What I have seen is this. If it is a money loser, the insurance companies simply pull out. If "someone" pays the difference on the insurees behalf, then who will be that 'someone' and second, that should carry across the board. Do for one, do for all. But with that said, of course "This will then motivate contractors such as carpet installers, painters, roofers, etc, to raise prices." are going to pass the cost to the person using their services. No one, including the  insurance companies, are in the charity business. They have bills and employees to pay.