Sustainable Financing Structures for Population Health: Historical Patterns and Insights for the Future
In preparation for the workshop, the roundtable commissioned a historical analysis of the strategies and conditions that are needed to realign resources and move funding from one arena to another.1 The resulting paper discusses examples of cross-sector policy and financing from four non-health domains that affect public health: the environment, the neighborhood, the home, and economics. An overview of the examples was provided by the authors, Raphael Bostic, a professor and the Judith and John Bedrosian Chair in Governance and the Public Enterprise as well as the chair of the Department of Governance, Management, and Policy Process at the Sol Price School of Public Policy at the University of Southern California; and Anthony Orlando, a doctoral candidate at the Sol Price School.
Session moderator Debbie Chang, the senior vice president of policy and prevention at Nemours Children’s Health System, said that these are examples of existing structures that have the potential to be effective for population health and that new financing structures are not necessarily the solution. (Highlights are presented in Box 2-1.)
Many of the challenges that people face in the area of economic development and in realizing their individual potential are health-related issues, Bostic said. For example, health can be an invisible barrier to success in school performance or to job attainment. The commissioned paper was designed to consider examples of successful, sustainable financing
structures from other domains that could have the potential for being used, at scale, in population health. Bostic offered two questions for participants to keep in mind as they listened to the examples presented by Orlando: What was the institutional arrangement that prevailed that allowed success to happen, and how did these institutions come together? Second, what were the sources of the financing? In all four examples, he said, resources have been reallocated from elsewhere. Orlando added
that each of the examples discussed in the paper has a different financing structure, as well as different pros and cons and lessons to learn.
In the 1970s there were about 200 days per year when the particulate matter in the air in Los Angeles exceeded healthy levels, including dozens of days each year when particulates were at emergency levels, Orlando said. There were certain hours during the day when students were not allowed outside for recess because of the high levels of particulates in the air. Fortunately, this is no longer the case.
Orlando highlighted two key events, one at the state level and one at the federal level, that catalyzed the change. At the state level, then-Governor Ronald Reagan created the California Air Resources Board (CARB) in 1967 to address the problem. For the first few years, however, the board had little impact. Orlando attributed this to the board’s lack of legal authority to regulate air quality and to a lack of political backing. Political will matters, Orlando said, but the question is, the political will of whom? Policy makers at one level of government might be very much in favor of an initiative, while policy makers at another level are completely unaware of it or unwilling to back it. Several years after the establishment of CARB, President Richard Nixon signed the Clean Air Act (CAA) in 1970, which gave CARB the legal authority to regulate particulates in the air. The act also put in place other regulations—for example, requiring cars to have catalytic converters and requiring the conversion of coal power plants to “cleaner” natural gas.
In considering this example, Orlando said, it is important to remember the policy context. The policy context in the 1970s was very different from the context today. This was a very top-down, government-regulated solution that would be less favored today, but it has been dramatically successful. Pollution levels in the air in Los Angeles over the subsequent decades have dropped significantly. Orlando added that there are many stories of public policy successes that have either been forgotten or that have not been passed down to the next generation, and he was personally quite surprised to learn that stories of brown air and not being able to see the building across the street were not exaggerated.
The context in which people live affects health, Orlando said. There are numerous social determinants of health within one’s neighborhood (e.g., concentrated poverty, crime, walkable neighborhoods, the ability to exercise, access to healthy food). In 1994 the U.S. Department of Housing
and Urban Development (HUD) launched Moving to Opportunity, an experimental initiative that gave some residents of public housing in select major cities the opportunity to move to new neighborhoods to escape whatever ills they faced in their current neighborhoods.
