Summary

Uncompensated care costs for the nation’s uninsured averaged $42.4 billion per year in the 2015-2017 time period. While substantial, these costs significantly declined following implementation of the Affordable Care Act’s coverage expansion, down from $62.8 billion per year in 2011-2013. Although health care providers incur substantial cost in caring for the uninsured, the bulk of their costs are compensated through a web of complicated funding streams, financed largely with public funds from the federal government, states and localities. This brief estimates the level of public funding that was paid to help offset providers’ uncompensated care costs for the uninsured in 2017. To conduct the analysis, we rely on several secondary data sources including government budget appropriations and expenditure data for major public programs that provided funds to cover the cost of care for the uninsured, as well as analyses of secondary data sources completed by others.  Key findings include:

• Nationally, at least $33.6 billion in public funds were paid to providers to help defray providers’ uncompensated care costs associated with caring for the uninsured in 2017.
• The federal government accounted for an estimated $21.7 billion, or nearly two-thirds of the public funding sources examined, most of which was through the Veterans Health Administration or Medicaid; providing $11.9 billion, states and localities made up the balance, primarily through indigent care and public assistance programs.
• Comparing the level of public funding to our estimate of total uncompensated care costs for the uninsured ($42.4 billion per year in 2015-2017), we calculate that in the aggregate nearly 80.0 percent of providers’ uncompensated care costs were offset by government payments designed to cover these costs.

Given the rise in the number of the uninsured since 2017, provider uncompensated care costs associated with caring for the uninsured have likely increased. Between 2017 and 2019, the number of uninsured grew by an estimated 1.5 million.  In addition, with the economic toll brought on by the pandemic, the nation’s uninsured rate may have continued to climb in 2020. With the increase in uninsurance since 2017, provider uncompensated care also likely increased.  As policymakers undertake efforts to expand coverage and assess the financial impact of the pandemic, understanding uncompensated care costs and the adequacy of public funding to help defray these costs can help direct policies targeted to the uninsured. With substantial public funding of uncompensated care, government costs associated with increases in coverage could be offset in part by savings in other parts of the public ledger.

Introduction

Uninsured people use less care than their insured counterparts, but when they do use care and cannot pay for it themselves, the cost of that care is uncompensated.  Providers may absorb these costs as bad debt or tap into funding sources designed to cover some of the costs. However, these funding sources  may be inefficient or may not target funds to providers with the most uncompensated care, which can  leave uninsured people with bad debt, credit issues, or even bankruptcy.

Over the years, the federal government, states, and localities have devoted considerable resources to pay providers for care they provide to uninsured patients through several public program efforts (e.g., Veterans Health Administration and state and local indigent care programs) and also through direct financial support (e.g., Medicaid disproportionate share hospital (DSH) payments).

The economic downturn caused by the COVID-19 pandemic has potentially led to millions more people in the United States being uninsured. In addition to posing challenges to these individuals’ ability to access needed health care and be protected from medical debt, rising uninsured rates could exacerbate issues with uncompensated care costs associated with providing health care to the uninsured.

In this brief, we examine government funding streams that were available to help providers defray the costs of providing medical services to the uninsured in 2017. Specifically, building on previous analyses, we use government program data and appropriations information and other data to estimate the level of public funds paid in 2017 to help offset providers’ uncompensated care costs associated with caring for the uninsured. This study complements our analysis that estimates the total cost of uncompensated care for uninsured people, using an alternative approach to estimate specific sources of funding for uncompensated care.¹  We compare the total amount estimated in this analysis to our 2017 estimate of the total cost of care for uninsured people to assess the extent to which government funding defrays the uncompensated care costs for uninsured people.

Findings

In the aggregate, we estimate that government payments to offset the cost of uncompensated care for the uninsured totaled $33.6 billion in 2017 (Figure 1 and Table 1).  The federal government contributed nearly two-thirds of these payments, an estimated $21.7 billion. States and local government payments accounted for the remaining amount, $11.9 billion.

The Veterans Health Administration was the single largest government payment source, spending an estimated $10.3 billion in caring for the uninsured in 2017, all of which was federal funds (Table 1). With estimated spending totaling $9.8 billion, funding provided through the Medicaid program followed closely. Medicaid payments to cover the cost of care for the uninsured were split between DSH payments ($4.4 billion) and uncompensated care pool payments ($5.4 billion).  The federal government accounted for more than four-fifths of this Medicaid funding, reflecting states’ use of alternate financing arrangements to finance their share of DSH and uncompensated care pool funds.³ 

Through public assistance and indigent care programs, states and localities spent an estimated $9.9 billion on caring for the uninsured. The bulk of these payments, $7.7 billion, came from tax appropriations for indigent care programs. An estimated $2.2 billion was spent through state and local government public assistance programs.

Other federal programs examined were the Indian Health Service, which spent an estimated $2.3 billion on the uninsured (all federal funds), and community health centers which spent an estimated $1.3 billion, with $1 billion being federal payments and $0.3 billion state and local.

Government payments substantially offset the cost of uncompensated care for the uninsured. In other recent work, we estimated uncompensated care costs for the nation’s uninsured averaged $42.4 billion per year in the 2015-2017 time period. Comparing this estimate to our estimate of government payments for uncompensated care in 2017 ($33.6 billion), public dollars cover nearly 80 percent of providers’ costs of caring for the uninsured.

The remaining share of uncompensated care (about 20 percent) may be covered by private sources, provider charity, or possibly transferred to other payers in the health care system. While, overall, government funding offsets nearly four-fifths of provider uncompensated care costs, it does not pay for all of these costs.  Based on our estimates, about $8.8 billion is not covered by public dollars included in this analysis.  Some of this remaining share may be accounted for by public sources not considered in this analysis, though in earlier analysis we estimate those amounts to be relatively small. Private funding sources (e.g., workers compensation, provider charity and philanthropic organizations), which we did not consider here, may also cover some of the residual share. Some of it may be also be paid for by the privately insured through increased health insurance premiums. The extent to which providers shift costs associated with shortfalls in Medicare and Medicaid payments and caring for the uninsured to private payers has been a long-standing health policy question and remains unsettled.⁴  While limited research has been conducted on provider cost shifting to pay for charity care associated with the uninsured,⁵ considerable work has examined whether hospitals charge private payers more because of shortfalls in public payments. Evidence on this question is mixed, showing that provider’s ability to do so is largely based in market power, cost shifting occurs at a relatively low rate, and when it occurs it does so well below a “dollar for dollar” shift.⁶ 

Even if we assume, however, that all the $8.8 billion spending on the uninsured not covered by public dollars was passed to the privately insured, the effect on premiums would be small. According to the National Health Expenditures Account, spending on private health insurance premiums totaled $975.5 billion in 2017, so uncovered spending on the uninsured accounted for less than 1 percent total spending on health insurance premiums.

Looking Ahead

Even with the significant coverage expansion afforded by the ACA, provider uncompensated care costs associated with caring for the uninsured remain substantial. In other recent work, we estimate that these costs averaged $42.4 billion each year in 2015-2017. At the same time, as reported here we find that the government covers the vast majority of uncompensated care costs; we calculate that nearly 80 percent of these costs were compensated with public funding.

Importantly, though, our analysis examined providers’ uncompensated care costs and sources of public funding in the aggregate, not at the individual provider level. The federal government, states and localities support multiple programs designed to help offset provider uncompensated care costs, and targeting of payments made under these varied programs has been a longstanding issue. Thus, some providers may incur costs treating the uninsured and receive little to no compensation.

The level of provider uncompensated care is far from static. Since 2017, the level of uninsurance has increased. Between 2017 and 2019, the number of the uninsured grew by 1.5 million and may have continued to increase in 2020 due the economic downturn caused by COVID-19. So, in all likelihood, provider uncompensated care costs have also increased since 2017.

Apart from rising uninsurance, changes to government payments to cover uncompensated care costs have occurred since 2017, and more are scheduled.  Beginning in in fiscal year 2020, for example, the distribution of Medicare hospital uncompensated care payments changed so that hospital uncompensated care levels rather than Medicaid and Supplemental Security Income (SSI) days are used to allocate these payments. Estimated to total about $8.4 billion each year, this Medicare policy change provides a substantial new funding source to help offset providers’ uncompensated care costs associated with the uninsured.⁷  On the other hand, sizable reductions in federal Medicaid DSH allotments are scheduled. Under current law, cutbacks in federal funding totaling $8 billion each year are set to start fiscal year 2024 and run to fiscal year 2027. As policymakers undertake efforts to expand coverage and assess the financial impact of the pandemic, understanding uncompensated care costs and the adequacy of public funding can help direct policies targeted to the uninsured. With substantial public funding of uncompensated care, government costs associated with increases in coverage could be offset in part by savings in other parts of the public ledger.

Technical Appendix

In this appendix, we provide a more detailed description of data sources, assumptions, and limitations used in the analysis.  The discussion is arranged by program funding source and level of spending.

As mentioned in the brief, we rely on government program data and appropriations information and other secondary data to estimate the level of public funds paid in 2017 to help offset providers’ uncompensated care costs associated with caring for the uninsured. Specifically, we examine the following funding sources: Veterans Health Administration, Medicaid DSH payments, Medicaid uncompensated care pool payments, state and local indigent care programs, and state and local public assistance programs, Indian Health Service, and community health centers.⁸  For direct patient payments, the estimates reflect payments made for direct medical care and services only;⁹  they do not include spending on non-medical related program activities (e.g., costs associated with facilities and administration). More specifically, we excluded costs associated with medical facilities, medical support and compliance, enabling services (e.g., outreach, education, community health workers, etc.), as well as long-term care services and supports.

These estimates are based on available information on program budgets as well as a series of supported assumptions about to what extent funds are directed to cover the cost of care for uninsured people. As such, there is uncertainty in these estimates.

Veterans Health Administration. The Veterans Health Administration (VHA) provides care to over 9 million veterans enrolled in the VA health care program. In 2017, the VHA spent $51.0 billion on direct medical care for veterans, which included direct medical care obligations used to support inpatient care and outpatient care, as well as dental care, mental health care, prosthetics and rehabilitation care. A 2017 national survey of VHA enrollees found that 20.2 percent of VHA enrollees lacked health coverage. Assuming that uninsured VHA enrollees incur costs proportionate to their share of the patient population, we apply the percent of uninsured VHA enrollees to the direct medical care spending to estimate that total VHA spending on care for the uninsured was $10.3 billion in 2017, all of which was federally funded (Appendix Table 1). This estimate may be an undercount if uninsured patients incur a larger share of costs relative to their share of the VHA patient population.

 Medicaid Program. Apart from base payments paid to hospitals, the Medicaid program also makes supplemental payments to hospitals, some of which can be targeted to help pay for uncompensated care hospitals render to the uninsured.  As set out in a 2019 report by MACPAC, Medicaid makes two types of supplemental payments that are designed, at least in part, to support uncompensated care costs hospitals incurring in caring for the uninsured: disproportionate share hospital (DSH) payments and uncompensated care pool payments.¹⁰ 

Medicaid DSH payments.  Required by federal law, Medicaid DSH payments are intended to help hospitals that serve a high or disproportionate share of Medicaid and low-income patients. DSH payments can be used not only to cover the unpaid cost of caring for uninsured patients but also can help offset Medicaid shortfall—that is, the difference between a hospital’s cost of providing care to a Medicaid patient and the Medicaid payment received for providing care.  Within broad federal guidelines, states decide on what basis they allocate DSH payments among hospitals.

In 2017, Medicaid DSH payments to hospitals totaled $12.1 billion, with the federal share totaling $6.9 billion; the state share, $5.2 billion.¹¹   To estimate what portion of these payments were available to help defray hospitals’ uncompensated care costs for the uninsured, we made several assumptions. First, we assumed that 50 percent of DSH payments went to cover uncompensated care costs for uninsured patients and 50 percent went to offset shortfalls in Medicaid base payments.  Limited information is available on how DSH funds are actually allocated. To our knowledge the most recent available information is 2019 work done by MACPAC which used 2014 DSH audit statements to examine on what basis DSH payments are distributed. MACPAC reported that nationally, in 2014, 69 percent of DSH hospital payments went to help offset the cost of caring for uninsured patients, and 31 percent went to cover Medicaid payment shortfall.¹²  Owing to the ACA coverage expansion, between 2014 and 2017, the number of uninsured declined while the number of Medicaid enrollees increased. Because of this decline, for this analysis we assumed that states adjusted their DSH allocations to account for these shifts in insurance coverage. If states in 2017 paid out less than 50 percent of Medicaid DSH payments to help defray uncompensated care costs, we overstate the availability of these payments to cover unpaid costs of uninsured patients.¹³  Alternatively, if states allocated more than 50% of their DSH payments to cover uncompensated care costs, we understate availability.

Second, we made assumptions about what share of Medicaid DSH payments represent new funding available to hospitals to help cover uncompensated care costs for the uninsured. For many years states have relied on provider taxes, inter-governmental transfers (IGTs), certified public expenditures (CPEs) and other financing mechanisms to finance their share of DSH payments rather than using revenue from state general funds, which is generally the source of funding for the state Medicaid share. Data collected by the US. General Accountability Office for state fiscal year 2012 (the most recently available information to our knowledge) found that, nationally, 63.9 percent of the state share of DSH payments used revenues from provider taxes, IGTs and similar funding types for financing; the balance of the state share (36.1 percent) of DSH payments was financed with state funds such as state general revenues.

