)

  7. Monotonic declines In use measures

  8. Big change in The probability Of use, 21% decline 31% reduction In costs 25% reduction In hospitalization

  9. 61% reduction In expenditures 31% reduction In Prob of use

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