What does "community rating" imply in health insurance pricing?

Community rating in health insurance pricing refers to a method where premiums are charged uniformly across all individuals within a specific geographic area, regardless of their age, health status, or other factors. This approach promotes affordability and accessibility, as it prevents discrimination based on health-related risk factors. For instance, under community rating, a healthy person and a person with significant health issues would pay the same premium if they live in the same geographic zone.

This method contrasts sharply with options that involve differing premiums for individuals based on their personal characteristics, such as age, health status, or income, which would not align with the principles of community rating. Instead of assessing individual risks and tailoring premiums accordingly, community rating aims to create a more equitable system by spreading risk across a larger pool of insured individuals. This is particularly beneficial in ensuring that those who may have higher health costs still have access to coverage without facing prohibitively high premiums.