Storytellers and filmmakers like to explore the concept of ‘what if’. For example, the Christmas classic It’s a Wonderful Life explores the idea of what the world would be like had the film’s main character never been born. It is an interesting story rife with possibilities. Here is another idea along the same lines: what if health maintenance organizations (HMOs) didn’t exist?
HMOs came to be with passage of the Health Maintenance Organization Act of 1973. The legislation required all employers with twenty-five or more workers to offer health insurance plans approved by the government. Nearly all those plans were structured as HMOs.
The entire HMO concept is one of saving money by offering preventative care. With that being the primary goal, history suggests that HMOs have been an utter failure. Healthcare costs have continued to rise much faster than inflation despite the HMO being the modern standard for health insurance. So what if the 1973 legislation had never passed?
Major Medical Health Insurance
Prior to the introduction of HMOs, health insurance was offered as a major medical policy. If you are at least fifty years old, you probably remember this model. Employers offered a health insurance plan that covered major expenditures only. You are talking things like surgeries, hospitalizations, and cancer treatments. Everything else was covered out-of-pocket.
If little Johnny had to go to the doctor for his annual checkup, mom and dad paid the doctor’s office directly. If little Susie needed glasses, mom and dad would cover the cost out of the family budget. Back then, health insurance was a lot more affordable because insurance companies were not shelling out billions of dollars on routine care.
Fewer Doctor Visits
If you are at least fifty years old, you may remember your parents talking about getting their first HMO insurance plan. They may have talked about how it would be nice to take you to the doctor whenever you were sick. Today, we think nothing of running to the doctor for every sniffle, hangnail, and upset stomach. The result is that more people see their doctors for more things.
Without HMOs there would undoubtedly be fewer doctor visits. That may not necessarily be a bad thing. Running to the doctor for an antibiotic every time you don’t feel well is not sound science. It is not sound healthcare. In fact, we are now reaping the consequences of over prescribing antibiotics.
Lower Healthcare Costs
These days, Dallas-based BenefitMall says that companies dread getting their new premium notices every year. They know healthcare costs are going up, they just don’t know how much. They dread having to figure out how they are going to pay higher health insurance premiums and still keep their employees happy.
Here’s something to consider – total healthcare costs could be lower without HMOs. If people actually had to pay for healthcare services out-of-pocket, they would be more careful to shop around. They would be less likely to run to the doctor unnecessarily. They would know how much services actually cost and would not stand for being overcharged. That is the way things used to be. And guess what? It worked.
If you want to know why healthcare costs so much these days, you can trace the answers back to that 1973 legislation. That is what started it all. And until we do away with the HMO system, nothing is going to change.
What would the world be like without HMOs? A lot like it was prior to 1973. Those days were good days, at least in terms of having affordable healthcare services virtually anyone could access.