Which principle underlies community rating?

Community rating is a principle in health insurance that emphasizes the collective pooling of healthcare costs among members of a community, regardless of individual health conditions. The core idea is that all individuals, including both healthy and unhealthy people, contribute to a shared pool of funds that pays for healthcare services. This method helps ensure that healthier individuals support those who may require more medical care, thereby reducing disparities in access to health insurance coverage.

This risk pooling approach creates a more stable premium structure and helps to protect individuals with higher healthcare needs from facing prohibitively high insurance costs due to their health status. It aligns with the goals of promoting equity and access in healthcare, ensuring that everyone can participate in the insurance system and receive necessary medical care.

In contrast, the other options relate to different principles of health insurance design. Segmenting members by age can lead to different premium rates based on age-related risk, which is separate from the concept of community rating. Offering discounts for healthy individuals or charging based on individual health status diverges from the community rating philosophy, as these methods create a tiered system based on individual risk rather than collective risk-sharing.