Why are premium rates different?

Dr. Michael Roizen, MD
Internal Medicine

With insurance, as with anything in life, you get what you pay for. Insurance premium rates differ depending on how much freedom you want, the type of insurance plan you have, and the benefits offered by that plan.

You pay more for more freedom in providers (doctors, hospitals etc.), more coverage, and more benefits, which is why HMOs have lower premiums than indemnity plans (fee-for-service) plans.

An indemnity plan is the equivalent to getting your full allowance and being dropped off at Dylan’s Candy Bar to choose whatever you want. An HMO, on the other hand, is as if your brother or sister went into Dylan’s for you and came out with a Tootsie Roll, a Dum Dum, and a jawbreaker and you could only choose from those options no matter how badly you were craving a peanut M&M.





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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.