Basic Information About Managed Care

Remember that insurance companies are financial institutions, not charitable ones. (They may have commercials that say they care about you, but so do your bank and electric company. Do you believe them?) Insurance companies exist to make money, and if they lose money, they can't pay your bills.

HMO's are insurance company "products" that your employer purchases. The insurance companies usually have a variety of products, and your employer chooses which you are offered.

That being said, insurers often use their popular products to sell their dog plans. If your employer wants to have one company's traditional product, it may not be able to buy it if it doesn't have a certain percentage of its employees in that company's HMO.

However, it must offer the same plans at the same terms to all employees - if a full-time executive can get Green Cross/Green Shield for $50 a month, then a full-time file clerk can, too. They can give it to them without their paying taxes on the value of the company's contribution, but in turn, no one can change plans more than once a year.

HMO's, at their core, are hospitalization insurance. You enroll in insurance to pay bills if you are so ill -- and have expenses so high -- that you could not hope to pay them on your own. God forbid you ever get your money's worth on your health insurance! The difference between HMO's and traditional health insurance is that they will pay for less expensive preventive care as a trade-off for expecting you to allow them to control the costs of the more expensive care.

Traditional insurance never paid for pap smears, mammograms, baby shots, office visits, cholesterol levels, prescription drugs, etc. - in fact, it didn't cover anything that didn't happen in a hospital. So doctors admitted patients for long hospital stays for tests that could easily have been done as an outpatient. Insurance companies had to find a more logical way of arranging things, and HMO's are one of those ways.

Notably, health insurance is not long-term care insurance. Once you recover enough from an illness to be able to go to a nursing home, your plan will stop paying for hospital care. Since medicine is increasingly successful at keeping people alive long enough to get out of the hospital, a long-term care insurance policy is a very good idea. That's especially true for young people, whose needs could be very long term, and who have young families -- families who won't want to have to go on welfare to get nursing home care covered for a disabled spouse or parent. A good long-term care plan will pay for things that keep you out of a nursing home in the first place, like modifications to your home or daily home health aide services.

Since your insurance would be extremely expensive if everyone could get anything they wanted from any doctor at any price, it is to your advantage that there be some management in "managed care." But it is important to know how your plan manages that care to be sure you can live with its strategies.



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©2000 Eileen K. Carpenter, MD