Health insurance rates have been going up for a long time and people have looked for ways to control costs. In the early 1990's they created the HMO (Health Maintenance Organization) in order to contain costs of claims for insurance companies. When they control costs for claims, they can offer plans at a lower cost. They accomplished these controls by restricting the doctors and hospitals to the ones who will agree to stricter and lower reimbursement rates for their services. The HMO plans started out with hospitals or small groups of doctors banding together to offer insurance plans to their patients. This was great for the people who used the doctors and hospitals within the network. They were able to lower their monthly premiums substantially and they offered more benefits.
Before HMOs there were no co payments for doctor visits. Doctor visits were covered, but they were covered just like any other medical expense which was subject to a deductible and co insurance. If you have a 500 dollar deductible and the doctor visit was only 200 dollars, you would have to pay the 200 dollars before the HMO's came out. With HMO's if you went to doctors in the network, you could get the visit for a co payment of 10 or 20 dollars without having to worry about the deductible. People loved this extra benefit along with the extra savings in monthly premiums.
While this seems like a good idea, the problem is that you are restricted to the doctors and hospitals in the HMO network. If you were in an HMO and went to a doctor outside of the network you could find yourself without coverage altogether. In order to control costs, sometimes the HMO only included one hospital and a handful of doctors. If you were a patient of the hospital everything was fine. But if you wanted to go to a specialist for something outside of the network you may be required to pay the entire amount. This could be a problem if you were diagnosed with a cancer or other disease and wanted to be treated by a specialist outside of the network.
HMO's are still popular today in some regions. They generally have larger networks to allow for specialists to treat people with special chronic diseases. People can save a lot of money each month. If the doctor that you see is in the network it could be a great way to save money on your medical insurance. If you are shopping for insurance consider HMO's but make sure that the network of doctors will satisfy all your medical insurance needs.
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