Funds for local public health services come from various sources, and the exact mix of funding varies significantly from one local public health agency to the next. The sources of funds may be grouped into four general categories:
All funds received or spent by a local health department must be budgeted, disbursed, and accounted for in accordance with the Local Government Budget and Fiscal Control Act.[4] The budgeting, disbursing, and accounting for a county health department or consolidated human services agency is done by the county’s budget officer and finance officer. District health departments and public health authorities are responsible for performing these functions themselves.
[1] N.C. Division of Public Health, Annual Report (October 2012), available at http://publichealth.nc.gov/aboutus.htm. The funds for counties included drug expenses and WIC food expenses, as well as funding for local health departments. [2] A study conducted by the School of Government in 2012 examined funding for local health departments in greater detail and found wide variations in the proportion of local health department expenditures that were from county appropriations versus other sources. See Comparing North Carolina's Local Public Health Agencies: The Legal Landscape, the Perspectives, and the Numbers (May 2012) [3] G.S. 130A-34.4 (enacted by S.L. 2012-126, sec. 3). [4] G.S. Ch. 159, Subchapter III, Art. 3. In 1914, New York City’s Commissioner of Health Herman M. Biggs remarked that “public health is purchasable” and that “within natural limitations, a community can determine its own death rate.” That powerful idea resonates today—a community’s or a nation’s inhabitants (or their elected representatives) will decide their health status by how they allocate funding. The poor performance of the United States compared with its global peers in life expectancy and other outcomes described in Chapter 1 reflects what this nation chooses to purchase; clinical care has far greater spending priority than population-based prevention and, more broadly, than social investments, such as in child well-being. As described in this report, changes are needed in the public health infrastructure—specifically in how funding is allocated, used, and tracked—to support greater effectiveness in population health improvement. However, changes also are needed in how the United States purchases health if the nation is to support more balanced investment in population-based strategies and in a public health infrastructure that can support them. Well-functioning public health departments are central to building a healthy population. However, estimating with precision the level of funding needed to support public health adequately is difficult for several reasons. First, the variation in definitions of public health (see Box 4-1) poses a challenge. Second, better coordination and less service fragmentation are likely to yield economies of scale for health departments, but the evidence base is not yet available that will allow a forecast of the magnitude of savings. Third, as described in Chapter 2, there is not yet a framework, nor are there tools, for tracking expenditures and revenues. Fourth, projecting the cost of a defined “package” of public health services for every state and locality requires both an agreement on what the package is and a better understanding of how the governmental public health infrastructure will shape itself to deliver the package. Some of those difficulties were described by the committee that authored the 2003 Institute of Medicine report The Future of the Public’s Health in the 21st Century.  A Fundamental Challenge to Estimating Financing Needs: How to Define Public Health. Many organizations and researchers have attempted to determine how much money is spent on all public health activities combined and how much money public health needs (more...) Efforts are being made to address these difficulties. The National Association of County and City Health Officials (NACCHO) and the Association of State and Territorial Health Officials (ASTHO) produce periodic reports that include financial information from local and state public health departments, and a continuous data harmonization activity could improve the quality and standardization of the survey data collected (Jones, 2011). In addition, an expanding public health systems and services research agenda and endeavor is under way. However, more effort is needed to facilitate standardization in data collection and in the current definitions of public health and related activities at all levels of government in which public health financial data are collected. That would enable the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary National Health Expenditure Accounts (NHEA) to provide a more accurate and uniform picture of governmental public health spending (Catlin, 2011; Sensenig, 2011). This chapter discusses current public health funding, estimates of the level of funding that public health needs, and some potential sources of adequate, stable, sustainable, and dedicated funding for public health. Public health spending may be reported as a percentage of national health spending (used by NHEA), as a percentage of national gross domestic product (used by OECD and WHO), as total dollars spent (used by OECD,1 WHO, NHEA, ASTHO, and NACCHO), or as per capita spending (used by all the above). The few available sources of information on public health funding listed above provide several estimates. However, interpreting all the estimates2 presents challenges related to the variation in how public health expenditures are defined, to the gaps in data reported by public health departments, to administrative differences in how data are collected or reported, and to methodological limitations, such as in how data are aggregated. Several sources have estimated that 3 percent of total national health spending goes to support nonclinical health or “public health” improvement efforts (Brooks et al., 2009; CMS, 2011; Miller, 2011; Miller et al., 2008). Turnock (2009) notes that 2 percent of Department of Health and Human Services (HHS) funding goes to CDC and the Health