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Tuesday, July 11, 2000

GAO/T-HEHS-00-150

RYAN WHITE CARE ACT

Opportunities to Enhance

Funding Equity

Statement of Janet Heinrich, Associate Director

Health Financing and Public Health Issues

Health and Human Services Division

Testimony

Before the Subcommittee on Health and Environment,

Committee on Commerce, House of Representatives

United States General Accounting Office

GAO
Page 1 GAO/T-HEHS-00-150

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today as you discuss ways to distribute Ryan White

CARE Act funds to states and localities. As you know, the program is

facing new challenges as the epidemic of the human immunodeficiency

virus (HIV) changes and spreads to new segments of the American

population. At the same time, new medicines and treatments have

lengthened the life expectancy of infected persons. This, in turn,

emphasizes the need to insure that program funding reflects the changing

pattern of the epidemic.

In fiscal year 2000, Ryan White grants have provided nearly $1.6 billion in

federal funding to assist state and local service providers in delivering

health care and support services to individuals and families affected by

HIV infection. Title I of the Act provides assistance to metropolitan areas

most affected by the disease and Title II primarily provides funding for

state agencies responsible for persons not served under Title I and for

funding drug therapies. Although the Ryan White program serves

individuals with HIV, funds are distributed on the basis of the number of

individuals whose disease has progressed to acquired immunodeficiency

syndrome (AIDS).

At the request of the Subcommittee, I will focus on three issues:

• the potential for distributing funds on the basis of counts of persons with

HIV infection in each geographic area rather than on counts of only

persons whose disease has progressed to AIDS;

• the differences in funds for states with an eligible metropolitan area

(EMA), which receive grants under both title I and title II of the Act, and

states without an EMA, which receive only title II grants; 1 and

• the current effect of the hold-harmless provision adopted in the 1996

reauthorization, when the method of counting living AIDS cases replaced

the practice of counting cumulative AIDS cases.

To address these issues, we have analyzed data from the Centers for

Disease Control and Prevention (CDC) and the Health Resources and

Services Administration (HRSA) in the Department of Health and Human

1Eligible metropolitan areas are urban areas with at least 500,000 population and at least 2,000 living

AIDS cases reported in the past five years.

Ryan White Care Act: Opportunities to

Enhance Funding Equity
Ryan White Care Act: Opportunities to

Enhance Funding Equity

Page 2 GAO/T-HEHS-00-150

Services (HHS) and have developed computer models to calculate how

funding would change under alternative formula scenarios.

In brief, we found that only about 60 percent of the states include HIV

cases that have not progressed to AIDS in their reports to CDC. To ensure

that the formulas provide an equitable distribution, all states would need

to report HIV cases. CDC officials told us that they expect all states to be

reporting new HIV cases by 2003 and that an additional 1 to 3 years may be

needed to allow cases that existed before then to be entered into their

reporting systems. However, the states’ ability to completely identify past

cases is not known.

We also found substantial differences in funding between states with an

EMA and those without one. For example, in fiscal year 2000 states that

had no eligible EMA received on average of $3,340 per person suffering

from AIDS. In contrast, the states with more than 75 percent of their AIDS

cases in an EMA received nearly 50 percent more, averaging $4,954 per

AIDS case. States such as California and New York with more than 90

percent of their cases in EMAs received $5,240 per case or almost 60

percent more than states without an EMA. GAO has in the past

recommended changes to the Ryan White Funding Formulas that would

result in more comparable funding across states.

Finally, a hold-harmless provision was included in the 1996

reauthorization to help with the transition of the EMAs that would receive

less by using living AIDS rather than cumulative AIDS cases, which

included both living and deceased cases. The transition has been very

gradual and has had the effect of providing some EMAs with more funding

on a per-person-with-AIDS basis than other similarly situated EMAs.

Currently, only one EMA, San Francisco, continues to benefit from the

hold-harmless provision, and it received substantially more aid than other

similarly situated EMAs. For example, San Francisco received more than

80 percent greater title I funding per person with AIDS than other EMAs.

