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Individual Health Insurance: PPO Insurances versus
HMO Plans

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Have changes on the job or in your personal situation left you in the search for private health insurance? You have come to the right place. Our user friendly search tools will take some basic information and match your needs with the best companies and policies in your area.

Premiums on private health insurance may seem expensive compared to group insurance but a couple of options that reduce the premiums somewhat are the PPO and HMO. These are both network programs which require you to use certain doctors, but these doctors have contracts to accept what the insurance is willing to pay as full payment minus a copay or deductible from the patient. While you will need to check the size of the network and be sure your doctor is included, you will probably find that a network plan is easier to locate and fund than the traditional fee for service.

PPO versus HMO
A PPO is a Preferred Provider Organization. When choosing a plan that limits your choice of doctors or hospitals, the PPO health insurance is preferable as a person can see any doctor in the network. The network, if you choose a major company such as Aetna, Bluecross, Cigna, Golden Rule, United Health and one or two others, is huge. That is, most of the doctors who participate in your state will probably be in these major networks. If you live in a state that has a few other companies, you may have to check the size of the network prior to purchasing the insurance. Most PPO plans will also allow you to see a doctor outside the network, but your share of the bill will be much higher.

HMO stands for Health Maintenance Organization. This approach to health care was started in 1971 by Nixon for what were primarily group health care plans. The premiums were quite low, and with the help of grants and loan guarantees, many employers at large companies were able to provide the insurance as one of the benefits of the job.

When an individual enrolled in an HMO, he /she first chose a primary care physician—called a gatekeeper—from a list of participating doctors. On an office visit, the patient paid a flat co-pay, often as little as $10.00. A hospital stay usually was covered at 80/20, and there was a maximum out of pocket after which all costs were covered by the insurance company.   Many people enjoyed the lower out of pocket costs of these plans—until they needed care beyond what they felt their primary physician (PCP) was providing. Getting a second opinion or visiting a specialist—even a chiropractor—was difficult and required a referral from the PCP. The PCPs would try various treatments before recommending the specialist because they were paid more for NOT sending people to specialists. In this way, at least according to the theory, the cost of health care was reduced as people would not see a more costly specialist until all less expensive options had been exhausted.

Blue Cross Blue Shield (BCBS) is the largest health insurance company in the country with each state having its own variation. They have worked in the PPO format for decades, so even if your insurance card does not say PPO Blue, it is likely that your plan has a network of doctors, hospitals, urgent care centers, diagnostic labs and even nursing homes. In fact, virtually the only doctors who would not be in the BCBS network are those who do not participate with insurance at all.

BCBS and other companies have also begin bringing back the HMO which has been somewhat out of favor in many states as neither patients nor doctors like the restrictions. However, if you can find an HMO, the premiums may be cheaper. With the government emphasis on care that is entirely managed by a government panel, it is not at all improbable that HMO may in the near future become the most common type of insurance available.

Deciding for yourself
As long as you and your doctors remain in charge of your healthcare, the HMO and the PPO will both provide quality care. Also, since the networks within each state are very large, you will most likely be able to get referrals from nearly any specialist you desire, even if you go with the HMO. The problem with either the HMO or PPO will reveal itself if you have to leave your state for a special type of care such as cancer treatment or therapy needed as a result of other serious diseases. In such a situation, the PPO would be your best coverage even though you may have to pay out of network prices.  At least within your state, you will be able to see any doctor in your PPO network with or without approval from your PCP.

PPO & HMO both easy to find
Private PPO and HMO insurance plans are plentiful although the PPO is certainly better known. For Medicare patients, most of the Medicare Advantage plans are now PPO, although some of those are now HMO.  Nearly all of the major players offer both for younger individuals, although sometimes you have to ask for the HMO. The two largest companies are Blue Cross Blue Shield and Aetna. Both companies have clients who are very satisfied and others who would give nearly anything to find another company. The satisfaction rate probably has less to do with the company than with the fact that most people do not really understand their policies and expect their insurance to pay much more than it is set up to do.