Health Impacts of Federal Pandemic Aid to State and Local Governments

The COVID-19 pandemic led to unprecedented levels of federal transfers to state and local governments. Did this funding impact population health? To answer this question, we leverage the fact that U.S. states that enjoy excess representation in Congress received substantially more fiscal assistance than did relatively underrepresented states. We find that the aid driven by excess representation had substantial impacts on population health. For each $1,000 increase in federal fiscal aid per state resident, we estimate that states experienced 38 fewer deaths from all causes per 100,000 residents from 2020 through 2022, of which 2/3 came from reductions in COVID-19 mortality. We estimate that the last $331 billion in federal pandemic aid, which corresponds with our in-sample variation, generated $591 billion in value through life years saved. Additional aid also reduced rates of COVID-19 related hospitalizations and emergency room visits, though not in the total number of positive cases detected. Plausible mechanisms for these improved outcomes include higher rates of COVID-19 vaccination, which plausibly account for nearly half of the mortality reductions we observe, and higher rates of COVID-19 testing. Medicaid enrollments and hospital capacity do not appear to play substantial mediating roles. Our robustness analyses provide evidence that the effects we estimate cannot be explained by pre-existing mortality trends, by the pandemic's differential impacts on relatively dense vs. rural areas, or by the pandemic's differential impacts on populations with more elderly individuals or with higher prevalence of chronic conditions. The mortality impacts we estimate were substantially greater for non-Hispanic Black Americans than for non-Hispanic White Americans, such that federal funds are associated with a reduction in population-wide health disparities over the course of the pandemic.