Using insurance to encourage vaccination

The most common proposals for pressuring people to vaccinate involve either vaccine mandates or vaccine passports. 

As some of the comments on my previous post suggest, there is another option, viz., making the unvaccinated responsible for the cost of their covid treatment.

In theory, this can be done either by denying insurance coverage to people who are unvaccinated without medical justification, or by raising health insurance premiums for the unvaxxed.  The first would be politically problematic and might not be very effective at inducing vaccination – a small number of people would be ruined financially, but many others might just continue to resist getting shots.

So why not charge people more for insurance if they are unvaccinated, or give a discount to the vaccinated?  This would give people an incentive to get vaccinated, it would force the unvaccinated to bear the predictable financial costs of their decision rather than imposing those costs on others, and it would respect individual choice about vaccination.  It is not a perfect solution; it would not make people bear the costs they create by remaining susceptible to infection and acting as vectors of transmission, and (unlike the mandate endorsed by Singer) it would not prevent people from making a mistake they will later deeply regret. Nonetheless, it seems worth considering.

One question is whether it is legal to charge unvaccinated people more for insurance under current law.  I used to teach insurance regulation (fun, right?), but I’m not up to date and so can’t comment on this. 

Putting aside the strictly legal question, there are good reasons to avoid making insurance premiums dependent on health behaviors. It is often difficult to know how costly it is for an individual to change their behavior – to lose weight, say – and allowing insurers to charge more for health behaviors that are difficult to change can undermine the risk-sharing function of insurance.  Getting vaccinated, however, really is very easy, and so might be a good candidate for an exception to the general rule against tailoring premiums to individual behaviors that affect the likelihood of sickness.

Finally, employers may be able to mandate vaccination even if they are not are not legally allowed to pass costs on to unvaccinated employees in the form of higher premiums.  And they clearly have an incentive to do this, both to contain health care costs and to avoid lost work time, sick leave and disability payments, etc.  So explicitly charging the unvaxxed more for insurance may not really be needed (at least for people who get insurance through work). My guess is that we will see increasing adoption of mandates by employers, especially as the number of unvaccinated people shrinks.