Risk Pooling and Plan Funding

What mechanisms are used to manage or organize risk?

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Risk Pool

How are individuals grouped to allow payers to offset the cost of individuals with high medical expenses with healthier individuals with lower medical expenses?

Policy Definition: A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Pooling risk together allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy, either in a plan overall or within a premium rating category. In general, the larger the risk pool, the more predictable and stable the premiums can be. source


Plan Funding

How are plans funded to provide health care benefits to individuals, while controlling
overall costs?

Policy Definition: Plan funding is the method used to finance (or pay for) and administer a
health benefit plan.


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