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

    [[Page 245]]

                                   21.  HEALTH

      ----------------------------------------------------------------------

                                   Table 21-1.  Federal Resources in Support of Health
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Estimate
                   Function 550                   1999   -----------------------------------------------------------
                                                 Actual     2000      2001      2002      2003      2004      2005
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Discretionary Budget Authority..........    30,209    33,803    34,951    34,765    35,247    36,058    36,833
      Mandatory Outlays:
        Existing law..........................   114,139   123,265   132,310   143,204   155,051   167,539   181,349
        Proposed legislation..................  ........  ........     1,119     2,756     5,275     8,104     9,847
    Credit Activity:
      Direct loan disbursements...............  ........  ........  ........       N/A       N/A       N/A       N/A
      Guaranteed loans........................  ........       100        51       N/A       N/A       N/A       N/A
    Tax Expenditures:
      Existing law............................    82,880    89,290    95,150   101,690   107,365   114,180   122,015
      Proposed legislation....................  ........  ........       128     1,333     2,809     3,909     4,681
    ----------------------------------------------------------------------------------------------------------------
    N/A = Not available.

      ----------------------------------------------------------------------
       In 2001, the Federal Government will spend about $167 billion and
    allocate about $95 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. The results of these Federal activities
    include significant improvements in the health of Americans as evidenced
    by recent 1997 statistics that indicate that since 1980, life expectancy
    has risen steadily from 73.7 years to 76.5 years of age and the infant
    mortality rate decreased from 12.6 deaths per 1,000 births to 7.2 deaths
    per 1,000 births. Furthermore, Federal programs made significant strides
    in preventing and eliminating infectious diseases, such as reducing
    Hepatitis B infection from 8.5 per 100,000 people in 1990 to 3.8 cases
    per 100,000 people in 1998, as well as in improving treatment and
    quality of care, and improving the quality of life for individuals
    suffering from chronic diseases and disability. The Department of Health
    and Human Services (HHS) is the Federal Government's lead agency for
    health.

    Health Care Services and Financing

       Of the estimated $167 billion in Federal health care outlays in 2001,
    87 percent finances or supports direct health care services to
    individuals.

      Medicaid: This Federal-State health care program served about 33
    million low-income Americans in 1999. States that participate in
    Medicaid must cover several categories of eligible people as well as
    several mandated services. The Federal Government spent $108 billion, 57
    percent of the total, on the program in 1999 while States spent $81
    billion, or 43 percent. 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
    1997, but accounted for almost two-thirds 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. Medicaid pays for
    over one-third of the nation's

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    long-term care services. Medicaid spends more on institutional care
    today than it does for home care, but the mix of payments is expected to
    be almost equal in 10 years.
       Because the Health Care Financing Administration (HCFA) and States
    jointly administer Medicaid, HCFA has worked with State Medicaid
    agencies to develop and test national performance goals for Medicaid.
    These efforts will continue in 2001. With respect to the goal of
    increasing immunization rates among needy children, HCFA will continue
    to collaborate with states to develop individualized state immunization
    goals. The first group of 16 states began determining their baselines in
    1999, and will complete them and set performance targets in 2000. All
    States will have established their baselines and targets by 2002. HCFA's
    goal complements the Centers for Disease Control and Prevention's
    (CDC's) broader 2001 goal of helping States ensure that at least 90
    percent of all U.S. children by age two receive each recommended basic
    childhood vaccine.

      State Children's Health Insurance Program: More than 11 million
    American children lack health insurance. To decrease the number of
    uninsured children, the State Children's Health Insurance Program
    (SCHIP) was established in 1997 in the Balanced Budget Act to provide
    $24 billion over five years for States to expand health insurance
    coverage to low-income, uninsured children. SCHIP provides States with
    broad flexibility in program design while protecting beneficiaries
    through basic Federal standards.
       Each State's SCHIP plan describes the strategic objectives,
    performance goals, and performance measures used to assess the
    effectiveness of the plan. HCFA has been working with the States to
    develop baselines and targets for the SCHIP/Medicaid goal of decreasing
    the number of uninsured children by enrolling children in SCHIP and
    Medicaid. At the end of 1999, two million children were enrolled in
    SCHIP.
      In 2001, HCFA's goal is to increase the number of children who
              are enrolled in regular Medicaid or SCHIP by one million over
              the previous year.

