I can’t give you exact numbers for an individual because it depends on the deductible but lets say the employer+employee cost is $400 a month for a zero deuctible plan. For a family plan, the total cost is closer to $1250 a month combined.
That is up to the person. I am only 36 and have gotten absolutely nailed by some of the rarest family health problems in the world for both me and my infant daughter. There is no way to see it coming. On the other hand, I trust my primary care doctor completely so an HMO wouldn’t be the worst thing in the world. Without the scientists in France however, I would not be able to have my now three year old daughter because it would be too risky. Blue Cross Blue Shield spared absolutely no expense on that ordeal. They even paid for an apartment inside of Children’s Hospital Boston for us to live in as well as all the Harvard doctors, geneticists and researchers that could be found. I am pretty sure that would not have happened under an HMO. It was money well spent.
I just checked the PPO box. The best doctors and nurses there are just flocked around and took care of the rest. You don’t need to get a PPO approved in the same way as an HMO. That is the biggest benefit if you really need it sometime.
HMO’s work for lots of people. That is all I can say.
That’s not really the question. I’m not interested in the differences between a single versus family plan. I’m curious what the difference is between a HMO and a PPO for our fictional John Smith when they both have identical deductibles. Gross approximations of course, I know there are a lot of variables. I’m just trying to get a general idea of what the total cost difference is between HMOs and PPOs in an apples to apples comparison.
Why exactly would you not have gotten that treatment through the HMO versus the PPO? Your PCP might have had to make the referral in the former case, but what about the PPO allowed you that special care that an HMO from the same company excluded? Is it something beyond the referral?
Does a PPO take the approval process out of the companies hands entirely? Is it true that an HMO could have refused a treatment that your PCP recommended?
I understand. I’m not trying to be contrary, I’m just trying to keep the discussion as big-picture as possible. John going on vacation to Hawaii and having to pay full price to get a non-emergency treatment probably isn’t going to completely alter the argument is all I’m saying.
Remember I’m trying to understand the system in the most general terms and deal with dollar figures in the long term. The annoyance of a extra doctors visit or having to pay full price for non-emergency treatment once in the life of the plan doesn’t dramatically change the landscape.
Just figure an extra a $50 - $100 a month for him and proportional for the costs of the company.
I might have gotten some of those benefits from an HMO but the insurance company gets involved directly in most serious cases. In a PPO, the doctors control it and just bill the insurance company. I doubt the benefits would end up the same but I don’t want to know it first-hand.
I doubt insurance companies companies never get involved in PPO plans. I am sure they do sometimes but HMO’s can certainly refuse treatments and perks. A PPO is is extra insurance that is supposed to cover that and that is why they cost more.
I think I jumped way too far into the big picture there. You’re right that the employee’s financial loss will stop when the deductible is met. But **someone **is now paying for an extra organ transplant/ month in traction/ whatever that could have been prevented. If we’re back to a small company, that just made a big difference in how much they’re up a creek with John’s diabetes. And while John is responsible for his own decision not to seek care, he probably does regret his choice.
The entire concept of preventative medicine and routine screening is a whole 'nother kettle of fish. But I’m pretty sure the debate and actuarial data for something like that won’t change too much between our current health care system and a theoretical nationalized one. It just shits the question of how much we as a country want to spend preventatively versus how much a private company decides they want to spend preventatively.
So without hijacking my own thread I’m trying to limit the ramifications to this particular patient, and to his company to a degree, and save the national and societal impacts and question for another day.
Choice of doctors. My employer offers choice of HMO or PPO. None of the doctors with whom I have long-established relationships are included in the HMO network. It’s worth the few extra bucks a month to me to keep my doctors.
Plus I have had some prior horrendous experiences with an HMO screwing up referrals and scheduling during a period when I was undergoing serious leg surgery and protracted rehab, and with my primary HMO doc disagreeing with my surgeon about appropriate treatment and therefore refusing to approve it.
As long as I have a choice in the matter, I will never be enrolled in an HMO again.
HMO networks are typically made up of physicians and facilities that sign contracts with the HMO to provide care to the HMO’s insured population. These contracts stipulate that the providers offer discounted rates to the HMO, in exchange for the HMO requiring that its members only receive covered care within this network. It’s essentially a volume discount for the HMO. If a member goes outside of the network, their SOL with respect to insurance coverage and usually have to pay the entire bill out of pocket. There are some exceptions for emergency situations and other services that must be covered out of network at all times due to state mandates, but this is generally true.
PPO’s typically have a network of preferred providers, under a similar contract situation as above. However, PPO’s offer two tiers of coverage to their members, depending on whether or not they use this preferred network. Cost sharing is cheaper within the network, more expensive outside, so in effect a member has an incentive to use the network because of lower copays. The PPO is charged full price for members seeking out of network services, and they charge members a higher copay to discourage out of network care when possible. In addition, their network also usually charges the PPO more than if the organization were an HMO due to the lack of an exclusive network and its associated volume.
As a result, PPO’s are more expensive than HMO’s, even given the exact same population and service mix, due to the less favorable contract situation.
An additional difference has to do with levels of medical management (think of referrals, prior authorizations, disease management, etc.) between the two organizations. HMO’s usually have a higher level of medical management, reducing medical costs at the expense of further restricting choice for the member, which also serves to make HMO’s cheaper.
This is an oversimplification, of course, but it should give the general idea.
Re HMO vs PPO
I’ve belonged to both . The only real differences are that with the PPO, I don’t need a referral to a specialist and I will have some coverage if I go to a non-participating provider. It’s not a matter of a higher copay if I go out of network - I’ll be responsible for whatever the doctor charges above the PPO’s payment, with no limit. The PPO requires preauthorization for certain tests and procedures just like the HMO did, and has denied authorization for a test for my daughter, and required that my son’s physical therapy be reauthorized after a certain number of visits. The only reason I switched was because for some bizarre reason, the PPO is much less expensive.
So far the thread has been very informative for me. It’s good to get an idea of what things cost. I’d still love to see some reliable estimates of what the total difference in cost between comparable HMOs and PPOs are, not just the difference in employee contribution. If the combined costs vary by 10-20% that’s one thing, if the cost doubles I find it unbelievable that a company would offer a HMO and a PPO side by side and/or that there isn’t a more universal understanding of what a employee would be giving up by opting for the HMO.
That said, I’d like to shift gears just a little.
Sticking with the original hypothetical where John has simple HMO coverage with a $1000 deductible. What is his treatment going to be like? What process is he going to have to endure during his first visit? What process does he have to follow when he gets medications and supplies? What process does he have to go through for his on going care? How does he navigate the HMO system? How does the system effect his treatment and monitoring regimen?
The difference is a lot closer to 20% than double. PPO’s are just a benefit and some employees really need them. Companies offer them to attract talent and often the people at the top want a PPO as well so they offer it and eat the additional cost. Many employees have few or any health problems so an HMO or even a Health Savings Account may help them keep their paycheck as intact as possible. I am job hunting right now and I literally cannot work for a company that has sub-standard health insurance. I would would have to cancel the interview process in the middle if I looked at the HR Benefits Package and it couldn’t do what I am probably going to need it to in the next few years to avoid wasting everyone’s time. There are lots of talented people in that situation so many large companies offer it.
I only know about the HMO experiences through the specs I have pored over for different companies and also through stories from co-workers and the media. There are probably some really good ones out there in practice but there are also lots of horror stories.