Health Maintenance Organizations (HMOs) offer a different model of healthcare financing where providers are paid a fixed amount per enrolled patient, aiming to reduce moral hazard and incentivize efficient care.
The subject of this question is about Health Maintenance Organizations (HMOs) in the context of health care financing. HMOs are a type of health insurance plan that provides healthcare using a fixed payment structure. Under an HMO, healthcare providers receive a set amount of money per patient enrolled, regardless of the number of services provided. This system contrasts with the traditional fee-for-service approach, where providers are reimbursed based on the individual services they render. The shift to HMOs aims to reduce moral hazard by giving healthcare providers an incentive to limit the quantity of care provided, as long as it does not lead to worse health outcomes. Today, many doctors receive compensation through a combination of managed care and fee-for-service, balancing the fixed payments per patient with additional reimbursements for specific treatments.