Selection Experiences in Medicare HMOs: Pre-enrollment Expenditures

Call, K. T., B. Dowd, R. Feldman, and M. Maciejewski. “Selection Experiences in Medicare HMOs: Pre-enrollment Expenditures.” Health Care Financing Review 20 (4): 197-210, 1999.

Using 1993 and 1994 data, the authors examine whether beneficiaries who enroll in a Medicare health maintenance organization (HMO), including those enrolling for only a short period of time, have lower expenditures than continuous fee-for-service (FFS) beneficiaries the year prior to enrollment. We also test whether biased selection varies by the level of HMO market penetration and the rate of market-share growth. We find favorable selection associated with enrollment into Medicare HMOs, which declines as market share increases but does not disappear. Among short-term enrollees, we find unfavorable selection, however, selection bias was not sensitive to market characteristics.