Limits...
Challenges in defining an optimal approach to formula-based allocations of public health funds in the United States.

Buehler JW, Holtgrave DR - BMC Public Health (2007)

Bottom Line: Simplicity and transparency are major advantages of formula-based allocations, but these advantages can be offset if formula-based allocations are perceived to under- or over-fund some jurisdictions, which may result from how guaranteed minimum funding levels are set or from "hold-harmless" provisions intended to blunt the effects of changes in formula design or random variations in source data.Whether or how past or projected trends are taken into account can also have substantial impacts on allocations.In the meantime, those who use formula-based strategies to allocate funds should be familiar with the nuances of this approach.

View Article: PubMed Central - HTML - PubMed

Affiliation: Department of Epidemiology and Center for Public Health Preparedness and Research, Rollins School of Public Health, Emory University, Atlanta, Georgia, USA. jbuehle@sph.emory.edu

ABSTRACT

Background: Controversy and debate can arise whenever public health agencies determine how program funds should be allocated among constituent jurisdictions. Two common strategies for making such allocations are expert review of competitive applications and the use of funding formulas. Despite widespread use of funding formulas by public health agencies in the United States, formula allocation strategies in public health have been subject to relatively little formal scrutiny, with the notable exception of the attention focused on formula funding of HIV care programs. To inform debates and deliberations in the selection of a formula-based approach, we summarize key challenges to formula-based funding, based on prior reviews of federal programs in the United States.

Discussion: The primary challenge lies in identifying data sources and formula calculation methods that both reflect and serve program objectives, with or without adjustments for variations in the cost of delivering services, the availability of local resources, capacity, or performance. Simplicity and transparency are major advantages of formula-based allocations, but these advantages can be offset if formula-based allocations are perceived to under- or over-fund some jurisdictions, which may result from how guaranteed minimum funding levels are set or from "hold-harmless" provisions intended to blunt the effects of changes in formula design or random variations in source data. While fairness is considered an advantage of formula-based allocations, the design of a formula may implicitly reflect unquestioned values concerning equity versus equivalence in setting funding policies. Whether or how past or projected trends are taken into account can also have substantial impacts on allocations.

Summary: Insufficient attention has been focused on how the approach to designing funding formulas in public health should differ for treatment or service versus prevention programs. Further evaluations of formula-based versus competitive allocation methods are needed to promote the optimal use of public health funds. In the meantime, those who use formula-based strategies to allocate funds should be familiar with the nuances of this approach.

Show MeSH
Trends in hypothetical disease for State A and State B, 2000-2005. Number of cases of a hypothetical disease reported in two states by year of report. These data are to be used in a formula calculation to allocate public health program funds between States A and B beginning in January 2007.
© Copyright Policy - open-access
Related In: Results  -  Collection

License
getmorefigures.php?uid=PMC1851708&req=5

Figure 2: Trends in hypothetical disease for State A and State B, 2000-2005. Number of cases of a hypothetical disease reported in two states by year of report. These data are to be used in a formula calculation to allocate public health program funds between States A and B beginning in January 2007.

Mentions: The perception of fairness of formula-based funding is based in part on the presumption that formulas represent an objective and evidence-based approach to resource allocation. While alluring, this perception can obscure the value-based judgments that necessarily underlie the design of any formula. This is illustrated by the example in Figure 2, which shows trends in incident case reports for a hypothetical disease for two states from 2000 to 2005. In this example, both states have the same number of incident cases in 2005 but arrived at this point via a decrease in one state and an increase in the other. These data are to be used in mid -year 2006 to fund a public health program that will begin January 2007. If a formula were based on the number of cases in 2005, the most recent calendar year for which full-year data are available when the funding decision is being made, each state would receive half of available funds. If the formula were based on the average number of cases for 2000–2005, the split would be approximately 40% for State A and 60% for State B, even though a plausible assumption is that by 2007 State A would have more cases than State B if recent trends predict future near-term trends. The allocation between states may differ more if it were based on prevalence rather than incidence or if projections in incidence or prevalence were considered. The relevance of these options for formula design would also differ if the program in question provided treatment services for people with the disease versus prevention services.


