Prioritising and Financing Health Promotion in Australia

This report was prepared to contribute to the 'Health Australia Initiative' on the issue of prioritisation and financing for health promotion. Research presented here is focused on the two tasks of: (i) proposing preferred approach(es) to priority setting; and (ii) funding mechanisms which would support the preferred health promotion activity. The criteria adopted in assessing these issues were: (i) the need for technical and allocative efficiency; (ii) equity between different population groups; (iii) 'dynamic efficiency', that is, a framework which encourages experimentation and progressive improvement; (iv) 'sustainability', that is, a funding mechanism which, while encouraging allocative efficiency, ensures continuity of funding for health promotion activities; and (v) 'manageability', that is, for reasons of financial management, expenditures should, at least in the short run, be containable. With respect to the first task of the report, the principle conclusion is that priority setting should be 'evidence based'. There is no possibility of achieving social objectives unless the relationship between program activities, objectives and outcomes is understood to the point where informed judgements are possible. In this respect the logic of the economic approach to decision making for the achievement of technical and allocative efficiency is compelling and it is the approach recommended. The economic approach is based on the logical principle that health outcomes will be maximised for a given health budget if the marginal benefit cost ratio is equalised across programs or projects. This requires resources to move to activities which generate greater benefits for those yielding lower levels of benefit. Two applications of the 'economic model' are advocated; viz Program Budgeting and Marginal Analysis (where the time frame for decision making is limited) and the 'Disease Based Framework', (where there is greater capacity for long term research and planning and a focus on resource allocation between disease stages and health delivery settings).