Challenges in defining an optimal approach to formula-based allocations of public health funds in the United States

Background  

Controversy and debate can arise whenever public health agencies determine how program funds should be allocated among constituent jurisdictions. Two common strategies for making such allocations are expert review of competitive applications and the use of funding formulas. Despite widespread use of funding formulas by public health agencies in the United States, formula allocation strategies in public health have been subject to relatively little formal scrutiny, with the notable exception of the attention focused on formula funding of HIV care programs. To inform debates and deliberations in the selection of a formula-based approach, we summarize key challenges to formula-based funding, based on prior reviews of federal programs in the United States.     

Reference allocations and use of a disparity measure to inform the design of allocation funding formulas in public health programs

Funding formulas are commonly used by federal agencies to allocate program funds to states. As one approach to evaluating differences in allocations resulting from alternative formula calculations, we propose the use of a measure derived from the Gini index to summarize differences in allocations relative to 2 referent allocations: one based on equal per-capita funding across states and another based on equal funding per person living in poverty, which we define as the "proportionality of allocation" (PA). These referents reflect underlying values that often shape formula-based allocations for public health programs. The size of state populations serves as a general proxy for the amount of funding needed to support programs across states. While the size of state populations living in poverty is correlated with overall population size, allocations based on states' shares of the national population living in poverty reflect variations in funding need shaped by the association between poverty and multiple adverse health outcomes. The PA measure is a summary of the degree of dispersion in state-specific allocations relative to the referent allocations and provides a quick assessment of the impact of selecting alternative funding formula designs. We illustrate the PA values by adjusting a sample allocation, using various measures of the salary costs and in-state wealth, which might modulate states' needs for federal funding.     

The Preventive Health and Health Services Block Grant: the Massachusetts experience

The Preventive Health and Health Services Block Grant funds a variety of disparate programs in health promotion and disease prevention. Many of these programs were funded by categorical grants to the States prior to the creation of this block grant in 1981. This block grant allows States to set priorities among the different programs by shifting their funding allocations. In addition, there is considerable opportunity to use these funds creatively in shaping the content of their programs. The Massachusetts Department of Public Health's experience with this block grant is reviewed, showing the grant's critical importance in the department's statewide disease prevention efforts. In order to maximize public health impact, the department has shifted its funding allocations based on explicit criteria. These criteria represent a model that may have widespread applicability for other State health departments.     

How federalism shapes public health financing, policy, and program options

In the United States, fiscal and functional federalism strongly shape public health policy and programs. Federalism has implications for public health practice: it molds financing and disbursement options, including funding formulas, which affect allocations and program goals, and shapes how funding decisions are operationalized in a political context. This article explores how American federalism, both fiscal and functional, structures public health funding, policy, and program options, investigating the effects of intergovernmental transfers on public health finance and programs.     

Optimal investment in a portfolio of HIV prevention programs.

OBJECTIVES: In this article, the authors determine the optimal allocation of HIV prevention funds and investigate the impact of different allocation methods on health outcomes. METHODS: The authors present a resource allocation model that can be used to determine the allocation of HIV prevention funds that maximizes quality-adjusted life years (or life years) gained or HIV infections averted in a population over a specified time horizon. They apply the model to determine the allocation of a limited budget among 3 types of HIV prevention programs in a population of injection drug users and nonusers: needle exchange programs, methadone maintenance treatment, and condom availability programs. For each prevention program, the authors estimate a production function that relates the amount invested to the associated change in risky behavior. RESULTS: The authors determine the optimal allocation of funds for both objective functions for a high-prevalence population and a low-prevalence population. They also consider the allocation of funds under several common rules of thumb that are used to allocate HIV prevention resources. It is shown that simpler allocation methods (e.g., allocation based on HIV incidence or notions of equity among population groups) may lead to alloctions that do not yield the maximum health benefit. CONCLUSIONS: The optimal allocation of HIV prevention funds in a population depends on HIV prevalence and incidence, the objective function, the production functions for the prevention programs, and other factors. Consideration of cost, equity, and social and political norms may be important when allocating HIV prevention funds. The model presented in this article can help decision makers determine the health consequences of different allocations of funds.     

A little planning goes a long way: multilevel allocation of HIV prevention resources.

