Definition: Community rating of health insurance policies is a method of setting premiums that spreads risk evenly across the entire community. Everyone pays the same rate regardless of age, health status, or claims history.
Thus, under community rating, a healthy 20-year-old student would pay the same premium for the same coverage as a 63-year-old with diabetes and COPD.
Community rating is controversial in the health policy community. Some feel that it drives premiums higher, forcing lower-income individuals to go uninsured. Others believe that it offers a crucial opportunity for those with expensive health problems to obtain affordable coverage.
