Since 2003, the President's Emergency Plan for AIDS Relief, or PEPFAR for short, has been USAID's global health initiative to fight HIV/AIDS. PEPFAR has received over $100 billion in funds for the response to HIV/AIDS. It has been the largest global health program dedicated to fighting a single disease. Why is PEPFAR making it on my blog? Aside from PEPFAR services being disrupted by the Trump administration cancelling various foreign aid contracts (read study on preliminary effects of that disruption here), Congress extended PEPFAR's reauthorization last year. If the reauthorization is not renewed, it is set to expire tomorrow: March 25, 2025.
This begs the question of whether PEPFAR should be reauthorized or not. Some of you might expect a knee-jerk response of "No" from me simply because it is a sizable government program. Last month, I made an argument for shutting down the U.S. Agency for International Development (USAID) in no small part because of the perverse incentives that foreign aid generally creates. That much is true. Additionally, I worry about how much on PEPFAR is spent. In FY2024, the government spent $6.5 billion on PEPFAR. Although it is about 0.1 percent of government spending, I am quite concerned with the ballooning public debt of the U.S. government.
At the same time, the price tag and the fact that it is a government program are not prima facie adequate reasons for me to automatically say "No." I am first and foremost a consequentialist libertarian. What this means is that my main reason for being libertarian is because I find that freer markets, lower taxes, and fewer regulations generally create more desirable outcomes than government intervention.
It would not be the first time I argued for at least some government intervention in public health policy. I have done so by arguing for birth control subsidies, partial smoking bans, and paying people to take the COVID-19 vaccine, all of which I did from a libertarian lens. One of the reasons I have such problems with government intervention generally is because it does not solve the problem the policy was intended to address, or even worse, it exacerbates the problem. A government policy that actually helps is a notable exception, not a norm. Looking at the data, it looks like PEPFAR is one of those exceptions from an outcomes-based point of view.
PEPFAR's main success is its considerable positive health outcomes. PEPFAR reports that it has saved 21 million lives. The Kaiser Family Foundation found that PEPFAR reduced the all-cause mortality rate in recipient countries by 20 percent. I came across an independent citizen review of PEPFAR (Piper et al., 2024) that estimated that PEPFAR saved between 7.5 million and 30 million lives between 2004 and 2018. At that point, $70 billion was spent. That would mean PEPFAR costs between $1,500 and $10,000 per life saved.
Let's create a low-bound estimate for this cost-benefit analysis. Use the average life expectancy payout from life insurance in the U.S. (i.e., $168,000) and the low-bound estimate of 7.5 million lives saved. it would mean $1.26 trillion in benefit for lives saved for the $70 billion spent, or $18 of benefit for each dollar spent. If you use the value of life from FEMA or EPA of around $11 million along with the high-bound estimate of lives saved (i.e., 30 million), the benefit-to-cost ratio increases to over $4,700 in benefit for each dollar spent.
This back-of-the-envelope cost-benefit analysis is quite frankly astounding. And to think it does not even consider the benefit of greater economic stability. The Kaiser Foundation calculated that PEPFAR was associated with a 2.1 percentage point increase in GDP from 2004 to 2018. Even if the boost to GDP was only 1.4 percentage points (Tompsett, 2020), that would still mean a $14 increase in per capita income for the sub-Saharan region, which is significant for a region with lower purchasing power. An economic analysis in the Public Library of Science found similar boosts to the GDP and education outcomes (Crown et al., 2023). Why would it create better economic outcomes? Because people who are healthier and live longer are able to contribute to the economy.
One could argue that PEPFAR puts major emphasis on HIV/AIDS while de-emphasizing other health issues in those regions, such as malaria, tuberculosis, maternal health, or malnutrition. One could also argue that the U.S. government should focus on health problems at home, whether that is the opioid crisis or diabetes and heart attacks primarily caused by high obesity rates. Where funds should be spent and how much are subjective policy preferences directed by one's priorities and values.
I would counter by saying that HIV/AIDS is another example of how a public health problem can be global, much like we saw with the COVID pandemic. Rather than focusing on government-to-government aid, PEPFAR focuses on public-private collaboration with pharmaceutical companies and suppliers of diagnostic tools, treatments, and other health technology to strengthen the private-care healthcare systems of developing countries that have been contending with high HIV/AIDS rates. This means that PEPFAR strengthens local health systems in the long-run instead of creating dependency on foreign governments for treatments and preventative services.
Focusing on both HIV/AIDS treatment and prevention not only mean a lower mortality rate, but also means that stopping future infections means fewer dollars spent on treatment, especially if those dollars are spent by the government. Tangentially, the Right-leaning Center for Strategic and International Studies (CSIS) makes a case for using PEPFAR to strengthen global security for when the next disease strikes. PEPFAR is an example of what foreign aid should strive for, rather than most foreign aid that perpetuates dependency and malfunctioning economies and political institutions.
Does that mean that the PEPFAR program is perfect? No. Even someone as critical of PEPFAR as the Right-leaning Heritage does not suggest eliminating PEPFAR, but rather reforming PEPFAR. If USAID is indeed eliminated, PEPFAR could be managed solely by the Centers for Disease Control and Prevention (CDC) or the Department of State instead of having USAID participation. There can also be better programmatic objectives, a focus on more countries due to the global nature of the HIV/AIDS epidemic, or even figure out how PEPFAR could develop sustainable health systems that can address multiple diseases.
Much like I did with arguing for birth control subsidies, the libertarian in me has to ask what sort of costs would be incurred if the program disappeared versus the cost of the program itself. Some problems that would emerge by eliminating PEPFAR include increased HIV transmission and new infections, rising mortality rates, increased healthcare costs, economic stability and social unrest, and potentially regional instability in parts of the world that already have more than their fair share of issues. The interconnectedness of these problems could create problems not only on a regional level, but a global one.
Some might balk at the price tag, but I would contend that it would cause more problems in the big picture by removing PEPFAR. I will conclude by saying that even with a need for reform, the number of lives saved and economic benefit derived from PEPFAR, not to mention the problems and headache avoided, make a very strong case for PEPFAR.
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