Suppose that there are two employers in Tinytown.CareCo offers a generous health insurance package to all employees while ApathyInc pays slightly higher wages,just sufficient to pay for health coverage for a person in average health.
Suppose that the cost of insurance increases if greater-than-average claims are made,whether the insurance is purchased by an individual or by a company for its employees.Therefore,over time,

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The less healthy employees at ApathyInc will see the value in switching to CareCo in order to have access to better health insurance. This will result in a healthier overall employee population at CareCo and potentially higher insurance costs for ApathyInc as they have a greater proportion of higher-risk employees.

Suppose That There Are Two Employers in Tinytown