      Other Health Care Services: HHS administers a number of other programs
    in addition to Medicare and Medicaid, each with its own performance
    goals, to support health services for low-income or specific
    populations. Selected health-related performance achievements and 2001
    goals are highlighted below.
       Indian Health Services (IHS): IHS is committed to addressing
              the major health problems afflicting Native American Indian
              and Alaska Native people and has targeted diabetes because of
              the high prevalence of this disease in this population. The
              percent of diabetics who met the clinically defined criterion
              of ``good glycemic control (i.e., blood sugar control)''
              increased from 29 percent in 1996 to 35 percent in 1998. In
              2001, IHS will demonstrate a continued trend in improved
              glycemic control in the proportion of Native American clients
              with diagnosed diabetes.
       Substance Abuse and Mental Health Services Administration
              (SAMHSA): The percent of youths age 12 to 17 who reported
              current use of illicit drugs decreased from 11.4 percent in
              1997 to 9.9 percent in 1998. In 2001, SAMHSA will aim to cut
              monthly marijuana use in this population by 25 percent, from
              the 1998 baseline of 8.3 percent to 6.2 percent by the end of
              2002.
       Services for the Mentally Ill: The Surgeon General's 1999
              report on mental health states that one in five Americans is
              living with a mental health disorder. Increased mental health
              services funded in SAMHSA will advance the goal of increasing
              the percent of adults with serious mental illness who are
              employed, are living independently, and have had no contact
              with the criminal justice system.
      Access to Health Insurance: Increased funding for the Health
              Care Access for the Uninsured (HCAFU) initiative will develop
              networks and coordinate services to increase the number of
              uninsured people receiving primary care, mental health,
              substance abuse, and other health services and expand the
              number of services supported.

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       Health Resources and Services Administration (HRSA): Funds
              provided throughout the 1990s enabled the network of 4,600
              family planning clinics to serve roughly 4.4 million clients
              each year. Through reproductive health care and counseling,
              these clinics helped achieve the lowest teenage pregnancy rate
              since recording began in 1976. The budget establishes the goal
              of serving 500,000 additional clients.

      Youth Smoking Cut in Half: HHS will continue its efforts to reduce
    underage smoking. The Administration will take steps to cut youth
    smoking by 50 percent compared with 1999 levels. These steps will
    include a combination of excise tax increases and a youth smoking
    assessment, as well as conducting education campaigns, funding and
    technical assistance to state programs, and cooperation with
    nongovernmental entities.
      Consumer Product Safety Commission (CPSC): Each year, there are an
    estimated 650,000 product-related head injuries to children under 15
    years old. As a part of CPSC's effort to reduce head injuries by 15
    percent by 2006, this independent agency recalled or took corrective
    actions on 12 products in 1998 that presented a substantial risk of head
    injury. In 2001, CPSC will increase the number of these recalls or
    corrective actions to 15.
      Bioterrorism: HHS' Office of Emergency Preparedness will work with
    localities to establish 25 new Metropolitan Medical Response Systems,
    which develop and link local public health, public safety, and health
    services capabilities to respond to a chemical/biological/nuclear
    terrorist incident, for a total of 97 systems in various stages of
    development by the end of 2001.
       HHS' Response to the HIV/AIDS Epidemic: Since 1993, HHS has taken
    significant steps to prevent the spread of AIDS and provide appropriate
    treatment to those living with HIV/AIDS. In 2000, the Administration
    established a new initiative to stem the rising tide of HIV/AIDS
    internationally: this is being expanded in 2001. HRSA's Ryan White CARE
    Act and the Centers for Disease Control and Prevention (CDC) efforts
    have successfully decreased the rate of newly reported HIV/AIDS cases in
    children due to perinatal transmission by 73 percent from 1992 to 1998.
       CDC financed prevention activities will reduce the actual
              incidence of new HIV infections in the United States five
              percent by the end of 2001 from the 1999 level of 40,000 new
              HIV infections.
       Working with other countries, USAID and international and
              U.S. government agencies, CDC will reduce the number of new
              infections among 15 to 24 year-olds in sub-Saharan Africa from
              an estimated two million, by 25 percent by 2005.
       HRSA will increase the number of AIDS Drug Assistance Program
              (ADAP) clients receiving appropriate anti-retroviral therapy
              (consistent with clinical guidelines) through State ADAPs
              during at least one month of the year, to a projected monthly
              average of 84,500 by 2001. This would constitute a 31-percent
              increase over the 1999 baseline of 64,500.

