IHS Overview

The Indian Health Service (IHS) within the Department of Health and Human Services (HHS) is the lead federal agency charged with improving the health of American Indians and Alaska Natives. IHS provides health care for approximately 2.2 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas.¹ IHS provides services to members of 566 federally recognized tribes. It provides services either directly or through facilities and programs operated by Indian Tribes or Tribal Organizations through self-determination contracts and self-governance compacts authorized in the Indian Self-Determination and Education Assistance Act (ISDEAA).²

The Snyder Act of 1921³ provides general statutory authority for IHS.⁴ In addition, specific IHS programs are authorized by two acts: the Indian Sanitation Facilities Act of 1959⁵ and the Indian Health Care Improvement Act (IHCIA).⁶ The Indian Sanitation Facilities Act authorizes the IHS to construct sanitation facilities for Indian communities and homes. IHCIA authorizes programs such as urban health, health professions recruitment, and substance abuse and mental health treatment, and permits IHS to receive reimbursements from Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), the Department of Veterans Affairs (VA), and third-party insurers.

Funding Sources

The IHS has three major sources of funding, described here in order of magnitude: (1) discretionary appropriations, (2) collections, and (3) mandatory appropriations. The IHS receives its discretionary appropriations through the Interior/Environment appropriations act,⁷ unlike most agencies within HHS, which receive their appropriations through the Labor, Health and Human Services and Education appropriations act.⁸ IHS's discretionary appropriations are divided into three accounts: (1) Indian Health Services, (2) Contract Support Costs, and (3) Indian Health Facilities.

As a second source of funding, IHS collects funds as reimbursement for health services provided. IHS has the authority to receive reimbursement from other federal programs such as Medicaid, Medicare, and the Department of Veterans Affairs. IHS also receives reimbursements from state programs (such as workers compensation) and from private insurance. IHS, under the authority for reimbursements given in IHCIA, is able to retain these payments to increase services available to its beneficiaries. In addition to reimbursements (its largest source of collections), IHS collects rent from facilities it owns.

The third and smallest source of IHS funding is a mandatory appropriation of $150 million annually to support Special Diabetes Programs for Indians.⁹ This mandatory funding was extended through FY2017 in the Medicare Access and CHIP Reauthorization Act (MACRA, P.L. 114-10), but no further appropriations have been enacted for FY2018. The President's budget requests continued mandatory funding for this program for FY2018.

FY2018 Budget Request and Funding History

Table 1 presents IHS's funding from FY2010 through the amounts proposed in the President's FY2018 budget submission. The table shows increases in both appropriated funds and funds collected by IHS. The table presents IHS's three budget accounts—Indian Health Services, Contract Support Costs, and Indian Health Facilities—and the funds collected and allocated to programs under these accounts. Collections, and proposed and actual mandatory funding, are subtracted from program-level funding to show the agency's discretionary budget authority.

IHS Collections

IHS facilities collect reimbursements from third-party payors for services provided to IHS beneficiaries who are also enrolled in other programs. These collections comprise a growing percentage of IHS's clinical services budget (see Table 1). Medicaid is the largest source of IHS's collections—approximately 69% of all reimbursements collected in FY2015, the most recent year of final data available—followed by Medicare (22% in FY2015) and private insurance (9% in FY2015). Beginning in FY2014, IHS began receiving reimbursements from the VA for services provided to IHS beneficiaries who were also enrolled in the VA (these reimbursements were 0.7% of all of IHS's third-party collections in FY2014 and FY2015). For FY2013, reimbursements were approximately $340,000; therefore, these funds are not visible in Figure 1.

Figure 1. IHS Reimbursements by Source, FY2010-FY2015 (Actual), FY2016-FY2018 (Expected)

Sources: Figure created by CRS. Funding amounts for FY2010-FY2015 and FY2018 are taken from IHS's congressional budget justification documents, available at http://www.hhs.gov/budget/. FY2016 and FY2017 are from IHS's operating plan for FY2017, available at https://www.ihs.gov/budgetformulation/includes/themes/newihstheme/display_objects/documents/FY2017-IHS-Operating-Plan.pdf.

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