With pandemic-era protections for Medicaid enrollees set to expire this month, state Medicaid programs are gearing up to resume eligibility checks and disenrollments. But how the unwinding of the federal continuous enrollment provision affects enrollees and state budgets will vary according to states’ differing approaches and administrative capabilities, a new KFF survey finds.

The 21st annual KFF survey of state Medicaid and Children’s Health Insurance (CHIP) Program officials finds that many states are using an array of strategies to promote continuity of coverage, while other states have adopted policies that may make it harder for people who are still eligible to retain coverage. Staffing shortages and systems limitations could also affect whether eligible enrollees are able to remain enrolled.

The survey, conducted by KFF in collaboration with the Georgetown University Center for Children and Families, presents a snapshot of actions that states are taking to prepare for the unwinding of the provision that has paused Medicaid disenrollments since February 2020. It also highlights states’ Medicaid eligibility, enrollment, and renewal policies and procedures in place as of January 2023.

KFF has estimated that enrollment in Medicaid and CHIP will have grown by 23.3 million enrollees, to nearly 95 million, by the end of March when the continuous enrollment provision expires. Millions of beneficiaries are expected to be disenrolled over the next year, including some who are no longer eligible for Medicaid and others who still qualify but lose coverage due to administrative paperwork problems.

In the new survey, the one-third of states that were able to report projected coverage losses estimate that about 18 percent of Medicaid enrollees will be disenrolled after the continuous enrollment provision ends. The estimates range from seven percent to 33 percent of total enrollees and are consistent with other estimates that about 15 million people may lose Medicaid coverage over the coming year.

There is variation in the strategies states are adopting that could affect the amount of coverage losses, including:

• Taking 12-14 months to complete renewals following the end of the continuous enrollment provision (43 states). Taking more time can help prevent inappropriate terminations of those who are still eligible but could maintain enrollment of ineligible people for longer.

• Improving rates of renewals using ex parte processes that use reliable data sources — such as the Federal Data Services Hub and Supplemental Nutrition Assistance Program (SNAP) information — to verify ongoing eligibility, reducing the administrative burden on both states and enrollees (30 states).

• Contacting enrollees when renewal action is needed and following up with those who don’t respond (36 states). About half of the states (27) have been flagging individuals who may no longer be eligible or who did not respond to renewal requests.
• Adopting continuous eligibility policies for children, postpartum and for some adults that will help more people retain coverage during the unwinding. A total of 37 states have extended postpartum coverage to 12 months and 26 states provide 12-month continuous eligibility to some or all children in Medicaid and CHIP.

At the same time, some states have not adopted these strategies. Several states lack fully automated systems, processing some or most renewals manually (12 states) and others have ex parte renewal rates below 25 percent (11 states), which will increase the administrative burden on staff and enrollees. Even among states that adopt policies to promote continuity of coverage, implementation of policies and systems capacity will be key in how enrollees fare during the unwinding.

The challenge of processing an unprecedented volume of eligibility renewals and disenrollments comes at a time when most state Medicaid programs face significant staffing challenges. The survey finds that more than half of reporting states have staff vacancy rates greater than 10 percent for eligibility workers (16 of 26 reporting states) and slightly less than half for call center staff (13 of 28 reporting states).

These and other findings from the survey will be discussed today at a public web briefing. An archived video recording of the briefing will be available on kff.org later today.

The full survey report, “Medicaid and CHIP Eligibility and Enrollment Policies as States Prepare for the Unwinding of the Pandemic-Era Continuous Enrollment Provision,” includes state-level data about Medicaid and CHIP eligibility in every state. Also available are other recent KFF analyses related to the end of the continuous enrollment provision, including “Unwinding the Continuous Enrollment Provision: Perspectives from Current Medicaid Enrollees” and “Medicaid Enrollment Growth: Estimates by State and Eligibility Group Show Who may be at Risk as Continuous Enrollment Ends.

The annual update of KFF’s collection of wide-ranging data on health and health care by race and ethnicity is now available, and this year includes measures on mental health care access, mental illness, substance use disorder, suicide rates, and drug overdose death rates.

The handy reference, “Key Data on Health and Health Care by Race and Ethnicity,” has nearly 50 charts and up to 70 data measures that highlight the scale and scope of disparities among six racial and ethnic groups in three broad categories: health coverage and access to and use of care; health status, outcomes, and behaviors; and social determinants of health.

When the measures are examined collectively to see how Asian, Hispanic, Black, American Indian and Alaska Native (AIAN), and Native Hawaiian and Other Pacific Islander (NHOPI) people fare compared to White people, readers can see the extent of disparities experienced by specific groups. For example, Black people fared worse than White people in 55 measures of health and health care and Hispanic people fared worse than White people in 44 of them. However, the data may mask disparities faced by subgroups within these broad racial and ethnic categories. For example, while Asian people fare the same or better than White people on many measures, certain ethnic subgroups of Asian people may fare worse. Further, ongoing data gaps and limitations hinder the ability to have a comprehensive understanding of the experiences of smaller groups, such as AIAN and NHOPI people.

