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Indian Health Service The Federal Health Program for American Indians and Alaska Natives

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President Proposes 2% Increase in Fiscal Year 2006 Budget for Indian Health Service

The proposed budget authority for the Indian Health Service (IHS), an agency in the Department of
Health and Human Services (HHS), for fiscal year (FY) 2006 is $3 billion. This is a $63 million, or
approximately 2%, increase over the FY 2005 enacted budget level. Adding in funds from health
insurance collections estimated at $642 million, designated diabetes appropriations of $150 million, and $6 million for staff quarters rental collections, increases the proposed budget for the IHS to $3.8 billion in program level spending. This increase reflects the impact of the Department’s Tribal budget consultations and a continuing Federal Government commitment to provide for the health of members of federally recognized Tribes.

The challenge for the IHS is to continue to provide access to quality health care for an increasing
population. An estimated 1.8 million American Indians and Alaska Natives will be eligible for IHS
services in 2006, an increase of 1.6 % over 2005 and 9.4% since 2001. The FY 2006 budget
includes new funds to help provide for the additional 29,000 people who are expected to seek
services in FY 2006, cover increased pay costs for the Federal and Tribal employees who provide
these services, and meet the rising cost of providing these services. Funds will go primarily to
Clinical Services (operation of hospitals and clinics, and purchase of medical care), but also to other IHS programs that are providing additional services and support functions.

The budget includes an additional $32 million toward covering increased Federal employee pay
costs and to allow tribally-run health programs to provide comparable pay raises to their staffs.

A total of $3 million is included for health facility constructions, sufficient to fully fund the construction of 24 units of new and 5 units of replacement staff quarters for the Harlem and Hays
outpatient facilities in Montana.

An additional $35 million is included to add staffing for six outpatient facilities at Red Mesa,
Arizona; Sisseton, South Dakota; Pinon Arizona; Idabel, Oklahoma; Coweta, Oklahoma,; and St.
Paul, Alaska. Tribes financed construction of two of these facilities, the Idabel and Coweta
facilities, saving the IHS $22 million in construction costs.

The FY 2006 budget request includes $94 million for sanitation construction – an increase of $2
million, or 2%, over FY 2005, to provide safe water and waste disposal systems to an estimated
20,000 Indian homes. Approximately 88% of American Indian and Alaska Native homes have been provided safe and reliable water since the inception of the IHS sanitation construction program. The IHS credits its sanitation constructions program with playing a key role in the long-term reductions it has achieved in infant mortality, gastroenteritis, and other environmentally related diseases.

Tribes continue to increase the number of IHS programs they operate under the authority of the
Indian Self-Determination and Education Assistance Act (Public Law 93-638, as amended). In FY
2006, Tribes will control an estimated $1.8 billion, or approximately 55%, of the total IHS budget
request. To enable Tribes to develop the administrative infrastructure necessary to successfully
manage these programs, the budget includes a total of $269 million for contract support costs, an
increase of $5 million over FY 2005. The additional funds will allow the IHS to provide contract
support costs for the 18 to 20 additional programs it anticipates Tribes will want to take over
administration of in FY 2006.

The budget includes an additional $27 million for contract health service (CHS) costs. The IHS
uses CHS funds to supplement the care provided in its own facilities by purchasing medical care
from hospitals and health providers. These CHS funds pay for specialty care, including most types
of surgery, and are used to purchase medical care for Tribes that do not have an IHS facility nearby.

While most IHS services are provided on or near reservations, approximately one percent of the
budget is used to provide services to Indian people living in urban areas. The IHS 2006 budget
request provides $33 million to help support 34 Urban Indian health organizations that provide
service in cities with large numbers of Indian people. Services provided vary from outreach,
referral, and case management to comprehensive care, including ambulatory medical care; dental
services; community education; alcohol and substance abuse prevention, treatment, and counseling; mental health counseling; and social services.

The budget includes $150 million for diabetes prevention and treatment grants. Through the Special Diabetes Program for Indians, the IHS has awarded $650 million in grants over the past 5 years to over 300 Tribes and Indian organizations to support diabetes prevention and disease management at the local level. This program has substantially increased the availability of services such as basic clinical exams, newer treatment medications and therapies, laboratory tests to assess diabetes control and complications, screening for diabetes and pre-diabetes, nutrition education, and physical fitness activities.

FY 2006 Proposed Budget Overview for the Indian Health Service (Dollars in thousands)

Type FY 2005 (Enacted) FY 2006 (Proposed) Change over FY 2005
Clinical Health Services
Hospitals & Health Clinics $1,289,418 $1,359,541 $70,123
Dental Health $109,023 $119,489 $10,466
Mental Health $55,060 $59,328 $4,268
Alcohol & Substance Abuse $139,073 $145,336 $6,263
Contract Health Services $498,068 $525,021 $26,953
Total, Clinical $2,090,642 $2,208,715 $118,073
Preventive Health Services
Public Health Nursing $45,015 $49,690 $4,675
Health Education $12,429 $13,787 $1,358
Community Health Reps. $51,365 $53,737 $2,372
Immunization AK $1,572 $1,645 $73
Total, Preventive $110,381 $118,859 $8,478
Other Services
Urban Health $31,816 $33,233 $1,417
Health Professions $30,392 $31,503 $1,111
Tribal Management $2,343 $2,430 $87
Direct Operations $61,649 $63,123 $1,474
Self-Governance $5,586 $5,752 $166
Contract Support Costs $263,683 $268,683 $5,000
Total, Health Services $2,596,492 $2,732,298 $135,806
Indian Health Facilities
Maintenance & Improvement $49,204 $49,904 $700
Sanitation Facilities $91,767 $93,519 $1,752
Health Care Facilities Construction $88,597 $3,326 ($85,271)
Facilities & Environmental Health Support $141,669 $150,959 $9,290
Medical Equipment $17,337 $17,960 $623
Total, Facilities $388,574 $315,668 ($72,906)
TOTAL PROPOSED BUDGET AUTHORITY $2,985,066 $3,047,966 $62,900
Insurance (Medicare/Medicaid/Private) $632,829(est) $641,920(est) $9,179
Staff Housing $6,200 $6,288 $88
Allocations from Other Sources
Special Diabetes Program for Indians $150,000 $150,000 $0
TOTAL PROGRAM LEVEL $3,774,095 $3,846,174 $72,079