Oakland, across the bay from San Francisco, and all other EMAs received

$1,289 per person in fiscal year 2000 title I funding compared with San

Francisco’s $2,359 per person. San Francisco continues to benefit from the

hold-harmless provision because a large proportion of its cumulative AIDS

cases were deceased under the formula used before fiscal year 1996 and

because there have been smaller increases in new AIDS cases compared

with other EMAs. GAO has in the past recommended changes to the Ryan

White funding formulas that would enhance comparable funding across

states.
Ryan White Care Act: Opportunities to

Enhance Funding Equity

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Since the first cases were identified in 1981, more than 700,000 persons in

the United States have been diagnosed with AIDS. Recent developments in

medical and pharmacological therapies have improved the survival of

persons with AIDS and have slowed the progression from HIV to AIDS. At

the end of 1999, an estimated 300,000 persons were living with AIDS. It is

also estimated that an additional 500,000 to 600,000 people are infected

with HIV that has not progressed to AIDS. The composition of the AIDS

population has also changed over time, with minorities and women

representing a larger portion of all cases.

Federal efforts to provide health and support services involve a wide

variety of programs and activities. In addition to Ryan White grants,

federal funding is provided through CDC, the Department of Housing and

Urban Development, Medicare, Medicaid, Social Security Disability

Insurance, and the Supplemental Security Income program, among others.

Seventy percent of Ryan White funds are distributed by formula under

titles I and II of the act, while titles III and IV provide discretionary grants

for a variety of support services. Title I has provided $527 million in

assistance in fiscal year 2000 to consortia of local service providers in

EMAs. To be eligible, a metropolitan area must have a population of at

least 500,000 and must have had a cumulative total of more than 2,000

reported AIDS cases in the past 5 years. There were 16 EMAs when the

program began in 1991, and the number has grown to 51 today.

Title I funding has increased at an average annual rate of 24 percent since

1991. (See fig. 1.) Half of these funds is distributed by formula on the basis

of estimated living AIDS cases in each EMA. HRSA distributes the

remainder of title I funds among EMAs on a discretionary basis in

response to proposals EMAs submit. Historically, the distribution of

discretionary grants has generally mirrored the pattern of the formula

grants.

Background
Ryan White Care Act: Opportunities to

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Figure l: Title I Funding, Fiscal Years 1991-2000

Title II provides funding for state agencies. In fiscal year 2000, 96 percent

of funds was distributed by formula, $528 million for the AIDS Drug

Assistance Program (ADAPS) and $266 million to provide health and

support services to persons not living in an EMA and for other activities.

Title II funds have grown at an average annual rate of 29 percent. Almost

all this growth has resulted from increased funding in the ADAPS program.

(See fig. 2.)

Fiscal Year

Dollars in Millions

$0

$100

$200

$300

$400

$500

$600

$700

$800

91 92 93 94 95 96 97 98 99 00

ADAPS

Base Grants

All Title II
Ryan White Care Act: Opportunities to

Enhance Funding Equity

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Figure 2: Title II Funding, Fiscal Years 1991-2000

In our previous report on the CARE Act funding formulas, we

recommended to the Congress that the funding formulas be modified so

that

• comparable medical services funding be made available regardless of

where people with AIDS live and

• an indicator be added to the formulas that reflect relative differences

across states and EMAs in the cost of serving people with AIDS. 2

As I will discuss in more detail, these recommendations continue to be

applicable today.

2Ryan White CARE Act OF 1990: Opportunities to Enhance Funding Equity (GAO/HEHS-96-26, Nov.

13,1996).

Fiscal Year

Dollars in Millions

$0

$100

$200

$300

$400

$500

$600

91 92 93 94 95 96 97 98 99 00
Ryan White Care Act: Opportunities to

Enhance Funding Equity

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Because the Ryan White program serves persons who have been

diagnosed with HIV that has not progressed to AIDS as well as those for

whom it has, it would be reasonable to distribute funds on the basis of the

total number persons living with HIV. However, while all states report

AIDS cases, many do not report the number of persons with HIV that has

not progressed to AIDS. Therefore, for purposes of distributing formula

funds equitably, the total number of AIDS cases continues to be the best

available indicator of need.

CDC indicates that 21 states, with 58 percent of all AIDS cases, do not

report HIV cases, report only some cases, or are awaiting CDC approval of

their reporting systems. Most notable among these are New York and

California which together have 31 percent of all AIDS cases. New York’s

legislature recently authorized HIV reporting to CDC but has not yet begun

implementation, and California has yet to authorize HIV reporting. Table l

lists the states with CDC-approved reporting systems and those not yet

approved.

