The current wave of COVID-19 in the United States primarily affects unvaccinated Americans, who represent more than 95% of current cases of hospitalization and death.
Given the average cost of a COVID-19 hospitalization in 2020 cost approximately US $ 42,200 per patient, will the unvaccinated bear more of the cost of treatment, also in terms of insurance?
We asked economists Kosali Simon and Sharon Tennyson explain the rules governing how health and life insurers can discriminate against clients based on immunization status and other health-related reasons.
1. Can insurers charge more for unvaccinated people?
This is a really interesting question and depends on the type of insurance.
Life insurance companies have the freedom to charge different premiums based on risk factors that predict mortality. Buying a life insurance policy often involves a health check or medical examination, and seeking immunization status is not prohibited.
Health insurers are another story. A a multitude of state and federal regulations over the past three decades strongly restricted their ability to use health factors in issuance or pricing policies. In 1996, the Health Insurance Portability and Liability Act started to ban the use of the state of health in any group health insurance policy. And the Affordable Care Act, passed in 2014, prevents insurers price plans based on health – with one exception: smoking status.
2. Are premiums or coverage still affected?
Fortune recently reported that although many of America’s largest life insurance companies are not yet asking clients for their immunization status, a few insurers told the magazine they did it for people at high risk. It was not clear in the article if this affects premiums.
A recent study comparing life insurance policies from 2014 to February 2021 found that premiums and coverage haven’t changed much during the pandemic. The study found evidence that the terms of the policy for older people and those with high-risk health conditions worsened.
The study’s authors suggested that the rapid development of vaccines might explain why life insurance markets have yet to show a dramatic response to COVID-19, but their work does not distinguish the vaccinated from the unvaccinated. .
It’s important to note that either way, the premiums and coverage of existing life insurance plans won’t change, so a death from COVID-19 will definitely be covered. In general, denial of life insurance claims is rare and only occurs for specific documented reasons.
3. So smokers can pay higher premiums?
In life insurance, smokers certainly pay higher premiums, as do obese people.
ValuePenguin, a unit of LendingTree that provides research and analysis, found that smokers generally pay more than three times more for life insurance than non-smokers.
The site also found that obesity increases premiums about 150% – or more if the person also suffers from health problems associated with being overweight.
As for the pricing of health insurance, the Affordable Care Act allows insurers to increase premiums up to 50% for smokers. The difference between what smokers and non-smokers pay may actually be higher because the former cannot use a key government grant pay the smoking supplement.
The ACA makes no similar exception for obesity.
4. What about reductions for the vaccinated?
There is one tool available to health insurers – including self-insured employers – to reduce premiums for vaccinated people: welfare incentives.
Just as insurers and companies offer discounts for things like trying to lose weight or quitting smoking, they are also allowed reduce the health insurance premiums paid by vaccinated employees.
In 2019, the average maximum incentive offered by employers for workers to participate in wellness activities was $ 783 per year.
Some employers are already promoting COVID-19 vaccinations this way. For example, Missouri State University offers a discount of $ 20 per month on health insurance premiums for employees who have received a COVID-19 jab. Others are considering similar discounts.
And so, even though insurers may not charge the higher premiums for unvaccinated, people who refuse to be vaccinated may end up paying more than their vaccinated colleagues.
5. Do insurers take into account other vaccines or flu shots in the rates?
To our knowledge, insurers have not specifically used vaccination status or the flu shot to set premiums.
As part of accessing your medical records, life insurers can find out if you have been vaccinated, but there is no system in place to check annually if you have been vaccinated against the flu. Health insurers cannot apply for immunization status for the reasons listed above.
Employers may offer incentives to get the flu shot as part of their wellness programs.
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