Medical underwriting and non-vaccinated COVID cases

Anonymous at Work asked a very interesting question in comments yesterday:

I wanted to ask about whether ACA, Medicare/caid, etc. can allow vaccination mandates or treat vaccination as an unhealthy habit akin to smoking for purposes of coverage denial and pricing.  To what extent is that possible under existing law, vs. needing a new law passed?

Damn good question.

The short answer is NOT REALLY FOR GOVERNMENT PROGRAMS.

Now let’s get to the longer answer.

The Affordable Care Act regulated insurance markets (individual Qualifying Health Plans (QHPs)) and fully insured small group have limited community rated, guaranteed issued pricing policies.  This is a technical way of saying that with limited exceptions, insurers have to cover anyone who submits an application at the same rate.  The ACA does allow for different prices to be offered on a few categories: geography, age and smoking status.  Prices can vary for the same plan in different parts of a state.  Prices can vary by up to three to one for 64 year olds relative to 21 year olds (this does interesting things to subsidized pricing) and prices can increase by up to 50% for people who attest that they are smokers.  The smoking penalty can not be paid for by federal subsidies.  Insurers are not obligated to charge a smoker surcharge  and if they do charge smokers more, the surcharge varies a lot.

The ACA does not allow for the exclusion of individuals on the basis of medical history.  Not being vaccinated against a potentially expensive and deadly infectious disease is part of a person’s medical history.  It is unlikely to be a wise decision but it is a decision that should not change the availability of insurance or its price.

Medicare, Medicaid and CHIP can’t deny coverage for pre-existing conditions or medical history.    Medicare supplemental coverage may be underwritten if it is purchased outside of the initial open enrollment period so this individuals on Medicare could see some incremental cost based on the lack of a vaccine in the future.  New legislation would be needed to impose vaccine history as a ratable factor for government programs. I have no idea how to get to 218-51-1 much less 218-51-1-5 to add vaccine history as a ratable factor.

Now, let’s talk about where it gets messy.

Individual insurance that is not regulated by the ACA is the Wild West.  Anything goes.  Underwriting happens.  Insurers could legally and quite conceivably decide to either deny coverage or increase premiums on the basis of vaccine history.  This means short term limited duration plans, Farm Bureau “we’re not insurance but we act like it” plans and Cost Sharing Ministries can YOLO their rates and coverage.

Now onto the ERISA regulated group markets of self-insured employers that use insurers for administrative functions there is a lot of wiggle room through the concept of a wellness program.  ERISA regulated plans have to offer community rating and guaranteed issue for similarly situated employees.  However there is a huge loophole.  Wellness programs can significantly change benefits and premiums.  Katie Keith at the Health Affairs Blog has more:

Wellness programs were initially authorized by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  HIPAA prohibited group health plans from determining eligibility or varying premiums based on health status. However, HIPAA regulations allowed premium discounts or rebates or cost-sharing modifications as incentives for participation in a wellness program that met certain requirements. HHS and the Departments of Labor and Treasury published final HIPAA wellness program rules in 2006, allowing wellness incentives to be tied to employees actually meeting specific biometric targets (such as losing weight or lowering your blood pressure). Under the 2006 rules, these incentives could be as high as 20 percent of the cost of group coverage. 

Those regulations became the basis for the ACA’s wellness program requirements, which offer a narrow exception to the ACA’s general prohibition on health status underwriting. These requirements are laid out in Section 2705 of the Public Health Service Act. Under Section 2705, employers must meet certain requirements to offer a wellness program that grants rewards or imposes surcharges based on an enrollee’s medical condition.

The ACA allowed health-contingent wellness incentives to be as high as 30 percent of the cost of coverage (up from 20 percent under HIPAA); federal regulators can increase this ceiling to 50 percent if they determine that such an increase is appropriate. 

I could see a large group employer start a wellness program where the absence of a large amount of neutralizing titers for COVID-19 would lead to a 30% premium surcharge.  I would not want to work in their HR or Comms department, but this is a perfectly plausible vehicle for uprating premiums based on medical history.