> insurance operates best at more scale, not less: first and foremost, the larger the pool, the more risk can be spread, as well as obvious efficiency gains in

> insurance operates best at more scale, not less: first and foremost, the larger the pool, the more risk can be spread, as well as obvious efficiency gains in administration. This may be true from the perspective of the insurance companies, but it does not mean that premiums will be lower with a larger risk pool. The global risk pool includes elderly and disabled people whose risk is paid for by healthy people. Smaller risk pools of more homogenous populations can result in lower overall premiums since they do not need to cover the highest risk individuals. For example, a corporation is comprised of employees almost entirely under retirement age, many age 20-30, and in relatively good health. This is why companies are able to offer HMO plans, because by isolating their risk pool they can more precisely model actuarial risk and thus save on premiums. It’s not how large a risk pool is that determines premiums, but rather the distribution of risk within that risk pool.