[Budget of the United States Government]
[VI. Investing in the Common Good: Program Performance in Federal Functions]
[22. Health]
[From the U.S. Government Publishing Office, www.gpo.gov]


 
                               22.  HEALTH

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                               Table 22-1.  FEDERAL RESOURCES IN SUPPORT OF HEALTH                              
                                            (In millions of dollars)                                            
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                                                                               Estimate                         
               Function 550                   1997   -----------------------------------------------------------
                                             Actual     1998      1999      2000      2001      2002      2003  
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Spending:                                                                                                       
  Discretionary Budget Authority..........    25,086    26,355    27,515    28,276    29,221    30,479    32,957
  Mandatory Outlays:                                                                                            
    Existing law..........................   100,882   106,339   115,050   122,450   131,564   141,347   152,447
    Proposed legislation..................  ........  ........        44       124       224      -110      -120
Credit Activity:                                                                                                
  Direct loan disbursements...............        21  ........  ........  ........  ........  ........  ........
  Guaranteed loans........................       140       152        74        13         6  ........  ........
Tax Expenditures:                                                                                               
  Existing law............................    75,506    80,580    85,925    91,480    97,585   104,356   112,109
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  Federal health programs work to improve America's health. In 1999, the 
Federal Government will spend about $141 billion and allocate about $86 
billion in tax incentives to provide direct health care services, 
promote disease prevention, further consumer and occupational safety, 
conduct and support research, and help train the Nation's health care 
work force. Together, these Federal activities have generated 
considerable progress in extending life expectancy, cutting the infant 
mortality rate to historic lows, preventing and eliminating infectious 
diseases, leveling fatality among those with HIV/AIDS, and maintaining 
the quality of life of individuals suffering from chronic diseases and 
disabilities.
  In 1995, estimated life expectancy matched the record high, 75.8 
years, of 1992. The steady rise since the early 1900s is partly 
attributable to advances in medical science, health technologies, and 
public health administration. Furthermore, infant mortality has reached 
a record low of 7.5 infant deaths per 1,000 live births, a six-percent 
reduction from the previous year. For the first time, HIV/AIDS death 
rates did not increase from the previous year. The age-adjusted death 
rate from HIV infection was 15.4 deaths per 100,000 population in 1995.
  President Johnson and Congress created Medicaid in 1965 as a Federal-
State partnership to provide health insurance for the low-income elderly 
and the poor. Since then, the Nation's leaders have expanded the program 
from time to time to meet emerging needs. In 1986, for instance, they 
answered public concerns about high infant mortality rates and the 
decline in private insurance coverage by expanding Medicaid coverage for 
prenatal and child health services. In 1997, the President and Congress 
created a new children's health program that builds on the success of 
previous Medicaid expansions for children.
  The Federal Government also helps expand health care coverage to those 
with which it has a special obligation (including veterans, uniformed 
military personnel, and American Indians and Alaska Natives). To foster 
significant advances in treatments and cures, Federal health grants help 
sponsor biomedical research that would not otherwise take place. 
Together, Federal assistance in health improves the public welfare and 
health status.

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  The Department of Health and Human Services (HHS) is the Federal 
Government's lead agency for health programs. HHS' Strategic Plan states 
the agency mission as: ``to enhance the health and well-being of 
Americans by providing for effective health and human services and by 
fostering strong, sustained advances in the sciences underlying 
medicine, public health, and social services.''
  HHS' Strategic Plan includes six goals:
  (1) LReduce the major threats to health and productivity of all 
Americans;
  (2) LImprove the economic and social well-being of individuals, 
families, and communities in the United States;
  (3) LImprove access to health services and ensure the integrity of the 
Nation's health entitlement and safety net programs;
  (4) LImprove the quality of health care and human services;
  (5) LImprove public health systems; and
  (6) LStrengthen the Nation's health sciences research enterprise and 
enhance its productivity.

