WHO BELONGS TO HMOS - A COMPARISON OF FEE-FOR-SERVICE VERSUS HMO ENROLLEES

As employers have turned to managed care to curtail the rising cost of health care benefits, the number of HMO enrollees has proliferated. B etween 1984 and 1994, HMO enrollment increased from approximately 15 m illion to over 49 million individuals. Although research has indicated that HMOs have been effective in limiting medical costs, there is mix ed evidence in the literature on how they achieve these savings. This article uses data from the 1987 National Medical Expenditure Survey to examine one hypothesis for these patterns: that HMOs enroll a healthi er population than fee-for-service plans. To test this hypothesis we e xamine HMO and fee-for-service enrollees with respect to socioeconomic variables such as age, race, sex, income, education, health status, a nd location. Our results indicate that HMOs tend to enroll a younger b ut not much healthier population than; traditional fee-for-service pla ns, suggesting that self-selection is not a major contributor to HMO c ost savings.