unless corrective action is taken. The prospects for the future look no better and may well be worse.

Thus, while public health finance has suffered from neglect for years (Honoré et al., 2004), the need for greater attention to financial considerations in public health has become especially urgent. Previous studies have called for increased funding for public health, but accomplishing this goal, or merely ensuring greater stability for funding at existing levels, requires negotiating a formidable array of political, legal, and other challenges. This paper analyzes these challenges and describes both a general strategy and more specific proposals designed to meet them. This paper is commissioned by the Institute of Medicine (IOM) Committee on Public Health Strategies to Improve Health and is intended to assist the committee in developing recommendations for funding state and local public health systems after health care reform.

The essay from 2004 quoted earlier describes a framework for public health finance that divides it into four possible categories, based on the source and use of funds, and whether they are controlled by government or the private sector. In the first, most traditional category, government controls both the sources (e.g., taxes) and uses (e.g., spending by state and local public health departments) of funds. In the second, government controls the sources, but the private sector controls the uses. This category consists primarily of tax expenditures. The third category involves private control of sources and government control of uses, as in the case of charitable services required of nonprofit hospitals to qualify for nonprofit tax status. In the final category, private entities control both the sources and uses of funds. Health promotion benefits provided by businesses to their employees but not due to tax savings are an example of this category (Patient Protection and Affordable Care Act (ACA), Public Law PL 111-148, as amended by Health Care and Education Reconciliation Act of 2010, PL 111-52. 111th Cong., 2nd Sess., 2010).

Funding of state and local public health departments, the committee’s concern, lies primarily within the first of these four categories of public health finance. For this reason, and because of its intrinsic importance, this paper focuses primarily though not exclusively on this category. State and local health department spending is financed in part by the federal government (including under the ACA [PL 111-52]), and local health department spending is in turn financed in part by state governments. This paper thus discusses public health finance at all three levels of U.S. government. It examines how funding of public health is and should be allocated within the federal system, and how it can be stabilized and, if possible, increased at a time when there are strong pressures in the opposite direction.

Governments at all three levels and in all regions of the country face similar problems: revenue bases that are eroding (Brunori, 2007a,b) and

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