IOM: Investing in public health will lower healthcare costs

Apr 11, 2012 (CIDRAP News) – Stronger public health funding could stem rising spending on healthcare and not only improve the nation's health but also its economic standing, an Institute of Medicine (IOM) report said yesterday.

The 261-page report sheds light on health funding problems that still remain in the wake of the 2011 passage of the Affordable Care Act and, in a list of 10 recommendations, suggests new ways to allocate health dollars and shore up the nation's public health capacity.

The report said that rising healthcare costs are eroding US life expectancy and other health measures and are diverting spending away from education and business development, which could hamstring the country's competitiveness at the global level,

Yesterday's report is the third of three IOM reports commissioned by the Robert Wood Johnson Foundation. The earlier studies included one on population health measurement and accountability, released in December 2010, and one on legal and public policy reform in public health departments, released in June 2011.

The new report's authors draw attention to chronic underfunding in public health systems and inefficiencies with current funding, the IOM said yesterday in a press release.

It said the United States spends more on health than other nations, nearly $2.5 trillion in 2009, but ranks lower than other developed nations on measures such as life expectancy and infant mortality.

Though chronic diseases represent the biggest portion of health spending, government figures show that only a small portion of per capita health spending goes toward public health—$251 per person, compared with $8,086 per person for medical care, the report notes.

Authors of the report said the critical first step for reaching better health outcomes is for the US Department of Health and Human Services (HHS) to set new goals for US life expectancy and per capita health spending.

"Setting these targets will engage medical care and public health professionals in a shared effort to maximize the value of the dollars that the nation invests in its health system," the IOM said. "It also will ensure that public health skills and knowledge are applied to medical care issues relevant to population health, such as the frequent overuse and misuse of medical procedures."

The group also recommended establishing a National Prevention, Health Promotion, and Public Health Council to develop a minimum package of public health services that state and local health departments should provide to their communities. The expert panel would gauge how much money health departments need to provide the basic services and, as a tool for assessing the best value, what proportions of federal health spending should be invested in medical care and public health.

Based on existing federal projections, the authors said federal spending on public health should at least double from its current level of roughly $11.6 billion per year to about $24 billion.

The most promising way to raise more funding for public health would be a transaction tax on medical care services, which could be used to fight diseases such as obesity that the medical care system isn't equipped to address.

For example, the authors noted that Minnesota and Vermont are using the revenue tool to expand access to medical care. They added that public health investments such as tobacco control have been shown to decrease illness, which over time has the potential to drive down clinical care costs.

Report committee chair Marthe Gold, MD, MPH, said in the statement that investments in public health are poised to increase Americans' productivity and quality of life, while reigning in medical expenses. She is the Arthur C. Logan professor and chair of the department of community health and social medicine at the City College of New York.

"The country's failure to maximize the conditions in which people can be healthy continues to take a growing toll on the economy and on society. As the backbone of the health system, public health departments could help communities and other partners engage in efforts and policies that lead to better population health," she said.

See also:

Apr 10 IOM press release

Apr 10 IOM report

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