What is an HMO Health Plan?
We answer your questions on, "What is HMO?" and on "Why you should choose HMO plans?"
Health insurance is confusing. We're not even talking about figuring out what you qualify for and who you can find to cover you and what you can afford. No, just getting the basic definitions down can be a tricky and trying process.
This introduction to HMOs should help you to get a good, solid understanding of what this type of organization is and what it does so that you can move forward with confidence that you are getting the right health coverage for your needs.
HMO: Health Maintenance Organization
The HMO stands for Health Maintenance Organization, which is most strictly defined as an organization which focuses on providing and/or arranging managed care for health insurance plans, self-funded health plans, individuals, and business entities in the United States; and working in the capacity of liaison with the health care providers themselves, the hospitals and doctors and so on.
How They Work
HMOs work on a prepaid basis either paid for in full or with a co-payment, usually small. Where a traditional indemnity insurance provider simply covers the costs incurred, an HMO will cover care provided by professionals who agree to practice under that HMO guidelines. In exchange for playing by the rules and giving significant discounts through the HMO, the plan provides these professionals with a steady stream of customers.
It is worth noting that HMOs typically cover any and all emergency care whether or not it falls within the guidelines set by the HMO's contract with the health care professional in question. This means, for instance, that a patient with a broken leg who needs pins inserted might be able to have the appropriate surgery performed even if it falls outside of the basic guidelines set forth by the HMO contract. This ensures that nobody ever sees their problems compounded while waiting for their doctor to get off the phone with their HMO.
The big appeal of the HMO for employers and other businesses is cost. The basic idea is that costs can be contained and greatly reduced by using an HMO. In truth, the total cost to the insurance company comes out to about the same, but the out-of-pocket costs for consumers are reduced considerably.
Controversy Regarding HMOs
There has been some controversy to the effect that HMOs run for profit will actually cherry-pick healthier patients in order to turn over bigger revenue. The truth is that while there are some HMOs that can be reasonably accused of doing this sort of thing, there are others who don't. You really need to shop around and look at each individual HMO before jumping to any conclusions or signing with anybody, as there's a lot of myth and misinformation flying around.
The fact that most people find health insurance confusing makes it all the easier for people to spread rumors and false facts about certain modes of health insurance, but the bottom line is that whatever you can do to stay healthy and safe at a reasonable cost is most certainly worth doing.