Health Maintenance Organization Act of 1973 - Principles

Principles

President Richard Nixon signed bill S.14 into law on December 29, 1973.

It included a mandated Dual Choice under Section 1310 of the Act.

Health Maintenance Organization (HMO) is a term first conceived of by Dr. Paul M. Ellwood, Jr. The concept for the HMO Act began with discussions Ellwood and his Interstudy group members had with Nixon administration advisors who were looking for a way to curb medical inflation. Ellwood's work led to the eventual HMO Act of 1973.

It provided grants and loans to provide, start, or expand a Health Maintenance Organization (HMO); removed certain state restrictions for federally qualified HMOs; and required employers with 25 or more employees to offer federally certified HMO options IF they offered traditional health insurance to employees. It did not require employers to offer health insurance. The Act solidified the term HMO and gave HMOs greater access to the employer-based market. The Dual Choice provision expired in 1995.

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