Certified in Public Health (CPH) Practice Exam

What is the community rating basis for health insurance primarily designed to do?

1. Automatically assign lower rates to subscribers from disadvantaged communities

2. Allow community representatives to negotiate favorable rates

3. Spread the risk across the pool of insured

4. Benefit financially the healthiest insured individuals

The correct answer is: Spread the risk across the pool of insured

The community rating basis for health insurance is primarily designed to spread the risk across the pool of insured. This means that insurance premiums are set based on the health status and risks of an entire community rather than on the individual health risks of each subscriber. Essentially, this approach ensures that all members of the community, regardless of their personal health conditions, contribute to the costs associated with healthcare, which helps to lower premiums for high-risk individuals and provides a more equitable system of healthcare coverage. The underlying principle is to create a large, diverse risk pool, where healthier individuals can help cover the costs for those who are less healthy. As a result, community rating promotes affordability and access to healthcare for all members, preventing discrimination against those with pre-existing conditions or those who may otherwise face higher rates due to their health status. This structure ultimately supports the goals of public health by encouraging a healthier population and reducing financial barriers to accessing needed care.