Insurance Company Concerns: Both Profit, and a Genuine Fear that Markets for Individual and Small Business Health Insurance could not Work:
- Insurance companies and plans did not believe that they could make a predictable and acceptable profit providing insurance to those individuals and small groups.
They were especially concerned about health insurance for individuals.
- Insurance plans were concerned that without some kind of governmental individual insurance mandate, the plans could never be sure that they would have enough healthy plan members to offset the yearly expenditures of the sick members.
They were afraid that if they tried to sell insurance to individuals and very small businesses, and there was no legally mandated individual health insurance, they would face a situation in which people would only join the plan if and when they were sick. This would prevent the health insurance plans from building up an annual store of premium funds sufficient to fully pay for care which would meet the health care needs of the insured individuals.
- This would result in expensive insurance (high and growing premiums for plan members), and large losses for the insurance plans, with the healthier plan members leaving these plans because too many individuals and small businesses would only buy insurance at the last minute when they really needed it.
- The fear was that this would result in a “Death Spiral” as healthier plan members left the plans, and those remaining in the plans would be sicker, and would not be able to pay sufficient premiums to cover their own care.