Monday, 3 April 2017

The myth about 'public health' saving money

An article was published in the British Medical Journal last week which claimed that £1 spent on 'public health' saved the NHS a multiple of £1 in the long run. Return on investment ratios of 8:1 or even 14:1 were discussed.

All total nonsense and a massive misrepresentation of the economics literature. To explain why, I wrote this piece for Spectator Health:

The reference to the ‘wider health and social care economy’ is a clue that we are not dealing with hard cash here. Nobody could argue with spending a billion pounds on public health if it extended people’s lives and saved £14 billion, but that’s not the proposition. 

In reality, the investment requires real money that comes out of the taxpayers’ pocket whereas the return is measured by giving a theoretical monetary value to a year of life and multiplying it by the number of years that are thought to be added by public health interventions. In this instance, it was assumed that an extra year of life is worth £60,000. So, if a £2 billion preventive health initiative leads to one million people living for an extra six months, the return on investment is £30 billion. 

That is all well and good, but it is not a £30 billion saving to the taxpayer. The cost is financial whereas the benefits are non-financial, albeit put in monetary terms for the purposes of an exercise. There is no financial return on the investment. On the contrary, by extending people’s lives the intervention will almost certainly lead to higher costs further down the line.

Do have a read.

Incidentally, I see that all of the authors (who include green ink warrior Simon 'Caps Lock' Capewell) appear to work in the state-funded 'public health' industry'.

1. North Wales Local Public Health Team, Public Health Wales, Mold, Flintshire, UK
2. Department of Public Health and Policy, University of Liverpool, UK
3. Department of Public Health, Halton Borough Council, Cheshire, UK
4. Department of Public Health, Wirral Metropolitan Borough Council, Merseyside, UK
5. Centre for Health Economics, University of York, UK 

And yet, despite their article being a blatant appeal for more taxpayers' money (eg. 'The UK government's ‘efficiency savings’ thus represent a false economy which will generate many billions of additional future costs to the ailing NHS and wider UK economy') they declare that they have no conflict of interest. Really?!

PS. If you want to see what the economic literature on preventive health actually says, read Death and Taxes.

PPS. As the flu jab cock-up proved, 'public health' only saves money when it goes wrong.

The flu jab blunder which contributed to the largest spike in deaths in a generation may have brought unexpected benefits for Britain’s pension black hole, a new report suggests.

Latest projections from the The Institute and Faculty of Actuaries (IFoA) show that the increase in the mortality rate in 2016 has slightly reduced overall life expectancy for the over 65s, down 1.3 per cent for men, and 2 per cent for women.

According to Mercer, the world’s largest human resources consulting firm, the shift has removed around £28 billion of pension scheme liabilities from the balance sheets of FTSE350 companies.

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