Health Insurance Insights Network

There is a tide in human affairs and, at present, it is flowing against the healthcare industry. The cost of services and drugs are rising fast. To pay for these costs, the premium rate hikes from the insurers are affecting employers, the self-employed and everyone else who fails to qualify for one of the fail-safe programs at both ends of the age range. As it stands, more employers are either opting out of providing health plans or reducing the coverage. More young people who should provide their own coverage are deciding not to start a plan or maintaining the minimum. And even the middle class with the better levels of income are finding private health plans unaffordable. This is forcing everyone to look more closely at which plans represent the best value for money. For the private buyer, the usual question is whether the buy into a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO). For the record, the Point of Service Plans stand between these two alternates and are less common.

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.