Max Baucus' bill makes you pay a fine if you don't have health insurance—unless you're American Indian.

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Sept. 18 2009 11:20 AM

American Indian Exceptionalism

Max Baucus' bill makes you pay a fine if you don't have health insurance—unless you're American Indian.

Max Baucus. Click image to expand.
Sen. Max Baucus

The health care plan released by Senate Finance Committee Chairman Max Baucus on Wednesday includes a requirement that every nonsenior American either buy insurance or pay a fine. There are exceptions, however, for anyone below the poverty line, people who face extreme hardship, and American Indians. (Read the bill summary here.) Why are American Indians exempt?

Because they have their own health care system. The Indian Health Service, which operates under the Department of Health and Human Services and whose funding comes out of the federal government's annual budget, provides care to any person who is a member or descendant of one of the 560 federally recognized tribes. Because they're covered by IHS, Indians don't need to purchase private insurance. (Many do anyway—more on that later.)

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The IHS provides two types of service. One is direct care through one of its 48 hospitals and 230 clinics across the country, most of which are located on or near a reservation. For anyone covered by IHS, treatment at these facilities is free. The other service is so-called "contract health services," or CHS. If an IHS hospital doesn't have the treatment or procedure you need—say you have to visit a cardiac specialist for a rare condition—they will refer you to a non-IHS facility. The visit is then paid for with federal money designated for CHS. Not every American Indian, however, qualifies for CHS. To qualify, you have to live either on a reservation or in a "contract health services delivery area," which usually abuts a reservation. If you don't, you're on your own. (As a result, there is a strong incentive for American Indians who don't have employer coverage to live on or near a reservation.) Nor is CHS coverage guaranteed for those who technically qualify. Congress allocates a limited amount of money every year—about $600 million—so emergency care takes priority. When that money runs out, some patients are out of luck.

Can American Indians get other insurance, too? Of course. Of the 1.4 million American Indians covered by IHS, nearly 60 percent have some other type of coverage as well: 20 percent get private insurance, 8 percent have Medicare, and 30 percent are covered under Medicaid.  Private insurance especially makes sense for Indians who live far from the nearest IHS facility. In fact, the tribes encourage private coverage, since third-party payers—private insurance and Medicare and Medicaid—are required to pay for your care before IHS does. If, for example, you're an American Indian over 65, your health care bill goes to Medicare first—even if you get treatment at an IHS facility. (Third-party revenue accounts for almost 50 percent of IHS hospital operating budgets.) Only if Medicare refuses to cover the procedure is IHS required to pay.

Government health care for American Indians is rooted in the Constitution, which states in Article I that Congress may regulate commerce with Indian tribes and was first implemented through various treaties signed by the federal government and individual tribes. The Snyder Act of 1921 provided funds "for the benefit, care and assistance" of Indians, who were then granted U.S. citizenship. In 1954, the Indian Health Service was established and took over administering health care from the Bureau of Indian Affairs. But it wasn't until 1975 that the Indian Self-Determination and Education Assistance Act integrated American Indians into Medicare and Medicaid and put tribes in charge of their own care—for example, they can build a new clinic and get reimbursed by Uncle Sam rather than waiting around for the government to build one. The system still has its issues: Whereas the U.S. health care system spends about $6,000 per American, IHS spends only $2,100. American Indians are less healthy on the whole than other Americans. And CHS, whose money sometimes dries up midyear, is chronically underfunded. Hence the oft-quoted aphorism, "Don't get sick after June."

Got a question about today's news? Ask the Explainer.

Explainer thanks Elmer Brewster of the Indian Health Service.

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