It's a simple money in, money out system. Health insurance isn't like homeowner's insurance where the insurer accumulates and invests a pool of money in anticipation of occasional rare events like natural disasters that cause a spike in claims. Medical expenses across a large patient population are very predictable and there is no significant carry over of premiums from year to year. In fact, under the Affordable Care Act (Obamacare), it is actually illegal for most health insurers to do that. Any excess premiums collected must be returned to customers at the end of the year.