Prevention as economic policy: the case Europe cannot afford to ignore

The economics of inaction

Europe’s debate on competitiveness has centred on industrial strategy, digital transformation and energy security. What it has systematically neglected is the silent economic drag of preventable disease. Non-communicable diseases (NCDs)—cardiovascular disease, type 2 diabetes, cancer and chronic respiratory conditions—account for more than 87% of all deaths in the EU (OECD, 2023). The burden is measured not only in lives lost, but in productivity foregone, public finances strained and labour supply eroded. Treating prevention as a health expenditure rather than an economic investment is not a technical oversight. It is a strategic failure with intensifying consequences.

The evidence on returns to preventive investment is strong. A landmark systematic review found that the median return on investment for public health interventions is 14.3 to 1, with nationwide programmes yielding a median of 27.2 to 1 (Masters et al., 2017). These returns materialise across multiple budgets and time horizons – lower long-term care costs, higher labour force participation, reduced disability expenditure — which is precisely why they are systematically undervalued in annual cycles. The macroeconomic evidence reinforces this: improvements in population health drive economic growth independently of education and capital accumulation (Bloom et al., 2004), and the economic burden of cardiovascular disease alone runs to tens of billions of euros annually in productivity losses across Europe – losses partially avoidable through earlier preventive action (Luengo-Fernández et al., 2023).

Notwithstanding the evidence, the investment response has been inadequate. Public spending on prevention averages between 2% and 3% of total health expenditure across EU member states. In 2022, 50.6% of EU adults were overweight or obese (Eurostat, 2024); 26% of EU residents still smoke, claiming nearly 700,000 European lives annually (European Commission, 2024); and physical inactivity is projected to generate almost 500 million new NCD cases worldwide between 2020 and 2030, adding US$27bn per year in direct healthcare costs (WHO, 2022; Ding et al., 2016).

The political economy of underinvestment

Understanding why prevention is underfunded requires confronting the political economy that systematically devalues it. Prevention’s returns are diffuse, delayed and statistically invisible. Acute care, by contrast, is visible, immediate and emotionally salient. It commands public sympathy and political attention in ways that prevention never will.

Fiscal accounting rules compound this structural bias. EU member states treat all health expenditure as current spending — whether it funds an emergency admission or a vaccination programme. There is no mechanism to recognise prevention as capital investment. This misclassification is not merely a technical accounting problem. It is a governance failure. As Monti, Torbica, Mossialos and McKee argued in the context of the Pan-European Commission on Health and Sustainable Development, national systems urgently need to change the way they record public spending, which currently fails to recognise the value of investment in the future; and the pandemic made clear that no country can address these challenges alone, pointing to the need for multilateral frameworks and shared European commitment to health as a public good (Monti et al., 2021).

Healthcare financing systems exacerbate the misalignment further. Most European systems reward activity rather than outcomes, compensating providers for treating disease rather than preventing it. Primary care, the setting best placed to deliver preventive interventions at scale, remains comparatively under resourced (Kringos et al., 2013). The consequences are visible: geographic variation in quality of care drives avoidable disparities in hospital readmission rates across Italian regions (Wang et al., 2020), and inequalities in avoidable hospitalisation in urban areas point directly to failures of primary prevention in the communities that need it most (Pongiglione et al., 2020).

The behaviour problem: why supply-side reform alone is not enough

Even where prevention programmes exist, a fundamental challenge remains: engagement. The economic model of rational health behaviour is contradicted by decades of evidence. Economists term this ‘present bias’ — the tendency to overweight immediate costs and underweight future rewards. The anticipated health gains of healthy behaviour are delayed and uncertain. The costs are immediate and certain. Public preferences are shaped further by societal context, institutional trust and perceived trade-offs between individual burden and collective benefit (Antonini et al., 2025). A one-size-fits-all approach is unlikely to succeed. Effective policy must account for preference heterogeneity and design accordingly.

Addressing this requires a combination of instruments, each operating through different mechanisms and reaching different populations. Fiscal measures, taxes on tobacco, alcohol and sugar-sweetened beverages, are among the most powerful tools available, shifting relative prices at population scale, generating revenues that can be reinvested in health, and producing effects that are strongest among lower-income groups who are most exposed to preventable risk (Colchero et al., 2016; Mytton et al., 2012). Choice architecture, changing default options, the salience of healthy choices and the framing of health decisions, produces meaningful behavioural shifts at low cost and without restricting individual freedom (Thaler and Sunstein, 2008; Marteau et al., 2011). Structural interventions, from smoke-free legislation to urban design that supports physical activity, operate through environmental and regulatory design rather than individual behavioural change mechanisms, and reach populations least responsive to information- or incentive-based interventions alone (Sallis et al., 2016).

Financial incentives offer a further and increasingly well-evidenced lever. A recent scoping review of 27 real-world prevention programmes across upper-middle and high-income countries mapped the full range of incentive structures in practice — from cash transfers and vouchers to lotteries and insurance premium reductions — finding that the timing and conditionality of incentives are central to their effectiveness (Petracca et al., 2025). Three implementation challenges deserve attention: sustaining behaviour change beyond the incentive period, ensuring equitable access across income groups and the potential crowding out of intrinsic motivation (Lipman et al., 2026).

No single instrument is sufficient. The most effective prevention systems deploy fiscal, environmental and incentive-based tools in combination, calibrated to the behaviour and the population in question.

Prevention as infrastructure: what needs to change

The conceptual shift required is simple but consequential: treating prevention as infrastructure rather than consumption. Europe invests in transport networks, energy grids and digital connectivity because these are recognised as enabling conditions for economic activity whose returns are diffuse, long-term and too large for any individual actor to capture alone. Prevention has precisely the same structure. Simulation modelling has shown that population-level interventions targeting unhealthy diets, physical inactivity and obesity could avert millions of NCD cases and generate net fiscal savings within a decade across OECD countries (Cecchini et al., 2010).

Three shifts are required. First, accounting reform: prevention spending must be reclassified as capital investment, enabling multi-year budget commitments and protecting prevention from the short-term fiscal pressures that have repeatedly dismantled it. Second, incentive reform across both provider and patient dimensions: outcome-based payment models rewarding avoided disease must be paired with patient-facing incentive schemes grounded in behavioural economics, deployed as standard instruments of prevention policy rather than experimental add-ons. Third, EU-level coordination: health remains primarily a national competence, but the EU’s added value lies precisely where national governments systematically underinvest due to spillovers, short-termism and fiscal constraints. Prevention meets all three criteria.

Europe is choosing, year after year, to spend its way through preventable disease rather than invest its way out of it. This is not a health system failure in isolation. It is an economic policy failure with direct consequences for productivity, fiscal sustainability and social cohesion. The evidence is in place. The financing instruments exist. The behavioural insights are available. What remains is political will — the will to recognise prevention not as a cost to be minimised, but as the most powerful lever Europe possesses for building a healthier, more equitable and more competitive society.

References

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The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.