Resources and Services Administration (HRSA), the primary federal sources of funding for local public health activities.3 The bulk of HHS funding goes to publicly funded clinical care (through Medicaid and Medicare) and to the National Institutes of Health (NIH), largely for clinical care research, little for primary prevention, and even less for population-based interventions. The CMS Office of the Actuary has historically provided measures and estimates of annual health spending in the United States by type of service delivered. CMS uses an economic accounting system—the NHEA—that measures health spending in the United States by the goods and services that are purchased and by the programs, payers, and sponsors that finance care. NHEA provides analytic information about the health sector and includes federal, state, and local governments that fund clinical care provided to individual citizens (“personal health care”), population-based services (“government public health activities”), health care investment (“research” and “structures and equipment”), and administrative costs associated with publicly financed healthcare (“government administration” and “net cost of health” insurance) (Catlin, 2011).4 In 2009, according to NHEA, 3.1 percent of the nation’s nearly $2.5 trillion spent on health, or $77.2 billion, was spent on government public health activities (the NHEA definition of what is included in public health is described in Box 4-1) (CMS, 2011).5 In per capita terms, of $8,086 in total health expenditures per person, about $251 was spent on public health by federal, state, and local governments. National calculations of per capita spending mask a great deal of variation from one state to another and from one locality to another. The Trust for America’s Health (TFAH) estimates of spending on public health by state governments for 2009-2010 range from a low of $3.40 per capita in Nevada to a high of $171.30 per capita in Hawaii, with a median of $30.61 per capita (TFAH, 2011). At the local level, the median in 2005 was $29.57 per capita, and “spending in the lowest 20 percent of communities averaged only around $8 per person, while the top 20 percent spent an average of $102 per person” which is 12.75 times as high as the lowest quintile (TFAH, 2010b). The differing definitions and accounting methods complicate attempts to provide a detailed, accurate, and complete apples-to-apples breakdown of public health funding at different levels of government. For example, of the $77.2 billion that NHEA classifies as public health spending, 14.9 percent is attributed to the federal government and 85.1 percent to state and local governments—a large change from the 44 percent federal and 56 percent state and local share in 1970 (Catlin, 2011). It is unclear whether the 14.9 percent accurately reflects federal contributions to public health funding. Fiscal year 2010 NACCHO data show that combined federal funding (including funds passed through to states) accounts for about 23 percent of overall local public health agency revenues—a relatively small portion that the federal government contributes to local public health activities. NACCHO and NHEA appear to capture similar but not equivalent information: public health revenues for the former, and public health spending at all levels of government for the latter. Beitsch and colleagues estimated the total state and local share of governmental public health spending on the basis of data that they aggregated from ASTHO and NACCHO reports. They calculated that “spending of state and local public health agencies constituted 2.37 percent of all U.S. health spending for 2004” and 2.32 percent for 20056 (Beitsch et al., 2006, pp. 917-918). The 2004 and 2005 CMS Office of the Actuary data indicated that federal government public health activity accounted for 2.8 percent of total national health expenditure in both years. If one compares those figures with the state and local totals that Beitsch and colleagues calculated and assumes a level of concurrence in how the two sources defined public health activity, the state and local share for those years appears to be close to the current CMS figure: about 82 percent in 2004 and 2005 compared with the current figure of 85 percent. These figures offer another data point to document the growing imbalance between state and local funding and federal funding of public health. Both NHEA and NACCHO sources document that states and localities shoulder a greater share of the financial burden for public health compared with their federal counterparts. The federal contribution is certainly lower than the federal contribution to governmental medical care cost (Medicaid and Medicare), which is 83 percent federal compared with 17 percent state and local funding, and 66 percent federal to 33 percent state and local funding for Medicaid alone.7 The differential support of health-related programs, whether their emphasis is on individual services (clinical care) or population-based strategies (public health), bears consideration in determining what constitutes an appropriate contribution to health by different levels of government and what explains the variation. The committee found no discernible rationale for a smaller federal interest in the support of population health, and it viewed a more equitable federal sharing of responsibility with states and localities as having a salutary effect on the stability, equitability, and adequacy of funding, which would benefit the nation’s health. Public health departments have a history of chronic underfunding and unstable budgets (Baker et al., 2005; HHS et al., 1994; TFAH, 2008; Sessions, 2012). Recent declines in funding have been punctuated by temporary federal infusions for emergency preparedness and economic stimulus (see, for example, TFAH, 2008). Federal funds for public health are allocated on an annual basis (as is much nonentitlement spending), so it is nearly impossible for states and localities to plan strategically, and the near horizon makes it extremely difficult to show results of newer programs. Newly funded programs often have the least stable funding and, in many cases, such as obesity