Both the HMO and PPO depend on the insurance companies making a contract with groups or networks of healthcare service providers, i.e. doctors, clinics, hospitals, pharmacies, laboratories and testing centers, and so on. The contract sets the prices the insurer will pay for the delivery of a list of services, drugs and medical devices. The benefit to both sides is clear. The healthcare professionals get a guaranteed volume of business and the insurers have certainty of prices. For you the choice is also reasonably clear. In an HMO, you are tied more directly to the network. If you want to go outside the nominated group, you will usually have to pay all or most of the cost involved. All the decisions about your care are taken by your Primary Care Physician (PCP). He or she manages your case and must agree all referrals for diagnosis or specialist treatment. As the name suggests, a PPO only lists preferred providers, i.e. you have greater freedom to take advice and treatment outside the network. If you stay within the network, your initial cash payment (a form of deductible) and small co-payments will usually be the only out-of-pocket cost to you. Opting to go outside the network usually requires you to pay everything as you go and then reclaim a proportion from the insurer.

This makes your choice clear. Because your choice is limited in an HMO, the insurer has more control over the cost of your treatment so the premium rates are lower. In a PPO, the costs are not necessarily controlled and so the premium rates are higher to reflect the greater possible cost. You get what you pay for. Paying more buys you more control over who delivers the treatment for your injury, disease or disorder. So get two sets of health insurance quotes, one for HMOs and the other for PPOs. Then look carefully through the list of providers and the coverage you are entitled to receive. Another factor is whether your regular physician is a part of the HMO network. If not, you may have to change to a doctor nominated as your PCP. A final feature to include in your evaluation of the health insurance quotes is that cheapness in some HMOs actually means a poorer service. If a network agrees low fees, it puts pressure on network members to see more patients in a day to hit the profit targets. A PPO usually makes more time available for each consult or visit. Now it’s your choice.

The new healthcare law is designed to help people to get coverage. As from September, insurers will not be allowed to refuse children because of their medical histories. In 2014, when the mandate to buy coverage comes into force, the same rule is to apply to adults. Thirty-five states already have high-risk pools but some, like California, have not controlled premium rates and the coverage is not generally affordable with low caps on total claims. During the next four months, the remaining states are to begin creating their own high-risk pools. The federal government is also to establish a national pool. It is not yet clear who will be allowed to buy through this pool. Indeed, there is a general air of uncertainty about the way in which the pools are to work, e.g. whether states like California will have to modify their existing schemes to comply with federal guidelines. Given the short time available for states to begin compliance, this lack of clarity is unsettling. The US Department of Health and Human Services is tasked with writing regulations. This makes practical compliance by the states challenging.

The simple solution would be to allow the states with pools to offer the federal pool alongside their own. The states without a pool can start drawing up their own regulations without having the DHHS guidance to hand. However, uncertainty remains. The California pool requires applicants to prove they have been repeatedly refused coverage. Suppose the federal rules only require an individual to have been uninsured for six months. Similarly, suppose the states allow insurers to add up to 35% to the premium rates for high-risk plans, whereas the federal rules insists the standard commercial rates apply.

This does not change the underlying plan which is to give those with any pre-existing condition access to individual health insurance within the next four years. For those who currently have no way of getting any coverage, this is a major step forward. The fact there are still details to be clarified does not prevent this from being a major improvement on the current reality in forcing health insurance companies to cease discriminating against those with any long-term health issue.

Let’s take this step by step. If a person continues to work, he or she will be covered under the employer’s plan. All other things being equal, working up until you are entitled to Medicare gives continuity of coverage. But there was always a problem if someone took early retirement. Insurance companies were reluctant to insure older people who might more quickly develop serious medical problems. So, to give people aged between 55 and 64 a bridge until they became eligible for Medicare, employers were given a tax break to enable them to pay for their ex-employees’ drugs. With the disappearance of the tax break, employers were therefore left with an obligation to pay for drugs without any relief.

