Health Maintenance Organization

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Running head: INFLUENCE OF HMO'S
University of Phoenix

The term Health Maintenance Organization (HMO) was developed in 1970 as part of the Nixon Administration to promote the growth of prepaid plans as a way to improve the nation’s health system. The Health Maintenance Organization has an appearance on the outside of being very appealing to those with little money to spend on insurance because it has a very low premium cost, but the truth be known that sometimes cheaper is not always better. In this paper I will discuss how HMO’s have influenced current healthcare systems.

Influence of HMO’s
HMO stands for Health Maintenance Organization and was designed by Congress to eliminate individual health insurance. After President Nixon proposed the Health Maintenance Organization Act Congress finally passed the Act in 1973. The new law supposedly created cheaper health coverage with millions of dollars going to HMOs. Combined with Medicare, the Health Maintenance Organization Act helped provide the market affordable individual health insurance. Employers stopped offering a choice of plans since managed care was less expensive than the individual insurance, making insurance more expensive for individuals. There is an advantage for HMOs because health plans have lower health premiums for both the employee and the employer. Because of these lowered costs, HMOs are very attractive and many employees will choose them. Another advantage is that there is no deductable for the patient. The only thing that is required is prescribed co-pay usually in the amount of 15 to 20 dollars a visit. HMO does also cover most prescriptions for co-pay as low as 2 dollars in most cases. Another positive aspect about HMO is that they pay for most programs that are designed to keep an individual healthy such as yearly checkups or gym memberships. By being pushed into managed care by employers, the individual patient is powerless. Because of the concerns of rising...
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