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52, 604

38, 785

44, 261

49, 677


$500 thousand or less,

additional 1.7 million children and youth under 21 years of age. Currently, children are covered by the program only if they receive aid to families with dependent children. States would be required to provide medicaid to low-income children and youth under age 21. This proposal would cost an estimated $263 million in outlays in 1979. Proposed legislation would also provide medicaid coverage to low-income expectant mothers not now covered.

Federal outlay savings of almost $400 million in medicaid are projected to result from the enactment of legislation establishing a quality control program. Total medicaid outlays are estimated to be $11.0 billion in 1978 and $12.1 billion in 1979 for the 21 million medicaid recipients.

Total Federal spending for health services is shown below.

[In millions of dollars]

1977 1978 1979
actual estimate estimate

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Direct provision of hospital and medical services:

General hospital inpatient services ---
Psychiatric hospital inpatient services.-
Long-term care inpatient services.
Outpatient services.---
Outpatient mental health services..
Other services ---

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220 1, 802

43 393

257 2,035

53 476

283 2, 140

64 446

Subtotal, direct provision of services



7, 809

Total, financing and provision of services.

42, 389

48, 935

55, 245

Allocated to health (function 550).
Allocated to other national needs.

(34,527) (39, 860) (45,097)
(7, 862) (9,075) (10, 148)

As stated initially, the mission of the major Federal health care programs—medicare and medicaid and the health service delivery programs—is primarily to assist those groups of Americans most in need, i.e., the aged, the poor, and the disabled. The following table shows total Federal health spending by income and age group.


(In millions of dollars]

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In 1979, obligations of $174 million are recommended for the Professional Standards Review Organization (PSRO) program, which reviews the appropriateness and quality of federally financed medical services. The 1979 request permits existing PSROs to continue at the 1978 program level, pending the development of performance standards and tests of the efficacy of PSROs to control costs and assure quality health care.

Other health care service programs.-In addition to medicare and medicaid, the Federal Government funds a number of health care delivery programs. These programs provide health care both directly and through grants and contracts. There are, for example, 25 health services programs in HEW that fund health services for particular groups, with estimated outlays of $2.8 billion in 1979. These programs include the community health center, community mental health center, maternal and child health programs and other health services programs including those described below.

An administration initiative will improve and expand services to prevent unwanted adolescent pregnancies for which budget authority of $100 million is requested in 1979. Budget authority of $60 million

and new legislation are proposed to establish networks of communitybased services to prevent unwanted adolescent pregnancies. The other $40 million would be used in existing health service delivery programs, that is, community health centers, family planning and maternal and child health (for which advance funding for 1980 is proposed in this budget), to provide services to an additional 280,000 teenagers. The health maintenance organization (HMO) grant program, with estimated outlays of $30 million in 1979, will encourage the development of prepaid group practices with the objective of demonstrating the capacity of HMO's to reduce unnecessary hospitalization and surgery. Nearly 200 HMO's will have received Federal assistance since 1973. Legislation will also be proposed to facilitate the participation of medicare and medicaid beneficiaries in HMO's and otherwise encourage the development of HMO's. Estimated outlays of $61 million in 1979 for the National Health Service Corps (NHSC) will be used to place health professionals in areas in which they are in short supply. The NHSC program will support 1,725 physicians and other health workers in 743 sites in 1979. The NHSC represents the primary Federal mechanism to assure better geographic distribution of health professionals. An estimated $559 million will be spent in 1979 on the direct provision of medical services by the Federal Government to 647,000 American Indians and Alaska natives living on or near Federal reservations. Federal funding for Indian health services has quadrupled since 1970; during this period, the health status of Indians in general has improved and that of Indian infants has improved dramatically. Outlays for Public Health Service (PHS) hospitals and clinics are estimated to be $157 million in 1979. These funds provide primarily for the medical care of American merchant seamen and activeduty Coast Guard personnel. PHS hospitals also provide a wide variety of services for residents of the community in which they are located, ranging, for example, from hypertension screening to inpatient care for community residents. An estimated $75 million in outlays will subsidize the delivery of mental health care at St. Elizabeths Hospital; the Hospital's patients are primarily District of Columbia residents. A 1978 supplemental budget request of $55 million in budget authority is proposed for the renovation of these facilities. The Federal and District governments will continue negotiations for the transfer of a fully accredited St. Elizabeths Hospital to the District of Columbia.

Taz expenditures.—In addition to direct Federal spending, Federal tax laws help finance health care by excluding from employees’ taxable income health insurance premiums paid by employers. The revenue loss from this tax expenditure is estimated at $6.1 billion for 1979. In

-___________ _ _ _-_- .

addition, individuals are permitted to itemize deductions for health care expenses and health insurance premiums within certain limits. In 1979, the revenue loss from this tax expenditure based upon current law is estimated at $2.7 billion. As a part of the tax reform and simplification proposals, deductibility of medical expenses, in combination with uninsured casualty losses, would be limited to expenses in excess of 10% of income rather than the current law which generally allows the deductibility of medical expenses in excess of 3% of adjusted gross income.

Health research.-The Federal mission of assuring the development of new knowledge on the causes, prevention, and treatment of disease is supported indirectly through grants and contracts for biomedical and behavioral research, as well as directly through research, carried out by Federal researchers in Federal facilities. With increases in life expectancy, the incidence of chronic and degenerative diseases in the United States has increased. Federal research emphasizes basic research in chronic and degenerative illnesses, such as cancer and cardiovascular disease, and in environmental and mental health problems. The table below indicates the allocation of total Federal outlays for the health research mission by research fields, including outlays for research facilities construction.


[In millions of dollars]

1977 1978 1979

actual estimate estimate

Cancer---------------------------------------------------- 767 796 830 Cardiovascular disease--------------------------------------- 306 355 382 Pulmonary disease------------------------------------------ 63 72 77 Mental health---------------------------------------------- 145 148 169 Neurological and visual disease-------------------------------- 196 238 263 Population and family planning------------------------------ 67 76 87 Environmental health--------------------------------------- 444 493 507 Aging----------------------------------------------------- 42 54 59 Metabolic diseases------------------------------------------ 186 226 246 Childhealth----------------------------------------------- 86 99 114 Nutrition---------------------------------------- 50 58 66 Infectious diseases------------------------------------------ 190 2|| 222 Dental---------------------------------------------------- 49 57 63 Health services research and development--------------------- 83 66 88 Other research and development------------------------------ 471 568 578 Research facilities------------------------------------------ 26 22 16 Total----------------------------------------------- 3, 173 3,539 3,766 Allocated to health (function 550)--------------------------- (2,543) (2,738) (2,935)

Allocated to other national needs---------------------------- (630) (801) (831)

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