TY - JOUR AU - Nicholson,Sean AU - Bundorf,Kate AU - Stein,Rebecca M. AU - Polsky,Daniel TI - The Magnitude and Nature of Risk Selection in Employer-Sponsored Health Plans JF - National Bureau of Economic Research Working Paper Series VL - No. 9937 PY - 2003 Y2 - September 2003 UR - http://www.nber.org/papers/w9937 L1 - http://www.nber.org/papers/w9937.pdf N1 - Author contact info: Sean Nicholson Professor Department of Policy Analysis and Management Cornell University 102 Martha Van Rensselaer Hall Ithaca, NY 14853 Tel: 607/254-6498 Fax: 607/255-4071 E-Mail: sn243@cornell.edu Kate Bundorf Health Research and Policy Stanford University HRP T108 Stanford, CA 94305-5405 Tel: 650/725-0067 Fax: 650/725-6951 E-Mail: bundorf@stanford.edu Daniel Polsky University of Pennsylvania School of Medicine Division of General Internal Medicine 423 Guardian Drive, Blockley Hall, Rm 1212 Philadelphia, PA 19104 E-Mail: polsky@mail.med.upenn.edu AB - Most existing studies of risk selection in the employer-sponsored health insurance market are case studies of a single employer or of an employer coalition in a single market. We examine risk selection in the employer-sponsored market by applying a switcher' methodology to a national, panel data set of enrollees in employer-sponsored health plans. We find that people who switched from a non-HMO to an HMO plan used 11 percent fewer medical services in the period prior to switching than people who remained in the non-HMO plan, and that this relatively low use persists once they enroll in an HMO. Furthermore, people who switch from an HMO to a non-HMO plan used 18 percent more medical services in the period prior to switching than those who remained in an HMO plan. HMOs would most likely continue to experience favorable risk selection if employers adjusted health plan payments based on enrollees' gender and age because the selection appears to occur based on enrollee characteristics that are difficult to observe such as preferences for medical care and health status. ER -