question: COVID-19 inequities have been well-documented. We evaluated whether higher rates of severe COVID-19 in racial and ethnic minority groups were driven by higher infection rates by evaluating if disparities remained when analyses were restricted to people with infection. We conducted a retrospective cohort study of adults insured through Kaiser Permanente (Colorado, Northwest, Washington), follow-up in March–September 2020. Laboratory results and hospitalization diagnosis codes identified individuals with COVID-19. Severe COVID-19 was defined as invasive mechanical ventilation or mortality. Self-reported race and ethnicity, demographics, and medical comorbidities were extracted from health records. Modified Poisson regression estimated adjusted relative risks (aRRs) of severe COVID-19 in full cohort and among individuals with infection. Our cohort included 1,052,774 individuals, representing diverse racial and ethnic minority groups (e.g., 68,887 Asian, 41,243 Black/African American, 93,580 Hispanic or Latino/a individuals). Among 7,399 infections, 442 individuals experienced severe COVID-19. In the full cohort, severe COVID-19 aRRs for Asian, Black/African American, and Hispanic individuals were 2.09 (95% CI: 1.36, 3.21), 2.02 (1.39, 2.93), and 2.09 (1.57, 2.78), respectively, compared to non-Hispanic Whites. In analyses restricted to individuals with COVID-19, all aRRs were near 1, except among Asian Americans (aRR 1.82 [1.23, 2.68]). These results indicate increased incidence of severe COVID-19 among Black/African American and Hispanic individuals is due to higher infection rates, not increased susceptibility to progression. COVID-19 disparities most likely result from social, not biological, factors. Future work should explore reasons for increased severe COVID-19 risk among Asian Americans. Our findings highlight the importance of equity in vaccine distribution. Supplementary Information The online version contains supplementary material available at 10.1007/s40615-021-01205-2.