Analysis of Selection Effects in New York City's Medicaid Managed Care Population

It is becoming increasingly apparent that over the next several years the majority of Medicaid patients in many states will become enrolled in managed care plans, some voluntarily, but most as the result of mandatory initiatives. An important issue related to this development is the extent to which this movement to managed care is accompanied by serious selection effects, either across the board during the phase in or among individual plans or plan types with full-scale implementation. This paper examines selection effects in New York City between 1993 and 1997 during the voluntary enrollment period prior to implementation of mandatory enrollment pursuant to a Section 1115 waiver. No substantial selection bias was documented between patients entering managed care and those remaining in the fee-for-service system among the largest rate groups, although some selection effect was found among plans and plan types (with investor-owned plans enrolling patients with lower prior utilization and expenses).