Tumblr Icon RSS Icon

Reinventing The HMO

Posted on  

"Reinventing The HMO"

Share:

google plus icon

The Stewart Community Choice health care plan concept, being launched in Massachusetts, seems like an obvious future step for a financially constrained world. They’ll be essentially offering people lower insurance premiums if they accept less choice of where they accept treatment. It makes sense as a matter of business, but as Sarah Kliff writes we’ve arguably seen this movie before:

Health insurance companies have made wagers similar to Steward’s in the past – and lost. Most notably was the rise of Health Maintenance Organizations, or HMOs, in the 1990s. The plans offered a similar trade off between choice and cost. And while they flourished for a few years, consumer backlash against limited options has led to HMO enrollment declining steadily for over a decade now.

This whole episode in American life is, in my view, under-discussed. After all, the HMOs were supposed to reduce cost. And the HMOs worked. But people have spent the past ten years voting with their feet away from this option. You often hear arguments about health care costs invoke the fact that the health care sector benefits from lots of explicit and implicit subsidies, which is true. But those subsidies weren’t suddenly created at the moment the worm turned on the HMO issue. People seem to quite authentically prefer, in the circumstances of 21st century America, to spend a large share of their marginal dollar on health care services.

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.