Unvaccinated COVID-19 hospitalizations cost the U.S. health system billions of dollars

Aug. 23, 2021

Despite the availability of safe and effective COVID-19 vaccines, vaccination rates have lagged, particularly in some states and among younger people. As of early August 2021, 28% of adults over the age of 18 in the U.S. remain unvaccinated for COVID-19. As a result of lagging vaccinations and the more infectious delta variant, COVID-19 cases, hospitalizations and deaths are on the rise again, according to a report published by Peterson-KFF.

These COVID-19 hospitalizations are devastating for patients, their families and health care providers. The hospitalizations are also costing taxpayer-funded public insurance programs and the workers and businesses paying health insurance premiums.

While real-time data on the cost of all COVID-19 hospitalizations are not publicly available, various sources point to an average hospitalization cost of around $20,000. The Centers for Medicare and Medicaid Services (CMS) reports that Medicare fee-for-service COVID-19 hospitalizations average $24,033. Another study of Medicare fee-for-service enrollees found an average COVID-19 hospitalization cost $21,752.

A FAIR Health analysis of private claims data including employer and private Medicare Advantage plans found that COVID-19 hospitalization costs ranged from $17,094 for people over age 70 to $24,012 for people in their 50s. Similarly, our analysis of pre-pandemic private insurance claims for pneumonia hospitalizations with complications averaged $20,292 (though the cost for hospitalizations requiring a ventilator are much higher).

Our analysis of CDC data indicates there were 37,000 preventable COVID-19 hospitalizations in June and another 76,000 preventable COVID-19 hospitalizations in July, among unvaccinated adults in the U.S. If each of these preventable hospitalizations cost roughly $20,000, on average, that would mean these largely avoidable hospitalizations have already cost the U.S. health system billions of dollars since the beginning of June 2021.

In June and July 2021, COVID-19 hospitalizations among unvaccinated adults cost the U.S. health system over $2 Billion, Based on our estimates, described below, we find preventable COVID-19 cost the U.S. health system $2.3 billion in June and July 2021.

Kaiser used counts of adult hospitalizations with confirmed COVID-19 in recent months reported to HHS to estimate preventable hospitalization costs for unvaccinated adults. We focus on hospitalizations of adults (ages 18+) with COVID-19 because many children are still ineligible for the COVID-19 vaccine, and even those minors who are eligible may need parental consent to get the vaccine.

Over 100,000 COVID-19 hospitalizations could have been prevented by vaccination in June and July 2021.

A Medicare study found patients with COVID-related admissions had multiple outpatient visits (3.2 on average) that cost approximately $164 each (and this is only for those COVID-19 patients who were hospitalized at one point). In our analysis of pre-pandemic private insurance claims, we estimated a typical outpatient office visit cost $105 on average. An analysis of privately insured noted COVID-19 outpatient treatment costs can average $500-$1,000 per patient.

Additionally, although breakthrough infections and hospitalizations are rare, unvaccinated people are also more likely to spread the virus to those who have taken measures to protect themselves and others, and those costs are not included in these estimates.

Implications of avoidable COVID-hospitalization costs among unvaccinated people.

The monetary cost of treating unvaccinated people for COVID-19 is borne not only by patients but also by society more broadly, including taxpayer-funded public programs and private insurance premiums paid by workers, businesses and individual purchasers.

Only a small share of the cost of a COVID-19 hospitalization is paid directly by patients themselves. In our analysis of privately insured patients hospitalized with pneumonia, the typical out-of-pocket payment was about $1,300. That is a significant amount for most patients to pay, but it is far less than the amount covered by public and private insurance coverage.

The Affordable Care Act and other laws prohibit insurers from charging unvaccinated people higher premiums. Though, through wellness programs, employers could impose higher costs. Private insurers have also begun reinstating cost-sharing for COVID-19 hospitalizations. Adults can largely avoid these out-of-pocket costs and severe illness by getting the free vaccines.

Though there was of course a societal cost to develop and distribute vaccinations, the vaccines save the U.S. health system money in the longer run by preventing costly hospitalizations. (Although the cost of treating COVID-19 patients has an upward effect on health spending and premiums, overall health services utilization and spending have been suppressed during the pandemic due to stay-at-home measures, potential risk of COVID-19 infection at a hospital or doctors’ offices and concerns over hospital capacity). In addition to preventable direct monetary costs for treatment of unvaccinated people, re-opening of schools and economic recovery also suffers as increasing COVID-19 cases continue to put Americans at risk of avoidable severe illness and even death. 

Petersen-KFF Health System Tracker report

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