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'It is not unreasonable' for Delta to add surcharge to unvaccinated workers' health plans: PBGH CEO

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Elizabeth Mitchell, Purchaser Business Group on Health CEO, talks about Delta's decision to charge unvaccinated workers an extra $200 on their monthly health insurance premiums.

Video Transcript

ZACK GUZMAN: Earlier this week, of course, the FDA approved fully the Pfizer-BioNTech COVID-19 vaccine, which opened the door for President Biden to waste little time calling on private and public companies here to play their part in getting employees vaccinated. Take a listen to what he said earlier this week.

JOE BIDEN: Today, I'm calling on more country-- more companies, I should say-- in the private sector to step up with vaccine requirements that will reach millions more people. If you're a business leader, a nonprofit leader, a state or local leader who has been waiting for full FDA approval to require vaccinations, I call on you now to do that. Require it.

ZACK GUZMAN: And in the wake of that, we've seen a growing number of companies, including the likes of United Airlines, calling on-- mandating-- well, actually coming out and mandating that their employees get vaccinated. That list grows longer. Then we saw their rival here, Delta Airlines, come out with a different strategy here, adding $200 in surcharges to employees' health care coverage should he or she opt to not get the vaccine in a very interesting twist on the other side of mandating vaccines.

And for more on that twist, happy to welcome Elizabeth-- welcome into the show Elizabeth Mitchell, the CEO of Purchaser Business Group on Health, a nonprofit coalition that represents nearly 40 private employers, public entities across the US in navigating purchasing health care plans, alongside Yahoo Finance's Anjalee Khemlani here, too, joining in on the conversation. Elizabeth, when we look at it, you know, it raises a lot of questions about what might be ethical or what might be the best ways here for companies to incentivize employees to get vaccinated, since we know the health benefits. But what do you make of that in terms of what companies might do to maybe mimic that $200 surcharge Delta's implemented?

ELIZABETH MITCHELL: Well, we already have over 13 members who have gone ahead and mandated vaccinations. Walmart was one of the first. They're our member. Disney was soon behind them. And it is a reasonable approach, and it's actually quite straightforward to say, if you want to come to work, you need to be vaccinated because it is in the best interest of the workforce. And employers offer these benefits to keep their workforce healthy and to attract and retain talent, and people want to know that they are working in a company where they will be safe. And it is an expectation of a growing number of employers that you will be vaccinated to come to work.

ANJALEE KHEMLANI: Elizabeth, Anjalee here. Talk to me about that incentive, though, the $200 premium. And we've seen how just the work-life balance issue caused a lot of people to exit their jobs and the labor force. Do you see maybe similar repercussions to something like this?

ELIZABETH MITCHELL: Well, when you look at the costs that employers are absorbing from hospitals and hospitalizations for folks who aren't vaccinated, this is a drop in the bucket. The average hospitalization for COVID is over $50,000. In June and July alone, companies absorbed over $2 billion of costs. And they pay those bills. These companies are self-insured, and they are paying for them. But that comes out of wages. It comes out of job growth. It comes out of families.

So it is something that employers have to address. I think that incentives are going to be part of the strategy, but it is also administratively burdensome to implement some of these incentive programs. But it is one tool that they have. And I think you are going to see more and more companies do something to either encourage or require vaccination.

ZACK GUZMAN: Yeah, I mean, when we talk about that, some people maybe take issue with the idea of adding cost, adding surcharges. But we've seen that kind of before on the flip side, maybe incentivizing workers who don't smoke, encouraging healthy behavior since you know there's going to be a back-end cost savings when it comes to health care. So how dissimilar is this, I guess? And maybe talk to people who might be a little put off by the idea of companies, you know, charging more just because someone doesn't want to get vaccinated?

ELIZABETH MITCHELL: It's very much like smoking surcharges, and it is not unreasonable. People can choose to smoke. They can choose to be unvaccinated. But that comes with additional costs for health care, and companies are paying those costs. Families are paying those costs because they hit everybody's premiums. So it is not unreasonable to expect those who are incurring greater costs to actually contribute more.

ANJALEE KHEMLANI: And Elizabeth, looking at how some of these incentives are being pulled out, some of the mandates as well, how are companies able to go about this? I know specifically, with Delta's strategy, there were concerns about the Affordable Care Act or HIPAA and how to move around that. I know on the ACA side, a lot of experts I spoke to said that really only applies to health care organizations, so employers are in the clear there. Do you agree with that? And also, what about HIPAA?

ELIZABETH MITCHELL: I think there are going to be implementation barriers and challenges, but I do believe employers will find ways to incentivize and encourage and ultimately require vaccination. Again, like smoking cessation, there were ways to identify additional costs and folks who are incurring them. And again, they want to attract and retain talent. That's why they offer these very rich benefits. They want employees to be healthy.

So they are absolutely prepared to contribute, and they-- my members pay over $100 billion a year in health care expenses for employees. So they are very happy to pay these costs to keep their employees healthy. But if folks are going to be contributing to escalating costs, it is completely expected that they may have to contribute more.

ANJALEE KHEMLANI: And looking at it in the long-term view, which is kind of what you're touching on right now, what are you hearing from your members in terms of how they see long-term handling of costs related to COVID as purchasers of health insurance?

ELIZABETH MITCHELL: Yeah, remember, these companies are self-insured. They pay all of these bills. Again, over $2 billion in costs in the last few months from COVID hospitalizations, that will land on them, and it will be shared by families and come out of wages and job growth. So this is a significant cost that they will be having to absorb, along with state and federal governments. We see this as a public-private partnership. We must all step up from all sectors to get control of this virus, to keep employees healthy, and to ultimately manage cost. And we believe there is an opportunity to lead from the private sector, and our members are doing that.

ZACK GUZMAN: Just lastly here, too, I mean, when we look at the behavioral economics behind this-- this is kind of my specialty and my background here-- was kind of looking at the cost side of this, right? It's always a stronger incentive if you're going to take money away from someone, charge them $200 more, than what you might see on the benefit side since it's not as palatable-- or not as noticeable here. So when you focus in on that and what Delta's done here, is it the expectation that you might see more members that you work with follow in that track? And what are maybe some of the other tactics you could see pop up?

ELIZABETH MITCHELL: Sure. Well, you're seeing required screenings and testing. You're seeing not allowing folks to come into the office if they haven't been vaccinated. There are lots of things that employers are doing to keep their workforce safe and healthy. These are administratively burdensome. Employers have been working throughout the pandemic to learn new ways to keep their employees healthy in very difficult circumstances. And you saw a lot of layoffs during the first rounds of COVID because a lot of these companies can't function when their workforce is not healthy.

So it is going to be a lot of effort on their part, a lot of costs they have to absorb to ensure that they can stay open, they can keep their employees healthy. And this is just one of many strategies that I would expect to see. And again, many of them are leaning more and more towards mandating vaccines because it is the most straightforward, it is the most effective. And frankly, the public supports it. Over 60% of the public in recent surveys say they want everyone to be required to be vaccinated. It keeps them and their family safe.

ZACK GUZMAN: Yeah, and we see government mandates potentially getting blocked in the states like Texas. There is a large part of the falls on the shoulders of employers here. But Purchaser Business Group On Health CEO Elizabeth Mitchell, appreciate you coming on here to chat with us today alongside Yahoo Finance's Anjalee Khemlani as well. Thanks again for the time.