Which of the following best describes the difference in cost between individual and group health insurance?

Group health insurance often has lower premiums because it is purchased by employers or organizations on behalf of a group of individuals, which spreads the risk among a larger pool of insured individuals. This collective bargaining typically allows for reduced rates as insurers are less exposed to the risk of high costs associated with a smaller group. Additionally, group plans benefit from lower administrative costs per person compared to individual plans, as they involve less underwriting and may include benefits that are standard across the group, contributing to overall cost savings.

Individual health insurance plans, while offering more tailored options for individuals, often come with higher premiums. This is due to the risk being concentrated on a single person or family, and the insurer facing less predictability in the potential claims that may arise. Furthermore, individual plans might not provide the same level of benefits or cost-sharing arrangements that are common in group plans, which can further lead to higher overall costs for the insured.

Overall, group plans are designed to be more affordable primarily due to the larger risk pool and associated economies of scale, making them a popular choice for employees and their families.