The federal government has systematically shortchanged communities with large Black populations in the distribution of billions of dollars in Covid-19 relief aid meant to help hospitals struggling to manage the effects of the pandemic, according to a study published Friday.

The study in the Journal of the American Medical Association found that the funding inequities resulted from a formula that allocated large chunks of a $175 billion relief package based on hospital revenue, instead of numbers of Covid-19 cases or other health data.

The effect was to distribute more money through the federal CARES Act to large hospitals that already had the most resources, leaving smaller hospitals with large numbers of Black patients with disproportionately low funding to manage higher numbers of Covid-19 cases.


“We are finding large-scale racial bias in the way the federal government is distributing” the funds to hospitals, said Ziad Obermeyer, a physician and a co-author of the study from the University of California, Berkeley.

“If you take two hospitals getting the same amount of funding under the CARES Act, the dollars have to go further in Black counties than they do elsewhere,” he said. “Effectively that means there are fewer things the health systems can do in those counties, like testing, buying more personal protective equipment, or doing outreach to make sure people are being tested.”


A spokesperson for the U.S. Department of Health and Human Services, which was responsible for distributing the funding, said in a statement that the department allocated the money in a “data-driven manner” in order to provide relief to hospitals swiftly in the weeks after the legislation was passed. “In choosing to act quickly, HHS adopted revenue as a measure of how to distribute funds across health care facilities and providers of different sizes and types,” the statement said. “While other approaches were considered, these would have taken much longer to implement.”

The spokesperson added that while Congress did not direct the department to examine the finances of the recipients, it recognizes the financial hardship many hospitals are facing and will make targeted distributions to those disproportionately impacted.

The study adds to a growing body of evidence showing that communities with large numbers of people of color are getting hit harder during the pandemic, with higher rates of infection than wealthier white communities. Not only do those communities have higher numbers of cases, but their hospitals already have less money to pay for additional clinical resources to care for patients and fund education and prevention efforts.

The CARES Act was passed in March to counteract the economic devastation wrought by the rapid spread of the coronavirus. In addition to direct cash payments to Americans and increased unemployment benefits, the $2.2 trillion stimulus package also included $175 billion in relief aid to hospitals.

The money was meant to bolster the balance sheets of hospitals that were hit hard by the pandemic. In addition to the increased costs of treating infected patients, hospitals also lost huge sums of money because of canceled elective procedures and a sudden drop in visits to their facilities.

The study published Friday found, however, that the federal funding formula resulted in allocations that were largely unrelated to the level of need in counties around the country. The most influential factor used in the funding formula was past revenue received from Medicare. While that makes sense on one level — the biggest hospitals with the most patients would get more money — it results in a distortion when the funding is compared to the actual health needs on the ground.

The researchers compared the funding provided to communities with more granular county-level data, including numbers of cases and deaths due to Covid-19; rates of illnesses such as kidney disease and high blood pressure that tend to exacerbate the effects of the virus; and data on the underlying financial health of the hospitals in the counties.

Overall, the study found, disproportionately Black counties received $126 per resident more funding than other counties, but that differential was generally not enough to offset the higher level of need in those places. Among counties that received the same funding, disproportionately Black counties had a higher level of Covid-19 disease burden, higher rates of chronic illness, and worse hospital finances.

“In all the categories, the funding was not well-aligned with those needs because of the choice to allocate proportional to revenue,” Obermeyer said. “Reallocating that funding according to where it’s most needed would be more equitable in the sense that it would get more money to Black counties. It would also be more economical because you’d be getting the resources to where they’re most needed.”

  • Several things: First, the study itself states, “Study limitations include that it relied primarily on estimated rather than actual disbursement, which may vary with changes in policy or COVID-19 burden and that nonhospital revenues were not available.” That should have been clearly stated in the article because we’re dealing with estimations, not actual data. Second, the CARES act was signed into law in March, at which time COVID just started taking off in the US. Without knowing how the virus was going to behave, how else should the money have been doled out? By basing it on hospital revenue, although not perfect, it’s at least a start to get the money to those facilities that likely care for the most patients at regular times. Black counties, per the study and the article, already receive $126 more per resident than other counties, so increased funding has already been addressed prior to COVID-19. The Congressional spokesperson also stated in the article that they will “make targeted distributions to those disproportionately impacted.” I interpret that to mean counties with large populations that have been ‘disproportionately impacted’ will be receiving additional funds, regardless if it’s a predominantly black or white community. I believe racial bias exists in general, but I don’t believe it’s a factor in this study. If it is, why is it not racial bias that black counties received $126 more in funding at baseline? There are plenty of white and other non-white communities that are poor and struggling; shouldn’t they get that same funding?

  • Where exactly does the racial bias part come in? I didn’t see any evidence of it in the article. Probably because of my white privilege.

  • Really really disappointed with you StatNews. Obviously you’ve jumped on the click bait bandwagon. I discovered you during Covid, but I’m pretty much done with you.

  • This makes a case for a bad allocation scheme with disproportionate outcomes but does not prove/show racial bias. The article even says that majority Black counties received more funding than other counties, just not enough more, due to a revenue-based distribution framework. So yeah, totally possible that officials poorly allocated funds, and also possible that their bad allocation scheme was just cover for racist motives, but the latter is not shown or proven or addressed by this study or article. So I don’t think this is a responsible headline (though probably good from a click perspective).

  • “The study in the Journal of the American Medical Association found that the funding inequities resulted from a formula that allocated large chunks of a $175 billion relief package based on hospital revenue, instead of numbers of Covid-19 cases or other health data”

    This does NOT indicate RACIAL bias, for cryin’ out loud! It indicates and demonstrates a whole slew of shortcomings and inadequacies (ubiquitous in ALL government endeavors) affecting equitable fund distribution but the implication, yet another cry of systemic racism, is completely false and downright dishonest and irresponsible.

    • I’m not completely convinced by what’s reported on this study but structural racism doesn’t require intent and before negating the hypothesis you’d have to offer proof of the other clause. Not just “it’s not”…

    • Income is frequently a basket category carrying race as an essential component. The racial bias occurs when African Americans are concentrated in those areas where INCOME camouflages race. We need to ask some crucial questions before we dismiss the study’s findings. What was the racial composition in those areas examined? What was the population sample like? This study could very well be correct. We certainly know that white supremacy is the only FUNCTIONAL form of racism in the U.S. The term “Racial bias“ is a softening of the term racism. We Americans don’t like to face our racial reality. Denial is the strongest component in perpetuating “racial bias.” If we read Ira Katznelson’s work he shows us how Africans we’re surgically cut out of many benefits of the G.I.bill using “employment categories” to camouflage “racial bias” (white supremacy). The same sociology applies to this study. Redlining using “residentiality” to camouflage racism. The study’s findings certainly adhere to and support earlier findings by sociologists who have studied race in the U.S.

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