Reducing health care spending. Will people spend less on health care if their health insurance requires them to pay some part of the cost themselves? An experiment on this issue asked if the percentage of medical costs that is paid by health insurance has an effect both on the amount of medical care that people use and on their health. The treatments were four insurance plans. Each plan paid all medical costs above a ceiling. Below the ceiling, the plans paid 100%, 75%, 50%, or 0% of costs incurred.

(a) Outline the design of a randomized comparative experiment suitable for this study.

(b) Briefly describe the practical and ethical difficulties that might arise in such an experiment.

AppendixLO1