BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2424

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          Date of Hearing:  May 11, 2016


                               Lorena Gonzalez, Chair

          2424 (Gomez) - As Amended April 6, 2016

          |Policy       |Health                         |Vote:|14 - 2       |
          |Committee:   |                               |     |             |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill creates a Community-based Health Improvement and  
          Innovation (CHII) Fund, a program and funding structure to  
          allocate funds to community-based chronic disease prevention,  
          with a focus on health equity priority populations.   
          Specifically, this bill:


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          1)Specifies funds are available to reduce health inequity;  
            prevent the  onset of priority chronic health conditions, as  
            defined; strengthen local and regional collaborations; and  
            evaluate effectiveness and cost-effectiveness of  
            community-based prevention strategies for priority chronic  
            health conditions.

          2)Specifies funds can be used for activities including promotion  
            of healthy diets and food environments, promotion of physical  
            activity and of a safe, physical activity-promoting  
            environment, and prevention of unintentional and intentional  

          3)Specifies policy, systems, and environmental change approaches  
            shall be emphasized, and that funds cannot be used to fund  
            clinical services.

          4)Specifies a target level of annual statewide investment from  
            the fund must be established as a set dollar amount per  
            capita, and allocates funds to the California Department of  
            Public Health as follows:

             a)   Statewide media and communications campaigns,
             b)   Evaluation of program activities, least 5%

             c)   Other program implementation activities, including  
               review and approval of local health improvement plans, the  
               definition of priority chronic health conditions and health  
               equity priority populations based on public health data,  


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               development of tools that to monitor progress towards  
               improving health and health equity, and related activities,  
               up to 6%.  

             d)   A grant program for local health jurisdictions, with a  
               $250,000 base award per three-year funding cycle, with the  
               balance of the funding awarded proportional to the number  
               of residents living below the federal poverty level, at  
               least 50%. 

             e)   A competitive grant program for community-based  
               organizations or local public entities, for evidence-based  
               or innovative approaches, at least 30%.

          1)Specifies funds shall supplement and not supplant existing  
            funding for community-based prevention activities of priority  
            chronic health conditions, and that participating hospitals  
            and health plan partners must identify monetary or in-kind  
            contributions to local projects. 

          2)Creates an advisory committee, as specified, and requires the  
            committee to produce a comprehensive master plan for advancing  
            chronic disease and injury prevention throughout the state, to  
            be submitted and revised triennially. 

          FISCAL EFFECT:

          1)CDPH would incur one-time costs for staffing, information  


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            technology, and contracts, likely in the low millions of  
            dollars. Ongoing costs would depend on the total allocation  
            and the number of grants and contracts to be managed. 

          2)This bill does not specify a funding source or amount, but it  
            is safe to assume a program of the scale envisioned would cost  
            in the tens of millions of dollars GF per three-year cycle, in  
            absence of another fund source.  Based on the minimum $250,000  
            allocated to each local health jurisdiction, which would make  
            up 50% of the funding, as well as the ambitious nature and  
            comprehensiveness of the program, staff estimates cost  
            pressure of $30.5 million GF at a minimum.  Assuming a program  
            of this size, $2.8 million would be allocated to  
            communications and media, $1.5 million to evaluation, up to  
            $1.8 million for CDPH administration and oversight, $15.3 to  
            local health jurisdictions to implement community-based health  
            improvement activities, and $9.1 million for competitive  

          3)A related stakeholder proposal request for a $380 million GF  
            appropriation for a Community Health Improvement and  
            Innovation Fund was discussed in the Assembly Budget  
            Subcommittee #1 on April 11, 2016.  This represents nearly a  
            $10 per capita investment, which would support one cycle of a  
            three-year grant program. 

          4)Research indicates funding evidence-based, community-based  
            chronic disease prevention activities can have a high return  
            on investment in terms of health care cost savings.  An ROI  
            analysis is beyond the scope of this estimate, but as this  
            bill focuses on the most costly and preventable conditions,  
            including obesity, heart disease, and diabetes, and assuming  
            the activities were evidence-based and well-implemented, it is  
            reasonable they could lead to improvements in population  
            health and a corresponding a reduction in health care cost  
            growth statewide, and for the state as a large payer.  In  


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            addition, the bill's focus on health equity priority  
            populations is likely to have a significant overlap with the  
            Medi-Cal population, increasing the chances of a positive ROI  
            for the state.  Finally, the bill's emphasis on funding  
            systems and policy changes means health-promoting changes  
            adopted pursuant to this program may have a lasting impact.   
            For example, the tobacco control program led to changes in  
            public acceptance of tobacco use, which in turn resulted in  
            policies that are unlikely to be reversed, such as  
            tobacco-free workplaces.   


          1)Purpose. The author states that through implementation of the  
            Affordable Care Act and other state actions, the state has  
            improved access to health care coverage.  However, despite the  
            staggering monetary and human cost, the state has made very  
            little effort to address the root causes of our high levels of  
            obesity and chronic disease, and our dramatic health  
            inequities.   The author states the evidence demands we act to  
            recalibrate our efforts towards improving health, and that  
            California's worsening health status indicates the current  
            level of funding for prevention activities are inadequate to  
            affect meaningful change in obesity and chronic disease on a  
            population basis. This bill sets up a structure for investment  
            to prevent chronic disease with a particular emphasis on  
            communities that suffer worse health status, which will  
            improve health, productivity, well-being and health equity of  
            Californians.  Furthermore, this bill focuses on primary  
            prevention-prevention of disease before it occurs-which is  
            shown to be effective and cost-effective, and for which there  
            is otherwise very little funding.  This bill is  
            author-sponsored and supported by the Health Officers  
            Association of California, the California Pan-Ethnic Health  
            Network, Health Access, and other groups.