To account for these alternative financing sources, we assumed that the state share of DSH payments raised by provider taxes, IGTs and like financing was the same in 2017 as it was in 2012. We further assumed that the state share of DSH payments financed with these alternative financing sources did not represent new funds to the hospitals. In many instances, hospitals supply the money to fund the alternative financing sources that states then used to pay the state share of DSH payments. In contrast, we assumed that the state share of the DSH payments financed with state general funds did represent new funds available to hospitals to help pay for the unpaid costs of caring for the uninsured. We similarly assumed that the entirety of the federal share of DSH payments represented new funding to hospitals available to defray the unpaid costs for the uninsured. Applying these assumptions, we estimate that $1.9 billion of the state share of DSH payments (.36 x $5.2 billion) in 2017 represents new funding to hospitals, of which 50 percent ($0.9 billion) went to help cover uncompensated care costs for the uninsured. Similarly, we estimate that 50 percent of the full federal share of DSH payments (half of $6.9 billion or $3.5 billion), were paid to hospitals to help cover uncompensated care costs for the uninsured (Appendix Table 2).  Combining the federal and state share we estimate that in 2017 $4.4 billion in Medicaid DSH payments were directed to hospitals with the goal of helping to defray the uncompensated care costs of the uninsured.

 Medicaid Uncompensated Care Pool Payments. In fiscal year 2017, nine states supported uncompensated care pool payments through Medicaid Section 1115 demonstrations.¹⁴  Combined, $8.0 billion in pool payments were made in 2017 across the nine states, about $4.6 billion in federal funds and $3.4 billion in state funding.¹⁵  The specifics of how pool payments are made and on what basis vary state to state; California’s Global Payment Program (accounting for nearly half, $3.8 billion, of all pool payments in 2017), for example, supported payments to cover the uninsured costs of care with a particular emphasis on providing care in appropriate, cost-effective settings.

Similar to state financing of Medicaid DSH payments, a large part of the state share of uncompensated care pool payments is financed with funds from providers and local governments through provider taxes and IGTs. According to the U.S. General Accounting Office, nationally, providers and local governments provided 78 percent of the state share of non-DSH supplemental payments in 2012.¹⁶  Consistent with our adjustment for state use of alternative funding sources in financing DSH payments, we assumed that the state share of uncompensated care pool payments paid for with these alternative sources did not represent new funds to providers. We further assumed that the state share of uncompensated care pool payments (22 percent) financed with state funds did represent new funds to providers. We also assumed that the entirety of the federal share of uncompensated care pool payments represented new funding to providers. Applying these assumptions, we estimate that $0.8 billion of the state share of uncompensated care pool payments (.22 x $3.4 billion) in 2017 represents new funding to providers. Combining this with the full federal share of uncompensated care pool payments ($4.6 billion), we estimate that $5.4 billion in Medicaid uncompensated care payments were paid to providers to help cover the unpaid costs of the uninsured in 2017 (Appendix Table 2). Between Medicaid DSH and UCC payments, we estimate that Medicaid paid $9.8 billion to help cover the cost of caring for the uninsured, with $8.1 billion in federal funds and $1.7 billion in state funds.

State and Local Tax Programs and Public Assistance. State and local governments provide funds to cover some uncompensated care costs through subsidies to providers and funding of public assistance and indigent care programs. We estimate state and local tax expenditures and spending on public assistance that goes toward uncompensated care based on the National Health Expenditure Accounts (NHEA) for 2017. There is no comprehensive information available on how these funds were used or what share went toward care for the uninsured. Mirroring our previous work in this area, we assume that 50 percent of these funds support uncompensated care costs.

Specifically, we calculated state and local tax appropriations to cover the cost of uncompensated care for the uninsured based on funds reported as “Other state and local programs” that went toward the following services: hospital ($15.3 billion), physician and other clinical services ($0.08 billion), other professional services ($0.01 billion), and prescription drugs ($0.01 billion). We assume half of these total funds support uncompensated care, leading to an estimated $7.7 billion in payments made by state and local tax appropriations in 2017 (Appendix Table 3).

For state and local public assistance spending to cover the cost of uncompensated care for the uninsured we use funds reported as “general assistance” that went toward the following services: hospital ($2.6 billion), physician and other clinical services ($0.8 billion), other professional services ($0.1 billion), and prescription drugs ($0.9 billion). We assume half of these total funds supported uncompensated care costs, leading to an estimated $2.2 billion in state and local public assistance paid in 2017 (Appendix Table 3).

 Indian Health Service. In 2017, the Indian Health Service (IHS) spent $3.4 billion providing direct medical care services to American Indians and Alaska Natives. This included spending on inpatient hospital services and services provided in health clinics (e.g., outpatient care and prescription drugs) as well as referred care services which supports the delivery of health care services not available in IHS-operated facilities. To estimate how much of this spending went to care for uninsured American Indians and Alaska Native, we deducted the $1.1 billion IHS received from third-party payers from total medical spending ($3.4 billion), and estimate that IHS spent $2.3 billion caring for the uninsured in 2017, all of which was federally funded (Appendix Table 4).

Community Health Centers. Administrated by the federal government, the Community Health Center (CHC) program comprises 1,373 health centers which, nationwide, provided health care services to 27 million individuals. National program data report that CHCs spent $15.5 billion on direct medical care and other clinical care services (e.g., dental, mental health, and prescription drugs) in 2017.¹⁷  Patient program revenue data show that 16.9 percent of total annual charges in 2017 were attributed to self-paying patients.  Applying the share of charges attributed to self-pay patients to total spending on medical spending, we estimate that CHCs spent $2.6 billion in caring for the uninsured in 2017 (Appendix Table 5).  We then deducted total collections received from self-pay patients ($1.1 billion) and funding received from private grants and contracts for the uninsured ($0.2 billion) and estimate that CHCs spent $1.3 billion in direct care for the uninsured.

Finally, to estimate the share of CHC spending on the uninsured by type of funding source (federal, state, or local), we multiplied the estimated level of CHC spending on the uninsured ($1.3 billion) by the share of total CHC program spending by federal, state and local sources. In 2017, program data show that the federal government provided 64 percent of overall CHC program funding, and state and local governments 24 percent.¹⁸  Applying these percentages to total estimated CHC spending on the uninsured, we estimate that the federal government paid $1.0 billion and federal and state and local governments $0.3 billion (Appendix Table 5).

1. The estimates in this brief include spending to cover both implicitly subsidized care (that is, the cost of care for an uninsured person with no identifiable source tied to that specific person) and care covered through alternative (non-health insurance) sources, such as payments to providers through the Indian Health Service or grants to Community Health Centers. ↩︎
2. For example, we do not include funding from the Ryan White HIV/AIDS Program or the Title V Maternal and Child Health Services Block Grant Program. ↩︎
3. The high share of federal funding is due to how states generally finance their share of these payments, which is through alternative financing sources such as provider taxes and intergovernmental transfers. See appendix for details. ↩︎
4. See for example, Frakt, A.B. (2011). How Much Do Hospitals Cost Shift? A Review of the Evidence. The Milbank Quarterly,  89 (1); 90-130. DOI: 10.1111/j.1468-0009.2011.00621.x;Gruber, J. & Rodriquez, D. (2007). How much uncompensated care do doctors provide? J. of Health Economics 26,  1151-1169. DOI: 10.1016/j.jhealeco.2007.08.001;Colorado Department of Health Care Policy & Financing. (n.d.). Colorado Cost Shift Analysis. https://www.colorado.gov/pacific/hcpf/colorado-cost-shift-analysis. ↩︎
5. One important exception to this is a study that showed that physicians provide negative to very limited uncompensated care to the uninsured. Gruber, J. & Rodriquez, D. (2007). How much uncompensated care do doctors provide? J. of Health Economics 26, 1151-1169. DOI: 10.1016/j.jhealeco.2007.08.001. ↩︎
6. The ability to cost shift depends upon several factors, one being relative market power between hospitals and health plans. So, in some cases hospitals with substantial market power may have the ability to negotiate higher payments from insurers in response to increases in uncompensated care costs. But, Frakt finds that the preponderance of the literature as of 2011 shows that cost shifting is one strategy hospitals can adopt to make up for payment shortfall but that others (e.g., cutting costs) may be even more important. Changes to the health care market since 2011 (e.g., increased provider integration and consolidation) could shift the dynamics between payors and hospitals, in turn affecting the extent of provider cost shifting. Frakt, A.B. (2011). How Much Do Hospitals Cost Shift? A Review of the Evidence. The Milbank Quarterly, 89 (1); 90-130. DOI: 10.1111/j.1468-0009.2011.00621.x ↩︎
7. In our analysis, we did not consider Medicare uncompensated care payments because until 2020 these payments were focused on defraying providers’ Medicaid payment shortfall not on the uninsured. Centers for Medicare and Medicaid Services. (2019, August 2). “Fiscal Year (FY)2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System (CMS-1716-F).” https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2020-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-acute-0. ↩︎
8. Unlike in our previous work on this topic, we do not include Medicare payments as a funding source for uncompensated care for the uninsured. While Medicare makes DSH and uncompensated care payments, in 2017 these payments were not directed to covering uncompensated care costs for the uninsured. Centers for Medicare and Medicaid Services. (2016, August 2). “Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Final Rule Policy and Payment Changes for Fiscal Year (FY) 2017.” https://www.cms.gov/newsroom/fact-sheets/hospital-inpatient-prospective-payment-system-ipps-and-long-term-acute-care-hospital-ltch-final-rule. Specifically, in 2017 Medicare DSH payments were paid based on the level of a hospital’s Medicaid inpatient days, and Medicare uncompensated care payments were allocated based on a combination of the number of a hospital’s inpatient Medicaid days and the number of Medicare days for low-income Medicare patients who received Supplemental Security Incomes (SSI). In other words, in 2017 Medicare DSH and uncompensated care payments were largely directed at making up for the shortfall in Medicaid base payment, not uncompensated care for the uninsured. For more on this topic, see Stensland, J., Gaumer, Z.R., & Miller, M.E. (2016). Contrary To Popular Belief, Medicaid Hospital Admissions Are Often Profitable Because Of Additional Medicare Payments. Health Affairs, 35 (12), 2282- 2288. https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2016.0599.  Importantly, beginning in fiscal year 2020 the way in which Medicare uncompensated care payments are distributed changed: Hospital uncompensated care levels (as reported in the Medicare cost report) rather than Medicaid and SSI days will be used to allocate Medicare uncompensated care payments, which are estimated to total about $8.4 billion. Centers for Medicare and Medicaid Services. (2019, August 2). “Fiscal Year (FY)2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System (CMS-1716-F).” https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2020-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-acute-0. Another source of Medicare funding for uncompensated care for the uninsured that we included in previous work was Medicare Indirect Medical Education or IME payments which compensate teaching hospitals for the indirect costs of activities associated with medical teaching that add to the cost of treating Medicare patients. Similar to the distribution of Medicare DSH and uncompensated care payments in 2017, IME payments are paid out as a percentage add-on to a hospital’s inpatient Medicare payments and do not consider uncompensated care costs for uninsured in determining payment. The costs of uncompensated care for the uninsured is not part of the Medicare IME distribution formula.  http://www.medpac.gov/-public-meetings-/meeting-details/september-2019-public-meeting. ↩︎
9. See note 1. ↩︎
10. In addition to DSH and uncompensated care pool payments, states can also make other Medicaid hospital supplemental payments. As identified by the Medicaid and CHIP Payment and Access Commission (MACPAC) these are upper payment limit (UPL) payments, delivery system reform incentive (DSRIP) payments, and graduate medical education (GME) payments. MACPAC. (2019, March). “Medicaid Base and Supplemental Payments to Hospitals.” Note the link to this issue brief is no longer publicly available but formerly accessed at https://www.macpac.gov/wp-content/uploads/2018/06/Medicaid-Base-and-Supplemental-Payments-to-Hospitals.pdf;  Unlike DSH and uncompensated care pool payments, however, UPL, DSRIP and GME payments are not intended to help hospitals cover the unpaid costs of the uninsured but rather are designed to support other purposes. For example, UPL payments are meant to supplement Medicaid hospital fee-for-serve base payments that in recent years many states have reduced or frozen. U.S. Government Accountability Office (GAO). (2019, July). “Medicaid States’ Use and Distribution of Supplemental Payments to Hospitals.” Report to Congressional Requesters. GAO-19-603. https://www.gao.gov/assets/710/700378.pdf. DSRIP payments, which are made available under some Medicaid Section 1115 demonstrations, are not intended to pay for medical services but rather are designed to help providers (hospitals and others) undertake infrastructure and other investments to improve access to and quality of care provided to Medicaid enrollees. Finally, GME payments are designed to support teaching hospitals in their efforts to train medical professionals, among other things. Given this, we do not include UPL, DSRIP and GME payments as funding for uncompensated care costs associated with the uninsured. ↩︎
11. In addition to community-based acute care hospitals, Medicaid DSH payments are also paid to institutions for mental diseases or IMDs. To better align with our uncompensated care estimate based on the MEPS, which excludes individuals residing in institutions from the survey sample, we exclude IMD DSH payments from this analysis. Medicaid and CHIP Payment and Access Commission (MACPAC). (2018, December) “MACStats: Medicaid and CHIP Data Book.” https://www.macpac.gov/wp-content/uploads/2018/12/December-2018-MACStats-Data-Book.pdf. ↩︎
12. States are statutorily required to submitting DSH audit data to CMS; at the time of MACPAC 2019 report 2014 was the latest year for which data were available. MACPAC. (2019, June). Report to Congress on Medicaid and CHIP June 2019. Chapter 2: Treatment of Third-Party Payments in the Definition of Medicaid Shortfall. https://www.macpac.gov/wp-content/uploads/2019/06/Treatment-of-Third-Party-Payments-in-the-Definition-of-Medicaid-Shortfall.pdf. ↩︎
13. Increasingly, states have relied on Medicaid UPL payments to help cover the Medicaid shortfall. In 2017, states paid $12.9 billion in hospital UPL payments, higher than the $12.1 billion states paid in DSH in the year. MACPAC. (2019, March). “Medicaid Base and Supplemental Payments to Hospitals.” Note the link to this issue brief is no longer publicly available but formerly accessed at https://www.macpac.gov/wp-content/uploads/2018/06/Medicaid-Base-and-Supplemental-Payments-to-Hospitals.pdf.Given the scale of state use of hospital UPL payments, it is plausible, though not certain, that a sizable share of Medicaid DSH payments is targeted to cover unpaid costs of the uninsured. ↩︎
14. The nine states: Arizona, California, Florida, Hawaii, Indiana, Kansas, New Mexico, Tennessee and Texas. MACPAC. (2019, March). “Medicaid Base and Supplemental Payments to Hospitals.” Note the link to this issue brief is no longer publicly available but formerly accessed at https://www.macpac.gov/wp-content/uploads/2018/06/Medicaid-Base-and-Supplemental-Payments-to-Hospitals.pdf. ↩︎
15. ibid. ↩︎
16. In addition to Medicaid uncompensated care pool payments, the GAO study included UPL payments and other add on payments in its non-DSH supplemental payment category. Similar to DSH payments, we considered the category of other sources of funding (e.g., tobacco settlement funds) as state funds for non-DSH supplemental payments. U.S. Government Accountability Office (GAO). (2015, March 13). “Medicaid Financing: Questionnaire Data on States’ Methods for Financing Medicaid Payments from 2008 through 2012.” GAO-15-227SP. https://www.gao.gov/products/gao-15-227sp. ↩︎
17. Note that we have excluded expenditures for enabling services such as outreach, case management, transportation services, as well as facility and non-clinical support services. Bureau of Primary Health Care, Health Resources and Services Administration (HRSA). (n.d.) Uniform Data System, 2017 Health Center Data. https://bphc.hrsa.gov/uds2017/datacenter.aspx?q=tall&year=2017&state=. ↩︎
18. At 12 percent, private sources accounted the rest of Community Health Center (CHC) funding. Health Resources and Services Administration (HRSA). (n.d.). Health Center Program Data Table 9E. https://data.hrsa.gov/tools/data-reporting/program-data/national/table?tableName=9E&year=2017. ↩︎

