When Is It Best To Buy A Managed Health Care Insurance Plan?
Health insurance plans today is broadly divided between traditional indemnity health insurance plans (which tend to be quite expensive) and managed health care insurance plans (which tend to be somewhat more affordable). The most well known form of managed care plan is that provided by the Health Maintenance Organizations (HMOs) which are designed to give you a reasonable level of medical care at a relatively low price.
For most of us the idea of being able to get medical care at a relatively low price is attractive, however, this can be very much a case of you "get what you pay for" and, unless you buy a managed care plan with both of your eyes wide open, you could well be disappointed by the quality of the care which you receive.
Managed care operates by tightly controlling costs and this means controlling access to care. Health maintenance organizations are networks of health care facilities whose services are contracted to the HMOs for an agreed fee.
Although it would seem logical that the term managed health care would mean that health care is managed, in fact it is often more a case of plan holders being managed, as they are normally required to seek their health care from within the HMO’s network and access to this health care is controlled by a single doctor to whom the patient is assigned. This frequently means that a patient's choice is severely limited and that a plan holder may have to join a waiting list for treatment.
In some limited circumstances plan holders will be allowed to seek treatment outside of the network but, when this happens, the HMO will usually require the plan holder to pay any costs which are considered to be above those which the HMO considers reasonable and customary for the treatment in question.
So, against this background, why would anyone choose a managed health care plan in preference to an indemnity health insurance plan, other than for reasons of mere cost?
The principle difference between indemnity health insurance and the managed care model is to be found in the cover provided. Indemnity health insurance is designed to cover the plan holder against unexpected, and frequently extremely high, medical bills arising out of an accident or serious illness. Managed care by contrast aims at providing preventative care and focuses its attention on keeping plan holders healthy by helping with the costs of routine medical care including such things as check-ups and vaccinations.
Obviously there are many situations in which one type of insurance would be more suitable than another. For example, if you are married and have a young and growing family then you may feel that focusing your attention on preventative medicine, particularly for your children, would make a managed care plan a good choice.
Community rating by class (CRC): The process of determining premium rates in which a managed care organization categorizes its members into classes or groups based on demographic factors, industry characteristics, or experience and charges the same premium to all members of the same class or group. See adjusted community rating (ACR).
Experience: The actual cost of providing health care to a group during a given period of coverage.
Open-panel HMO: An HMO in which any physician who meets the HMO's standards of care may contract with the HMO as a provider. These physicians typically operate out of their own offices and see other patients as well as HMO members.
Rebate: A reduction in the price of a particular pharmaceutical obtained by a PBM from the pharmaceutical manufacturer.
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