Participating residents were assigned by lottery to one of three groups: a group that received housing choice vouchers and were required to use them to move to a low-poverty neighborhood; a group that received housing choice vouchers to use wherever they chose, with no restrictions; and a control group that stayed in public housing and did not receive any vouchers. Orlando noted that a complex issue in the context of housing choice vouchers is that people often choose to stay in the same high-poverty neighborhoods. He suggested that such people have social capital and connections that they do not want to lose (e.g., babysitters, family and friends who can connect them to employers). Some might even be afraid to move to the low-poverty neighborhoods. Some research suggests that when low-income families move into a low-poverty neighborhood, they may feel more stress because now they feel that they have to live up to neighborhood expectations or they may be ostracized in the community, Orlando said.
The Moving to Opportunity researchers sought to understand how people would behave if they were given the choice of where to live. Orlando provided two key takeaways from the Moving to Opportunity experiment. Both groups who received vouchers experienced improved health, especially mental health. However, the health aspect was actually a side benefit, he said. Moving to Opportunity was created to help people economically, and early studies of the program suggested that Moving to Opportunity was a failure because the heads of the households, the adults who had made the choice to move, were not experiencing significantly better economic outcomes (in terms of unemployment, wages, etc.). A decade later, however, researchers found that the children of the families that had moved were doing significantly better financially as adults. This is consistent with existing sociological research on neighborhoods, Orlando said, which suggests that it is difficult for adults to make the jump to a better occupation and better income, but neighborhood conditions have a tremendous impact on children’s cognitive development, their mental health, their ability to develop impulse control, and their development of the focus and emotional intelligence that is required to succeed in the workplace. These outcomes are not apparent until the children enter the workplace many years later. When advocating for addressing the social determinants of health, Orlando said, it is important to make sure that policy makers, voters, and others are aware that there are health implications of economic interventions and that outcomes should not be considered only in economic terms.
From a financing perspective, Moving to Opportunity was a private–public partnership, with private foundations supplementing the government funding for the vouchers and private consultants hired to ensure that the research would be objective. After the experiment was completed, the private foundations remained in many of the communities and continued to assist the residents.
In response to a question about the funding for the vouchers for Moving to Opportunity, Bostic said that the vouchers had existed for about 20 years before Moving to Opportunity started. What changed with Moving to Opportunity was the locations where the vouchers could be used. Essentially, it was the same amount of resources used in a different way, toward housing in different neighborhoods. There was also a multiplier effect in that once beneficiaries achieved self-sufficiency in their new home and did not need the voucher anymore, those dollars could be deployed to other people. The original demonstration project was slated for 5 years, but it has been continued far longer, in large part because of the support of philanthropic institutions.
Although people might not immediately think about housing as being related to health, Orlando said, they do understand that everything they breathe at home and everything they drink that comes through their pipes matters to their health. One of the more successful housing interventions was the Healthy Homes Initiative, launched in 1999 by HUD. The initiative awarded federal grants to state and local governments to create their own programs to reduce household hazards—in particular, to reduce children’s exposure to lead in homes. This example is more suited to the current political environment, Orlando suggested, as there is support in Congress (i.e., political will) for this type of grant program as opposed to the more top-down regulatory approach. Again, he stressed that it is necessary to work within the current political context. These grants have been very successful in reducing lead exposure and making homes healthier. Orlando suggested that an element of success was that the grants from HUD gave states and cities ownership of the process, as well as the freedom to create programs that were best suited to the context of their cities. Conversely, one potential drawback is that the federal government does not have much control over the resulting programs, which may affect the likelihood that legislators provide sufficient funding.
In many ways a person’s childhood economic and educational circumstances determine the career path that the person follows and his or her earning potential. There have been multiple efforts at education reform in the past 20 years, Orlando said, and the evidence for their success has been very mixed. One standout example is the Harlem Children’s Zone.
The Harlem Children’s Zone is a “no excuses” charter school. All students are held to a high level of expectations, and no excuses for poor progress that are based on the student’s background are accepted. The research shows, Orlando said, that this type of charter school does succeed in closing the achievement gap in terms of student tests scores, especially in mathematics and reading.
