What Happens When You Don't Use Up Your Medical Insurance?

It adds to the revenue of the insurance company. 
The concept of underwriting risk can be straightforward. Insurance companies create "pools" or groups of people that pay premiums into a system and create a huge financial reserve that is used to pay for people who get sick. By the laws of probability, only a certain percentage of people will get ill during the year. It is their portion of the fund that is used to settle all claims lodged by those who actually got sick.
In the absence of this pooling, then the concept of health insurance cannot work.

So imagine if medical insurance companies gave you a refund each year that you didn't use your premium payments. There would be two major problems;

First, let's say you assume that applies to all people insured in your medical plan. That means about 80% do not get sick and they are therefore refunded. On the other hand, the remaining 20%  get sick and incur a myriad of expenses (chemotherapy, accidents, diabetes, etc). This means that the total amount of funds received from the 20% can never be close to cover the expenses and the insurance company goes under. They knew this that's why they set up the business in the first place. Therefore, the collected premiums from “healthy” persons will pay for those that need it. The government also knows this and they have set policies that ensure that a medical insurance company must have a minimum amount of reserves. This is based on a worst-case scenario where everyone covered under your insurance plan gets sick and you have to pay them.

Second, medical insurance companies encourage you to use up your insurance for preventative visits (physicals exams, wellness programs, etc).  This works for them because it ensures you remain healthy and in the long run, you will require less expensive healthcare.
If you fail to use your health benefits, we get a paradox where you may have lower expenditures in the short term but in the medium-to-long-term, you, my friend, are a time bomb waiting to explode. And when you explode with medical conditions that could have been identified earlier, "very expensive" is an understatement.

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