Final answer:
The health insurance provision that requires the application become part of the policy is the Entire Contract provision. The individual mandate of the 2010 healthcare reform requires everyone to have insurance or pay a penalty. Charging the actuarially fair premium to the group as a whole can cause healthier individuals to opt out, raising costs.
Step-by-step explanation:
Health Insurance Provisions
The provision that requires the application to become part of the policy in health insurance is the Entire Contract provision. This provision ensures that all agreements between the insurer and the insured are included within the policy, including the application itself. It is critical for the transparency and understanding of the insurance agreement for both parties.
In terms of the individual mandate provision of the 2010 U.S. healthcare reform, it requires everyone to have insurance or pay a penalty. This was implemented to encourage broader participation in health insurance coverage.
If an insurance company attempts to charge the actuarially fair premium to the group as a whole rather than to each group separately, it can result in a loss of business, as healthier individuals may choose to opt out, leaving the insurer covering a pool with higher average risk and potentially higher costs.