All insurance depends on spreading risk across a large population of people who may not use it so we can pay the claims for those who do use it. For decades medical insurance companies have used “risk pooling” to group similar risks together so they can provide affordable coverage to their clients. In many cases a process called “Multiple Employer Trust” was used to offer medical coverage to employer groups. These were all risk spreading methods. In addition multiple plans were offered in the same employer to provide employee choice. And then the term “Exchange” came into the lexicon.
Each of these may in fact be a very good deal but you need to look at motivation and how they get paid. Never forget money into the business must always exceed money going out. So if something is offered for free then something else of value may be overpriced to make up for the financial shortfall. Even Walmart knows this equation when they run a “Loss Leader”. Continue reading