Date:  April 10, 2012


Reallocation of Health Dollars and New Sources of Funds Needed to Strengthen Nation's Public Health Capacity


WASHINGTON — To improve America's lackluster performance on health outcomes compared with its peer nations and to maintain its international competitiveness, the United States needs to invest more in its chronically underfunded public health system and spend public health dollars more efficiently, says a new report from the Institute of Medicine


The United States spends more on health than other nations — almost $2.5 trillion in  2009 — and yet scores lower than other wealthy nations on life expectancy, infant mortality, and other indicators of population health, the report notes.  Rising health care spending diverts funds from education, business development, and other investments that keep nations globally competitive.  The chronic diseases that drive the bulk of U.S. health spending are conditions that could be decreased or prevented through the initiatives, services, and expertise that public health departments provide.  However, only a small fraction of U.S. health dollars goes to government-administered public health — just 3.1 percent in 2009, according to the Centers for Medicare and Medicaid's National Health Expenditure Accounts, which amounts to $251 per person in public health spending compared with $8,086 per person in medical care spending.


The U.S. Department of Health and Human Services should set new goals for U.S. life expectancy and per-person health spending as a critical first step in framing the nation's efforts to achieve better overall health outcomes, said the committee that wrote the report.  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.  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.


To guide more appropriate allocation of public health dollars, the report calls for the National Prevention, Health Promotion, and Public Health Council to oversee the development of a minimum package of public health services that specifies the services every community should receive from its state and local health departments.  An expert panel convened by the Council should determine how much money is needed for every public health department to provide at least these services.  It also should determine the proportion of federal health spending that needs to be invested in medical care and public health respectively to realize greater value, the committee said.


Current data are too limited to allow a precise calculation of the amount of funding necessary to cover a basic package of services, the report notes.  To provide a sense of what could be needed, however, the committee concluded from a number of existing estimates and projections that federal spending on public health should at least be doubled from its current level of about $11.6 billion per year to approximately $24 billion as a starting point to meet the needs of public health departments. 


Of the many ways to raise the additional funds, instituting a transaction tax on medical care services seems most promising, the committee concluded.  The funds raised by the tax should be used to improve environmental and social conditions that promote health and prevent diseases such as obesity that are largely outside the medical care system's ability to influence.  Both Minnesota and Vermont have successfully used this form of tax to expand access to medical care.  A tax on medical services is unlikely to have a substantial negative economic effect and will raise the funds necessary to strengthen public health departments, the committee said.  Moreover, as past investments in population health initiatives such as tobacco control have shown, these investments can substantially decrease the prevalence of illness and injuries and over time may reduce clinical care delivery costs. 


Roughly half of local public health departments provide basic medical care as part of their services, particularly those that serve large populations of low-income, uninsured residents.  As the Affordable Care Act takes effect, Medicaid and new state health insurance markets will begin reimbursing clinical care for the individuals that public health departments currently serve.  State and local governments should allocate the funds freed up by this shift in coverage to public health departments to use for activities that promote health and prevent illness and injuries.


"Developing and implementing strategic population-based efforts to improve our health as a nation will increase the quality of life and productivity of Americans at the same time that it will contribute to moderating the expense of the clinical care system," said committee chair Marthe Gold, Arthur C. Logan Professor and Chair, department of community health and social medicine, Sophie Davis School of Biomedical Education, City College of New York, New York City.  "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."


The report is the third in a series examining ways to strengthen the nation's public health system.  As discussed in the previous reports, on measurement and on law and policy respectively, evidence shows that social and environmental conditions shape people's health and that providing medical care cannot improve population health by itself.  In addition to adequate funding, it will take robust data collection and public policy and laws informed by data and quality metrics to support activities that will alter the many factors that influence people's health. 


The report was sponsored by the Robert Wood Johnson Foundation.  Established in 1970 under the charter of the National Academy of Sciences, the Institute of Medicine provides objective, evidence-based advice to policymakers, health professionals, the private sector, and the public.  The Institute of Medicine, National Academy of Sciences, National Academy of Engineering, and National Research Council together make up the independent, nonprofit National Academies.  For more information, visit or   A committee roster follows.



Christine Stencel, Senior Media Relations Officer

Shaquanna Shields, Media Relations Assistant

Office of News and Public Information

202-334-2138; e-mail



Copies of For the Public’s Health: Investing in a Healthier Future are available from the National Academies Press; tel. 202-334-3313 or 1-800-624-6242 or on the Internet at  Additional information is available at Reporters may obtain a copy from the Office of News and Public Information (contacts listed above).

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Board on Population Health and Public Health Practice


Committee on Public Health Strategies to Improve Health


Marthe R. Gold, M.D., M.P.H. (chair)

Professor and Chair

Department of Community Health and Social Medicine

Sophie Davis School of Biomedical Education

City College of New York

New York City


Steven M. Teutsch, M.D., M.P.H. (vice chair)

Chief Science Officer
Los Angeles County Department of Public Health

Los Angeles


Leslie Beitsch, M.D., J.D.

on Medicine and Public Health
Associate Dean for Health Affairs

College of Medicine

Florida State University



Joyce D. Essien, M.D., M.B.A.

for Public Health Practice

Rollins School of Public Health
Emory University
, and

Medical Officer Captain

Centers for Disease Control and Prevention (retired)



David W. Fleming, M.D.

Director and Health Officer

Department of Public Health



Thomas Getzen, Ph.D.

Professor of Risk, Insurance, and Healthcare Management

Fox School of Business

Temple University, and

Executive Director

International Health Economics Association (iHEA)



Lawrence O. Gostin, J.D., L.L.D.

Linda D. and Timothy J. O'Neill Professor of Global Health Law

Georgetown University;

Faculty Director

O’Neill Institute for National and Global Health Law

Georgetown University Law Center; and

Professor of Public Health

Johns Hopkins University

Washington, D.C.


George J. Isham, M.D., M.S.

Medical Director and Chief Health Officer
HealthPartners Inc.

Bloomington, Minn.


Robert M. Kaplan, Ph.D.

Office of Behavioral and Social Sciences Research

Office of the Director

National Institutes of Health

Bethesda, Md.


Wilfredo Lopez, J.D.

General Counsel Emeritus

Department of Health and Mental Hygiene

New York City


Glen P. Mays, Ph.D., M.P.H.

F. Douglas Scutchfield Endowed Professor in Health Services and Systems Research

College of Public Health

University of Kentucky



Phyllis D. Meadows, Ph.D., M.S.N., R.N.

Associate Dean for Practice
Office of Public Health Practice, and

Clinical Professor of Health Management and Policy
of Public Health

University of Michigan

Ann Arbor


Mary Mincer Hansen, R.N., Ph.D.


Masters of Public Health Program, and

Associate Professor

Department of Global Health

Des Moines University

Des Moines, Iowa


Poki S. Namkung, M.D., M.P.H.

Health Officer

Santa Cruz County Health Services Agency

Santa Cruz, Calif.


Margaret E. O’Kane, M.H.S.

National Committee for Quality Assurance

Washington, D.C.


David A. Ross, Sc.D.

Task Force for Global Health

Public Health Informatics Institute

Decatur, Ga.


Martin Jose Sepulveda, M.D., F.A.C.P.

Fellow and Vice President

Health Research
IBM Corp.

Somers, N.Y.


Steven H. Woolf, M.D., M.P.H.


Center on Human Needs, and


Department of Family Medicine

Virginia Commonwealth University






Alina Baciu, Ph.D., M.P.H.

Study Director