What Does the RAND Health Insurance Experiment Tell Us About the Impact of High-Deductible Health Plans on Health Outcomes?

As healthcare spending has risen, patients have been required to pay more when they seek care. This trend is exemplified by increases in deductibles, copayments, and coinsurance rates, as well as by increased enrollment in high-deductible health plans such as health reimbursement arrangements or health savings accounts. It is widely accepted, based on considerable evidence accumulated over decades of study, that higher cost sharing will lead to reduced healthcare expenditures. The gold standard of evidence supporting this conclusion is the RAND Health Insurance Experiment (HIE), which was a randomized trial of higher cost sharing conducted in the 1970s. Estimates from the HIE suggest that when patients were required to pay for 95% of their care (up to an out-of-pocket maximum that was based on their income) they reduced spending by about 30%. Less dramatic levels of cost sharing suggested that a 10% increase in cost sharing would result in about a 2% reduction in spending. Numerous resulting academic publications and research reports based on the HIE have examined the impact of cost sharing on a wide range of spending categories and subpopulations. (July 2008)