The overview of how specific racial/ethnic groups fared compared to White people is a gateway to explore the detailed findings, some of which have received attention or policy action recently:

• Among adults with any mental illness, Black (39%), Hispanic (36%), and Asian (25%) adults were less likely than White (52%) adults to receive mental health services as of 2021.
• 2020 data reflect that AIAN people had the highest rates of drug overdose deaths compared with all other racial and ethnic groups. Drug overdose death rates among Black people exceeded rates for White people as of 2020, reflecting larger increases among Black people in recent years.
• Although Black people did not have higher cancer incidence rates than White people overall and across most types of cancer that were examined, they were more likely to die from cancer.
• At birth, AIAN and Black people had a shorter life expectancy compared to White people as of 2021, and AIAN, Hispanic, and Black people experienced larger declines in life expectancy than White people between 2019 and 2021. These life expectancy trends may matter in any discussion of increasing the age of eligibility for Medicare.
• Black infants were more than two times as likely to die as White infants, and AIAN infants were nearly twice as likely to die as White infants as of 2021. Black and AIAN women also had the highest rates of pregnancy-related mortality.

Editor’s note: This analysis was revised on March 27, 2023 to account for data anomalies and incorporate corrections, including to our estimate of the value of property tax exemption. These corrections result in a modest increase in the total estimated value of tax exemption, from $27.6 to $28.1 billion.

Over the years, some policymakers have questioned whether nonprofit hospitals—which account for nearly three-fifths (58%) of community hospitals—provide sufficient benefit to their communities to justify their exemption from federal, state, and local taxes. This issue has been the subject of renewed interest in light of reports of nonprofit hospitals taking aggressive steps to collect unpaid medical bills, including suing patients over unpaid medical debt, including patients who are likely eligible for financial assistance. Further, recent research indicates that nonprofit hospitals devote a similar or smaller share of their operating expenses to charity care in comparison to for-profit hospitals. In light of these concerns, several policy ideas have been floated to better align the level of community benefits provided by nonprofit hospitals with the value of their tax exemption.

This data note provides an estimate of the value of tax exemption for nonprofit facilities based on hospital cost reports, filings with the Internal Revenue Service (IRS), and American Hospital Association (AHA) survey data (see Methods for additional details). We define the value of tax exemption as the benefit of not having to pay federal and state corporate income taxes, typically not having to pay state and local sales taxes and local property taxes, and any increases in charitable contributions and decreases in bond interest rate payments that might arise due to receiving tax-exempt status. (For additional information, see Methods.)

Results

The total estimated value of tax exemption for nonprofit hospitals was about $28 billion in 2020 (Figure 1). This represented over two-fifths (44%) of net income (i.e., revenues minus expenses) earned by nonprofit facilities in that year. To put the value of tax exemption in perspective, our estimate is similar to the total value of Medicare and Medicaid disproportionate share hospital (DSH) payments in the same year ($31.9 billion in fiscal year 2020) (i.e., supplemental payments to hospitals that care for a disproportionate share of low-income patients which are intended, in part, to offset the costs of charity care and other uncompensated care).

The estimated value of federal tax-exempt status was $14.4 billion in 2020, which represents about half (51%) of the total value of tax exemption. This is primarily due to the estimated value of not having to pay federal corporate income taxes ($10.3 billion). In addition, we assumed that individuals contribute more to tax-exempt hospitals because they can deduct donations from their income tax base ($2.5 billion) and issue bonds at lower interest rates because the interest is not taxed ($1.6 billion). Our estimates of changes in charitable contributions and interest rates on bonds only account for federal tax rates for simplicity and may therefore understate the total value of tax exemption because they do not account for the effects of state taxes.

The total estimated value of state and local tax-exempt status was $13.7 billion in 2020, which represents about half (49%) of the total value of tax exemption. This amount includes the estimated value of not having to pay state or local sales taxes ($5.7 billion), local property taxes ($5.0 billion) or state corporate income taxes ($3.0 billion).

The total estimated value of tax exemption (about $28 billion) exceeded total estimated charity care costs ($16 billion) among nonprofit hospitals in 2020 (Figure 2), though charity care represents only a portion of the community benefits reported by these facilities. Hospital charity care programs provide free or discounted services to eligible patients who are unable to afford their care and represent one of several different types of community benefits reported by hospitals. The Internal Revenue Service (IRS) also defines community benefits to include unreimbursed Medicaid expenses, unreimbursed health professions education, and subsidized health services that are not means-tested, among other activities. One study estimated that the value of tax exemption exceeded the value of community benefits broadly for about one-fifth (19%) of nonprofit hospitals during 2011-2018 or about two-fifths (39%) when considering the incremental value of community benefits provided relative to for-profit facilities. Other research suggests that nonprofit hospitals devote a similar or smaller share of their operating expenses to charity care and unreimbursed Medicaid costs—which accounted for most of the value of community benefits in 2017—when compared to for-profit hospitals.

