A federal trust obligation, underfunded for the duration

The Indian Health Service is the federal agency responsible for healthcare for federally recognized American Indian and Alaska Native tribal members. Its mandate stems from treaty obligations and federal statutes dating to the 19th century. The federal government, in the framework of trust responsibility, owes healthcare to tribal members — not as a discretionary benefit but as the fulfillment of constitutional and treaty commitments.

That commitment has been chronically underfunded for the entire history of the IHS. Per-capita IHS funding has historically been less than half of comparable federal health programs (Medicare, the Veterans Health Administration, federal employee health benefits, Medicaid). The exact ratio depends on counting methodology — what costs are included, how multi-payer arrangements are handled — but the order of magnitude is consistent: IHS funding has not provided comparable resources to its federal-program peers.

The health consequences are documented. Native Americans face among the worst chronic-disease outcomes in the developed world. Diabetes rates, cardiovascular disease rates, substance-use disorder rates, and maternal mortality rates among Native Americans substantially exceed national averages. The IHS system, structurally underfunded for the demands placed on it, cannot fully address the conditions that the underfunding has helped produce.

How the underfunding pattern persists

Several structural features compound the underfunding:

Discretionary appropriations. Unlike Medicare and Medicaid, IHS is funded through annual discretionary appropriations rather than mandatory entitlement spending. Each year, IHS competes with every other discretionary federal priority for appropriations. Continuing resolutions, budget caps, and political environments that constrain non-defense discretionary spending have produced chronic shortfalls relative to assessed need.

Population growth. The Native American population has grown — both through demographic increase and through expanded tribal recognition and self-identification — without commensurate increases in IHS funding. Per-capita resources have eroded over time even when nominal funding has held steady.

Inflation lag. Healthcare cost inflation has consistently exceeded general inflation. IHS appropriations that have kept pace with general inflation have therefore lost purchasing power against actual healthcare cost growth.

Service demand growth. The chronic conditions the IHS system addresses (diabetes, cardiovascular disease) require ongoing care that compounds over time. Demand grows faster than capacity.

Workforce constraints. IHS facilities, particularly in rural and reservation locations, face chronic recruitment and retention challenges for medical staff. Compensation, geographic isolation, and facility conditions all contribute to vacancy rates that reach 25% or higher in some categories.

What mandatory funding would do

The most consequential reform proposal — making IHS funding mandatory rather than discretionary — would address the structural pattern in several ways:

Stable annual increases. Mandatory funding programs grow with formula-driven increases that account for population growth and healthcare-cost inflation. The political negotiation over each year’s funding level would be replaced by a baseline commitment that grows automatically.

Insulation from continuing resolutions. When Congress operates under continuing resolutions or partial shutdowns, mandatory programs continue to function. Discretionary programs, including IHS, face direct disruption.

Multi-year planning capability. Mandatory funding allows IHS to plan multi-year initiatives, capital projects, and workforce development with confidence that the funding will be available. Discretionary appropriations make multi-year planning structurally fragile.

Treatment as obligation, not benefit. Mandatory funding reframes IHS as the federal government meeting a trust obligation rather than providing a discretionary benefit. The substantive distinction matters for both political durability and administrative posture.

The Better Care Better Jobs Act and several standalone proposals would make IHS funding mandatory. Partial steps have been taken — most notably the inclusion of advance appropriations starting in FY 2023, which provides a modest planning improvement without converting IHS to fully mandatory funding.

What advance appropriations did

Advance appropriations are a partial reform. Under the framework adopted starting in FY 2023, IHS appropriations are enacted one year ahead of the fiscal year in which they apply. This provides limited planning stability — if Congress shuts down or operates under a CR for the upcoming fiscal year, IHS already has its appropriation for that year secured.

The reform was substantial in symbolic terms: it acknowledged the structural distinction between IHS and other discretionary programs. It was modest in financial terms: it did not change funding levels, only timing.

The follow-on agenda is to convert advance appropriations into full mandatory funding, with formula-based growth that addresses the per-capita underfunding pattern.

Beyond appropriations

Mandatory funding would not, by itself, eliminate the underfunding gap. Several parallel reforms would compound:

Per-capita funding parity targets. Statutory commitments to bring IHS per-capita funding closer to Medicare or VA per-capita levels, with implementation timelines.

Third-party billing reform. IHS facilities can bill Medicare, Medicaid, and private insurance for services provided to eligible patients; revenue from such billing supplements appropriations. Maximizing third-party billing requires administrative investment IHS has historically lacked.

Contract support cost reform. Tribes contracting and compacting their own healthcare programs (under ISDEAA) receive reimbursement for indirect costs, but the reimbursement has been chronically below actual cost. Full reimbursement would shift resources from federal administrative overhead to direct services.

Joint venture and shared services programs. IHS partnerships with VA, federal qualified health centers, and tribal organizations have produced operational efficiencies in some sites; expansion would compound progress.

Capital infrastructure investment. Many IHS facilities are decades old and operating well past planned lifespans. Capital investment is a separate budget category that has been chronically underfunded.

What to watch

• Mandatory funding proposals in Indian Health Care Improvement Act reauthorizations and standalone bills.
• Annual appropriations for IHS and the rate of nominal increases.
• Advance appropriations continuation and possible expansion.
• Third-party billing implementation at IHS and tribally operated facilities.
• Contract support cost reimbursement reform.
• Joint venture and shared services program expansion.
• Workforce recruitment and retention programs (loan repayment, scholarship, residency placement, housing).

Bottom line

The IHS funding gap is one of the most documented failures of federal trust responsibility. The reforms required are well understood; the political and institutional resistance has produced a multi-decade pattern of incremental progress without structural transformation. Mandatory funding would be the single most consequential reform — addressing the discretionary-appropriation vulnerability, providing planning stability, and reframing IHS as the federal government meeting a trust obligation rather than providing a discretionary benefit. The political coalition for that reform exists; the legislative bandwidth has been the missing variable.