Health Care Services and Financing

  Of the estimated $141 billion in Federal health care outlays in 
1999,\1\ 88 percent finances or supports direct health care services to 
individuals.
---------------------------------------------------------------------------
  \1\ Excluding Medicare and the military and veterans medical programs.
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  Medicaid: This Federal-State health care program served about 33 
million low-income Americans in 1997, with the Federal Government 
spending $95.6 billion (57 percent of the total) while States spent $72 
billion (43 percent). States that participate in Medicaid must cover 
several categories of eligible people, including certain low-income 
elderly, people with disabilities, low-income women and children, and 
several mandated services, including hospital care, nursing home care, 
and physician services. States also may cover optional populations and 
services. Under current law, Federal experts expect total Medicaid 
spending to grow an average of 7.2 percent a year from 1998 to 2003.
  Medicaid covers a fourth of the Nation's children and is the largest 
single purchaser of maternity care as well as of nursing home services 
and other long-term care services; the program covers almost two-thirds 
of nursing home residents. The elderly and disabled made up less than a 
third of Medicaid beneficiaries in 1996, but accounted for almost two-
thirds of spending on benefits. Other adults and children made up over 
two-thirds of recipients, but accounted for less than a third of 
spending on benefits. Medicaid serves at least half of all adults living 
with AIDS (and up to 90 percent of children with AIDS), and is the 
largest single payer of direct medical services to adults living with 
AIDS.
  States increasingly rely on managed care arrangements to provide 
health care through Medicaid, with enrollment in such arrangements 
rising from 7.8 million in 1994 to 13 million in 1996.
  The 1997 Balanced Budget Act (BBA) made important changes to Medicaid 
in order to reduce spending, mainly by reducing the Disproportionate 
Share Hospital program, and giving States more flexibility. 
Specifically, the Act gave States the option of requiring most 
beneficiaries to enroll in managed care plans without seeking a Federal 
waiver. It repealed the Boren Amendment, giving States more flexibility 
to set hospital and nursing home reimbursement rates. It added a State 
option of guaranteeing Medicaid eligibility to children for 12 months, 
regardless of changes in the child's family income, and restored 
Medicaid benefits for certain groups of immigrants who would otherwise 
lose them under the 1996 welfare law.
  The Health Care Financing Administration (HCFA), which administers 
Medicaid, will work with the States to develop and test Medicaid 
performance goals in accordance with the 1993 Government Performance and 
Results Act. Because Medicaid's success is integrally related to States' 
decisions on eligibility, reimbursement rates, delivery systems, and 
services, HCFA must select performance goals in consultation with States 
to ensure that they are compatible with State goals and objectives.

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  In 1998, HCFA and the National Association of State Medicaid Directors 
will conduct three formal consultation meetings to:
   identify areas of performance measurement;
   identify potential performance measures; and
   reach consensus on performance measures for HCFA's 2000 
          Annual Performance Plan.
  In 1999, HCFA will work with the States to establish performance 
measurement baselines and performance targets.
  Medicaid supports HHS' first three strategic goals.

  Children's Health Insurance Program: Ten million American children 
lack health insurance. To increase the number of children with 
insurance, the BBA established the State Children's Health Insurance 
Program (CHIP), which provides $24 billion over the next five years for 
States to expand health insurance coverage to low-income, uninsured 
children. The new program strikes a balance between providing States 
with broad flexibility in program design and protecting beneficiaries 
through basic Federal standards. States have great flexibility to choose 
to expand Medicaid, create a separate State program, or use a 
combination of the two. At the same time, the new law ensures that 
States provide a meaningful benefit package, limit cost sharing, 
maintain their current Medicaid programs, and provide accountability.
  Each State may receive CHIP funding after HCFA approves its child 
health plan. State child health plans must describe the strategic 
objectives, performance goals, and performance measures used to assess 
the effectiveness of the plan. In preparation for its 2000 Annual 
Performance Plan, HCFA will work with the States to develop a consensus 
for a performance measure related to cutting the number of uninsured 
children and increasing the enrollment of eligible children in CHIP and 
Medicaid.
  In developing such a measure, HCFA and the States likely will consider 
such factors as:
   How much CHIP has increased the number of children with 
          creditable health coverage;
   The characteristics of the children and families who were 
          helped;
   The quality of coverage and types of benefits provided;
   The level of State contributions; and
   Recommendations to improve the program.
  HCFA will work with the States to identify possible sources of data 
for performance measurement. In 2002, the Secretary of Health and Human 
Services will issue a report, based on State evaluations, with 
conclusions and recommendations.
  HHS also is working to develop performance measures for CHIP. As does 
Medicaid, CHIP supports HHS' first three strategic goals.

