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Vaccine penalties are here, and it's unclear whether they will work

Delta Air Lines' decision to charge unvaccinated employees an extra $200 per month for health insurance signals that rewards alone aren't doing enough to measurably increase rates of COVID-19 vaccination.

Why it matters: Employers are playing a central role in getting more people vaccinated, but it's unclear how much, or if, these types of penalties will help.

How it works: Federal law allows employers to charge higher health insurance premiums to workers based on a health factor only if that factor is within a "wellness program," according to Georgetown University health insurance expert Sabrina Corlette.

Yes, but: "Most [wellness] programs do not work," health policy researchers wrote in 2017. "Some raise serious legal concerns."

Delta's surcharge may not follow federal guidelines.

  • Penalties can't be so large that they'd be "coercive," according to the Equal Employment Opportunity Commission.
  • Rewards and penalties in a wellness program also can't exceed 30% of the cost of employee-only coverage, which in 2020 averaged $7,470, according to the Kaiser Family Foundation.
  • Delta's $200-a-month penalty, or $2,400 for the year, exceeds 30% of that average and would more than double the average worker contribution. Other companies have been contemplating much lower surcharges.

Delta's surcharge may not lead to behavioral change.

  • Health insurance premiums are automatically deducted from workers' paychecks, so people won't feel the penalty like they would if they had to pay $200 from their wallet.
  • Research suggests sticks over carrots can be "stigmatizing."
  • Tobacco surcharges haven't really worked.

Between the lines: The policy might not even affect all Delta employees, based on a closer read of the company's language.

  • Delta specifically said this will apply to unvaccinated workers in its "account-based health care plan," which presumably are only those who have some type of health savings account.
  • Delta did not immediately respond to questions.

The bottom line: If companies want more of their workforce vaccinated, mandates might be the clearest, legally protected option over rewards and penalties.

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