Is it time to switch to an HMO Plan?

by John Hansen

It is a question of HMO vs PPO. Rates on PPO plans are getting painfully high, and there is no hope in site that they will go down. So many California consumers are expected to switch to an HMO Plan in Open Enrollment 2017.

Rate Increases Driving People Away from PPO Plans

Covered California announcements that their average rate increases will be around 13% in 2017. The leading PPO carriers, Anthem and Blue Shield, are much worse.

Anthem Blue Cross of California announced that its rates are going up on average 17.2%. Blue Shield of California announced that its rates will rise on average 19.9%.

Keep in mind that these are not ceiling limits. These are averages. That means that many California consumers will experience rate increases of over 20% on new and existing health plans.

That will send them shopping. During Open Enrollment from November 1, 2016 to January 31, 2017, Californians will go storming into the health insurance marketplace with one agenda: get cheaper health insurance coverage.

With that agenda as the driving motivation, it will be difficult for many to keep justifying the higher premiums they have to pay to maintain PPO coverage. So many, some for the first time ever, will be considering switching to an HMO Plan.

PPO lovers like the freedoms their coverage offers. They have a wide-range of doctors to choose from. They don’t have to go through the gateway Primary Care Physician (PCP) in order to see a specialist.

However, their commitment to staying PPO is being challenged more and more as the price tag goes up.

HMO Plans Mean Managed Care and Lower Rates

Consumers looking to save money are going HMO! The Health Maintenance Organization (HMO) model requires patients to get referrals in order to see a specialist.

Medical care is managed. This allows carriers to maintain lower costs, which they in turn pass on to consumers by way of cheaper health insurance rates.

“But I want to manage my own care!” Yes, understood. But you need to know that, with health insurance, you are put into a pool of people. Based on the health care usage of that pool, your rates go up or go down.

Maybe you want to manage your own healthcare, but it’s in your best interest for everyone in your pool to be managed by the HMO Plan and their personal Primary Care Physician.

So, where will people go?

Many will stick with Anthem Blue Cross or Blue Shield and just switch to one of their HMO plan offerings. The blues specialize in PPO coverage, but they also have HMO’s.

Psychologically, this will be less traumatic. These consumers are comfortable with Anthem Blue Cross/Blue Shield. Even though it’s not a PPO, it’s still blue.

Other California consumers will switch to one of the top three leading HMO’s depending on their budget. If they’re willing to spend a little more, they’ll go with the highly rated Kaiser Permanente California or SHARP.

These high end HMO Plans offer excellent service and high quality of care. As far as health care outcomes and recovery rates, the PPO’s cannot compete.

For many, going HMO means better quality of care and lower rates.

Also, Kaiser and SHARP plans offer a one-stop-shop experience that many consumers have grown to love. Insured members can see a doctor, visit a specialist, go to Emergency, pick up prescription drugs and go to the hospital all in one convenient location.

Going Cheap? Go with the Molina HMO.

If California consumers are really looking to lower their premiums, they’ll likely switch over to one of the fastest growing HMO’s in the state, Molina Healthcare California.

Molina specialized in government assisted health insurance coverage through Medicaid, Medi-Cal and other programs. So, when the Affordable Care Act (ACA) came into play, they were well positioned.

They have basically taken the market in Florida. They’re strong in Texas. In California, Molina insurance sales started quietly in 2014 and 2015. However, in 2016 they priced themselves very well and took a lot of market share from Health Net.

Molina offers only HMO plans with managed care health insurance coverage. They only offer on-exchange plans. Government assisted medical is their niche. That’s what they do well, and they’re sticking to it.

So, during the 2017 Open Enrollment Period when lots of angry consumers charge into the marketplace looking to save money, they are going to find Molina, which for many will be the cheapest health insurance available.