This partnership survey from the Kaiser Family Foundation (KFF) and The Washington Post examines the experiences and attitudes of frontline health care workers during the coronavirus pandemic. These individuals, who work across many different health care fields including doctors and nurses, nursing home managers, front desk clerks, as well as those who assist with patient care such as bathing, eating, cleaning, exercising, or housekeeping, have been on the front lines of an industry providing care for the sickest adults.

The project includes interviews with a nationally representative sample of 1,327 frontline health care workers (those with direct contact with patients and their bodily fluids), representing hospitals, doctors’ offices, outpatient clinics, nursing homes and assisted care facilities, and those working in home health care. The sample includes workers who work in many, and multiple, aspects of patient care. The project also includes a comparison survey allowing researchers to compare the group of frontline health care workers to the general population, that included 971 U.S. adults not working as frontline health care workers.

This is the first release from this comprehensive survey focusing on the intentions among frontline health care workers to get vaccinated, and the factors influencing those decisions. Upcoming releases will focus on the emotional, physical, and financial toll of the last year on frontline health care workers.

This survey is the 35th in a series of surveys dating back to 1995 that have been conducted as a part of The Washington Post/KFF Survey Project.

Read The Washington Post’s reporting on frontline health care workers:

More than 4 in 10 health-care workers have not been vaccinated, Post-KFF poll finds

Yes, vaccine skepticism exists among health-care workers — but far less so among top medical professionals

Should health-care workers be required to get coronavirus shots? Companies grapple with mandates.

Stress on the front lines of covid-19: Health-care workers share the hardest parts of working during the pandemic.

Burned out by the pandemic, 3 in 10 health-care workers consider leaving the profession

KFF/Washington Post Frontline Health Care Workers

The latest partnership survey from the Kaiser Family Foundation (KFF) and The Washington Post examines the experiences and attitudes of frontline health care workers during the coronavirus pandemic. More than one year into a global pandemic that has infected almost 29 million Americans including more than 500,000 who have died due to the coronavirus, one of the most directly impacted groups has been frontline health care workers. These individuals, who work across many different health care fields including doctors and nurses, nursing home managers, front desk clerks, as well as those who assist with patient care such as bathing, eating, cleaning, exercising, or housekeeping, have been on the front lines of an industry providing care for the sickest adults. The spread of COVID-19 throughout the country overwhelmed many health care settings with intensive care units at capacity and other facilities struggling to keep both patients and employees safe. Now, with three COVID-19 vaccines currently being distributed to adults across the country, this project takes a look at the toll of the last year on frontline health care workers.

The project includes interviews with a nationally representative sample of 1,327 frontline health care workers (direct contact with patients and their bodily fluids), representing hospitals, doctors’ offices, outpatient clinics, nursing homes and assisted care facilities, and those working in home health care. The sample includes workers who work in many, and multiple, different aspects of patient care including patient diagnosis and treatment (n=636), administrative duties (n=251), and/or assisting with patient care such as bathing, eating, cleaning, exercising, and housekeeping (n=526). The survey also included a comparison survey allowing researchers to compare the group of frontline health care workers to the general population, that included 971 U.S. adults not working as frontline health care workers. For more information about sampling and method of recruitment, see methodology.

This survey is the 35th in a series of surveys dating back to 1995 that have been conducted as a part of The Washington Post/KFF Survey Project.

Vaccine Intentions Among Frontline Health Care Workers

As of early March, just over half (52%) of frontline health care workers say they have received at least one dose of a COVID-19 vaccine, including 42% who have received both doses. This leaves 48% of frontline health care workers who have not yet received a COVID-19 vaccine despite the fact that health care workers who have direct contact with patients were the among the first groups prioritized for vaccine access across all states (NOTE: the survey was fielded February 11- March 7^th, 2021, at the start of which both the Pfizer vaccine and Moderna vaccine had already received emergency use authorization from the Food and Drug administration, the Johnson & Johnson single dose vaccine was authorized during the survey field period on February 27, 2021).

Majorities of health care workers working in hospitals (66%) and outpatient clinics (64%) say they have received a COVID-19 vaccine, compared to half of those working doctors’ offices (52%), or in nursing homes or assisted care facilities (50%), and just one in four (26%) home health care workers. Similarly, about seven in ten (68%) of those responsible for patient diagnosis and treatment like a doctor or a nurse report receiving a COVID-19 vaccine, compared to about four in ten of those who perform administrative duties (44%) or who assist with patient care such as bathing, eating, cleaning, exercising, and housekeeping (37%).

Less than half of Black frontline health care workers (39%) and Hispanic frontline health care workers (44%) report personally receiving a COVID-19 vaccine, compared to six in ten (57%) White health care workers, mirroring the disparities found in vaccine uptake rates among the national adult population. While the KFF COVID-19 Vaccine Monitor has found a steady increase in the share of Black adults and Hispanic adults who report being vaccinated for COVID-19 or saying they will get the vaccine as soon as it’s available to them, these populations remain more likely than White adults to say they’re waiting to see how the vaccine works for other people before getting vaccinated themselves.

The unvaccinated group includes one in five frontline health care workers who either have their vaccine scheduled (3%) or who plan to get vaccinated but haven’t scheduled it yet (15%), as well as 12% who have not decided whether they will get vaccinated, and one in five (18%) who say they do not plan on receiving a COVID-19 vaccine. About three in ten (28%) of Black health care workers say they do not plan on getting vaccinated, as do one-fourth of health care workers working in nursing homes or assisted care facilities (24%) or providing patient in-home care (23%), those who assist with patient care (24%), and health care workers without a college degree (24%).

WHY ARE NEARLY HALF OF HEALTH WORKERS NOT VACCINATED? The Role of employers

The role of employers in getting frontline health care workers vaccinated may be a factor for the nearly half of frontline health care workers who say they have not received a COVID-19 vaccine. Reflecting the overall vaccination rates among frontline health care workers, the share of workers who were offered a COVID-19 vaccine from their employer was much lower among those working in patients’ homes. One in three home health care workers (34%) say they have either been offered or received a COVID-19 vaccine from their employer compared to eight in ten of those working in hospitals (80%), and majorities working in nursing homes or assisted care facilities (72%), outpatient clinics (64%), and doctors’ offices (50%).

More than eight in ten (84%)  vaccinated health care workers who are not self-employed say they received a COVID-19 vaccine from their employer, including 93% of vaccinated workers who work in a hospital, 90% of those working nursing homes or assisted care facilities, eight in ten of those working doctor’s office (79%) or outpatient clinics (79%), and seven in ten (69%) home health care workers. About one in five (17%) vaccinated health care workers who provide in-home care say they received a COVID-19 vaccine from their state or county health department.

The vast majority of health care workers who were able to get vaccinated through their employer say it was easy to schedule their COVID-19 vaccine, including 70% who say it was “very easy.” On the other hand, four in ten (41%) of the vaccinated health care workers who did not get a vaccine from their employer (16% of all non-self employed vaccinated frontline health care workers) say it was difficult to schedule. The majority of self-employed frontline health care workers had not received a COVID-19 vaccine (61%).

Among those who are not self-employed and have not received a COVID-19 vaccine but are planning to get vaccinated or have a vaccine appointment scheduled, six in ten say they plan on getting it through their employer (60%) while 6% say they were offered it from their employer are planning to get it somewhere else. An additional 28% say they were not offered a COVID-19 vaccine from their employer.

WHY ARE NEARLY HALF OF HEALTH WORKERS NOT VACCINATED? Concerns About Safety And Efficacy

Concerns about vaccine safety and effectiveness are major factors why some frontline health care workers say they have not received a COVID-19 vaccine. Among the nearly half of health care workers who have not received a COVID-19 vaccine, eight in ten say worries about potential side effects (82%) and thinking the vaccine is too new and wanting to wait to see how it works for others (81%) are major factors in their decisions on whether to get vaccinated. In addition, two-thirds (65%) say distrust in the government to ensure safety and effectiveness is a major factor. The concerns of the unvaccinated health care workers mirror the concerns among the general public and highlight challenges for national vaccination adoption.

The top concerns are consistent across key demographic groups, with larger shares saying side effects and newness of the vaccines are major factors in their decision to not get a COVID-19 vaccine than lack of trust in the government (but still a majority say it is a major factor). Notably, three-fourths of Black health care workers who have not received a COVID-19 vaccine (77%) say distrust of the government to ensure safety and effectiveness is a major factor in their decision, compared to smaller shares of White and Hispanic health care workers (60% and 61%).

While large majorities of unvaccinated health care workers say worries about possible side effects are a major factor why they haven’t been vaccinated, few (6%) vaccinated health care workers report experiencing major side effects. The majority of vaccinated health care workers (60%) say they experienced minor side effects and one-third (34%) say they didn’t experience any side effects. The most commonly reported major side effects include pain (4%), headaches (3%), fever (3%), tiredness (3%), and chills (2%). According to the Centers for Disease Control and Prevention, most of these reported side effects would be classified as mild to moderate, and are common.

Majorities of frontline health care workers and the general public are confident that the COVID-19 vaccines available in the U.S. have been tested for safety and effectiveness. More than six in ten are confident vaccines being used in the U.S. have been properly tested for safety and effectiveness (64% and 65%, respectively), but still more than one-third of frontline health care workers say they are not confident (36%). Among health care workers, views on the safety and effectiveness of the vaccines are largely connected to vaccine intent with seven in ten (71%) of those who are confident in the vaccines’ safety and effectiveness reporting receiving at least one dose of a vaccine, compared to 17% of those who are less confident.

Overall confidence in the U.S.’s testing of the vaccines differs among race and ethnic groups, education levels, and partisanship, both among health care workers and the public overall. Large shares of Black adults, adults without a college degree, and Republican and Republican-leaning adults say they are not confident the COVID-19 vaccines have been properly tested for safety and effectiveness. Among frontline health care workers, these groups are also the groups in which one in five say they will definitely not receive a COVID-19 vaccine.

Views of the safety and effectiveness of the vaccine are different among Republican health care workers and total Republican adults at higher levels of education. Seven in ten Republican health care workers with a college degree (69%) and more than eight in ten (85%) Republican health care workers with a post-graduate degree are confident that the vaccines have been properly tested and approved. This is compared to around six in ten of total Republican adults with higher levels of education who are confident.

These differing views of the safety and efficacy of the vaccines may also be related to vaccine intent with majorities of Republican health care workers with a college degree (57%) and a post-graduate degree (69%) say they have received at least one dose of a COVID-19 vaccine, compared to 37% of Republican health care workers with less than a college degree.

