Making the Economic Case for Investing in Public Health and the SDH

In recent years much attention, by the public and politicians alike, has been paid to the question “Is our health care system sustainable?” Mounting evidence suggests that it is not.

80% of provincial program spending to cover health care by 2030

David Dodge and Don Drummond, two of Canada’s eminent economists, report that by 2030, provincial health care expenditures will account for about 80% of provincial program spending.1

Escalating costs are driven mostly by an increase in the use of drugs, medical technology and human resources to treat a growing burden of largely preventable diseases such as diabetes, hypertension, heart disease, stroke, cancer, mental illness and musculoskeletal conditions.23

At the same time, these financial pressures will reduce governments’ ability to fund education, social services (including income supports), early childhood care and learning, social housing and access to nutritious food. The result? A seriously negative impact on the health and well-being of the general population, greater inequities and low public confidence in publicly funded health care and public health services.

Preventable disease and injuries drive higher hospitalization rates for lower-income groups

The Canadian Institute for Health Information (CIHI) has shown that disparities in health associated with socio-economic status are reflected in the costs to the health care system.4 Although Canadian residents have universal access to hospitals and out-patient physician services regardless of their ability to pay, the CIHI and other studies demonstrate that disparities in health care service utilization by different socio-economic groups exist in Canada. People from lower income quintiles were more likely to be hospitalized and receive medication than middle- and higher-income residents. The differences were attributable in part to higher disease prevalence among lower-income residents.4

In other words, there is an excess hospitalization rate for people from lower-income groups, which is likely related to preventable causes of disease and injury.

Making the case for preventative public health

CPHA and other health-based organizations have made the argument that investments “upstream,” in population health-based services, programs and interventions that focus on disease prevention, health promotion and health protection, will result in decreased demand for and the utilization of “downstream” acute care health facility-based services.5

Recent evidence from several economic case studies of preventative strategies makes the case for preventative public health tactics even more enticing. For example, a study showed that for each 10% increase in local public health spending, deaths from cardiovascular disease dropped by 3.2%. This represents increased spending of US$312,274 at the local health agency level (US). By contrast, to achieve the same reduction in cardiovascular mortality through clinical care interventions would require over US$5.5 million, or more than 27 times the public health investment.67

There is now a substantial body of evidence showing that the majority of health care expenditures are spent on conditions that are largely preventable (e.g., diabetes, hypertension, heart disease, stroke, cancer and injuries). In the US, it has been estimated that an investment of US$10 per person per year for ‘proven community-based disease prevention programs (on) physical activity, nutrition, and (reducing tobacco use can lead to reductions of:

  • type 2 diabetes and high blood pressure by 5% in 1 to 2 years;
  • heart disease, kidney disease and stroke by 5% in 5 years; and
  • some forms of cancer, COPD and arthritis by 2.5% in 10 to 20 years.

This would yield net savings of almost US$18 B annually, a return on investment (ROI) of 6.2 for every US$1 invested.8 These ROI estimates are very conservative, being based solely on savings in health care costs alone without considering other societal costs such as lost productivity. Many studies also show the return on investment in Canada of disease and injury prevention and health promotion interventions.

Yet, only a small proportion of investment is made by federal and provincial/territorial governments in ‘upstream’ public health functions5 and in the social determinants of health (SDH) as a means to improve human health and control ‘downstream’ health care costs to treat preventable illness and injury.91011

Using new methodologies to make the prevention case

Several promising methodologies have emerged recently investigating the impact of disease prevention and health promotion on health and health care costs. A critical one is dynamic simulation modeling. What differentiates this approach is its capacity to project and estimate different pathways under different assumptions, exploring the consequences of different scenarios.12 The evidence in the US derived from economic modeling analysis shows that ‘upstream’ investments in primary prevention and public health reduce health care expenditures over the long term.7 Increasing efficiency (reducing waste) in the health care system, while slowing the rate of increase in expenditures, does not have as much impact.

In May 2012, CPHA hosted a meeting of experts from the fields of public health, health economics and economic modeling to explore the feasibility and utility of dynamic simulation modeling, or similar models to demonstrate the impact of investments in disease prevention, health promotion and health protection. The workshop report13 provides a summary of the discussions and the suggested ‘next steps.’

Dodge, D. (2011). Chronic health care spending disease: a macro diagnosis and prognosis. Ottawa: C.D. Howe Institute Drummond, D. (2010). Charting a path to sustainable health care in Ontario. 10 proposals to restrain cost growth without compromising quality of care. Toronto: TD Bank Financial Group.
Canadian Institute for Health Information/Statistics Canada. Health Indicators 2012. June 2012. Downloaded June 19, 2012 from
Millar J, Best A, Lee V. Discussion Paper: Accelerating Change in Primary Health Care in Canada. September 16, 2011. Photocopy
Canadian Institute for Health Information. Hospital Disparities by Socio-Economic Status for Males and Females. October 2010
Kendall P. Investing in Prevention: Improving health and creating sustainability: the Provincial Health Officer’s special report. Office of the Provincial Health Officer/British Columbia, September 2010. Downloaded October 2011 from
Mays, G. Evidence links increases in public health spending to declines in preventable deaths. Health Affairs 30(8), 2011: 1585-1593
Milstein B, Homer J, Briss P, Burton D, Pechacek T. Why behavioral and environmental interventions are needed to improve health at lower cost. Health Affairs, 30(5), 2011: 823-832
Trust for America’s Health. Prevention for a healthier America: investments in disease prevention yield significant savings, stronger communities. 2009
Public Health Agency of Canada. Investing in Prevention: the economic perspective. Key findings from a survey of the recent evidence. May 2009. Downloaded October 2011 from
National Collaborating Centre for Determinants of Health. Integrating Social Determinants of Health and Health Equity into Canadian Public Health Practice: Environmental Scan 2010. March 2011. Downloaded April 2012 from
House of Commons. Chronic Diseases Related to Aging and Health Promotion and Disease Prevention. Report of the Standing Committee on Health. May 2012. Downloaded May 28, 2012 from
Milstein B, Homer J, Hirsch G. Analyzing National Health Reform Strategies with a Dynamic Simulation Model. Am. J Public Health, 100(5), May 2012: 811-819
Canadian Public Health Association, Dynamic Simulation Model Workshop. May, 2012. Downloaded March 13, 2013 from