BACKGROUND: HIV prevention funds are often allocated by decision makers at multiple levels. High-level decision makers may allocate funds to regions, and regional decision makers then allocate those funds to specific programs. Often, funds are allocated proportionally (e.g., in proportion to HIV incidence) rather than efficiently (i.e., to maximize HIV infections averted). The authors investigate the impact of efficient and proportional allocation methods at 2 different decision levels. METHODS: The authors developed an optimization model of resource allocation at 2 levels-an aggregate upper level and multiple local levels-and considered efficient allocation and allocation proportional to HIV incidence. Using data from 40 U.S. states, they compared 4 strategies for allocating HIV prevention funds. RESULTS: The greatest health benefit (HIV infections averted) occurred when efficient allocations were made at both levels. When funds were allocated proportionally at the higher level and efficiently at the lower level, the health benefit was about 5% less than when efficient allocations were made at both levels. When funds were allocated efficiently at the higher level and proportionally at the lower level, the health benefit was 15% less than when efficient allocations were made at both levels. The least health benefit (23% less than when efficient allocations were made at both levels) occurred with proportional allocation at both levels. CONCLUSIONS: Efficient allocation only at the higher level cannot overcome poor allocations at lower levels. Moreover, efficient allocation at the lower level is likely to yield greater gains than efficient allocation at the higher level. Thus, upper-level decision makers, such as donor organizations, should develop incentives to promote efficient allocation by lower-level decision makers.     

Small area analysis on a large scale--the California experience in mapping teenage birth "hot spots" for resource allocation.

Small-area analysis has become an important tool in the effective targeting of limited public health resources. In California, new funding for teenage pregnancy prevention programs required more and better information to justify the allocation of these funds to areas with the greatest need. Consequently, these funds were allocated using maps with census tract analyses of teenage birth rates and an overlay of geographic frequencies. State and local agencies' programs have responded with positive feedback to the maps, and public health management subsequently has augmented funding for mapping equipment and training. The lessons learned and future directions are discussed.     

Management issues in the organization and delivery of family planning services.

Statewide family planning programs have been developed primarily in the Southeast and in a few other States of the nation. They are managed by State public health agencies with a few exceptions. This paper presents issues which are of importance to persons and agencies interested in developing a statewide family planning program; namely State support, allocation of funds, setting goals based on impact rather than efficiency of services, secondary sources of funding, and patient data systems. Arguments for a statewide program include the maximum use of available resources (for example, title V maternal and child health funds), the opportunity to distribute resources equitably throughout the State, the development of a statewide third-party reimbursement system, the opportunity to develop evaluation mechanisms, support for starting a system of fee collection, and the use of a statewide patient data system. Arguments against a State program include some loss of local control of a project, possible organizational battles within State agencies, State political domination of program policy, and a possible shift of funding away from existing strong projects. In the early 1970s, development of statewide systems was coupled with a rapid increase of funding when broad coverage of services and accessibility were key factors. At the present, categorical funding is no longer increasing, and efficiency and maximization of resources are becoming more important.     

Decentralization and equity of resource allocation: evidence from Colombia and Chile

OBJECTIVE: To investigate the relation between decentralization and equity of resource allocation in Colombia and Chile. METHODS: The "decision space" approach and analysis of expenditures and utilization rates were used to provide a comparative analysis of decentralization of the health systems of Colombia and Chile. FINDINGS: Evidence from Colombia and Chile suggests that decentralization, under certain conditions and with some specific policy mechanisms, can improve equity of resource allocation. In these countries, equitable levels of per capita financial allocations at the municipal level were achieved through different forms of decentralization--the use of allocation formulae, adequate local funding choices and horizontal equity funds. Findings on equity of utilization of services were less consistent, but they did show that increased levels of funding were associated with increased utilization. This suggests that improved equity of funding over time might reduce inequities of service utilization. CONCLUSION: Decentralization can contribute to, or at least maintain, equitable allocation of health resources among municipalities of different incomes.     

AIDS funding: competing needs and the politics of priorities

Despite the Department of Health and Human Service's 1983 claim that AIDS is the nation's "number one health priority," funding for AIDS research, prevention, and treatment remains inadequate. Worse, it is often marshaled from or juxtaposed against other necessary health allocations. Consequent AIDS-related resource crises include diverting funds for research on other diseases to AIDS investigations, propping up AIDS prevention efforts at the expense of traditional sexually transmitted disease control programs, and pitting the health needs of AIDS patients against the needs of those seeking other urgent health services, e.g., prenatal care. While this forced competition typically is blamed on fiscal constraints, examination of federal spending priorities suggests that it results principally from Reagan Administration policies. This Administration has consistently boosted military spending at the expense of social and health services, and has deliberately undermined efforts to obtain sufficient and new allocations for AIDS. In order to avert political divisions spurred by competition for currently scarce resources, AIDS and other health activists together must argue that excessive military allocations must be shifted to health research and services, and that a national health program must be implemented, if AIDS programs are to be funded appropriately without jeopardizing other necessary health initiatives.     

