Roosevelt Institute | Cornell University

Reforming Native American HealthcareWhy the U.S. Indian Health Service Should Decrease its Reliance on Purchased/Referred Care

By Viktoria CatalanPublished August 17, 2021

Cornell Roosevelt Institute
Despite having some of the highest rates of chronic conditions in the United States, many Native American communities have limited or no access to proper healthcare facilities, medical personnel, or health insurance coverage. In an attempt to mitigate these adversities, many tribes currently rely on funding from Purchased/Referred Care, a federal program established through the U.S. Indian Health Service. This article argues against the continuation of Purchased/Referred Care as a primary funding priority and instead advocates for re-allocation of funds towards more Native American-specific healthcare systems.

American Indian and Alaska Native (AI/AN) communities have the highest rates of chronic conditions in the United States, including obesity, cardiovascular disease, poor mental health, alcohol and substance abuse, and cancer. The Indian Health Service (IHS) is a federal agency responsible for providing accessibility and delivery of healthcare services to (currently 2.2 million) Native Americans in the U.S. Specifically, the IHS funds and establishes health facilities and services, as well as covers medical expenses for patients of AI/AN descent. 

Unlike Direct Care, which refers to healthcare offered at tribe-sponsored healthcare facilities and at 111 IHS-sponsored healthcare facilities, the IHS also offers the Purchased/Referred Care (PRC) program. When Native American-specific health systems and programs cannot provide enough secondary care, medical providers, emergency services, facilities, health insurance coverage, etc., PRC can refer certain AI/AN patients to facilities outside of this network and potentially cover associated expenses. However, due to a significant lack of funding from the federal government, the IHS must rank those who would benefit from PRC, considering factors such as eligibility, medical priority, and residency. PRC is not an entitlement program, meaning that it is not required to cover every individual that meets these requirements. There is also no guarantee that the IHS will cover expenses associated with referrals to additional medical assistance and/or secondary providers. As a result of only a small increase in PRC funding each year, the IHS tends to prioritize patients in emergent or acutely urgent conditions. Although Preventative Care Services are the IHS’s second medical priority, many Native Americans with chronic conditions remain dissatisfied with limited/no access to services. Furthermore, legislation has not been written specifically enough to detail how much funding Congress should grant the IHS, nor how this funding should be allocated among tribes or towards PRC. Although Congress is required to provide funds to the IHS, the federal agency’s medical expenditures per patient is about $6000 lower than the national average, as well as about $5000 lower than the average per federal prison inmate in the U.S. As a result of this consistent underfunding, AI/AN individuals have adopted a culture of dealing with “tolerated illness” over the past few decades. It is evident that underfunding of both the PRC program and of IHS services in general is currently the largest barrier against Native American healthcare in the United States. 

One policy option for IHS might be to invest its federal funds more into PRC so that these individuals can seek a wider variety (and perhaps higher quality) of care in non-tribal facilities. However, there are stronger arguments for a gradual shift to investments in local AI/AN health systems, with the goal that no tribes will rely on the PRC program as one of its first funding priorities. 

The first argument in support of this shift is that the IHS’s investment in PRC for all tribes is financially unfeasible. In 2011, the IHS stated that its current budget for PRC was $779 million and, despite increasing its funding by $144 million, 100% coverage of additional referrals to non-tribal healthcare providers would require another $861 million. Moreover, this funding requirement does not include covering the more than half of tribes that are self-governed and/or have chosen to not receive direct services from IHS. AI/AN communities would benefit significantly from lower cost preventative services in tribe- and IHS-sponsored facilities, including nutrition programs, mental health and psychiatric services, and screening programs, in order to alleviate the prevalence of chronic medical conditions across all tribal regions. From a financial standpoint, investing in PRC may take decades to observe truly impactful change among AI/AN communities, thereby prolonging patient dissatisfaction and poor health outcomes. 

The second argument favoring a gradual shift away from PRC funding highlights the significant racial and cultural discrimination experienced by AI/AN patients in facilities that are not sponsored by tribes nor the IHS. In a 2019 research study, 23% of Native Americans from across the U.S. claimed to have experienced discrimination in non-tribal healthcare settings, 15% avoided obtaining care because of discrimination, and 34-38% claimed that they or their relatives have received violence and/or harrassment in healthcare settings, all larger percentages than those from white U.S. adults in this study. Instead of focusing too heavily on PRC, investing in IHS- and tribe-sponsored healthcare systems would immediately foster a medical environment in which these individuals can properly communicate their health concerns, receive appropriate medical recommendations, and have their cultural practices respected in the process. 

Lastly, the IHS’s investment in tribe- and IHS-sponsored facility reform at the expense of PRC funding would not be terribly harmful for the latter, since PRC would still be stabilized by Medicaid’s ongoing expansion. During Medicaid’s expansion in 2014-2015, more Native Americans had access to and coverage for U.S. healthcare services outside of IHS- and tribal-sponsored healthcare facilities. In 2016, Medicaid provided $649 million, or two thirds of all third-party reimbursements, to the IHS. The PRC program would continue to function successfully the more that the federal government expands and funds its Medicaid program, which further encourages the IHS’s self-reliance and funding towards local initiatives within AI/AN-specific health systems. Therefore, a crucial step to observing relatively rapid but long-term change in Native American healthcare is if Congress can stabilize, if not strengthen, Medicaid funding in support of the IHS.