Death spiral is a condition where the structure of insurance plans leads to premiums rapidly increasing as a result of changes in the covered population.
This incentivizes some of the remaining policyholders to change to more expensive policies which are still cheaper than the newly increased premiums, exacerbating the problem.
Since the original size of the group was small in relation to the total subscriber base, the event is inconsequential to the insurer.
It accomplishes the same effect: purging companies' risk pool of higher risk individuals or allowing the insurer to eliminate any high-risk pool altogether or excluding individuals' health conditions even though the health conditions were acquired during the terms of the policies with the company and while the premiums were faithfully paid.
During the lifetime of a specific risk pool, the sick bear an increasing share of their medical costs, negating the benefits of signing up for health insurance in the first place.