Therefore, under guaranteed issue, insurers must compensate by raising premiums for everybody with individual coverage. Typically, this premium hike encourages healthier people with individual health insurance who anticipate few health risks to drop their coverage. Under guaranteed issue, the individual market can become, in essence, the 'market of last resort' for any individual who does not obtain insurance from another source. Insurance companies remaining in the market find that their healthier subscribers leave the marketplace because they no longer find coverage to be affordable. Rates then rise, since the remaining older population no longer is balanced by a younger and healthier membership base.
Individuals seeking coverage find fewer available choices and products.
The remaining choices frequently have higher deductibles and cost-sharing. In the individual market, the costs of the individual can only be spread among those in the individual pool. Community rating in the individual market does not reduce the total cost of providing health coverage within a particular community, it just changes how that cost is distributed. Much of health care in the individual market is paid with after-tax dollars. In the group market, the health care costs can be spread among the members of a given group.