I know what you are getting at here but almost any individual market at the state level is going to be bigger than almost any entire company from a risk pool amortization perspective.

Given that, your fourth bullet point would point in the direction of insurance companies preferring the state pools to selling to companies one at a time.

The problem with the state pools is not (for the most part) one of size, but of adverse selection.

I'd actually be interested to see the numbers. Obviously, as you say, it's not just size but also the risk profile of the group...but add to that the fact that this pool is being split between as many companies as are selling on the marketplace, I wouldn't be surprised if size is part of it.

Regardless, if universal health coverage is a goal, the only way to truly amortize risk is to have everyone in one pool. Anything less pits some very perverse incentives against an inherently inefficient market. It's no wonder no one wants to participate!

Even small states like Iowa (total population ~3 million) are going to have 10s of thousands of people on the individual exchanges. That's bigger than all but very large corporations (who tend to self insure anyways).

I hear you about universal health coverage. I've come around to the idea that we should have it at the national level above some sort of cap. I think free markets can still work when it comes to your annual checkup or small expenses like a broken arm or a monthly prescription for non esoteric drugs.

It's a big leap to say 400 million pools of one is inefficient therefore the best option is one pool of 400 million.