Benefits of Vaccine Mandates Outweigh Workers’ Comp Costs of Vaccine Injuries

Vaccinations have served to significantly reduce the spread of COVID-19 in populations with high take-up rates, according to the Centers for Disease Control and Prevention(CDC). In the past months, many businesses and public entities have begun to require their employees to be vaccinated for COVID-19. President Biden also recently announced a new plan requiring all federal workers and contractors, along with all employers with 100 or more employees, to be fully vaccinated against COVID-19. President Biden’s plan is estimated to affect roughly 100 million Americans.

COVID-19 mandates serve to increase vaccination rates and, as a direct result, reduce the spread of COVID-19 and prevent serious illness. They also reduce lost work time and medical treatment costs for employees who might otherwise file workers’ compensation claims. However, these mandates and increased vaccination rates also come with a cost – the rare occurrence of vaccine injuries due to adverse reaction.

The assumption is that if an employee has an adverse reaction to employer mandated vaccines, then the employee would be entitled to receive workers’ compensation benefits.

Our research considered the following sources of information: estimated doses to be administered based on the U.S. workforce and COVID-19 vaccination rates, estimated compensability rates, state vaccine mandate legislation, and claim severities based on state average weekly wages and the National Vaccine Injury Compensation Program. The vast majority of claims are expected to be moderate in severity and would not require medical treatment.

As mentioned above, President Biden announced an employer-mandated COVID-19 vaccination plan that would affect approximately 100 million U.S. employees, representing approximately 66% of the U.S. work force. With 66% percent of employees affected and a 50% compensability rate, we estimated COVID-19 vaccine injury losses to be $726 million. These losses would represent 3.1% of the NCCI’s Accident Year 2020 losses. We also estimated costs at different severities and compensability rates, which are displayed in the table below.

While these costs could be significant to the industry, it is safe to assume the savings from the reduction in COVID-19 claims, due to the effect of vaccination mandates on reduced virus transmission rates and reduced hospitalization rates, will far outweigh the vaccine injury costs. This estimate of savings is very complex, given the myriad of variables to consider, such as transmission rates, compensability rates, COVID-19 presumption laws, percentage of employees working from home, and the impact of new virus strains.

However, we provided a simplified example for California to demonstrate that huge savings that can be achieved by vaccinations. We estimated monthly workers’ compensation savings on COVID-19 losses in California of approximately $63 million, which in less than a year would exceed the total estimated COVID-19 vaccine injury losses of $726 million for the entire United States. The estimate of $63 million is based on comparing COVID-19 claim counts pre-vaccine vs. post-vaccine, and applying an average WC COVID-19 claim severity of $6,000 as per figures from the National Council on Compensation Insurance.

With more employers beginning to require vaccinations for their employees following the implementation of President Biden’s plan, and if the CDC, as expected, recommends COVID-19 vaccine boosters eight months after the second dose, the frequency of vaccine injury claims would increase proportionally and raise costs.

However, these costs would be more than offset by the savings in treatment and lost work time costs and lives saved due to vaccines administered. Since a lot is still unknown about COVID-19, its vaccines, and what percentage of employers will mandate the booster shots, carriers and self-insured corporations should be on the lookout for these trends.