As health policy studies go, the RAND Health Insurance Experiment is the gold standard. Conducted 25 years ago at a cost of $50 million (close to $300 million in today's medical marketplace), this study sorted families into health plans with different deductibles as well as an HMO, and carefully monitored the results.

The findings: (a) patients are responsive to out-of-pocket costs (the more they have to pay, the less health care they buy); (b) changes in the amount of spending have no apparent impact on health care outcomes in most cases; and (c) judging from the difference in behavior between HMO doctors and fee-for-service doctors, physicians are also very responsive to economic incentives.

So what does this mean? That's not clear. My view is very different from the economists who did the study. Since I am chairing this session, I'll go first.