Mom refuses to have someone as POA. What happens if she is diagnosed with dementia and there is no POA?

So your Mom has no will as well? Because if she does you need to go dig that out. There is often a "springing POA" in a will. A lawyer would be negligent not to suggest that to anyone making a will. IF there is a Springing DPOA then you would need the diagnosis of two MDs, likely one to be neuro-psyc, or whatever is stipulated in the document itself.
IF there is no will, and no POA, first of all be certain you WANT this onerous job. It is a lot of work and you will be on the phone with many entities and you will be having to keep meticulous records of every penny into accounts and every penny out. Just to get a phone in Mom's room will take you hours and hours of time on the phone. You will be doing her taxes, et al.
If you decide you would like to do all this, then when your Mom is diagnosed you can ask the court to appoint you conservator or guardian. If she is hospitalized (the usual place all this comes up) then a Social Worker can help you get emergency temporary guardianship in most states with a call to a judge.
If you do NOT wish to serve as a guardian then tell the hospital you do not wish to and that you would like the state appointed guardian. Do know then that you will not have input into whether or where placement occurs nor to control of financial assets which will be all used to care, and likely if a real property will be sold for care.
You may want now to discuss with Mom that if she doesn't want to provide the wherewithall for you to serve as her POA you won't be allowed to do so and she will be appointed a guardian by the state. In which case neither of you will have much to say about anything.
Best of luck with this. Again, I was Trustee and POA for my brother, a very agreeable, organized and wonderful man with a simple estate and I am here to warn you to watch what you wish for.

Why does she refuse to create a power of attorney?

Hire an attorney and whomever the family is comfortable with take guardianship. We had to do that with my mother in law in Missouri.

Often I think resistance comes from ignorance, fear, and the deeper representation of preparing for one's final. I would prepare a non-emotional "presentation" to her explaining what PoA is, when it becomes active and why it is such an important protection for her.

Before she goes in for testing, plan a quiet time with her to talk. For this meeting see if you can get any of her other family, neighbors and friends to divulge whether they have assigned a PoA, so she sees it is normal and safe. Maybe even video them saying they have it and why. Do you yourself have a PoA? She should see it if you do. I've had a PoA since my early 40s.

You can also print out posts from this forum written by distraught adult children trying to provide care for their parent who didn't assign a PoA and read them to her. Explain to her what happens if there's no PoA: either the family is forced to go through a grueling process in the courts which is very expensive and time-consuming, or the family has to wait until she (your mom's) situation gets so bad and dangerous that APS will finally move to get guardianship. After that, she is no longer in control and neither are any of her children or LOs. So, she can make a controlling decision now or let the chips fall where they may and give up all control.

If you are able to get her to at least agree to go to an elder law/estate planning attorney with you, this attorney will take her aside privately to inverview her to make sure she's not being pressured into the decision, and that she is cognitively capable of making the assignment. FYI it has less to do with retention and more to do with comprehension. She can ask the attorney any questions about what happens if she doesn't have a PoA and becomes incapacitated. Assure her there will be no pressure to sign anything -- and then you will have to live with what she decides, but maybe go home with the unsigned document in case she changes her mind. I wish you much peace in your heart no matter the outcome.

You will need to do a guardianship. Ask the MD when/if he diagnoses to give you the proper letter that she is no longer competent to act for herself. Be very careful that this is a FIDUCIARY responsibility that you want to do and are capable of. It requires meticulous record keeping and providing your papers to many entities and hours and hours on the phone.
A Social Worker can assist you if MD can point you in that direction for filing as conservator and/or guardian. Again, be certain you want this job. The state can take over as guardian if you do not. I was Trustee and POA for a very cooperative, organized and wonderful man who agreed with every single decision. It was still an enormous job. Begin your research now, and good luck.

Most likely she will not be able to assign anyone as POA after a diagnosis.

Our neuro team told us they would not see my husband until he completed, POA, Healthcare Proxy and will.

What is your mom's fear about appointing a POA?

There's a little book called "5 at 55" about the 5 documents that EVERYONE needs by the age of 55. POA is #1.