[eleusive]

For one, it reduces the effects of adverse selection[1]. The idea is that everyone reaps economic benefits through such programs, as an average company will have a pool of workers, some who are "healthy" although others may have medical problems.

Compare this to a individuals wanting health insurance - if they're young and healthy they're less likely to want to pay much for insurance, which leaves older and sicker people to pay higher and higher premiums. Of course this is really only an issue with privatized insurance and is a great argument for having a single-payer solution.

[1] http://en.wikipedia.org/wiki/Adverse_selection

[yummyfajitas]

Compare this to a individuals wanting health insurance - if they're young and healthy they're less likely to want to pay much for insurance, which leaves older and sicker people to pay higher and higher premiums.

That's NOT what adverse selection is. That's simply actuarial pricing - everyone pays for their own risk.

Adverse selection is caused by information disadvantage - the party buying insurance has information the insurance company does not have or is unable to incorporate into the price. https://en.wikipedia.org/wiki/Adverse_selection

The main cause for adverse selection in health insurance markets are regulations against pricing in various forms of pre-existing conditions.

[eleusive]

That's NOT what adverse selection is.

It's absolutely an adverse selection problem - insurance companies, as you say, can't necessarily price based on your existing health condition (not only because of regulations, but also because of asymmetrical information which is too costly, if not impossible to obtain).

As a result, healthy people will choose not to purchase health insurance, since due to the adverse selection problem, there doesn't exist a mutually beneficial transaction for both parties (insurance policies have to price for the average due to the lack of health data, which is economically disadvantageous for the healthy to take). And thus begins the adverse selection death spiral[1]

http://en.wikipedia.org/wiki/Death_spiral_%28insurance%29