Appendix I: The health systems the federal government already runs

This appendix supports the section "The systems we already run" in the plan. It describes each system, the statute that governs it, and the specific provision the plan changes.

Five systems, one government, wildly different generosity

The United States already operates or directly finances health care for roughly 25 million people outside of Medicare, Medicaid, and private insurance: veterans through the Veterans Health Administration, service members and their families through the military health system and TRICARE, federal civilian employees through their benefits program, members of tribal nations through the Indian Health Service, people in federal custody through the Bureau of Prisons, and the residents of five territories through a capped version of Medicaid. Two of these, the VA and the Indian Health Service, are direct providers of care, with their own hospitals, clinics, and clinicians. The rest are payers.

The government runs them at starkly different levels. National health spending is $13,473 per person. The Indian Health Service spent $4,078 per user in fiscal 2023, under a third of the national figure, for a population the United States is bound by treaty to serve. The plan strengthens every one of these systems. It does not fold the two direct providers into the national payer, because both exist to meet specific obligations and both serve populations who have reason to want a system of their own.

The Veterans Health Administration

The VA is the largest integrated health system in the country: over 9.1 million enrolled veterans, 1,380 facilities, including 170 medical centers and 1,193 outpatient sites, and its own clinicians, pharmacies, and electronic record. Its reputation in the press is worse than its record. On most measures of quality and safety it matches or outperforms the private sector, its drug prices are the lowest in the country because it negotiates them, and its record system, VistA, has run as a single record across the whole system for longer than any national health record anywhere.

The plan does not touch its structure. Two things change.

Eligibility widens. Today a veteran's access to the VA is rationed by two mechanisms. The first is the service-connection rating, a percentage the VA assigns to say how much of a veteran's condition is linked to military service, which governs both disability compensation and priority for care. The second is the priority group, an eight-tier queue that decides which veterans may enroll and in what order, in which a veteran with a high disability rating or low income is admitted first and a veteran with neither may be turned away when the budget is tight. Under the plan every veteran is eligible to choose the VA. Because every veteran is also covered by the national program for anything the VA does not deliver, the choice costs nothing and forecloses nothing.

VistA's successor becomes the national record. The plan builds one national health record that follows the patient (the plan, "The record and the public app"). The clinicians who have used a single system-wide record longer than anyone in America are the people to run it.

The Indian Health Service

The Indian Health Service is a direct provider, with hospitals and clinics on and near reservations, and a payer for care it cannot provide itself, through what is called Purchased/Referred Care. It exists because of treaties. In exchange for land, the United States promised health care to tribal nations, and the courts and Congress have recognized that promise as a trust responsibility. It has never been funded as one.

The funding is discretionary. Unlike Medicare or Medicaid, which are entitlements that pay whatever eligible care costs, the IHS receives a fixed annual appropriation set by Congress. When the sum is exhausted partway through the fiscal year, the agency defers or denies care for the rest of it, and it does, every year, under a formal priority system in which only care needed to prevent death or serious harm is guaranteed. A government shutdown stops the money. Congress gave the IHS advance appropriations for the first time for fiscal 2023, so that a shutdown no longer halts it, but the underlying sum remains discretionary and remains at under a third of national per-capita spending.

Tribes may run their own systems. Under the Indian Self-Determination and Education Assistance Act of 1975, a tribe may contract or compact to take over the IHS programs serving it and run them itself, and more than half of IHS funding now flows through tribally operated programs. The tribes that do this incur administrative costs, called contract support costs, which the government is obliged to pay and for decades underpaid until the Supreme Court ordered it to pay them in full. Purchased/Referred Care, the money for treatment the IHS and tribal facilities cannot provide, runs out first every year.

Most Native people do not live on reservations. Roughly seven in 10 American Indians and Alaska Natives live in urban areas, where the IHS presence is a network of urban Indian health organizations funded at a small fraction of the whole.