Acting through Kathleen Sebelius, Secretary to the Department of Health and Human Services, President Obama has announced a $5 billion package to offset the loss of the tax break. This will run from June 2010 to January 2014 when the individual health plans offered through the new exchanges should come onto the market. It is estimated that about 4,500 private and public employers will be eligible to claim from this new fund. The intention is to provide continuity of coverage under the current health plans and it will be condition that the employers maintain their contributions, i.e. federal money is a top-up not a substitute for payment by employers. Ms Sebelius has also made it clear that the individual health plans offered to early retirees must include coverage for chronic and high-cost diseases and disorders. Employers cannot cherry pick the diseases to be covered. That means the victims of heart attacks or those diagnosed with diabetes and cancer will get continuing support under the plans if federal funding is to be drawn down.

In general, the business community has been slow in showing its gratitude. The feeling seems to be that Government made a mistake when pushing through the reform bill and was now offering a fraction of the total money required to fill in the hole. Nevertheless, the President has recognized the problem and made funds available to help offset it. Whether these funds will prove sufficient is something we will have to wait and see. For the retirees, it should mean access to benefits with fewer hassles.

The answer starts off in California where the maximum rate of 39% was due to take effect. The state referred the proposed increase to independent auditors for an opinion. The answer came back negative. It seemed Wellpoint couldn’t add up. Well, that’s oversimplifying things a little. But the reality is that the numbers Wellpoint offered to support their premium increases were based on some very shaky mathematical assumptions. When news of the report became public, Wellpoint withdrew the proposed increase. Acting on this, Kathleen Sebelius who is Secretary of the Department of Health and Human Services sent out a letter to all state insurance commissioners encouraging them to review every proposed premium increase. This is the first sign that the balance of power is shifting against the insurance industry and in favor of the consumer. For too long, insurance companies have hidden behind complicated mathematical explanations and gamed the system. With the Affordable Care Act now law, Sebelius is encouraging every state to give itself the power to approve rate increases. The first sign of continuing good news for consumers comes out of Connecticut where Attorney General Blumental forced an audit of Blue Shield and Anthem Blue Cross, both Wellpoint subsidiaries. Connecticut’s Insurance Commissioner Sullivan rejected these companies requests for increases last year. It seems likely the same thing will happen this year.

By moving so quickly to encourage states to review all proposed rate increases, Secretary Sebelius is demonstrating one of the key advantages now available to the Federal Government under the new laws. That the interests of the consumer will be put before the interests of the health insurance industry. This means every state should be going through a routine of analysis every time premium rate increases are proposed. The assumptions, evidence, claims histories and trends asserted should all be rigorously tested. If there are any problems, the increases should be denied. The aim should always be to ensure affordable individual health insurance plans are available to the majority of people living in the US. For too long, the insurers have been allowed to bamboozle regulators with math and complicated explanations. With independent audits now coming into play, the kind of success enjoyed by the citizens of California should be felt around the US.

We need to consider two contradictory statements: when they fall sick, the poor go to an emergency room and, if they are lucky, receive treatment that keeps them alive; when they are insured, the rich receive care that gives them better health. Except the international statistics show the US has higher mortality rates than most of the other developed countries. To help you understand, we need a comparison with Europe where there is a completely socialized healthcare service and better life expectancy. Both at a European and individual state level, there are panels of experts who decide what treatments and which drugs represent good value for money. States will only pay for treatment proven effective and safe, and will not pay drug companies the retail price they claim. Instead, the states will only pay for approved drugs at prices agreed in negotiations. In the US, insurance companies happily pay for a battery of medical tests and procedures even though there is no evidence any of this work is effective. This adds to the irony. Sometimes the rich die young even though they have received multiple treatments. This is because their expensive treatments are ineffective.