control, take many years to demonstrate impact. In contrast with the case of hospital infrastructure, supported in a stable manner beginning with the Hill–Burton Act of 1946 (which aimed to strengthen the nation’s hospitals and to reach a specified ratio of hospital beds per unit of population), and the NIH biomedical research enterprise, supported by fairly stable and ample congressional appropriations, there has never been a consistent stream of federal funding for public health. The current economic downturn has placed additional financial strain on state and local jurisdictions and deeply affected public health and other government agencies, forcing staffing cuts, furloughs, and cuts in programs, including such essential programs as immunization and tobacco control activities (ASTHO, 2011; NACCHO, 2011b). Since 2008, 34,400 jobs in local health departments (about one-fifth of the local public health workforce) have been lost to layoffs and attrition (TFAH, 2011), and over 52,200 combined state and local public health jobs have been lost since 2008 (17 percent of the state and territorial public health workforce and 22 percent of the local public health workforce; ASTHO, 2012). In 2010, the Affordable Care Act (ACA) established the Prevention and Public Health Fund to promote public health, particularly through control of chronic diseases (TFAH, 2011). Its budget of $15 billion over more than a decade, beginning with $1.25 billion in 2013 and increasing to $2 billion per year, is modest relative to the $2.5 trillion spent annually on health. In its first year, $500 million of the fund was spent in large part to support the primary care workforce and to replace other public health funding that had been cut. The president’s 2013 budget includes a $4.5 billion cut in the fund and transfers to fill deep cuts in the CDC budget. Moreover, in February 2012, Congress passed and the president signed an act that includes a $6.25 billion cut in the fund. Among the reasons for the cut was the intention to use the funds to protect physicians from large cuts in Medicare reimbursement fees. However justified and health-relevant the purposes of such cuts, they detract from the broader prevention and public health agenda for which the fund was originally intended. The level of spending needed for public health agencies to maintain necessary activities and expand to other population health challenges can be estimated with a top-down or a bottom-up approach. The top-down approach estimates the funds needed on the basis of an existing number or benchmark that is considered adequate. Bottom-up figures are based on estimating the costs of major components of the system and summing them to obtain a total. TFAH in collaboration with the New York Academy of Medicine (NYAM) used different approaches to estimate the shortfall in public health funding. Using a top-down approach, they developed an estimate based on NACCHO data on local public health department revenues and federal budget data for CDC, HRSA, SAMHSA, the Substance Abuse and Mental Health Services Administration, the Food and Drug Administration, and the Indian Health Service. The TFAH–NYAM analysis gives an estimate of $20 billion for the shortfall in public health support. In a second analysis, TFAH–NYAM determined that if the average OECD public health spending level were used as a benchmark, the United States would need to spend an additional $24 billion. The study acknowledged the limitations inherent in any international comparison of public health expenditures, including the fact that OECD averages (and other averages) compare estimates that were based on different definitions of the scope of public health. Extrapolating a bottom-up study of public health funding needs for Washington state to a national level, TFAH–NYAM estimated that an additional $18 billion would be needed for U.S. public health. TFAH also noted that the Washington state model “uses a default population without defined demographic characteristics” and “may understate or overstate the necessary increase in public health investment when extrapolated nationwide” (TFAH, 2008). Despite the limitations of the data and the use of different ways of deriving the estimates, the three TFAH–NYAM estimates of funding needed on a national level are in a relatively small range. In its thinking about approaches to determining the level of funding required, the committee used a bottom-up approach. It reviewed available data on state public health spending, comparing per capita spending by states. The average state public health spending for the nation is $38.06 per capita (calculated from TFAH 2010 state data) (TFAH, 2010b). Multiplied by 311.6 million inhabitants of the United States, that amounts to a total of about $12 billion at the national level (as expected, the same as the figure obtained from summing all state public health spending) (TFAH, 2010a).8 The two jurisdictions that rank at the top of state public health spending and are outliers are Hawaii and Washington, DC, which spend $171.3 and $111, respectively, per capita. Once those two outliers are disregarded, the other states that have high per capita spending form a cluster, beginning with Idaho at $76.60 per capita, followed by other states that spend $75.42, $71.61, $70.57, and so on. On the basis of the chronic underfunding of public health, the committee concluded that, at a minimum, federal funding that would move the low-funded states up to the level of the higher-funded states (minus the outliers) would bring public health funding much closer to meeting national needs. Multiplying Idaho’s per capita expenditure by the population of the United States (311.6 million) would bring total state public health spending to $23.9 billion, nearly $12 billion more than (or twice as much as) the total current state spending on public health. The committee found it reasonable to use state data to derive an estimate for an increase in the federal contribution for the following reason: Given the historical decline in the federal share of public health funding and the threats to the nation’s health from inadequate public health action, the federal government