Are HMOs able to offer lower premiums because of favorable risk selection or utilization savings? What is the relationship between health plan choices and risk selection? Using Round I CTS Household Survey (CTSHS) data to study the effect of risk selection in employer-sponsored health plans, researchers at the University of Pennsylvania found that lower HMO premiums could not be explained by favorable selection, nor was utilization lower for HMOs. The researchers applied their methodology from the earlier study and analyzed Round II CTSHS data. The researchers examined the influence an individual’s health risk has on his/her selection of an employer and whether employers choose their type of insurance based on the unmeasured health or health care utilization of their employees. As both the public and the private sector combat risk selection, this study sheds light on how risk selection affects health plan choice.