Why scrapping a key health promotion agency makes little economic sense

News the world’s first independent health promotion agency – Australia’s own VicHealth – is to be abolished has been called “incomprehensible” and “a disaster” that places democracy at risk.

VicHealth is the agency that’s been behind successful quit smoking and skin cancer campaigns, among others.

Then came the push – including from experts in public health, and political parties – to save the almost-40 year-old agency.

The Victorian government has said absorbing VicHealth into the state’s health department is needed to help repair the budget. But, from an economic perspective, this looks like a bad call.

We receive funding from VicHealth, or have done so in the past.

Here’s why health promotion is worth more than every dollar invested.

Prevention is better than cure

Health promotion involves empowering people and communities to make healthier choices and create supportive environments. It aims to address the broad drivers of health, reduce inequities and improve overall wellbeing. One key aim is to prevent disease from arising in the first place.

In Australia, more than one-third of our total disease burden is preventable. Modifiable risk factors such as overweight and obesity, tobacco use and poor diets cost the health system A$38 billion dollars each year.

Preventable chronic (long-term) illness also reduces workforce productivity. This creates a substantial economic burden well beyond health.

Given these health and economic costs, there’s a strong case for governments to invest more in preventing disease.

This is already recognised in the National Preventive Health Strategy 2021–2030, which recommends increasing spending on health promotion and disease prevention to 5% of the health budget. Currently it accounts for less than 2%.

There is clear evidence prevention can deliver a strong return on investment.

For example, we analysed 16 obesity prevention initiatives and found 11 policies would likely deliver substantial health gains while also saving long-term health-care costs.

Such policies include sugary drink taxes and restrictions on marketing of unhealthy foods.

Broader research shows health promotion initiatives demonstrate returns of around $2.20 for every dollar spent.

Back to VicHealth

VicHealth was initially funded through tobacco tax revenue. It started out with a focus on reducing smoking rates, and famously bought out tobacco sponsorship in sports and the arts.

Over the years, the agency has funded landmark prevention efforts such as Quit and SunSmart. More recently, it has partnered with communities and organisations to also address unhealthy diets, physical inactivity and alcohol use.

Today, VicHealth takes a broader perspective to health promotion. This approach recognises that individual risk factors are shaped by the commercial and economic systems in which we live. The focus is on health and equity being prioritised alongside economic prosperity.

Evaluations of programs that were initially supported by VicHealth clearly demonstrate the agency’s value. For example, Quitline in Victoria produces a return of $1.24 for every dollar spent (calculated from values in this economic evaluation).

Victorian investment in SunSmart has achieved a return of $2.22 per dollar. When productivity was taken into account, the SunSmart program was estimated to prevent $713 million in productivity losses in 1988–2011.

The scale of the potential benefits of VicHealth supported initiatives outweighs its relatively modest annual budget of about $47 million.

It can take time for prevention efforts to pay off

Despite the great potential for prevention initiatives to improve health and save money, Australian governments have consistently under-invested in them.

One big reason comes down to timing of costs and benefits. Prevention requires upfront investment while the benefits may only be realised many years later.

One study estimated an initial investment of $1.2 billion (inflated to 2024 values) and total spending of $7.6 billion would be required to implement 23 of the most cost-effective prevention initiatives.

These initiatives included a wide range of measures such as cancer screening programs, vaccinations and education campaigns.

Importantly, the study showed these interventions could avoid over $19 billion (in 2024 values) in health-care spending.

Short-term budget cycles can make it hard for government to commit to these high-value interventions.

This is a key reason why independent health promotion agencies, such as VicHealth, are typically better placed to ensure sustained and stable funding for programs and initiatives that deliver longer-term health and economic returns.

Disease prevention is political, and goes beyond health

Australian governments have previously made bold attempts at investing in prevention.

The Australian National Preventive Health Agency was established to oversee an $872 million investment to address modifiable risk factors for disease. However, a change in government more than a decade ago resulted in the withdrawal of this funding and dismantling of the agency.

So we need an independent body that operates at arms length to government if we are to focus on best practice prevention initiatives, without the impact of changes in governments and their shifting priorities.

The Victorian government has proposed to integrate VicHealth’s prevention activities within the state’s health department. But many prevention initiatives operate outside the health sector.

For example, school-based initiatives and community-led campaigns typically include involvement from multiple government departments, local councils, as well as community and commercial organisations.

So an independent health promotion agency, such as VicHealth, is ideally placed to lead these collaborations across sectors.

The urgent need to focus on prevention

Australia’s spending on health and aged care is set to soar, rising from 6.2% of GDP in 2022–23 to 10.8% by 2062–63.

The Productivity Commission has flagged the fiscal pressures this will create. Among its recommendations are supporting disease prevention and early intervention, with an independent advisory board and a dedicated prevention fund.

At a time when independent, well-funded prevention efforts are being recommended, disinvesting a world-leading health promotion agency makes little economic sense.