What is HMO Health Insurance?
What is HMO Health Insurance?
Health care in America is changing rapidly. Two decades ago, most people in the United States had indemnity insurance coverage. Indemnity insurance allows one to go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay a portion of the bill.
An HMO is a health care organization that was created to lower health care costs for patients or others such as employers or the government. If you join an HMO, you get to use their services at a very low cost, much less than if you went to the doctor and paid for them.
Types of Health Insurance Coverage
Today, more than half of all Americans who have health insurance are enrolled in some kind of managed care plan - an organized way of both providing services and paying for them. The main types of managed care plans work include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.
Why HMO Health Care is Good
HMOs are also appealing to those who pay for services because HMOs are usually large organizations that can buy services for thousands of people and, at the same time, decide what type of care they will receive. Both of these allow HMOs to lower the cost of health care and give companies cheaper health care rates for their employees.
The most obvious advantage to belonging to an HMO is cost. First, the premiums of managed care are usually lower than traditional health insurance. Secondly, HMOs and most other types of managed care plans only require that you co-payments for your medical care up front. Lastly, many HMOs require only a small co-payment for a visit to the doctor, a hospital stay, or a prescription. This is far less expensive than the usual 80 percent reimbursement of traditional health care insurance.
Disadvantages of HMO Health Insurance
Aside from the benefits, there are disadvantages as well. What most people dislike is the requirement that you use only doctors and hospitals that are part of the HMO plan. All HMO plans require you to use doctors and hospitals that are “in-network” or in their contracts. Your HMO will provide you with a list of doctors. Also, HMOs usually require you to choose a primary care physician who will be in charge of your health care. If you need other types of care, such as seeing a specialist or going to the hospital, you are first required to get approval from your primary care provider.
Also, HMOs operate on the concept of capitation - they receive a flat fee each month for each person they cover. While this creates a good mechanism for cost control, it can also lead to restrictive practices such as difficulty in assessing specialists or special drugs. If you do need specialists care, an HMO require approval from the primary care physician, which can be time-consuming and difficult for those with serious illnesses.