The value of tax exemption grew from about $19 billion in 2011 to about $28 billion in 2020, representing a 45 percent increase (Figure 3). The value of tax exemption increased in most of the years (7 out of 9) in our analysis, though there was a notable decrease of $5.8 billion in 2018. The largest single-year increase was $4.1 billion in 2020. The large decrease in the value of tax exemption in 2018 coincided with the implementation of the Tax Cuts and Jobs Act of 2017, which permanently reduced the federal corporate income tax rate from 35 to 21 percent and therefore decreased the value of being exempt from federal income taxes.

The large increase in the value of tax exemption in 2020 overlapped with the start of the COVID-19 pandemic. This increase primarily reflects a large increase in aggregate net income for nonprofit hospitals in 2020. Although there were disruptions in hospital operations in 2020, hospitals received substantial amounts of government relief, and it is possible that other sources of revenue, such as from investment income, may have also increased. Increases in net income in turn increased the value of not having to pay federal and state income taxes.

Increases in the estimated value of tax exemption over time also reflect net income growth that preceded the pandemic as well as increases in estimated property values, supply expenses, and charitable contributions, each of which would carry tax implications if hospitals lost their tax-exempt status (e.g., with some supply expenses being subject to sales taxes). Even when setting aside the strong financial performance of nonprofit hospitals in 2020 as a potential outlier, total net income among nonprofit facilities increased substantially in the preceding years, before increasing further in 2020. Although we are not able to directly observe the value of the real estate owned by hospitals, the estimated value of exemption from local property taxes—which is based on our analysis of property taxes paid by for-profit hospitals—increased by 63 percent from 2011 to 2019. Finally, the supply expenses in our analysis increased by 44 percent and charitable contributions increased by 49 percent from 2011 to 2019.

Discussion

The estimated value of tax exemption for nonprofit hospitals increased from about $19 billion in 2011 to about $28 billion in 2020. The rising value of tax exemption means that federal, state, and local governments have been forgoing increasing amounts of revenue over time to provide tax benefits to nonprofit hospitals, crowding out other uses of those funds. This has raised questions about whether nonprofit facilities provide sufficient benefit to their communities to justify this tax benefit. Federal regulations require, among other things, that nonprofit hospitals provide some level of charity care and other community benefits as a condition of receiving tax-exempt status. However, a 2020 Government Accountability Office (GAO) report raised questions about whether the government has adequately enforced this requirement. Further, some argue that the federal definition of “community benefits” is too broad—e.g., by including medical training and research that could benefit hospitals directly—though others believe that the definition is too narrow. Most states have additional community benefit requirements for nonprofit or broader groups of hospitals—such as providing charity care to patients below a specified income threshold—though there is little information about the effectiveness of these regulations or the extent to which they are enforced.

Several policy ideas have been floated at the federal and state level that would increase the regulation of community benefits spending among nonprofit hospitals or among hospitals more generally. These include proposals to create or expand state requirements that hospitals provide charity care to patients below a specified income threshold, mandate that nonprofit hospitals provide a minimum amount of community benefits, establish a floor-and-trade system where hospitals would be required to either provide a minimum amount of charity care or subsidize other hospitals that do so, create mechanisms to increase the uptake of charity care, expand oversight and enforcement of community benefit requirements, replace current tax benefits with a subsidy that is tied to the value of community benefits provided, and introduce reforms intended to better align community benefits with local or regional needs. These policy options would inevitably involve tradeoffs. While they may expand the provision of certain community benefits, hospitals would incur new costs as a result, which could in turn have implications for what services they offer, how much they charge commercially insured patients, and how much they invest in the quality of care.

Editor’s Note: The press release was updated on March 27, 2023, to reflect corrections in the underlying analysis, resulting in a modest increase in the total estimated value of tax exemption, from $27.6 to $28.1 billion.

The tax-exempt status of the nation’s nonprofit hospitals collectively was worth about $28 billion in 2020, a new KFF analysis of hospital financial data estimates.

The total reflects the estimated federal, state and local taxes that nonprofit hospitals do not have to pay. It also includes estimated increases in charitable contributions and decreases in bond interest rate payments due to hospitals having tax-exempt status.

Nearly three-fifths of the nation’s community hospitals are nonprofits, an Internal Revenue Service designation that requires hospitals to provide charity care and other benefits to their communities in exchange for federal tax-exempt status.

