Managed care has drastically changed health care in the U.S. since the ‘90s. It focuses on reducing the cost of health care while increasing wellness and preventative care. According to Shi and Singh managed care organizations offer lower premiums and more comprehensive services than regular insurance companies.
Within managed care there are three major types of organizations. Health Maintenance Organizations, Preferred Provider Organizations and Point-of-Service Plans comprise the three types of managed care organizations. HMOs and PPOs both focus on reducing health care costs through preventative care. HMOs provide medical treatment on a fixed monthly fee. The consumer has a list of medical providers to choose form. The typical advantages of HMOs include low out-of-pocket costs, no lifetime maximum payout, and a focus on wellness and preventative care. Disadvantages include difficulty to receive specialized care, and care from non-HMO providers is not covered. PPOs differ from HMOs because they offer open-panel options for enrollees and offer non-capitation payment. Essentially, consumers choose from a selected panel of physicians and health facilities but also have the option to choose a different health care provider and pay a higher copayment if they desire. Advantages of PPOs include inexpensive out-of-pocket payments and choice of healthcare provider. Disadvantages include less coverage for treatment provided by a non-PPO provider and higher expenses than HMOs. Point-of-Service Plans, also referred to as hybrid plans, combine features of HMOs with those of PPOs. The major benefits of POS include maximum consumer freedom, minimal co-payments, no deductibles, option to use nonparticipating providers (with a substantial fee), and out-of-pocket payments are limited. The disadvantages of POS are the deductibles and co-payments for non-network care and the tight controls to get specialized care.
According to Shi and Singh, in 2006, 20% of employees were enrolled in HMO plans, 60% enrolled in PPO plans and 13% enrolled in POS plans. The government should encourage the usage of POS plans because they give consumers the most freedom with their managed care plans. The increase of POS consumers should begin with the shift of HMO users over to PPO plans since HMO plans are the most tightly constrained. This would then prompt a shift of PPO consumers to POS plans. In the long run this shift would drastically decrease the access of HMO plans. The access of medical providers would remain about the same. Consumers will have more freedom choosing their physician. However, in a study done in Illinois, 97% of physicians in the HMO network were also found in the PPO network. Access to providers in POS plans may increase slightly because of the decrease in HMO plans. Health care costs for enrollees would remain low unless they saw a non-network provider. At the end of the 2010 year, a town in Burlington toyed with removing HMO plans and only offering high deductible health insurance plans. The HMO plans were estimated to increase by 20% in January 2011 which was going to cost the town over two million dollars where as the high deductible plan would cost the town under one million. This realization caused a 12% increase in high deductible plans. Though this situation is slightly different, it shows consumers how costly HMO plans are to the health care system. POS and PPO plans are cost beneficial because consumers get more for what they are paying. In addition, the money put into HMO plans would be shifted over toward the PPO and POS plans reducing the cost for consumers. The quality of health care networks in the POS plans would increase because there would be an increase in access.
Congress should pass a referendum that would support the consumption of more Point-of-Service plans in order to maximize access, reduce cost and slightly increase quality.
References
"Elimination of HMO Illinois plan and Transition to the PPO plan”. 5 Oct 2010. Loyola & You. http://www.luc.edu/hr/pdfs/FAQs.pdf
“HMOs, PPOs, and POS plans”. 25 March 2011. http://www.agencyinf.net/iv/medical/types/hmo-ppo-pos.htm
Shi, L., & Singh, D. A. (2008). Delivering Health Care in America: A Systems Approach (4th ed., pp. 334-371). Sudbury, MA: Jones and Bartlett Publishers.
Warren, C. (2010). Burlington health insurance debate continues. Wicked Local, Retrieved from http://www.wickedlocal.com/burlington/news/x1384149275/Burlington-health-insurance-debate-continues#axzz1HwS8tYSd
Lauren Rush
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