Affordable Quality Medical Services: Is It Possible?

In the media, we would see medical professionals such as physicians getting lambasted for the exorbitant fees that they allegedly charge their patients. Even the Bureau of Internal Revenue (BIR) capitalizes on this public perception by placing television advertisements that depict physicians as irresponsible and greedy tax evaders. Of course, as with all other taxpayers, such an accusation is not without basis. However, we really cannot blame physicians, hospitals and other medical service providers for charging relatively high fees because of the amount of expenses they have incurred in acquiring their medical degrees, equipment, facilities, and other related tools of the trade. The thing is, whether you agree with their professional rates or not, the fact remains that availing adequate medical services either from hospitals, clinics, or through house calls entails that you shell out a substantial amount of money, which may ruin your budget and cripple your cash flow. The bad news is that we are all mortal humans and are therefore susceptible to various sicknesses and diseases. Heck, even Superman gets sick when exposed to Kryptonite!

However, the good news is that there are certain financial products that can help ordinary persons such as rank-and-file employees and contractual workers avail of otherwise costly medical services for a fraction of a price. These financial products come in the form of health maintenance organizations (HMO) and health insurance. For a small amount referred to as premiums, HMO members and critical illness insurance policy owners do not need to carry the burden of their own medical expenses nor that of their dependents if so covered by their plan.

Nonetheless, many people still get confused between health or medical insurance and HMOs. Some of them even think that HMOs are a sort of a pre-need plan much like education plans and memorial plans. Such confusion is exacerbated by the issuance of Executive Order 192 on November 12, 2015, which transfers the regulation and supervision over HMOs from the Department of Health (DOH) to the Insurance Commission (IC). Although a good move by PNoy, it really does not help when the IC division in charge thereof is the Pre-need Division, albeit temporarily.

Moreover, such confusion in the minds of our countrymen may cause some unnecessary damage to both industries in that health/medical insurance operates differently from that of HMOs. People desiring one or the other may be made to invest in a product that they did not intend to get in the first place then put the blame on the entire industry when they fail to receive the services or reimbursements they require.

According to Investopedia, “health maintenance organization is an organization that provides health coverage with providers under contract. A Health Maintenance Organization differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health providers have the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO’s members.

HMO’s are believed to have been started in the early 1900s when companies began to offer employees plans of prepaid medical service, and have done very well since. The HMO Act of 1973 helped to cement the HMO into the U.S. health system by providing grants to start or expand HMOs, removing many restrictions imposed by the individual states, and required employers with more than 25 employees to offer a federally-certified HMO to employees.”

So which is better, HMO or health insurance? Neither, actually. HMOs and health insurance should not be perceived as exclusive from each other moreso as competitors. Inasmuch as health insurance policies provide higher benefit coverage than HMOs, the latter serve as a primary defense against medical costs because HMO members do not need to shell out their own money unlike in a health insurance policy which reimburses the insured only after they have paid for the hospitalization or medical services themselves. Therefore, as a financial planner, I would recommend that people both sign up with a reputable HMO and purchase a life insurance policy with a critical illness rider in order to cover for the medical expenses that may exceed the maximum benefit limit of the former.

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Terence Camua is a lawyer and a registered financial planner of the RFP Institute Philippines. He is likewise the senior vice president for operations of IMS Wellth Care, Inc. For questions on law or personal finance, e-mail him at teng@personalfinance.ph or terence.camua@lawyer.com.

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