Methods of Evaluating Public Health Funding Formulas

A significant portion of public health spending is allocated using funding formulas. Recognizing that most formulas are devised in a political environment, we use an analysis tool that allows leaders to make decisions that yield the most improvement to the public's health.

Our study analyzes fund allocations in two states using a number of metrics. Some of these measures, such as the Senate index which counts the number of winning and losing counties, have been used before, but not applied to public health funding. Other metrics, such as a Lorenz-curve measure of funding inequality, were developed anew for this application.

In addition to evaluating metric usefulness, we also apply adjustors to public health fund allocations. Drawing on actual funding allocation data, in addition to population size, we considered measures of poverty, risk behavior, and morbidity/mortality as indicators of need for public health programs and measures of income disparity, costs, and local resources as factors to adjust allocations. By simultaneously studying evaluation metrics and allocation adjustments, we are able to judge funding formulas from a number of perspectives.

We find that allocations based on service need were correlated to those adjusted for poverty and income inequality. Allocations based on voter registration penetration were extremely close to actual allocations, indicating the strength of political influence on the allocation of funds.

Our approach allows policymakers to incorporate need, cost differences and equity to get a more thorough understanding of the implications of funding formula design.