An insurance company has been monitoring the enrollment and…

An insurаnce cоmpаny hаs been mоnitоring the enrollment and claims experience of one of its group health insurance plans over several years.  Over the past two years, as more and more employees enrolled in the group health insurance plan, the claims experience and overall expected loss continued to increase. In response, the insurance company was forced to increase the group insurance premium rate charged per employee.  The insurance company noticed that after the premium increase, a large number of employees "opted out" of the health plan during the third year enrollment period. However, to the insurance company's surprise: at the end of this third year, the expected loss of the group actually increased yet again... even though the number of covered individuals decreased.  What concept best explains the pattern that is occurring within this health insurance plan? And why?