Question

In at least 150 words, explain why were HMOs formed?

Answer 1

Ans) HMO stands for health maintenance organization. HMOs have their own network of doctors, hospitals and other healthcare providers who have agreed to accept payment at a certain level for any services they provide. This allows the HMO to keep costs in check for its members.

- The new year begins as employees begin a process called open enrollment–when many employees designate a health plan through their employer. Unfortunately, most are forced to enroll in a managed care plan, i.e., an HMO or PPO. That’s right: force actually lies at the core of today’s health care system.

- From their beginnings, HMOs were designed–by Democrats and Republicans–to eliminate individual health insurance. The result is a vast network of health care collectives (HMOs, PPOs, Point-of-Service plans) created by government that are destined to do harm to individuals.

- The individual was first discouraged from buying insurance in 1942 when employee health premiums were made tax deductible to employers–not to individuals. Congress created Medicare in 1965, making individual insurance for those over 65 obsolete. Subsidized, unrestricted health care for seniors lead to an unprecedented frenzy of spending by patients and doctors.

- Costs went up, introducing an economic obstacle to individual health insurance. As costs rose, those on the New Left, including then freshman Sen. Ted Kennedy, argued that government ought to pay for everyone’s health care and promoted the idea of a health maintenance organization, a term coined by a left-wing college professor.

- President Nixon appeased the left and proposed the HMO Act, which Congress passed in 1973. The law created new, supposedly cheaper health coverage with millions of dollars to HMOs, which, until then, constituted a small portion of the market. Kaiser Permanente was the only major HMO in the country by 1969 and most of its members were compelled to join through unions.

- Combined with Medicare, the HMO Act eventually eliminated the market for affordable individual health insurance.

- The new managed care plans mushroomed with federal subsidies. Employers perceived managed care as less expensive than individual insurance and stopped offering a choice of plans, making insurance more expensive for the individual. The government had effectively instituted HMOs, at the insistence of the left and the capitulation of conservatives and pragmatic businessmen..