Health Maintenance Organization (HMO) is a healthcare insurance plan that commonly confines coverage to care from physicians who work for the HMO insurance. In general, an HMO plan does not insure out-of-network care unless at the time of emergency (Noghanibehambari & Salari, 2020). Hence, HMO requires individuals to work in its service or live there to get coverage. The paper elaborates on the merit and demerits of this form of health insurance, as well as its focus on either cost or quality of care to members.
HMO insurance offers a wide range of advantages to the members. The first merit is that it provides preventive care; HMO plans emphasize wellness, inspire members to look for health treatment in advance, and have checkups annually (Noghanibehambari & Salari, 2020). Moreover, HMOs frequently deliver helpful and right-time information to their members about the benefits of staying healthy. Second, HMO is a lesser complicated billing, and commonly, their billing is much less complex than other plans; as a result, members experience fewer challenges.
The third advantage of this insurance plan is less expensive health insurance. Rather than the deductible, the plan has monthly premiums and small copayments for health services and treatments without looking at the members’ medical needs (Noghanibehambari & Salari, 2020). The fourth merits of HMO plans dictate no maximum payout in lifetimes for its members. Thus, their policies lack a maximum lifetime payout compared to other medical insurance plans. Furthermore, they will cater to medical needs as long as individuals are participants of the plan.
In contrast, the HMO plan has several limitations for its participants. Firstly, this plan has restrictions on how to use the plan even after paying for the HMO plan (Noghanibehambari & Salari, 2020). They must designate a specialist who will be accountable for an individual’s medical needs, referrals, and primary care. Thus, participants are responsible for any costs incurred if they see somebody out of the care network, even without a contracted specialist.
Secondly, participants need referrals for any specialists in case they want HMO to cover their visits. For instance, if a member wants to see a dermatologist, their primary care physician must make a referral before seeing the plan to cover the visit (Noghanibehambari & Salari, 2020). Otherwise, the participant must pay for the entire cost. Thirdly, HMO plans have specific conditions that members must meet for particular health issues, such as emergencies. As a result, they usually put very strict rules on what constitutes an emergency (Noghanibehambari & Salari, 2020). Therefore, members’ conditions failing to fit the criteria are denied coverage by HMO plans.
Fourthly, doctors who participate in the HMO plan are normally needed to check a minimum number of patients daily. Resulting in the limitation of time physicians spend with the patient to address their needs (Noghanibehambari & Salari, 2020). Fifthly, participants face more difficulties changing their physicians since many HMOs discourage their members from changing primary care physicians (Noghanibehambari & Salari, 2020). They might limit changing primary care physicians to once or twice over time.
HMO plan focuses on the quality of the health care but the cost as it provides medical insurance for a month or annual. HMO limits participants’ coverage of health care offered via a network of physicians and other healthcare providers contracted by the HMO (Noghanibehambari & Salari, 2020). As a result of these contracts, premiums are lower than traditional health insurance because healthcare providers have the privilege of the patient referred to them.
HMO can be a structured private or public entity that offers members basic and supplemental health services. The organization protects its network of health providers by signing contracts with primary care physicians, specialists, and clinical facilities. All medical bodies that enter into contracts with the HMO receive payments upon an agreed fee to deliver many services to the HMO members (Noghanibehambari & Salari, 2020). Therefore, agreed payment permits an HMO to offer lower premiums compared to other forms of healthcare insurance plans while holding a high quality of care from the network.
Additionally, HMO was established under the Health Maintenance Organization Act of 1973. President Richard Nixon signed the insurance plan while the law clarified the definition of HMOs as a private or public entity that offered basic and supplemental health care to its subscribers (Noghanibehambari & Salari, 2020). Moreover, the law needs the plan to offer people basic medical care insurance to exchange for regular and fixed premiums launched through a community rating system.
In conclusion, HMO is a form of insurance that offers coverage of medical bills via a network of a specialist. This HMO plan comprises a group of health care providers that restrict medical care coverage offered by physicians. Contracts cause premiums to be low because the healthcare practitioners have the merit of patients directed to them, although they add additional restrictions to the HMO participants. This healthcare insurance is less expensive, has less complicated bills, and focuses on the quality of its members’ healthcare.
Noghanibehambari, H., & Salari, M. (2020). Health benefits of social insurance. Health Economics, 29(12), 1813-1822.