Preliminary Results of a Controlled Trial of the Effect of a Prepaid Group Practice on the Outpatient Use of Mental Health Services

Using data from the Rand Health Insurance Study, which randomly assigned families into a prepaid group practice (PGP) and a fee-for-service insurance plan, this study finds different patterns of outpatient mental health care for the two groups. In the absence of cost sharing, fee-for-service participants are as likely as PGP participants to visit formally trained mental health specialists, but with 2.8 times greater imputed expenditures. Thus, fee-for-service provides more intensive therapy. Because the participants are random samples of the same population, these differences result from institutional differences (and patient incentives for cost sharing) rather than adverse selection.