Unfortunately, one of his employees, Stan, has had a heart attack and continues to need treatment. George decides that health insurance for his employees is simply unaffordable. However, to receive the federal corporate income tax break offered to companies offering insurance, he has to deduct the funds used to pay for the insurance directly from his payroll. And then, these employees wouldn't be able to afford comparable individual insurance. Stan could try to purchase health insurance from the Texas Health Insurance Risk Pool, an insurance program for persons who find it difficult to obtain insurance because of their medical histories.
Small governments face similar problems.
With a small group, the insurer's profits are slim, and profits can disappear if even one person has a medical emergency. Consequently, a single large claim can increase premiums to the point where a company is priced out of the market. If the employer looks for another carrier, the pre-existing medical condition of one or a few workers can make it hard to obtain good rates. If an employer has even one high-risk employee, however, an insurer may place premiums too high for the business to provide insurance for anyone. In 16 states, not including Texas, that have aggressively implemented reforms concerning insurance for small employers and individual citizens, the average annual growth in uninsured populations has been eight times higher than the average for the other 34.