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.
Let's define them first in layman's terms. Then, we'll really get into how matters!
We also need to separate out individual/family and employer plans from the new HMO entry in the senior market, Advantage plans!
First a quick lay of the land to get our feet wet.
HMO or Health Maintenance Organizations are a group of doctors, hospitals, and other medical providers that form an association in which medical services will be delivered to enrolled patients on a fixed dollar basis.
PPO or Preferred Provider Organizations are doctors, hospitals, and other medical providers that agreed to a discounted schedule of re-imbursement with the carrier.
You can quote HMO's and PPO's side by side here within the main markets:
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.
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.
HMO's typically provide lower copays for office visits, lower deductibles (sometimes no deductible) and much less out of pocket for hospitalization.
NOTE: Since Covered California came to be, there are few if any differences in benefits at a given Metallic level between HMO and PPO.
HMO's used to be much cheaper than PPOs but now that the benefits are standardized, the rates have come up quite a bit.
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.
"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 (only Anthem's EPO currently has this now. Employer plans will generally have it on PPO plans with Shield or Cross).
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 California health 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.
Check out our Kaiser versus PPO guide as a prime example of HMO versus PPO!
Now, let's look at HMO versus PPO in the senior market!
Medicare supplements are the traditional "PPO-like" plans for seniors while Advantage plans are the new HMO entry for that market.
Very similar contraints and differences like above since the HMO model requires certain restrictions to work.
We have great reviews on how to compare the "HMO versus PPO" natures of these two plans here:
You can quote both of them here and we're happy to help with any questions!