RAND Health Insurance Experiment

Summary

The RAND HIE is the most important health insurance experiment ever conducted. The core finding—that free care increases use by 30% with no average health benefit—was used to justify cost-sharing in public programs. The crucial nuance: for poor patients with chronic conditions, free care substantially improved blood pressure control and vision. The experiment revealed that across-the-board cost-sharing policies harm the most vulnerable patients most. It remains the primary evidence base for debates about insurance design 50 years later.

Research question

"Does cost-sharing (co-payments) reduce health care utilization, and does reduced utilization harm health?"

Methodology

Result

Mixed

Free care group used 30% more services than 95% co-insurance group; no significant health outcome differences for average participants; poor and sick patients on free care had meaningfully better blood pressure and vision outcomes

Evidence strength

Moderate

Randomized trial; replication status unknown or limited.

Replication status

N/A