      Health Research: The National Institutes of Health (NIH) supports and
    conducts research to gain knowledge to help prevent, detect, diagnose,
    and treat disease and disability. 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. In 1999, NIH-supported research
    led to numerous scientific advances in the prevention and treatment of
    disease and disability. For example, scientists demonstrated the safety
    and effectiveness of the anti-AIDS viral drug nevirapine for preventing
    mother-to-child transmission of HIV. Nevirapine is 70 times less
    expensive and much easier to administer than AZT, the standard of care
    in the United States. It offers new hope for reducing maternal-child HIV
    transmission in developing countries and may be useful for further
    reducing mother-to-child transmission of AIDS in the U.S. NIH
    performance goals include:
       Increasing the pace and progress of genome sequencing by
              completing one-third of the human genome sequence with 99.9
              percent accuracy by the end of 2001; by 1999, 442 million base
              pairs, roughly 15 percent, of the human genome sequence had
              been completed.

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       Developing by the end of 2001 a comprehensive, public
              database of Federally and privately-sponsored clinical trials
              for serious or life threatening diseases to ensure that
              patients, providers, and researchers have access to and are
              aware of cutting-edge and potentially lifesaving therapies.
      Additionally, NIH continues to lead the national effort to meet the
    President's goal of developing an AIDS vaccine by 2007.

      Health Informatics Initiative: The budget includes a new investment in
    Health Informatics (HI) to allow HHS to improve integration of the broad
    range of available health information and data. The HI Initiative will
    also allow HHS to take a leadership role in the establishment of health
    data standards to improve the uniformity and ease of transmission of
    healthcare data while strengthening the confidentiality of health
    information. The ultimate goal of the initiative is to improve patient
    care and health outcomes through the efficient and effective use of
    health informatics data. This initiative will complement the initiative
    to reduce medical errors mentioned in Chapter 3, ``Strengthening Health
    Care.''
      Public Health Regulation and Safety Inspection: The Food and Drug
    Administration (FDA) spends over $1 billion a year to promote public
    health by ensuring that foods, drugs, biological products, and medical
    devices are safe. It leads Federal efforts to review new products and
    ensure that regulations enhance public health without unnecessary
    burden. The FDA also supports important research and consumer education.
       To allow innovative new drugs, medical devices, and other products to
    be made available to the public more quickly, the FDA has set the
    following performance goals for 2001:
       review and act on 90 percent of standard original new drug
              application submissions within a year of submission, while
              handling a new drug application workload that grows annually;
       complete first action on 90 percent of new medical device
              applications (known as pre-market applications) within 180
              days, compared to 79 percent in 1998; and,
       complete first action on 50 percent of food and color
              additive petitions within a year of submission, compared to
              the goal of 30 percent in 1999.
       The Food Safety and Inspection Service (FSIS) in the U.S. Department
    of Agriculture spends $650 million annually to inspect the Nation's
    meat, poultry, and egg products, ensuring that they are safe, wholesome,
    and not adulterated. In 1996, FSIS began implementing a modernized
    inspection system, Hazard Analysis and Critical Control Point (HACCP)
    system, that has begun shifting responsibility for ensuring meat and
    poultry safety from FSIS to the industry. USDA and HHS have the
    following food safety goals:
       By 2001, 99 percent of federally-inspected meat and poultry
              plants will comply with the HACCP system;
       Currently, approximately 45-50 percent of high-risk domestic
              food establishments are inspected annually. FDA will increase
              this coverage rate to 100 percent;
       CDC will expand State health department capacity to subtype
              DNA and rapidly exchange information using PulseNet for E.coli
              and Salmonella Typhimurium, from 40 labs each in 2000 to 45
              labs each by 2001, and for Listeria from 20 labs in 2000 to 30
              labs by 2001.