What makes the Harlem Children’s Zone unique is that it combines the charter school with community programs. The Harlem Children’s Zone has expanded over the years and now covers a 97-block area in Harlem in New York City. Any child who lives in those 97 blocks, regardless of whether he or she attends the school, can participate in the community programs. The programs include after-school tutoring, extracurricular activities (e.g., karate, dance classes), and college prep classes. There are also programs for parents, such as parenting classes, income tax help, or anything else that might help the families help their children.
Harlem Children’s Zone has shown significant success in closing the achievement gap in test scores. The results over the long-term have been less clear, however. Similar to the case of Moving to Opportunity, researchers have tried to assess how students’ earnings are affected years later, after they graduate, and the evidence has been mixed. Whether this is a sustainable solution is up for debate, Orlando said.
From a financing perspective, Harlem Children’s Zone is a typical charter school in the sense that it has city funding. It is also a public–private partnership, and like many high-achieving charter schools, it receives significant funds from private foundations, including the Gates Foundation and other education reformers. Harlem Children’s Zone now has assets of hundreds of millions of dollars, Orlando said, which makes its schools far better funded on a per school or per pupil basis than public schools or even most charter schools. The question is whether this is a scalable financing arrangement (i.e., whether that much money can be put into every school in the country) and Orlando suggested that it probably is not.
Each of the examples described on preceding pages is different, Orlando concluded, from top-down regulation to partnerships between different levels of government, to public–private partnerships. Each has been successful in its own way. Not all of the approaches may be scalable, he cautioned, and not all may fit into today’s policy context, but they all
offer examples to draw on when advocating for funding to address the social determinants of health.
A robust discussion followed the presentations. Participants considered common elements across the cases, the need to address equity issues and take a holistic approach to problem solving, housing and health, bringing initiatives to scale, policy making, and overcoming disincentives and challenges.
Common Elements Across Cases
Bostic and Orlando expounded on the key conditions for success that enabled the reallocation of resources in these non-health sector examples. Bostic highlighted several elements that must reach a threshold level if broad collective action is to be catalyzed. First, there must be an acknowledgement that there is a problem. Each of the cases discussed revolved around an issue that had been widely recognized and broadly understood, he said. There must also be some sense of agreement about what should be done about the problem (i.e., a particular approach or strategy). There needs to be the legal authority to create a structure that establishes the incentives. For example, it was only after the CAA provided legal authority that CARB was able to really effect change. Finally, Bostic said, it is important to have an evidence base that can help set forth the benefits to be gained from reallocating resources.
Orlando added that another element of success is collaboration between science and communications. Many scientists face challenges in communicating their ideas to legislators and the public. As an example, he said that the first person who ran CARB was a scientist, which helped to establish firmly for policy makers and voters that this was an actual scientific problem and that there was a scientific way to solve it. The second person who ran CARB was a communications expert and former campaign manager who knew how to make change happen within the political system. Orlando also noted the need to define the set of second-best solutions and not just the ideological “big idea.” Politics is a matter of compromise, and securing the political will requires people who are willing to compromise and work toward achievable solutions.
Applying an Equity Lens
Chang pointed out that the roundtable applies an equity lens to all of the population health topics it considers, and she asked what the examples suggest is needed to adequately address equity issues. The four
cases selected all have an equity dimension, Bostic replied. Moving to Opportunity and Harlem Children’s Zone are both about putting people on a trajectory to become self-sufficient and not require public assistance. He said that while policies may focus on equity, it is important to make the case that there will be a general, broad-based benefit when seeking support. Orlando agreed that it can be difficult to garner support for an intervention that is solely designed to address an equity concern. The upside of the examples discussed is that there are co-benefits, which often are more important than the initial stated goal in convincing people to back the program. Moving to Opportunity started as a demonstration project (not a policy) for this reason, Bostic continued. The intent was to show what the set of benefits could be if the program were brought to scale. The CAA also has a very significant equity element to it, Bostic said. The worst-quality air was in the neighborhoods that had the fewest resources, in places where residents were not able to buy their way out of the problem.