States' allocations of funds from the tobacco master settlement agreement

This study assesses six states' allocation decisions for funds from tobacco settlement agreements, using information from newspaper articles and other public sources. State allocation decisions were diverse; substantial shares were allocated to areas other than tobacco control and health, including capital projects and budget shortfalls. The allocations did not reflect the stated goals of the lawsuits leading to the settlements. This outcome reflects a lack of strong advocacy from public health interest groups, an unreliable public constituency for tobacco control, and inconsistent support from state executive and legislative branches, all combined with sizable budget deficits that provided competing uses for settlement funds.     

基本公共卫生经费按项目成本付费方式研究

为探索合理、有效的公共卫生经费补偿方案、提高经费使用效率,本研究以北京市丰台区为例,选取7个社区卫生服务中心,通过台账登记的方式收集成本测算的各项数据,并对各项目成本进行整理与测算分析。结果显示：开展基本公共卫生服务的人均服务成本为40元,当前的公共卫生服务经费标准应根据物价水平进行调整。建议公共卫生经费应在保证公共卫生服务正常开展的基础上,按照不同的公共卫生项目,通过绩效考核方式进行拨付,使公共卫生服务经费使用效率最大化。     

Chances dim for fiscal '97 boost in AIDS drug funds

Congressional leaders rejected a proposal to supplement Federal funding for State-run AIDS drug assistance programs (ADAP), and President Clinton refused to intervene. A proposal by Rep. Nancy Pelosi (D-CA) that included $68 million in additional ADAP funding was part of a supplemental appropriations bill aimed largely at paying for flood relief. Some State ADAP programs remain financially sound following the latest round of Ryan White CARE Act grant allocations. Several States have curtailed new enrollments or adopted other cost-saving measures. Almost all of the States' budgets are being rapidly depleted as more people demand access to expensive medicines. The worst problem is in Mississippi, where State funds are not used to cover AIDS programs. AIDS policy advocates and State public health officials were disappointed that President Clinton declined to support Rep. Pelosi's request. The President's AIDS policy director, Sandra Thurman, explained that the funding request could not be developed without taking into account two factors. First, the Department of Health and Human Services is seeking ways to extend Medicaid eligibility to more low-income people living with HIV, reducing the ADAP budget. Second, upcoming treatment guidelines could affect the amount of funding needed to adequately fund the ADAPs. The guidelines are expected to recommend combination drug therapy using a protease inhibitor.     

The complexities of multi-level governance in public health

This article reviews some of the challenges to developing national public health programs, focussing on the distribution of constitutional authority for public health and governance challenges that arise from this. Constitutional authority for public health resides primarily with the provinces. The federal government has obtained the authority to legislate in this area primarily through its power over criminal law. Challenges facing the establishment of national public health programs include the ambiguity over constitutional responsibility, challenges in managing externalities and spillovers, and issues related to funding and data ownership. Policy-making is also complicated by the importance of municipal and supranational governments in public health. National programs need to be structured in a way that balances the advantages of regional approaches to public health challenges with the benefits of a coordinated central response. To do so, policy-makers need to address unique challenges to public health governance.     

Securing funds for health promotion: lessons from health promotion foundations based on experiences from Austria, Australia, Germany, Hungary and Switzerland

Worldwide, countries face the challenge of securing funds for health promotion. To address this issue, some governments have established health promotion foundations, which are statutory bodies with long-term and recurrent public resources. This article draws on experiences from Austria, Australia, Germany, Hungary and Switzerland to illustrate four lessons learned from the foundation model to secure funding for health promotion. These lessons are concerned with: (i) the broad spectrum of potential revenue sources for health promotion foundations within national contexts; (ii) legislative anchoring of foundation revenues as a base for financial sustainability; (iii) co-financing as a means to increase funds and shared commitment for health promotion; (iv) complementarity of foundations to existing funding. Synthesizing the lessons, we discuss health promotion foundations in relation to wider concerns for investment in health based on the values of sustainability, solidarity and stewardship. We recommend policy-makers and researchers take notice of health promotion foundations as an alternative model for securing funds for health promotion, and appreciate their potential for integrating inter-sectoral revenue collection and inter-sectoral funding strategies. However, health promotion foundations are not a magic bullet. They also pose challenges to coordination and public sector stewardship. Therefore, health promotion foundations will need to act in concert with other governance instruments as part of a wider societal agenda for investment in health.     

The 'third wave' of HIV prevention: filling gaps in integrated interventions, knowledge, and funding

There is growing optimism in the global health community that the HIV epidemic can be halted. After decades of relying primarily on behavior change to prevent HIV transmission, a second generation of prevention efforts based on medical or biological interventions such as male circumcision and preexposure prophylaxis--the use of antiretroviral drugs to protect uninfected, at-risk individuals--has shown promising results. This article calls for a third generation of HIV prevention efforts that would integrate behavioral, biological, and structural interventions focused on the social, political, and environmental underpinnings of the epidemic, making use of local epidemiological evidence to target affected populations. In this third wave, global programs should deliver HIV prevention services together with cost-effective interventions for reproductive health and for tuberculosis, malaria, and other diseases. Additionally, new efforts are needed to address gaps in HIV prevention research, evaluation, and implementation. Increased and sustained funding, along with evidence-based allocation of funds, will be necessary to accelerate the decline in new HIV infections.     

