Public health funding formulas in political context

Public health funding formula developers must understand how different designs shape allocations and how recommendations for designing formulas—including the development process itself—will be received in a political context.

Any funding formula leads to multiple policy questions, but three of the most fundamental are: Should formulas seek to promote funding equity or service equivalency? What are the potential unintended consequences of different funding allocation strategies? How could these be mitigated? Our research considers financial impacts of alternative measures for allocating funds to states in selected federal public health programs. The objective of policy analysis is to interpret these findings in light of the broader political context in which they will be received. Choices concerning funding formulas – e.g., financing (sources of revenue and the implications for equity of those sources), structure (block grants, categorical funding, matching rates, etc.), and definitions of need – profoundly affect perceptions of program efficiency, effectiveness, impact, and utility.

In any situation where allocation of public funds is at stake, a mix of political forces predictably comes into play as advocates for particular jurisdictions or programs seek to protect or increase funding. The role of self-interest, especially when accompanied by political power, may be a barrier to optimal formula design. Political leaders and community representatives may have unrealistic expectations regarding the number and precision of factors that should be incorporated formulas. The concept of pay for performance increasingly shapes debates about public health spending, which argues for consideration of performance measures in formulas and spending allocations.