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Community rating is a concept usually associated with health insurance, which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.

Pure community rating prohibits insurance rate variations based on demographic characteristics such as age or gender, whereas adjusted or modified community rating allows insurance rate variations based on demographic characteristics such as age or gender.

Concept

Community rating, as a basis for premium calculation, is fundamentally different from the usual method of determining insurance premiums, i.e. risk rating. In a risk rated insurance market, an insurer calculates the premium payable by a potential policy holder in order to enter into an insurance contract on the basis of various factors particular to that individual, such as the risk of a claim occurring, and the value of any such claims during the term of an insurance policy. In a community rated market, the insurer may not calculate premium on the basis of the risk factors attaching to the particular person wishing to purchase an insurance contract, but rather the risk factors applying to all persons within the market as a whole. Thus, in a community rated market, the insurer evaluates the risk factors of market population, and not those of any one person when calculating premiums.^[1] Some form of risk equalization also often exists in a community rated system.

Health insurers vary premium rates based on case characteristics, such as:
- benefit design
- family composition
- demographic characteristics:
  - age
  - gender
  - geographic area
  - occupation
  - industry
- lifestyle factors:
  - tobacco use
  - weight
- health status and claims history
Community rating — prohibits insurers from varying rates based on health status or claims history
- Pure community rating — allows insurers to vary rates based on benefit design and family composition only
  - Limited variation in rates by geographic area is sometimes included in the pure community rating category (e.g. New York City)
- Adjusted (modified) community rating — allows insurers to also vary rates based on demographic characteristics (e.g. age and gender) and lifestyle factors (e.g. tobacco use)
Guaranteed issue — requires insurers to issue insurance to any eligible applicant without regard to health status or other case characteristics

Occurrence

Community rating of supplemental private health insurance:

Australia,^[2] Ireland^[3] — lifetime community rating of private hospital insurance supplemental to universal publicly financed hospital insurance

Community rating of basic private health insurance:

Netherlands — age and gender rating illegal = pure community rating; individual guaranteed issue
- individual mandate with low-income government subsidies for 40% of households^[4]^[5]
Switzerland — age and gender rating illegal = pure community rating; individual guaranteed issue
- individual mandate with low-income government subsidies for 40% of households^[4]
United States^[6]
- age rating limited to 3:1 (300 percent); gender rating illegal; individual guaranteed issue
- individual and employer mandates with government subsidies for individuals with income up to 400% of the Federal Poverty Level - those with lower incomes pay lower costs.
- tobacco use can increase premiums up to 1.5:1, while geographic factors can also affect price.

References

^ Neuhaus, Walther (November 1995). "Community rating and equalisation" (PDF). ASTIN Bulletin. 25 (2): 95–118. doi:10.2143/AST.25.2.563242.
^ Organisation for Economic Co-operation and Development (November 25, 2004). Private health insurance in OECD countries. Paris: OECD. p. 78. ISBN 978-92-64-00668-3.
^ "Introduction of Lifetime Community Rating (LCR) to the Private Health Insurance Market: FAQ and Examples" (PDF). Irish Department of Health. Retrieved 20 February 2016.
^ ^a ^b Leu, Robert E.; Rutten, Frans F. H.; Brouwer, Werner; Matter, Pius; Rütschi, Christian (January 16, 2009). "The Swiss and Dutch health insurance systems: universal coverage and regulated competitive insurance markets" (PDF). Commonwealth Fund. Archived from the original (PDF) on July 31, 2009. Retrieved September 29, 2009.
^ Thomson, Sarah; Mossialos, Elias (June 24, 2009). "Private health insurance in the European Union" (PDF). European Commission.
^ "Access to Health Care" (PDF). American Cancer Society Cancer Action Network. Retrieved 2018-06-06.

[1] Neuhaus, Walther (November 1995). "Community rating and equalisation" (PDF). ASTIN Bulletin. 25 (2): 95–118. doi:10.2143/AST.25.2.563242.

[OECD-2] Organisation for Economic Co-operation and Development (November 25, 2004). Private health insurance in OECD countries. Paris: OECD. p. 78. ISBN 978-92-64-00668-3.

[3] "Introduction of Lifetime Community Rating (LCR) to the Private Health Insurance Market: FAQ and Examples" (PDF). Irish Department of Health. Retrieved 20 February 2016.