Improving Children's Access to Oral Health Services: The Oral Health Initiative

Although major improvements have been made in oral health during the 20th century, many children in minority groups, from families with low-income, and with special health care needs still do not receive the oral health services that they need. To address the problem, the Health Resources and Services Administration (HRSA), working with the Health Care Financing Administration (HCFA), has launched the Oral Health Initiative. The initiative seeks to strengthen oral health service-delivery systems, enhance collaboration among federal agencies, and provide states with the resources needed to improve the oral health of hard-to-reach children. HRSA's activities include enhancing programs, services, and training, such as expanding the number of direct-service dental programs; establishing or enhancing graduate training programs in pediatric and general dentistry and in dental public health; and funding training programs in dentistry to train dental public health leaders.     

Assessment of in-country capacity to maintain communicable disease surveillance and response services after polio eradication—Somalia

One objective of the 2013–2018 Global Polio Eradication Initiative (GPEI) Strategic Plan was the transition of GPEI polio essential functions to other public health programs [1]. For many developing countries, in addition to polio essential functions, GPEI funding has been supporting integrated communicable disease surveillance and routine immunization programs. As GPEI progresses toward polio eradication, GPEI funding for some polio-free countries is being scaled back. The Somalia Polio Eradication Program, led by international organizations in collaboration with local authorities, is a critical source of immunizations for >2.5 million children. In addition, the polio program has been supporting a range of communicable disease surveillance, basic health services (e.g. routine immunizations) as well as emergency response activities (e.g. outbreak response). To assess current capacities in Somalia, interviews were conducted with representatives of relief organizations and ministries of health (MoHs) from Somaliland, Puntland, and South-Central political zones to elicit their opinions on their agency’s capacity to assume public health activities currently supported by GPEI funds. Seventy percent of international and 62% of representatives of domestic relief agencies reported low capacity to conduct communicable disease surveillance without GPEI funds. Responses from MoH representatives for the three zones in Somalia ranged from “very weak” to “strong” regarding capacity to conduct both polio and non-polio related communicable disease surveillance and outbreak response activities. Zones programs are unprepared to provide communicable diseases services if GPEI funding were substantially reduced abruptly. Polio transition planning must strategically plan for shifting of GPEI staffing, operational assets and funding to support identified gaps in Somalia’s public health infrastructure.     

Options for sustaining school-based health centers

Several methods exist for financing and sustaining operations of school-based health centers (SBHCs). Promising sources of funds include private grants, federal grants, and state funding. Recently, federal regulation changes mandated that federal funding specifically for SBHCs go only to SBHCs affiliated with a Federally Qualified Health Center (FQHC). Becoming a FQHC allows a SBHC to bill Medicaid at a higher rate, be notified about federal grants, and access the federal drug-pricing program. However, FQHCs must bill for services, including a sliding-fee scale based on ability to pay; develop a governance board with a majority of consumer members; provide a set of designated primary care services; and serve all people regardless of ability to pay. Private grants impose fewer restrictions and usually provide start-up and demonstration funds for specific program needs. Such funds are generally time limited, so new programs need to be incorporated into the operational budget of the center. State funding proves relatively stable, but fiscal challenges in some states made these funds less available. Using a variety of funding sources will enable ongoing provision of health care to students. Overall, SBHCs should consider infrastructure development that allows a variety of funding options, including formalizing existing partnership commitments, engaging in a needs assessment and strategic planning process, developing the infrastructure for FQHC status, and implementing a billing system for client services.     

President seeks 3 percent increase in AIDS funding for '98

President Clinton's spending proposals for 1998 include increased funding for AIDS research, care, and treatment, as well as initiatives to help people return to work if their multidrug therapy is effective. Some AIDS advocates are still disappointed with this funding level and predict that there will be a shortage of funds available to provide adequate services to HIV/AIDS patients. Advocates also expressed concern over reduced Medicaid spending since many AIDS patients rely completely on Medicaid for health care. The spending proposal keeps Federal funding for the network of State AIDS drug assistance programs at $167 million despite the demand for multidrug treatments. The budget includes $634 million for AIDS-related programs at the Centers for Disease Control and Prevention (CDC) and $1.54 billion for AIDS-related research directed through the National Institutes of Health (NIH) Office of AIDS Research. The total cost of AIDS care, research, and prevention reaches nearly $8.9 billion. Funding proposals for each agency and allocations for the Ryan White CARE Act are outlined.