Here’s a leech:
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What happened next is starkly summarized in a 1995 letter sent to Premera Blue Cross by a woman in Eastern Washington.
A few months before she gave birth that year, the woman bought an individual policy from Premera. As soon as the insurer paid her hospital expenses, the woman canceled the policy, telling Premera “we will do business with you again when we are pregnant.”
True to her word, in 1996, she bought insurance, Premera said, once again canceling after the insurer paid for the delivery of her next child.
Altogether, she paid in $1,807 in premiums. Premera paid out $7,024.68 in medical bills.
You don’t have to be a business genius to recognize the problem with those numbers when multiplied by thousands of customers.
Claims went up. Premiums rose. Pretty soon only sick people thought insurance was worth the cost. Premiums rose even more.
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