The first measure is based on the effective number of affiliated households in a given state over the total number of households. The advantage of this strategy is twofold. First, the independence of the ex ante negotiations between the federal and state governments over the number of affiliations that a state would pursue in a specific quarter from ex post health-demand shocks rules out the possibility of self-selection. Second, the fact that political and logistical constraints in addition to economic conditions weighted heavily in the determination of the targets allows one to overcome the problem of non-random placement.