Anyone who has looked around at the various health insurance options on the market has likely heard about HMOs. Health Maintenance Organizations provide users with health insurance that differs in many ways from traditional offerings, yet can offer significant savings in cost without a detriment to the level of health care received. Below we’ll take a look at HMOs and explain the advantages and disadvantages involved with making a HMO your primary health insurance provider.
So – what exactly is a Health Maintenance Organization? HMOs have been around since the early 1970s as a way to offer health insurance with low out-of-pocket costs for individuals around the country. The federal government’s HMO Act mandated that any business that offers their staff health insurance and employs more than 25 people must also offer federally certified HMO options as well. While this expired in the mid-1990s, it brought health maintenance organizations into the mainstream and millions of people started to take advantage of the low premiums offered for health insurance.
HMOs require that all of their users obtain their health care services from providers that are inside their “network”. Each HMO works with physicians, dentists, surgeons, hospitals and other providers to obtain lower costs for services based on their large amount of clients that they have in the area. This cost savings is then passed on to the HMOs clients, which reduces their health insurance premiums. Virtually anyone can purchase health insurance through a HMO as well, which makes them a great option for users that don’t have the ability to tap into private health insurance through work or other organizations.
Advantages of HMOs
The key benefits of being a member of a HMO typically revolve around price and cost savings. Many HMOs are registered as non-profit companies, and without shareholders and investment banks constantly clamoring for more profits they are able to run a more efficient and lean organization. Users of HMOs can save a significant amount in their health insurance premiums in exchange for giving up the flexibility of being able to choose whichever health professional you want for treatment. The other advantage to being a member of a HMO is that referrals inside the network are relatively easily obtained. For instance, when you see a primary care physician about a more serious issue, they can typically make a referral to a specialist in the HMO that can assist – at no extra cost to you.
Disadvantages of HMOs
The main disadvantage to using a HMO is that individuals are tied in to a network of care providers which might not include your current doctors, dentists and the other specialists that you see. Once you’re part of a HMO, switching doctors requires you to change HMO providers, which can be difficult and costly. Another disadvantage to HMOs is that many patients have reported lengthy approval times for care requiring the service of a specialist. Specialist referrals can only come through the primary doctor, and must be run through the HMO for approval before they will guarantee to cover the cost. This can take time ranging from days to weeks, depending on the urgency and severity of the person’s need.
Finding Cheap HMO Plans
The good news with HMOs is that they are generally one of the least expensive health insurance options that are available. As previously mentioned, the affordability that HMOs can offer comes from their ability to limit which health care providers the patient sees. By eliminating high-priced doctors and removing other unnecessary overhead, the HMO has much lower overall costs which are then passed down to those who are covered under their insurance plans. Many HMOs offer further discounts for their customers, including price breaks for those that take proactive steps toward better health, and discounts for students and youth.
HMOs are an inexpensive and useful option for individuals who are fine with using the doctors that are inside the network. The health insurance offered by a quality HMO is sufficient for most people, whether they are a single young professional or an older adult with children and a family. If your workplace doesn’t offer health insurance as part of your job, take some time to compare the prices and services offered for HMOs in your area.
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