Saving Preventive Health Care: How Social Impact Bond Can be an Alternative

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Abstract

Prioritizing preventive health care is extremely difficult due to the combination of diffuse benefits and concentrated costs, particularly in congressional budgeting, and therefore many worthy prevention programs are underfunded or unfunded altogether. National health expenditures have consistently grown as a proportion of GDP. While it is true that public health spending has also been growing, it has not kept pace with spending on personal health care, or out-of-pocket expenditures.
One possible solution to this persistent challenge over financing prevention is a type of alternative financing measures like Social Impact Bond (SIB), where private sector funders can be rewarded if they invest in public projects that meet short term goals (i.e., the pre-specified outcomes among the treated) set by the stakeholders. SIB model can offer strong incentives for private investors or other non-governmental entities to take part in financing, spreading, and scaling interventions that address the upstream determinants of health. In recent years, several states have been exploring SIB; some already have one or more active SIB programs underway.
This paper explores (a) why it is difficult to finance preventive health measures, (b) whether SIBs can be alternative financing to preventive health interventions theoretically, and (c) how much SIB-financed health programs improve goals compared to the standard tax-financed health programs. It delves into two SIBs cases: Nurse-Family Partnership in South Carolina and Asthma Impact Model in California. They are on-going programs that have been recently launched which makes it challenging to evaluate, but it is still meaningful to see improved intervention, efficiency, and health outcomes at an earlier stage of the program(s). The relative advantages over tax financing suggest better assessment for SIBs programs and careful expansion of SIBs as alternative financing for preventive health programs.

Author

• Eunice Park, University of Wisconsin-Madison