The health care industry began making rapid medical advances in the later half
of the 20th century. While this was great for longevity and well-being, these
new technologies and research processes have continued to encourage health care
costs to inflate at an alarming rate. As a result, indemnity and fee-for-service
insurance plans, which most people had for health insurance until the 90s, were
forced to raise premium and deductible rates. This made them unaffordable for
many people.
Since the early 90s, new health insurance options have continued to surface as providers seek a better way to manage costs. The most popular and oldest form of managed care is the Health Maintenance Organization (HMO). If you are healthy, or are a younger person with no family to support, an affordable HMO is probably your best choice of insurance product. But regardless, as indemnity and managed care products continue to evolve and converge, most insurance policies utilize at least some HMO techniques.
How HMOs Work
Health Maintenance Organizations are considered preventive health plans. By paying a monthly premium, the HMO covers:
- Doctor visits
- Hospital stays
- Emergency care
- Lab tests
- X-rays
- Therapy
HMOs stress preventive care as a way to manage medical costs. By averting major illnesses and limiting excessive spending and wasteful practices, HMO plans can do an effective job in controlling costs. Yet, even these organizations have been forced to make changes as our nation's health care landscape continues to change.
While this form of health care offers a range of services, patients must typically select one primary care physician from within the HMO's network. The primary care physician will then refer you to any specialists that might be required. With an HMO you are limited to visiting doctors, hospitals, and clinics that are part of the provider network. There is no deductible, but you may or may not be responsible for a co-payment, depending on your coverage. If you choose to visit a provider from outside the HMO network, your insurance will not cover the fees.
HMOs can be structured in a number of ways. Group model HMOs may have centralized medical offices and clinics. Other HMOs may offer Individual Practice Associations (IPA) which contract with physician groups or individual doctors in private practice, thus building a satellite of local coverage for patients to choose from.
Advantages and Criticisms
One of the great advantages of HMOs is that they are usually the least expensive plans, and co-payment amounts are low. If you're dealing with a group model HMO, medical facilities tend to be conveniently centralized. The intent of the HMO is to have the patient build their relationship with one primary care physician who can direct them to appropriate sources within the network when they have additional needs. You have unlimited use of the system, as the concept is to prevent you from becoming sick, and they often pay for things like vaccinations, annual checkups, and smoking cessation programs.
HMOs have become increasingly criticized for placing financial concerns ahead of patient concerns. As organizations are forced into finding new ways to control costs, physicians are limited in the amount of time they can spend with each patient. Many patients have become unhappy with the limited choices an HMO may offer."
