The Rand Health Insurance Experiment and HMOs

The Rand Health Insurance Experiment (HIE) provides the most persuasive evidence to date on the relative effects of health maintenance organization (HMO) and fee-for-service care on utilization, costs, client satisfaction, and health care outcomes. Publications from the HIE have suggested that HMO care was associated with lower costs because of reduced hospitalizations, lower client satisfaction, and poorer health status among the subgroup with limited incomes and initial health status. In our view, the evidence justifies the conclusions related to utilization, costs, and satisfaction, but not the suggestion that HMO care had adverse health effects on low-income, sick individuals.