Introduction

The bidirectional relationship between health and wealth is one of the few accepted relationships that bonds and transcends the disciplines of economics and public health [1]. The health/wealth relationship is particularly pronounced in infectious diseases with high disease-transmission rates, where mitigation can reduce both short- and long-term demographic/economic damage. Such damage may involve increased mortality, morbidity, and disability; the closure of schools and consequent arrest of human capital development; and/or unemployment, bankruptcies, and disruption of domestic and foreign trade [1]. Central to this is the impact that infectious diseases can have on governments in terms of increased expenditure and lost tax revenues [2]. Thus, government plays a central role in creating development incentives, purchasing and distributing vaccines to combat infectious disease.

Every year the US federal government invests in the Vaccines For Children (VFC) program, purchasing more than half of vaccines used in children [3]. To inform the debate over regular negotiations regarding public vaccination funding, the present analysis measures the annual net government fiscal dividend from ongoing investments in childhood vaccination using an established public economic framework [4–6]. The fiscal framework extends the human capital approach to assess the economic impact of morbidity and mortality attributable to vaccine preventable conditions in children from the perspective of government [2,4,5]. Within our framework we compare how infectious diseases influence government cash flows in terms of lost tax revenue attributed to labor productivity, and changes in transfer payments over the lifetime of the birth cohort with and without immunization. Findings from this analysis provide vital information to government officials operating under the fiscal constraints.

Materials and methods

Results

Total discounted lifetime fiscal benefits attributed to pediatric vaccination within a single birth cohort is estimate at $41.7 billion. This fiscal windfall arises from: (A) averted tax revenue losses $30.6 billion, (B) savings on disability costs $1.6 billion, (C) reduced special education costs $0.91 billion and (D) public-sector healthcare costs $8.6 billion after deduction of publicly-purchased vaccination costs (Table 1, columns A+B+C+D–vaccination costs).

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Table 1. Summary of fiscal effects attributed to vaccination discounted by 3%.

https://doi.org/10.1371/journal.pgph.0002461.t001

All pediatric vaccines raise tax revenues by reducing vaccine-preventable morbidity and mortality in amounts ranging from $7.3 million (hepatitis A) to $20.3 billion (diphtheria) over the lifetime of the birth cohort. Fiscal savings were also due to averted disability transfer payments and special education costs for children experiencing permanent disablement. Savings from disability pensions were attributable to six of the infectious conditions with most of these averted costs attributed to hepatitis B, Hib infections, and measles, totaling $149.5 million, $343.4 million, and $89.9 million, respectively.

The inclusion of future longevity costs has a limited impact on the total fiscal benefits for government from childhood vaccination. Specifically, longevity increases government obligations for Social Security benefits and Medicare, which reduces fiscal gains by $billion. This breaks down to increased Social Security benefits of $4.6 billion and Medicare costs of $3.9 billion that are deducted from fiscal gains (Table 1, columns A+B+C+D–E–F–vaccination costs).

The fiscal BCR based on changes in tax receipts and transfer costs relative to public vaccination costs was 17.8 excluding longevity costs. Including longevity costs attributed to Social Security and non-related healthcare obligations decreased the fBCR to 3.9.

The estimated economic gains from childhood vaccination as a proportion of GDP from the net fiscal gains including longevity from a single birth cohort without and with longevity costs represent 0.18% and 0.14% of GDP in 2019, respectively.

The results of the scenario analysis show high sensitivity to the selection of discounting rate with the scenario of 0% discount rate resulting in high fBCRs due to the impact of productivity growth (Table 2). Including the costs attributed to longevity increased the fBCR to 1.6 and 8.1 for discount rate set to 0% and 5% wage increases, respectively. By comparison, our findings indicate that changing vaccine costs had limited impact on the fBCR when evaluated with or without the effects of longevity included. A scenario that set wage growth and inflationary measures to 0% and zero discount rate lowered the fBCR to 1.2 when effects of longevity were included.

