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Centre for Health Economics and Policy Analysis

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Multidisciplinary CHEPA-led team awarded CIHR grant for economic forecasting

06 Mar 2018

CHEPA is proud to announce that it has been awarded a one-year $265,000 Operating Grant for economic forecasting for its research project, Investing in primary and secondary prevention: Economic forecasting to inform policies regarding amortization of program costs, by the Canadian Institutes of Health Research (CIHR). The funding is part of a joint initiative of the CIHR and the J.W. McConnell Foundation that will see CIHR contribute $175,000 and the J.W. McConnell Family Foundation contribute $90,000.

The research will be co-led by Jeremiah Hurley, Dean of McMaster University’s Faculty of Social Sciences and a member of CHEPA, and CHEPA Director Jean-Eric Tarride. It involves a multi-disciplinary team of experts that includes eight other CHEPA members – Laura Anderson, David Feeny, Michel Grignon, Emmanuel Guindon, Christopher Longo, Gillian Mulvale, Daria O’Reilly and Arthur Sweetman.   The other members are Stelios Georgiades, Hertzel Gerstein and Susan Jack of McMaster University’s Faculty of Health Sciences; Susan McCracken, DeGroote School of Business, McMaster University; Mike Joyce, Queen’s University Department of Policy Studies; Bill Praamsma and Garima Talwar from the Ontario Ministry of Finance; Anne Hayes, Ontario Ministry of Health and Long-Term Care and Kim Elmslie, Public Health Agency of Canada.

The work has two goals:
1. To develop a framework that lays an analytic foundation to support implementation of cost amortization in prevention and early intervention; and
2. To conduct four economic forecasting simulations that illustrate the analytic framework in action in the areas identified by CIHR in the call for proposals.

The four simulations are an early psychosis intervention program (mental health); an integrated autism program based on intensive behavioural interventions and applied behaviour analysis (child and youth health); a diabetes prevention program that integrates diet, weight loss and physical activity (food security with a focus on nutrition and diabetes), and a family-nurse partnership program targeted at low-income, first-time mothers to improve outcomes for both the child and the family (intergenerational trauma).

In 2015 Canadian health care spending was more than $219 billion. Many investments in health and social programs for primary and secondary prevention require that governments pay up-front for programs and results that will produce a net financial gain over time due to reduced future service costs (in health, education, social services, etc.) and/or increased tax revenue associated with increased labour market activity by program beneficiaries.

Unlike investments in physical infrastructure such as bridges or highways, current public sector accounting rules do not allow the government to amortize the costs of such investments over multiple years. This project will analyze a range of issues associated with possible changes to the accounting rules to allow such amortization, with a focus on the economic methods and evidence that would be required for economic forecasts of the costs and consequences of such investments.

This analysis will produce a framework to guide both the development of policies related to the amortization of the costs of investments in primary and secondary prevention, and decision-making regarding the amortization of specific proposed investments.

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