[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.
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\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).