CDC officials told us that they expect all states to be reporting newly

diagnosed HIV cases by 2003 and that an additional 1 to 3 years may be

needed to get all HIV cases entered into a new reporting system. The

potential for lags in reporting the older cases was clear when we

State HIV Reporting Is

Improving but Is Still

Incomplete

Table 1: States and Their HIV Reporting Status

Alabama New Jersey California Montana

Alaska New Mexico Connecticut New Hampshire

Arizona North Carolina Delaware New York

Arkansas North Dakota District of Columbia Oregon

Colorado Ohio Georgia Pennsylvania

Florida Oklahoma Guam Puerto Rico

Idaho South Carolina Hawaii Rhode Island

Indiana South Dakota Illinois Vermont

Iowa Tennessee Kentucky Washington

Kansas Texas Maine

Louisiana Utah Maryland

Michigan Virgin Islands Massachusetts

Minnesota Virginia

Mississippi West Virginia

Missouri Wisconsin

Nebraska Wyoming

Nevada

CDC-approved Not approved
Ryan White Care Act: Opportunities to

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compared the experience of states that had been reporting HIV cases for

different lengths of time. States with long reporting histories had many

more HIV cases compared with their number of AIDS cases than did newly

reporting states. This is illustrated by comparing Texas and Colorado.

Texas just began reporting HIV cases in 1999 but Colorado has been

reporting since 1985. Reported HIV cases in Texas are about one-eighth

the number of AIDS cases. In Colorado, with a much longer reporting

history, the number of reported HIV cases exceeds reported AIDS cases by

a factor of about 2 to 1. (See fig. 3.) The extent to which states can identify

preexisting cases once they begin HIV reporting is not known. Some of the

discrepancy, illustrated by the Colorado and Texas comparison, could be

reduced as Texas identifies more preexisting cases. States that begin

reporting more recently may continue for some time into the future to

have a larger proportion of previously diagnosed but not reported cases.
Ryan White Care Act: Opportunities to

Enhance Funding Equity

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Figure 3: HIV Reporting Not Comparable Across States

The cost of serving persons who have HIV disease can vary substantially,

depending on the stage of their disease. Persons whose disease has

progressed to AIDS often require more expensive drug therapies and more

intensive care. If HIV data were integrated into the funding formulas,

greater weight could be assigned to persons whose need for therapy are in

the more expensive stages of the disease. Doing so would better ensure

that the distribution of funds is commensurate with the cost of care.

Information on such cost differences and how to estimate the number of

persons in different stages of the disease would need to be addressed

before this type of adjustment could be incorporated.

Whether states have an EMA or not, they have the same service delivery

responsibilities: to provide health care and support services to persons

who have HIV disease. However, states with EMAs receive more funding

per case because EMA AIDS cases are counted once in distributing title I

funding and counted a second time in distributing title II funding. States

without an EMA receive no funding under the title I distribution, and, thus,

when total Ryan White resources are considered, some states receive

considerably less than others per case. The magnitude of these funding

differences is illustrated in figure 4. In fiscal year 2000, states that have no

EMA have received approximately $3,340 per case. States with less than 50

States With No EMA

Are Disadvantaged

Under the Current

Formula Structure

Started Reporting HIV in

1985

Started Reporting HIV in

1999

Colorado Texas

AIDS

2,727

HIV

5,285

AIDS

22,505

HIV

2,947
Ryan White Care Act: Opportunities to

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percent of their cases within an EMA have received $3,600 per case. States

with more than 75 percent of their cases within an EMA have received

nearly 50 percent greater funding than states with no EMA, or $4,954 per

case.

Figure 4: States With No EMA Receive Less Funding

A comparison of Colorado and Indiana provides a clear example of these

funding disparities because both states have roughly 2,300 living AIDS

cases. Colorado has an EMA because most of its cases are concentrated in

the Denver metropolitan area. Indiana’s cases are more dispersed. As a

consequence, Indiana does not have an EMA and receives no title I

funding. The effect is that Indiana receives $3.3 million less to help it serve

the same number of cases as Colorado.