has an important role and needs to increase its spending. An increase of $12 billion over the current federal share—in effect, a doubling—could be thought of as bringing states to the per capita spending level of the third-most generous state. The committee also considered another possibility for arriving at a bottom-up estimate: identifying some of the largest system components and providing cost estimates for them. “Costing out” some components of the minimum package of public health services may provide an idea of the main needs for additional public health funding. For example, the committee identified tobacco control as an essential program—a program that no public health department could be without, given the enormous deleterious impact of smoking on both health and medical care cost. The national average spending on tobacco control was $1.22 per capita in 2004, less than one-fourth of CDC’s recommended minimum of $5.989 (CDC, 2004). Multiplying the nearly $6 per capita by the population of the United States, even without translating it into 2011 dollars, yields $1.9 billion needed annually for adequate tobacco control alone. Costing out additional components of the public health infrastructure would be made easier by the improvements recommended in the present report, such as more standardized financial data and agreement on a minimum package of public health services and their costs. Additional examples could include determining the cost of operating complex, multipurpose public health information and surveillance systems, the cost of developing or acquiring policy analysis expertise at the local public health department level, and the cost of developing sophisticated and multifaceted communication capabilities that are shared among a department’s programs. Although data on public health spending are scarce and there is not enough information for precise estimates of what is needed to finance population health activities, it is evident from the figures and needs described earlier that the funding of the nation’s public health infrastructure is inadequate. The problem is even worse when one looks beyond total funding at the disproportionately low levels of funds dedicated to the leading causes of death or the preventable disease burden. Sufficient, stable, and dedicated funding is needed to help public health agencies to perform the core public health functions of assessment, policy development, and assurance and to ensure that all communities have access to the minimum package of public health services—the array of foundational capabilities and basic program areas described in Chapter 2. To reach that goal, funders will need to ensure that funding streams are coordinated, that there is flexible support for foundational capabilities, and that categorical grants are designed to fund an agreed-on list of basic programs (based on the preventable burden of disease) and not merely continue traditional patterns of funding, which are based primarily on stakeholder advocacy or decision-maker support. The committee has identified two types of models to describe funding roles and responsibilities of federal, state, and local governments to ensure that every jurisdiction provides the minimum package of public health services. Because the failure of a jurisdiction to provide that package of services may present a threat to the nation’s health, a national top-down model is based on the federal responsibility to ensure that every jurisdiction has the resources to establish the foundational capabilities and deliver the basic programs with a trust fund or other unified source. In a second, bottom-up model, foundational capabilities are a decentralized responsibility of states and localities, and funding is obtained through a matching mechanism whereby states and localities demonstrate that they have the foundational capabilities in place to get additional funds to provide the basic programs. Federal funding is needed both to augment services provided by state and local public health agencies and to add additional services where the minimum package is not provided. Every public health department has some foundational capabilities, but some public health departments lack some capabilities (such as policy analysis or communication), and many others have inadequate capacity in one or more areas. Regardless of model, the committee believes that federal agreement with the minimum package is important, as is its incorporation into federal financing mechanisms. The many gaps in information that have been described in this report prevent the committee from offering a firm estimate of the additional funds needed to provide the minimum package of public health services in all localities. However, on the basis of its review of the work of others and its own formulation of approaches, the committee provides an estimate of $24 billion for the total federal investment to build a governmental public health infrastructure that will be able support the type of population health strategies that are needed to improve the health of Americans and limit the growth of expenditures on medical care services. The estimate is developed on the basis of weak and limited data, but the committee looked at available data in several ways to converge on a plausible estimate. The number is roughly twice the current $11.6 billion that is the federal portion of NHEA spending on public health (roughly equivalent to the CDC and HRSA budgets). In the committee’s opinion, the amount is suggestive of what might be immediately needed from the federal level to support public health departments’ population-based strategies and interventions to protect and promote health. The 2008 TFAH estimate of the total shortfall in public health spending (federal, state, and local) is $20 billion (TFAH, 2008). The committee’s more conservative estimate entails a doubling of the federal contribution (from $11.6 billion to $24 billion) narrowly defined according to the NHEA classification, but it is meant to be a starting point for discussion (for example, about how public health is defined for funding purposes) and research toward the development of a more precise estimate.