The plan's provisions:

• IHS funding becomes mandatory rather than discretionary, with advance appropriations kept and a funded path to per-capita parity with the national system.
• Full funding of contract support costs and Purchased/Referred Care, so a tribe is not penalized for operating its own system.
• Nothing in the Act abrogates a treaty, the trust responsibility, or the self-determination contracts and self-governance compacts tribes hold under the 1975 Act, or the Indian Health Care Improvement Act, which the Affordable Care Act made permanent in 2010. Tribes choose: run their own system, use the national system, or both.
• Government-to-government consultation is written into the Act, with tribal representation on the independent body that decides the national benefits schedule.
• Urban Indian health organizations are funded as part of the system.

The military and federal employees

TRICARE covers active-duty service members, retirees, and their families, some 9.6 million people, through a mix of military hospitals and clinics and contracted civilian networks. The Federal Employees Health Benefits Program covers federal civilian employees and retirees through a menu of private plans, with the government paying most of the premium. Both are payers, not providers, in the sense that matters here: the military hospitals continue to exist as facilities, but the insurance function of both programs is absorbed into the national program, which covers every member and every family identically to every other American. The military treatment facilities remain, serve their populations, and bill the national payer like any other provider.

The territories

Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands are home to about 3.5 million American citizens and nationals, and federal health law treats them as something less than states in two ways.

Medicaid is capped. In the states, federal Medicaid funding is open-ended: the federal government pays its share of whatever eligible care costs. In the territories, under Section 1108 of the Social Security Act, federal Medicaid spending is subject to a hard annual ceiling, and when it is reached the territory pays the rest or cuts the program. Congress has raised the caps repeatedly on a temporary basis, and Puerto Rico in particular has lurched from one funding cliff to the next.

The match rate is fixed below the formula. In the states, the federal share of Medicaid costs is set by a formula tied to per-capita income, from 50 percent in the richest states to about 77 percent in the poorest. The territories are assigned a flat statutory rate of 55 percent regardless of income. Puerto Rico's per-capita income would earn it the maximum rate, around 83 percent, if the formula applied.

The consequences are a Medicaid program in Puerto Rico that covers fewer services at lower rates, a steady emigration of physicians to the mainland, and a health system that cannot plan beyond the next appropriation. The plan applies every provision identically in all five territories. The capped budgets are repealed. There is no territorial match rate, because the benefit runs directly to the person, not through a block grant to the territory. Every territorial resident is enrolled automatically, and each territory gets a physician retention package.

People in custody

The largest mental health facilities in America are county jails. Roughly 1.9 million people are held in prisons and jails on a given day, and they are held in the only institutions where the Constitution guarantees health care, under the Supreme Court's 1976 decision in Estelle v. Gamble that deliberate indifference to a prisoner's serious medical needs is cruel and unusual punishment, and where the care is the worst in the country.

Part of the reason is a provision in the original 1965 Medicaid statute, the "inmate exclusion," which bars federal Medicaid payment for any care provided to an "inmate of a public institution." Its effect is that a county pays for its jail's health care out of its own general fund, which is a standing reason to run it as cheaply as possible, and a person's Medicaid coverage is suspended or terminated on the day they are booked, and frequently not restored on the day they leave. The weeks after release are the period of highest risk of overdose death in any population studied, and a person leaving jail with no coverage, no medication, and no appointment is the reason.

The plan's provisions:

• Repeal the inmate exclusion. Coverage does not depend on custody status.
• Buy correctional health care from the community system, not a captive vendor. The same providers, the same prices, the same quality registries, and the same patient record as everyone else, overseen by an independent health inspectorate with the right to enter any facility. When the national payer covers care inside at the same rate as care outside, the county's incentive to run it cheaply disappears, and the private correctional health contractors, whose record is the subject of a long line of lawsuits, lose their market.
• Nobody falls off at either gate. Enrollment continues after release. People leave with their medications in hand and an appointment already booked, and any treatment started inside continues outside.