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Table 2. Scenario analysis of core model inputs and impact on fiscal benefits cost ratio with and without longevity expenditure.

https://doi.org/10.1371/journal.pgph.0002461.t002

Discussion

Public expenditure on childhood vaccination in the United States (US) includes purchases through the VFC, with additional contributions from Section 317 and state and local purchases, which together purchase more than half of vaccines used in children [3,32]. Under the terms of the VFC, contracts are negotiated between manufacturers and the Secretary for defining vaccine purchases and delivery [33]. Both VFC and Section 317 have shown to increase vaccination coverage, and VFC has been shown to reduce income disparities in vaccination uptake. High coverage levels enabled by public-sector support for vaccination contributes to maintenance of herd protection and sustained low rates of vaccine-preventable diseases in the US population. However, the economic value of public financing for immunization has not been studied, and the sustainability of these programs has been questioned [32]. Additionally, with the introduction of the Inflation Reduction Act by Congress in 2022, the role of economic data could be increasingly important for establishing value of technologies, although the law stops short on the role of defining economic value from changes in outcomes [34].

In support of public spending on vaccination, this paper reveals the significant government benefits associated with public sector investment in the U.S. childhood immunization program that derive from reductions in morbidity and mortality associated with 14 childhood disease vaccines recommended by the Advisory Committee on Immunization Practices. We estimate $30.6 billion in tax revenue losses, $1.6 billion in disability transfer payments, and $909 million in special education cost can be averted from childhood vaccination over the lifetime of the 2017 birth cohort, representing discounted benefits exclusively gained by the government. Furthermore, we estimate that $1 spent on vaccines generates $17.8 in fiscal return over the lifetime of the birth cohort.

The analysis reported here considers a birth cohort that includes disabled and non-disabled individuals and those that die from infectious conditions for which we quantify lifetime fiscal losses. The lifetime present value of tax revenue loss due to mortality is estimated based on the age of death. Similarly, the model calculates the percentage loss of earnings and tax revenue due to disability and cognitive disability. Depending on the age of disability the present value of tax revenue loss is estimated for the remaining life expectancy of the disabled person. Averted deaths and disability cases are then multiplied by the averted tax revenue loss. On average, the government benefits from each incremental life that is saved in terms of future tax revenue. However, in reality the government benefits substantially more from preventing disability as these individuals require a lifetime of income support and will pay fewer taxes due to reduced work activity. For example, the disability costs paid by Social Security for an individual every year are more than $14,000 annually [35]. Although permanent disablement is rare for pediatric infectious diseases, for completeness we included these cost estimates in our fiscal projections.

Vaccine-induced longevity costs were approximately $4.6 billion in retirement pension costs and $3.8 billion future Medicare costs. In a scenario where vaccines were absent, this would represent a potential fiscal loss of 0.18% in GDP based on the lost lifetime earnings of a single birth cohort.

Findings from the univariate sensitivity analysis suggest that the discount rate applied is one of the most impactful parameters on government cash flows. While there are some suggestions to use differential discount rates or lower discount rates for longer time horizons [5], we have applied a single discount rate of 3% over the duration of the model which suggests our findings might be conservative. When forecasting government revenues, standard practice by federal agencies is to discount future cash flows using projected yields on Treasury securities as this more appropriately reflects the future value of money to the government [36]. As Treasury securities have been at historic lows over the past several years [37], it was felt it would be more conservative to use the accepted 3% discount rate normally used in health economic literature as the base case. As shown in our analysis, varying the discount rate had a significant impact on the fBCR, however in both extreme scenarios the yield on pediatric vaccination remained positive.

