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Health Insurance–what’s the difference between an HMO and a PPO?

07-18-2008 by Colleen King

Health insurance is never a simple thing, but the things that really make in complicated (in my mind) most people never encounter. The difference between an HMO and a PPO is pretty simple, but NOT if you don’t deal with it regularly.


  


Health Maintenance Organizations (HMOs) are where you select a primary care physician (PCP) and they coordinate your care, whether it’s hospitalization, referrals to specialists, you name it. They hospitalize you in the medical group’s hospital, refer you to specialists within in their medical group, and only go outside the ‘network’ if there isn’t a specialist that can handle something very complex.


Preferred Provider Organizations (PPOs) also have a network of doctors and hospitals, but you aren’t tied to a selected or assigned PCP. You choose who you see, and when. You can see non-network doctors and go to non-contracted hospitals but you pay a larger share of the cost.


Which kind of plan is better? Depends on your perspective. Many think HMOs don’t cover ‘anything,’ when in reality, from a financial perspective they cover more than a PPO. You just have a smaller network to choose from because that’s part of the cost containment mechanism.


People burn through the $$ often time with PPOs, but they have more latitude in who they see. In individual health insurance, at least in California, HMOs are more expensive than PPOs. But in group health insurance HMOs are less expensive.


So again, which is better? Ask 10 people, you’ll probably get 7 different answers. There’s a lot to consider specific to your situation. A good agent can help you evaluate your needs and make recommendations. If you’re in California and you don’t have an agent, feel free to drop me a note.


Be well!



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