President Barack Obama answered an important philosophical question last week: How will the federal government fully fund a starved Indian health system?

The answer is budget by budget. The administration boosted spending by 13 percent in fiscal year 2010 and is proposing another 9 percent increase for 2011. But this budget does not resolve the contradiction between “historic underfunding” and the larger reality about federal spending. The proposed budget calls for $5.4 billion in spending for Indian health care, ranging from clinical services to facility maintenance and construction. (The bulk of that money, $4.4 billion would be from appropriations, the rest comes from health insurance collections and special grants.)

Health and Human Services Secretary Kathleen Sebelius said, “Our budget also contains a significant increase in funds for the Indian Health Service as we continue to work to eliminate health disparities. It is the principle that we are trying to establish in our healthcare system – that regardless of race, ethnicity, gender or geography every American deserves high quality and affordable care.”

But while spending on Indian health is increasing, is it growing fast enough to catch up? There remains a significant gap between what is spent on an American Indian/Alaska Native patient than a federal prisoner, $2,130 per person versus $3,985. One measure used by the federal government is a benchmark based on spending for federal employees. The IHS has currently appropriated about 55 percent of that standard on per person basis.

Last April, a tribal task force recommended a $2.1 billion increase in the budget authority for IHS in FY 2011. The tribal leaders called for a 10-year phase in of $21.2 billion to reach spending parity.

The National Indian Health Board describes the budget this way: “The budget demonstrates the administration’s continuing commitment to honoring the federal government’s trust responsibilities and treaty obligations. Exempting IHS from the same ‘freeze’ that other programs and agencies are under is a significant sign. However, with IHS deeply and chronically underfunded, IHS services remain woefully short of need.”

Perhaps the area that most highlights that shortage of need comes in the area of contract health care, services that must be purchased for IHS patients. There is a $46 million boost, or more than 11 percent, from $398 million in FY 2010 to $444 million in FY 2011. That’s important because it’s increasing faster than medical inflation (about 5.7 percent) and the patient population growth of about 2 percent.

Contract care is often the primary narrative for the IHS in news accounts. This is the source of “don’t get sick after June.”

A few weeks ago, before the budget was announced, I talked to IHS Director Yvette Roubideaux about contract health. “It’s a program where we know people are not satisfied because in general American Indian and Alaska Native people believe health care is something owed to them. Unfortunately, with the contract health service program we’re struggling to meet the need with existing resources,” she said. “That unfortunately results in some denials and deferments of services. We know that the patients don’t like this; we know the tribes don’t like that, but it’s the reality of providing health care with a limited budget.”

Roubideaux said the fair way is to stick with medically based decisions. She would also like to increase the alternative sources of funding, such as employee insurance, Medicaid or Medicare.

That’s the other side of the contract health story. When clients of the Indian health system bring their own insurance – employer-based, purchased directly or because of other public programs – adds resources. The FY 2011 revenue budget only shows a slight growth in this area, revenue from private and public health insurance is estimated at $829 million up from $814 million.

The president’s budget is only a proposal, one that will be refined by the Congress. That might even mean more money. But it’s important to put this in perspective. Federal domestic spending is under pressure because it’s an easy symbol of excess. The federal spending that’s growing the fastest is off the table, namely Medicare, Medicaid and interest on the debt.

And that brings us back to the need for general health care reform: There won’t be spending parity in the Indian health system until that’s accomplished.


Mark Trahant is a Kaiser Media Fellow examining the Indian Health Service and its relevance to the national health care reform debate. He is a member of Idaho’s Shoshone-Bannock Tribes. Comment at www.marktrahant.com.