This really is the first question to ask when you are considering what California health insurance plan to choose. They are very different in how they work and people typically have a strong preference one way or the other in terms of how they like to access medical care. First, the official definition of both.
HMO (Health Maintenance Organization)
An HMO is a collection of hospitals, doctors, and other health services all organized under one network. By managing care and contracting with the providers, HMOs keep costs down while providing a full range of health services. You usually pay only small co-pays when using services, no matter how many or what kind of services you use. In return, though, you must usually use the hospital(s), doctors, and other health providers in the HMO’s network. In an HMO, you select a
primary care physician. If you need a specialist, the
primary care physician must first refer you to that specialist before you can see them. HMOs in California are regulated by
Department of Managed Health Care (DMHC).
PPO (Preferred Provider Organization)
In a PPO,
health insurance companies contract with doctors, hospitals, and other providers to form a “network.”
Depending upon your plan, you can sometimes get health care outside the network (someone or someplace not included in the network) but you will have to pay more.
Unlike an HMO, you usually can see a specialist without first being referred by your primary care physician, and you have much more freedom in choosing a doctor or hospital. PPOs in California are regulated by both California Department of Insurance (CDI) and Department of Managed Health Care (DMHC).
Now that we have that out of the way, let's really drill down and see how they affect you. In a nutshell...
HMO's are:
1) more structured in how you access care,
2) tend to have richer benefits (less out of your pocket when sick or hurt)
3) cost more in monthly premium.
PPO's are:
1) more flexible in which doctors you can see and how that happens
2) tends to cost-share more of the out-of-pocket with you in the form of deductibles, copays, and co-insurance
3) has a wide range of monthly premium amounts depending on the level of benefits.
Let's go through these various points in more detail for HMO.
"more
structured
in how
you
access
care"
With
an HMO,
you
choose a
Primary
Care
Physician
or
designated
medical
group up
front.
Referral
and
decision
on
health
care are
made
through
that
provider
and
services
outside
of this
provider/medical
group
will
most
likely
not be
covered
unless a
true
emergency.
Authorizations
for
coverage
are more
common.
You are
also
limited
to the
medical
group
for
specialists
unless
they do
not have
one that
you need
(of
course,
with
referral
from
Primary
Care
Physician).
The
medical
group is
usually
within
45-60
miles of
your
residence
depending
on the
health
carrier.
"tend
to have
richer
benefits"
HMO's
typically
provide
lower
copays
for
office
visits,
lower
deductibles
(sometimes
no
deductible)
and much
less out
of
pocket
for
hospitalization.
The
max
out of
pocket
on HMO's
typically
runs
half of PPO
plans.
The
lifetime
max is
usually
unlimited
versus
an
average
$5
million
for PPO
plans
(which
is
rarely
an
issue).
"cost
more in
monthly
premium"
HMO's
have
become
very
expensive
over the
past
decade
as
California medical
costs
escalated.
Since
the
benefits
are
richer
and
total
medical
expenditure
has
skyrocketed,
richer
plans
are
absorbing
more of
this
increase
and that
gets
passed
down to
you in
the form
of
premiums.
HMO SYNOPSIS...HMO's work for people who would rather pay more over on a monthly basis but have less out of pocket when a medical injury/illness happens and can be flexible about the doctors/hospitals they see.
Let's
go
through
these
various
points
in more
detail
for PPO.
"more
flexible
in which
doctors
you can
see and
how that
happens"
With a
PPO
plan,
you can
access
any of
the
in-network
PPO
providers
up and
down
California.
You do
not have
a
Primary
Care
Physician
and you
refer
yourself
out to
specialist.
You can
even use
providers
out of
State
through
the Blue
Card
program.
You can
even see
doctors
outside
the
network
but you
will pay
more out
of
pocket.
There
are 10's
of
thousands
of
doctors
up and
down the
State
with the
major
California
health
insurance
carriers.
"tends
to
cost-share
more of
the
out-of-pocket
with you
in the
form of
deductibles,
copays,
and
co-insurance"
With
PPO
plans,
you are
picking
up more
of the
costs
when you
get sick
or hurt.
Copays
are
higher,
deductibles
can
range
from
$500 to
$5000
and
co-insurance
usually
runs
around
30-40%
depending
on the
plan.
Some PPO
plans
such as
the
HSA
Health
Savings
Account
plans
apply
everything
to the
main
deductible.
"has
a wide
range of
monthly
premium
amounts
depending
on the
level of
benefits"
PPO's
offer
many
options
from
traditionally
the
cheapest
plans on
the
market
to plans
as
expensive
as the
HMO
plans.
There
tends to
many
different
options
with
varying
copays,
co-insurance,
and most
importantly...deductibles.
PPO
SYNOPSIS...PPO's
work for
people
who want
more
flexibility
over
which
doctors
and
providers
they can
see and
are
willing
to pay
more
when
sick or
hurt to
obtain
this
control.
PPO's
also
work for
people
who just
want to
cover
the
big
catastrophic bill and
keep
their
monthly
premium
down.
We hope
this
comparison
of HMO's
and
PPO's in
the
California
health
insurance
market
helps.
You
should
be able
to
significantly
narrow
your
options
by first
answering
this
important
question.
Other important concepts to help you understand your California health insurance quote are:
California
health
insurance
simplified
Introduction
to
California
health
insurance
HMO's
and your
doctor
PPO
plans
guide
To
run your
instant
health
insurance:
California
Individual
Family
health
insurance
quote
California
Small
Group
health
insurance
quote
