Public health spending not the cure experts believe, says new IEA report
Phillip Booth quoted in The Telegraph
Victoria Hewson writes for The Telegraph
- It has been argued that the government’s response to the epidemic was hindered by cuts to the public health budget;
- In 2018/19, Public Health England (PHE) had a budget of £4bn, of which £3.13bn was given to local authorities as ring-fenced grants;
- Like-for-like public health spending by local authorities fell by 17 per cent between 2014/15 and 2018/19, but this has little bearing on the government’s response to Covid-19 because the responsibility for dealing with such epidemics lies with Public Health England and the NHS;
- In fact, PHE’s budget for infectious disease prevention rose from £52m in 2014/15 to £86.9m in 2018/19;
- It is not possible to tell from the available data whether England’s public health budget is too small, large or about right, but many of the arguments made for increased spending on public health are based on a misunderstanding of economics;
- More than a third of public health interventions would not be approved if they were NHS treatments because they are not cost-effective;
- However, it is widely believed that spending on public health saves money in the long term by reducing future healthcare costs – and that cutting the budget represents a “false economy”;
- Most public health interventions are cost-effective if a quality-adjusted year of life is valued at £20,000, yet fewer than a fifth of interventions save money or produce a cash return.
A new report from the Institute of Economic Affairs, False economies: Myths about public health spending, challenges the widely held belief that spending on public health saves money in the long term by reducing future healthcare costs.
In the context of the Covid-19 epidemic, Christopher Snowdon, Head of Lifestyle Economics at the IEA, highlights flaws in the argument that the UK’s response has been weakened by cuts to the public health budget.
In 2018/19 PHE had a budget of £4bn, of which £3.13bn was given to local authorities as ring-fenced grants. Like-for-like public health spending fell by 17 per cent between 2014/15 and 2018/19.
But this has little bearing on the government’s response to Covid-19 because the responsibility for dealing with such epidemics lies with PHE and the NHS. There has been no cut in PHE’s budget for infectious disease prevention; on the contrary it rose by £34.9m between 2014/15 and 2018/19.
The main complaint about the government’s response to the coronavirus epidemic has been the lack of personal protection equipment (PPE) and the shortage of ventilators and diagnostic testing kits – yet procurement is the job of the Department of Health (even though PHE’s “primary duty is to protect the public from infectious diseases”).
Public health measures can avert future health problems and therefore prevent future healthcare costs. But these savings are less common than many people believe – and the claim (first published in a 2017 BMJ paper and reiterated in a 2019 DoH Green Paper) that public health spending produces a 14 to 1 return on investment is widely misunderstood.
Most public health interventions are cost-effective if a quality-adjusted year of life is valued at £20,000, but less than 20 per cent of interventions save money or produce a cash return. More than a third of public health interventions would not be approved if they were NHS treatments because they are not cost-effective.
Claims about cost-effectiveness are more tenuous when interventions deprive individuals of intangible benefits. If people understand the health risks of pleasurable activities, such as drinking and smoking, they will price in the intangible costs of poorer health. If the state uses coercion to make them abandon such activities, they will lose thousands of pounds’ worth of intangible benefits.
Quantifying the social value of pleasure is as legitimate as calculating the social value of a life year, but only the latter is included in most public health cost-benefit analyses. If lost benefits were included, the overall cost-effectiveness of public health spending would be reduced.
Christopher Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs and author of False Economies: Myths about public health spending, said:
“The health system has fallen short in its handling of COVID-19, but this is not due to a lack of funds at Public Health England. The agency’s budget for infectious disease prevention has risen steeply in recent years.
“It cannot be assumed that further increases to Public Health England’s £4 billion budget would have left the country better prepared for a pandemic. Given its preoccupation with nanny state regulation, the money would more likely have been diverted towards its pet projects of clamping down on sugar, alcohol and tobacco.
“It is a myth that taxpayers save £14 for every pound spent on public health. Many public health interventions are not cost-effective and less than 20 per cent of them are cost-saving. In many cases, the money would be better spent on healthcare.
“If a fraction of England’s £4 billion public health budget had been spent on stockpiling PPE, we would be in a much stronger position today.”
Notes to editors
For media enquiries please contact Emily Carver, Media Manager: 07715 942 731.
‘False economies: Myths about public health spending’ can be downloaded under embargo here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
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