Reasons and Remedies for Underinsurance for Child and Adolescent Vaccines

For childhood and adolescent vaccinations, having private insurance may be worse than having no insurance at all. If that seems odd, given the usual advantages of insurance in the US health care system, consider the federal Vaccines for Children (VFC) program. The VFC program pays for all vaccinations recommended by the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention for children who are uninsured, Medicaid-eligible, or of American Indian/Alaska Native origin. The architects of VFC wanted to ensure an equitable floor of financing in all states for children who have historically been most vulnerable to the problem of undervaccination.¹

Privately insured children by comparison are expected to have coverage for ACIP-recommended vaccines through their health insurance plans. The present dilemma is that, although the majority of health insurance plans eventually cover ACIP-recommended vaccines for children and adolescents, an increasing number of children are underinsured for vaccines. Underinsured children face economic barriers to vaccination because their health insurance plans do not cover vaccines, or because the coinsurance or co-payment structures of their plans leave payment of some or all of the cost of immunization to parents and guardians. As the number of recommended vaccines and the prices of those vaccines increase,² so too do the economic barriers to vaccination for underinsured children.

Wisely, the architects of the VFC program also anticipated that privately insured children might not have coverage for newly recommended vaccines. However, the VFC statute stipulates that underinsured children may access VFC-financed vaccinations only at federally qualified health centers or rural health centers,¹ where most privately insured children do not routinely seek care. In so doing, the VFC program substitutes logistic obstacles for economic barriers and potentially induces fragmentation of care for underinsured children—fragmentation that may yield lower, not higher, vaccination rates.

These logistic obstacles within VFC serve a purpose—to discourage private insurance plans from leaving the responsibility of paying for newly recommended vaccines to the public sector (ie, to avoid “crowd-out” when private coverage is displaced in favor of public coverage). Less explicit in the VFC program but more important for understanding the growing problem of underinsurance is the idea that private payers will want to cover all newly recommended vaccines, because their enrollees will want such coverage for their child dependents.

Published literature offers surprisingly little information about the demand from privately insured families for coverage for all newly recommended childhood and adolescent vaccines. In a 2004 national household survey,³ 84% of parents agreed with the general statement that “vaccines protect children's health,” and 79% of parents indicated that they would be willing to pay a slightly higher monthly plan premium (from $3 to $6) to guarantee their children would have coverage for all newly recommended vaccines. Among parents unwilling to pay a higher premium for blanket coverage, 44% said they would pay $50 or more for a newly recommended childhood vaccine out of pocket, if advised to do so by their child's physician.³ This study indicates that many parents want coverage for newly recommended vaccines for their children and are willing to pay for such coverage, but this still leaves about 20% of families with underinsured children (similar to a published estimate of 14% of children underinsured from the Institute of Medicine [IOM] based on year 2000 data¹ ).

Public officials at the state level, faced with a dearth of population data about public demand for new childhood and adolescent vaccines, have in many cases substituted their best judgment, whether at a state immunization program or health department or within state legislatures that appropriate funds for vaccine purchase. Where individual judgment is applied, differences naturally arise.

In this issue of JAMA, Lee and colleagues⁴ demonstrate, through a series of interviews with immunization program officials conducted in 2005-2006, that approaches to vaccine financing for the underinsured were not consistent across vaccines within states and were not equitable for specific vaccines across states. Although some states relied exclusively on VFC financing, other states successfully secured additional federal funding, and in some instances contributed state funds toward vaccine purchase. Because of shortfalls in financing, however, as many as 30 states were unable to provide publicly purchased vaccines to underinsured children in private offices.⁴ With the recent additional recommendations of comparatively expensive rotavirus and human papillomavirus vaccine series in 2006,⁵ vaccine financing challenges in the private sector for underinsured children and adolescents have likely increased further. Lee et al⁴ correctly conclude that their findings portray a strained immunization safety net and a confusing array of gaps in public vaccine financing that may beleaguer physicians, public health practitioners, and privately insured parents.

However, the growing problem of underinsurance for vaccines is not just about a lack of sufficient public financing to do the job. Rather, widely varying state-level approaches to underinsurance for childhood and adolescent vaccines likely reflect varying levels of agreement among the general public that the increasing number of recommended vaccines are all equally deserving of programmatic prioritization and public financing.

