The Food and Drug Administration (FDA) fully authorized Pfizer’s COVID vaccine on Monday for use in people over the age of 16. This moved the vaccine from an Emergency Use Authorization (EUA) to regular approval. Within hours of the FDA approval, companies, municipalities and other large employers started to announce vaccine mandates.
Delta Airlines is one of those companies. They are applying a moderately strong stick approach. Unvaccinated individuals will see their company sponsored health insurance premiums increase.
BREAKING: Delta Air Lines says unvaccinated employees must pay $200 per month surcharge for health insurance. pic.twitter.com/Lye141Oed9
— Sam Sweeney (@SweeneyABC) August 25, 2021
Actuarially, Delta Airlines is partially risk rating their health insurance pool. A group of employees who are statistically likely to run up big claims will be paying more in premiums. Risk-rating is unusual in the US health insurance system at this time. The ACA bans most forms of risk rating in the fully insured small group and individual markets with carve-outs for age and smoking status. ERISA usually regulates large, employer groups that self-insurer like Delta. Here, employers must offer a class of employees truly community rated premiums. However there is a carve-out as Sabrina Corlette of Georgetown explains:
Federal rules allow for two types of wellness programs – participatory, where the incentive is based on whether the employee participates in the program – or “health contingent”, where the employee actually achieves a health-related target. 6/13
— Sabrina Corlette (@SabrinaCorlette) August 25, 2021
What do we know about wellness programs and behavioral surcharges?
They don’t do much good.
The ACA tobacco surcharge has not been shown to increase smoking cessation attempts. Instead, it merely increases adverse selection as reasonably healthy smokers look at their net premiums even after subsidies and decide that the combination of the subsidized base amount and the non-subsidized surcharge makes the ACA a bad deal so they don’t buy coverage.
A vaccination wellness program is a bit different than the other workplace wellness programs in that it involves two distinct decisions three to six weeks apart and no other changes in behavior. However, if we think that it is still a wellness program with a modest stick attached to it, we should not anticipate huge changes in behavior.
More importantly, we need to go back to thinking if we want to engage in risk rating as we discussed earlier this summer:
In health insurance, we aren’t often making that same decision that experience and risk rating is just. We, as a society, think that there is a significant component of luck that is randomly distributed that is highly correlated with costs. And if we think that luck matters a lot and that the provision or non-provision of affordable and useful insurance produces lots of suffering that we don’t want to see, then pure risk rating goes out the door. We’ve mostly made the decision as a society that pure risk rating produces bad things in the healthcare setting…
This is a political and social decision.
Going to a broader sense of risk rating in health insurance is a political and moral decision.
It could work.
It could have consequences that we either do or do not want.
I understand the frustration. I want to not worry about sending my currently unvaccinated nine year to school with hundreds of other unvaccinated kids every day. I want to not worry that my mother who has a medical history that looks like a CVS receipt won’t be exposed to an infection that could beat her vaccinated immune system. I don’t want to worry, and that means a combination of societal behavioral changes like increasing ventilation and regular, routine masking when indoors and mass vaccination. I’m frustrated. I’m confident that many Jackals are also frustrated. It is two shots, with the biggest unknown is whether the post jab celebratory food is pancakes or ice cream, and yet tens of millions of people still refuse to acknowledge that they are part of a broader society and their behavior generates benefits and costs that other people can not avoid paying.
But do we want to go down a path of risk rating health insurance again with a system that is unlikely to produce significant positive behavioral changes?