Delta Air Lines Is Charging Unvaccinated Employees $200 Insurance Fee. Will It Work?

As the fourth wave of the COVID-19 pandemic continues, more companies are starting to require coronavirus vaccines for their employees. But this week, Delta Air Lines chose a different tactic when it became the first major U.S. company to say it will charge more for health insurance if employees do not get vaccinated.

Some may see this as a compromise between vaccine mandates and more positive incentives, but experts say it could be complicated to execute and that there’s no way to tell how effective it will be.

The move represents the tricky calculus employers are being forced to make as they try to keep employees safe and their companies running while avoiding the worker shortages hitting some industries. It also comes as vaccinated individuals around the country are blaming unvaccinated people for surging daily case numbers, resulting in increased hospitalizations, deaths, a return to mask-wearing and social-distancing measures, among other consequences.

“We’ve always known that vaccinations are the most effective tool to keep our people safe and healthy in the face of this global health crisis,” Delta CEO Ed Bastian wrote in a memo to staff on Wednesday. “That’s why we’re taking additional, robust actions to increase our vaccination rate.”

Starting on Nov. 1, Delta employees who have not been vaccinated will have to pay an extra $200 per month if they remain on the company’s health insurance plan. Delta justified the decision with the steep cost to the company of covering employees who are hospitalized due to the virus. Every Delta employee who has been hospitalized with COVID-19 was not fully vaccinated, the company said, and these hospitalizations cost an average of $50,000.

Some experts say this doesn’t come as a surprise. A recent analysis from the nonpartisan Kaiser Family Foundation found that COVID-19 hospitalizations involving unvaccinated patients in June and July cost the U.S. health system a total of $2.3 billion. Hospitalizations have increased this month, which means the cost is likely to continue rising.

“The cost impact is definitely a factor in employers and plans trying to encourage more people to get vaccinated through various mechanisms,” says Krutika Amin, associate director of KFF’s program on the Affordable Care Act and co-author of the analysis.

Many parts of the corporate world have been considering—and implementing—various methods for getting people vaccinated in recent weeks. The National Football League said in July that teams with COVID-19 outbreaks among unvaccinated players will have to forfeit any games that can’t be rescheduled during the conference’s regular season. Major employers including Disney, Google, Walmart and Goldman Sachs have said they will require staffers to be vaccinated before returning to their offices. Some colleges and universities are charging unvaccinated students for regular coronavirus testing. And now that the FDA has fully approved the Pfizer vaccine, the Biden Administration has said all nursing homes that receive federal funding must mandate vaccines for their workers.

Generally, employers can legally require that their employees be vaccinated as long as they provide accommodations for those who cannot get a vaccine due to a disability or sincerely held religious beliefs. ​​About 14% of U.S. employers now require or plan to require their staff returning to worksites to be vaccinated, according to a recent survey from Mercer, a corporate benefits consulting firm. This is a significant increase from the 3% of employers who were doing so in a May survey.

But Bastian, Delta’s CEO, told CNN this week he didn’t think a vaccine mandate fit with his company’s culture. At this point, 75% of the company’s staff is vaccinated, he said, and more than 80% of its pilots and flight attendants are vaccinated. “Every company has to make its own decision for its culture, its people, what works according to its values,” he said. “I think these added voluntary steps, short of mandating a vaccine, are going to get us as close to 100% as we can.”

Delta employees who do not get vaccinated will also face other restrictions. They must immediately start wearing masks in all indoor settings, and they will have to undergo weekly COVID-19 testing starting Sept. 12. By the end of September, unvaccinated employees will stop receiving pay protection if they have to miss work due to testing positive for the virus.

The insurance charge is more complicated than a straight mandate. Under federal law, insurers and employers cannot charge people more for pre-existing health conditions. But an exception in the Health Insurance Portability and Accountability Act (HIPAA) allows employers to use incentives as part of a workplace wellness program, and that’s how the coronavirus vaccine charges will be set up.

However, some health care experts note that these kinds of premium incentives do not always work. The Affordable Care Act allows insurers to charge people more for smoking tobacco, and research has shown that tobacco-related surcharges do not lead people to stop smoking but do lead them to give up insurance coverage. Other studies have also shown little evidence for weight loss incentives and for workplace wellness programs more broadly.

“I am very sympathetic to the complaints that those of us who are vaccinated can’t get back to our normal lives because of this group of people who are unvaccinated, and they’re going to cost the health system all this money,” says Sabrina Corlette, co-director of the Georgetown University McCourt School of Public Policy’s Center on Health Insurance Reforms. “But when the incentive is tied to the premium that somebody pays for their health insurance coverage, there’s no evidence that that particular incentive works.”

The insurance charges are also likely to have the biggest impact on low-income people who may already be struggling to afford their health insurance premiums, Corlette says. Not having health insurance often deters Americans from seeking health care, and this could pose further problems at a time when politicians and public health officials are urging people to consult their own primary care doctors if they have questions about the vaccines.

“Do we really want to price people out of insurance coverage that would give them access to a primary care provider who might be somebody that they trust and will listen to, and will help them understand the benefits of getting vaccinated?” Corlette asks.

But Scott Ratzan, an expert in health communication at the City University of New York Graduate School of Public Health & Health Policy, says that while physicians are among the most trusted sources of information, he believes the added cost of an insurance surcharge might “wake up” people who have so far avoided getting vaccinated.

“I think it’s a good thing that we start to remind people there’s a consequence for, frankly, bad decisions when it comes to not getting vaccinated. And these don’t only have consequences on themselves, they have consequences on all of society,” Ratzan says.

He serves as executive director of Business Partners to CONVINCE, a global group of employers encouraging COVID-19 vaccination, and says he expects more companies to take similar steps soon. In some cases, firms may decide to implement extra insurance charges for unvaccinated employees if they believe their employees’ unions will not accept a vaccine mandate. For example, the Air Line Pilots Association’s Delta Master Executive Council, which represents 14,000 pilots at Delta, has already expressed concern about the company’s new policy. “The Delta MEC has consistently advocated to maintain the right of each individual pilot to consult with his or her medical provider regarding COVID-19 vaccinations or booster doses,” the union said in a statement. “While the Delta MEC respects Delta Air Line’s efforts to mitigate the impact of breakthrough COVID-19 variant infections, it needs to bargain with the Delta MEC over any employer-mandated vaccination for pilots.”

And while such insurance charges are legal, some see the move as a slippery slope. Corlette would prefer companies mandate vaccination over tying the decision to health costs.

“This is something that we fought long and hard about with the Affordable Care Act. Your health status or whether or not you sit on the couch all day and watch Netflix or jog every day—that shouldn’t be a factor in what a health insurance company can charge you as a premium,” she says. “It goes back to this kind of very fundamental question of, is access to health care a fundamental right, or is it a privilege?”