Terry Allen of the Cuyahoga County Board of Health in Greater Cleveland noted that while the national background rate of lead poisoning is very low, hyperlocal data suggest that there are pronounced disparities based on place in many urban areas. He asked whether there is an understanding that such gaps still exist for this and other issues (e.g., teen pregnancy), and raised a concern about national-level data preventing policy makers from understanding the need to close these gaps. Bostic said that the way federal grant monies are used is often left to the discretion of local parties. He said there is about $100 million per year available for lead abatement in the home and that communities can get three $5 million grants on an annual basis. However, many communities are not engaged. Part of the communications function is to make sure that these issues are understood to be significant and to make sure that all the players are sharing a goal that is worth pursuing.
Taking a Holistic View of Problem Solving
George Flores of The California Endowment suggested that from an equity perspective, solving one problem in one aspect or in one place could result in a new problem popping up in another. For example, in addressing the air quality conditions in the immediate Los Angeles area, the trucking industry and industrialization moved further up toward the mountains, and now places in the Inland Empire Riverside–San Bernardino area have tremendous air pollution issues. With regard to people’s ability to move to opportunities or change communities to improve themselves, there have also been considerable challenges related to gentrification and neighborhood change.
It is important, Flores said, to take a holistic look and realize that when making environmental changes, school changes, or economic changes, the capacity of the people in those communities must also be increased. They need to have or develop the agency, the voice, the leadership, and the capacity to govern their lives and become self-sufficient at a higher level because they are now living and working and trying to succeed in a new environment. Without that investment in people, he said, the model will be less successful. It is also important to recognize that bad environments are the way they are because of bad policies, racism, discrimination, and decisions that were made by power structures that are probably still in place. Until those change, the same afflictions will resurface in a matter of a generation or two. The policies and the power structure need to change as well, Flores added.
Orlando agreed and said that, for example, charter schools are often very controversial in these neighborhoods, in part because residents feel that outside foundations are coming in and telling them how to run their schools and not asking for the input of the local communities. He stressed that it is important to take into account what people’s actual desires are in the affected communities.
Housing and Health
Bob Kaplan from Stanford University asked whether housing relocation (i.e., Moving to Opportunity) was the best economic investment opportunity from the perspective of trying to improve health outcomes. He cited studies that suggest that the health effect is small. Bostic reiterated that Moving to Opportunity was not designed as a health intervention. However, investments in non-health domains can have ancillary health benefits. He reminded participants to look beyond the health domain for allies in other domains and for investment of non-health resources that can contribute to improving population health. Orlando agreed and added that often the best health interventions are those that are not targeted toward health. Partnering with others who are interested in solving other non-health problems offers a better chance of getting funding requests approved by Congress or by a city council.
Orlando reminded participants of the importance of context. Today, in cities like Los Angeles, housing is so expensive and there is such a shortage of housing units that people who receive vouchers might look for 90 days and still not be able to find a housing unit in a new neighborhood. In other words, in many cities today relocation vouchers may no longer be the best use of money. Bostic and Chang noted the current debate on how much focus should be on place versus the individual.
Michael Bodaken of the National Housing Trust (NHT) mentioned
the longitudinal generational research on Moving to Opportunity that shows long-term effects. He noted that NHT is buying properties in high-opportunity neighborhoods and introducing vouchers into those properties. Bostic briefly described how housing vouchers work, including the percentage of a recipient’s salary to be contributed to housing cost and the government portion that is added, up to a calculated fair market rent. He added that there is a proposal out for comment to change how the fair market rent is calculated (based on smaller zip code areas, rather than an entire metropolitan area) that grew out of the experiences of Moving to Opportunity.
Bringing Initiatives to Scale
Isham was interested in what the examples implied about the scale of resources that might be necessary to increase life expectancy in the entire U.S. population by a significant amount. Orlando acknowledged that none of the interventions discussed would dramatically increase population health on a national scale. Most were targeted to certain cities or places, and he suggested that voters and policy makers do not have national interventions to address population health on their minds, in part because budget resources are limited for both political and economic reasons. Some of the examples are more scalable than others, but they serve as examples of different types of financing arrangements.
