Edward J. Fox, PhD

Start With the Money, Not the Program

A useful way to study Indian health financing is to begin with
the question: where did the money come from?

The answer may be an IHS appropriation, Medicaid, Medicare,
Tribal resources, Purchased/Referred Care, private insurance,
or another source. These sources do not operate in exactly the
same way, and they should not automatically be treated as
interchangeable.

Following the money means tracing a financing source through
the health system and asking what happens to it along the way.

A Simple Financing Map

At the most basic level, the system can be viewed as a series
of relationships between a source of funds, a health program,
a provider, and the patient.

Federal Appropriations

Federal appropriations are a foundational source of financing
for the Indian Health Service and for Indian health programs
operated by Tribes and Tribal organizations.

But an appropriation is not simply a payment for every service
delivered to every patient. It supports programs, personnel,
facilities, services, and other activities within the Indian
health system.

This distinction becomes important when researchers compare
the IHS budget with measures of health care need or with
spending in other health systems.

Medicaid: Money That Follows Eligible Patients

Medicaid adds another important financing stream. Eligible
American Indians and Alaska Natives can receive Medicaid
coverage, and Indian health programs can receive reimbursement
for covered services.

This means Medicaid financing can enter the Indian health
system through the services provided to eligible patients.

For research purposes, Medicaid therefore raises two related
questions: how many people are enrolled? and
how much is being paid for their care?

Those questions become especially important when comparing
administrative enrollment data, population estimates, and
reported spending.

Medicare: Another Financing Stream

Medicare is a separate source of financing for eligible
American Indians and Alaska Natives.

Medicare matters because many Indian health patients are also
eligible for Medicare. Their care can therefore involve a
financing source that sits outside the IHS appropriation.

The same basic research principle applies: enrollment,
utilization, reimbursement, and the population being measured
all affect the estimate of financing.

Purchased/Referred Care

Indian health programs cannot provide every service directly.
Purchased/Referred Care supports qualifying care obtained
outside an Indian health facility when services cannot be
provided through the direct system.

PRC is important to the financing story because it illustrates
that the Indian health system includes both direct care and
purchased care.

It also demonstrates why simply looking at the number of
services delivered inside IHS facilities does not describe the
full financing of Indian health care.

Tribal and Other Resources

Tribes and Tribal organizations operate health programs and
may contribute resources beyond federal IHS funding. Other
coverage sources can also participate in financing care,
including private insurance and other public programs.

These additional sources make the financing system broader than
the federal Indian Health Service budget alone.

Why We Cannot Simply Add Everything Together

Once several financing streams are identified, an obvious
temptation is to add them together and call the result
“Indian health spending.”

That can be misleading.

Different sources may describe different populations, services,
payment arrangements, or periods of time. Some measures may
also describe payments to Indian health programs while others
describe broader health spending.

A sound estimate therefore requires careful attention to
definitions, populations, time periods, and possible
overlap.

From Financing Streams to Evidence

The value of following the money is that it turns a broad
question about Indian health spending into a series of
measurable questions.

How many people are covered? How many services are provided?
What is reimbursed? What is appropriated? What is paid outside
the IHS system? And what remains unfunded?

The next segment turns to the IHS itself and asks what its
financing actually supports—and how appropriations relate to
the health care needs of the population served.