[Leu_2009-4] Leu, Robert E.; Rutten, Frans F. H.; Brouwer, Werner; Matter, Pius; Rütschi, Christian (January 16, 2009). "The Swiss and Dutch health insurance systems: universal coverage and regulated competitive insurance markets" (PDF). Commonwealth Fund. Archived from the original (PDF) on July 31, 2009. Retrieved September 29, 2009.

[Thomson_2009-5] Thomson, Sarah; Mossialos, Elias (June 24, 2009). "Private health insurance in the European Union" (PDF). European Commission.

[6] "Access to Health Care" (PDF). American Cancer Society Cancer Action Network. Retrieved 2018-06-06.

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@@ Line 1: / Line 1: @@
 [[File:Star of life2.svg|thumb|right|The [[Star of Life]], incorporating the [[rod of Asclepius]], a symbol of medical care]]
 '''Community rating''' is a concept usually associated with [[health insurance]], which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without [[medical underwriting]], regardless of their health status.
 ''Pure'' community rating prohibits insurance rate variations based on demographic characteristics such as age or gender, whereas ''adjusted'' or ''modified'' community rating allows insurance rate variations based on demographic characteristics such as age or gender.
@@ Line 6: / Line 6: @@
 == Concept ==
-Community rating, as a basis for premium calculation, is fundamentally different from the usual method of determining insurance premiums, i.e. ''risk'' rating. In a risk rated insurance market, an insurer calculates the premium payable by a potential policy holder in order to enter into an insurance contract on the basis of various factors particular to that individual, such as the risk of a claim occurring, and the value of any such claims during the term of an insurance policy. In a community rated market, the insurer may not calculate premium on the basis of the risk factors attaching to the particular person wishing to purchase an insurance contract, but rather the risk factors applying to all persons within the market as a whole. Thus, in a community rated market, the insurer evaluates the risk factors of market population, and not those of any one person when calculating premiums.<ref>{{cite journal |doi=10.2143/AST.25.2.563242 |author=Neuhaus, Walther |date=November 1995 |title=Community rating and equalisation |journal=[[International Actuarial Association|ASTIN Bulletin]] |volume=25 |issue=2 |pages=95–118 |url=http://www.casact.org/library/astin/vol25no2/95.pdf}}</ref> Some form of [[risk equalization]] also often exists in a community rated system.
+Community rating, as a basis for premium calculation, is fundamentally different from the usual method of determining insurance premiums, i.e. ''risk'' rating. In a risk rated insurance market, an insurer calculates the premium payable by a potential policy holder in order to enter into an insurance contract on the basis of various factors particular to that individual, such as the risk of a claim occurring, and the value of any such claims during the term of an insurance policy. In a community rated market, the insurer may not calculate premium on the basis of the risk factors attaching to the particular person wishing to purchase an insurance contract, but rather the risk factors applying to all persons within the market as a whole. Thus, in a community rated market, the insurer evaluates the risk factors of market population, and not those of any one person when calculating premiums.<ref>{{cite journal |doi=10.2143/AST.25.2.563242 |author=Neuhaus, Walther |date=November 1995 |title=Community rating and equalisation |journal=[[International Actuarial Association|ASTIN Bulletin]] |volume=25 |issue=2 |pages=95–118 |url=http://www.casact.org/library/astin/vol25no2/95.pdf|doi-access=free }}</ref> Some form of [[risk equalization]] also often exists in a community rated system.
 * Health insurers vary premium rates based on ''case characteristics'', such as:
@@ Line 21: / Line 21: @@
 *** weight
 ** health status and claims history
 * '''Community rating''' — prohibits insurers from varying rates based on health status or claims history