So long as the healthcare service industry remains profit driven, doctors have a direct financial incentive to perform endless tests and multiple procedures to justify big bills. There is no national body to approve treatments and then monitor their safety and effectiveness. Health insurance companies could challenge the medical profession to justify what they do and the prices they charge. But, for the most part, health insurance companies pay up without question. What is clear that until and until there are controls over medical costs, the premiums on individual health plans will continue to rise. Worse, there is no evidence to show that those who do pay these high premiums live any longer than the uninsured.

Because of the national anger, some companies have paused. WellPoint had proposed the increases take effect from March 1. Any increases, even if approved by the states, will now be delayed until May at the earliest. This decision is partly in response to the summons of WellPoint’s chief executive officer to Washington to justify the requested increases. Insurance companies find themselves in a difficult political situation. Their management teams accept a duty to maximize profits for the benefit of the stockholders. They look around at an America seriously affected by the recession. Increasing numbers of people are unable to afford the premiums, some because of unemployment, others because of a squeeze on credit. More worrying from the insurance industry is that more healthy people are deciding not to insure at all. This means the group of people left holding policies has a higher percentage of those with existing health problems. Without more healthy people in the group paying premiums and not claiming, it becomes more expensive to insure those less healthy people who remain. It is also a verified fact that hospitals and healthcare service professionals have also been increasing their fees and charges. The pharmaceutical companies have increased the price of almost all the most commonly used drugs. The insurance industry is under pressure from both sides. As Secretary Sibelius points out, however, this is not a completely accurate picture. Every year, insurance companies are required to submit reports to all the US states in which they are licensed to sell policies. This data shows many companies actually increased the number of policyholders during 2009.

The market in health insurance plans is complicated by the political situation. Democrats and Republicans are two armies unable to agree a truce long enough for some reform to be made. As it stands, there is no immediate likelihood that medical costs will be controlled. If the costs continue to rise faster than inflation, insurers will have no choice other than increasing their premiums. If they do not, they will not have enough cash in hand to pay out on all the claims. This means, for the average person, it will become increasingly difficult to find cheap health insurance. For those with a pre-existing condition, group health insurance will be the only option but, for those plans, premiums are rising at their fastest rates. For years, it has been obvious that the healthcare industry is broken. It would be ironic if, having come this close to some meaningful reforms, we not only saw the reform bills lost in Washington, but also found every major insurer imposing massive premium increases. That really would be the final nail in the coffin.

You are reading this article on the internet. When online, you can buy more or less any product or service across state or national boundaries. Although there are some restrictions, e.g. some states limit your right to import drugs from foreign countries, there is an almost free market where you can search for the cheapest price and buy whatever you need. There is no possible economic justification for retaining this historical privilege for insurance companies. All it does is preserve their ability to maximize their profits at your expense. For example, in Minnesota three insurance companies dominate 80% of the market for health plans. There is no doubt that, if more companies entered the market, the premium rates would fall. During his run for President, Senator John McCain was in favor of free markets for health plans. President Obama supports it and the proposal is in both versions of the healthcare reform bills currently stalled in Washington. But because the Republican party’s only policy is to oppose everything the Democrats propose, it seems even this simple change in the law may be lost. What will the result be? The anticompetitive behavior of the insurance industry will continue and you, the consumer, will suffer.

Could the law change tomorrow and allow everyone access to cheap health insurance wherever it can be found? The problem is that the states have different sets of regulations and compliance leads to different costs. The playing fields are not level. So, premiums are significantly lower in those states which have the fewest consumer protections. It would not be fair competition if people living in Minnesota, which has strong consumer protections, could all get health insurance quotes from states with little or no consumer protections. The only way in which there could be a free market is to have a single set of federal regulations for the sale of health insurance plans. Sadly, the political parties do not want to talk about this even though we would all benefit. In the US, the political elite’s interests do not match the needs of the ordinary citizens.

In general, family insurance plans are individual health insurance policies that allow the policy-holder’s family to be included in it as well. A great number of employers instead of providing group coverage, offer their workers individual plans with including possibilities if they have any family members they want to add. The federal law also restricts the insurance companies from excluding family members with pre-existing conditions from group plans. And in most cases, the employer will pay a part of the worker’s yearly premium. This of course makes family health insurance less costly for an individual’s family budget. Still, if you lose the job your insurance coverage will also be taken away.

