Abstract

Objectives

The Indian Health Service (IHS) provides services to American Indian and Alaska Native individuals. However, IHS faces a longstanding underfunding problem. This article examines the extent, reasons, and alternative solutions for the IHS underfunding problem.

Methods

We used the most recent 15-year quantitative and qualitative data from a fiscal administration perspective and established a conceptual framework from an economic perspective to better understand the nature of financing IHS. We applied the framework, especially efficiency and equity criteria, to examine the justifiability of proposed benchmarks for IHS budgeting and compare proposed solutions.

Results

First, we identified budget planning and approving steps where significant IHS budget cuts occurred and why. Second, the United States has a federal Indian trust responsibility for American Indian and Alaska Native healthcare and thus mandatory spending in principle. However, in practice, it has been a discretionary spending decision for the United States to maximize social welfare subject to limited fiscal resources. Third, between the 2 economic criteria for resource allocation, vertical equity, instead of allocative efficiency, justifies more IHS appropriations. Fourth, entitlement mandatory spending on IHS was proposed by legislators during 2001 to 2004 but failed to receive Congressional votes. Nonentitlement mandatory spending and sequestration exemption were proposed by the President but were unapproved for fiscal year 2024.

Conclusions

To our knowledge, this article is the first to evaluate discrepancies in IHS budget proposals, before and during enactment, to elucidate the stages at which underfunding may occur and the implications for future research and policy making by the IHS, Tribal Nations, and US Congress.