Compared to other common health insurance plans, such as preferred provider organizations (PPOs), HMOs are generally less expensive. HMOs provide medical care for their patients for a prepaid fee. įrom a patient’s perspective, HMOs represent a potential option for health insurance. Following the passage of the HMO Act, HMO enrollment increased from approximately 6 million in 1976 to over 29 million in 1987. This structure intends to yield lower health care costs by, for example, motivating the transition of inpatient care to outpatient care when appropriate and the utilization of less expensive and fewer unnecessary medical interventions.
HMOs are designed to accomplish these goals by integrating health insurance and health care delivery within the same organization and thus aligning the incentives of the health care payer and provider. health care and simultaneously decreasing costs. The HMO Act offered funds to support HMO development with the hope of improving overall U.S. Ellwood’s ideas, ultimately leading to the passage of the HMO Act in 1973. The Nixon presidential administration supported Dr. Paul Ellwood, a Minnesota physician, is credited with championing some of the major concepts of HMOs, such as rewarding health care providers and organizations that emphasized maintaining their patients' health.
Preventative medicine was not a prominent idea in health care at the time. motivated innovation in health care delivery. In the years preceding the HMO Act of 1973, rising health care costs and feelings of inferior care quality in the U.S.
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