Biased Selection Under an Experimental Enrollment and Marketing Medicare HMO Broker

All studies conducted to date suggest that nearly all Medicare HMOs have experienced favorable risk selection in their Medicare HMO enrollments. While there is little definitive empiric knowledge about the extent to which Medicare HMOs can and do encourage favorable selection through marketing and enrollment activities, it has been speculated that centralizing all such functions through an independent broker could reduce enrollment selection bias. In 1985, the Health Care Financing Administration initiated a three-year demonstration of a HMO broker model in Portland, Oregon, known as Health Choice, Incorporated (HCI). This study reports empiric findings that provide no evidence to support claims of the efficacy of an enrollment brokerage function in reducing Medicare HMO enrollment selection bias.