‘Social Impact Bonds’ Tap Private Money for Public Health
Thursday, October 30, 2014
More states are considering “social impact bonds” for multiyear projects in health, education and prisoner rehabilitation. Are they a good investment?
South Carolina is turning to an unusual source to finance a new program intended to reduce the state’s high rate of premature births: private investors.
If the program succeeds in slicing that rate among Medicaid beneficiaries and reduces state spending as a result, South Carolina will repay the principal plus a healthy, yet-to-be determined rate of return. If the program doesn’t meet expectations, the state will owe the investors less or even nothing at all.
The state sees the plan as a way to launch a promising health program without having to bear the costs for years to come, if ever.