Pay People to Get Vaccinated? Even Better, Pay Pharmacies

(Bloomberg Opinion) -- Now that the Johnson & Johnson single-dose vaccine is back on the market, the main issue in the U.S. is quickly becoming a lack of demand rather than a lack of supply. West Virginia has even begun offering an incentive — a $100 savings bond for those aged 16 to 35 — to encourage vaccinations.

This is undoubtedly the right way to go. Shaming people for not getting vaccinated is likely to backfire and harden resistance. On the other hand, the increasing prevalence of more infectious strains of Covid, and the possibility of new strains arising, means that current levels of vaccination are not nearly sufficient.

It would be convenient if the U.S. were able to lean on the fact that everyone who wants a vaccine can get one. Then the economy could reopen and people who chose to take the risk would simply bear the costs of their choice. There are two reasons, however, why this won’t work.

First, it could be a long while before a vaccine becomes available for children. Just as important, there is the chance that the new variants will be around for some time. The current vaccines seem to provide reasonable immunity against known variants, and pharmaceutical companies are preparing to create booster shots against vaccine-restraint strains that may arise.

Contracting Covid, however, does not seem to provide nearly the same level of protection even against the strains. If a segment of the population remains unvaccinated, then the U.S. may always have a subpopulation in which new variants are circulating. If a particularly virulent strain gets out, that could create a new public-health crisis.

All of this is to say that it makes sense to invest in getting more people vaccinated. West Virginia’s approach is one way, but there’s reason to be skeptical. The state has had to offer the bond to anyone who has already gotten a shot, avoiding a potential public backlash but raising costs significantly.

A better approach would be to increase the reimbursement rate to pharmacies and other providers by $100, too. President Joe Biden has already made steps in this direction, but as of now reimbursements only cover costs. Making vaccination profitable would give corporations such as CVS and Walgreens an incentive to get people in to their clinics for a jab.

Private pharmacies can tailor their message to their clientele and vary their approach across regions as necessary. So they might offer a gift card to reluctant seniors in Wisconsin, for example, while in Arizona they launch an ad campaign that stresses the patriotic nature of vaccination.

In any case, pharmacies can attempt different strategies in an effort to find out what works. That’s something the federal government doesn’t have the luxury of doing. What it does have, however, is a vested interest in ensuring a rise in vaccination rates. Increasing reimbursement rates is the way to achieve it.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Karl W. Smith is a Bloomberg Opinion columnist. He was formerly vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina. He is also co-founder of the economics blog Modeled Behavior.

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