Total Funding Per Case

None Less Than 50% 50% to 75% 75% or More

Percentage

of States’

Cases in

an EMA

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$3,338 $3,601

$4,526

$4,954
Ryan White Care Act: Opportunities to

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Page 10 GAO/T-HEHS-00-150

Finally, I would like to discuss the hold-harmless provision added to title I

in the 1996 reauthorization. Before the 1996 reauthorization, funding was

distributed among EMAs on the basis of the cumulative count of

diagnosed AIDS cases. By 1996, many persons diagnosed with the disease

in the 1980s had died, yet they were still counted for purposes of

distributing funding to EMAs. The areas of the country with the longest

experience with the disease had the most deceased cases and benefited

the most from using cumulative case counts in the formula.

The 1996 Ryan White reauthorization changed this practice by replacing

cumulative case counts with estimates of living AIDS cases. The effect of

the change was to shift funding away from EMAs with high proportions of

deceased cases and toward those with higher proportions of newly

diagnosed cases.

Because these shifts would have been quite large, a hold-harmless

provision was added so that the EMAs that were affected would gradually

make a transition to an allocation based on living AIDS cases. Under the

transition rules adopted at that time, EMAs that would otherwise have lost

funding were guaranteed to receive in fiscal year 1996 the same funding

they received in 1995, 99 percent in 1997, 98 percent in 1998, 96.5 percent

in 1999, and 95 percent in 2000.

HRSA records show that four EMAs benefited from the hold-harmless

provision in 1996: Houston, Jersey City, New York, and San Francisco. By

1999, San Francisco was the only EMA that continued to benefit from the

provision for two reasons. First, it had benefited the most from using

cumulative rather than live cases before fiscal year 1996 and second, it has

had smaller increases in newly reported cases than other EMAs. It

received 80 percent more title I funding than other EMAs: $2,360 per case

compared with $1,290 in fiscal year 2000 (see fig. 5).

The Hold-Harmless

Provision Currently

Benefits a Single EMA
Ryan White Care Act: Opportunities to

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Figure 5: San Francisco Receives Substantially More Funding Than Other EMAs

The high grant that San Francisco derives from the hold-harmless

provision has declined somewhat but continues to be sizable. Figure 6

shows that in fiscal year 1996 San Francisco’s title I grant was more than

twice the grant of other EMAs. In fiscal year 2000, it has been reduced to

roughly 80 percent.

$1,289

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

San Francisco All EMAs

Total Funding Per Case

$2,359
Ryan White Care Act: Opportunities to

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Figure 6: San Francisco’s Funding Advantage Has Declined Modestly, Fiscal Years 1996-2000

As I noted earlier, roughly half of title I funding is distributed by formula,

and half is distributed on a discretionary basis. Discretionary funding is

awarded on the basis of the quality of proposals submitted to HRSA. The

discretionary grants awarded to San Francisco appear to reflect the holdharmless provision as well as those in need. For example, for fiscal year

2000 San Francisco’s discretionary award per AIDS case was roughly twice

as large as the average for the other EMAs.

In conclusion, Mr. Chairman, the HIV-AIDS epidemic continues to evolve

and the location of the disease continues to change as well. As a

consequence, it becomes increasingly important that federal resources

match the distribution of persons who suffer from this dread disease.

When data on all living HIV cases become available in the next few years,

their inclusion in funding formulas will improve the ability of the Ryan

White CARE Act to effectively deliver funding to persons in need.

However, improvements in matching funding to persons in need of health

and support services could also be achieved with this reauthorization if, as

we have recommend, the double counting of EMA AIDS cases was phased

out. We would be happy to work with subcommittee to achieve this.

Total Funding Per Case

$2,359

$1,364 $1,289

$0

$1,000

$2,000

$3,000

$4,000

1996 2000

San Francisco Other EMAs 

$2,803
Ryan White Care Act: Opportunities to

Enhance Funding Equity

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Mr. Chairman, that concludes my prepared statement. I would be happy to

answer any questions that you or other Members of the Subcommittee

may have.

For future contacts regarding this testimony, please call William J. Scanlon

at (202) 512-7118 or Jerry Fastrup at (202) 512-7211. Greg Dybalski and

Michael Williams also made important contributions to this statement.

(201080)

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