Final answer:
The RAND HIE was designed to address the problem of moral hazard in health insurance by studying the impact of cost-sharing arrangements on healthcare utilization and costs. While the experiment provided valuable insights, a shortcoming was the limited duration of follow-up. The use of healthcare services may change for a person without insurance when they are moved to a coinsurance rate of 25% or 0%.
Step-by-step explanation:
The RAND Health Insurance Experiment (HIE) was designed to address the problem of moral hazard in health insurance. Moral hazard occurs when individuals change their behavior as a result of having health insurance, leading to increased demand for healthcare services. The HIE aimed to study the impact of different cost-sharing arrangements, such as deductibles, copayments, and coinsurance, on healthcare utilization and costs.
While the RAND HIE provided valuable insights into the effects of cost-sharing on healthcare utilization, one shortcoming of the experiment was the limited duration of follow-up. The study followed participants for only three years, which may not capture the long-term effects of cost-sharing on healthcare outcomes.
If a person who previously had no insurance is moved to a coinsurance rate of 25%, their use of hospital care, dental care, and physician services may decrease compared to when they had no insurance. However, if the coinsurance rate is reduced to 0%, their use may increase. The level of coinsurance affects the financial burden individuals face when seeking healthcare services, which can impact their utilization patterns.