Immunization Issues

Financing Immunizations

Updated: June 16, 2004

Vaccine development and manufacture today entail high costs. Thus some vaccines can be expensive, especially vaccines just recently licensed.

Successful control of vaccine-preventable diseases requires high immunization coverage of populations for whom the vaccine is recommended. Achieving such high coverage requires that barriers to receipt of vaccines be minimized, including financial barriers.

Immunization coverage levels are affected by the availability and costs of vaccines to families. For that reason, various strategies have been developed to assure the availability of vaccines to all, such as direct provision of vaccines by public agencies, provision of free vaccines to private providers, and reimbursement of immunization through Medicaid and Medicare.1

Thus far these strategies have focused largely on routine childhood immunization.

In 1993 the US Congress passed the Vaccines for Children (VFC) Act. The VFC Act provides an entitlement to free vaccines for children who:

  • Are 18 years old or younger;
  • Are eligible for Medicaid
  • Have no health insurance; or
  • Are Native American or Alaska Native.

Eligibility status is based upon parent or guardian declarations and there is no need to confirm those declarations.

Children who have health insurance that does not cover immunizations may receive free vaccines through the VFC Act. In these circumstances, these children may have to go to a Federally Qualified Health Center (FQHC) or Rural Health Clinic (RHC) for immunizations.2

Immunization campaigns can deliver VFC vaccines, however, to children whose families report that they are “underinsured”.

The Centers for Diseases Control and Prevention is also mandated by the VFC legislation to maintain stockpiles—which should cover a six-month supply—of the various childhood vaccines so as to help prevent vaccine shortages.

The VFC Act is one of the 3 major government vaccine financing systems. The other two are the Vaccination Assistance Act (Section 317 of the Public Health Service Act) and funds that individual state legislatures provide to their health departments

Section 317 was introduced in 1962 to allow the federal government to provide vaccines and personnel such as public health advisors and epidemiologists to health departments instead of cash (direct assistance).

The Federal Government can often obtain vaccine at reduced prices compared with other purchasers because it buys a large volume of doses with limited number of distribution points—the manufacturer delivers the vaccine to a few locations rather than every state or clinic—and a no-return policy—that is, the government keeps unused vaccines. A no-return policy is a common practice in vaccine contracts in the private sector.

Vaccines purchased through the Section 317 program can be provided to anyone, including adults. In addition to Section 317, several states made the commitment to “universal purchase,” in which the states—using a combination of federal and state funding sources—purchase and distribute vaccines recommended for children to all immunization providers, both public and private. In December 2000, there were 15 universal purchase states.1

According to the CDC, in 2002 childhood vaccines in the US were purchased by:

  • The private sector - 43%
  • The VFC program - 41%
  • Section 317 - 11%
  • State/local governments - 5%.1

Another aspect of financing immunizations is reimbursement for the vaccine providers for supplies, their personnel, and giving the vaccines. Many providers have raised concerns that their reimbursements are inadequate to cover their costs. In that situation the remaining costs must be covered by the parents or by the provider. Co-payments, required by many health plans, are the responsibility of the family.

Some of the vaccines that are routinely recommended for children may be costly, but generally are less expensive for a family than the costs that would be incurred if the child develops a vaccine-preventable disease.

Additional Reference

References