Was RAND Health Insurance Study Wrong?

News that there were serious methodological flaws in the RAND health insurance study is actually very, very important. The RAND health insurance study remains the source for almost all speculation about how individuals react to different types of health insurance. When we say that higher co-pays make people cut care indiscriminately, we're going off of their evidence. When some say that health outcomes weren't much better with no co-pays, they're going off of RAND's evidence. When HSA supporters say that higher co-pays didn't degrade health status at all, and thus we should cut insurance spending across the board, they're going off of RAND's evidence. The problem is, RAND's evidence may not have been very good:

Of the various responses to cost sharing that were observed in the participants of the RAND HIE, by far the strongest and most dramatic was in the relative number of RAND participants who voluntarily dropped out of the study over the course of the experiment. Of the 1,294 adult participants who were randomly assigned to the free plan, 5 participants (0.4 percent) left the experiment voluntarily during the observation period, while of the 2,664 who were assigned to any of the cost-sharing plans, 179 participants (6.7 percent) voluntarily left the experiment. This represented a greater than sixteenfold increase in the percentage of dropouts, a difference that was highly significant and a magnitude of response that was nowhere else duplicated in the experiment.