Hospital funding in black and white

DDuring our training as doctors, we alternated between safety-net hospitals, elite academic medical centers, and private clinics. Means of patient care and comfort were lavish in some establishments, spartan in others. The differences were often night and day or, as we quantified in a later analysis, black and white: we cared for significantly more white patients in high-resource facilities and significantly more black patients and other patients of color in those with fewer resources.

While the 1964 Civil Rights Act prohibited hospitals from discriminating on the basis of race, segregation persists. According to the Medicare data we analyzed, a relative handful of hospitals — just 10% of all hospitals — provide three-quarters of all Medicare-covered black care.

We have found that in hospital care, as in public education, separate usually means unequal. Hospitals where blacks make up a large share of inpatients have relatively meager facilities — measured by the monetary value of buildings and equipment — and are much less likely than other hospitals to offer expensive services, high-tech and often lifelong. save services like cardiac catheterization labs, or even routine services like cardiac rehabilitation programs. The term “structural racism” seems particularly appropriate for these systematic inequalities in the bricks, mortar and equipment of hospitals.


Race-based inequities in hospital resources are the legacy of slavery, discrimination, and health care funding policies that directed resources toward white communities and away from communities of color. The current hospital payment system continues to cement these inequities by assigning different dollar values ​​to the care of different patients: lower values ​​for care provided to the uninsured or Medicaid-covered, and higher values ​​for care to the insured. individuals and patients. with Medicare – especially those who are able to afford deductibles, copayments, and coinsurance.

Blacks are more likely to be relegated to the lower value group. Far more blacks are uninsured or dependent on Medicaid than whites, and black workers are less likely than white workers to have employment-based private insurance. Fewer privately insured Black families have the financial assets to cover the often substantial out-of-pocket expenses of an insured hospital stay. This payment structure incentivizes hospital leaders to prioritize services and outreach efforts that attract lucrative — and predominantly white — patients.


We used audited financial data that hospitals report to Medicare to quantify the financial disadvantage hospitals face in serving Black communities. Hospitals caring for a large portion of black patients were paid $283 less for each day a patient stayed in hospital compared to other hospitals. As a result, while many hospitals were making a profit on their inpatient care, facilities serving blacks were in the red.

Funding differences were not attributable to differences in the degree of patient illness, the complexity of care provided by hospitals, or hospital characteristics such as their size, location, or whether they were centers academics.

Equalizing funding would have required $14 billion in additional payments to hospitals serving black people in 2018 (the most recent year for which data was available), or about $25 million per hospital serving black people.

Our analysis confirmed our findings on the ground: hospitals serving blacks have to make do with fewer financial resources than other hospitals.

That the US hospital payment system values ​​different patients differently – and therefore penalizes hospitals serving black people – is a political choice, and unusual among wealthy countries. In most other wealthy countries, even those like Germany with hundreds of different insurance plans, a single fee schedule applies to all patients. In the United States, the second-class status of those covered by Medicaid was entrenched from the start when, in the midst of the civil rights era, Congress chose to separate coverage for the poor (many of whom were black) from that for the people. elderly (most of whom were white). Medicare offered seniors a federal plan modeled on Blue Cross coverage, while Medicaid, enacted simultaneously, relegated the poor to a welfare-based program largely controlled, even today, by state governments, some of which are explicitly racist.

That the current hospital funding system places a lower monetary value on the care and lives of black patients is a largely hidden but pernicious form of structural racism. Health reforms should equalize payments between patients and hospitals, and repair the damage of past policies by directing investments to resource-strapped facilities that have long served black communities.

Gracie Himmelstein is an internal medicine resident at UCLA Health. Joniqua N. Caesar is a resident in the Combined Medicine and Pediatrics Program at Johns Hopkins. Kathryn EW Himmelstein is an infectious disease fellow at Mass General Brigham and Harvard Medical School.

Michael J. Birnbaum