Insurance Company

• Issuing medical coverage is a risky endeavor for any insurance company. /Although this industry spends copious amounts of money on risk management in an effort to avoid losing money, some customers ultimately cost the business greatly. In most cases, high costs result from unpredictable anomalies. For instance, an insurance company might take what it perceives as a safe gamble by insuring a seemingly healthy college student with no pre-existing conditions. However, if a standard checkup reveals a cancerous tumor, the insurance company's gamble on the college student now becomes an expensive liability. The very act of issuing insurance bears some element of financial risk that cannot always be avoided.
  
  

Employers

• Many companies offer health insurance to employees for tax breaks and to attract high-caliber workers. Furthermore, large corporations have the option of passing higher insurance premiums onto its employees. Despite the advantages of offering health insurance, companies face financial risks. Though risk-pooling enables large corporations to mitigate the risk by virtue of its large labor force, smaller companies receive no such benefit. So smaller businesses incur much greater financial risks than large corporations: If just one person in an office of 10 gets diagnosed with an expensive, terminal condition, everyone's premiums rise to subsidize the cost of a sick worker.
  
  

Individuals

• Though individuals may face greater financial risks when they have no medical insurance, being underinsured still poses potential threats. Patrick Marsek and Francis Sharpe, authors of "The Complete Idiot's Guide to Medical Tourism," cite a "Consumer Reports" survey that indicates that 43 percent of insured people are ill-prepared financially to handle a medical emergency. The financial risks are even higher for those who pay the most for insurance because of pre-existing conditions: a relapse of a condition could bankrupt a person if he is unable to cover the premium.
  
  

Mandatory Health Insurance Risks

• If issuing health insurance is mandatory for companies that employ above a certain number of employees, a negative effect cold be that small businesses hire fewer workers to circumvent the requirement. In addition, small businesses may discriminate in the job hiring process and seek only seemingly healthy workers. As an example, Bernard Healey states in his book, "The New World of Health Promotion," that overweight workers utilize health-care services 10 to 36 percent more often than individuals at a normal weight. This extra weight could lead to hiring discrimination as a way for the business to cut costs, he says.