The Toll Of The Coronavirus Pandemic On Health Care Workers

The report, based on findings from the KFF/Washington Post Frontline Health Care Workers Survey, explores the coronavirus pandemic through the lens of a frontline health care worker in the U.S.. This survey is the 35th in a series of surveys dating back to 1995 that have been conducted as a part of The Washington Post/Kaiser Family Foundation Survey Project and includes interviews with a nationally representative sample of 1,327 frontline health care workers (those with direct contact with patients and their bodily fluids), representing people working in hospitals, doctors’ offices, outpatient clinics, nursing homes and assisted care facilities, and those working in home health care. The sample includes workers who work in many, and multiple, aspects of patient care. The survey also included a comparison survey of 971 U.S. adults not working in health care. See Appendix A for the demographic profile of the frontline health care workers included in this project.

More than one year after COVID-19 overwhelmed the U.S. health care system, the Frontline Health Care Workers Survey finds that some health care workers are now seeing the light at the end of the tunnel as the vaccine roll-out continues. But with less than half of health care workers reporting receiving a COVID-19 vaccine and majorities of frontline health care workers saying they have experienced adverse mental health impacts from the pandemic, this analysis also finds that there may be some longer term impacts on those who were at the forefront during this global pandemic.

• The coronavirus pandemic has had a major impact on the mental health of frontline health care workers. A majority of frontline health care workers (62%) say worry or stress related to COVID-19 has a negative impact on their mental health. In addition, more than half (56%) of all frontline health care workers say that worry or stress related to COVID-19 has caused them to experience trouble with sleeping or sleeping too much (47%), frequent headaches or stomachaches (31%), or increased alcohol or drug use (16%). In addition, 13% of health care workers say they have received mental health services or medication specifically due to worry or stress related to COVID-19 and an additional one in five (18%) say they thought they might need such services, but did not get them.
• The youngest health care workers (18-29 years old) seem to have been hit hardest by working during a global pandemic. Three-fourths of younger frontline health care workers report worry or stress related to COVID-19 has had a negative impact on their mental health and seven in ten say they feel “burned out” about work. These feelings may be directly tied to their work experiences during the COVID-19 pandemic as four in ten of these youngest workers are working in a hospital setting and nearly half (45%) report assisting with patient care such as bathing, cleaning, and housekeeping. And, almost one in eight (13%) of 18-29 year old frontline health care workers say they had at least 10 patients in their direct care who died as a result of COVID-19.
• Throughout the past year, news reports have told of hospitals running low on personal protective equipment (PPE) and at over-capacity for the intensive care units. This experience seems relatively common among the hardest hit frontline health care workers. Over half (56%) of health care workers in hospitals say that their workplace reached over-capacity of ICU beds to treat critical patients, and one third (34%) of health care workers working in either hospitals or nursing homes say that at some point during the pandemic, their workplace ran out of PPE for its employees. And while most health care workers say their employer is “doing about the right amount” or “going above and beyond” when it comes to providing sick leave to employees who had COVID-19 or ensuring employees have the ability to get vaccinated, more than half of health care workers – including a majority of health care workers across different types of health care settings including hospitals (59%), office or clinic (52%), nursing home or assisted care facility (58%), and those who work in patient homes (56%) – say their employer is “falling short” when it comes to providing additional pay for employees who are working in the most high-risk situations.
• The survey also finds some optimism among frontline health care workers with most health care workers across workplaces and across race and ethnicity saying that the COVID-19 outbreak in the U.S. is at least “somewhat under control” including one fourth who say it is “mostly under control” or “completely under control.” Nearly six in ten frontline health care workers also say they anticipate the COVID-19 pandemic in the U.S. to be controlled enough so that people can resume normal life by early 2022 or later, while 47% say normal life can resume by mid-fall or sooner—including 5% who say life can safely resume in the U.S. now.

Majorities Of Health Care workers Report feeling hopeful, But significant shares also report negative feelings

More than one year into a global pandemic, the KFF/Washington Post Frontline Health Care Workers Survey finds three-fourths (76%) of frontline health care workers saying they feel “hopeful” when going to work these days. Majorities also say they feel “optimistic” (67%) and motivated (63%). Yet, about half also say they feel “ burned out” (55%) or “anxious” (49%). About one in five (21%) say they feel “angry” when they go to work these days.

The share of frontline health care workers who report feeling these emotions does not vary drastically across places where they work (hospital, nursing home, office or clinic, or providing in-home care), but there are some differences depending on their direct experience with the coronavirus. Nearly one-third of frontline health care workers who had a patient die as a result of COVID-19 (32%) or they themselves tested positive for COVID-19 (29%) report feeling “angry.”

Younger health care workers are more likely to report negative emotions than their older counterparts. Seven in ten (69%) frontline health care workers between the ages of 18 and 29 say they feel “burned out” compared to 59% of health care workers between the ages of 30 and 49, 43% of those ages 50 to 64 years, and 27% of health care workers who are ages 65 and older. Three in ten frontline health care workers ages 18-29 also report feeling “angry” about going into work these days. A smaller share of younger health care workers (49 years and younger) also report feeling positive emotions, such as hopeful, optimistic or motivated about going to work than their older counterparts (50 and older).

The Mental health Burden

A majority of frontline health care workers (62%) say worry or stress related to COVID-19 has a negative impact on their mental health. A smaller share, but still at least four in ten say the same about their physical health (49%), relationships with family members (42%), and relationships with coworkers (41%). While the share of frontline health care workers who say their mental health has been negatively impacted is similar to the share of the public overall, there are some key groups that report disproportionate impacts.

Once again, the burden seems to be hardest hit on the youngest group of frontline health care workers. Four in ten 65 and older frontline health care workers report that worry or stress related to COVID-19 has had a negative impact on their mental health, as do a majority of 50-64 year olds (51%) and 30-49 year olds (65%); yet an even larger share of 18-29 year olds report the same (75%).

More than half (56%) of all frontline health care workers say that worry or stress related to COVID-19 has caused them to experience trouble with sleeping or sleeping too much (47%), frequent headaches or stomachaches (31%), or increased alcohol or drug use (16%). In addition, 13% of health care workers say they have received mental health services or medication due to worry or stress related to COVID-19 and an additional one in five (20%) say they thought they might need such services but did not get them. Among those who felt they needed but didn’t get mental health care , the most commonly cited reasons are because they were too busy (27%), they were afraid or embarrassed about seeking care (17%), they couldn’t afford it (16%), or they couldn’t get time off work (14%).

Three in ten frontline health care workers say that as a result of the COVID-19 pandemic, they have considered no longer working in health care. This includes at least one-third of those working in administrative tasks or assisting with patient care like bathing and cleaning. One-fourth of those responsible for patient treatment and diagnosis like doctors and nurses say they considered leaving health care as a result of the COVID-19 pandemic.

One group that disproportionately reports higher rates of considering leaving health care (48%) are those who worked in places like hospitals and nursing homes during the pandemic and their facilities ran out of PPE and where the ICU was over capacity.

The Hardest Part Of The Pandemic? Concerns Over Safety For Both Themselves And Their Family Members

When asked to say in their own words, one in five frontline health care workers say the hardest part of working during the COVID-19 pandemic was their worry about getting exposed to the coronavirus or getting sick from the virus themselves or exposing their family members (21%). This is closely followed by 16% who say having to wear personal protective equipment (PPE) was the hardest part of work. Fewer offer responses like precautionary measures/safety protocols (8%),  long hours and lack of time off (7%), not enough PPE or other supplies (5%), patients being isolated (5%), or dealing with stress, anxiety, or fear (5%) as the hardest part of working during the COVID-19 pandemic.

Many health care workers report that they did get sick from coronavirus in the past year, but few experienced major symptoms. One in six frontline health care workers say they tested positive for COVID-19, including 8% who say both they and someone else in their household tested positive. An additional 11% say someone in their household tested positive but they did not. One-fourth of frontline health care workers working in nursing homes or assisted care facilities say they tested positive for COVID-19 (24%) compared to less than one in five working in hospitals (18%), doctor’s offices or clinics (14%), or providing in-home care (8%).

Among health care workers who tested positive, one-fourth (4% of all health care workers) say they experienced “major symptoms” while most say they experienced “minor symptoms” (72% of those who tested positive and 12% of all health care workers). One in twenty say they tested positive but didn’t experience any symptoms (1% of all health care workers).

About eight in ten frontline health care workers say that concern about being exposed to COVID-19 at work and exposing others in their household has been sources of stress during the past year, including at least four in ten who say these concerns were a “major source of stress.” A smaller share, but still a majority (63%), say concern about having enough personal protective equipment (PPE) has been a source of stress.

While there are no differences in sources of stress across the different types of work or places they work with majorities all saying these were all at least minor sources of stress, there is a connection between mental health and sources of stress. Among frontline health care workers who reported experiencing adverse mental health impacts from the pandemic (six in ten of total frontline health care workers), about nine in ten say concerns about being exposed to COVID-19 at work or concern about exposing others in their household to COVID-19 were sources of stress.

Views Of their Employers

Throughout the past year, news reports have told of hospitals running low on personal protective equipment (PPE) and surpassing their capacity in intensive care units.  This experience is common among the hardest hit frontline health care workers. Over half (56%) of health care workers in hospitals say that their workplace reached over-capacity of ICU beds of places to treat critical patients, and one third (34%) of health care workers in either hospitals or nursing homes say that at some point during the pandemic, their workplace ran out of PPE for its employees.

And while most health care workers say their employer is “doing about the right amount” or “going above and beyond” when it comes to providing sick leave to employees who had COVID-19 (66%) or ensuring employees have the ability to get vaccinated (88%), more than half of health care workers who are not self-employed say their employer is “falling short” when it comes to providing additional pay for employees who are working in the most high-risk situations (56%).

A majority of health care workers across different types of health care settings including hospitals (59%), office or clinic (53%), nursing home or assisted care facility (58%), and those who work in patient homes (56%) say their employer is “falling short” in providing additional pay for employees working in high-risk situations.

Despite these issues, eight in ten health care workers say that they think the general public has shown a great deal (28%) or a fair amount (52%) of respect for health care workers like them throughout this time. Nine in ten say that the patients they interact with have a great deal (35%) or a fair amount (52%) of respect for them.

Frontline health Care Workers Are optimistic About the current status of the vaccine, say life will return to normal relatively soon

Majorities of health care workers across workplaces and race and ethnicity say that the COVID-19 outbreak in the U.S. is at least “somewhat under control” including one fourth who say it is “mostly under control” or “completely under control.” The view of the status of the pandemic is similar across demographic groups but notably, while about one-fourth of White health care workers say that the outbreak is either “completely” (4%) or “mostly under control” (19%), only about one in ten Black health care workers say the same. Three in ten (31%) of Black health care workers say the COVID-19 outbreak is “not at all under control.” While majorities across workplaces say that the COVID-19 is at least somewhat under control, one-fourth of those working in in-home patient care (27%) say that it is “not at all under control.”

About four in ten frontline health care workers say they anticipate the COVID-19 pandemic in the U.S. to be controlled enough so that people can resume normal life by mid-fall or sooner – including 6% who say life can safely resume in the U.S. now. However, most frontline health care workers think the pandemic will only be under control enough for normal life to resume in early 2022 or later (58%). The general public has similar expectations about when they expect normal life to resume, with one quarter (27%) saying by mid-summer or sooner, 17% saying mid-fall, four in ten (38%) saying by early 2022 and an additional 17% saying later than that.

About one in four in-home health care workers saying they expect a return to normal later than early 2022. This is similar to the share of those working in nursing homes and assisted care facilities. These groups are also less likely to say they have received at least one dose of a COVID-19 vaccine, due to both concerns about getting it and a lack of access.

Six in ten (61%) frontline health care workers say that most Americans are not taking enough precautions to prevent the spread of COVID-19, similar to the share of the general population who say the same about their peers. Seven in ten (68%) Black health care workers, younger health care workers ages 18-29 (68%) and health care workers who are Democrats and Democratic leaning independents (73%) say Americans are not taking enough precautions, while a majority of health care workers who are Republicans or Republican leaning independents (56%) say Americans are taking enough precautions to prevent the spread of COVID-19.

The KFF/Washington Post is a partnership combining survey research and reporting to better inform the public. The KFF/Washington Post Frontline Health Care Workers Survey is the 35^th in the series and focuses on the toll of the coronavirus pandemic on frontline health care workers, These individuals, who work across many different health care fields including doctors and nurses, nursing home managers, front desk clerks, and those who assist patients with daily tasks like bathing, eating, cleaning, exercising, or housekeeping, have been on the front lines of an industry providing care for the sickest adults during the past year.

Interviews were conducted in English and Spanish with a nationally representative sample of 1,327 frontline health care workers, defined as those who work in a health care delivery setting in direct contact with patients or bodily fluids. The survey also included a comparison survey allowing researchers to compare the group of frontline health care workers to the general population, that included 971 U.S. adults not working as frontline health care workers using the SSRS Online Panel. The survey was conducted online and via telephone from February 11- March 7, 2021. Sampling, data collection, weighting, and tabulation were managed by SSRS of Glenn Mills, Pennsylvania. Teams from KFF and The Washington Post worked together to develop the questionnaire and analyze the data, and both organizations contributed financing for the survey.

Sampling and Recruitment

Frontline health care workers are defined for the purpose of this project as individuals who work in a health care delivery setting and have direct contact with patients or their bodily fluids. This definition is based on the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices (ACIP) category of essential health care workers.

