Short answer: By limiting pricing to age, location, tobacco, and family size, community rating spreads risk across the whole pool; raising premiums somewhat for young, healthy groups and lowering them for older or higher-risk ones.
Modified adjusted community rating compresses what insurers can charge: because they can’t price on health, gender, claims history, or industry, rates reflect the broader community rather than a single group’s risk. The practical effect is that younger, healthier groups pay a bit more than their raw risk would suggest, while older or less-healthy groups pay less; everyone gets predictable, non-discriminatory pricing. Some states tighten it further by banning tobacco rating or, in NY and VT, age rating.