A Different View of Government Funding
Posted by Wade on August 21st, 2006
Is Government Funding of Health Research Good or Bad? Well, recently Ryan posted an interesting read about funding for stem cell research. The post can be read here. In short, Ryan argued that sometimes it’s important not to throw money at certain projects, because it may stifle creativity and innovation.
I’m not sure whether Ryan anticipated the direction his post would go, but the conversation immediately led to a discussion of whether funding for medical research is better when done by the private sector, or when government funds the research with tax dollars. Connor and I have taken the view that government should not use tax dollars to fund this type of research. However, one commentor, Brian, took the opposite view. In an effort to give Brian equal time to express his views, I extended him an offer to put together a guest post for us. He has done so. What follows is a question and answer discussion presented by Brian himself.
Disclosure Statement: I am a graduate student at a private university using NIH funds for my research and private funds for my stipend. I plan to remain in academia.
What is the NIH?
The National Institutes of Health (NIH) is a collection of 27 individual institutes, each devoted to studying a particular aspect of human health. There were not always 27 institutes and it is likely that there will be more in the future.
How is the NIH funded?
The NIH is a branch of the Department of Health & Human Services and is funded by Congress. As such, it is subject to the same rules of securing—or losing—funding as most other government organizations.
What does the NIH do with the government funding [tax money]?
The NIH currently receives around $28 billion per year. Ten percent of that money is used to fund in-house research conducted by about 6,000 scientists. Positions at the NIH are highly sought after; not surprisingly, the NIH employs some of the world’s most highly regarded scientists, including several Nobel laureates.
Eighty percent of the NIH budget is used to fund research, principally in universities, throughout the US, its territories, and even other countries. Universities also seek funding from private organizations (e.g. American Cancer Society), partnerships with businesses (eg. Pharmaceutical companies), patents, etc. NIH funding, however, is the lifeblood of academic research. Like the NIH, academic positions are generally regarded as attracting the best scientists, despite paying much less than private industry.
The remaining ten percent of the NIH budget is lumped as “other.” Among the things covered are administrative costs, special programs, and public education.
How does the NIH choose research projects?
Eventually, the NIH divides its collective budget among its individual institutes. The NIH seeks advice from a variety of sources, including:
- Individual researchers and professional societies
- Patient organizations
- Congress and the President
- Other councils and committees
Grant applications are submitted to a study section, which is comprised of scientists who are in the same field as the grants being reviewed. Study sections reviewed and score grants that are directed toward several different institutes. According to the NIH:
“The merit of a research proposal is assessed by several criteria, including: the importance of the problem or question; the innovation employed in approaching the problem; the adequacy of the methodology proposed; the qualifications and experience of the investigator; and the scientific environment in which the work will be done.”
In other words: Is it important, new, possible, and in good hands?
How many grants get accepted?
The process of peer review is notoriously critical (albeit not vindictive). The average age of a first-time grant awardee is 42 years. About a decade ago, only about 30% of applications were funded; today that number is less than 20% and in some institutes (e.g. NCI) even scoring in the top 10% is not necessarily good enough. This does not mean that grants scoring in the top 20-50% are bad; it just means there isn’t enough funding. (Certainly those scoring very low are simply bad.)
Are grantees held accountable?
Grantees must report progress every year and reapply for funding typically every five years. The success during the previous grant cycle will be considered by the current study section. While researchers are not obligated to discover exactly what they propose, they are judged on whether they were productive with their grant money—and whether what they produced was “important and new” (as discussed above). Misusing a grant may mean never seeing another.
How does the NIH measure success?
The goal of the NIH is to lead “discoveries that improve people’s health and save lives.” There are several ways the NIH tries to measure its own success (http://www.nih.gov/news/070101wyden.htm), but I think the best evaluations are outside audits. Here are two:
1) Government Audit: The U.S. Congressional Joint Economic Committee issued a report in May 2000, titled, “The Benefits of Medical Research and the Role of NIH.” The committee’s report stated that
“the benefit of increased life expectancy…as a result of advances in health care creates annual net gains of about $2.4 trillion (in 1992 dollars)… [If] only 10 percent of these increases in value ($240 billion) are the result of NIH-funded medical research, it indicates a payoff of about 15 times the taxpayers’ annual NIH investment….”
The report acknowledges that this figure, while already substantial, does not include savings in
“lost wages due to morbidity and mortality, expenditures associated with health care and treatment of disease, and the intangible costs of pain and suffering caused by disease… [which] amount to approximately $3 trillion annually.”
2) Private Audit: The Mary Woodward Lasker Charitable Trust’s initiative, called “Funding First,” asked a group of economists to examine the return on investment of the NIH. The report, titled, “Exceptional Returns: The Economic Value of America’s Investment in Medical Research,” was published in May 2000. They found that
“the reductions in mortality from cardiovascular disease alone averaged $1.5 trillion annually during the period 1970-1990. If just one-third of this gain is a result of medical research, the return on investment averaged $500 billion.”
