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Out-of-pocket medical spending: fee-for-service vs. HMO coverage

July 09, 2003

Total out-of-pocket medical spending was significantly higher, on average, for consumer units with fee-for-service insurance ($2,315 per year) than for consumer units covered by a health maintenance organization ($1,789).

Average out-of-pocket medical spending, fee-for-service insurance and health maintenance organization coverage, 1999 and 2000
[Chart data—TXT]

For health care insurance alone, consumer units with fee-for-service insurance paid $1,029, on average, while those covered by a health maintenance organization (HMO) paid $870. Other significant differences in spending were for physicians’ services ($210 for those with fee-for-service coverage, $129 for those with HMO coverage), laboratory tests and x-rays ($38, compared with $15), hospital services other than room ($68 and $37, respectively), prescription drugs and medicines ($329 and $236), and dental services ($311 and $265).

The two groups of insureds were similar with respect to age, income, family size, and the number of children living in the consumer unit. Annual income averaged $43,226 for those with HMO coverage and $43,728 for those with fee-for-service insurance. The fee-for-service group had an average age of 50, the HMO group 48. On average, fee-for-service consumer units were composed of 2.6 persons, of which 0.80 was a child, while HMO consumer units comprised 2.7 persons, of which 0.91 was a child. The demographic differences between the two groups likely are not large enough to be a contributing factor in expenditure differences.

These data come from the Consumer Expenditure Survey. Find out more in "Consumer expenditures for selected items, 1999 and 2000," Monthly Labor Review, May 2003. These averages were calculated with data collected in 1999 and 2000. A consumer unit can be related members of a household; a single person living alone or with others, but who is financially independent; or two or more persons living together who share responsibility for major expenses.

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Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Out-of-pocket medical spending: fee-for-service vs. HMO coverage at (visited May 28, 2024).

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