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Health Insurance: HMOs vs. PPOs

Written by Nickel - 4 Comments

I wrote awhile back about choosing between an HMO and a PPO for our new health insurance plan. Thus, I was quite interested the other day when I ran across a Consumer Reports survey on this very topic…

First off, did you know that annual health insurance premiums for a family have increased by 59% since 2000? That’s six times the inflation rate! And employers are increasingly passing those higher costs on to their employees.

They also surveyed over 35,000 people about their HMOs and PPOs and found that only 64% of individuals were “completely satisfied” or “very satisfied” with their plan. Here are a few more interesting tidbits:

HMOs scored slightly higher in overall satisfaction than PPOs, which dovetails with other research that finds many consumers somewhat more willing to give up choice of provider to get lower costs.

We actually went with the PPO because we feel the exact opposite — we value choice over cost.

People in HMOs had more trouble obtaining care than members of PPOs.

No surprise there.

Nearly one-third of all PPO members reported billing problems, nearly three times the rate for people in HMOs.

This isn’t particularly surprising, either… HMOs have very slimmed down, simple billing systems.

There was no difference between HMOs and PPOs in levels of satisfaction among those with chronic conditions, except for people with back pain. Those patients were happier with PPOs.

This is sort of a curious finding… I’d expect PPOs to result in happier patients across the board, but it seems that amongst the chronically ill, there is only a slight advantage to PPOs.

[Source: Consumer Reports]

Published on October 13th, 2006 - 4 Comments
Filed under: Insurance

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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4 Responses to “Health Insurance: HMOs vs. PPOs”

  1. 1
    Frugal Frugalson Says:

    I’ve been pretty happy with the coverage I’ve received from my HMO family plan, but the cost increases have been pretty brutal.

    My health insurance premium has increased by 51% since 2001, and it would have gone up quite a bit higher if I didn’t downgrade my plan to one with higher co-pays and deductibles.

  2. 2
    Rob Says:

    I actually have a POS plan (no seriously that is its name) and the means except for hospitals I can chose any service provider. I have you all beat, my premium went up 38.3% this year.

  3. 3
    nancy Says:

    I too have a POS,(point of service). Priour to that, I had an HMO. I like being having the flexibility to goto different doctors.

  4. 4
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