I will stress two points here.
A) The Lasker Foundation is completely independent of the NIH; the JEC is not only independent, it is supervisory to the NIH.
B) Both reports (and others like them) assume that some fraction of the gain in life expectancy, etc, is due to research funded by the NIH. Those doubting the validity of such an assumption are encouraged to read here.
What are some problems with the NIH?
All of this is not to say that the NIH is perfect. There are problems, inefficiencies, and even dishonesty. For example, the NIH recently was forced to institute broad reforms on the way its scientists are “consulted” by private research companies, an effort directed at eliminating conflicts of interest. There is the ongoing criticism that NIH-funded discoveries are made public, so private businesses and foreign countries benefit from knowledge paid for by American citizens. There is even the criticism that the NIH has too little autonomy.
Conclusions
Overall, I think the NIH is a model format for government. It seeks advice from taxpayers and professionals, uses an impartial and competitive system for distributing funds, insists on results for continued funding, and has a return on investment greater than any mutual fund—or pharmaceutical company. The single biggest problem with the NIH, in my opinion, is that it does not have enough money: I would suggest, at minimum, a doubling of its budget.
I guess it all boils down to who you think should foot the bill for this research. I feel that it is unconstitutional for Joe Taxpayer to have to pay for it. I think medical research and innovation should be left up to the private sector, funded by the private sector, and accountable to the private sector. Slapping on some government funding and oversight does not a better model format make.
Comment # 1 left by Connor Boyack on August 21st, 2006
So what level of “healthcare”, if any, should government foot the bill for? Doctors visits? Hospitals? Emergency Rooms? First-responders (police, ambulatory, fire)? Epidemics (CDC)?
Remember the constitution charges the government with the responsibility of promoting the general welfare. As Brian pointed out, the NIH and the projects they fund have shown to be extremely profitable both financially and emotionally.
Comment # 2 left by Ryan on August 22nd, 2006
There’s a certain level of healthfulness that a society must maintain in order to just function. It behooves the government, for the good of society, to ensure that a certain standard be met. There are a lot of success stories that wouldn’t have happened without government funding and oversight. For example, the eradication of smallpox and the development of numerous vaccines that protect the population from scourges that have plagued societies throughout history. The level of prosperity and quality of life that we’ve attained would not be possible without government money. The way I see it it’s been an investment by the community of citizens for the collective good. Sure, it’s been a coerced investment, but we wouldn’t have driveable roads or functional police forces if we didn’t make some coerced investments for the collective good.
That said, once a certain standard has been met, it seems a bit like overkill. Judged against history, we are an incredibly healthful society. Our longevity is insane, and past a certain point longevity is a drag on society. I think we’re past that point. Any increase in average life span means more non-contributors for society to support.
It seems to me that if we maintained our current level of collective healthfulness we’d be fine. Sure, there are millions of individuals who would benefit from cures or treatments for this disease or that disease, but I think much of the billions of dollars that currently go into research, much of which has very little bearing on human health (I know: my own NIH-funded biological research will probably never increase any person’s healthfulness), would cause more collective benefit if it were used by the government in other ways, or left in the taxpayer’s pocket.
I don’t suggest that we completely de-fund the NIH. There is a certain level of research that needs to continue in order for us to maintain our current level of healthfulness. New infectious diseases will continue to emerge and threaten our well-being. The CDC must remain fully funded. But I don’t think we need to do nearly as much as we’re doing. Not that it’s bad, just that there are more worthy causes in my view.
I will say that I’m glad our society sees fit to fund the NIH, even if I don’t think it should, because that’s the reason I’m getting paid to get a PhD. It may also be the reason I get a paycheck for the rest of my life. But probably not. Academia is the pits.
Comment # 3 left by Tom on August 22nd, 2006
Wade,
Thanks again for the posting this.
Connor,
“Unconstitutional” is a serious challenge. I know you advocate for a stripped down government, but it seems like you use a very short yard-stick. Also, your objection strikes me as, “Yes, the NIH is good in practice for Americans, but it is still wrong in principle.” If so, is it time to reconsider the principle?
Comment # 4 left by BrianJ on August 22nd, 2006
By the way, nice logo in the post, Wade. Every time I see it, I think I’m seeing the Young Women’s logo.
Comment # 5 left by BrianJ on August 22nd, 2006
I think I would get rid of the National Center for Complemetary and Alternative Medicine (NCCAM).
Comment # 6 left by Jared on August 24th, 2006
I am surprised that no one has mentioned that when compared to the defense budget it is silly to discuss how much money is funded to the NIH. I guess we would rather spend more money killing people than making people healthy.
