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You are here: Home / Anderson On Health Insurance / Medical underwriting and non-vaccinated COVID cases

Medical underwriting and non-vaccinated COVID cases

by David Anderson|  July 29, 20218:15 am| 8 Comments

This post is in: Anderson On Health Insurance, COVID-19

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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.

 

 

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8Comments

  1. 1.

    Big R

    July 29, 2021 at 10:10 am

    What about using county-level vaccination and case RATES as a factor in rate-setting, which presumably would be allowed under the “geography” factor permitted in underwriting? And if the insurer says “if you don’t report this data we’re going to assume it’s the worst possible outcome” would that eliminate a perverse incentive to simply stop reporting data?

  2. 2.

    Ken

    July 29, 2021 at 10:12 am

    When I joined my current company in 2012, they had a wellness program where if you completed some online courses and logged weekly exercise, you got a (small) cut in the payroll deduction for health premiums.

    A few years later it was subcontracted to a third party and the payroll rewards went away, I assume because there was no easy way to deliver the data to HR. The incentive was then in the form of “points” with the third party, which could be exchanged for (vaguely health-related) merchandise.

    The current program is with a different third party, and to use their rewards system you have to install that vendor’s app on your phone and provide them with a bunch of personal info, which I’m unwilling to do.

    As you might guess, my participation in the company-sponsored diet and exercise programs dropped with each change. I still exercised but not as regularly. It was actually COVID that reversed that trend.

  3. 3.

    David Anderson

    July 29, 2021 at 10:30 am

    @Big R: That geographic variation is baked into the state index rate and the allowable geographic rating difference is due to local costs and patterns of care and not underlying morbidity.  So short answer — not really

     

    Good lawyers working with good actuaries can get somewhat around those constraints, but it is a not really solution.

  4. 4.

    Fleeting Expletive

    July 29, 2021 at 10:49 am

    I’m so glad there is a knowledgeable person to help me understand these issues.

    For assessing a group’s (city, worksite, company or district)  overall immunity, would the wastewater viral/antibody levels indicate vaccine uptake rate?  Seems it would be helpful to isolate hotspots and monitor trends,.

  5. 5.

    David Fud

    July 29, 2021 at 10:50 am

    I had asked you about this topic on twitter, and I have to say that I really believe that insurance premium differentiation should broadly apply to risky behaviors. Drive fast with a meter in the car? Higher automobile premiums. Don’t take vaccines? Pay a higher premium. Have a gun? Have to insure it/higher premium/no coverage for gun related health problems.

    I realize that these are taboo costs in American society. However, if someone started a pool of folks who were up front about their cheaper behaviors (speeding, guns, vaccines, whatever), you would think it could bifurcate the insurance market between the two risk pools and force the increases indirectly on the more expensive pool.

    Of course, I don’t work in the industry, so I could just be full of BS.

  6. 6.

    Robert Sneddon

    July 29, 2021 at 11:06 am

    @David Fud: I don’t have a chihuahua in this fight being a downtrodden and oppressed peon in the uber-Socialist Dictatorship of Great Britain and its NHS but if I understand correctly, USians who don’t smoke can get a discount on insurance premiums. Why do the insurance companies not offer a similar discount for those whose medical records indicate they are vaccinated against COVID-19? It’s not like handing out Amazon or Walmart gift cards at the vaccination centres but it might incentivise some waverers.

  7. 7.

    David Anderson

    July 29, 2021 at 11:06 am

    @Fleeting Expletive: Wastewater surveillance screening will not detect immunity levels.  It will detect current infection levels as poop carries shed viruses quite well.  However once an individual recovers, they stop shedding even as they are either immune or very resistant.

    One challenge with workplace wastewater surveillance is some people will not take a shit at work no matter how they are feeling so the sample is neither complete nor random.

  8. 8.

    Anonymous At Work

    July 29, 2021 at 1:03 pm

    So, long story short (Too late!), insurance pricing isn’t a viable route except for maybe large group employers, and they’d be much more likely to impose a mandate on employees before they consider messing with their insurance programs (which is what my employer did! Good for them/us!).

    It is disheartening since hitting the dead-enders in the wallet would seem to be a way to encourage them to get over themselves.  In the South, “Your family can pick Tucker Carlson or your bass boat but not both!” would get people off the fence quickly.

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