Smart Choices: How to Choose a Health Plan That's Right for You
By Carolyn M. Clancy, M.D.
June 3, 2008
Whether we're making big or small decisions, American consumers like to have options. This preference also applies to making decisions about health plans.
Having a lot of options about which health plan to choose can be confusing, because plans can be very different. All plans don't pay for the same services or pay the same amount for services. Not all plans include the same doctors, hospitals, and other care providers. On top of that, health plans also vary in what you have to pay out of your pocket. "Out of pocket" costs refer to the amount you pay before the health plan starts to pay for your care or the cost you share with your health plan.
When choosing a health plan, you should also consider the quality of care a plan provides. For the past decade, my agency, the Agency for Healthcare Research and Quality, has collected and reported data from patients on what they think about their health plans. Other groups track how well health plans do on key issues, such as helping patients quit smoking or control their blood pressure. These tools are available to the public and can help you make an informed decision.
Even though we know a lot more today than we did 10 years ago about health plan quality, it's a good idea to learn the basics about how health plans work. This will help you make an informed decision about your coverage—before you or a family member are faced with a medical emergency.
Today, more than half of all Americans who have health insurance are enrolled in a managed care plan. These plans usually cover a wide range of services. Costs are lower when patients use doctors and hospitals that are part of the plan. These are called "in-network providers."
There are three main types of managed care plans:
- Health maintenance organizations, or HMOs. Many of these plans focus on preventing diseases and staying healthy. If you join an HMO, you usually must receive all your care from network providers, except during a medical emergency. After you enroll, you will need to select a primary care doctor, who will manage your care and work with other health care providers you see.
- Preferred provider organizations, or PPOs. These plans let you choose doctors and hospitals that are outside of the network, but you will have to pay more yourself for your care.
- Point-of-service organizations, or POS. A newer type of health plan, POS plans use a primary care doctor to manage your care. They also let you choose doctors and hospitals that are not part of the plan, but you will need to pay more.
Because managed care plans have helped control health care costs, they have become more common than fee-for-service health plans that pay separately each time you get care. Fee-for-service plans let you choose any doctor or hospital you want, and you can switch doctors at any time. These plans cover just a part of your medical bills, and you have more out-of-pocket costs for some services than you would if you chose a managed care plan.
Another type of health plan you may have heard of is called consumer-directed coverage. These plans allow you and your family to have greater control over your health care, including what types of care you receive and how much you spend on services. Some of these, such as health savings accounts, require you to be covered by a plan that makes you pay a lot out of pocket before it starts to pay. Detailed information on these and other types of health plans are available in a new guide from AHRQ.
Regardless of the type of health plan you are considering, make sure you compare:
- How much the plan costs.
- What the plan covers and at what cost.
- Which doctors, hospitals, and other providers you can use.
- How you get after-hours and emergency care.
- What your out-of-pocket costs will be.
- Which medical conditions are covered and if any limits are put on what the plan will pay.
Choosing the right health plan is a big decision. By knowing more about the differences between plans and how they work, you'll make a well-informed decision that best meets your needs.
I'm Dr. Carolyn Clancy, and that's my advice on how to navigate the health care system.
Choosing a Health Plan (Transcript) Podcast Help
Questions and Answers About Health Insurance
A Consumer Guide
National Committee on Quality Assurance
HEDIS & Quality Measurement
Current as of June 2008
Smart Choices: How to Choose a Health Plan That's Right for You Navigating the Health Care System: Advice Columns from Dr. Carolyn Clancy, June 3, 2008. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/consumer/cc/cc060308.htm