The studies showing the rate of return on investment tell us that we are netting a profit, not spending. So if we stop investing money in NIH projects our future tax revenue will be less. In a time of economic trouble the best way to spend tax money is on research projects that will improve the economy. It is difficult to show the direct return of investments from NIH funding since some of it is factored from the effects of a healthy workforce. But those effects are real. Private industry knows this. Some businesses have exercise facilities for this reason. My father tells me of factory in a city in Mexico where he used to live. When the factory learned that their workers were coming to work hungry they opened earlier and served breakfast. This seems benevolent, and maybe it was, but the factory increased productivity by having healthy workers. Later they fed the whole family as well, so there was some benevolence.
Brian forgot to mention that one benefit of government funding of science is that the knowledge is then public domain. Not owned by a private individual who can choose to hide it or charge huge amounts. He also didn’t mention all of the many discoveries made by NIH. A very long list.
This year the NIH budget was cut by 0.5% add in inflation and it is worse. That was an idiotic decision.
Comment # 7 left by Aaron on August 31st, 2006
I guess we would rather spend more money killing people than making people healthy.
You miss the point of defense spending! You should consider thinking about global terrorism, Iran, North Korea and other threats as a threat to your/our existence. It’s silly to talk about being healthy if there is no life to make healthy.
Comment # 8 left by Wade on August 31st, 2006
Defense spending… now there’s another issue to discuss in another post.
It is best summarized, for me, by Pres. Kimball’s statement:
Comment # 9 left by Connor Boyack on August 31st, 2006
Interesting quote Connor!
Do you think Pres. Kimball was advocating for a full scale-back of defense spending? I would like for you to provide the citation for that quote so I can read it in context. I have a hunch that he may have been speaking of ideals instead of practical reality.
I would say that if U.S. defenses were in any way weakened or ignored in general, the freedoms the Church enjoys (and which actually enables the Gospel to be taught throughout the world from the U.S.) would be threatened and jeapordized. The reality is that our Country is not going to turn into the anti-nephi-lehis. While a vast amount of our country believes in passivism, the passivists don’t put their trust in God. So there is somewhat of a disconnect between your citation to Kimball and the meaning of defense spending.
Comment # 10 left by Wade on August 31st, 2006
The talk is from the June 1976 Ensign can be accessed here. It’s an excellent one.
Comment # 11 left by Connor Boyack on August 31st, 2006
Aaron,
I’m glad you found the post. I have three responses:
1) You said that I didn’t mention the discoveries made by the NIH. Check the link in the original post after the words “Those doubting the validity of such an assumption are encouraged to read here.”
2) I agree with your basic position that defense spending is too high and health research spending too low. But I wouldn’t say that it is because we would rather kill people—that’s really a dark way of viewing it. I think it’s because war and defense are perceived as dealing with immediate threats so they easily occupy our attention, whereas planning for the future (health care, retirement, etc) requires more discipline. In other words, cancer and heart disease just aren’t as scarey as communists and terrorists.
3) I like your point that when you make money in a venture, you really can’t call it “spending.” Clever!
Connor,
Amazing: I think we may actually agree on something regarding government spending!
Wade,
I follow your reasoning, but I think you take it too far: “I would say that if U.S. defenses were in any way weakened or ignored in general, the freedoms the Church enjoys would be threatened….” With the US spending almost 1/2 of the world’s total military spending—which requires well over half of the US’s discretionary spending—I think the US is spending far, far more than is necessary.
Comment # 12 left by BrianJ on August 31st, 2006
Brian:
I think the US is spending far, far more than is necessary.
You’re probably right. I think the government could be much more frugal in it’s spending habits. Also, I think defense spending is largely driven by defense contractors lobbying for sweet deals that pad their pocket books. But while I think we could spend less, I think we could be more efficient with what we do spend–and this partly has to do with science discoveries in regard to armour and weapons.
Comment # 13 left by Wade on August 31st, 2006
Wade,
Agreed. In light of the original post, is there some way to hold the military accountable for its spending and also a way to measure its return on investment?
Comment # 14 left by BrianJ on August 31st, 2006
It’s an interesting thought! I’ve not read much about statistics on the DOD’s return on investment. There has got to be some form of congressional oversight on this though.
As a side note, I have a good friend who is a jet fighter pilot (he flies F-18 Hornets) and he’s serving in Iraq right now. I’ve seen footage of some of his bombing runs. I asked him how much one of the mid-size bombs they use costs. He said, “about $150,000.” However, he also said that every single piece of ordinance is meticulously accounted for and reported on (whether it hit the target, whether it exploded properly, what the target was etc.). So I do think there is accounting for the funds. I just wonder what kind of effeciency we could have if the politicians behind the game actually cared about it? They are heavily pressured by defense contractor lobbyists. I think the recent Cunningham episode is indicative.
Comment # 15 left by Wade on August 31st, 2006