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          2)Background. The burden of chronic disease in California is  
            high and growing.  Chronic conditions account for 80% of  
            health care expenditures and 80% of hospital admissions.   
            Approximately 60% of health expenditures are on behalf of  
            individuals with multiple chronic conditions. Many chronic  
            diseases and conditions have common, preventable risk  
            behaviors including poor diet, tobacco use, and lack of  
            physical activity. The World Health Organization (WHO)  
            estimates eliminating these chronic disease risk factors could  
            eliminate 80 percent of all heart disease, stroke, and type 2  
            diabetes worldwide-and 40% of cancers.

            Over the past 30 years, obesity rates have tripled. Only 40%  
            of the state's adults have a healthy weight, while the other  
            60% are overweight or obese.   One in four California adults  
            do not engage in any physical activity.  More than one in ten  
            California adults has diabetes, and over 50% of California  
            adults have either diabetes or pre-diabetes.  Nationwide, one  
            in three U.S. children born in 2000 are likely to develop  
            diabetes over their lifetimes. There are also significant  
            disparities in health status by race and ethnicity, education,  
            income, geography, and sexual orientation.  

          3)Current health spending. Overall health spending in California  
            was $230 billion in 2009. In 2016-17, California is projected  
            to spend nearly $85 billion on health care services in  
            Medi-Cal ($19 billion General Fund), and around $5 billion on  
            behalf of state employees in CalPERS.   At this time, the  
            state allocates nearly no state dollars to either state-based  
            or community-based approaches to preventing chronic disease.    
            Most GF dollars for public health and prevention were cut  
            during the Great Recession. In 2008-09, $60 million was cut  
            and in 2009-10 it was $154 million, which eliminated the  
            majority of state prevention funding, including funding for  
            HIV/AIDS prevention, community-based preventative health, sex  
            education, support of local health departments, and other  


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            programs.  The federal Centers for Disease Control and  
            Prevention provides about $62 million across a number of  
            different entities in the state for all chronic disease  
            related activities, including local health jurisdictions.  

          4)Community-based prevention. Community-based prevention uses a  
            variety of strategies to improve health on a population basis  
            within a community.  These strategies often include  
            partnerships with other entities, such as non-profits, local  
            governments, school districts, and hospitals and other  
            community institutions.  The CDPH California Wellness Plan,  
            which aims to prevent and control chronic disease, describes a  
            number of strategies. For example, to improve physical  
            activity, one strategy is to increase the number of municipal  
            general plans that contain a health element, with language  
            specific to environments that promote daily physical activity.  
             Another is to increase the percentage of schools that have a  
            joint use agreement for shared use of physical activity  
            facilities, so the school grounds can be leveraged for  
            community sports and recreation after hours. Many strategies  
            have the potential to be lasting changes that impact more and  
            more of the population over time, as people cycle in and are  
            touched by institutions and their policies. 


          5)Key findings on cost-effectiveness. A recent policy brief by  
            the Robert Wood Johnson Foundation summarizes key findings  
            based on a review of studies published between 2008 and 2013.   
            This brief indicates strategic investments in proven,  
            community-based prevention programs save lives and money.    
            Findings include:

                 Local public health spending saves lives in a  
               cost-effective way. Increased spending by local health  
               departments had large and significant effects on mortality  
               from leading preventable causes of death over a  


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               thirteen-year period ending in 2005. This relationship was  
               consistent across several different mortality measures, and  
               it persisted after accounting for differences in  
               demographic and socioeconomic characteristics, medical  
               resources, and other community characteristics. The study  
               also found achieving similar health improvements through  
               delivering more health care-for example, by providing more  
               primary care visits- would cost around 15 times more than  
               investing in public health.

                 Low-income communities benefit more. A follow-up to the  
               study above found the positive effects of increased public  
               health spending were 21-44% greater in low-income  
               communities as compared to average communities.

                 Primary prevention can lower costs. A 2011 Urban  
               Institute study concluded it is in the nation's best  
               interest, from a health and economic standpoint, to  
               maintain funding for evidence-based public health programs.  
                Specifically, it showed investments in primary prevention  
               programs will not only help slow the chronic disease rate,  
               but have also been shown to lower private insurance costs  
               and improve economic productivity while reducing worker  
               absenteeism. It notes savings achieved through prevention  
               programs can significantly and quickly outweigh initial,  
               upfront investments.

                 Community prevention is the only health investment that  
               is projected to lower costs. A 2011 study published in  
               Health Affairs showed that a combination of three  
               strategies-expanding health insurance, delivering better  
               preventive and chronic care, and implementing community  
               prevention-is more effective at improving health than any  
               one strategy.  Community prevention was the only strategy  
               that slowed the growth in prevalence of disease and injury,  
               and the only strategy that did not increase health costs.    
               Finally, adding community prevention to an insurance  
               expansion is projected to significantly improve health and  
               lower costs over a 10- to 25-year time horizon.


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                 Substantial return on investment is possible. A 2008  
               report by Trust for America's Health and the Robert Wood  
               Johnson Foundation showed an investment of $10 per person  
               annually in proven, community-based public health programs  
               could result in a return on investment averaging $5.60 for  
               every $1 invested over 5 years.  

             1)   Staff Comments. Three cities, Berkeley, Pasadena, and  
               Long Beach, operate as their own health jurisdictions.  An  
               adjustment to the funding minimum could be made for cities  
               that have their own LHJs in order to maintain equity in a  
               statewide allocation. 

          Analysis Prepared by:Lisa Murawski / APPR. / (916)