As COVID-19 Hospitalizations Surge, Preventable Costs of Healthcare Rise

Vaccinations for COVID-19 have been free and readily available to adults across the U.S. since mid-April 2021. The vaccines are highly safe and effective at preventing severe disease, hospitalization and death. They also reduce the likelihood of mild or asymptomatic infection.

However, vaccination rates have lagged in some states and among younger people. According to a recent Kaiser Family Foundation (KFF) study, as of early September 2021, 25% of adults in the nation remain unvaccinated for COVID-19.  As a result of the slower vaccination rate and more infectious delta variant, severe cases, hospitalizations and deaths are again on the rise.

According to the KFF analysis, the total preventable cost of treating unvaccinated patients in hospitals totaled approximately $5.7 billion for the three-month period of June through August 2021. This estimate was derived from U.S. Department of Health and Human Services data about COVID-19 hospital admissions, the share among unvaccinated patients and the share that likely could have been prevented if the patients were vaccinated.

Overall, there were 32,000 preventable COVID-19 hospitalizations in June, 68,000 preventable COVID-19 hospitalizations in July and 187,000 preventable COVID-19 hospitalizations in August – for a total of 287,000 cases among unvaccinated adults. The average cost of each COVID hospitalization was approximately $20,000.

Only a small share of the cost of a COVID-19 hospitalization is typically paid directly by patients themselves. The remainder is typically paid through insurers, including public programs like Medicare and Medicaid, and private insurance purchased by workers, businesses and individuals. In the current situation, insurers are starting to reinstate cost-sharing for COVID-19 treatment. Employers can also impose higher costs through certain wellness programs.

The Affordable Care Act and other laws prohibit insurers from charging unvaccinated people higher premiums, and require them to cover the cost of COVID-19 tests for diagnosis purposes.  However, insurance providers are not required to cover the cost of COVID-19 testing for employment purposes.

For example, to combat the pandemic more aggressively, President Biden has directed the Occupational Safety and Health Administration (OSHA) to develop a rule requiring employers with 100 or more employees to mandate that workers be vaccinated or produce a weekly negative COVID-19 test result.  Insurers may shift some or all costs for the weekly required tests to workers.

In the long-term, COVID-19 vaccines can help save the national health system billions of dollars by eliminating preventable and costly hospitalizations.  Employees can avoid the risk of serious illness and death from COVID-19, as well as avoid out-of-pocket costs, by receiving a safe, free and effective vaccine as soon as possible.

Pacific Federal is a Zenith American company and subsidiary of Harbour Benefit Holdings, Inc.