Latesha Moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a​ $250 deductible and an HMO that charges a ​$10 ​co-payment per visit plus a ​$20 monthly premium deduction from her paycheck. Latesha anticipates seeing a doctor once a month for her high blood pressure. The cost of each office visit is ​$70. She normally sees the doctor an average of three times a year for other health concerns. Comment on the difference in costs between the two​ health-care plans and the advantages and disadvantages of each.


To determine the costs and weigh the advantages and disadvantages of each plan, let’s analyze both options in detail based on Latesha’s anticipated medical visits.

### 1. **Traditional Health Insurance Plan**

- **Deductible**: $250
- **Coverage After Deductible**: 80% of each doctor visit’s cost
- **Cost per Doctor Visit**: $70
- **Anticipated Visits per Year**:
  - **Monthly High Blood Pressure Visits**: 12 visits
  - **Other Health Concerns**: 3 visits
  - **Total Visits**: 12 + 3 = 15 visits

#### Calculation
1. **Initial Out-of-Pocket Cost** (to cover deductible): $250
2. **Remaining Visits** After Deductible (15 visits - deductible met within 4 visits):
   - After covering the deductible, 11 visits remain.
   - Latesha will pay 20% of each visit after the deductible: 20% of $70 = $14 per visit
   - **Total for Remaining Visits**: 11 visits x $14 = $154
3. **Total Cost with Traditional Insurance Plan**:
   - Out-of-pocket for deductible: $250
   - Out-of-pocket for remaining visits: $154
   - **Total Annual Cost**: $250 + $154 = $404

### 2. **HMO Plan**

- **Monthly Premium**: $20
- **Co-Payment per Visit**: $10
- **Total Annual Premium Cost**: $20 x 12 = $240
- **Annual Doctor Visits**: 15 visits

#### Calculation
1. **Total Co-payment for Visits**: 15 visits x $10 = $150
2. **Total Cost with HMO Plan**:
   - Annual premium: $240
   - Co-payments: $150
   - **Total Annual Cost**: $240 + $150 = $390

### **Comparison and Commentary**

- **Traditional Health Insurance Plan**:
  - **Total Cost**: $404 annually
  - **Advantages**:
    - Covers a broader range of medical expenses beyond doctor visits.
    - Can be beneficial if Latesha expects more expensive or frequent medical needs beyond regular visits.
  - **Disadvantages**:
    - Higher out-of-pocket cost ($404), primarily due to the deductible.
    - Less predictable costs, as the deductible must be met first, and each visit has a partial cost (20%).

- **HMO Plan**:
  - **Total Cost**: $390 annually
  - **Advantages**:
    - Lower annual cost ($390).
    - Fixed, predictable co-payment per visit and lower overall premium.
    - Easier budgeting with straightforward $10 co-payment per visit.
  - **Disadvantages**:
    - Limited provider network and potentially fewer covered services.
    - May restrict access to specialists without referrals, depending on the HMO policy.

### **Conclusion**
The HMO plan has a slight cost advantage ($390 vs. $404). Additionally, it offers predictable payments and lower initial costs, which may be beneficial if Latesha primarily needs routine visits and values cost consistency. The traditional plan, while slightly more expensive, could offer broader coverage and more flexibility in provider choices if her health needs change or increase significantly.

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Would you like a deeper breakdown of any part of this analysis?

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**Relative Questions:**

1. How would increasing the number of annual doctor visits affect the total cost of each plan?
2. What if the deductible for the traditional plan changed? How would this impact the analysis?
3. How would this analysis change if Latesha had to see specialists regularly?
4. What additional out-of-pocket costs might arise under the HMO plan?
5. How would higher medical costs per visit (e.g., $100 instead of $70) influence each plan’s appeal?

**Tip:** When comparing health insurance plans, always consider not just the regular doctor visits but also potential unexpected costs to see which plan may better meet your needs in the long run.

Latesha Moore has a choice at work between a traditional health insurance plan that pays 80 percent of the cost of doctor visits after a $250 deductible and an HMO that charges a $10 co-payment per visit plus a $20 monthly premium deduction from her paycheck. Latesha anticipates seeing a doctor once a month for her high blood pressure. The cost of each office visit is $70. She normally sees the doctor an average of three times a year for other health concerns. Comment on the difference in costs between the two health-care plans and the advantages and disadvantages of each.

Understand the cost differences between a traditional insurance plan with deductible and co-insurance and an HMO plan with fixed co-payments. Explore Latesha’s example with anticipated visits, and see how each plan affects her overall healthcare expenses. Ideal for students in Grades 11-12 exploring practical applications of comparative analysis and budgeting.

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