The $28 billion total is much higher than the $16 billion in free or discounted services provided by nonprofit hospitals in 2020 through their charity care programs, though charity care is just one element of the community benefits nonprofit hospitals provide. Other community benefits include unreimbursed expenses related to Medicaid and health professional education, and certain subsidized health services.

“The Estimated Value of Tax Exemption for Nonprofit Hospitals Was About $28 Billion in 2020” is available as part of KFF’s expanding work examining the business practices of hospitals and other providers, and their impact on costs and affordability.

In anticipation of a ruling in a case with enormous implications for access to medication abortion in the United States, a new KFF brief explains the impact of this case, and others filed in federal courts, involving the FDA’s regulation of medication abortion. The case that has gotten the most attention recently is Alliance for Hippocratic Medicine (AHM) v. FDA, filed in November 2022, a challenge to the FDA’s decision to approve mifepristone (the first medication taken as part of the medication abortion drug regimen) and to include misoprostol in the medication abortion regimen. The outcome of AHM v. FDA, along with the other challenges, could have ramifications for access to medication abortion throughout the country, including in states where abortion is legal and protected. The outcome could also potentially have broader implications for the FDA’s authority in regulating drugs.

Read the brief, “Legal Challenges to the FDA Approval of Medication Abortion Pills,” which focuses on the major claims in the AHM case. Many of the issues raised in the brief will also be relevant to the other abortion cases involving the FDA and its role in approving and regulating mifepristone.

As Congress considers reauthorizing the President’s Emergency Plan for AIDS Relief (PEPFAR) for a fourth time, a new KFF Policy Watch details key facts about the program and top issues related to its authorization and funding. Created in 2003 as the U.S. government’s signature global health effort in the fight against HIV, PEPFAR is broadly regarded as one of the most successful programs in global health history, with the U.S. government reporting tens of millions of lives saved over the past 20 years. However, the reauthorization comes in a period of heightened debate over the federal budget in a divided Congress.

The Policy Watch asks and answers frequently asked, fundamental questions about PEPFAR’s reauthorization, including:

•    Will PEPFAR end without reauthorization?

•    Are there any provisions of the program that would end without reauthorization?

•    Is PEPFAR reauthorization required for the program to receive continued funding?

•    What are some issues to consider for PEPFAR’s future, and are these affected by reauthorization?

Read “PEPFAR Reauthorization 2023: Key Issues” and access a variety of resources about the program in our PEPFAR Policy Resource Hub

This year, Congress will consider reauthorization of the President’s Emergency Plan for AIDS Relief (PEPFAR), which was created in 2003 as the U.S. government’s signature global health effort in the fight against HIV. This would be PEPFAR’s fourth reauthorization. The program is broadly regarded as one of the most successful programs in global health history, with the U.S. government reporting tens of millions of lives saved over the past 20 years. Our analyses have also found positive spillover effects associated with the program beyond HIV, such as large, significant reductions in both maternal and child mortality and significant increases in some childhood immunization rates. At the same time, with a divided Congress, there are likely to be heightened disagreements over funding levels across the federal budget, potentially tied to the need to raise the debt ceiling later this year.

Following are fast facts about the program and top issues related to PEPFAR’s authorization and funding.

What are authorization and reauthorization bills, and what is their connection with appropriations bills?

Established by House and Senate rules, the two-step process of authorization/appropriations supports the linkages between the authorizing and appropriating committees of each chamber:

• Authorization legislation establishes programs, policies, and organizational, oversight, and reporting requirements. It is also “intended to provide guidance to appropriators as to a general amount and under what conditions funding might be provided to an agency or program” before appropriations may be made. It may have time-limited provisions, including for funding.
• Reauthorization legislation allows existing law for programs and policies to be adapted to current circumstances, such as adding or updating reporting requirements, increasing oversight, and extending or modifying time-limited provisions.
• Appropriations legislation provides budget authority, allowing funding for an agency or program.

For foreign assistance specifically – including global health assistance – this two-step process is also required by law. Still, this requirement is often waived by Congress since it has not passed comprehensive foreign assistance authorization legislation since 1985. (Some instances of limited authorization legislation for specific programs, including global health programs such as PEPFAR, exist, but these are less frequent occurrences than the use of waivers for the process.) Thus, absent an authorization or reauthorization bill, an appropriations bill can have the effect of authorizing the creation of a new program when providing funding for a specific activity for the first time and/or authorizing the continued operation of an existing program by providing continued funding for its activities.

When was PEPFAR created, and how many times has it been reauthorized?

President George W. Bush called for the creation of a new U.S. global HIV program in his State of the Union address on January 28, 2003, and Congress passed authorizing legislation just four months later on May 23, 2003. This legislation established the program, its structure – including creating a new position of U.S. Global AIDS Coordinator at the Department of State, with the rank of Ambassador – and initial funding authorization levels. Since then, PEPFAR has been reauthorized three times (see Table 1).

