The insurance industry and the unvaccinated | Opinion
An Illinois state lawmaker proposed a bill in which neither the state nor health insurance providers would have to pay for COVID-19-related medical care for those who choose to remain unvaccinated against COVID-19 and to be infected.
Such a bill is clearly an abuse of the government. The lawmaker, Representative Jonathan Carroll, subsequently withdrew the bill due to threats made against him, his family and his staff. Yet this proposal opens up for discussion the calculation of the risks that go into the delivery of health care and the way in which health insurance premiums are set.
Insurance is a mutual risk. Whether it’s auto insurance, life insurance, or health insurance, coverage comes at a cost, with claims paid out of premiums billed. This is why young drivers pay higher auto insurance premiums than older drivers, and smokers pay higher life insurance premiums than non-smokers. The history of claims payments supports such differential premiums.
With health insurance, like all forms of insurance, premiums are based on the collective risk profile of the population covered. When an external event disrupts the risk profile, the amounts paid will be different from what is historically expected.
Delta Air Lines, a company that sponsors health insurance for its employees, recognized the disruption and began evaluating health insurance supplement for those who chose to remain unvaccinated. From a risk assessment perspective, the airline considered this to be reasonable and appropriate. He estimated that those who had not been vaccinated were more likely to accumulate higher costs for medical care and hospitalization than those who had been vaccinated.
Based on the company’s risk assessment, this was a sound business decision, regardless of why people chose to be vaccinated or went unvaccinated.
What the Illinois lawmaker proposed was much more draconian. He effectively wanted to remove anyone who was unvaccinated from the group of people with health insurance coverage needing treatment for COVID-19. This is akin to an exemption from coverage, which is not unknown to insurers, but unreasonable if imposed by state law.
The delivery of health care is a complex process of services provided and payments made. Doctors take an oath to provide care to all of their patients and “do no harm”. It is against their principles to deny care to sick patients with COVID-19 if they are not vaccinated, or any other condition for that matter, regardless of their ability to pay for the services. However, those who pay for services are not bound by such ideals.
Inserting a COVID-19 exemption or supplement into a health insurance policy for unvaccinated people can be seen as a good deal, as Delta Air Lines discovered. It also provides an incentive to get vaccinated, which is in line with President Joe Biden’s vaccination mandate, although legal headwinds will likely prevent the mandate from being enacted and implemented.
Three vaccines are available free to Americans and have been shown to be the most effective in preventing people from going to the hospital. Breakthrough infections do occur, although the preponderance of them have been mild cases.
When people choose to be vaccinated, they take advantage of all the resources available to protect themselves and others, these resources being offered free of charge.
When people choose to go unvaccinated, they choose not to use these resources. Research has shown that the unvaccinated are more vulnerable to infections, hospitalizations, death and long-distance COVID-19. The uncertainty surrounding the omicron variant adds another wrinkle to the risk equation to be determined.
Denying care to people who make decisions based on their perception of information, even erroneous or incomplete, is contrary to the principles of ethical medical practice. When it comes to paying for care, however, after almost two years of the pandemic, with around 50 million confirmed cases and 800,000 deaths, insurance companies know enough to make informed business decisions.
Whether it’s coverage exemptions or surcharges for the unvaccinated, or premium discounts for the vaccinated, the COVID-19 insurance risk calculation not only suggests the need for a change, but it also requires it.
The same principles apply to life insurance. Life insurance payments have increased during the pandemic. With vaccines available to reduce these deaths, if people choose to go unvaccinated, for whatever reason, they are at a higher risk of death than those who choose vaccination. The life insurance risk calculation suggests the need for differential premiums, which already exist for people who choose to engage in risky behaviors like smoking.
As COVID-19 enters the age of the omicron, the uncertainty surrounding the virus demands that the best tools available be used. If people choose to reject such tools, the risk economy means that insurers will respond by charging some what they want.
It is not a moral, ethical or political decision. It’s a good business decision.
(Sheldon H. Jacobson is professor of computer science at the University of Illinois at Urbana-Champaign. He wrote this for the Chicago Tribune.)