Last August, President Barack Obama hand delivered a letter to Alaska Gov. Bill Walker from U.S. Department of Health and Human Services (HHS) Secretary Sylvia Burwell. In the letter, Burwell agreed to something that Walker and other tribal health advocates had been asking for for years: full federal funding for low-income Native Americans' health care.

The policy change, which went into effect in March, is significant for states with large Native American populations that were spending millions of dollars on their care. Native Americans have a higher risk of contracting and dying from certain conditions such as liver disease, diabetes and chronic lower respiratory diseases.

Members of federally recognized tribes automatically qualify for health care through the Indian Health Service (IHS), a federally funded branch of HHS. There are more than 140 IHS hospitals and health clinics across the country, but patients often need care outside the IHS system. When that happens, states were covering half the cost for Native Americans who are also enrolled in Medicaid. Out of the more than 5 million American Indians and Alaska Natives in the United States, about 1 million of them are Medicaid recipients. 

But as of last month, IHS/Medicaid patients can get care anywhere that accepts Medicaid, and the federal government will completely cover the costs -- something it doesn't do for state Medicaid programs.

The new policy will not only be a financial relief for states like Alaska, Oklahoma and South Dakota, it could also allow them to revisit health issues that have been neglected or rejected because of money concerns.

In South Dakota, which spent $139 million of Medicaid funding on Native Americans' care in one year, Kim Malsam-Rysdon, the state's health secretary, said the extra money has put Medicaid expansion back on the table.

South Dakota’s Republican governor, Dennis Daugaard, said he won’t ask state legislators to take up the issue this legislative session but is considering a special session to discuss it. Daugaard has been open to Medicaid expansion since 2013 but has had to contend with an unwilling state legislature. State officials think the freed-up funds could be enough to sway them.


The policy change also means medically necessary travel is now fully covered, which is huge for people living on or near reservations that don't always have the practitioners that patients need.

“In Alaska, if you don’t have your medical travel expenses covered, then you often simply don’t have care,” said Valerie Davidson, Alaska’s health commissioner.

The state is currently staring down a $3.8 billion deficit, so Davidson said Alaska will mostly be using the extra money to preserve existing health services. But she still has a wish list.

“Long-term care within the IHS has rarely been funded, often because we simply didn’t live long enough,” said Davidson, an Alaska Native herself. “In Anchorage, our largest city, there are no tribally operated long-term care facilities. I’m hoping there will be some interest in funding the construction of more [of] these facilities as well as more behavioral health clinics.”

Since the IHS is a branch of the federal government, state health departments often feel like they don’t have freedom to properly coordinate care when patients are sent outside the IHS system. But some are hopeful that dynamic is changing.

“This policy change recognizes the partnership that exists between states and their tribal nations," said Dana Miller, director for tribal relations at the Oklahoma Healthcare Authority. "Now that the funds are there, we are going to see states and tribal groups working together more in a really positive way."