Non-randomized experiments can be biased Measured demand curve P DM is biased compared to PH true demand D People generally choose the amount of insurance they receive Sicker people will choose more insurance because they know they will need PL DM Q more care Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Non-randomized experiments can be biased Measured demand curve DM is biased compared to true demand DT People generally choose the amount of insurance they receive Sicker people will choose more insurance because they know they will need more care
Evidence from Randomized Experiments
Evidence from Randomized Experiments
Two Randomized Experiments RAND Health Insurance Experiment (HIE) Oregon Medicaid Experiment Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Two Randomized Experiments RAND Health Insurance Experiment (HIE) Oregon Medicaid Experiment
RAND HIE Randomly assigned 2,o00 families from six US cities to different insurance coverage plans Copayments groups: ■Free,25%,50%,and95% Tracked utilization of health care (Q)in each copayment plan(P) Copayment acts as the marginal cost that each family faces when buying care Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics RAND HIE Randomly assigned 2,000 families from six US cities to different insurance coverage plans Copayments groups: ◼Free, 25%, 50%, and 95% Tracked utilization of health care (Q) in each copayment plan (P) Copayment acts as the marginal cost that each family faces when buying care
Oregon Medicaid Experiment Compared two groups of low-income adults Medicaid lottery winners vs.lottery losers Lottery winners got to apply for public health insurance through Medicaid So they faced lower out-of-pocket prices for care Lottery losers could not get Medicaid (but might have purchased outside insurance) Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Oregon Medicaid Experiment Compared two groups of low-income adults Medicaid lottery winners vs. lottery losers Lottery winners got to apply for public health insurance through Medicaid So they faced lower out-of-pocket prices for care Lottery losers could not get Medicaid (but might have purchased outside insurance)