Will PEPFAR end without reauthorization?

No. PEPFAR operates largely under permanent authorities of U.S. law that allow for ongoing funding and the continuation of the major structures of the program, such as the Office of the Global AIDS Coordinator at the Department of State as well as the position of Global AIDS Coordinator, U.S. participation in the Global Fund, and annual reporting on PEPFAR efforts. Absent a reauthorization, the PEPFAR program would continue, provided funds are appropriated. There are, however, some requirements that are time-bound and would “sunset” if a reauthorization bill is not passed (Congress could, for example, simply extend the dates of these time-bound provisions in a reauthorization bill) or if Congress does not address them through another legislative vehicle. Specifically, there are seven requirements that would end after FY 2023, and one that would end after FY 2024, if not addressed. Of these, two relate to how HIV funding is allocated, four specify requirements related to the U.S. contribution to the Global Fund, and two address reporting or oversight (see Table 2).

Is PEPFAR reauthorization required for the program to receive continued funding?

No. Under current legislative rules, Congress can continue to appropriate funding for the program each year. As mentioned above, typically, reauthorization and appropriation bills work hand-in-hand, though there are exceptions, such as authorized programs that do not have a current funding authorization but for which funding is effectively authorized when it is appropriated (as has been the case for PEPFAR since FY 2014). At the same time, the House of Representatives recently passed a rules package for the 118th Congress that requires authorization and oversight plans for House committees, which may signal heightened oversight as well as more visibility around, and potential discussion of, the practice of appropriating funding to programs without a current funding authorization.

Does a funding authorization signal a required level of funding?

When included in an authorization or reauthorization bill, a funding authorization may indicate congressional intent to appropriate funding at certain levels, but Congress is not required to appropriate the level of funding that is authorized for a discretionary program. Ultimately, Congress may appropriate more funding than authorized in some instances, while it may appropriate less in others. This happened during PEPFAR’s first five-year authorization, FY 2004 – FY 2008, when more was appropriated than the $15 billion initially authorized ($19.8 billion was appropriated). The reverse happened during the its second period, FY 2009 – FY 2013, when less was appropriated than the $48 billion authorized (just under $37.2 billion was provided).

A funding reauthorization in PEPFAR for an area (e.g., bilateral HIV) or purpose (e.g., U.S. contribution to the Global Fund) may be a specific funding amount – either as an exact amount that indicates Congress wants that amount directed to this, as a floor that indicates Congress wants at least this amount directed to this, a ceiling that indicates Congress wants no more than this amount directed to this – or more general, stating “such sums as necessary” are authorized for this (this amount may be within an overall funding authorization level or may be standalone).

What are some issues to consider for PEPFAR’s future and are these affected by reauthorization?

Regardless of what happens with reauthorization, there are several discussions underway and questions about PEPFAR’s future that are not dependent on the program’s reauthorization (though Congress could choose to address them that way). Among others, these include discussions about PEPFAR’s role in pandemic preparedness and response, particularly given its work to address COVID-19 in PEPFAR countries and the numerous global challenges ahead for shoring up pandemic preparedness more generally. Indeed, in December 2022, the Secretary of State announced plans for a new Bureau of Global Health Security and Diplomacy that would bring together the functions of several Coordinators and offices, including PEPFAR’s Office of the U.S. Global AIDS Coordinator and Global Health Diplomacy and the Coordinator for Global COVID-19 Response and Health Security. The Bureau would be led by the Department of State official who is already dual-hatted as the U.S. Global AIDS Coordinator and the U.S. Special Representative for Health Diplomacy, currently Dr. John Nkengasong. There are also broader questions about how PEPFAR, and other vertical disease programs (those focused on single diseases), can best contribute to making health systems stronger and more sustainable at the country level; how, with what has largely been flat funding, the program can make further gains in the HIV response; and how best to promote equity, particularly regarding key and other vulnerable populations.

President Biden released the FY 2024 President’s Budget Request on March 9, 2023. The request includes discretionary funding for U.S. global health programs at the State Department, the U.S. Agency for International Development (USAID), the Centers for Disease Control and Prevention (CDC), and the National Institutes of Health (NIH). Funding provided to the State Department and USAID through the Global Health Programs (GHP) account, which represents the bulk of global health assistance, totals $10.9 billion, an increase of $367 million above the FY 2023 enacted level. Most of the increase is for global health security (GHS), which totals $1.2 billion (an increase of $345 million above the FY 2023 enacted level) and includes $500 million for the Pandemic Fund. Funding also increased for family planning and reproductive health (FP/RH), Gavi, and the Health Reserve Fund, but is lower for bilateral HIV, tuberculosis (TB), and malaria. The FY 2024 request also includes new dedicated funding for the Global Health Worker Initiative. Funding for the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), maternal and child health (MCH), nutrition, vulnerable children, and neglected tropical diseases remained flat. See the table below for additional detail on global health funding in the FY 2024 request (downloadable tables here). See the KFF budget tracker for details on historical annual appropriations for global health programs.