  Other Health Care Services: HHS supplements Medicare and Medicaid with 
a number of ``gap-filling'' grant activities to support health services 
for low-income or specific populations, including Consolidated Health 
Center grants, Ryan White AIDS treatment grants, the Maternal and Child 
Health block grant, Family Planning grants, and the Substance Abuse 
block grant. In addition, the Indian Health Service (IHS) delivers 
direct care to about 1.3 million American Indians and Alaska Natives as 
a part of the Federal Government's trust obligations. The IHS system, 
located primarily on or near reservations, includes 49 hospitals, 195 
health centers, and almost 300 other clinics.
  HHS agencies have sought to ensure that specific populations have 
access to high-quality Federal health services. Similar to health 
insurance programs, these supplemental health service programs support 
HHS' first three strategic goals. HHS agencies have developed 
performance measures to help plan, track, and evaluate program 
effectiveness.
  In 1999, HHS agencies will work to meet the following goals:
  IHS: Cut the incidence of amputation and blindness linked to 
          diabetic neuropathy and retinopathy by five percent in the 
          Native American and Alaska Native diabetic populations, 
          compared to the 1996 rate,

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          which varies from 45 percent among the Sioux to 18 percent 
          among the Pima Indians.
   Substance Abuse and Mental Health Services Administration: 
          Reverse the upward trend and cut monthly marijuana use among 
          12 to 17-year-olds by 25 percent, from the 1995 baseline of 
          8.2 percent to 6.2 percent, by the end of 2002.
  Health Resources and Services Administration (HRSA): Increase 
          the percent of infants born to pregnant women receiving 
          prenatal care, beginning in the first trimester, from the 1995 
          rate of 81.3 percent.
   HRSA: Cut, by eight percent, the number of AIDS cases in 
          children as a result of perinatal transmission, compared to 
          the 1996 baseline of 678 cases.
   Agency for Health Care Policy and Research: Release and 
          disseminate Medical Expenditure Panel Survey data and 
          associated products to the public within nine to 12 months of 
          data collection.
   Office for Civil Rights: Increase the number of managed care 
          plans in compliance with Title VI, Section 504 and the 
          Americans with Disabilities Act.
  Also in 1999, the Consumer Product Safety Commission will reduce 
product-related head injuries to children by 10 percent.

   Prevention Services: Prevention can go far to improve Americans' 
health. Measures to protect public health can be as basic as providing 
good sanitation and as sophisticated as preventing bacteria from 
developing resistance to antibiotics. State and local health departments 
traditionally lead such efforts, but the Federal Government--through 
HHS' Centers for Disease Control and Prevention (CDC)--also provides 
financial and technical support. For a half-century, CDC has worked with 
State and local governments to prevent syphilis and eliminate smallpox 
and other communicable diseases.
  More recently, CDC has focused on preventing a host of diseases, 
including breast cancer, prostate cancer, lead poisoning among children, 
and HIV/AIDS. Furthermore, CDC is working to reduce the prevalence of 
chlamydia among high-risk women under age 25 in federally-funded family 
planning and Sexually Transmitted Disease (STD) clinics from nine 
percent in 1996 to below six percent. HHS' prevention programs support 
its first, fourth, and fifth strategic goals.
   Working with HCFA, CDC will continue to help States ensure 
          that, by age two, at least 90 percent of all U.S. children 
          receive each recommended basic childhood vaccine.

  Biomedical Research: The National Institutes of Health (NIH) is among 
the world's foremost biomedical research centers and the Federal focal 
point for the Nation's biomedical research. NIH research is designed to 
gain knowledge to help prevent, detect, diagnose, and treat disease and 
disability. NIH conducts research in its own laboratories and clinical 
facilities; supports research by non-Federal scientists in universities, 
medical schools, hospitals, and research institutions across the Nation 
and around the world; helps train research investigators; and fosters 
communication of biomedical information.
  NIH supports over 50,000 grants to universities, medical schools, and 
other research and research training institutions while conducting over 
1,200 projects in its own laboratories and clinical facilities. NIH-
supported research has helped to achieve many of the Nation's most 
important public health advances. Examples of recent research advances 
include the identification of a gene that predisposes men to prostate 
cancer; the development of potentially life-saving new therapies for 
HIV-infected individuals; the identification of certain risk factors for 
breast cancer which result from mutated genes; and the development of 
new technology for detecting defects in human chromosomes.
  In continuing to make new discoveries in these and other research 
areas, NIH has set forth its vision of biomedical and behavioral 
research in the HHS strategic plan. Also, as a steward of public funding 
for research, NIH helps grantee institutions improve their internal 
business systems so they can more easily comply with Federal grant 
requirements. NIH programs support HHS' first, fourth, and sixth 
strategic goals.

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  NIH has set bold performance goals for the next century of research, 
such as:
   completing the sequencing of the human genome project by 2005 
          by initially reaching a production rate of 100 million base 
          pairs in 1999, growing to a production rate of over 300 base 
          pairs a year by 2003; and
   leading the national effort to meet the President's goal of 
          developing an AIDS vaccine by 2007.