The cost of delivering the minimum package would be obtained from the National Prevention, Health Promotion, and Public Health Council’s annual report to Congress (see Recommendation 7). The annual appropriation process and frequent fluctuations in funding (for example, funding cuts interspersed with occasional increases, such as from bioterrorism legislation [NASBO, 2005] and stimulus legislation) are impeding the ability of public health departments to prevent disease, promote health, and protect the health of their communities in the face of a wide array of threats (Fee and Brown, 2002; TFAH, 2011; Kurland et al., 2004; Schultz, 2009).10 Given the ideally supportive role of the federal government in the process of building up funding for public health, it seems appropriate to increase federal contributions first, to lead the way for state and local participation. As discussed in Chapter 2, public health agencies will continue to play a role in assuring access to and quality of clinical care in their communities, but as insurance becomes more widely available and clinical care more accessible, the role of governmental public health as a direct service provider is likely to diminish. As recommended in the committee’s first report (IOM, 2011c) and described in Chapter 2, public health departments of the future must be positioned to form partnerships with medical care entities and to share information derived from clinical data sources to identify health priorities in their communities. Accountable care organizations and the patient-centered medical home model for clinical care delivery are examples of where clinical care and public health share interests (IOM, 2012). Governmental public health could contribute to the quality of the health system by collaborating with clinical care systems to provide information to those systems and the public about the appropriateness, quality, safety, and efficiency of services delivered in the community. A diminished role in direct clinical service delivery by governmental public health could reasonably be projected to free up state or local general revenue funding11 in public health budgets that had formerly been allocated to provision of care. Those resources could be used to build data capacity and other essential public health services in localities. Although the savings in clinical care delivery could plausibly be claimed for other government services or for reduction in taxes, redirecting the savings to provide additional resources for the public health departments’ population health mission will pay health and economic dividends in the long term.
In considering potential sources of funding for public health activities, the committee identified and applied three criteria: There should be a relationship between the sources and public health use. 2.The amount of funds that could be raised should be large enough (that is, commensurate with the magnitude of the preventable disease burden that the activities are designed to address) and sustainable. 3.Allocation from any given source should not have substantial deleterious economic effects. The committee reviewed a wide array of potential sources and discussed their advantages and disadvantages and barriers to their use (see Table 4-1 and Sessions, 2012, Appendix D for additional discussion of revenue sources). Although a single funding source was viewed by the committee as desirable in that it would reduce the complexity involved in establishing a funding mechanism and structures for accountability, the combination of several funding sources may, for pragmatic reasons, merit consideration. As discussed in the committee’s report on law and policy (IOM, 2011b), such policy tools as taxes and fees may be formulated to serve dual purposes, for example, to raise funds and to spur more health-promoting behavior (such as decreasing consumption of alcohol or sugar-sweetened beverages). Options differ widely in how they fulfill the above criteria and in their political palatability and other aspects of feasibility. The last three of the potential funding sources described in Table 4-1 are somewhat different from the rest in that they represent public–private funding mechanisms and leverage government funding or government’s financial interest to raise private sector funds or bring other private sector resources to bear on population health improvement. See Box 4-2 for a discussion of an international public–private model of funding public health, in this case specifically health promotion. A Different Model for Funding Public Health and Health Promotion. An additional model to fund population health activities is found in the not-for-profit or quasigovernment health promotion foundations formed by several countries, including Australia (more...) Having considered such an extensive array of options, the committee favors a transaction tax on all clinical services because of its pertinence to population health, its ability to raise adequate funds, and the low likelihood of deleterious economic effects (i.e., it meets all criteria). The feasibility of the tax has been demonstrated