Resources:

• White House, Office of Management and Budget (OMB), President’s Budget for FY 2024
• State Department, FY 2024 International Affairs Budget

Editor’s Note: This brief was updated on March 10, 2023 to reflect recent price announcements by Moderna and the release of the President’s FY 2024 budget request.

The federal government has spent more than $30 billion¹  on COVID-19 vaccines, including the new bivalent boosters, incentivizing their development, guaranteeing a market, and ensuring that these vaccines would be provided free of charge to the U.S. population. However, last year, the Biden Administration announced that it no longer had funding, absent further Congressional action, to make additional purchases and it began preparing for the transition of COVID-19 vaccines to the commercial market. This means that manufacturers will be negotiating prices directly with insurers and purchasers, not just the federal government, and prices are expected to rise. Elsewhere, we have analyzed the implications of commercialization for access to and coverage of COVID-19 vaccines, finding that most, but not all, people will still have free access. Still, the cost of purchasing vaccines for the population is likely to rise on a per dose basis, though the extent to which it affects total health spending is dependent on vaccine uptake and any negotiated discounts, among other factors.

Here, we illustrate the potential total cost of Pfizer and Moderna COVID-19 vaccines, based on their publicly-announced expected prices, once they enter the U.S. commercial market. Specifically, we compare the average price paid by the federal government for the COVID-19 bivalent boosters to the estimated average commercial prices that have been suggested by manufacturers, and calculate an overall cost for purchasing vaccines for the adult population (ages 18 and older) across different scenarios of vaccine uptake (we only estimate costs for purchasing a single vaccine dose under different population uptake scenarios though it is possible that additional boosters will be needed on an annual or some other regular basis). While four COVID-19 vaccines have been authorized or approved for use in the United States, we focus our analysis only on Pfizer and Moderna vaccines, which account for almost all doses administered in the U.S. (97% as of March 2² ) and approximately 80% of all federal funding spent on COVID-19 vaccines.

The federal government has so far purchased 1.2 billion doses of Pfizer and Moderna COVID-19 vaccines combined, at a cost of $25.3 billion, or a weighted average purchase price of $20.69 per dose. In mid-2020, months before any COVID-19 vaccine was yet authorized or had even completed clinical trials, the federal government purchased an initial 200 million vaccine doses from Pfizer and Moderna (100 million each), at a price of $19.50 per dose and $15.25 per dose, respectively. This guaranteed an advance market for these vaccines, should they prove safe and effective and receive emergency use authorization (EUA) from the Food and Drug Administration (FDA), as each did in December 2020. In total, the federal government has made six different bulk purchases from Pfizer, totaling 655 million doses, and five bulk purchases from Moderna, totaling 566 million doses, for a total of 1.2 billion doses. Subsequent federal government purchases were made at a higher price per dose, with a weighted average across these purchases of $20.69. (See Figure 1 below and Tables in Appendix.)

The federal price paid per dose has generally increased over time, with the highest price paid for the most recent bivalent, or updated, boosters. The most expensive price per dose paid by the government was for the recent purchase of bivalent booster doses from each manufacturer, including 105 million doses at $30.48 per dose from Pfizer and 66 million doses at $26.36 per dose from Moderna (or a weighted average price per dose of $28.89). This represented a 56% increase in the price per dose for Pfizer, compared to the initial Pfizer purchase price, and a 73% increase for Moderna. In total, the U.S. has purchased 171 million doses of the bivalent booster at a cost of $4.9 billion.

While the commercial prices for COVID-19 vaccines are not yet known, both Pfizer and Moderna have signaled likely ranges that are three to four times greater than the pre-purchased federal price for the bivalent booster. In a recent investor call, Pfizer indicated that it expected a commercial price per dose for its vaccine to be between $110 and $130. Moderna has also suggested the same range. This range is 4 to almost 5 times greater than the weighted average price per dose paid by the federal government for Moderna and Pfizer bivalent doses ($28.90).

In the unlikely outer bound scenario in which all adults were to receive a vaccine at the announced expected commercial prices, it could cost between $28.4 billion and $33.5 billion to purchase enough vaccine doses for the U.S. adult population for a one-year period (258 million doses). The lower end of this cost range ($28.4 billion for 258 million doses) is several billion higher than what the federal government has spent for more than four times as many Pfizer and Moderna doses to date ($25.3 billion for 1.2 billion doses). See Figure 2.