The frontline health care worker sample includes a hybrid sample from two online probability-based panels and telephone samples recruited from random digit dialing (RDD). The online panels were the SSRS Opinion Panel, a representative probability-based panel of U.S. adults age 18 and older, recruited using the SSRS Omnibus poll (a weekly dual-frame RDD telephone survey) and through address-based sampling (ABS) (n=398), and the IPSOS KnowledgePanel, a probability-based online panel of U.S.  adults age 18 and older recruited through ABS (n=628), targeting panelists who previously indicated they were employed. The telephone sample of frontline health care workers include computer-assisted telephone interviews conducted with respondents reached by cell phone and landline. To efficiently maximize the sample of health care workers, the sample included 124 respondents who previously completed an interview on KFF’s monthly tracking poll (n=85) or the SSRS Omnibus Poll (n=39) and said they worked in a health care delivery setting. An additional 94 respondents who previously completed an interview on the SSRS Omnibus and indicated that they were employed were also reached.

Weighting and Data Processing

The combined landline, cell phone, and web sample was weighted to match the sample demographics to estimates for the national population, and specifically to the adult health care worker population. A multi-stage weighting process was used to adjust for the fact that not all survey respondents were selected with the same probabilities and to account for systematic non-response. In the first weighting stage, adjustments were made regarding the probabilities of selection to the two web panels, and for probability of selection and non-response to the telephone callback samples. In the second stage, weighting was conducted separately for those who qualified as health care workers and all other adults. Demographic benchmarks for health care workers were derived from analysis of a sample of all respondents interviewed on the SSRS Omnibus survey between December 21, 2020 and February 28, 2021 (N=10,075), and the December 2020 KFF Health Care Tracking Poll and January 2021 KFF COVID-19 Vaccine Monitor Survey (combined N=3,239). Each of these surveys were probability samples of the U.S. adult population that were weighted to the Census Bureau’s American Community Survey and included questions to identify front-line health care workers. While there are no known administrative data available for frontline health care workers, the survey-derived benchmarks for front-line health care workers estimates were validated by comparison to the 2019 ACS demographic estimates within matching occupation and industry code. In the final weighting stage, each group (health care workers and all others) was weighted to reflect its actual share in the U.S. adult population.

All sampling error margins and tests of statistical significance have been adjusted to account for the sample design and weighting. The margin of sampling error for the total frontline health care worker sample is plus or minus 3 percentage points. The margin of sampling error for the comparison sample (U.S. adults) is 4 percentage points. The margin of sampling error may be higher for subgroups. Note that sampling error is only one of many potential sources of error in this or any other public opinion poll. Kaiser Family Foundation public opinion and survey research and The Washington Post are charter members of the Transparency Initiative of the American Association for Public Opinion Research.

Each organization bears the sole responsibility for the work that appears under its name. The project team from KFF included: Mollyann Brodie, Ph.D., Ashley Kirzinger, Ph.D., Audrey Kearney and Liz Hamel. The project team from The Washington Post included: Scott Clement and Emily Guskin.

The KFF COVID-19 Vaccine Monitor is an ongoing research project tracking the public’s attitudes and experiences with COVID-19 vaccinations. Using a combination of surveys and qualitative research, this project tracks the dynamic nature of public opinion as vaccine development and distribution unfold, including vaccine confidence and acceptance, information needs, trusted messengers and messages, as well as the public’s experiences with vaccination.

Key Findings

• The share of U.S. adults who report being vaccinated for COVID-19 or intending to do so as soon as possible continues to rise (currently 61%) and the share taking a “wait and see” approach continues to shrink (now 17%), while the share who say they will “definitely not” get the vaccine (13%) has remained about the same since December, according to the latest KFF COVID-19 Vaccine Monitor. Black adults saw the largest increase in vaccine enthusiasm (55% of them now say they have either gotten vaccinated or want to as soon as possible), but one-quarter of Black adults say they still want to “wait and see” how the vaccine works for others before getting vaccinated, somewhat higher than the share of White adults who say the same. About three in ten Republicans and White Evangelicals say they will “definitely not” get the vaccine, as do one in five adults living in rural areas.
• While a growing share of adults say they now have enough information about where and when they will be able to get vaccinated, three in ten – including larger shares of Hispanic adults, young adults, and those with lower incomes – are unsure whether they’re currently eligible to receive the vaccine in their state. Among those who believe they are eligible, about one-third say they tried to make an appointment to get vaccinated and about half of this group says their attempt was unsuccessful. In a sign that the appointment process may be getting easier at least for older adults, the share of those ages 65 and over who say they tried but were unable to get an appointment declined from 16% in February to 7% this month.
• In the latest COVID-19 Vaccine Monitor, we tested a variety of potential incentives, messages, and pieces of information that might be used to increase vaccination uptake. We find there is a role for convenient access to vaccines in medical settings; about half of those in the “wait and see” group say they would be more likely to get vaccinated if the vaccine were offered to them during a routine medical appointment. Travel and freedom of movement may be incentives for others; about four in ten in both the “wait and see” and “only if required” groups say they would be more likely to get a shot if airlines required it of passengers or if the CDC said that vaccinated people could travel freely and would not have to wear masks in most situations. Employers also have a role to play, both in facilitating access and offering incentives. About four in ten employed adults in the “wait and see” group say they would be more likely to get the vaccine if their employer arranged for on-site vaccination or offered them a $200 incentive to get vaccinated.
• Among the pieces of information tested, the most impactful was that the vaccines are nearly 100% effective at preventing hospitalization and death from COVID-19 (two-thirds of those in the “wait and see” group said hearing this would make them more likely to get vaccinated). Other messages that were effective for at least four in ten of those in the “wait and see” group include that scientists have been working on the technology used in the new COVID-19 vaccines for 20 years, that more than 100,000 people from diverse backgrounds took part in the vaccine trials, that the vast majority of doctors who have been offered the vaccine have taken it, and that there is no cost to get the vaccine. However, while a variety of incentives, messages, and information may be helpful in swaying some in the “wait and see” and “only if required” groups to consider vaccination, none of them do much to sway those in the “definitely not” camp.
• With the introduction of the one-dose Johnson & Johnson (J&J) vaccine to the U.S. market, we find that about half of those who are open to getting vaccinated say they do not have a preference for which vaccine they would like to get, while about three in ten say they have a strong preference and about one-quarter have a slight preference. Among those who have not been vaccinated, just over half say they would probably or definitely get each of the three available brands (Pfizer, Moderna, and J&J), though a slightly larger share of those in the “wait and see” group say they would “definitely” get the one-dose J&J vaccine (16%) than says the same about the Pfizer or Moderna two-dose versions (8% and 7%, respectively). Among those who express a preference, the most common reason offered is that they prefer a one-dose vaccine (24%), suggesting that the convenience of a one-dose vaccine may make it easier to reach certain harder-to-convince populations to get vaccinated.

Trends In COVID-19 Vaccination Intentions

As states continue to expand eligibility for COVID-19 vaccination, the latest KFF COVID-19 Vaccine Monitor reports that the share of the public that has gotten the vaccine or is eager to do so continues to grow while the share that is waiting to see how the vaccine works for others continues to shrink. About six in ten adults (61%) say they have already gotten at least one dose of the vaccine (32%) or will get it as soon as they can (30%), up 6 percentage points since February. At the same time, the share taking a “wait and see” approach declined from 22% in February to 17% this month. A small but persistent share say they will get the vaccine only if they are required to do so for work, school, or other activities (7%) or that they will “definitely not” get the vaccine (13%), similar to the shares who have given those responses since January.

Enthusiasm for getting the COVID-19 vaccine continues to grow among people across racial and ethnic backgrounds, with the largest increase this month among Black adults. Over half of Black adults (55%) now say they’ve either gotten at least one dose of the vaccine or will get it as soon as they can, up from 41% in February and approaching the shares among Hispanic adults (61%) and White adults (64%). At the same time, the share of Black and Hispanic adults who say they will “wait and see” how the vaccine works for others before getting vaccinated themselves has fallen steadily since December. However, Black adults (24%) remain somewhat more likely than White adults (16%) to say they will “wait and see” before getting vaccinated.

While enthusiasm for getting the COVID-19 vaccine continues to inch up across partisan groups, a persistent divide remains, with about eight in ten Democrats (79%), almost six in ten independents (57%), and fewer than half of Republicans (46%) saying they have either received at least one dose of the vaccine or intend to do so as soon as possible. About three in ten Republicans (29%) say they will “definitely not” get vaccinated, similar to the share who said so in February.

Looking across various demographics, the groups most likely to say they’ve either already gotten the vaccine or will get it as soon as possible are adults ages 65 and over (82%), Democrats (79%), and college graduates (73%). Young adults ages 18-29 (25%) and Black adults (24%) continue to be among the groups most likely to say they want to “wait and see” before getting a COVID-19 vaccine. About three in ten Republicans (29%) and a similar share of White adults who identify as Evangelical Christians (28%) say they will definitely not get the vaccine, as do one in five rural residents (20%) and essential workers in fields other than health care (21%).

Information Needs And Experiences With Appointments

The share of unvaccinated adults who say they have enough information about when they will be able to get the COVID-19 vaccine increased from 36% in February to 53% in March, and the share who say they know enough about where they can get a vaccine increased from 55% to 67%. Still, that leaves almost half the public feeling like they don’t have enough information about when they can get the vaccine and one third saying they don’t know enough about where they can get it.

Further, three in ten of those who have not yet been vaccinated say they are not sure if they’re currently eligible to get a COVID-19 vaccine in their state or not. This share rises to about four in ten among Hispanic adults (45%), adults under age 30 (39%), those with household incomes under $40,000 (37%), and adults without a college degree (35%).

Among adults ages 65 and over, almost two-thirds (64%) say they’ve gotten at least one dose of the vaccine (up from 44% last month) and another 7% have scheduled an appointment to get vaccinated. Just 7% say they tried but were unable to get an appointment (down from 16% last month). The share of older adults who report receiving at least a first dose of the vaccine is somewhat higher among those ages 75 and over (72%) and college graduates (77%).

Among all adults who have not been vaccinated but believe they are eligible, about one-third say they tried to get an appointment to get the COVID-19 vaccine, including 16% who say they were able to schedule an appointment and another 17% who say they tried but were unable to get an appointment.

Among all adults who tried but were unable to get an appointment, 43% say they couldn’t get an appointment because they didn’t meet eligibility requirements, one-third say there were no appointments available, and smaller shares report that the vaccine was not available (6%), the available appointment times didn’t work for their schedule (5%), or they had technical difficulties (4%).

Concerns Among Those Who Have Not Yet Been Vaccinated

Among the 37% of adults who are not yet convinced to get the vaccine right away (defined as those who say they will “wait and see” before getting vaccinated, will get the vaccine “only if required” or will “definitely not” get it), side effects continue to be the top concern, with about seven in ten (70%) saying they are very or somewhat concerned that they might experience serious side effects from the vaccine. Just over six in ten (63%) are also concerned that the effects of the vaccine might be worse than if they actually got COVID-19 and the same share are concerned that they might be required to get the vaccine even if they don’t want to. About four in ten are concerned that they might have to miss work because of vaccine side effects (45%) or that they might get COVID-19 from the vaccine (39%), while fewer are concerned that they won’t be able to get the vaccine from a place they trust (21%), or they will have difficulty traveling to a vaccination site (10%).

The potential side effects of the vaccine continue to be the top concern across racial and ethnic groups. Among those who are not convinced to get vaccinated right away, about half of Black adults (50%) and Hispanic adults (52%) are concerned they might get COVID-19 from the vaccine, higher than the share of White adults who express this concern (33%). In addition, four in ten Black adults (38%) and one-quarter of Hispanic adults (27%) are concerned they won’t be able to get the vaccine from a place they trust, and about one in five (20% of Black adults and 22% of Hispanic adults) are concerned they will have difficulty traveling to a vaccination site.

 

Among those who are not convinced to get vaccinated right away, a larger share of Republicans (71%) compared to independents (57%) and Democrats (53%) say they are concerned that they might be required to get the vaccine even if they don’t want to.

While many vaccine outreach efforts are currently focused on the “wait and see” group – a group that has been shrinking over time – the share of the public who say they will “definitely not” get the vaccine has been about the same size since December 2020, representing about one in seven adults (13%). Understanding this group’s concerns about the vaccine will be crucial to any effort to ultimately convince them to get vaccinated.

When asked to say in their own words the main reason why the don’t want to get vaccinated, those in the “definitely not” group cite a range of concerns. The most frequently mentioned reason is feeling that the vaccines are too new or that there is not enough information about the long-term effects (mentioned by 17%), followed by concerns that the vaccines are not effective against COVID-19 (8%), a general sense that they don’t need the vaccine (8%), and concerns about the vaccines’ ingredients (8%). The range of reasons suggests that there is not a single message that will help sway these individuals to consider getting vaccinated, but that a range of strategies and conversations will be needed to move even some of them away from their “hard no” position.

Messages, Information, And Incentives That Might Increase Vaccination Uptake

In the latest COVID-19 Vaccine Monitor, we tested a variety of potential incentives, messages, and pieces of information that might be used to increase vaccination uptake. We find that while various incentives and messages may help convince people in the “wait and see” and “only if required” groups to get vaccinated, very few of them move people in the “definitely not” group.

Travel And Routine Medical Visits

About three in ten adults who are not convinced to get the vaccine right away say they would be more likely to get the COVID-19 vaccine if airlines required passengers to be vaccinated before they could fly (31%), if the CDC said vaccinated people could travel freely and would not need to wear masks in most situations (31%), or if the vaccine was offered to them during a routine medical visit (30%).

Notably, half of adults who want to “wait and see” before getting the vaccine say they would be more likely to get it if it was offered to them at a routine medical visit (50%). Those who say they would only get the vaccine if they are required are less motivated by having the vaccine offered at a routine appointment (32%), but about four in ten of this group says they would be more likely to get vaccianted if airlines required it of passengers and if the CDC said that vaccinated people could travel freely and not wear masks in most situations (similar to the share who say so among the “wait and see” group). Among those who say they will definitely not get the vaccine, fewer than one in ten are moved by any of these potential scenarios.

