Studying what works, doesn’t work in health insurance reform
Regardless of the outcome of this year’s election, one result is fairly certain—the new administration will take a second look at the Affordable Care Act.
The landmark health reform legislation President Barack Obama signed into law in 2010 led to a major expansion of health insurance accessibility, and set off the most significant overhaul of the U.S. healthcare system since the advent of Medicare and Medicaid in 1965. These milestones of change to our health insurance system, enacted decades apart, share a link to one of the largest social science experiments in U.S. history.
Called the Health Insurance Experiment, the study was launched in 1971 by RAND Corp. researchers who brought nonpartisan, unbiased analysis to the discussion—an essential component of almost any healthcare debate, whether it’s regarding the ACA or the pros and cons of other insurance reforms being tested across the industry.
The Health Insurance Experiment sought to answer: How much more medical care would people use if it was free, and what would be the consequences for their health? At the time, the national debate centered on free, universal healthcare and whether the benefits would justify the costs. HMOs were still a relatively novel concept in the U.S. In addition, more than 20 million people had signed up for Medicare, and the federal government was looking for hard data on cost-sharing.
Between 1974 and 1982, RAND conducted field work for the study, funded by what is now HHS. More than 7,700 people were randomly assigned to one of several insurance plans that reflected an array of cost-sharing options. One major finding showed that those who paid for a share of their healthcare generally used fewer services than those who received free care, yet there was effectively little or no difference in health outcomes between the groups. There were exceptions—free care led to health improvements among the poorest and sickest, and the study suggested that cost-sharing should be minimal or nonexistent for the poor.
The study’s impact has been widereaching. Its conclusions encouraged the restructuring of private insurance and helped increase the stature of managed care in America. Its reach has extended to China, where RAND conducted a similar study in the 1990s that led to a rural cooperative medical system affecting about 800 million people.
Within RAND, lessons learned from the Health Insurance Experiment
continue to reverberate. It’s a reminder that innovative research and healthcare reform don’t happen overnight. Before research could begin, we had to come up with objective ways to measure health status and quality of care— standards now used around the world.
A high-tech descendant of that research with roots in the 1970s is helping to shape ongoing healthcare reform. Over the past decade, RAND developed a complex, computer-based simulation model called Compare, which assesses the likely effects of different health coverage policy options on millions of individuals’ healthcare choices. The insights generated were shared widely with members of the Obama administration and Capitol Hill staffers during the debate over the ACA. When the Supreme Court upheld a key part of the reform law that provides health insurance subsidies to qualifying Americans, the decision cited RAND research conducted using this model.
We continue to use Compare to analyze ACA modifications and alternative plans proposed by presidential candidates, members of Congress and other thought leaders. And we are expanding our modeling capability to consider how changes in payments to Medicare providers will affect federal spending, provider participation and healthcare access among those over age 65. These are two of roughly 300 health research projects RAND has underway at any point in time.
The ACA has done much to expand access to care, and it provides additional impetus for innovation in healthcare delivery. But much more work needs to be done with respect to how it’s organized and financed before a broad consensus is reached regarding getting good value for money spent. A commitment to research, analysis and evaluation will help ensure that we get there sooner rather than later.
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