Challenges in defining an optimal approach to formula-based allocations of public health funds in the United States.

Buehler JW, Holtgrave DR - BMC Public Health (2007)

Trends in hypothetical disease for State A and State B, 2000-2005. Number of cases of a hypothetical disease reported in two states by year of report. These data are to be used in a formula calculation to allocate public health program funds between States A and B beginning in January 2007.
© Copyright Policy - open-access
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC1851708&req=5

Figure 2: Trends in hypothetical disease for State A and State B, 2000-2005. Number of cases of a hypothetical disease reported in two states by year of report. These data are to be used in a formula calculation to allocate public health program funds between States A and B beginning in January 2007.
Mentions: The perception of fairness of formula-based funding is based in part on the presumption that formulas represent an objective and evidence-based approach to resource allocation. While alluring, this perception can obscure the value-based judgments that necessarily underlie the design of any formula. This is illustrated by the example in Figure 2, which shows trends in incident case reports for a hypothetical disease for two states from 2000 to 2005. In this example, both states have the same number of incident cases in 2005 but arrived at this point via a decrease in one state and an increase in the other. These data are to be used in mid -year 2006 to fund a public health program that will begin January 2007. If a formula were based on the number of cases in 2005, the most recent calendar year for which full-year data are available when the funding decision is being made, each state would receive half of available funds. If the formula were based on the average number of cases for 2000–2005, the split would be approximately 40% for State A and 60% for State B, even though a plausible assumption is that by 2007 State A would have more cases than State B if recent trends predict future near-term trends. The allocation between states may differ more if it were based on prevalence rather than incidence or if projections in incidence or prevalence were considered. The relevance of these options for formula design would also differ if the program in question provided treatment services for people with the disease versus prevention services.

Bottom Line: Simplicity and transparency are major advantages of formula-based allocations, but these advantages can be offset if formula-based allocations are perceived to under- or over-fund some jurisdictions, which may result from how guaranteed minimum funding levels are set or from "hold-harmless" provisions intended to blunt the effects of changes in formula design or random variations in source data.Whether or how past or projected trends are taken into account can also have substantial impacts on allocations.In the meantime, those who use formula-based strategies to allocate funds should be familiar with the nuances of this approach.

View Article: PubMed Central - HTML - PubMed

Affiliation: Department of Epidemiology and Center for Public Health Preparedness and Research, Rollins School of Public Health, Emory University, Atlanta, Georgia, USA. jbuehle@sph.emory.edu

ABSTRACT

Background: Controversy and debate can arise whenever public health agencies determine how program funds should be allocated among constituent jurisdictions. Two common strategies for making such allocations are expert review of competitive applications and the use of funding formulas. Despite widespread use of funding formulas by public health agencies in the United States, formula allocation strategies in public health have been subject to relatively little formal scrutiny, with the notable exception of the attention focused on formula funding of HIV care programs. To inform debates and deliberations in the selection of a formula-based approach, we summarize key challenges to formula-based funding, based on prior reviews of federal programs in the United States.

Discussion: The primary challenge lies in identifying data sources and formula calculation methods that both reflect and serve program objectives, with or without adjustments for variations in the cost of delivering services, the availability of local resources, capacity, or performance. Simplicity and transparency are major advantages of formula-based allocations, but these advantages can be offset if formula-based allocations are perceived to under- or over-fund some jurisdictions, which may result from how guaranteed minimum funding levels are set or from "hold-harmless" provisions intended to blunt the effects of changes in formula design or random variations in source data. While fairness is considered an advantage of formula-based allocations, the design of a formula may implicitly reflect unquestioned values concerning equity versus equivalence in setting funding policies. Whether or how past or projected trends are taken into account can also have substantial impacts on allocations.

Summary: Insufficient attention has been focused on how the approach to designing funding formulas in public health should differ for treatment or service versus prevention programs. Further evaluations of formula-based versus competitive allocation methods are needed to promote the optimal use of public health funds. In the meantime, those who use formula-based strategies to allocate funds should be familiar with the nuances of this approach.

Show MeSH