What does community rating ensure in health insurance?

Community rating in health insurance is a pricing structure where the premiums for health insurance are set based on the collective risk of the entire community rather than individual risk factors. This approach ensures that all individuals, regardless of their health status, age, or other personal metrics, pay the same premium for coverage. This method is particularly designed to promote equity in health insurance access and to support those who might otherwise face prohibitively high costs due to pre-existing conditions or health issues.

By utilizing community rating, insurers spread the risk across a diverse group, which helps to avoid discrimination against individuals with higher health risk profiles. This leads to more stable and predictable pricing for everyone within the community, encouraging broader participation in health insurance programs.

The other options reflect principles that do not align with community rating. Charging lower premiums for healthy individuals would introduce a tiered pricing structure based on individual health status, which community rating specifically seeks to eliminate. Similarly, assessing premiums based on health status or increasing premiums for individuals who have filed claims contradicts the foundation of community rating, which is designed to ensure a uniform premium across all members of the community.