Public spending on social services vs. direct health care and associated health outcomes

January 4th, 2017 / By Paul LaBrec

In last month’s blog , I discussed the appearance of a new set of ICD-10 codes related to social determinants of health and discussed how this individual-level measurement may be analyzed in relation to community-level measurements of social factors impacting health.  This month I’m taking a more macro-environmental view of the topic and discussing public spending on social services and public health versus direct health care, and the association of those expenditures with healthcare outcomes. 

As was the case last month, my thoughts were initiated by an article in Health Affairs.1 The article by Elizabeth Bradley and colleagues examined public data collected between the years 2000 and 2009 and analyzed at the state level to assess the ratio of state spending on social services and public health versus spending on direct health care, and the association of that ratio with population health outcomes.  Social service and public health spending included expenses such as public education, needs-tested public welfare programs, nutritional assistance, transportation, environmental health, recreation programs, public safety, housing aid and community development.  Direct medical care spending included Medicare spending and Medicaid spending.  Health outcomes assessed included the prevalence of obesity and asthma, reported days of activity limitation, reported mentally unhealthy days, and mortality rates for acute myocardial infarction, lung cancer, type 2 diabetes and post neonatal infant mortality. 

The authors found that for every $1 of Medicare and Medicaid spending the average state spent $3 on social services and public health.  States with the highest ratios of social service-to-health care spending included Vermont, New Mexico and Alaska; states with the lowest ratios included Connecticut, Texas and Louisiana.  In the period studied, the states with the highest ratios of social service-to-health care spending had better health outcomes both one and two years out.  Independent of healthcare spending, higher social services spending was positively associated with better health outcomes. 

Now we have identified three levels at which we can assess the social environment of health:

  • State-level social services, public health, and medical services environment
    • Public health and safety
    • Availability and quality of social services
    • Access to and quality of health care
  • Community-level physical and social environment
    • Neighborhood safety
    • Environmental quality
    • Access to recreational facilities
  • Individual level health and social risk factors
    • Personal health risk factors (physical and behavioral)
    • Social support network
    • Access to healthy food

This is only a small sample of elements falling into each category.  Indeed, many factors have dimensions at multiple levels.  For example, public health and safety has dimensions at each level in a vaccination program—state funding and organization, community clinic education and access, and individual knowledge of disease prevention and access to vaccine.

When looking at the relationship between these three levels in assessing the success of a public Medicaid program, for example, the goal will be to find the optimal balance of funding and support that delivers the best outcomes toward the triple aim of patient experience, per capita cost reduction and improved population health.

Paul LaBrec is research director for Populations and Payment Solutions with 3M Health Information Systems.


1 Bradley EH et al. “Variation In Health Outcomes: The Role Of Spending On Social Services, Public Health, And Health Care, 2000-09.” Health Affairs 35, no.5 (2016):760-768.