Community rating is designed to combine claims history of which groups?

Community rating is a method used in health insurance pricing that combines the claims history of similar groups, often defined by geographical locations, into one risk pool. This approach aims to promote fairness in insurance premium calculations by spreading the risk across a broader population rather than allowing higher-risk individuals to be charged disproportionately higher premiums based solely on their individual health status.

By pooling together similar groups, community rating helps ensure that premiums are more stable and affordable for all insured individuals within those communities. This method is especially significant in markets where underwriting is limited or prohibited, as it helps protect individuals from financial strain due to higher-than-average health care costs that can arise from individual circumstances.

Combining claims history from similar geographical areas can also reflect the local health care dynamics, allowing for a more realistic assessment of risk and cost associated with providing insurance, rather than focusing on the specifics of individual employers or just high-risk individuals, which could lead to inequitable pricing structures.