 ** '''Pure community rating''' — allows insurers to vary rates based on benefit design and family composition only
-*** Limited variation in rates by geographic area is sometimes included in the pure community rating category (e.g. [[New York]])
+*** Limited variation in rates by geographic area is sometimes included in the pure community rating category (e.g. [[New York City]])
 ** '''Adjusted (modified) community rating''' — allows insurers to also vary rates based on demographic characteristics (e.g. age and gender) and lifestyle factors (e.g. tobacco use)
 * '''Guaranteed issue''' — requires insurers to issue insurance to any eligible applicant without regard to health status or other case characteristics
-** The federal [[Health Insurance Portability and Accountability Act|HIPAA Act of 1996]] requires that all small group (2 to 50 employee) health insurance be ''guaranteed issue''
-** Five ([[Maine]], [[Massachusetts]], [[New Jersey]], [[New York]], [[Vermont]]) of the seven states which require ''community rating'' for individual health insurance also require its ''guaranteed issue''
 == Occurrence ==
 Community rating of ''supplemental'' private health insurance:
-* [[Australia]] — lifetime community rating of private hospital insurance supplemental to universal publicly financed hospital insurance<ref name="OECD">{{cite book |author=[[Organisation for Economic Co-operation and Development]] |date=November 25, 2004 |title=Private health insurance in OECD countries |location=Paris |publisher=OECD |isbn=92-64-00668-0 |page=78}}</ref>
+* [[Australia]],<ref name="OECD">{{cite book |author=Organisation for Economic Co-operation and Development |author-link=Organisation for Economic Co-operation and Development |date=November 25, 2004 |title=Private health insurance in OECD countries |location=Paris |publisher=OECD |isbn=978-92-64-00668-3 |page=78}}</ref> [[Ireland]]<ref>{{cite web|publisher=Irish Department of Health|title=Introduction of Lifetime Community Rating (LCR) to the Private Health Insurance Market: FAQ and Examples|url=http://health.gov.ie/wp-content/uploads/2014/07/FAQ.pdf|accessdate=20 February 2016}}</ref> — lifetime community rating of private hospital insurance supplemental to universal publicly financed hospital insurance
-* [[Ireland]] — pure community rating of all private health insurance supplemental to universal publicly financed health insurance<ref name="OECD"/>
 Community rating of ''basic'' private health insurance:
 * [[Netherlands]] — age and gender rating ''illegal'' = pure community rating; individual guaranteed issue
-** individual mandate with low-income government subsidies for 40% of households<ref name="Leu 2009">{{cite web |author=Leu, Robert E.; Rutten, Frans F. H.; Brouwer, Werner; Matter, Pius; Rütschi, Christian |date=January 16, 2009 |title=The Swiss and Dutch health insurance systems: universal coverage and regulated competitive insurance markets |publisher=[[Commonwealth Fund]] |url=http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2009/Jan/The%20Swiss%20and%20Dutch%20Health%20Insurance%20Systems%20%20Universal%20Coverage%20and%20Regulated%20Competitive%20Insurance/Leu_swissdutchhltinssystems_1220%20pdf.pdf}}</ref><ref name="Thomson 2009">{{cite web |author=Thomson, Sarah; Mossialos, Elias |date=June 24, 2009 |title=Private health insurance in the European Union |publisher=[[European Commission]] |url=http://ec.europa.eu/employment_social/spsi/docs/social_protection/lse_ec_phi_final_report_web_en.pdf}}</ref>
+** individual mandate with low-income government subsidies for 40% of households<ref name="Leu 2009">{{cite web |author1=Leu, Robert E. |author2=Rutten, Frans F. H. |author3=Brouwer, Werner |author4=Matter, Pius |author5=Rütschi, Christian |date=January 16, 2009 |title=The Swiss and Dutch health insurance systems: universal coverage and regulated competitive insurance markets |publisher=[[Commonwealth Fund]] |url=http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2009/Jan/The%20Swiss%20and%20Dutch%20Health%20Insurance%20Systems%20%20Universal%20Coverage%20and%20Regulated%20Competitive%20Insurance/Leu_swissdutchhltinssystems_1220%20pdf.pdf |access-date=September 29, 2009 |archive-url=https://web.archive.org/web/20090731040825/http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2009/Jan/The%20Swiss%20and%20Dutch%20Health%20Insurance%20Systems%20%20Universal%20Coverage%20and%20Regulated%20Competitive%20Insurance/Leu_swissdutchhltinssystems_1220%20pdf.pdf |archive-date=July 31, 2009 |url-status=dead }}</ref><ref name="Thomson 2009">{{cite web |author1=Thomson, Sarah |author2=Mossialos, Elias |date=June 24, 2009 |title=Private health insurance in the European Union |publisher=[[European Commission]] |url=http://ec.europa.eu/employment_social/spsi/docs/social_protection/lse_ec_phi_final_report_web_en.pdf}}</ref>