  Public Health Regulation and Safety Inspection: The Food and Drug 
Administration (FDA) spends $1 billion a year to promote public health 
by helping to ensure through pre-market review and post-market 
surveillance that foods are safe, wholesome, and sanitary; human and 
veterinary drugs, biological products, and medical devices are safe and 
effective; and cosmetics and electronic products that emit radiation are 
safe. FDA also helps the public gain access to important new life-saving 
drugs, biological products, and medical devices. It leads Federal 
efforts to ensure the timely review of products and ensure that 
regulations enhance public health, not serve as an unnecessary 
regulatory burden. In addition, the FDA supports research, consumer 
education, and the development of both voluntary and regulatory measures 
to ensure the safety and efficacy of drugs, medical devices, and foods. 
With the 1997 reauthorization of the Prescription Drug User Fee Act, FDA 
will continue to collect pharmaceutical industry fees to accelerate the 
review of drug applications.
  FDA programs support HHS' first and fifth strategic goals.
  To speed the review process, FDA has set the following performance 
goals for 1999:
   review and process 90 percent of complete new drug 
          applications within a year of submission;
   review and process 90 percent of complete new drug 
          applications for priority drugs within six months of 
          submission; and
   review and process 75 percent of new medical device 
          applications (know as pre-market applications) within 180 
          days, compared to 54 percent in 1996.
  To give the public useful health information, FDA has set the 
following performance goal:
   Ensure that, by the year 2000, 75 percent of consumers 
          receiving drug prescriptions will get more useful and readable 
          information about their product.
  FDA will define the term ``usefulness'' in terms of: scientific 
accuracy, unbiased content and tone, specificity and comprehensiveness, 
and timeliness. Based on the FDA's own national surveys, only 32 percent 
of consumers received useful information on new drug prescriptions in 
1992.
  The Food Safety and Inspection Service (FSIS) inspects the Nation's 
meat, poultry, and egg products, ensuring that they are safe, wholesome, 
and not adulterated. With $600 million in annual funding, agency staff 
inspect all domestic livestock and poultry in slaughter plants; conduct 
at least daily inspections of meat, poultry, and egg product processing 
plants; and inspect imported meat, poultry, and egg products. In 1996, 
FSIS issued a major regulation that will begin shifting responsibility 
for ensuring meat and poultry safety from FSIS to the industry. The 
regulation should allow FSIS to better target its inspection resources 
to the higher-risk elements of the meat and poultry production, 
slaughter, and marketing processes.
   By 1999, 92 percent of all federally-inspected meat and 
          poultry products will be under a Hazard Analysis Critical 
          Control Point (HACCP) system and, by 2000, all plants will 
          produce products under HACCP.

Workplace Safety and Health

  The Federal Government spends $550 million a year to promote safe and 
healthy workplaces for over 100 million workers in six million 
workplaces, mainly through the Labor Department's Occupational Safety 
and Health Administration (OSHA) and Mine Safety and Health 
Administration (MSHA). Regulations that help businesses create and 
maintain safe and healthy workplaces have significantly cut illness, 
injury, and death from exposure to hazardous substances and dangerous 
employment. In 1996 (the most recent year for which data are available), 
workplace

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injuries and illnesses fell to the lowest rate on record. OSHA and MSHA 
will work to continue this trend by enforcing their regulations and 
helping employers and workers.
   By focusing on the most hazardous industries and workplaces 
          and the most prevalent workplace injuries and illnesses, OSHA 
          over the next two years will reduce workplace injuries and 
          illnesses by 20 percent in 50,000 workplaces.
   MSHA will, in 1999, reduce fatalities and lost workdays in 
          all mines to below the average number recorded for the 
          previous five years.

Tax Expenditures

  Federal tax laws help finance health insurance and care. Most notably, 
employer contributions for health insurance premiums are excluded from 
employees' taxable income. In addition, self-employed people may deduct 
a part (45 percent in 1998, rising to 100 percent in 2007 and beyond) of 
what they pay for health insurance for themselves and their families. 
Individuals who itemize also may deduct certain health-related 
expenses--such as insurance premiums that employers do not pay; expenses 
to diagnose, treat, or prevent disease; and expenses for certain long-
term care services and insurance policies--to the extent that they 
exceed 7.5 percent of the individuals' adjusted gross income. Total 
health-related tax expenditures, including other provisions, will reach 
an estimated $86 billion in 1999, and $491 billion from 1999 to 2003; 
the exclusion for employer-provided insurance and related benefits 
(including deductions by the self employed) accounts for most of these 
costs ($76 billion in 1999 and $438 billion from 1999 to 2003).