For weeks, big employers like Citigroup, Google and The Walt Disney Co. have been warming to the idea of requiring coronavirus vaccines for employees. Now that one vaccine has received full federal approval, President Joe Biden wants more to follow suit.
Delta Air Lines has chosen a very different tack — one that might seem to provide employees more choice but could be much harder to carry out. The company on Wednesday became the first large U.S. employer to embrace an idea that has been widely discussed but is mired in legal uncertainty: charging unvaccinated employees more for health insurance.
Starting Nov. 1, Delta employees who have not received the vaccine will have to pay an additional $200 per month to remain on the company’s health plan. It is part of a series of requirements that unvaccinated workers will face in the months to come, the airline’s chief executive, Ed Bastian, said in a memo to staff.
“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,” he said. “That’s why we’re taking additional, robust actions to increase our vaccination rate.”
Every Delta employee who has been hospitalized because of the coronavirus in recent weeks was not yet fully vaccinated, with hospital stays costing the company an average of about $50,000. Like most large employers, Delta insures its own workforce, meaning it pays health costs directly and hires an insurance company to administer its plans.
Corporate executives have wrestled with how to restore some normalcy to their operations, including by letting workers return to offices. They are trying to achieve several goals that can at times come into conflict: keeping employees safe, retaining staff opposed to vaccines at a time of tremendous turnover, and showing customers that they are taking the pandemic seriously while not alienating others put off by masks and other restrictions.
Several companies, particularly those in health care, have made vaccination a condition of employment. Under a recent Biden administration policy, any nursing home that receives federal funds will be required to mandate vaccines for workers.
Nearly 14% of U.S. employers now require, or plan to require, staff to be vaccinated in order to work at a company site, according to a survey this month from Mercer, a benefits consulting firm. In a May survey, just 3% of employers planned to require vaccinations.
Insurance surcharges may appeal to companies that are seeking a less coercive means to increase vaccination rates, said Wade Symons, a partner at Mercer. He has had conversations with about 50 large companies that are considering imposing such fees, he added.
“They still want to have the appearance of a choice,” Symons said.
The businesses, he said, tend to be in industries that involve a lot of in-person work: manufacturing, hospitality, financial services, retail and transportation. Many have already tried incentives like cash bonuses or raffles for large prizes but still have vaccine holdouts.
Delta said 75% of its staff and more than 80% of its pilots and flight attendants were vaccinated. But when CNN asked Bastian on Wednesday why the airline hadn’t simply mandated vaccines, he framed the issue as one of corporate culture.
“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.”
Legally speaking, insurance surcharges are more complicated than simple employment mandates, which are widely considered legally sound. Federal law bars employers and insurers from charging higher prices to people with preexisting health conditions. But the vaccine surcharges are being structured as employer “wellness” incentive programs, which are permitted under the Affordable Care Act. Such programs must be voluntary but can involve rewards or penalties as large as 30% of an employee’s health insurance premium.Under federal law, employers must provide accommodations for workers who cannot receive a vaccine for health reasons or sincerely held religious beliefs. A recent lawsuit successfully challenged wellness programs with large financial penalties, arguing that the provision violated the Americans with Disabilities Act.
“This is not rocket science, but it is not easy,” said Rob Duston, a lawyer with Saul Ewing Arnstein & Lehr in Washington, D.C., whose focus includes employment and disability issues.
“You are dealing with the overlap of at least three different laws,” he added, referring to the Employee Retirement Income Security Act, the Affordable Care Act, and the Equal Employment Opportunity Commission’s wellness plan and COVID-19 guidelines. The companies will have to abide by the Americans with Disabilities Act and health privacy laws, too.
Wellness programs have become widespread in large corporations even though studies show that they have very little effect on employee health. In some cases, they have tended to nudge workers who are facing penalties to drop their workplace coverage.
“It seems like a more complicated way to do it,” said Karen Pollitz, a senior fellow at the Kaiser Family Foundation, who has studied such plans extensively and recently wrote a paper on vaccine mandate options. “In the middle of a pandemic, you want people to have health insurance. Why are you making it more likely they’re going to drop their health insurance?”
But vaccination may prove different from other health behaviors that employers are seeking to change. Unlike weight loss or smoking cessation, vaccination does not require a long-term behavior change.
Jeff Levin-Scherz, a population health leader at the consulting firm Willis Towers Watson, said he had his doubts.
“Premium surcharges might make intuitive sense, but based on their structure they are unlikely to lead to a large increase in vaccination rates,” Levin-Scherz said. “The surcharge approach has no impact on employees who waive coverage, and the penalties will be disproportionately imposed on lower-wage workers.”
At Delta, the surcharge is one of several new requirements for unvaccinated workers. Starting immediately, those employees will have to wear masks indoors. In about two weeks, they will be subjected to weekly coronavirus tests. Then, on Sept. 30, unvaccinated employees will lose protections intended to cover pay for work missed while having to quarantine.
The airline, which is based in Atlanta, its biggest hub, has a lot of employees in a state with a relatively low vaccination rate. Just over half of Georgia’s adult population is fully vaccinated, according to data from the Centers for Disease Control and Prevention.
Delta’s decision not to require the vaccine may also help it to avoid criticism from Georgia’s conservative lawmakers, who have punished it in the past. In 2018, the state legislature voted to repeal a tax break on jet fuel after Delta ended a discount for members of the National Rifle Association, but the governor later ordered state officials to stop collecting the tax, effectively restoring the break. Lawmakers threatened to start collecting it again this year after Delta opposed new voting restrictions in the state.
“It’s not an idle threat,” said Charles Bullock III, a professor of political science at the University of Georgia. “Doing this is probably more in keeping with where the Republican leadership would be,” he said of Delta’s approach on vaccination.
American Airlines and Southwest Airlines, both based in Texas, have also not required vaccines. But United Airlines, which is based in Chicago, said this month that it would require vaccines, starting on Sept. 27.
United’s chief executive, Scott Kirby, has lamented the dozens of letters he has had to write to families of employees who died from the virus. “We’re determined to do everything we can to try to keep another United family from receiving that letter,” he and Brett Hart, United’s president, told employees this month.
One industry that has achieved high employee vaccination rates is Nevada’s casinos. State regulators allowed casinos to operate at full capacity once at least 80% of employees had received at least one shot of a coronavirus vaccination, a threshold some big properties achieved. Last week, MGM Resorts went further and said COVID vaccination would be a condition of employment for all salaried employees and new hires.
“Vaccination is clearly the most effective tool in battling the pandemic, and it is one of our top priorities,” said Brian Ahern, a spokesperson for MGM.
Culinary Workers Union Local 226, which represents many casino workers, supports the mandate. “We would support stricter mandates, as the vaccine is the only way we can get through this pandemic,” Bethany Khan, director of communications and digital strategy for the union, said in an email.