What is a primary purpose of group health insurance?

The primary purpose of group health insurance is to spread risk across a large group of individuals. This means that the costs associated with healthcare are distributed among all members of the group, which helps to make insurance more affordable for each person involved. By pooling together a diverse group of insured individuals, the insurance company can calculate premiums based on the overall health and claims experience of the entire group rather than relying on the health status of individuals. This can lead to lower premiums for the group as a whole compared to individual insurance policies, which can be more expensive due to the individual risk assessment required.

In this context, while insurance for one individual at a low cost might be an attractive feature, it is not the primary purpose of group health insurance. Additionally, while group insurance does help manage risk, it cannot eliminate risk for individual members completely; rather, it mitigates some aspects of that risk through the law of large numbers. The idea that all employees would pay the same premium is also not necessarily correct, as premiums can vary based on several factors, including age, health status, and specific plan options chosen within the group insurance framework.