@dfoster85 - Oops, I think you were mixing up "moral hazard" and "adverse selection." People buying insurance only when they need it is inverse selection.
Another difference between individual plans and group plans is that in the United States, at least, individual plans tended to have lower lifetime limits on coverage. But since 2010, lifetime limits have actually been illegal - which is really great news for that tiny percentage of people with very high healthcare costs. What are they supposed to do after they "cap out"?
Individual plans, basically the only option for self-employed health insurance, have also come under fire for have high rates of rescission, which is when a person gets sick and the insurance company goes through their application with a fine-tooth comb looking for a reason to cancel it - like a misstatement on the application. The 2010 health care law in the US was supposed to help with that practice, but I haven't heard whether it has been successful. Group plans didn't have that issue because the policies were not individually underwritten.