Consequently, today's problem of underinsurance is principally a result of implicit prioritization of recommended vaccines. Administrators in private health insurance plans and public officials prioritize certain recommended vaccines over others, likely using different rationales (eg, cost, cost-effectiveness, clinical burden of preventable disease) across plans and state programs to do so.

One response to de facto prioritization of vaccines is not to allow it, on grounds that prioritization runs contrary to the recommendations of ACIP that do not distinguish between universally recommended vaccines based on clinical importance, economic burden, or other criteria. In 2004, a panel convened by the IOM to examine vaccine financing concluded that the VFC program should be replaced with a complex federal program that would, among other initiatives, mandate insurance coverage for all recommended vaccines in private plans and then subsidize such coverage with reimbursements to private plans for the costs of vaccines and administration fees.¹

Although such a program is unlikely to be implemented for several reasons,⁶ a little-emphasized component of the IOM panel's recommendations may offer an opportunity to strike a compromise between fiscal constraints on immunization spending and continued enhancement of the child/adolescent vaccination schedule. The IOM panel suggested that the ACIP consider the “spillover” effects of vaccines; that is, to what extent a newly licensed vaccine benefits the public as well as the vaccinated individual. Vaccines with fewer spillover effects would receive what the panel termed “selective” consideration and might not therefore be incorporated in the mandate-and-subsidy program (ie, they would be recommended for use but not financed for all children).

Even if a comprehensive mandate-and-subsidy program as envisioned by the IOM panel were never implemented at the federal level, a tiered approach to financing newly recommended vaccines for underinsured children and adolescents might be considered as part of the existing VFC program in the future. The most appealing aspect of the spillover approach is that it aligns the public financing aspect of the underinsurance dilemma with the public good aspect of vaccination efforts: vaccines that benefit more of the population per individual immunized would receive higher priority. This general principle might be broadened beyond what the IOM panel originally proposed, so that higher priority would also be assigned to vaccines that were, for instance, able to demonstrate longer duration of immunity, stronger spillover effects than originally anticipated in clinical trials, or broader application in developing world markets that would enhance the global value of a vaccine. Importantly, priority tiers would need to be reevaluated and reassigned, as appropriate, as more data became available over the product lifetime of a vaccine.

Ultimately, in a future vaccine financing system with the VFC program at its core, higher priority would take the form of expanded federal financing for underinsured children. The expanded financing would establish a minimum standard of coverage for most preferred–tier vaccines across all states and would leave state-specific coverage determinations in place for less preferred–tier vaccines.

The chief risk of a tiered approach to vaccine financing for children and adolescents is that the less preferred vaccines would have a less active market, because lower-priority status might affect how private insurance plans would cover, and families would decide to pay for, vaccines. Although the priority status would only officially affect financing for underinsured children and the VFC program would continue to pay for all recommended vaccines, private health insurance plans and parents might take their cues from the prioritization process and be less likely to pay for less preferred vaccines at private-sector prices. This would be a risk faced by vaccine manufacturers. The opportunity to “move up” in priority status over time, however, might encourage manufacturers to continue producing and marketing even those vaccines that did not initially rate the most preferred status.

Strong proponents of immunization will likely object to the concept of universally recommended vaccines ranked on their relative merits. Nonetheless, that position fails to acknowledge the implicit prioritization of recommended vaccines that is already occurring at the state level, as illustrated by the findings by Lee et al.⁴ Rather than continuing a program in which de facto prioritization creates inconsistencies across states that are difficult for the public to understand, the public health and medical communities may benefit from making prioritization of vaccines more explicit and consistent.

The process of explicit prioritization is challenging in the public sector, as witnessed in recent years during shortages of influenza vaccine.⁷ However, the lists of priority populations that emerged through evidence-based deliberations about the burden of influenza illness⁸ have improved the influenza immunization effort by clarifying steps to take in case of vaccine supply shortage. Explicit prioritization of financing for newly recommended vaccines, as a remedy for shortfalls in financing for underinsured children, cannot be far behind.