 * [[Switzerland]] — age and gender rating ''illegal'' = pure community rating; individual guaranteed issue
 ** individual mandate with low-income government subsidies for 40% of households<ref name="Leu 2009"/>
+* [[United States of America|United States]]<ref>{{Cite news|url=http://www.acscan.org/pdf/healthcare/implementation/background/NewFederalRatingRules.pdf|title=Access to Health Care|work=American Cancer Society Cancer Action Network|access-date=2018-06-06|language=en}}</ref>
-* within the [[United States of America|United States]]:<ref>{{cite web |author=[[Government Accountability Office|Government Accounting Office]] |date=September 30, 2003 |title=Private health insurance: Federal and state requirements affecting coverage offered by small businesses |publisher=Government Accounting Office |pages=41–43 |url=http://www.gao.gov/new.items/d031133.pdf}}<br />{{cite web |author=[[Georgetown Public Policy Institute|Georgetown Health Policy Institute]] |date=February 2009 |title=Individual market rate restrictions (not applicable to HIPAA eligible individuals), December 2008 |publisher=[[Kaiser Family Foundation]] |url=http://www.statehealthfacts.org/comparemaptable.jsp?ind=354&cat=7&sub=87&yr=63&typ=5}}<br />{{cite web |author=[[Georgetown Public Policy Institute|Georgetown Health Policy Institute]] |date=February 2009 |title=Individual market guaranteed issue (not applicable to HIPAA eligible individuals), December 2008 |publisher=[[Kaiser Family Foundation]] |url=http://www.statehealthfacts.org/comparemaptable.jsp?ind=353&cat=7&sub=87&yr=63&typ=5}}<br/>{{cite web |author=[[Georgetown Public Policy Institute|Georgetown Health Policy Institute]] |date=February 2009 |title=Small group health insurance market rate restrictions, January 2009 |publisher=[[Kaiser Family Foundation]] |url=http://www.statehealthfacts.org/comparemaptable.jsp?ind=351&cat=7&sub=86&yr=92&typ=5}}<br/>{{cite web |author=Codispoti, Lisa; Courtot, Brigette; Swedish, Jen |date=September 2008 |title=Nowhere to turn: How the individual health insurance market fails women |publisher=[[National Women's Law Center]] |url=http://nwlc.org/reformmatters/NWLCReport-NowhereToTurn-WEB.pdf }}<br />{{cite news |author=Lazar, Kay |date=April 26, 2009 |title=Prickly policies; Age-based pricing for health insurance has some consumers cutting back on coverage |work=[[The Boston Globe]] |page=1 (Business) |url=http://www.boston.com/business/healthcare/articles/2009/04/26/prickly_policies/?page=full}}<br />{{cite web |author=Appleby, Julie |date=August 31, 2009 |title=Health insurance: How much more should older people pay? |publisher=[[Kaiser Family Foundation|Kaiser Health News]] |url=http://www.kaiserhealthnews.org/Stories/2009/August/31/age-rating.aspx}}</ref>
+** age rating limited to 3:1 (300 percent); gender rating illegal; individual guaranteed issue
-**Community rating for individual ''and'' small group (2 to 50 employees) health insurance:
+** individual and employer mandates with government subsidies for individuals with income up to 400% of the [[Federal Poverty Level]] - those with lower incomes pay lower costs.
-***[[New York]] — age and gender rating ''illegal'' = pure community rating; individual guaranteed issue
+** tobacco use can increase premiums up to 1.5:1, while geographic factors can also affect price.
-***[[Vermont]] — age and gender rating ''illegal'' = pure community rating for small group health insurance;<ref>{{cite web |author=Health Care Administration Division |date=October 28, 1999 |title=Regulation H-99-4. Community rating and approval of community rating formulas |publisher=[[Government of Vermont#Department of Banking, Insurance, Securities and Health Care_Administration|Vermont Department of Banking, Insurance, Securities & Health Care Administration (BISHCA)]] |url=http://www.bishca.state.vt.us/HcaDiv/RegsBulls/hcaregs/REG_H-99-4.PDF}}</ref> individual guaranteed issue
