Why the claim experience differs between individual and group health plans

The claim experience can differ between individual and group health plans due to several factors:

1. Risk Pool: Group health plans cover a large number of people, typically employees of a company or members of an organization. This large pool of people allows for a more diverse mix of healthy and sick individuals. Therefore, the risk is spread out among the group, and the overall cost of healthcare is lower. In contrast, individual health plans cover a smaller pool of people, which can lead to higher healthcare costs for individuals who have pre-existing medical conditions or are at higher risk for certain health conditions.
2. Negotiation power: Group health plans negotiate rates and discounts with healthcare providers and insurers. Due to the size of the group, they have greater bargaining power, which can result in lower costs for medical services and treatments. This can lead to lower premiums and cost-sharing for individuals in the group. Individual health plans typically do not have the same bargaining power, resulting in higher healthcare costs.
3. Underwriting: Group health plans typically do not require medical underwriting or a medical examination before coverage begins. This means that individuals with pre-existing medical conditions can still receive coverage. In contrast, individual health plans may require medical underwriting, which can lead to higher premiums or denial of coverage for individuals with pre-existing medical conditions.
4. Benefit Design: Group health plans may have more comprehensive benefit designs than individual health plans. This means that the group plan may cover more services and treatments, resulting in lower out-of-pocket costs for members of the group. Individual health plans may have more limited benefits and may not cover all necessary services or treatments.

Overall, the differences in risk pool, negotiation power, underwriting, and benefit design can lead to varying claim experiences between individual and group health plans.