Groups formed to get medical insurance

[chas4423]

I live in Arizona. I have checked with Nevada. In the health insurance game, it appears that the more people listed on a policy, the lower the cost per person. Do all states have laws that preclude people or companies from forming huge non profit groups with the expressed purpose of obtaining health insurance?

Charles Johnson
[email protected]

 

[ALawyer]

Among the reasons large groups cost less are:

1. The group typically handles some of the billing and collection and administration of the policy, and commission rates on group coverages are MUCH lower than on individual policies.

2. Usually there is many other reasons OTHER than getting insurance for people to join a group and that limits adverse selection.

3. Many groups are employer based and people who are employed full or part time are healthier than those not employed.

It is usually the INSURANCE COMPANIES that don't want phony groups created just to get coverage. Also, the lobbies for the insurance agents are very powerful -- the typical good insurance agent knows his or her state senator and assembly person-- and they have influenced legislature and regulators to ban artifical groups as such groups typically cut the agent out of the lucrative commission loop.