The primary advantage of a group plan is that it spreads risk across a pool of insured individuals. This benefits the group members by keeping premiums low, and insurers can better manage risk when they have a clearer idea of who they are covering. In addition, insurers can exert even greater control over costs through health maintenance organizations (HMOs), in which providers contract with insurers to provide care to members.
The HMO model tends to keep costs low at the expense of restrictions on the flexibility of care afforded to individuals. On the other hand, preferred provider organizations (PPOs) offer patients a greater choice of doctors and easier access to specialists but tend to charge higher premiums than HMOs.