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1、JournalofEconometrics11(1979)43-61.0North-HollandPublishingCompanyAFINITESELECTIONMODELFOREXPERIMENTALDESIGNOFTHEHEALTHINSURANCESTUDY*CarlMORRISTheRandCorporation,SantaMonica,CA90406,USAUniversityofTexas,Austin,TX78701,USA1.IntroductionThenationcurrentlyisdebatingwhatform,ifany,ofnationalhealthi
2、nsuranceshouldbeadopted.Evaluatingalternativeproposalsrequiresthebestknowledgeconcerningtheconsequencesofalternativewaysoffinancingmedicalcareservices.Toincreasecurrentknowledge,theDepartmentofHealth,Education,andWelfareissponsoringtheHealthInsuranceStudy(HIS)whichisbeingdesignedandanalyzedbyThe
3、RandCorporationandconductedwiththehelpofseveralsubcontractors.AsummarydescriptionofthestudydesignisprovidedinNewhouse(1974).Themainpartofthisstudyinvolvescollecingfromthreetoliveyearsoflongitudinaldataoneachofalargenumberoffamiliesafterassigningtothemoneofseveralkindsofhealthinsuranceplans(treat
4、ments).Thefiniteselectionmodel(FSM)hasbeendevelopedprimarilytodeterminewhichfamiliesshouldbeassignedtowhichtreatments,althoughitalsoisusedforotherpurposes.TheFSMisbothasetofconceptsandacomputerpackagefordefiningandthencarryingouttherequiredoperations.Theconceptsarediscussedbelow.Theyincludeformu
5、lasforassessingtheworthofaparticularassignment,andalgorithmsforfindingoptimalornear-optimalassignments.Goodassignmentsmustsatisfyrequirementsofprecision,balance,androbustness.Statisticsneededtoassessprecisionandbalanceareprovidedinsections2,4,5whenalinearmodelisspecified.Themainideabehindtheopti
6、malityalgorithmisgiveninsection2,butitismodifiedandadaptedtoprovidebalancedandrobustsamplesinmoregeneralsituationsinsections4,6and7.TheworkhereisanoutgrowthofthatofConliskandWatts(1969).Theirallocationmodelhasbeenusedtofindoptimalsamplesizesforseverallarge-scalepublicpolicyexperimentsbeforetheHI
7、S.Whiletheirmodel*ApreviousversionofthispaperappearedintheProceedingsoftheAmericanStatisticalAssociation,SocialStatisticsSection,1965,pp.7X-85.44C.Morris,ExperimentaldesignoftheHISdictatesclassicaldesignsinsituationswherethe
