Health plan switching and attrition bias in the RAND health insurance experiment

John A. Nyman

Research output: Contribution to journalComment/debatepeer-review

6 Scopus citations

Abstract

One of the most influential "lessons" of the RAND Health Insurance Experiment (HIE) is that cost sharing can reduce hospitalizations by about a quarter, with no effect on health for the average adult. In an earlier paper in this journal, I suggested that a portion of this reduction is due to participants becoming ill and dropping out of the experiment in order to switch to their preexperiment insurance coverage and thus avoid paying the cost-sharing amount. The sixteenfold higher voluntary attrition rate in the cost-sharing arms provides compelling evidence in support of this alternative explanation. Evidence is also provided by the finding in Manning, Duan, Keeler (1993) that the predicted number of hospitalizations among those who dropped out of the coinsurance arms was significantly greater by 34.5 percent than the actual number of hospitalizations, suggesting that participants anticipate hospitalizations and leave the experiment before incurring the cost-sharing payment. Still more evidence is provided by the finding that those (cost-sharing) participants with greater incomes, instead of being more likely to be hospitalized, as greater income usually implies, were less likely to be hospitalized than poor participants. This finding is consistent with their having better preexperiment insurance coverage than poor participants and therefore being more likely to have an incentive to drop out. This inpatient attrition bias makes it dangerous to rely on this lesson of the HIE, because it is not clear that hospitalizations were actually reduced by one-quarter, much less that if such a reduction actually had occurred, there would be no health consequences.

Original languageEnglish (US)
Pages (from-to)309-317
Number of pages9
JournalJournal of health politics, policy and law
Volume33
Issue number2
DOIs
StatePublished - Apr 1 2008

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