Vaccination and insurance rates

So, everyone knows that the greater the proportion of people vaccinated, the more effective the vaccine is, and so our target should be close to 100% vaccinated (only close to, not exactly, because there are a small percentage who have a legitimate medical reason not to be vaccinated). And everyone also knows that, unfortunately, there are a significant number of people who are reluctant to be vaccinated, for reasons other than those legitimate medical reasons. It’s not all that big a problem right now, when we’re limited by how much vaccine is available, and someone declining means that someone else moves up in the queue (though it’s still a problem to some degree, given that there’s a reason that those people were further back in the queue to begin with), but it’s going to become a bigger problem with time.

Put all that together, and it’s clear that we need more incentives for people to get the vaccine. And given the American system, it seems to me that there’s a pretty obvious incentive available. People who are refusing the vaccine are putting their health at greater risk, and so it would make sense for insurers to charge them higher rates, just like they charge higher rates (for instance) for smokers.

Are any insurance companies talking about raising rates for people who voluntarily refuse the vaccine? Are they even allowed to? And if they’re not allowed to, should we change the rules so they are?

It seems counterproductive to me, some people are just contrarian by nature, and such a tactic might actually backfire. It would be better to just educate them about the vaccine.

You laid out a public health argument for raising rates. Is there a legit business reason for insurance companies to do this?

Both health insurance and life insurance would be facing higher costs for covering people who are not vaccinated. Someone has to cover those higher costs. Having the unvaccinated customer pay more seems the most reasonable answer.

Do they do that for any other vaccination or health recommendations? People get charged more for skipping colonoscopies?

For people under 50, I doubt you could make much of a financial case that on an individual level, the insurance company is going to spend a lot more on an unvaccinated person. How much higher do you think their rates should be?

AFAIK, health insurance providers don’t charge people different premiums based on their health or lifestyle, although a big issue with the ACA was that providers could no longer deny you a policy based on preexisting conditions. I suspect that might include your coronavirus vaccination status.

However, life insurance providers definitely do assess your risk of dying within the coverage period. When you apply for a policy, they do a health check and also ask you a lot of questions about your lifestyle: do you scuba-dive? Do you race motorcycles? Do you smoke? And so on. They cover the big points of risk, but they don’t shitpick: example, racing motorcycles (i.e. competition on a closed course where laps and/or times are measured) increases your premiums, but street riding doesn’t, even if you ride 20,000 miles per year. If their actuarial data showed that eschewing the coronavirus vaccine altered their risk of a payout in a statistically significant way, I wouldn’t be surprised if they factored your vaccination status into their premium calculus.

The legit business reason is that by raising their rates for anything they can get away with (where “get away with” includes both regulations, and what people will tolerate before they switch), they make more money. I would have thought that part would be obvious.

Most health insurance programs nowadays do have some sort of healthy lifestyle discount, where you get a checklist of things like regular checkups and a certain amount of exercise.

Well there you go. Insurance companies can add covid vaccinations to the healthy lifestyle discount list.

Since they don’t have any data yet, it might be premature though.

Well, it’s certainly premature right this moment, since most people can’t get vaccinated yet even if they want to.

The vaccines also have different levels of protection. Would you expect insurance companies to have different premiums for those who might get the Oxford vaccine over the Pfizer one? I could see insurance companies going the other way: not paying for the more expensive vaccines. Pfizer looks like ~$20/dose, Moderna ~$40/dose and Oxford is only ~$4/dose.

My Medicare advantage plan through Human does offer financial incentives for preventive care. It’s not much, but it’s things I’d do anyway for the most part. It’s like a $25 bump for my annual Medicare wellness check or an annual flu shot. I used to get $5 a month for every month I had more than a certain number of days that I met a step minimum when I linked my Garmin to their tracker.

I don’t remember how much the reward for a colonoscopy was, but if you weren’t getting one you sure wouldn’t do it for that. I don’t know if there’s a Covid vaccine reward yet, but it’s early for that to have made it through the bureaucracy.

That seems to be the case since ACA. Pre-ACA, the insurance company would do a census on everyone in your group (typically your workplace), average all the numbers and set the rate based on that. You would, in effect, be charged higher rates because some of your co-workers smoked or rock climbed or have chronic medical issues.
Then for a while rates were set based on gender and age and these days, at least for me, it’s based only on age.

Having said that, what they could do is offer a monetary incentive. For example, when you get the second dose, they’ll send you a check for $50 or $100. That would get a lot of people to go that otherwise wouldn’t get it or wouldn’t be in any particular hurry to do it. I’m guessing it wouldn’t be all that difficult for their actuaries to figure out how much they could send all their members and still come out ahead based on a very large percentage of those inoculated not catching it…especially if the government is footing the bill for the actual vaccine.

For a vast majority of insured people, whether through Medicare/Medicaid or workplace based plans, premiums aren’t set at the individual level.

As others have pointed out, health insurance companies do it by giving discounts, or direct cash, for doing healthy things. One company I worked for gave my $25 a month for hooking up my fitness tracker and making enough steps in a month. None of the other vaccinated diseases have had this high a death rate in my lifetime, so I’ve never seen any incentive for them, but I could see this being different.

The scary thing is that if you catch it and die the insurance company will pay out a lot less money than if you end up in the hospital for any length of time and/or have lifelong problems.