IHS Overview

The Indian Health Service (IHS), within the Department of Health and Human Services (HHS), is the lead federal agency charged with improving the health of American Indians and Alaska Natives.¹ IHS provides health care for approximately 2.6 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas.² IHS provides services to members of 574 federally recognized tribes.³ It provides services, either directly or through facilities and programs operated by Indian tribes or tribal organizations, through self-determination contracts and self-governance compacts authorized in the Indian Self-Determination and Education Assistance Act (ISDEAA).⁴ IHS also awards grants to 41 Urban Indian Organizations (UIOs), which operate programs in urban areas.⁵

The Snyder Act of 1921⁶ provides general statutory authority for IHS.⁷ In addition, specific IHS programs are authorized by two acts: the Indian Sanitation Facilities Act of 1959⁸ and the Indian Health Care Improvement Act (IHCIA).⁹ The Indian Sanitation Facilities Act authorizes IHS to construct sanitation facilities for Indian communities and homes (e.g., providing water to American Indian/Alaska Native Homes). IHCIA authorizes programs such as urban health, health professions recruitment, and substance abuse and mental health treatment, and permits IHS to receive reimbursements from Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), the Department of Veterans Affairs (VA), and third-party insurers. Also, the Public Health Service Act provides funds for the Special Diabetes Program for Indians grants administered by IHS.

Funding Sources

In general, IHS has three major sources of funding, described here in order of magnitude: (1) discretionary appropriations,¹⁰ (2) collections, and (3) mandatory appropriations. In FY2020, IHS received additional funding through emergency-designated discretionary appropriations in response to the Coronavirus Disease 2019 (COVID-19) pandemic. In addition, these laws also provided funds to Indian tribes, tribal organization, and UIOs directly. (Because these funds were not appropriated or transferred to IHS, they are not discussed in this report.)¹¹ In FY2021, IHS received emergency-designated discretionary appropriations in the Consolidated Appropriations Act, 2021 (P.L. 116-260); these funds were appropriated to other HHS accounts but were transferred to IHS (see Table 1). In FY2021, IHS also received mandatory appropriations in the American Rescue Plan Act (ARPA, P.L. 117-2), another COVID-19 response measure.¹² For FY2022-FY2026, IHS will receive $700 million in emergency-designated discretionary funding each fiscal year, for a total of $3.5 billion for sanitation facility construction in the Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58).

Unlike most agencies within HHS, which receive their appropriations through the Labor, Health and Human Services, and Education Appropriations Act, IHS receives its discretionary appropriations through the Interior/Environment Appropriations Act.¹³ IHS's discretionary appropriations are divided into three accounts: (1) Indian Health Services, (2) Contract Support Costs, and (3) Indian Health Facilities.

In addition to funds appropriated to the agency, IHS collects and expends funds received as payment for health services provided. IHS has the authority to receive payments from other federal programs such as Medicaid, Medicare, CHIP, and the VA. IHS also receives payments from state programs (such as workers' compensation) and from private insurance. Under its IHCIA collection authority, IHS can retain these payments to increase services available to its beneficiaries. In addition to these collections, IHS collects rent from the facilities it owns.

In most years, the smallest source of IHS funding is a mandatory annual appropriation of $150 million to support the Special Diabetes Program for Indians.¹⁴ The Consolidated Appropriations Act, 2021 (P.L. 116-260) provided $150 million for each of FY2021 through FY2023 for this program. For FY2020, emergency discretionary appropriations provided in response to COVID-19 were $2.846 billion, including funds that were appropriated directly or transferred to IHS, making these funds a significant source of agency funding in FY2020. In FY2021, the ARPA funds totaled $6.094 billion, approximately 70% of the budget authority requested for the agency in FY2022 ($8.47 billion).

FY2022 Budget Request and Funding History

Table 1 presents IHS's funding from FY2016 through the President's proposed FY2022 budget submission. (Note that the FY2020 and FY2021 emergency supplemental discretionary appropriations for COVID-19 response and FY2021 mandatory ARPA funds are displayed in the Coronavirus Testing, Treatment and Related Services row of the table.) The table shows that during that time period, both discretionary appropriated funds and funds collected by IHS increased, whereas the mandatory appropriations generally remained level. The table presents IHS's three budget accounts—Indian Health Services, Contract Support Costs, and Indian Health Facilities—and the funds collected and allocated to programs under these accounts. To show regular discretionary budget authority only, collections and proposed and actual mandatory funding are subtracted from program-level funding. The FY2020 emergency supplemental discretionary appropriations for COVID-19 response and FY2021 ARPA funds are also subtracted.

Regular discretionary appropriations for IHS have increased over time, with the largest funding increase relative to the prior year being in FY2018. In particular, FY2018 funding included increases for a number of programs funded under the Indian Health Facilities account, which includes maintenance and improvement and construction of new facilities. In addition, the FY2018 appropriation increased funding for mental health and alcohol and substance abuse services, and provided new funding for the Indian Health Care Improvement Fund, which distributes funds to facilities that have low funding levels relative to the populations they serve.¹⁵ These increases generally were sustained in FY2019, FY2020, and FY2021. The FY2022 budget request would increase IHS regular discretionary appropriations by more than $2 billion over the FY2021-enacted level. Much of that increase ($1.32 billion) would be for IHS's largest budget item—clinical services—which is used to support most of IHS's clinical activities. The budget request would also increase funding to IHS's facilities (this account also will receive $700 million under the IIJA in FY2022). Other items proposed for increased funding include Indian Health Professions, which supports scholarship and loan repayment for health professionals in exchange for providing care at IHS-funded facilities. The agency has long-standing staffing challenges and high vacancy rates for certain positions and in certain geographic areas.¹⁶

The President's FY2022 budget request includes funding for two new line items. First, it proposes funding for electronic health records, which IHS is in a multiyear process of updating.¹⁷ The President's budget would provide $284.5 million for this activity, an increase from the $34.5 million provided in FY2021. The second budget item is a legislative proposal for a new indefinite appropriation that would be similar in structure to the Contract Support Costs account; however, in this instance, the appropriation would be for tribal leases. As it does with the Contract Support Costs account, IHS has a legal obligation to pay for these lease costs pursuant to a 2016 court decision, Maniilaq Association v. Burwell,¹⁸ which requires IHS to reimburse "the Tribe or Tribal Organization for its reasonable facility expenses" when IHS enters into a "lease," upon request, with any tribe or tribal organization that is furnishing a facility that supports ISDEAA programs.¹⁹ In other words, since FY2018, IHS has been paying lease costs in instances when an Indian tribe or tribal organization provides the facility for an ISDEAA program. Lease costs have increased from $6 million in FY2018 to an estimated $123 million in FY2021 (according to the FY2022 President's budget).²⁰ In Table 1, the lease costs amounts for FY2018-FY2020 are not delineated separately; instead, they are included within the Indian Health Services account. In FY2021 appropriations, payments for tribal leases were provided in a separate account and received an appropriation of "such sums as may be necessary." (At that time, the FY2021 budgetary costs were estimated to be $101 million, as reflected in the table.)²¹ The FY2022 President's budget would provide $150 million for these leases, continuing the practice of funding them as a "such sums" appropriation in a separate discretionary account.²²