U.S. Covid Funding Flaw Shortchanges Hospitals in Black Communities

The CARES Act funding relied on the same flawed method that caused issues for the health system in the study, said Ziad Obermeyer, one of the authors of the Covid paper as well as the research on the Optum algorithm. He and his fellow researchers looked at actual disbursements where data already existed and used the publicly disclosed formula to calculate the rest. They found that communities with more Black residents did get more relief dollars —  partly because of  grants that sent funds straight to hard-hit areas — but not as much as they should have based on the number of virus cases, underlying conditions that put residents at risk for severe cases, and how financially strapped the hospitals in those communities are.

“When you compare counties that have a similar level of funding, the counties that are disproportionately Black are in much worse health,” Kakani said. “You shouldn’t need to be in worse health to get the same funding.”

The report comes on top of findings that Black and Latino people had far higher case counts, hospitalizations and deaths from Covid-19. One of every 1,450 Black Americans has died of Covid, compared with one of every 3,350 White Americans, according todata from the Johns Hopkins Center for Health Equity reported in the National Urban League’s State of Black America report. Rates of infection are more than twice as high for Black people as White, and hospitalizations are more than four times more frequent. 

“The existing design of many formula-based funding streams are in and of themselves promoters of continued disparity. Many of these funding formulas were not designed to address racial inequity, racial disparities,”  said Marc Morial, president and chief executive officer of the Urban League. Instead, when it comes to inequality, “you’re codifying it and you’re perpetuating it.”

The first $50 billion in pandemic-relief funding was distributed in April based on providers’ revenue. Subsequent payments were targeted at Covid hotspots and certain types of providers, like rural hospitals or long-term care facilities. HHS did set aside more funding for hospitals that serve uninsured patients and for rural areas, but the bias related to revenue was evident there as well, Obermeyer said. In the pool of money reserved for rural areas, for example, the money also was allocated based on revenue or substitutes for it, like total expenses or number of beds, he said. 

The disparity in distribution extends to community-based care — like clinics and doctors’ offices — which means fewer funds go to providers that serve a large number of Medicaid recipients, said Allison Orris, counsel at Manatt Health, a firm that offers legal, consulting and other servicesAnd while HHS tried to patch the inequalities with targeted funding for areas with high rates of Covid or those with high rates of uninsured and Medicaid patients, those targeted funds went to hospitals, leaving out clinics and other smaller providers. “We are really concerned that it has the result of delivering the least amount of aid to providers on the ground serving communities in need,” she said.

Some of Orris’s colleagues plan to release a report on this in the next few weeks. A number of these issues probably occurred because of the need to swiftly get funds out the door. But because there is still money left that hasn’t been allocated, they contend the department should look at ways to make up the difference with coming allocations. “HHS has been somewhat responsive,” said Anne Karl, a partner at Manatt.

Obermeyer said it’s another example of using revenue as a shorthand for need. “Because everything can be measured with dollars, we forget that not everything should be measured in dollars,” he said, “and that that choice implies a certain set of priorities and values that embed all of these structural inequalities.”

Instead, policy makers and health-care providers need to look at ways to measure actual medical need. In this case, the U.S. has detailed data on things like hospital strain, case counts and the local prevalence of conditions like heart disease, renal failure and high blood pressure that make Covid worse, Obermeyer said. 

In the meantime, the pandemic continues to lay bare inequities in the U.S. health-care system that hurt Black patients. 

“When we get to 200,000 deaths, we’re probably going to have 60,000 to 70,000 Black deaths,” said Morial of the Urban League. “Black people are going to make up 35-40 % of the deaths, but we’re only 13% percent of the population. Covid took the reality of these disparities and put it on blast, on Front Street, so nobody can deny that it exists.” 

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