RAND Health Insurance Experiment (1974–1982)

The RAND Health Insurance Experiment (HIE), conducted from 1974 to 1982 with funding from the U.S. Department of Health, Education, and Welfare (now the Department of Health and Human Services), addressed three key questions in health care: how does cost sharing or HMO (health maintenance organization) membership affect use of health services, how does cost sharing or HMO membership affect care received, and how does cost sharing or HMO membership affect an individual’s health? The HIE is significant as one of the few large-scale experimental studies to investigate how cost affects individual’s use of health care and their health.

In the HIE, 7,700 people in six U.S. cities were randomly assigned to four fee-for-service plans, with different levels of cost-sharing: free care or coinsurance rates of ...