in Minnesota and Vermont, where funds raised by the tax are used to expand access to medical care (PHPG, 2012; Wicks, 2008). The tax is known as a “provider tax,” “a fee,” or an “assessment” and is implemented through “a state law that authorizes collecting revenue from specified categories of providers” (NCSL, 2011). In fact, federal law allows the collection of “health care–related taxes” from 19 classes of health care providers or services (PHPG, 2012, p. 1). Such taxes have been used to generate state funds for federal Medicaid matching, but states may “designate or earmark the revenue for any state purpose” (NCSL, 2011). They have been used to “raise provider rates, fund other costs of the Medicaid program or be used for other non-Medicaid purposes, such as depositing the funds into the state’s general treasury” (PHPG, 2012, p. 1). Among other public health purposes, the tax could be used to strengthen the efforts of public health departments to support their clinical care counterparts in becoming more efficient and effective and to further public understanding of and expectations for clinical care. Most states have some type of provider tax, and 30 states tax more than one category of providers (Wicks, 2008), generally to raise provider reimbursement rates (by adding to funds available for this purpose) or to expand coverage. The committee believes that using such a tax to raise funds to support public health is reasonable given the need to improve the balance of spending, especially by government, on clinical care and public health. According to the Minnesota Department of Management and Budget, the state was expected to raise $512.1 million in revenues from its 2 percent transaction tax (Michael, 2011; Wicks, 2008). Extrapolating from Minnesota’s population of 5.34 million to the U.S. population of 311.6 million, one could expect to raise approximately $29.9 billion.12 In Vermont, the tax—which ranges from 0.14 to 6 percent depending on the provider class—is expected to raise $129.7 million in 2012 (Pacific Health Policy Group, 2012).13,14 Extrapolated to the current population of the United States and assuming similarly tiered assessments, one could expect to raise about $64 billion. A different way to estimate the total funds that could be raised by the tax is to calculate an assessment of 2 percent on the $2.05 trillion personal health care line item of the nearly $2.5 trillion in total national health expenditures (CMS, 2011), which would yield approximately $40 billion. Although it imposes a small amount of financial burden on the clinical encounter, a tax on medical care transactions is unlikely to have a substantial deleterious economic effect. And from the perspective of developing a health system that links its activities in clinical care and population-based strategies, a tax in the clinical care setting is a coherent approach for aligning the shared end goal of better health. Access to medical care is one of the determinants of health. Expanding access is contributing to better population health in Minnesota and Vermont, but population-based efforts have the potential to do so more powerfully. For example, through the implementation of a variety of effective tobacco control policies, new generations of Americans are born into a society where norms about smoking and the environmental conditions that surround that behavior have changed dramatically over nearly five decades. The critical goal for both the public and private sectors is to bend the curve on the burden of preventable disease experienced by Americans. A tax that is designed to assist in doing so could seem sensible to employers and health plans that stand to reap the benefits of and savings realized from a healthier population. The funds raised by the tax would be used to meet health needs that clinical care alone cannot meet (prevention, especially primordial prevention), and the tax therefore has the potential to be a win–win for insurers and payers. The clinical care system would benefit from contributing to the funding of population-based interventions. Improving the healthfulness of physical and social environments is likely to have effects at different levels of prevention. Fewer people would enter the clinical care delivery system to receive care for preventable conditions. Transformed community conditions could also contribute to adherence to lifestyle and other factors that are linked to the environment, which could mitigate such illnesses as hypertension and diabetes. Policies and other interventions could also alter environmental factors to discourage distracted driving and thus affect a growing cause of injuries and fatalities related to motor vehicles. The committee believes that new and reliable sources of funding to support public health are needed. The nation’s priorities regarding the financing of clinical care are crystal clear—there is a dedicated, stable, long-term, and vast outlay of funds. Public health practice and population health improvement activities deserve similarly adequate and dedicated funding to help meet the nation’s pressing health challenges.
