What is the primary function of group health insurance?

The primary function of group health insurance is to reduce healthcare costs for a larger group. This is achieved through risk pooling, where the health insurance costs are spread across a number of individuals, allowing for lower premiums compared to individual policies. In a group plan, the insurer underwrites the risk of the entire group rather than assessing each member's risk individually. This can lead to economies of scale, which in turn helps to keep the cost of insurance affordable for all members of the group.

Additionally, group health insurance often provides basic coverage that meets essential health benefit requirements, helping ensure that members of the group have access to necessary healthcare services without the burden of high out-of-pocket expenses. This feature makes group health insurance an attractive option for both employers and employees, as it promotes health and wellness at a reduced cost.