-**** age and gender rating ''illegal'' = pure community rating for individual health insurance from [[Blue Cross and Blue Shield Association|BlueCross BlueShield]] and [[Health maintenance organization|HMO]]s
-**** age and gender rating combined ''limited'' to 1.5:1 (150 percent) for individual health insurance from other insurance companies
-***[[Maine]] — age rating ''limited'' to 1.5:1 (150 percent); gender rating ''illegal''; individual guaranteed issue
-**** smoking status rating ''unlimited''
-***[[Massachusetts]] — age rating ''limited'' to 2:1 (200 percent); gender rating ''illegal''; individual guaranteed issue
-**** individual and employer mandates with low-income government subsidies or exemptions
-***[[New Jersey]] — age and gender rating combined ''limited'' to 3.5:1 (350 percent); individual guaranteed issue
-***[[Washington (U.S. state)|Washington]] — age rating ''limited'' to 3.75:1 (375 percent); gender rating ''illegal''
-***[[Oregon]] — age rating ''unlimited ''; gender rating ''illegal''
-**Community rating for small group (2 to 50 employees) health insurance ''only'':
-***[[Maryland]] — age rating ''limited'' to 2.8:1 (280 percent); gender rating ''illegal''
-***[[New Hampshire]] — age rating ''limited'' to 4:1 (400 percent); gender rating ''illegal''
-***[[Rhode Island]]* — age and gender rating combined ''limited'' to 4:1 (400 percent)
-**** *health status rating ''limited'' to ± 10% of community rating
-***[[Colorado]]  — age rating ''unlimited''; gender rating ''illegal''
-***[[Connecticut]] — age and gender rating ''unlimited''
-**No community rating, but age rating ''limited'' and/or gender rating ''illegal'' and/or health status rating ''limited'':
-***Age rating ''limited'' in individual health insurance: to 3:1 (300 percent) in [[Minnesota]], to 4:1 (400 percent) in [[New Hampshire]], to 5:1 (500 percent) in [[North Dakota]] and [[South Dakota]]<ref name="Courtot 2008a">{{cite web |author=Courtot, Brigette; Codispoti, Lisa; Waxman, Judy; Swedish, Jen |date=November 2008 |title=The individual insurance market: a hostile environment for women |publisher=[[National Women's Law Center]] |url=http://www.nwlc.org/pdf/individual%20insurance.pdf}}</ref>
-***Age rating ''limited'' in small group health insurance: to 3:1 (300 percent) in [[Minnesota]] and [[South Dakota]]<ref name="Courtot 2008b">{{cite web |author=Courtot, Brigette; Codispoti, Lisa; Waxman, Judy; Swedish, Jen |date=November 2008 |title=Women and employer-sponsored insurance |publisher=[[National Women's Law Center]] |url=http://www.nwlc.org/pdf/employer%20sponsored%20insurance.pdf}}</ref>
-***Gender rating ''illegal'' in individual health insurance in: [[Minnesota]], [[Montana]], [[North Dakota]]<ref name="Courtot 2008a"/>
-**** Gender rating ''limited'' to 1.2:1 (120 percent) in [[New Mexico]]<ref name="Courtot 2008a"/>
-***Gender rating ''illegal'' in small group health insurance in: [[California]], [[Iowa]], [[Michigan]], [[Minnesota]], [[Montana]], [[North Dakota]]<ref name="Courtot 2008b"/>
-***Health status rating ''limited'' (but no guaranteed issue) of individual health insurance:<ref name="Courtot 2008a"/>
-****[[Iowa]] — health status rating ''limited'' to 1.35:1 (135 percent)
-****[[New Hampshire]] — health status rating ''limited'' to 1.5:1 (150 percent)
-****[[Minnesota]] — health status rating ''limited'' to 1.67:1 (167 percent)
-****[[Nevada]] — health status rating ''limited'' to 1.75:1 (175 percent)
-****[[South Dakota]] — health status rating ''limited'' to 1.86:1 (186 percent)
-****[[Utah]] — health status rating ''limited'' to 1.86:1 (186 percent)
-****[[Louisiana]] — health status rating ''limited'' to 2:1 (200 percent)
-****[[Kentucky]] — health status rating ''limited'' to 2.08:1 (208 percent)
-****[[Idaho]] — health status rating ''limited'' to 3:1 (300 percent)
 == References ==
-{{reflist|2}}
+{{Reflist|2}}
-[[Category:Health economics]]
-[[Category:Insurance terms]]
 [[Category:Health insurance]]