What is a significant concern regarding community rating?

A significant concern regarding community rating is that it may result in higher premiums for everyone. Community rating is a practice where insurance companies set premiums based on the collective health outcomes of a particular geography or demographic group rather than individual risk factors. This means that healthier individuals may end up paying more for insurance than they would under individual risk-based pricing, as the costs are averaged out across all members of the community.

When the premiums are determined by the health status of the group as a whole, insurers may raise premiums to cover the costs of those who are less healthy or who require more medical attention, leading to a situation where everyone bears that cost collectively. This can disincentivize healthy individuals from joining pools, exacerbating the issue, as their absence would leave a higher concentration of less healthy individuals, thus sometimes resulting in even higher premiums.

Community rating aims to promote equity and accessibility in health insurance, but its structure can unintentionally create financial burdens that impact all insured individuals within the community.