    Workplace Safety and Health

      The Federal Government spends approximately $620 million a year to
    promote safe and healthy conditions for over 100 million workers in six
    million workplaces, mainly through the Department of Labor's (DOL)
    Occupational Safety and Health Administration (OSHA) and Mine Safety and
    Health Administration (MSHA). Through a combination of enforcement,
    compliance assistance, and regulatory approaches, these agencies protect
    workers from illness, injury, and death caused by occupational exposure
    to hazardous substances and conditions. According to 1998 DOL data,
    occupational fatalities and injuries and illness have fallen to the
    lowest level on record.
       In 2001, OSHA will: (1) reduce injury/illness rates 20
              percent in at least 75,000

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              of the most hazardous workplaces where the agency initiates an
              intervention; (2) reduce injuries and illnesses by 15 percent
              at work sites engaged in voluntary, cooperative relationships
              with OSHA; and (3) initiate an investigation of 95 percent of
              worker complaints within one working day or conduct an on-site
              inspection within five working days.
       In 2001, MSHA will reduce fatalities and lost-workday
              injuries in all mines to below the average number recorded for
              the previous five years. From 1994 to 1998, there was an
              average of 92 fatalities and 4.07 lost-workday injuries.
      These efforts are complemented by an additional $10 million in HHS to
    fund worker safety research at the Agency for Healthcare Research and
    Quality.

    Federal Employees Health Benefits Program (FEHBP)

      Established in 1960 and administered by the Office of Personnel
    Management (OPM), the FEHBP is America's largest employer-sponsored
    health benefit program, providing over $18 billion in health care
    benefits a year to about nine million Federal workers, annuitants, and
    their dependents. About 85 percent of all Federal employees participate
    in the FEHBP, and they select from about 300 health plans.
      Since 1993, OPM has made improvements in the quality and quantity of
    health plan information provided to enrollees, consumer protections, and
    the scope of health benefits covered by the program. In 1993, the annual
    health benefits open season guide provided program enrollees little more
    than cost information regarding the program's participating carriers. By
    1999, these materials had been enhanced to provide accreditation,
    performance, and customer satisfaction information in plain language
    consumers can easily understand. Between 1993 and 1999, FEHBP benefits
    were expanded to provide coverage for bone marrow transplants, breast
    reconstructive surgery, contraceptives, and guaranteed length of stay
    for maternity and mastectomy.
      In 2000, the FEHBP became fully compliant with the President's
    Patients' Bill of Rights, providing enrollees even stronger rights of
    information disclosure, choice of providers and plans, rights of
    complaint and appeal, and other consumer protections.
      In 2001, OPM will increase the number of plans in the FEHBP with above
    average customer satisfaction ratings to 40 percent, an increase over
    the 33 percent so rated in 1998. In addition, the FEHBP's benefit
    structure will provide parity in the provision of mental health and
    substance abuse benefits and FEHBP carriers will institute initiatives
    to improve health care quality through the prevention of medical errors
    and enhancements in patient safety.
      In addition, the Administration will propose legislation that will
    help control the future rate of growth of FEHBP premiums by leveraging
    the purchasing power of the federal government. If enacted, this
    initiative will enable OPM to develop a comprehensive dental insurance
    benefit that would be available to Federal employees, annuitants, and
    their families.

    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 (60 percent in 2000, rising to 100 percent in
    2003 and beyond) of what they pay for health insurance for themselves
    and their families. Total health-related tax expenditures, including
    other provisions, will reach an estimated $95 billion in 2001, and $540
    billion from 2001 to 2005. The exclusion for employer-provided insurance
    and related benefits (including deductions by the self employed)
    accounts for most of these costs ($81 billion in 2001 and $456 billion
    from 2001 to 2005).