Even under much lower vaccine uptake scenarios (e.g., 50% of adults getting a booster), the total cost to purchase COVID vaccines at the commercial price would still exceed the cost of purchasing enough vaccines for everyone at the federal bivalent booster price. Under a scenario where half of the adult population is vaccinated for COVID-19 at the announced commercial prices-per-dose, the total cost (ranging from $14.2 billion to $16.8 billion) still greatly exceeds the cost of purchasing vaccines for all adults at the average federal bivalent price ($7.5 billion). Although all adults are recommended to get the Omicron booster, a 50% uptake rate would be similar to that of the annual flu vaccine. If only a quarter of the adult population were to be boosted at the commercial price per dose, the total cost could range from $7.1 billion to $8.4 billion. The low end of that range is slightly lower than the cost of vaccinating all adults at the federal price. Current take-up of the Omicron booster – at 19.6% of all adults as of March 2– is even lower, though these boosters only became available last September and there are continuing efforts to encourage people to get boosted. KFF’s latest COVID-19 vaccine monitor survey found that just under a third of adults who had not yet had an updated booster said they planned to get one as soon as they could.

While most people will still be able to get COVID-19 vaccines for free, these costs will be borne by both public and private vaccine payers. As we have described in an earlier analysis, most people with health insurance will still be able to get COVID-19 vaccines, including boosters, for free even after the federally purchased supplies are depleted. But these costs will still be borne by public and private payers. In addition, the cost estimates we provide above are only for the vaccine doses themselves; there is also the cost of vaccine administration which could range from about $25 to $40 per dose, as well as a potential physician visit fee. For insured people, these costs would be covered by the insurer, as they are currently. Thus far, about four in ten adults who have received an updated booster dose are over age 65 and likely covered by Medicare, while the remaining two thirds are likely primarily covered by either Medicaid or private insurance. As older adults are more likely to opt for booster shots, a disproportionate share of the total national spending may be borne by the Medicare program. (For most preventive vaccines, Medicare pays 95% of the average wholesale price, which is often referred to as the “list” price, but we do not account for this potential modest discount in our cost illustrations above.) For private insurers and their enrollees, these costs are expected to have an upward effect on premiums. Our recent analysis of 2023 premium filings from ACA Marketplace insurers found that some insurers say the end to federal purchasing could have a small upward effect on premiums next year. These costs could continue to push premiums upward in future years as well, particularly if private insurers under-estimated the cost of the vaccine dose before Pfizer and Moderna’s price announcements.

For the uninsured and underinsured – who will not have guaranteed access to free COVID-19 vaccines – the commercial price could discourage vaccination. The suggested average price for COVID-19 vaccines after commercialization ($110 to $130 per dose) is significantly higher than the commercial price for the annual flu vaccine ($18 to 30 per dose), and could be a cost barrier for the uninsured and underinsured, who have no guaranteed mechanism for receiving COVID-19 (or any) vaccines once federal supplies are depleted. This includes people with private insurance in grandfathered or short-term limited duration health plans, as these are not subject to the Affordable Care Act’s requirement to provide recommended vaccines with no out-of-pocket cost. These individuals could have to pay all or some of the cost of the vaccine and associated physician appointments or administration fees. To provide enough COVID-19 vaccines for the 23.4 million uninsured adults in the U.S. at commercial prices for a one-year period excluding administration costs would cost between $2.6 billion and $3 billion; at the average federal price paid for the bivalent booster, it would cost $677 million. (The total cost would be higher if extended to the under-insured). To address the lack of guaranteed access to vaccines for uninsured adults, in last year’s budget request, the Biden administration proposed creating a new “Vaccines for Adults” (VFA) program to provide uninsured adults with access to all ACIP-recommended vaccines, including COVID-19 vaccines, at no cost, although Congress did not act on that proposal. The administration has once again included the proposal in its FY 2024 budget request. In addition, both Moderna and Pfizer have indicated that they will use patient assistance programs to provide free COVID-19 vaccines to the uninsured and underinsured but details on those programs are not yet available.

Discussion

On a per-dose basis, the cost to continue to vaccinate adults in the U.S. against COVID-19 after federally purchased doses are depleted is likely to be significantly higher than the costs borne in the past by the federal government. Here, we find that the commercial price ranges announced by Moderna and Pfizer are four to almost five times greater than the pre-purchased federal price for the bivalent booster, resulting in comparatively high total costs even if, for example, only half the population were to get boosted. At the same time, it is important to note that even at higher spending levels driven by commercial pricing, COVID-19 vaccination is likely to be cost-effective compared to not vaccinating, given the effectiveness of these vaccines at preventing hospitalizations and deaths.

While most consumers with public and private insurance will be protected from having to pay directly for vaccine costs, those who are uninsured and underinsured may face cost barriers when the federally-purchased vaccine doses are depleted. In addition, as private payers take on more of the cost of vaccinations and boosters, this could have a small upward effect on health insurance premiums.

