HMO Health Insurance Plans

HMO Health Insurance Plans
HMO Health Insurance Plans
Health maintenance organizations, better known as HMO health insurance plans, have been around since 1929 – the year that Ross-Loos Medical Group of Los Angeles started offering health insurance to Los Angeles County employees for the princely sum of $1.50 per month. The same year, a small town doctor in Oklahoma started selling shares to farmers to participate in a new hospital, and Baylor Hospital started providing public school teachers with prepaid medical care, a program that would eventually become Blue Cross. These early insurance plans filled a much-needed gap, offering health services for low monthly fees in a time of great economic uncertainty.

How HMO Plans Became the Flagship of Modern Health Insurance

Although the Great Depression eventually ended, the notion of prepaid health care survived and transformed into today''s PPO, POS, and HMO health insurance plans. HMOs, however, almost went extinct; in 1970, there were only 40 HMO health insurance plans in the United States.

Dr. Paul Ellwood, a pediatric neurologist from Minnesota, felt that private, “group health” was a better alternative than Medicare. He coined the term “health maintenance organization” and tried the idea out in Minnesota, later introducing it to the Department of Health and Human Services. This led to the 1973 passage of the Health Maintenance Organization Act, resulting in the rapid growth of HMO plans.

Types of HMO Health Insurance Plans

Today, there are three main HMO models: the staff model, the group model, and the network model. Because HMOs have evolved quite a bit since the 70s, today''s plans are generally a variation of the third model. In the network model, the HMO contracts with groups, independent physicians, and other health care providers. Insured members must choose physicians who fall within the HMO network.

HMO insurance plans will doubtless continue to evolve as health policies change. In all likelihood, however, the HMO concept will survive in some form for many decades to come.