[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

[[Page 246]]

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.

[[Page 247]]

   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.

[[Page 248]]

   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

[[Page 249]]

          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).
