Search form


HMOs: Health Care Cost Containment

Useful Resources

HMOs: Health Care Cost Containment

December 16, 2008

Health Maintenance Organizations (HMOs) are a form of insurance-financed managed care. In a managed care system, a health insurance plan pays a closed network of doctors and hospitals an annual rate for each enrollee regardless of how much health care that enrollee uses. If a group of enrollees uses less health care than the insurance company paid for in advance, the doctors and hospitals keep the difference as a bonus. This system is called "capitation." A primary care doctor typically acts as a gatekeeper for an HMO enrollee and refers him to a closed network of specialists when necessary. Theoretically, managed care should keep health care costs down by providing doctors with incentives to keep their patients healthy and avoid expensive hospital care. HMOs became very popular in the late 1980s and throughout the 1990s as a cost-containment method, but in recent years, patients began to revolt against them. Some patients didn't like the closed provider network, and others questioned their physician's and insurance companies' motives when they were denied care. Almost 64.5 million people belonged to an HMO as of July 2008, according to, a website sponsored by the Henry J. Kaiser Family Foundation. This is their most recent estimate as of August 2009. Updated February 2010


Medicare is facing a demographic tsunami of Baby Boomers. And seniors are living longer, with more disabilities. What will this mean for Medicare’s long-term finances? This webinar will look at the major challenges facing Medicare in the coming years. Sign up here.

We've opened recruitment for our all-expenses-paid 2016 California Health Journalism Fellowship, to be held in Los Angeles March 6-10, 2016. Apply now for a $1,000 reporting grant and five days of information-packed seminars, workshops and field trips on California's health care challenges. Click here for details.

We’ve grown considerably since we began in 2004 at the University of Southern California’s Annenberg School of Journalism, and we’re thrilled to announce we now have a new name and new look for our website, formerly known as Reporting on Health.


Member Activities

Michael LaForgia has shared a fellowship project

Read it.

Liza Gross has added an award to their profile

Michelle Levander has shared a blog post

Read it.

Samantha Caiola has shared a blog post

Read it.

Lisa Pickoff-White has shared a blog post

Read it.
More Member Activities

Follow Us