What is the main purpose of risk pooling in health insurance?

The main purpose of risk pooling in health insurance is to help manage the costs of insurance coverage. Risk pooling involves combining the risks of many individuals to create a collective risk. By pooling resources, insurers can spread the financial risk associated with healthcare costs over a larger group of people. This means that while individual members may have varying healthcare needs and costs, the overall financial burden is shared, helping to stabilize insurance premiums and making coverage more affordable for all members of the group.

In a well-functioning risk pool, healthier individuals contribute to the costs associated with those who require more medical attention, which ultimately allows for greater efficiency and sustainability within the health insurance system. This collective approach is essential in making healthcare accessible while maintaining a balance in cost distribution among members.