The problem with community rating is that it:
A)causes moral hazard.
B)results in poor-quality health care.
C)is very unpopular with health care providers.
D)may cause adverse selection.

Question

Quizplus · Accepted Answer

Community rating may cause adverse selection, which is when healthier individuals may be disinclined to purchase health insurance if premiums are the same for everyone, while sicker individuals are willing to pay more. This can result in a higher proportion of sicker individuals in the insurance pool, which can lead to higher claims costs and ultimately higher premiums for everyone. This can create a cycle where healthier individuals are even more disinclined to purchase insurance.

The Problem with Community Rating Is That It