When speaking of individual plans, we speak about the health insurance plans you buy directly from a provider. Such plans provide a high degree of freedom, as you can freely choose the company to buy from or the type of coverage you want in your policy or not. In most cases, however, the coverage provided by individual plans will be somewhat inferior to the extents you get with a group plan, still if there’s no other option you can choose a plan that will meet your exact requirements. Keep in mind that in many cases individual health insurance plans won’t allow you to include family your members with pre-existing conditions.

For those who want to get the lowest health insurance quotes and the best coverage option the best choice would by taking a group health insurance plan. Such plans usually offer the most coverage for the lowest rates, and are way more inexpensive than separate individual policies in general. However, if your employer does not provide you with group health insurance you will have to invest some time in comparing group health insurance quotes from different providers as the difference in rates can be quite impressive. And also make sure to fully understand all the terms and provisions before actually buying and signing the policy.

Some elements to consider before actually buying the policy and shopping around: policy types offered, providers available in your area, coverage types and exclusions, benefit pay off procedures. You should also learn all possible options regarding the premium payment and deductible adjustment effect. Make sure you buy the policy from a reputable company licensed to work in your state and your insurance agent is able to answer all of your questions regarding the coverage options and special provisions of the policy. There should be no compromises when insuring your family because having good coverage really matters when there are any health problems.

Why think about it now? Well, let’s take the worst case scenario. Suppose you or one of your family are struck down. Suddenly, you are looking at big bills and worried about the extent of the cover available under the policy. This is not the best time to open negotiations with the insurer. You are emotionally weak. Worse, the reality of large losses will color the reaction of your insurer. The best time for these negotiations is when you are calm and all the losses for the insurer are in the future. This allows everyone to deal with hypotheticals and not get alarmed when big numbers are mentioned. So why do insurers start talking about big numbers? The national statistics show claims for long-term care almost always fall into the range of three to five years. That’s a big bill when you add in all the different services potentially required, whether in your own home or a nursing facility.

So what happens to people without long-term health insurance? The worst happens to those who have built up assets. Instead of providing for their families, they find all their assets sold to cover the apparently endless series of bills. Of course, some families have one or two who can be persuaded to act as carers. They sacrifice their earning capacity to provide home nursing. This, of course, is the worst case, where the losses just keep mounting up as families cope with the emotional and financial costs of the care. Health insurance provides protection for retirement savings and the assets readied for the children to inherit. Long-term policies cannot remove the emotional burden of living with an injured or dying loved one, but it can make the time less financially stressful.

By a curious irony, both the insured and the uninsured now often face the same problem: to find prices on the internet for the treatment needed. In the same way you might shop around for an HD TV to replace your old set, you start asking, “How much does this operation cost?” followed closely by, “Where can I find a better price?” A number of doctors and healthcare facilities have begun to cater more directly to the uninsured market and now post their prices online. More importantly, some will negotiate on these prices. The fact you have a policy does not prevent you from taking advantage of this opportunity. But you need to move with care (as always). There is never just one price for any procedure or operation. So many different factors affect price starting with where you live and who the local providers are. The prices will differ depending on whether you ask a hospital, clinic or individual doctor to quote. The root of the problem is often the insurance industry. The companies offer many types of policy and, depending on the volume of business directed to doctors, clinics and hospitals, negotiate different prices for each treatment option. It’s not unusual for there to be ten and more prices for the same treatment depending on who is paying.

So you cut through this arbitrary pricing structure and find the real prices. If you have a health insurance policy, ask your insurer for the provider prices for the networked doctors. The better companies help you find the lowest price treatments. On the internet, there are search engines giving you lists of doctors in your area with the best prices for the treatment you need. Did you know thirty-three states require hospitals publish their prices? Shopping around really can save you money on your health insurance!