MARK TRAHANT   Austerity

The Indian Health Service faces, what IHS Director Yvette Roubideaux calls, a “new reality” requiring a business model to match this era.

For example the 2012 budget was $4.3 billion. But when third party collections and the Special Diabetes Program is added to that base, the funding totals $5.38 billion. Third party collections, mainly Medicaid, Medicare and insurance, are important because that money is “generated and kept” at each service unit.

And, better yet, that’s one line on the budget can continue to grow. Even as Congress threatens sequester or other budget cuts.

“We also must work on customer service – if more of our patients have insurance or other health coverage, we do not want them to go to other providers,” Dr. Roubideaux wrote on her blog. “Even though IHS is a ‘service,’ it is also a healthcare system, and we need to think like a business. We are encouraging every one of our employees to contribute towards ensuring that we provide the best quality of care and to maximize the resources we have to provide that care. No one in the IHS system can afford to ignore the bottom line. If our goal is to provide the best care possible, we need to ensure that we can survive in the changing health care marketplace in which our facilities must thrive.”

One key element in that third party collections is Medicaid. Medicaid is a state-federal partnership, an insurance program for low-income families. However the Affordable Care Act expands access to Medicaid, an idea that’s supposed to make sure that more people can afford basic health insurance. But the rules of Medicaid, because it’s a partnership are up to state governments. Moreover not every state is choosing to participate.

A recent study from the Harvard Law School says: “There is strong empirical evidence that ‘opting out’ of expansion will have many negative implications by any measure, not only for individual and public health outcomes, but also for state fiscal stability. In other words, expanding Medicaid to residents with income up to 133% federal poverty level is in every state’s interest. While political battles loom large in the coming months, states will benefit from analyzing the actual costs and benefits of the Medicaid expansion and making an informed decision that best serves states’ residents at large.”

American Indians and Alaska Natives are a big part of that equation, a benefit for state governments as well as a source of revenue for the Indian health system. (The Indian health system includes the IHS as well as tribal, nonprofit and urban Indian programs).

A study in by the Montana Budget and Policy Center said “Medicaid expansion is a bargain for Montana. From 2014-2017, the federal government will pay 100% of the cost to expand Medicaid to low-income adults earning less than 138% of the federal poverty level, which is $26,344 for a family of three. Beginning in 2017, Montana will pick up a small portion of the costs, paying no more than 10% from 2020 forward. In addition, any services billed by Indian Health Service to Medicaid for care of American Indians will continue to be reimbursed 100% by the federal government, eliminating any fiscal obligation by the state.”

A Medicaid expansion in Montana would add up to 19,547 American Indians into that funding pool, money that would stay at local service units, clinics.

The Montana report concludes: “The influx of new federal dollars created by Medicaid expansion will provide an economic boost throughout Montana.”

This is a key point and one that’s much broader than a state-issue in Montana. The data suggests that it’s in states’ interests to expand Medicaid and to use that mechanism as a vehicle to improve funding for the Indian health system. Even in an era of austerity, this is a potential boost in funding across Indian Country. It also represents the new reality.