HMOs vs. PPOs 9/05: Health insurance, healthcare

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In this report: Overview; CR Quick Recommendations; Ratings; How to choose; Low-cost plans; Less-than-perfect care; Which plan for you?; How to appeal denial of care

September 2005

Weighing your health plan choices
		Illustration by James Steinberg

You’re about as likely to hear good news about your health insurance as you are to find a pair of Payless shoes in one of Paris Hilton’s closets.

CR Quick Take

Consumer Reports surveyed roughly 35,000 readers about their HMOs and PPOs. Among our findings:


•	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.
•	People in HMOs had more trouble obtaining care than members of PPOs.
•	Nearly one-third of all PPO members reported billing problems, nearly three times the rate for people in HMOs.
•	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.
•	Our Ratings of 76 HMOs and PPOs show that the best plans provide a broader choice of doctors and easier access to care.

First, there’s the ever-increasing price. Since 2000, annual premiums for family coverage have risen 59 percent, six times the rate of inflation. That figure comes from the 2004 Employer Health Benefits survey of 1,925 U.S. firms conducted by the Kaiser Family Foundation, a nonprofit health-care research group, and the Health Research and Educational Trust, which is an affiliate of the American Hospital Association.

Employers are passing more of those higher costs on to you. A Consumer Reports 2004 survey of 35,719 subscribers about their health maintenance organizations (HMOs) and preferred provider organizations (PPOs) shows that 47 percent paid more than $1,000 in premiums alone during the previous 12 months; only 37 percent spent that much in 2002.

What’s more, the health-care system remains plagued by enormous quality gaps, according to the 2004 State of Health Care Quality report issued by the National Committee for Quality Assurance (NCQA), a nonprofit health-care research group that compiled performance results from 563 health plans. The report finds, for example, that if Americans with hypertension received care through one of the country’s top 10 percent of health plans (which control blood pressure in about 71 percent of such patients), up to 26,000 deaths could be prevented annually.

Obviously, your choice of managed-care plans can make a big difference in the quality of medical treatment you receive. That’s why, every two years, we ask our readers to rate their plans. This year, in our Ratings of HMOs and PPOs, we present detailed information on 35 HMOs, plans that pay almost all expenses for patients who stick to providers within a network, and 41 PPOs, plans that cost more but allow more choice of doctors.

Only 64 percent said they were “completely satisfied” or “very satisfied” with their plan. Among those who had a serious illness, satisfaction varied widely between those enrolled in the top third and bottom third of the plans. In the top-rated HMOs, for example, 25 percent said they had trouble getting care. In the low-rated group, the share complaining jumped to 37 percent. Not surprisingly, people who had a serious health problem had more billing problems than those who didn’t, particularly those who belonged to PPOs.

Managed-care companies, however, do not feel your pain. They are poised for another year of gains in 2005, with total revenues projected to increase 10 percent, to $272 billion, according to a forecast from Corporate Research Group Inc., a managed-care research and publishing group based in New Rochelle, N.Y.