Despite numerous incentives from states, insurers, and employers, many people still haven't been vaccinated against Covid-19, leading some employers to start imposing financial penalties in the form of increased health insurance premiums. Industry stakeholders say insurers themselves could raise premiums next. 

The 5 biggest obstacles to vaccine passports (and how they might be overcome)

Background

So far, according to Forbes, most employers and insurers have offered incentives rather than penalties to encourage people to get vaccinated against Covid-19.

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For instance, data from Mercer found that 19% of employers offered paid time off for employees to get vaccinated, with some offering additional time off to allow employees to get their children vaccinated. And according to America's Health Insurance Plans, some private insurers have offered people credit toward their medical premiums or gift cards if they get vaccinated.

However, a Kaiser Family Foundation poll found that vaccine incentives have limited value, potentially indicating that other methods need to be taken to encourage vaccination.

Some stakeholders believe the high cost of hospitalization—for both insured and uninsured people—could be an incentive. For instance, in an op-ed for the New York Times, Elisabeth Rosenthal and Glenn Kramon cite a case in which an uninsured patient in Miami received a $104,000 hospital bill for a 14-day stay due to Covid-19.

And even with insurance, Covid-19 hospitalization can be costly, Rosenthal and Kramon write. They explain that many major private insurers, including Aetna and UnitedHealthcare (UHC), have rolled back patient payment waivers—which covered deductibles and coinsurance—for Covid-19 treatment that were in effect last year, before vaccines were available. This means that if hospitalized for Covid-19, insured patients now have to cover their deductible, as well as copays and potentially even out-of-network care costs, Rosenthal and Kramon report.

(Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group. UHG separately owns UHC.)

A hit to unvaccinated employees' paychecks

According to an article in Forbes, some employers are moving to penalize unvaccinated employees to encourage them to get vaccinated.

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He cites data from Mercer, a large employee benefits consultancy, which found that some employers are considering adding premium surcharges to the paychecks of employees who remain unvaccinated. These surcharges would be between $20 to $50 a month, similar to what some companies already charge for employees who smoke.

Wade Symons, Mercer's regulatory resources group leader, wrote in a column on the company's website that "most employers continue to hold off on [vaccine] mandates because of potential employee relations issues that such a move might provoke."

However, due to an increase in Covid-19 infections and hospitalizations around the country, "health coverage surcharges for the unvaccinated are a tactic employers are reviewing as an alternative to a mandate," he added. According to Mercer, 20 employers over the past few weeks have issued inquiries about "adding health coverage surcharges for the unvaccinated as a way to drive up vaccination rates in their workforce."

Will insurers be next?

Similarly, according to Rosenthal and Kramon, insurers may also try to encourage vaccination uptake by "penalizing the unvaccinated." They note that some health insurance policies already refuse to cover treatment for "risky behavior" such as scuba diving and rock climbing. The Affordable Care Act also allows insurers to charge smokers up to 50% more for some health plans compared to nonsmokers, and 40 states follow this guidance.

According to Rosenthal and Kramon, these kinds of policies aim to discourage unhealthy behavior that can hurt others and lead to large financial costs. The authors note that people who aren’t vaccinated against Covid-19 and then get infected expose others around them to the coronavirus. And the high cost of care for Covid-19 patients could lead to higher premiums for those who chose to remain unvaccinated as well as everyone else on their insurance plans the next year.

"But what if the financial cost of not getting vaccinated were just too high?" Rosenthal and Kramon conclude. "If patients thought about the price they might need to pay for their own care, maybe they would reconsider remaining unprotected." (Rosenthal/Kramon, New York Times, 8/2; Japsen, Forbes, 8/8)