Geographic variation in public health spending: correlates and consequences.

Geographic variation in health care spending within the United States has long been a source of policy concern because it implies large inefficiencies and inequities in resource use (Wennberg and Gittelsohn 1973). The greater-than-twofold differences in health care spending observed across U.S. communities persist after accounting for differences in medical care prices (Welch et al. 1993; Skinner and Fisher 1997;), socioeconomic status (SES), and illness burden (Wennberg and Cooper 1998; Fisher et al. 2000;). Moreover, several recent studies suggest that residents of high-spending regions do not enjoy superior health outcomes compared with their counterparts in low-spending regions (Fisher et al. 2003a,b;). Medical care represents only one class of resources used to improve health and control disease, and studies suggest that these resources account for only about half of the gains in life expectancy realized during the past half-century (Brown et al. 1991; Trust for America's Health [TFAH] 2006; Sensenig 2007;). By comparison, public health resources support activities designed to promote health and prevent disease and disability at the population level, such as efforts to monitor community health status, investigate and control disease outbreaks, educate the public about health risks and prevention strategies, enforce public health laws and regulations like those concerning tobacco use or food preparation, and inspect and assure the safety and quality of water, air, and other resources necessary for good health (Institute of Medicine [IOM] 1988). These activities may account for gains in health and life expectancy that are not attributable to medical care. As such, geographic variation in public health resources may contribute to gaps and inequities in population health. Relatively little is known, however, about the extent and nature of geographic variation in public health spending. Although no uniform system of accounts exists to track public health spending at national, state, or local levels, available estimates suggest that less than 5 percent of the nation's health-related spending is devoted to public health activities (Brown et al. 1991; TFAH 2006; Sensenig 2007;). Public health activities are supported through a patchwork of local, state, federal, and nongovernmental funding mechanisms that vary widely across states and communities (Gerzoff, Gordon, and Richards 1996; Gordon, Gerzoff, and Richards 1997; TFAH 2006;). These mechanisms give rise to large geographic disparities in spending for public health services. The National Association of State Budget Officers (NASBO) estimated that state governments' per-capita spending on public health activities varied by a factor of >30 in 2003, ranging from >U.S.$400 per person in Alaska and Hawaii to U.S.$200 per capita in 2005, with the median local public health agency spending about U.S.$30 per person (National Association of County and City Health Officials [NACCHO] 2006). On balance, very little empirical evidence exists about the extent and nature of geographic variation in public health spending (Carande-Kulis, Getzen, and Thacker 2007). The lack of uniform data on public health spending has hampered research on this topic. The NASBO and more recently the TFAH have used information from state budget documents to produce estimates of state governmental spending on public health activities, but differences in state accounting and reporting conventions cause significant errors and inconsistencies in estimates (NASBO 2005; TFAH 2006;). Other studies have classified the public health expenditures of individual state or local governments using standardized accounting protocols, but these individual assessments do not support systematic comparisons of spending across communities and over time (Barry et al. 1998; Budetti and Lapolla 2008;). Estimates of federal, state, and local governmental expenditures on public health activities are included in the National Health Expenditure Accounts maintained by the U.S. Centers for Medicare and Medicaid Services (CMS), using data collected by the U.S. Census of Governments. These estimates, however, are widely considered to be incomplete because they include expenditures for a relatively narrow set of governmental activities and because they exclude expenditures on personal health services commonly provided by public health agencies, such as immunizations, chronic disease screening, and communicable disease control (Sensenig 2007). Completely lacking in the literature are estimates of the resources expended on public health activities by nongovernmental organizations such as community hospitals, community-based organizations, health insurers, and employers (Mays, Halverson, and Kaluzny 1998; Mays et al. 2000;). This paper uses a recently compiled longitudinal dataset on local governmental public health agencies to examine how public health spending levels vary across communities and change over time. Following similar studies of variation in medical spending, we focus on three primary questions of interest: (1) what are the demographic, socioeconomic, and institutional characteristics of high-spending and low-spending communities? (2) What characteristics are associated with growth and decline in spending levels over time? (3) What types of communities are most likely to experience reductions in public health spending? Answers to these questions will help policy makers at all levels of government anticipate resource needs and make better decisions about how to allocate scarce public health resources. This study focuses on spending at the local level because local public health agencies—rather than their state and federal counterparts—assume primary responsibility for directly implementing public health activities in most communities (DeFriese et al. 1981; Halverson et al. 1996;). Most federal and state grants for public health activities, and significant private funding, are channeled through local public health agencies (Mays et al. 2004b; NACCHO 2006;). Moreover, these agencies frequently work to mobilize and coordinate the public health activities of other organizations in the community (Mays, Halverson, and Kaluzny 1998; IOM 2002;). As such, these agencies provide valuable settings in which to study the determinants and consequences of public health spending in the United States.