If the pandemic has taught us anything, it’s that public health spending is a smart investment

May 27, 2020 10:12 am
Baby gets medicine

The ACA has helped millions of patients like one, two-month-old Karina, receiving Tylenol after a vaccination. Photo by John Moore/Getty Images.

As a country we have woefully underinvested in public health. This was true in 1960 and it is true today. We spend 0.45% of gross domestic product on public health, or $93 billion. We spend more than nine times that amount on national defense, 4% of GDP — $850 billion. 

Instead of investing additional money to save lives, we spend on weaponry designed to take it away. 

But set aside defense and consider this: The United States spends more on administrative overhead for medical care and health insurance than it does on public health activities. Less than 3% of all health spending goes to public health. Per-capita public health spending (inflation-adjusted) rose from $39 in 1960 to $281 in 2008, but has fallen by 14% over the past 10 years. The Center for Disease Control’s budget has declined slightly over the past decade but funding cuts at the state and local levels have been alarming. 

Public health is the science of protecting and improving the health of people and their communities by promoting healthy lifestyles, researching disease and injury prevention, and detecting, preventing and responding to infectious diseases.

Public health activities include monitoring community health; investigating and controlling disease outbreaks; educating and communicating with the public about health risks and prevention strategies; enforcing public health laws and regulations such as tobacco and drug use; and inspecting and ensuring the safety and quality of water, food, air, and other factors important for health. Think of your county or local public health agency and everything it does to help Minnesotans individuals — from acquiring health insurance to program interventions addressing obesity, asthma and smoking. It is remarkable that staff at public health agencies are able to complete all of these activities with very limited budgets. 

With large rates of return it makes sense to invest in public health. Research shows that every 10 percent increase in local public health spending reduces mortality rates by between 1.1 and 6.9 percent. A 2017 systematic review published in the Journal of Epidemiology and Community Health evaluated studies that calculated the return on investment for public health interventions. The researchers identified 52 studies that looked at interventions at a local or national level and found health protection interventions saved $34 for every $1 spent. 

Americans can expect to live into their late 70s, on average, in large part because of public health investments. From 1900 to 1999, life expectancy at birth increased from 47 years to 77 years. Although much of that was due to significant improvement in the care of infants and children, experts believe that 25 of the 30 years gained can be attributed to public health. More recently we have experienced a decline in life expectancy, possibly as a result of inadequate investments in public health. 

Even though the U.S. spends more on health care per capita than any other country, we spend the least on public health among countries of the group of developed democracies known as the OECD. At the same time the U.S. has worse health outcomes — such as morbidity and mortality — than other industrialized countries. The limited investment in public health may help explain the divergence between large amounts of health care spending and poor health outcomes. 

Minnesota receives fewer per capita public health dollars from the federal government than nearly every state. Relative to other states, local health agencies in Minnesota rely more heavily on funding from local sources — 61%. The local tax levy alone represents the largest single source of funding, providing 30%; federal funding makes up 22% and state funding 17%. In recent years, counties have increased local property taxes, yet total county expenditures have declined as a result of reductions in state aid to local government. After adjusting for inflation, although Minnesota’s local tax levy increased 15.6 percent between 2006-2010 the portion of local tax levy expenditures allocated to local health agencies decreased 2.4 percent.

If the positive health benefits don’t persuade you, look at the economics. Workers are the biggest drivers of America’s economy. So ensuring we have healthy producers and consumers is critical. According to Gallup polling data, chronically ill employees lose 450 million more work days than healthy ones. The Institute of Medicine estimated the indirect costs of preventable chronic illness at more than $1 trillion a year, money that could be better spent increasing wages. Finally, reducing utilization of health care by investing in public health will lower the costs of employer-provided health insurance. This reduction of input costs will make our goods and services more competitive in global markets.

Thankfully, there is an increasing emphasis on the importance of improving population health as a key factor in reducing our spending on medical care. If reducing mortality rates is not a winning argument to sway politicians to support public health investment, then maybe saving money will be. 

Spending modestly to prepare for a pandemic is sound policy. The alternative is dealing with a pandemic while in crisis mode at much greater cost. 

Across a range of issues, we find stark tradeoffs between spending now and spending later: reduce lead in drinking water or pay for a lifetime of adverse effects; invest in vaccine research and development or confront epidemics that cost many human lives. It is difficult to argue against public health investment given these outcomes. But somehow as a country we have made different choices — funding programs that are less beneficial.

We need the political will to generate revenue and allocate resources to priorities where we’ll see significant future benefits. That means we’ll need a state budgeting process that evaluates not only fiscal costs, but future savings and benefits. Greater investment in public health is vital, but we also need improvements in public health practices. In Minnesota, we should be investing in public health educational programs across the state, including the University of Minnesota School of Public Health. 

We can no longer neglect our public health infrastructure — the current pandemic has unveiled the inadequacy of our preparedness along with glaring inequities. Minnesota must be a leader in public health investments; we cannot fall behind allowing the health of Minnesotans to deteriorate like our roads and bridges. And we cannot rely on those currently residing in the White House to guide us through this crisis or near future public health emergencies. We must prepare now by investing in public health.

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Jennifer Schultz
Jennifer Schultz

Jennifer Schultz is a health economist and DFL state legislator in Minnesota. She will be writing columns on health care issues and policy solutions. Contact her at [email protected]