Across racial and ethnic groups, about half of Hispanic adults who are not yet convinced to get the vaccine right away say they would be more likely to get vaccinated if airlines required it to fly (49%) and if the CDC said vaccinated people could travel freely and not wear masks in most situations (47%). Fewer than three in ten White adults say they would be more likely to get vaccinated when presented with any of these scenarios.

The Role Of Employers

Employers also have a role to play in incentivizing their employees to get vaccinated and offering access to the vaccine on the job.

Among those who are employed and not yet convinced to get the vaccine right away, about one-quarter (25%) say they would be more likely to get the vaccine if their employer arranged for a medical provider to come to their place of work and administer it to employees, rising to 37% among employed people in the “wait and see” category. In addition, one in five say they would be more likely to get vaccinated if their employer offered them an extra $50 to get vaccinated (19%) while an additional 3% say they would be more likely to get the vaccine if their employer offered them $200, for a total of 22%. Among employed people in the “wait and see” group, 30% say they’d be more likely to get vaccinated if their employer offered them an extra $50 and a total of 38% say the same about a financial incentive of $200.

In a separate question, about half the public (51%) says that employers should be allowed to require certain employees to get vaccinated for COVID-19, while nearly half (45%) say this should not be allowed. There is a large partisan divide on this question that reflects the divide on many questions about the pandemic, with seven in ten Democrats (70%) saying employers should be allowed to require vaccination and a similar share of Republicans (71%) saying they should not.

Messages And Information

When those who are not yet convinced to get the COVID-19 vaccine right away are presented with messages and information that might encourage vaccination, the most effective piece of information is that the vaccines are nearly 100% effective at preventing hospitalization and death from COVID-19. Two-thirds (66%) of those in the “wait and see” group and about four in ten (42%) in the “only if required” group say hearing this would make them more likely to get vaccinated. In addition, hearing that scientists have been working on the technology used in the new COVID-19 vaccines for 20 years is an effective message for many, with half (49%) of the “wait and see” and about four in ten (39%) of the “only if required” group saying this would make them more likely to consider vaccination.

Three other pieces of information were convincing for about four in ten of the “wait and see” and at least three in ten of the “only if required groups: that more than 100,000 people from diverse backgrounds took part in the vaccine trials, that the vast majority of doctors who have been offered the vaccine have taken it, and that there is no cost to get the vaccine. About a third in both groups say they’d be more likely to get vaccinated after hearing that while the long-term effects of the vaccine are unknown, the long-term effects of COVID-19 could be worse. Somewhat fewer say they would be more likely to get the vaccine after hearing that some young and healthy people have been hospitalized and died from COVID-19 and that the reason the vaccines were approved so quickly was because red tape that is usually part of the process was removed, not because corners were cut.

Few of these messages or pieces of information were effective at moving those who say they will definitely not get vaccinated, with the share of that group saying they’d be more convinced after hearing each message in the single digits.

Among those not yet convinced to get the COVID-19 vaccine right away, few (15%) say they would be more likely to get the vaccine if former President Donald Trump came out with a message strongly urging people to get vaccinated. Indeed, even among Republicans, just one in five say they would be more likely to get vaccinated if former President Trump strongly urged people to get vaccinated.

Do People Have A Preference For A Specific Vaccine?

With the FDA granting emergency use authorization to the Johnson & Johnson (J&J) COVID-19 vaccine on February 27, the U.S. now has three highly effective vaccines available to the public. All three vaccines have been rigorously studied and proven to prevent hospitalization and death from COVID-19, though they use different technologies. While the Moderna and Pfizer vaccines that have been on the market since January require two doses administered several weeks apart, the J&J vaccine is administered as a single dose.

Despite the high efficacy of all three vaccines, there has been some confusion surrounding these different technologies and the different dosages. When asked if there are differences in how well the three COVID-19 vaccines available on the U.S. market work, half (52%) of the public say they are not sure. Fourteen percent think there are major differences in how well the vaccines work, about a quarter (26%) think there are minor differences, and 8% say there are no differences. As the vaccine roll-out continues, uptake may be dependent on how well the public trusts the safety and efficacy of the different vaccines.

Among U.S. adults who are at least somewhat open to getting the vaccine—expressed by saying they either want the vaccine as soon as possible, they want to wait and see how it works for others before getting it themselves, or they will get it if required to do so for work, school, or other activities—three in ten say that they have a “strong preference” for which vaccine they get (28%), while an additional one in four (24%) say they have a “slight preference”, and 46% say they do not have a preference. Younger adults are more likely to say it doesn’t matter which vaccine they get, with nearly six in ten willing 18-29 year-olds (56%) saying they have no preference, compared to four in ten of those ages 30-49 (43%) or 50-64 (41%) and one third of those ages 65 and over (33%). Four in ten (43%) of people ages 65 and over who have not yet been vaccinated say they have a strong preference for which vaccine they would like to get and 21% say they have a slight preference.

When asked separately about each of the three FDA authorized COVID-19 vaccines, majorities of those planning or considering getting vaccinated say they would be open to getting each one. About seven in ten say they would “probably” or “definitely” get each of the three vaccines, including at least one-third who say they would “definitely get” each. About one in seven say they would definitely not get each of the vaccines.

Among those who want to wait and see how the vaccines are working for other people before getting vaccinated, a larger share says they would definitely get the J&J one-dose vaccine compared to either of the two-dose options. One in six (16%) of those in the “wait and see” group say they would “definitely get” the J&J vaccine, compared to about one in ten who say the same about the Pfizer or Moderna vaccines (8% and 7%, respectively). This analysis shows that the convenience of a one-dose vaccine may make it easier to reach certain harder-to-convince populations to get vaccinated.

Among those who say they have a preference for one vaccine over another, the main reasons are that they prefer the ease of a one-dose vaccine (24%), their perceptions of the level of effectiveness of the different vaccines (14%), they have heard good or better things about one vaccine (7%), they are concerned about side effects or a reaction to a particular vaccine (7%), the ingredients or formulation of the vaccines (6%), or they say one vaccine would be more convenient or easier to obtain than others (6%).

This KFF COVID-19 Vaccine Monitor was designed and analyzed by public opinion researchers at the Kaiser Family Foundation (KFF). The survey was conducted March 15-22, 2021, among a nationally representative random digit dial telephone sample of 1,862 adults ages 18 and older (including interviews from 476 Hispanic adults and 490 non-Hispanic Black adults), living in the United States, including Alaska and Hawaii (note: persons without a telephone could not be included in the random selection process). Phone numbers used for this study were randomly generated from cell phone and landline sampling frames, with an overlapping frame design, and disproportionate stratification aimed at reaching Hispanic and non-Hispanic Black respondents. Stratification was based on incidence of the race/ethnicity subgroups within each frame. Specifically, the cell phone frame was stratified as: (1) High Hispanic: Cell phone numbers associated with rate centers from counties where at least 35% of the population is Hispanic; (2) High Black: Cell phone numbers associated with remaining rate centers from counties where at least 35% of the population is non-Hispanic Black; (3) Else: numbers from all remaining rate centers. The landline frame was stratified as: (1) High Black: landline exchanges associated with Census block groups where at least 35% of the population is Black; (2) Else: all remaining landline exchanges. The sample also included 190 respondents reached by calling back respondents that had previously completed an interview on the KFF Health Tracking Poll at least nine months ago. Another 402 interviews were completed with respondents who had previously completed an interview on the SSRS Omnibus poll (and other RDD polls) and identified as Hispanic (n = 178; including 63 in Spanish) or non-Hispanic Black (n=224). Computer-assisted telephone interviews conducted by landline (356) and cell phone (1,506, including 1,093 who had no landline telephone) were carried out in English and Spanish by SSRS of Glen Mills, PA. To efficiently obtain a sample of lower-income and non-White respondents, the sample also included an oversample of prepaid (pay-as-you-go) telephone numbers (25% of the cell phone sample consisted of prepaid numbers) Both the random digit dial landline and cell phone samples were provided by Marketing Systems Group (MSG). For the landline sample, respondents were selected by asking for the youngest adult male or female currently at home based on a random rotation. If no one of that gender was available, interviewers asked to speak with the youngest adult of the opposite gender. For the cell phone sample, interviews were conducted with the adult who answered the phone. KFF paid for all costs associated with the survey.

The combined landline and cell phone sample was weighted to balance the sample demographics to match estimates for the national population using data from the Census Bureau’s 2019 U.S. American Community Survey (ACS), on sex, age, education, race, Hispanic origin, and region, within race-groups, along with data from the 2010 Census on population density. The sample was also weighted to match current patterns of telephone use using data from the January- June 2020 National Health Interview Survey and to adjust for non-response bias, predominantly in the callback sample frames, on health insurance coverage, registered voter status, age, and reported vaccination rates (based on the non-callback RDD sample). The weight takes into account the fact that respondents with both a landline and cell phone have a higher probability of selection in the combined sample and also adjusts for the household size for the landline sample, and design modifications, namely, the oversampling of prepaid cell phones and likelihood of non-response for the re-contacted sample. All statistical tests of significance account for the effect of weighting.

The margin of sampling error including the design effect for the full sample is plus or minus 3 percentage points. Numbers of respondents and margins of sampling error for key subgroups are shown in the table below. For results based on other subgroups, the margin of sampling error may be higher. Sample sizes and margins of sampling error for other subgroups are available by request. Note that sampling error is only one of many potential sources of error in this or any other public opinion poll. Kaiser Family Foundation public opinion and survey research is a charter member of the Transparency Initiative of the American Association for Public Opinion Research.

This work was supported in part by grants from the Chan Zuckerberg Initiative DAF (an advised fund of Silicon Valley Community Foundation), the Ford Foundation, and the Molina Family Foundation. We value our funders. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

During the 2020 presidential campaign, President Biden supported several policies to lower prescription drug costs, including proposals to authorize the federal government to negotiate drug prices, cap out-of-pocket drug costs in Medicare Part D, and limit drug price increases to the rate of inflation. Whether or not the 117^th Congress acts on these or other prescription drug proposals, the Administration has at its disposal a variety of administrative levers to address drug costs.

This brief focuses on two pathways through which the Biden Administration could use its executive authority to implement policy changes related to prescription drug costs. The first pathway would use the authority provided under the Affordable Care Act (ACA) through the Center for Medicare and Medicaid Innovation (CMMI, or Innovation Center) (established under Section 1115A of the Social Security Act). The Innovation Center is authorized to design, implement, and test new health care payment models to address concerns about rising costs, quality of care, and inefficient spending. The second pathway would use authority that was established soon after Medicare was enacted – known as Section 402 demonstration authority – to implement Medicare demonstrations to test new ways of delivering health care and paying health care providers.

We review examples of recent efforts to use these authorities to lower prescription drug costs, including the Trump Administration’s Most Favored Nation Model initiated through the Innovation Center and the Trump Administration’s proposed $200 prescription drug vouchers for Medicare Part D beneficiaries via Section 402 demonstration authority. We examine questions that have been raised regarding the use of these authorities and discuss how the Biden Administration might use them to implement prescription drug policies. In addition to these pathways, the Administration could employ other administrative tools to implement policy changes related to prescription drug costs, including through annual payment and policy rules, regulatory guidance, and waivers; those tools are not discussed further here.

Background

Since the early days of the Medicare program, the HHS Secretary has had the authority to initiate demonstrations that can lead to permanent changes in the Medicare program. The Secretary was first granted this authority under Section 402 of the Social Security Amendments of 1967, which was then modified by the Social Security Amendments of 1972. Section 402 provides broad authority to the Secretary to develop and implement demonstration projects to test new Medicare payment methodologies, and allows the Secretary to waive compliance with certain Medicare requirements relating to payment and reimbursement to conduct these demonstrations.¹  In addition to demonstrations and models initiated by the Executive Branch, Congress has also mandated demonstration projects through legislation, either as part of more comprehensive legislation relating to the Medicare program or as part of appropriations legislation.

In the years leading up to the establishment of the Innovation Center, the Medicare Payment Advisory Commission (MedPAC) and other experts noted shortcomings with the demonstration process, including insufficient and declining funding, the long timeframe for research and evaluation of demonstration projects, administrative barriers including requirements under the Paperwork Reduction Act, implementation or expansion delays due to administrative and judicial review, and the condition of budget neutrality. Further, the process for scaling up successful models required Congressional action, which may delay or block their implementation. Additionally, the Centers for Medicare and Medicare Services (CMS) can be prevented from modifying or ending demonstration models based on early results (whether positive or negative) when models are specified in law.

Partly in response to these concerns, Congress established the CMS Innovation Center in the Affordable Care Act of 2010 (ACA). Congress specifically directed the Innovation Center to focus on models that could potentially lower health care spending for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) while maintaining or enhancing the quality of care furnished under these programs. While the focus of the Innovation Center is on Medicare, Medicaid, and CHIP, Innovation Center models have also incorporated multi-payer and all-payer approaches that affect patients with private insurance to increase the potential impact of these models on the broader health system.

