Health Insurance Articles
Why Are HMO Health Insurance Plans Less Expensive Than Some Other Plan Types
2010-02-04
There are several different popular types of health insurance coverage available today. The type of health insurance policy that you choose will most often depend upon what your employer has chosen, so it is not unusual for employers to select the type of health insurance that is the most cost-effective. In most cases, an Health Maintenance Organization, or HMO, is less expensive than other types of insurance. There are two primary reasons for this.
First of all, an HMO can give cheaper health insurance coverage because they typically deal in very large contracts with specific health care providers. The HMO essentially enters into a contract with the selected health care providers, stating that all of the patients covered by their insurance plan will visit only the doctors and hospitals that have also entered into the agreement with the HMO. In return for this exclusivity, the health care providers offer a significantly lowered rate to the HMO, and the HMO passes these savings onto those who are enrolled in their plan. This reduced price does come with limitations for the patient, however. Patients who are enrolled in an HMO will be required to select a primary care physician from an approved list of providers, and all medical care of any kind will need to go through this particular doctor. Should there be the need to see a specialist or get a hospital procedure, that process must begin with the primary care physician, who will have to approve the patient's referral to another doctor.
The other main reason that an HMO can provide less expensive health care to patients, is that it focuses on preventative care. The typical HMO is very focused on trying to keep the long-term costs of health insurance coverage as low as possible. They try to achieve this by eliminating unnecessary doctor visits and procedures (which is largely the role of the primary care physician), and by keeping patients as healthy as possible so that doctor visits are not needed. An HMO will usually provide its enrolled members with essential tools in order to achieve the healthiest lifestyle possible. For example, if an HMO can assist in preventing the development of heart disease (a very expensive and potentially deadly problem to treat). By conducting cholesterol screenings as well as having a primary care physician provide medical tips and guidance regarding long-term health, these health investments are considered to be extremely worthwhile.
The HMO type of health insurance is not ideal for everyone. However, for those seeking the lowest cost health care plan, it may be an ideal solution.
