CLEVELAND — Unvaccinated people might become the new smokers when it comes to health insurance.

Just as smokers sometimes pay higher health care premiums, employers are considering requiring people who don’t get the COVID-19 vaccine to pay higher insurance premiums.

The reason is clear: the unvaccinated are filling hospitals and costing health insurance providers billions. Those costs get passed on to other consumers in the form of raised premiums.

Preventable COVID-19 hospitalizations among unvaccinated adults cost over $5 billion from June through August 2021 alone, according to a joint analysis from the Peterson Center on Healthcare and the Kaiser Family Foundation.

The costs of COVID-19 treatment for private insurers are estimated to range up to $546.6 billion over 2020 and 2021, according to the advocacy and education group America’s Health Insurance Plans.

“That impacts the overall affordability of health care and health insurance for all of us, when we can least afford it,” said Kelly O’Reilly, president and CEO of the Ohio Association of Health Plans.

Delta Airlines has already taken action. Unvaccinated Delta employees face $200 monthly increases on their health insurance premiums starting Nov. 1. The airline cited the steep costs to cover employees who are hospitalized with the virus as its reason for the move.

JPMorgan announced Monday that unvaccinated employees will pay higher payroll contributions in 2022, to offset the costs associated with the increased risk of contracting coronavirus and additional testing.

Mercer, a major consulting firm that works with employers from around the world, is hearing from clients who want to know how to charge unvaccinated workers more for health insurance, according to press reports.

It could be an additional $20 to $50 each paycheck, a Mercer spokesman told USA Today that “Unvaccinated folks have the potential to cost employers more from a health care cost perspective, so they’re feeling they’re justified in that additional surcharge.”

Charging unvaccinated employees more for health insurance was seen as a way to encourage vaccination in the workplace, until the Biden administration announced a vaccination mandate in September. The Biden policy requires companies with more than 100 employees to mandate vaccines or regular testing for unvaccinated workers.

Employees in health care and education organizations that receive federal funds must be vaccinated, as well as all federal employees and contractors. The plan affects about 80 million Americans.

Placing a premium on unvaccinated workers is more about the reality that workers who haven’t gotten the shot could drive up health care costs for everyone.

The idea has traction among people who are vaccinated. A recent survey of 600 American adults found that 38% of those vaccinated, and only 7% of unvaccinated people, thought health insurance companies should charge unvaccinated people more for coverage. The poll was commissioned by Expertise.com, a service provider search firm.

O’Reilly said she had not heard of any insurance companies in Ohio that plan to raise premiums for unvaccinated people.

“I think we will see more of that potentially over time as a way for employers to incentivize their employees to get vaccinated,” O’Reilly said.

Some insurance providers serving Northeast Ohio are still deciding what to do. It’s too early in the process to comment on the relationship between premiums and vaccination at this time, said Mike Gallina, vice president, organizational development & community engagement for AultCare Health Plans.

Other insurance providers — including Anthem Blue Cross and Blue Shield in Ohio, Humana, Cigna Health and Life Insurance, SummaCare and Medical Mutual of Ohio — either did not respond to interview requests or declined comment.

Self-insured companies have flexibility

There are two ways that companies offer health insurance to employees — and one way makes it easier to penalize workers who aren’t vaccinated against COVID-19.

Some buy insurance for their employees, with the medical costs then being paid for by the insurance provider. This is known as a fully insured plan.

O’Reilly said there are more regulations pertaining to companies with fully insured plans, so it will be harder for those companies to charge unvaccinated workers more for insurance coverage.

Some companies are self-insured. This means that the business itself is taking the financial risk of covering employees’ health care costs, said Tom Campanella, healthcare executive-in-residence at Baldwin Wallace University. These businesses hire insurance providers only to administer and process claims. The company itself pays workers’ claims.

Self-insured businesses can legally charge additional premiums for the unvaccinated people that work for them, Campanella said.

“They’re taking the financial risk, so they’re really setting the rules,” he said. “They’re in a position where they have a lot of flexibility as to how they address issues like COVID-19.”

A self-insured company also could lower premiums for all employees because the Biden administration’s vaccine mandate means the company is not anticipating high insurance costs.

A company that was anticipating an 8% increase in premiums could lower it to a 5% increase because worker vaccination rates are high, Campanella said.

“It might be sort of a little bit of a carrot out there,” he said.


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