Wide-ranging federal policy allays employers’ dilemma over vaccine mandates

Plenty of employers have tried the carrot approach in their growing mix of strategies to encourage employees to get the COVID-19 vaccine. Now, with President Joe Biden’s sweeping new orders that will require employers with more than 100 workers to mandate shots or weekly testing, the stick tactic has just won out. 

The Sept. 9 announcement affirms a recent cascade of companiesvaccination mandates—following the Food and Drug Administration’s full approval of the Pfizer Inc. and BioNTech SE vaccine last month. And it covers those that were still in the midst of decision making. Others that stopped short of requiring outright mandates, meantime, began considering levying penalties in the form of health insurance surcharges for unvaccinated workers -- a path that, while somewhat uncertain, may also gain speed, some observers believe.

“This is the first vaccine mandate ever applicable to private employers,” Kathryn Bakich, health compliance practice leader and senior vice president at employee benefits consulting firm Segal, told the Society for Human Resource Management (SHRM). “Employers are moving toward mandatory vaccination policies at great speed. Those that aren’t mandating vaccines are considering whether they can implement premium differentials in their health plans to penalize employees who won't get the vaccine.”

Bakich says wellness regulations currently permit incentives and penalties for taking legitimate health-related steps, noting. “I would expect that the Biden administration would move to help employers by explicitly issuing guidance to permit these incentives."

Taking the Tougher Stance

Even before the mandate, many companies rolled out incentives and more were considering disincentives. A survey that polled 961 U.S. employers between Aug. 18-25 by advisory company Willis Towers Watson found that while 2% of employers were offering either a discount to vaccinated employees or imposing a premium surcharge on unvaccinated employees, another 18% were considering one or both approaches.

Delta Air Lines Talks Results

Delta Air Lines Inc. was considered the first major company to launch the surcharge trend when it announced in an Aug. 25 memo to employees that it would impose a $200-a-month health plan fee on employees who are not vaccinated by Nov. 1. Its experiment has returned some early results.

Since then, the company says it’s seen a five-fold increase per day of workers receiving vaccines, Delta Executive Vice President and Chief Legal Officer Peter Carter recently told Bloomberg Law.

Moreover, the company’s Chief Health Officer Dr. Henry Ting reported during a Sept. 9 Infectious Diseases Society of America media briefing that nearly 20% of the remaining 20,000 Delta workers without shots have now started the vaccination process. So far, he says there has been no employee turnover as a result of the policy.

Addressing Financial Risk

In addition to taking steps to ensure a safe workplace and protect employees from a major health risk, employers have a financial impetus for the tougher rules. Unvaccinated people have 29 times more COVID-19 hospitalizations than those who are fully vaccinated, according to recent reporting by the Centers for Disease Control and Prevention. 

In its announcement, Delta acknowledged that its newly imposed fee was intended to address that financial risk. The average hospital stay for COVID-19 patients has cost the company $50,000 each, the airline’s CEO Ed Bastian said, noting that since the rise of the Delta variant, “all Delta employees who have been hospitalized with COVID were not fully vaccinated.”

The Bottom Line

As employers grapple with the new mandate amid the current Delta variant surge, labor concerns and the vaccine-hesitant, change may be the only constant in the near term.

Half of U.S. workers are in favor of vaccine requirements at their workplaces, according to a poll from The Associated Press-NORC Center for Public Affairs Research. Yet varying levels of vaccine hesitancy among workers continue. SHRM research, for example, found that 28% of U.S. workers say they won't get the COVID-19 vaccine even if it costs them their job.

“We have reached a point in the pandemic where employers that have worked hard to make it easy for employees to get vaccinated are also considering approaches to make it more difficult for employees to remain unvaccinated,” says Jeff Levin-Scherz, M.D., Willis Towers Watson’s population health leader. “The one certainty right now is that employers will continue to adjust their plans through the remainder of 2021.”