Who Should Pay the Costs of Covid-19 Hospitalizations for Unvaccinated People?

Disclaimer: Views expressed in Bob’s Blog belong solely to the author and do not purport to reflect the opinions or views of the CAC Office in Aging or its staff. Posted September 14, 2021

Here we are – a year and a half into the Covid-19 pandemic and it rages on. The Delta variant, the latest form of virus, has proved to be more contagious than the other strains.

Hospitals in East Tennessee Are Full

Ambulance drivers have to check with hospitals to make sure they have room before they take a patient there. At times they have to check with several before they find one that can accept a new patient.

When person has a major problem like a heart attack or a stroke, it may become a life and death situation if they can’t be treated quickly.

As of the End of August, 2021, 45% 0f Those in Knox County are Unvaccinated

While the president, the CDC, various medical associations and the federal government are asking people to get vaccinated, only 56.45% of the people living in Knox County have received the first shot of the vaccine and 50.64% have been fully vaccinated as of the end of August 2021. In the rest of Tennessee, the numbers are lower.

Covid-19 is more severe for the unvaccinated. At the present time, 90 to 95% of those hospitalized with Covid-19 throughout our country are not vaccinated.

Hospital Costs for Those with Covid-19

A non-profit organization, Fair Health, helps people like you and me understand the costs of healthcare. In the spring of 2020, they did a study of hospital costs for patients with Covid-19.  Here are their findings:

  • According to public health experts they checked with, 15 to 20% of those with Covid-19 who seek treatment may need hospitalization.
  • The average charge for each Covid-19 patient without insurance or who was confined at a hospital outside their network was $73,000.
  • The average estimated in-network amount for each patient with insurance was lower: $38,221

A year later, those hospitalized require the same amount of care. There is no reason to believe that the costs of their hospitalizations are lower than they were in 2020.

As of the end of August of 2021, the Knox County Health Department was reporting there have been 1,544 hospitalizations due to Covid-19 since the start of the pandemic in 2020. 774 hospitalizations were in 2020 and 770 thus far in 2021.

Let’s estimate the cost of the 770 hospitalizations this year.

  • 770 X $73,000 = $56,210,000
  • 770 X $38,221 = $29,430,170

If the average cost was $50,000 the total cost for all 770 hospitalizations this year has been about $38,500,000.

Higher Insurance Premiums and Higher Taxes

For those with Medicare or insurance, Medicare or Insurance pays the cost of their hospitalizations.

Most people are unaware of how the cost of medical insurance is set. They assume the insurance companies set the cost on their own based on how much money they want to make. That isn’t the way it’s done.

The cost of a medical insurance plan for a company is based on:

  • the total cost of the medical claims paid for the employees of that company, plus
  • the cost to process and pay the claims for the insurance company, plus
  • a profit for the insurance company.

Here’s an example:

Cost of Medical Bills                Administration        Profit              Cost for the year

$1,000,000                                   $100,000                   $50,000          $1,150,000

The annual and monthly premium for each employee for the following year is determined by dividing the total cost from the prior year by the number of people covered under the plan.

Annual           Monthly

Cost for 2020                              Employees               Premium       Premium

$1,150,000                                   200                             $5.750            $479.17

The company determines how much of the $479.17 they will pay monthly and how much they will require each employee to pay. Some companies may pay the entire amount. Others may pay half and some require the employees to pay most or all.

Medicare works the same way except there are many more people covered by Medicare than those covered by any company’s own insurance plan.

For those who don’t have Medicare or insurance, the cost is normally paid by the State or Federal Government.

If Medicare or insurance is paying for it, you and I end up paying for it when Medicare or the insurance companies increase their rates to cover what they had to pay out this year.

The costs of hospitalizations for people with Covid-19 are much higher than normal.   Hospital costs between $38,000 and $73,000 for each person can very quickly distort the cost of insurance plan.

In the example above, I indicated the cost of medical bills was $1,000,000. The average cost was $5,000 per employee.  Let’s say 5% of the 200 employees had severe cases of Covid-19 and the average cost was $50,000. Each of those 10 employees was unvaccinated. The cost to the plan would be $500,000 more.  The impact would have been:

Medical Bills – 2020                   Administration        Profit              Cost for the year

$1,500,000                                   $100,000                   $75,000          $1,675.000

Annual           Monthly

Cost for 2021                              Employees               Premium       Premium

$1,675,000                                   200                             $8,375            $697.92

Let’s look at the other side.

When a person gets vaccinated, there is no charge. However, the charge for it is paid by the federal government. According to the British Medical Journal, here is what the US government is paying the suppliers for the Covid-19 vaccine:

Company              Cost/Dose                 Doses Needed                     Total

Pfizer                     $19.50                                2                                     $39.00

Moderna               $15.00                                2                                     $30.00

J & J                      $10.00                                1                                     $10.00

The highest cost for a vaccinated person is $39. The estimated cost for the unvaccinated person who requires hospitalization is $50,000.

Is it fair for all 200 employees in the company in our example to have to pay the additional $218.75 in monthly premium for their insurance coverage because the 10 employees who contracted Covid-19 decided not to get vaccinated?

When the State or Federal Government pays the costs of hospitalizations for those who are uninsured and unvaccinated, you and I eventually will pay for it in higher taxes. Is that fair for you and I?

People and Companies Are Speaking Out

In August of 2021, Jonathan Meer, the Mary Julia and George R. Jordan Jr. Professor of Public Policy in the Economics Department at Texas A&M University in College Station, TX, wrote an article on this. There he said all people should not have to share the costs of those unvaccinated people who require hospitalization because of Covid-19.  Those people who chose not to be vaccinated put themselves at risk. They should have to pay the full costs of the hospitalizations themselves.

Health insurers already charge more for insurance coverage for smokers. They also are permitted to exclude coverage for charges for care required by injuries from the commission of illegal acts or when people are under the influence of drugs.

As of November 1, 2021, Delta Airlines is going to require their unvaccinated employees to pay an additional $200 monthly toward the cost of their health insurance. The company announced this in August of 2021 to give employees sufficient time to get fully vaccinated before this change became effective.

Many other companies have not gone this far. However, they are requiring all of their employees to get vaccinated. There are two reasons.

  • First – to keep Covid-19 from spreading among their employees and customers.
  • Second – to avoid having the costs of their medical insurance go up dramatically because of the payments made for the hospital care for unvaccinated employees who get the virus.

Each of Us is Entitled to Our Feelings

I don’t know how you feel about vaccinations for Covid-19.

  • You may have already been vaccinated or are in the process of getting vaccinated, or
  • You may be feeling no one should force you to get vaccinated.

You have a right to your feelings However, do you feel all those who are vaccinated should have to share in the cost of your hospitalization if you are unvaccinated and contract Covid-19?

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If you have any comments on what you have read in this post, please email them to me. Also – if you have any ideas about subjects you would like to see discussed in future posts, please send me an email and let me know. My email address is bob.ooablog@gmail.com.