Many of the factors that will influence the future commercial market and the exact price of COVID-19 vaccine doses are hard to predict at this point. Here, we illustrated the cost of a purchasing a single vaccine dose under different population uptake scenarios, but it’s possible that doses could be needed more frequently if new variants arrive, or less frequently if the pandemic wanes. Costs will also depend greatly on the number of people that elect to be vaccinated, and booster uptake is low so far. Ultimately, the price for future doses is hard to know, and they could be higher than those implied by companies so far if new formulations are developed, or could come down if discounts are negotiated. Still, insurers and public programs will not have much leverage since they are generally required to cover all ACIP recommended COVID vaccines with no patient out-of-pocket cost. Without advanced purchases or guarantees by the federal government, it’s also possible that future supply may not always match demand, which would have unpredictable consequences for the price and availability of vaccines in the U.S.

Appendix

*bivalent booster

Sources: KFF analysis of data from:

• https://www.medicalcountermeasures.gov/app/barda/coronavirus/covid19.aspx
• https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-announce-agreement-us-government-600
• https://www.medicalcountermeasures.gov/newsroom/2020/pfizer/
• https://www.defense.gov/News/Releases/Release/Article/2455698/trump-administration-purchases-additional-100-million-doses-of-covid-19-investi/
• https://www.medicalcountermeasures.gov/newsroom/2020/pfizer-1/
• https://www.medicalcountermeasures.gov/newsroom/2021/covid19purchases/
• https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-provide-us-government-additional-200
• https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-provide-us-government-additional-50
• https://www.hhs.gov/about/news/2022/06/29/biden-harris-administration-secures-105-million-doses-of-pfizers-latest-covid-19-vaccine-for-fall-vaccination-campaign.html

*bivalent booster

Sources: KFF analysis of data from:

• https://www.medicalcountermeasures.gov/app/barda/coronavirus/covid19.aspx
• https://www.medicalcountermeasures.gov/newsroom/2020/modernamanufacturing
• https://investors.modernatx.com/news/news-details/2020/Moderna-Announces-Supply-Agreement-with-U.S.-Government-for-Initial-100-Million-Doses-of-mRNA-Vaccine-Against-COVID-19-mRNA-1273/default.aspx
• https://www.medicalcountermeasures.gov/newsroom/2020/moderna/
• https://investors.modernatx.com/news/news-details/2020/U.S.-Government-Exercises-1st-Option-for-Additional-100-Million-Doses-of-Modernas-COVID-19-Vaccine-Candidate/default.aspx
• https://www.medicalcountermeasures.gov/newsroom/2021/covid19purchases/
• https://investors.modernatx.com/news/news-details/2021/U.S.-Government-Purchases-Additional-100-Million-Doses-of-Modernas-COVID-19-Vaccine/default.aspx
• https://investors.modernatx.com/news/news-details/2021/U.S.-Government-Purchases-Additional-200-Million-Doses-of-Modernas-COVID-19-Vaccine/default.aspx
• https://www.hhs.gov/about/news/2022/07/29/biden-harris-administration-secures-66-million-doses-modernas-variant-specific-covid-19-vaccine-booster-for-potential-use-in-fall-winter-2022.html

Source: KFF analysis

Sources: KFF analysis of data from:

• https://public3.pagefreezer.com/browse/HHS%20%E2%80%93%C2%A0About%20News/20-01-2021T12:29/https://www.hhs.gov/about/news/2020/07/31/hhs-dod-partner-sanofi-gsk-commercial-scale-manufacturing-demonstration-project-produce-millions-covid-19-investigational-vaccine-doses.html
• https://public3.pagefreezer.com/browse/HHS%20%E2%80%93%C2%A0About%20News/20-01-2021T12:29/https://www.hhs.gov/about/news/2020/08/05/hhs-dod-collaborate-with-johnson-and-johnson-to-produce-millions-of-covid-19-investigational-vaccine-doses.html
• https://public3.pagefreezer.com/browse/HHS%20%E2%80%93%C2%A0About%20News/20-01-2021T12:29/https://www.hhs.gov/about/news/2020/05/21/trump-administration-accelerates-astrazeneca-covid-19-vaccine-to-be-available-beginning-in-october.html
• https://public3.pagefreezer.com/browse/HHS%20%E2%80%93%C2%A0About%20News/20-01-2021T12:29/https://www.hhs.gov/about/news/2020/07/07/hhs-dod-collaborate-novavax-produce-millions-covid-19-investigational-vaccine-doses-commercial-scale-manufacturing-demonstration-projects.html

1. This includes vaccines that have been authorized for use in the United States (vaccines from Pfizer, Moderna, J&J, and Novavax) as well as others that either did not make it past the clinical trial phase or for which manufacturers have not sought authorization (vaccines from Merck/IAVI, Sanofi/GlaxoSmithKline and Astra-Zeneca). ↩︎
2. Analysis of data from the CDC’s COVID-19 Data Tracker: https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-people-booster-percent-pop5. ↩︎