Private health insurance is community rated, meaning everyone pays the same price for the same policy. This differs from other types of insurance, which are “risk rated” and influenced by personal factors such as driving record, smoking status or age, etc.
Health insurance doesn’t discriminate against members based on health status, age or claims history. For example, a healthy 20 year-old and an unwell 60 year-old will both pay the same base premium for the same cover regardless of how often they claim.
The government introduced community rating because they viewed it as unfair that someone with a higher number of claims in the past or a higher risk of health problems should have to pay more to get the same treatment. If community rating were not in place, individual insurance premiums could progressively increase until it became unaffordable for those who need it most.
Community rating keeps private cover accessible to anyone who needs it regardless of health status, and enables private health insurers to help take the burden off the public healthcare system. And that’s good news for all of us!
