Racial Disparities in COVID-19 Hospital Funding

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 provided funding to hospitals to support pandemic-related expenses and to make up for lost revenue from non-COVID care that could not be delivered on account of the pandemic.  Funds were allocated to health care facilities based on their prior revenue, their location, the insurance status of the population they typically serve, and their number of COVID-19 hospitalizations.  NBER Researchers Amitabh Chandra of Harvard and Sendhil Mullainathan of the University of Chicago, along with Pragya Kakani of Harvard and Ziad Obermeyer of the University of California, Berkeley, studied the allocation of CARES Act funding across hospitals in counties with different racial composition.  Their findings, published in JAMA, suggest that conditional on their level of funding, the COVID-related needs of hospitals in counties with a high share of Black residents were greater than those of hospitals in other counties.  The disparities were greatest for counties with a high level of per capita CARES Act funding.  In the video below, Mullainathan explains their findings and the source of this disparity -- Black patients typically receive less treatment, and therefore generate lower hospital revenues, for a given diagnosis.  

Five NBER working papers distributed this week investigate the COVID-19 pandemic’s economic and health consequences, or the impact of policies that respond to it. One studies how nominal rigidities in the economy can amplify the macroeconomic losses associated with a negative supply shock like the pandemic (28258). A second shows that pandemic-related K-12 school closures, and the associated shift to on-line learning, have exacerbated inequality in educational attainment (28264). Two studies examine the tradeoffs between health outcomes and economic activity. One estimates the reduction in COVID-19 cases associated with a county increasing the share of its workers who are working from home (28275), while another explores the integration of epidemiological and economic models to describe the trade-offs between various lock-down policies and the number of new virus cases (28282). The final study finds that relationship-oriented lenders played a key part in originating loans under the Payroll Protection Program (PPP) (28286).

These five papers bring the number of NBER working papers on the COVID-19 pandemic to 338, more than one in five of the 1689 papers that were issued in 2020. All COVID-19 papers are open access and have been collected for easy reference. Like all NBER papers, they are circulated for discussion and comment, and have not been peer-reviewed. They may be viewed in reverse chronological order or by topic area.