Bostic noted that three of the four examples have been scaled. The CAA is a national law; as noted, the efforts to revise the national housing voucher calculation grew out of Moving to Opportunity; and every community in the country has access to resources to address lead paint issues. He cautioned about the need to make the distinction between going to scale and solving the problem. Each of these programs will only touch a finite number of people because resources are not unlimited. But to the extent that the programs reach across the entire country and make progress in as many places as possible, improvements among the poorest performers will increase the average.
Bostic also noted that the Obama administration tried to scale the Harlem Children’s Zone, and U.S. Department of Education initiatives were explicitly patterned after this model. The challenge they found was that the local context mattered significantly and the way that the program was structured did not translate into the same benefits in other places. The challenge was not the scalability, but rather the complexity of the program’s implementation—a factor that had not been fully appreciated when the program was put into place.
Expenditures and Policy Making
Tom Kottke of HealthPartners in Minneapolis pointed out that Finland spends 1 percent more than the United States on health and welfare, but the country’s gross domestic product (GDP) is half that of the United States. It ranks about fourth internationally in education. Is there something to be learned from the Finnish experience about education and how the country has been able to achieve this on half of the U.S. GDP?
There are many policy approaches that make sense, Bostic said. Communities and societies need to determine what makes sense for them and what they are willing to fund and at what levels. That is part of the political process. The variation in the extent to which various states are willing to fund certain activities demonstrates that the political process can lead to different results, depending on who is involved. Who has a voice and whose priorities are heard and understood are among the factors that shape decisions about the aggregate expenditures on implementing policies. It is important that the voice of population health (experts) is heard, Bostic said, so that the issues that are important for improving quality of life are understood better and move higher on the priority list for resources.
Orlando did caution that the spending cited by Kottke mostly captures health expenditures that are not social determinants (i.e., elements of the medical system). He emphasized the importance of thinking about health expenditures as everything spent on transportation, urban planning, the environment, and anything else that affects health. If this spending is included, the amount of money spent on health is actually much higher than just medical expenditures.
Disincentives and Challenges
Steve Smith of the University of Florida observed that regardless of their specific goals (e.g., better education, economic improvement, etc.), all of the examples from the different sectors were essentially aimed at doing the same thing—increasing opportunity for individuals so that they would have better, longer lives. He also observed that there are disincentives to overlapping these efforts, particularly at the federal government level and perhaps at the state level as well. He asked how these disincentives could be overcome to align the different fields that are basically trying to achieve the same result and act as a force multiplier for accomplishing change.
At the federal level, Bostic said, one disincentive is that if one department uses resources that create benefits in other departments, the original department does not get credit for it. So, for example, the incentive to collaborate where some housing money might be used for a health
clinic is significantly diminished. Such partnerships essentially become “charitable goodwill.” At the local level, one of the challenges is that the beneficiaries of incentives are often different governmental entities. For example, if the City of Los Angeles builds a homeless shelter, there are benefits to the county health system because the number of emergency room visits is reduced. There is no way for the city to recapture those benefits. In contrast, San Francisco is both the city and the county, and the same people see the budget line items. They capture the actual benefits, and so they are willing to invest.
One of the biggest challenges, particularly in addressing the social determinants of health, Bostic said, is a lack of binding long-term enforcement mechanisms. In some cases, for example, individuals at the city and the county level might have an agreement that the one who reaps the savings will transfer some money back to the one who spent. However, if one of the individuals is voted out of office or reaches a term limit, a new person comes in, and commitments and contracts must be reestablished and renegotiated continuously. Bostic suggested that there is a need for a new contractual structure under which communities or parties will have to actively opt out. Then perhaps there could be agreements that are more binding. He noted that 401(k) retirement funds where people have to opt in have far lower participation than plans where people have to opt out.