An HMO stands for Health Maintenance Organization, and refers to a particular type of health care plan that was founded in the United States. An HMO is different from traditional or typical health coverage in that it already specifies and gives doctors guidelines on how doctors should conduct their work in terms of dealing treatments and procedures. HMOs are a more affordable type of health care coverage when compared to traditional health insurance. But the trade off is that there are limitations to what kind of treatments are given or allowed.
The origin of HMOs happened sometime during the early half of the 20th century when businesses started giving their employees prepaid medical programs. These programs allow for the care of the patients as long as it is within the scope of the procedures allowed in the program. HMOs continued until the mid part of the century until slowly began to lose popularity in the 1960 and 70s. But HMOs presence in the US became more established with the passing of the HMO Act.
HMOs are able to give cheaper medical or health coverage mainly because of two things. First, HMOs contract certain health care providers who are contracted to join the HMO and then give large quantities of patients to these health care providers. Second, by removing treatments that the HMOs decide are not really important or crucial and by giving more emphasis in preventive health care. These are the factors that allow HMOs to drastically reduce the cost of health coverage.