Community Rating

8 Health Care Glossary Items #1

When you purchase an insurance policy, you pay premiums for the policy. The amount of your premium is different based on the state you live or the policy you are purchasing. One method of determining the amount to be paid is "community rating". This method was popular during the early days of the "Blue Cross" plans in the 1930s and 1940s.

Community rating basically says that everyone pays the same premium regardless of health risk. In practice, this means that those who need to pay more for health care receive a greater  return on their premiums than those who don't use their insurance as often. Essentially, those who are well help support those who are sick.

Many states have passed laws mandating either modified forms of community rating, or in the case of New York and Vermont, pure community rating. Almost every health care plan proposed by Democrats has involved the use of community rating to determine health care premiums.