The ACA mandates that only 15-20 percent of every premium dollar can be retained by an insurer to cover administrative, sales, marketing, profit, and other costs (HHS, 2010). One way to minimize potential adverse effects of the recommended tax for population health would be to consider it an allowable “care” expense included among expenditures that qualify toward medical loss ratio mandates. That would be similar to wellness and disease management and other clinical care initiatives that can be part of the $0.80-0.85 of each dollar of premium collected by insurers or health plans. By supporting more robust public health action to prevent disease and disability in the population, the tax would deliver health value to beneficiaries. In this chapter, the committee attempted to provide an answer to the report’s central question: How much? Estimating the needs of U.S. public health is a challenging and, today, uncertain endeavor. Financial data on the U.S. public health infrastructure, whether measured as revenues or as expenditures, are incomplete and fragmentary at best. Changes are needed in public health agencies (such as development and implementation of charts of accounts to permit accurate tracking and reporting of financial data in addition to more effective management), in funding mechanisms (such as greater flexibility and greater coordination), and in how the scope of public health practice is defined and bounded.15 A great deal of public health activity and even organization has emerged in response to parallel streams of funding generated by interested constituencies, rather than becoming available to meet specific needs in coordinated and coherent ways. The committee’s conclusion, based on information gathered from a variety of sources, is that public health funding is inadequate to meet current and future needs. Multiple sources—CDC, NACCHO, ASTHO, the work of Novick et al. (2008), Turnock (2009), and many others—attest to the fact that public health agencies are engaged in a constant struggle to make ends meet; they are trying to develop foundational capabilities needed among programs on a shoestring budget, deciding what essential programs are less essential when times are lean, and making do with less—and less. For example, while funding for public health preparedness has decreased, the threat of pandemics or bioterror attacks has not evaporated. Cuts in staffing and resources leave public health departments unable to respond to crises (NACCHO, 2011a). In 2011, 18 percent of local public health departments reduced or eliminated maternal and child health services programs (NACCHO, 2011a). These are economically challenging times for localities, states, the nation, and the world, but the importance of population-based public health interventions and the need for a vibrant public health enterprise to undertake them have not lessened and may well have increased. Governments are well versed in making tough choices and tradeoffs, but as a nation, the United States cannot afford to continue to defer the needs of its public health infrastructure while national expenditures on clinical care escalate. Underfunding of public health is far too costly in lives and dollars. REFERENCES
12 Including the estimates developed by OECD, which takes the best available data from member nations but acknowledges variations in how public health activity is defined. 3HRSA also has additional funding responsibilities. 45The NHEA describes four categories of spending: three kinds of health consumption expenditures—personal healthcare, government administration and net cost of health insurance, and government public health activity—and investment. 62005 data from the Office of the Actuary reported by Heffler et al. (2005). 7It should be noted that out-of-pocket costs for Medicare beneficiaries are substantial and that not all costs are paid by government, whereas government pays essentially all Medicaid costs. 8The 311.6 million figure rounds up the 2011 estimate of the Census Bureau (311,591,917). 9In its 1999 report, Best Practices for Comprehensive Tobacco Control Programs, CDC outlined formulas for its per capita spending recommendation, using nine elements of a comprehensive program. “These formulas were based on evidence from the scientific literature and the experience of large-scale and sustained efforts of state programs in California and Massachusetts” (CDC, 2007, p. 111). In 2006, a technical review panel updated the costs and kept the formulas from the 1999 estimates after adjusting some variables. 10Adding to the fluctuations is that an influx of federal funds has been seen to lead to a cutback in state funding, as was the case with the funding added in the years after 1989-1991 measles outbreak (IOM, 2003). 11This does not refer to funding streams, such as state Medicaid, that are intended specifically for clinical care. 12The estimates extrapolating from Minnesota’s revenues are based entirely on population and do not consider how they might differ from the “average state” on factors that affect revenue—such as health care use, quality, and funding of the public health department. 13PHPG (2012) calculated that if the 6 percent tax were assessed on all classes of providers, nearly $178 million could be raised in 2013, $40 million more than the estimated $137 million expected in 2013. 14The estimates extrapolating from Vermont’s revenues are based entirely on population and do not consider how they might differ from the “average state” on factors that affect revenue—such as health care use, quality, and funding of the public health department. 15Comparisons with other nations’ public health spending are similarly difficult because each country has its own definition of public health. The international efforts to standardize systems of health accounts appear to have been focused on the delivery of clinical care and much less on public health activities. |
When did federal funding become a major source of funding for state and local health departments
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