Next Year: Huge Changes Ahead For Indian Healthcare System (Including Some New Money)

Mark Trahant*

Republished with permission from Mark Trahant’s blog,, or, March 25, 2013.

Three years ago, on March 23, 2010, President Barack Obama signed into law the Affordable Care Act. The bill also included the permanent authorization of the Indian Health Care Improvement Act.

As I wrote at the time: “When Medicare and Medicaid passed Congress in 1965 and were signed into law there was no consideration – none – of how those bills impacted Indian Country. It was as if the Indian Health Service, then all federal employees, was off the books, a forgotten instrument. In fact there wasn’t even a plan that allowed IHS to tap into Medicare or Medicaid dollars. That had to wait for the Indian Health Care Improvement Act of 1976.

That is not the case with President Obama’s health care reform. Indian Country is included throughout the document in large and small measures designed to improve the health of Native people.”

Indeed, three years later, only a year before many of the most important provisions of the law begin, it’s hard to understate what this law means to the Indian health system.

Consider the money. The Indian Health Service is funded largely by appropriations. In recent years this has worked well with bipartisan support for increased funding. Since 2008 there has been a 29 percent increase in IHS funding.

But that is unlikely to continue. The appropriations process itself is, well, I’ll use the technical term here, a total wreck. So getting a logical appropriation will be less and less likely.

But the Affordable Care Act opens up revenue streams that are not appropriations, money that is, essentially, automatic. If a patient qualifies, then the money is there. This happens two ways. First, many more people will be eligible for Medicaid funding and second there will be new insurance exchanges with plans that could be purchased by both individuals and tribes, mostly, as employers.

As IHS director Dr. Yvette Roubideaux told a House hearing last week: “The Affordable Care Act is an important part of reform for the IHS since the law has many new benefits for American Indians and Alaska Natives. The insurance reforms in the law protect those with insurance, and the State and Federally Facilitated Exchanges or Marketplaces, will make purchasing insurance easier in 2014. The Medicaid Expansion will cover more American Indians and Alaska Natives based on a higher income threshold, so more adults will have option to enroll in Medicaid. And American Indians and Alaska Natives can still use IHS since the Affordable Care Act extends authorization of appropriations indefinitely.”

Think of it this way: Every patient will have the power of a customer, and serving that customer means more money, not less. Because beginning next year more American Indians and Alaska Natives will be either eligible for Medicaid or reduced-cost insurance purchased through the exchanges. So more patients will be bringing money into the Indian health system, not just relying on what’s been appropriated from Congress. (This, in theory, should also improve the quality in the Indian health system because those same patients could go outside of IHS and purchase health care from a private provider.)

And the law does have incentives for American Indians and Alaska Natives to participate in exchanges, such as a waiver of co-pays for those whose family income does not exceed 300 percent of the poverty level, or roughly $66,000 for a family of four in 2010 or $83,000 in Alaska.

Many of the rules regarding the implementation of the Affordable Care Act are so complicated that the impact on Indian Country won’t be visible for a time.

For example Jim Roberts, a policy analyst with the Northwest Portland Area Indian Health Board, writes “the exchanges are important because they are the new frontier for Indian health financing; we won’t see IHS appropriation increases like we have in the past.” And for many tribal members, based on income and the IRS definition, they should  be eligible for a subsidy for insurance purchased through an exchange. But will folks? Consider the IRS regulations on Employer-Sponsored Insurance. The agency says plans will be deemed “affordable” if the cost is under 9.5 percent of a family’s income. “As a result,” Roberts writes, “premium subsidies and cost-sharing assistance will not be available to the uninsured and unenrolled Indian spouses and children of tribal employees who have access to affordable self-only coverage but who cannot afford dependent coverage because the premiums are too high. Yet these folks have IHS coverage, but if you can’t bill for their services, how can IHS generate revenue?”

However in Indian Country, “the rule, more than the exception” is that tribal members only sign up for insurance when the employer pays all of the premium. “And if there is any cost for their family they most always do not sign them up because most ESI plans require the Employee to pay 100% of the cost. It’s unfortunate because this shifts cost to the IHS. Indian families that have access to IHS should meet the requirement for having “essential coverage” (Individual Mandate rebranded), but the IRS rule does not consider IHS coverage as ‘essential coverage.’”

Another problem Roberts sees coming is definition of American Indian and Alaska Native in a family that includes mixed-race marriages. “Family of 4, two enrolled Indian parents exempt from the penalty and children are not enrolled, do you apply 50% of the penalty amount? Likely not, it would be applied to the household if any family member doesn’t qualify for an exemption. This will be very complicated to operationalize,” Roberts writes.

The next few months will be complicated and occur at the same time that the Indian Health system will stretched by the financial limits of funding during this year’s sequester. The regional disparities in health care delivery already present in the Indian health system could be further widened because some will states opt out of the Medicaid expansion.

Ideally of course none of this would matter. Congress would appropriate money for the Indian health system directly, as a promise made by the United States, and that system would run parallel to other health systems. Fully funded, of course. But that’s not likely to happen soon.

But the Affordable Care Act opens up the possibility of full funding in a different way. The Indian health system will still deliver health care, but the funding mechanism will soon come from a variety of sources, some new, some complicated, but free from the politics of appropriations. Implementation of this law will be complicated, and tribes will have to fight for rule changes and other tweaks along the way. But at least, at the end of the process, there should be more money.

*Mark Trahant is a writer, speaker and Twitter poet. He lives in Fort Hall, Idaho, and is a member of The Shoshone-Bannock Tribes. Join the discussion about austerity. A new Facebook page has been set up at:


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