In the scenario analysis it was observed that vaccine acquisition costs do not dramatically influence the fiscal yield for government. In our scenario analyses, changing the acquisition cost by +/- 10% resulted in a fBCR of 3.8 and 3.9, respectively when compared to the base case of 3.9 when costs of longevity are included (Table 2). This is attributed to the fact that acquisition costs occur early in the fiscal life and can yield benefits over many years, and the human capital gains–and associated taxes derived from wages–are sustained over many years in comparison with upfront vaccine investment costs. While vaccine costs are important for government in the short-term, over the long-term public economic gains are more than enough to cover small variations in prices.

Public economic assessments seek to reflect the real impact of inflation and tax revenue on public accounts in relation to funding decisions. To reflect these changes, it is necessary to adjust expenditure for inflation, and future wage growth, both of which influence government revenue projections as applied in many types of public economic assessments [6]. As noted in our scenario analysis, future wage growth had a pronounced effect that more than doubled the fBCR when wages grow at 5% increasing the fBCR to 8.1, and when wage growth was zero, the fBCR reduced to 1.7 when the effects of longevity were included. In contrast, decreasing inflation impacts government spending on transfer programs as these are often linked to CPI, therefore decreases government spending relative to revenue. This explains why the fBCR increases to 7.2 (with longevity) in the absence of inflation in the model (Table 2).

The averted fiscal costs described here are largely attributable to changes in mortality due to reductions in vaccine-preventable infectious conditions in children which are both highly contagious and have high mortality rates. The magnitude of fiscal gain varies depending on the number of deaths averted and the timing of such deaths. Diphtheria causes fewer deaths than pneumonia-related infections. However, these deaths occur mostly in childhood, preventing children from ever entering the workforce, therefore depriving government of future tax revenue on potential wages. In contrast, pneumococcal infections occur over the lifetime and mostly concentrated in later years. As many of these individuals have paid taxes early in life, the fiscal loss is less pronounced compared with a condition where mortality is concentrated in children. As few infectious conditions give rise to permanent disability that can influence future education attainment and employment trajectory, the costs of special education and disability represent 6% of averted fiscal costs. By contrast, diseases with high morbidity in infants, but low mortality or disability consequences, such as rotavirus and varicella, have lower fiscal consequences because the disease experience typically occurs in childhood and seldom leads to death. While preventing these diseases may be cost-effective from a societal perspective, their impacts are less pronounced from a fiscal perspective [7,8].

The public good of protection from disease is achieved in the US through a combination of public and private financing. The contribution of one or the other financing source cannot be disentangled, as herd immunity requires high coverage rates for many diseases. Private health insurers benefit from reductions in vaccine-preventable disease case rates, which reduces hospitalizations and demand for medical services. Similarly, health service cost savings extend to government and taxpayers for those treated through public programs. The VFC program, established in 1993 after successive years with high rates of measles cases, has been shown to increase coverage rates by removing financial barriers to vaccination for a large portion of the population. Since implementation, the US achieved greater than 90% coverage for many routine childhood vaccines [38]. In our analysis, we account for the main fiscal costs and benefits that result from the sustained high level of coverage that public and private financed.

All members of society interact with government public accounts through taxation and redistribution of income through social benefits, including public health programs. Within this social contract, all members of society have a vested interest in the health of their neighbors and in ensuring they remain healthy and productive, accumulate wealth, and continue paying taxes. Moreover, what is not captured in this analysis is the deadweight loss associated with premature death or disablement as remaining workers or future workers face higher taxes to pay for social benefit programs promised to others. In this context, all members of society benefit from each other’s commitment to vaccinate, thereby reducing deadweight losses that can lead to increased taxes, and increased prices for all. The fiscal analysis presented here spotlights these relationships and demonstrates the accrued benefits from investing in vaccination programs and the benefits of reducing disease transmission of vaccine-preventable conditions.

Conclusions

There are many justifications for investing in public vaccination programs for preventing childhood infectious conditions. In the fiscal analysis described here we provide further justification on fiscal grounds and the resulting tax revenue gains and reduced transfers associated with preventing infectious conditions.

Supporting information