Table 1.
Examples of cost-sharing programs sponsored by the US federal government to cultivate partnership with private entities in several major industries
| Sector | Cost-sharing model | Description |
|---|---|---|
| US Department of Agriculture (USDA) | Cotton Ginning Cost Share Program (2016) | The USDA provided targeted assistance to cotton growers to share in the cost of ginning. This one-time payment began in July 2016 to assist with this year’s ginning season [26]. In this program, the USDA allocated $300 million to purchase 40% of individual farmers’ cotton production, at a cap of $40,000 per farm. This cost-sharing program was based on a worldwide oversupply of cotton, whereby cotton farmers in the US were losing market share and forced to sell capital equipment to cover short-term debts. The cost-sharing program is an upfront investment from the USDA to keep farmers in the cotton market through 2016 despite competitive demand, and reduce operational costs for the 2016 farming year. No repayment in this program was necessary |
| Farm Bill of 2014 | The USDA allocated $24 billion to the Crop Commodities program and $30 billion to the Conservation Reserve Program [27]. First, the Crop Commodities program was designed to enforce that farmers of covered commodities (e.g., corn, wheat, rice, peanuts, and soybeans) receive a fair market price for their products in order to achieve expected revenue based on the size of their farm on an annual basis. Furthermore, the Conservation Reserve Program financed the conversation of highly erodible cropland to other environmentally sensitive acreage to vegetative cover (e.g., native bunchgrass and grasslands; wildlife and pollinators food and shelter plantings; windbreak and shade trees; filter and buffer strips; grassed waterways; riparian buffers). This latter program would be used to instigate a supply-side shift towards lowering expected revenues from individual farms | |
| Conservation tree planting | This USDA cost-sharing model assists private landowners to plant trees on properties for wind protection, wood products, soil and water conservation and wildlife habitats [28]. The distribution of cost sharing was that the USDA would pay landowners 50% of the cost of trees plus a 40% practice incentive payment for ensuring adherence to the purpose of planting, which could add up to 90% of the total cost-sharing incentive. This particular program provides insight into cases which the government is willing to provide as much as 90% of cost sharing with individuals, provided that the product is used properly | |
| US Department of Defense (DOD) | Cost-sharing contracts [29] | This DOD law defines a cost-sharing contract as a cost-reimbursement contract in which the contractor receives no fee and is only reimbursed for an agreed upon portion of its allowable costs. A cost-sharing contract may be used when the contractor agrees to absorb a portion of the upfront costs, with the expectation of substantial compensating benefit upon the completion of service |
| North Atlantic Treaty Organization (NATO) | While NATO as an entity is well known, its cost-sharing structure is less familiar, but potentially informing to the issue of prescription drug pricing and who pays. NATO’s 28 members each contribute to a general fund based on a cost-sharing formula according to gross national income, which represents a small percentage of each member’s defense budget [30] | |
| US and Republic of South Korea Alliance | The US continues to support South Korean defense systems with a monetary investment and presence of troops and supplies inside Korea, provided Korea assumes greater responsibility for its own defense at a rate of increase of 5.3% per year, as of 2015 [31] | |
| Environmental | Byrd-Bond Amendment to the Clean Air Act of Title IV (1995) | Under this amendment, the government would establish a reserve of SO2 emissions for early investors in updates to reduce long-term emissions [32]. Manufacturing and energy plants investing during phase I to reduce SO2 emissions would receive credits to lower penalties for later emissions in greater quantities beyond accepted margins in latter phases, after 1995 |
| Farm Bill: Greenhouse Gas Emissions clause | The US government would pay 75–90% of the costs of vegetation that farmers purchase to reverse effects of greenhouse gas emissions in the USA [33] | |
| Healthcare | Ryan White CARE Act | The Ryan White Comprehensive AIDS Resources Emergency (CARE) Act provided a safety net of coverage for high costs of care in low-income, uninsured and underinsured victims of AIDS and their families. The act provided funding for a three-way cost-sharing program between patients, the federal government (e.g., Medicaid) and private insurers. Prior to the enactment, AIDS patients may have had to pay completely out-of-pocket for treatment without assistance from a government or private insurer |
| Center for Medicare and Medicaid Innovation (CMMI) | CMMI has proposed several instances of equal-sided risk models, in which payment hinges on improved population health management [34]. Health systems that take on greater upfront risk for a population are rewarded up to 50% relative to the amount of risk that they take | |
| Department of Veterans Affairs (VA) | The VA provides low-cost drugs to veterans as a result of an ability to guarantee a discounted rate of − 24% from manufacturers, in addition to other discounts that may be applied for specific drugs [35] | |
| Energy | Retail Ethanol Infrastructure Cost Sharing Program (2008) | As part of the American Recovery and Reinvestment Act, the US Department of Energy agreed to subsidize 15–30 companies up to $3.5 million to invest in the development of high-grade ethanol from corn products [36] |