Health maintenance organizations report lower hospitalization and surgical experience than (ee-for-service practice. If this is true, then sickness absence should be less. This pilot study compared morbidity experience of 247 pairs of Mountain Bell Telephone Company employees — HMO- enrolled employees matched with employees covered only by Blue Cross/Blue Shield. The study period extended before and after enrollment of the HMO subjects. Rates for the HMO group for hospitalization and surgery decreased after enrollment, whereas rates for the Blue Cross/Blue Shield group increased. The absence disability rate for the HMO group remained constant but increased for the BOBS group. Differences in absenteeism may exist due to the type of medical insurance. The potential impact of such a difference upon absence costs is considerable.