What is a Health Maintenance Organization (HMO)?

A Health Maintenance Organization (HMO) is best defined as a type of health insurance plan that requires members to use a network of doctors and hospitals for their healthcare services. This structure typically emphasizes coordinated care and preventive services, encouraging members to select a primary care physician (PCP) who becomes the primary point of contact for their healthcare needs. Members must generally obtain referrals from their PCP to see specialists within the network, which helps streamline the management of their healthcare.

The design of an HMO aims to maintain lower healthcare costs for both the insurer and the members by promoting the use of a confined network of healthcare providers. This approach helps in managing costs effectively when compared to other plan types that might allow broader access to out-of-network providers at a higher cost to the member.

In contrast, the other options describe different models or characteristics in healthcare coverage. For instance, plans that do not require the use of a specific network generally refer to other plan types like Preferred Provider Organizations (PPOs) which allow more flexibility. Flexible plans that cover all healthcare services without restrictions are not characteristic of HMOs. Lastly, a government-funded health service provider does not accurately describe HMOs, as they can be private organizations as well. Understanding these distinctions reinforces the specific nature