Should the Unvaccinated Be Required to Pay for Hospital Bills?
My friend and fellow economist Jonathan Meer of Texas A&M University had a provocative article on Market Watch last Friday in which he advocated making people who refuse to be vaccinated pay for their own medical bills in the event they are hospitalized for Covid. It’s titled “Don’t want the COVID-19 vaccine? Then pay the full cost if you land in the hospital.”
His argument is quite compelling: people should not be allowed to impose costs on others for their own behavior. He writes:
Insurers, led by government programs, should declare that medically-able, eligible people who choose not to be vaccinated are responsible for the full financial cost of COVID-related hospitalizations, effective in six weeks.
Why 6 weeks? Because, he explains, that gives time for pretty much any U.S. resident to get vaccinated.
I like the fact that he leads with government programs because these are least like insurance and more just simply tax-and-subsidy schemes. For Medicare and Medicaid, for example, the taxpayers have no say. For that reason, I was pleasantly surprised to see University of Michigan economist Justin Wolfers tweet an agreement with Jonathan. I would have thought that Justin would want socialized medicine to do in this case what it does generally: shift the costs from some to others. I’m pleased that he opposes this.
When it comes to private insurance, though, Jonathan’s case is less compelling. He argues that an insured person who doesn’t get vaccinated and goes to the hospital imposes costs on “others in their insurance group.” That’s not as clear as he thinks, although it could be true. Whether it’s true depends on how health insurance rates are set. If they’re set based on past experience, then he’s right; if they’re set in a forward-looking way, based on what’s expected in the future, then he’s wrong, as long as the Covid crisis is short term. Also, there’s another problem. I doubt that the insurance contract stated that in the event that the person gets Covid and didn’t get vaccinated, the insurance company won’t pay. So Jonathan’s proposal, if applied to non-government health insurers, is essentially to rewrite the contract in the middle of the period it covers. That’s a pretty serious breach.
Jonathan recognizes the slippery slope that follows from his argument for making those who don’t get the vaccine bear the cost. He writes:
The most common objection to this policy is a slippery slope argument: what if the insurers stop covering the health outcomes of other lifestyle-driven diseases, like cirrhosis or Type 2 diabetes? Or not covering health costs for those who are unbelted in auto accidents?
How does he answer it? He writes:
Health insurers already do charge more to people who smoke and are permitted in many states to exclude coverage when injuries arise from illegal acts or under the influence of drugs – including alcohol. And a full debate about whether people should be charged more when engaging in certain activities is not unreasonable if the costs of these kinds of choices are going to be spread to everyone.
He seems to hesitate, though, writing:
But more importantly, there is a direct and clear connection between vaccination and the likelihood of serious complications from COVID, unlike the decades-long development, mediated by genetics, between many health behaviors and serious illness. A more apt comparison would be if a safe single-shot cure for Type 2 diabetes was developed. The rest of us would be justified in refusing to cover the costs of complications for diabetes for anyone who refused to take the cure.
For him, it seems important that other conditions can develop over decades as a result of unhealthy behavior. He doesn’t say why this matters and indeed, in his previous paragraph I quoted, he seems to be saying it’s legitimate to charge smokers more for health insurance even if the bad results take decades.
Interestingly, a lot of the commenters on the Market Watch site are quite willing to slide down that slippery slope.
Jonathan goes on to write:
Those of us who are vaccinated did the responsible thing.
A little too simplistic. There’s not just one responsible thing. People who have had Covid actually have more protection against Covid than people who got both vaccines. So how is it irresponsible for them to refuse the vaccine?
Unfortunately, the only people Jonathan mentions who object to the vaccine are “[t]hose who continue to believe that COVID is no more than a cold, or that the pandemic is a sophisticated fraud, or that sheep parasite medicine is more effective than vaccines with shockingly good efficacy.” Notice what groups are missing? People who’ve had Covid, people who have some reason to fear a bad reaction to the vaccine, and very young people, to name three groups.