Through the Innovation Center, the ACA granted the HHS Secretary more tools to design, adapt, and test models that could produce savings and be more rapidly scaled. The Secretary has the ability to waive more regulations and has broader authority to expand and implement successful Innovation Center programs into Medicare, Medicaid, and CHIP, and terminate the models that fail. Further, the law allocated dedicated funding to the Innovation Center: $5 billion for fiscal year 2010, $10 billion for the years 2011 through 2019, and another $10 billion for each decade thereafter. These funds are not subject to annual appropriations and are designated for the operation of the Innovation Center, including direct support for individual models and delivery system reform initiatives, and operational expenses, including payroll expenses for full-time employees, contracts, and administrative expenses. Notably, Innovation Center models are not subject to the Paperwork Reduction Act, and there is no administrative or judicial review of the Secretary’s decisions for certain aspects of models (described in greater detail below). HHS also cannot require that an Innovation Center model initially be budget neutral.

With the passage of the ACA, the Innovation Center is the primary vehicle through which the Administration tests new models, even though Section 402 demonstration authority has existed much longer. More detailed discussion of these administrative pathways, plus examples of how they have been used to implement policy changes related to prescription drugs, is below.

Innovation Center Models

The ACA established the Innovation Center to test innovative payment and service delivery models that could lead to permanent program changes, with the goal of reducing program spending while preserving or enhancing the quality of care or improving quality of care without increasing spending. The law expanded the Secretary’s authority to waive Medicare and other program requirements in order to develop and conduct these models, and does not limit this authority to reimbursement or payment related changes. (This is in contrast to the Secretary’s waiver authority for Section 402 demonstrations, discussed more below.)

For the sole purpose of testing models, the Secretary may waive all requirements of Title XI of the Social Security Act (SSA) (General Provisions, Peer Review, and Administrative Simplification) and Title XVIII of the SSA (Medicare), three sections of Title XIX of the SSA relating to the Medicaid program, and nearly all sections of Title XIX of the SSA pertaining to the Program of All-Inclusive Care for the Elderly (PACE).²  The waiver authority for Title XI includes all sections, including fraud and abuse laws, such as the federal anti-kickback statute. The waiver authority for Title XVIII also includes all sections, including for example provisions related to Medicare eligibility, covered benefits, and payment rules, among others. However, provisions pertaining to Medicare that are not included in Title XVIII and not explicitly mentioned cannot be waived, such as the Medicare payroll tax of 1.45% on employers and employees, which is specified in the Internal Revenue Code.

Innovation Center Model Implementation and Expansion

Congress gave the Innovation Center more authority to initiate, terminate, modify, or expand models than what is allowed under Section 402 demonstration authority. As defined by statute, Innovation Center models are first implemented under Phase I, and if a model meets certain criteria, it can be expanded, including on a nationwide basis, under Phase II.

phase I

Phase I for Innovation Center models is the testing phase. The law directs the Secretary to select models for testing “where the Secretary determines that there is evidence that the model addresses a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures.” The law also mentions a list of possible models to be tested including but not limited to:

• Contracting directly with groups of providers of services and suppliers to promote innovative care delivery models, such as through risk-based comprehensive payment or salary-based payment.
• Promoting care coordination between providers of services and suppliers that transition health care providers away from fee-for-service based reimbursement and toward salary-based payment.
• Allowing States to test and evaluate systems of all-payer payment reform for the medical care of residents of the State, including dual eligible individuals.

The ACA prohibits the Secretary from requiring budget neutrality as a condition of testing during Phase 1 of the model. However, after testing of a model has begun in Phase I, the statute authorizes the Secretary to modify the design of a model or terminate a model unless it is expected to:

• improve quality of care without increasing spending under the applicable program (i.e., Medicare, Medicaid or CHIP);
• reduce program spending without reducing quality of care; or
• improve the quality of care and reduce program spending.

The statute also specifies that, following Phase I of the model, the Secretary shall conduct an evaluation of the model, which includes an analysis of the quality of care provided and changes in program spending attributed to the model.

phase ii

Phase II for Innovation Center models is the expansion phase. Under Phase II, taking into account the evaluation from Phase I, the Secretary may expand the duration and scope of a model, through rulemaking, including implementation on a nationwide basis. While not specifically required by statute, Phase I models that require mandatory participation have also typically been subject to the public rulemaking process.

In order for a model to be implemented nationwide, it must meet the following three criteria:

1. The Secretary determines that such expansion of the model would reduce spending under the applicable program (i.e., Medicare, Medicaid or CHIP) without reducing the quality of care; or would improve the quality of care without increasing spending;
2. The Chief Actuary of CMS certifies that such expansion would reduce (or would not result in any increase in) net program spending; and
3. The Secretary determines that such expansion would not deny or limit the coverage or provision of benefits under the applicable program for beneficiaries.

To date, four Innovation Center models have met the statutory criteria to be certified by the Secretary for expansion. These four models are the Diabetes Prevention Program (DPP) model, the Home Health Value-Based Purchasing (HHVBP) Model, the Prior Authorization Model for Repetitive Scheduled Non-Emergent Ambulance Transport (RSNAT), and the Pioneer ACO model. These certifications enable the Secretary to expand the program to become a permanent part of Medicare, as the Secretary did for the Diabetes Prevention Program Model, which became a full preventive benefit in Medicare Part B for eligible beneficiaries (the “Medicare Diabetes Prevention Program”), effective April 2018.

In September 2020, CMS announced that the RSNAT model would be expanded nationwide, though the implementation of the expansion into new states is being delayed due to the COVID-19 pandemic. In January 2021, CMS announced its intent to expand the HHVBP model, and this expansion must be implemented through rulemaking to begin no earlier than January 1, 2022. The Secretary has not made the Pioneer ACO model a part of the full Medicare program.

In contrast to Section 402 demonstrations discussed below, the testing, evaluation and expansion of Innovation Center models are specifically exempted from the Paperwork Reduction Act, which can be time consuming and burdensome.³  Further, the statutory language notes that specific features of the model are not subject to administrative or judicial review:

• the selection of models for testing or expansion;
• the selection of organizations, sites, or participants to test those models selected;
• the elements, parameters, scope, and duration of such models for testing or dissemination;
• determinations regarding budget neutrality;
• the termination or modification of the design and implementation of a model;
• determinations about expansion of the duration and scope of a model.

Section 402 Demonstrations

Since the passage of the ACA, both the Obama and Trump Administrations relied more on the authority provided under the Innovation Center than on Section 402 demonstrations, with a few notable exceptions. Section 402 gives the Secretary authority to engage in demonstration projects to determine whether changes in methods of payment or reimbursement will have the effect of “increasing the efficiency and economy of health services” without affecting quality of care. Such demonstrations could include paying providers for services not otherwise covered by Medicare at the time of the demonstration or experimenting with changing the basis of provider payments.⁴  Section 402 allows the Secretary to waive requirements under Medicare and Medicaid, but only as long as they relate “to reimbursement or payment on the basis of reasonable cost, or (in the case of physicians) on the basis of reasonable charge.”

While budget neutrality is not specified in statute or regulation, according to CMS’ Medicare Waiver Demonstration Application, “Medicare-waiver-only demonstrations must be budget neutral. Budget neutrality means that the expected costs under the demonstration cannot be more than the expected costs were the demonstration not to occur.” Although most demonstrations have generally conformed to the administrative practice of budget neutrality, there have been exceptions, which are discussed in more detail below. Section 402 demonstrations also have typically been subject to certain types of review such as requirements under the Paperwork Reduction Act and administrative or judicial review.⁵  Under the Paperwork Reduction Act, agencies that plan to collect data on 10 or more individuals must submit information to the Office of Management and Budget (OMB) on proposed collection efforts as well as provide a 60-day period for public comment.⁶  Some Section 402 demonstrations, such as competitive bidding for clinical laboratory services and durable medical equipment, have also been subject to judicial review, a situation when the courts review various federal agencies’ actions, typically based on criteria included in the Administrative Procedure Act (APA).

Many of the demonstrations initiated by the Secretary under Section 402 and by Congress have ultimately led to permanent changes in Medicare law. For example, hospice demonstrations beginning in 1974 ultimately led to a hospice benefit becoming first authorized as part of Medicare in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). This benefit was originally scheduled to sunset in 1986 but then permanently added to Medicare benefits in the Consolidated Omnibus Budget Reconciliation Act of 1985. The inpatient prospective payment system (IPPS), which is how Medicare pays hospitals for acute inpatient stays, also had its origins in various demonstration projects. Starting in 1974, the Health Care Financing Administration (a precursor to CMS) engaged in various demonstrations that led to the design of a new Medicare prospective payment system, using a system of diagnosis-related groups (DRGs), which was enacted as part of the Social Security Amendments of 1983. Other demonstration projects that have been expanded program-wide include the skilled nursing facility and home health prospective payment systems; competitive bidding for durable medical equipment; and Medicare coverage for heart transplants.⁷ 

While the funding of some demonstrations has been Congressionally earmarked, CMS has a research, evaluations, and demonstrations (RDE) budget that is appropriated annually. In FY 2020, $20.1 million was appropriated for these activities, significantly less than the funding allocated to the Innovation Center, which averages $1 billion per year. Funding appropriated to the RDE generally fluctuates from year to year, but has been declining over time, particularly after the establishment of the Innovation Center, from $57.4 million in FY 2007 to $35.6 million in FY 2010 and $20.1 million in FY 2020. The RDE section of the budget notes that “CMS leverages other funding sources, such as ACA 3021 (Innovation Center) funding, to support RDE projects wherever possible.”

How Have Innovation Center Models and Section 402 Demonstration Authority Been Used to Address Prescription Drug Costs?

Innovation Center: The Trump Administration leveraged the flexibility and authority of the Innovation Center to address prescription drugs at least three times. Two of the models are ongoing: the Part D Senior Savings model, which limits out-of-pocket costs on insulin in participating Part D plans, and the Part D Payment Modernization Model, which tests the impact of a revised Part D payment structure that creates incentives for plans, patients, and providers to choose drugs with lower list prices in order to better manage spending in the catastrophic phase. This Part D Payment Modernization Model was updated by the Trump Administration for calendar year 2022 to waive the requirement that all drugs in five of six protected classes (all protected class drugs except antiretrovirals) be included in formularies, the requirement that plans cover a minimum of two drugs in other therapeutic classes, and the requirement that sponsors take on downside risk. However, the Biden Administration recently announced that they are not moving forward with these changes. Sponsors may not modify coverage of drugs in protected classes, they must continue to cover a minimum of two drugs in other therapeutic classes, and sponsors must continue to take on two-sided risk to participate in the model. To date, only two Part D plans are participating in this model.

The third model is the Most Favored Nation model, a mandatory nationwide model designed to lower payments for the top 50 Part B drugs that contribute to high Part B spending, by aligning payment for Part B drugs more closely to what other countries pay and removing incentives for doctors to prescribe higher-priced drugs. The model was set to go into effect January 2021, but stakeholders filed lawsuits to block the model from being implemented, with one of the primary complaints being that the Administration violated the APA by not following the appropriate rulemaking process. HHS has been temporarily blocked from implementing this rule under a preliminary injunction issued by the U.S. District Court for the Northern District of California, based on its ruling that the Trump Administration failed to follow the standard notice and comment rulemaking procedures. According to the Innovation Center, the Biden Administration will not implement this rule without further rulemaking.⁸ 

While the Obama Administration frequently used Innovation Center authority, such as for Accountable Care Organizations (ACO), bundled payment models, and in collaboration with states for all-payer ACO models such as in Vermont and Maryland, it did not do so as often relating to prescription drug costs.

In March 2016, the Obama Administration issued a proposed rule for a Part B Drug Payment Model to be implemented through the Innovation Center – although this model was ultimately withdrawn prior to implementation due to criticisms of the mandatory nature of the proposed model and opposition from patient and physician groups. The model offered alternative payment designs for Part B drugs to test whether these approaches would “strengthen the financial incentive for physicians to choose higher value drugs.” Under current law, for most Part B drugs, providers are reimbursed based on the average sales price (ASP) of a given drug plus a 6 percent add-on payment. The first phase of the model would have assigned certain providers an alternative payment approach of ASP plus 2.5 percent, plus a flat fee. The second phase of the model would have tested the application of value-based purchasing tools, in addition to the alternative ASP add-on payments. To eliminate selection bias and test whether these alternative payment approaches would change physician behavior and achieve savings, all providers and suppliers in selected geographic areas would have been required to participate.

While not solely a model pertaining to prescription drugs, the Obama Administration initiated the Medicare Advantage Value-Based Insurance Design (VBID) Model (though the model went into effect during the Trump Administration). Among the variety of payment and delivery approaches the model tests, the model provides Medicare Advantage plans with flexibilities, targeted to Medicare beneficiaries based on chronic conditions, including allowing reductions in cost-sharing for Medicare Part D covered drugs. For 2021, 19 sponsors are participating in this model.

The Obama Administration also initiated the Part D Enhanced Medication Therapy Management Model through the Innovation Center (though the model went into effect during the Trump Administration), which seeks to provide basic, stand-alone prescription drug plans with flexibility to implement innovative medication therapy management programs to optimize medication use. This model is ongoing.

Section 402: The Trump Administration proposed to use Section 402 demonstration authority relating to prescription drugs in order to send $200 prescription drug cards to Medicare Part D beneficiaries, though this proposal was not finalized. According to a draft document, the demonstration was designed to determine whether these $200 drug cards, which would help cover out-of-pocket costs for beneficiaries’ prescription drugs, would improve medication adherence, health outcomes, and improve the efficiency of Medicare payments. Questions pertaining to the design and cost of this proposed demonstration are discussed in more detail in the section below.

One of the Trump Administration’s stated rationales for using this demonstration authority for the proposed drug cards (rather than the Innovation Center) is that CMS has previously used Section 402 authority to test other changes to Part D, citing the Part D Low-Income Newly Eligible Transition Program and the Part D Reinsurance Payment Demonstration (Appendix Table 1). These demonstrations were initiated by the Bush Administration in the years after the enactment of the Medicare Modernization Act of 2003, which created the Part D program for prescription drugs, and before the Innovation Center was established. The Part D Low-Income Newly Eligible Transition Program adjusted weighting for regional benchmarks to ensure low-income Medicare beneficiaries had access to affordable plan choices and increase incentives for them to enroll in low-cost plans. The Part D Reinsurance Payment Demonstration was designed to encourage Part D sponsors to offer enhanced benefit packages by offering an alternative method for reinsurance financing, including paying organizations up-front capitated payments. While the Obama Administration did not use Section 402 demonstration authority relating to prescription drugs, it did use this authority to implement the Medicare Advantage Quality Bonus Payment demonstration, which is discussed below.

Questions Raised About the Use of Innovation Center Models and Section 402 Demonstration Authority

Over the years, the Government Accountability Office (GAO), the HHS Office of Inspector General (OIG), members of Congress, and other stakeholders have raised questions with respect to models initiated through the Innovation Center and demonstrations conducted under Section 402 authority.

Can models require mandatory participation?

Some stakeholders have questioned whether Innovation Center models are allowed to be mandatory, although the ACA does not specify that models must be voluntary. Part of the reason mandatory models have been proposed is to ensure that a sufficient number of providers participate in both the research and control groups, and minimize the risk of selection bias. In 2016, over 170 members of Congress stated in a letter to CMS that the Innovation Center was overstepping its authority by making models mandatory, mentioning the Comprehensive Care for Joint Replacement (CJR) model, and the proposed Part B Drug Payment Model discussed above, among others. The CJR model was initially mandatory for all hospitals in 67 designated areas of the country, but the Trump Administration pared back the mandatory hospital participation requirement, effective January 2018. However, in the final rule that made participation in the CJR model voluntary, CMS responded to commenters who contended that CMS lacks the authority to mandate participation in Innovation Center models, by affirming it does have this authority, stating that:

Are models subject to an adequate rulemaking process?

Some members of Congress have expressed concern with the rulemaking process for Innovation Center models. In a January 2019 letter to CMS, Ways and Means Chairman Richard Neal and Ranking Member Kevin Brady argued that the Innovation Center process has been historically opaque and does not use the traditional rulemaking cycle, particularly for models that are not mandatory. Further, in the 116^th Congress, Representative Sewell sponsored H.R.5741, “The Strengthening Innovation in Medicare and Medicaid Act,” which seeks to address these and other concerns, such as requiring more advance public notice and opportunities for stakeholder input, limiting the scope of models to no more applicable individuals than necessary to obtain a statistically valid sample, and establishing judicial review of some aspects of models, including review of the elements, parameters, scope, and duration of such models for testing or dissemination as well as determinations about expansion of the duration and scope of a model.

Concerns over the rulemaking process were one of the main criticisms of the Trump Administration’s Most Favored Nation model, which was finalized in an interim final rule, meaning it can be effective immediately without public comment. This model was set to go into effect January 1, 2021, but stakeholders including PhRMA, BIO, and others, filed lawsuits to block the model from being implemented, with one of the primary complaints being that the Administration violated the APA by not following the appropriate rulemaking process. Generally, the APA requires agencies to publish notices of rulemaking in the Federal Register, providing at least 60 days for public comment before going into effect. The Trump Administration attempted to make a case for a “good cause” exception, which allows them to waive the notice and comment requirements under the APA, citing the “particularly acute need for affordable Medicare Part B drugs now, in the midst of the COVID-19 pandemic.” However, several U.S. district courts agreed with the reasoning in the complaints and have blocked implementation, including a preliminary injunction by the U.S. District Court for the Northern District of California based on its ruling that the Trump Administration failed to follow the standard notice and comment rulemaking procedures.⁹  According to the Innovation Center, this rule will not be implemented without further rulemaking.

Is the demonstration designed as an experiment, with a comparison group to test for significant outcomes?

One question that has been raised in relation to demonstrations is whether the demonstration has an adequate comparison group. This matter was recently highlighted with the Trump Administration’s proposed $200 prescription drug cards. According to the draft document, the demonstration would test the impact of lower out-of-pocket drug costs on medication adherence and discontinuation rates, as well as downstream effects on health care utilization and Medicare Part A and B spending. However, many experts have questioned the experimental design of the demonstration. Because every Medicare Part D beneficiary who does not receive the most generous level of low-income subsides would be eligible for the card, there would be no comparison group. Critics also argue that the “test” the demonstration seeks to carry out has already been well established, with many studies showing that lower cost sharing for drugs improves medication adherence.

Will the demonstration achieve savings or increase costs?

The high cost of demonstrations has also been a concern, particularly when they are not designed to achieve savings. While most demonstrations conducted under Section 402 authority are generally required to be budget neutral by OMB, this has not been true of all demonstrations. This issue was raised in regard to the Trump Administration’s proposed $200 prescription drug cards. The drug cards were intended to lower the cost of medications, which could improve medication adherence and reduce unnecessary health care utilization, ultimately lowering Medicare Part A and B spending over time. However, the draft document acknowledges that actually observing such reductions would be difficult given the short duration of the demonstration, and estimated that the cost of the demonstration would be $7.9 billion dollars without any estimate of potential savings or expectation of budget neutrality. Many stakeholders were critical of the cost of the plan, with members of Congress sending letters to HHS and GAO seeking to review the proposal’s legality, including a determination of whether the discount card would have “the effect of increasing the efficiency and economy of Medicare” – a condition of section 402 demonstrations.

Though it was not intended to address to prescription drug policy, questions about the cost a demonstration were also raised when the Obama Administration initiated the Medicare Advantage (MA) Quality Bonus Payment demonstration that was in effect from 2012 to 2014. The HHS Secretary initiated this demonstration under Section 402 authority to test an alternative method for calculating and awarding MA bonuses, rather than implementing the bonus structure set forth in the ACA. The Office of the Actuary (OACT) estimated the cost to be over $8 billion dollars.

GAO evaluated the extent to which this demonstration conformed to principles of budget neutrality, relative to other Medicare demonstrations, and recommended canceling the demonstration due in large part to its high cost. The GAO concluded that this demonstration “dwarfs all other Medicare demonstrations—both mandatory and discretionary—conducted since 1995 in its estimated budgetary impact and is larger in size and scope than many of them.”

How Could the Biden Administration Use Executive Authority to Take Action on Prescription Drug Costs?

Having narrow Democratic majorities in both the House and the Senate may give the Biden Administration somewhat more room to implement pieces of its health policy agenda through legislation. But the Biden Administration may also consider executive action, potentially relying on the Innovation Center or Section 402 demonstration authority to pursue health care changes, including changes related to prescription drugs.

Several proposals supported by President Biden during his campaign would lower drug costs for Medicare and private insurers. The Innovation Center has authority and has tested multi-payer or all-payer models that include private insurers in the past (e.g., delivering primary care or providing coordinated oncology treatments). However, it may be somewhat easier to test models that apply exclusively to Medicare in the case of prescription drugs, because the Innovation Center has less leverage outside of the Medicare program to enforce lower payments. For example, the negotiation provision under H.R. 3, the drug price legislation passed by the House of Representatives in December 2019, applied to both Medicare and private insurance, enforced by financial penalties on drug manufacturers that did not agree to participate in the negotiation process. However, an Innovation Center model would not have the same leverage to reach all private insurers, and in particular, would not be able to compel drug manufacturers to offer the lower, negotiated Medicare drug price to private insurers. The Innovation Center would need to identify a new mechanism to apply lower drug prices more broadly to private insurers.

During his campaign, President Biden supported allowing the federal government to negotiate drug prices in Medicare Part D and for other payers as well as “directing the Medicare program to target excessively priced prescription drugs that face little or no competition.” To pursue this goal in the absence of Congressional action, the Biden Administration could, for example, consider initiating a model designed to test whether the federal government could achieve savings, without adversely affecting quality, by negotiating prices under Medicare for high-priced drugs that lack competition. According to CBO’s analyses of previous drug negotiation legislative proposals, CBO expects that Medicare savings would be achieved from negotiations over high-priced drugs that lack competition, which would lead to lower beneficiary premiums and cost sharing. CBO also noted that this new authority would lower revenues for some drug manufacturers, and (depending on design details) could lead to higher drug prices in other countries and a reduction of about 8 drugs coming to market from the 2020 to 2029 period and about 30 fewer drugs over the subsequent decade, due to the loss in revenue for drug manufacturers. However, CBO did not analyze the potential effects of this foregone innovation on public health.

The Biden campaign supported a proposal to “empower the HHS Secretary to negotiate prices that are capped to a level associated with average OECD median prices.” Depending on whether or not the Biden Administration moves forward in some fashion with the Trump Administration’s Most Favored Nation Model that is currently blocked in the courts, the Administration could design a new model to test the use of international reference prices for setting prices for certain Medicare-covered drugs. If similar to the Trump Administration’s model, Medicare’s actuaries estimated $85.5 billion in savings over the course of the 7-year demonstration. However, the pharmaceutical industry and others have raised concerns about the potential for this approach to adversely affect patients’ access to medications and to lead to higher prices in other countries.

During the campaign, President Biden also supported an approach that would limit drug price increases to the rate of inflation. In the absence of legislation, the Administration could consider initiating such a model through the Innovation Center, designed to test whether limiting price increases for certain Medicare-covered drugs to the rate of inflation, such as drugs that have historically high increases year over year, reduces spending for the Medicare program. CBO analyses of similar proposals lawmakers introduced during the 116th Congress for Medicare Part B and Part D drugs indicate the potential for significant savings if drug manufacturers limited price increases to the rate of inflation or paid a rebate to the federal government. Given concerns that inflation caps could result in higher launch prices that would affect Medicare spending and have spillover effects on costs incurred by other payers, the Innovation Center would need to assess in advance of launching the new model whether this model would be expected to achieve net savings for the program (without adversely affecting quality).

This is by no means an exhaustive list of ideas to address prescription drug costs, and Innovation Center and Section 402 demonstration authority are not the only regulatory vehicles for implementing changes to prescription drug policies. Previous administrations have also implemented changes to prescription drug policies through the annual rulemaking process, such as changes to formulary requirements, as in a recent final rule that allows Medicare Part D plans to establish a second specialty tier, and proposed (but not finalized) modifications to the treatment of protected classes in Part D. While the Administration can use annual payment and policy rules to implement programmatic changes, these changes typically are not major shifts in policy as they are not allowed to waive existing Medicare payment rules and statutory requirements using these mechanisms (unlike under demonstration and Innovation Center authority).

KFF polling from December 2020 shows that there is strong bipartisan support for some of President Biden’s health care proposals, including 89% who favor allowing the federal government to negotiate with drug companies to get a lower price on medications that would apply to both Medicare and private insurance – a proposal that would require legislation, such as the bill (H.R. 3) that passed the House of Representatives in the last Congress. While addressing the COVID-19 crisis is clearly the first order of business for the Biden Administration, there will likely be continued pressure to address high prescription drug prices and rising drug costs, and some of these policies could potentially be carried out via the Innovation Center or Section 402 demonstration authority.

 

1. This authority also allows for demonstrations under Medicaid, though waivers have been more typically used in the Medicaid program. https://modern.kff.org/medicaid/issue-brief/the-landscape-of-medicaid-demonstration-waivers-ahead-of-the-2020-election/ ↩︎
2. Medicaid requirements that can be waived include: that a Medicaid program must be operated statewide (Section 1902(a)(1)); that it must have a public process for determining payment rates for hospital services (1902(a)(13)); and a provision relating to prepaid payments under Medicaid managed care (1903(m)(2)(A)(iii)). The Program of All-Inclusive Care for the Elderly (PACE) is section 1934 and the Secretary can waive all provisions except subsections (b)(1)(A) and (c)(5). ↩︎
3. The Medicare Payment and Advisory Commission, “Report to Congress – Chapter 1: Enhancing Medicare’s Ability to Innovate,” June 2010. http://www.medpac.gov/docs/default-source/reports/Jun10_Ch01.pdf?sfvrsn=0 ↩︎
4. Ibid. ↩︎
5. Ibid. ↩︎
6. Government Accountability Office, “CMS Innovation: Model Implementation and Center Performance,” March 2018. https://www.gao.gov/assets/700/690875.pdf ↩︎
7. The Medicare Payment and Advisory Commission, “Report to Congress – Chapter 1: Enhancing Medicare’s Ability to Innovate,” June 2010. http://www.medpac.gov/docs/default-source/reports/Jun10_Ch01.pdf?sfvrsn=0 ↩︎
8. In another case, the U.S. District Court for the Southern District of New York temporarily prohibited the federal government from applying the rule to a single drug (EYLEA), manufactured by Regeneron Pharmaceuticals. ↩︎
9. The Northern District of California case has been stayed until April 23, 2021, at which point the parties will update the court on whether to continue the stay, allow the lawsuit to proceed, or dismiss the case. In another case, the U.S. District Court for the District of Maryland entered a temporary restraining order prohibiting implementation of the rule until January 20, 2021. The parties agreed to stay the Maryland litigation until a final rule based on the interim final rule is published, provided that the federal government does not seek to have the California court’s preliminary injunction overturned on appeal. If the federal government decides to rescind the interim final rule or otherwise decides not to proceed with it, the parties must notify the court. ↩︎