vestigations, if the employee is assigned to a foreign coun-
try or detailed to a State or political subdivision thereof 
or to a nonprofit institution, and if the circumstances are 
such as are likely to preclude the remedies of third persons 
against the United States described in section 2679(b) of 
title 28, United States Code, for such damage or injury. 
TITLE IV—OTHER FUNCTIONS 
OF HEALTH BOARDS 
Subtitle A—Advocacy, Grievance 
Procedures, and Trusteeships 
SEC. 401. ADVOCACY AND LEGAL SERVICES PROGRAM. 
(a) ESTABLISHMENT OF PROGRAM.—The National 
Health Board shall establish a program of health advocacy 
to ensure the full realization of the patient rights enumer-
ated in subtitle A of title II. Such a program shall in-
clude— 
(1) the employment of individuals having basic 
legal knowledge and skills as health advocates; 
(2) the presence of health advocates— 
(A) in inpatient health care facilities at all 
times; and 
(B) in other health care facilities during 
the provision of health care services; 
(3) provision for health advocates to (A) in-
form, on an ongoing basis, users and health workers 
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of such patient rights and (B) report to the National 
Health Board any infraction of such rights which is 
not promptly corrected; 
(4) provision for regular meetings between 
health workers and health advocates, users, and any 
user representatives to discuss ways of ensuring the 
fulfillment of such rights through affirmative action 
of such workers and the National Health Board; and 
(5) appropriate action by the National Health 
Board to ensure that infractions of such rights are 
promptly and sufficiently corrected. 
(b) HEALTH RIGHTS LEGAL SERVICES.— 
(1) ESTABLISHMENT OF PROGRAM.—The Na-
tional Health Board shall establish a health rights 
legal services program and shall provide such pro-
gram with sufficient legal and administrative per-
sonnel, funding, and facilities (A) to ensure that 
users and health workers receive, free of charge, 
high quality legal services (including representation 
in grievance proceedings commenced under section 
402) for legal problems related to health rights and 
health care services, and (B) to improve, through 
litigation and other activities, the health care system 
and expand the rights of users and health workers. 
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(2) SERVICES.—The health rights legal services 
program shall provide directly, by contract with the 
Legal Services Corporation, or by contract with 
members of the private bar, for— 
(A) establishment of a legal services office 
in each region to provide representation (other 
than representation provided under subpara-
graph (B)) of users, health workers, and vol-
untary associations having a demonstrated in-
terest in health care in proceedings and hear-
ings under sections 324 and 402; and 
(B) establishment of legal services offices 
in such communities and districts as are deter-
mined, in accordance with guidelines established 
by the National Health Board, to have inad-
equate legal services to provide the legal serv-
ices described in paragraph (1)(A). 
(3) USE OF CONTRACTS.—The National Health 
Board may carry out the functions described in 
paragraph (1)(B) directly, by contract, or otherwise. 
SEC. 402. GRIEVANCE PROCEDURES. 
(a) GRIEVANCE PROCEEDINGS.— 
(1) IN GENERAL.—The National Health Board 
shall provide, in accordance with this section, that 
any user, health worker, or any user association hav-
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ing a demonstrated interest in health care may com-
mence a grievance proceeding before the Board (or 
a person or committee designated by such Board) 
with respect to an alleged violation of this Act. The 
National Health Board may commence a grievance 
proceeding before itself (or a person or committee 
designated by such Board) with respect to an alleged 
violation of this Act. 
(2) GRIEVANCES AGAINST NATIONAL HEALTH 
BOARD.—Grievances against the National Health 
Board may be presented to and adjudicated by the 
Inspector General for Health Services or the Inspec-
tor’s General local designees. Grievants shall also 
have access to review in the courts. 
(b) REVIEW.— 
(1) BY NATIONAL HEALTH BOARD.—The Na-
tional Health Board shall provide, subject to para-
graphs (2) and (3), for its review (or a review by a 
person or committee designated by the Board), by 
appeal to the Board by any party to a proceeding 
described in subsection (a)(1) or on its own initia-
tive, of an adverse decision. 
(2) LIMITATION ONCE SUIT COMMENCED.—On 
and after the date a suit with respect to an adverse 
determination in a grievance proceeding or review 
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proceeding is filed under subsection (e), no review 
proceeding respecting such proceeding may be com-
menced by appeal to the Board under paragraph (1), 
and any such review proceeding which was com-
menced by appeal to the Board under such para-
graph before the date of filing of such suit and is 
pending on such date shall promptly be discon-
tinued. 
(3) TIME LIMIT.—No review of an adverse ad-
ministrative decision may be made by appeal or by 
initiative under this subsection unless the appeal is 
filed or notice of the initiative is published (as the 
case may be) not later than 30 days after the publi-
cation of the decision. 
(c) INVESTIGATION.—Whenever a grievance pro-
ceeding is commenced under subsection (a), the entity be-
fore which the proceeding is held shall investigate the 
grievance. 
(d) RIGHT TO SUE.—Any party to a grievance pro-
ceeding or review proceeding commenced under this sec-
tion may bring suit in the United States district court for 
the judicial district in which such proceeding, or review 
proceeding, was brought, for the review of an adverse de-
termination in such proceeding or review proceeding. Such 
court shall affirm such determination unless it finds that 
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such determination is not supported by substantial evi-
dence or is arbitrary and capricious. 
Subtitle B—Occupational Safety 
and Health Programs 
SEC. 411. FUNCTIONS OF THE NATIONAL HEALTH BOARD. 
(a) OVERSIGHT AUTHORITY.—On and after the effec-
tive date of health services, the National Health Board 
shall oversee occupational safety and health programs con-
ducted at the regional level, and shall participate in the 
establishment and administration of occupational safety 
and health standards under the Occupational Safety and 
Health Act of 1970. 
(b) CONFORMING AMENDMENTS.— 
(1) IN GENERAL.—To provide for participation 
of the National Health Board in the establishment 
and administration of occupational safety and health 
standards, the Occupational Safety and Health Act 
of 1970 (29 U.S.C. 651 et seq.) is amended— 
(A) in section 3, by adding at the end the 
following new paragraph: 
‘‘(15) The term ‘National Health Board’ means 
the National Health Board of the United States 
Health Services.’’; 
(B) by striking ‘‘Secretary of Health and 
Human Services’’ each place it appears (other 
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than in section 22(b)) and inserting ‘‘National 
Health Board’’; 
(C) in the first sentence of section 6(b)(1), 
by inserting ‘‘shall request the National Health 
Board and’’ before ‘‘may request’’; 
(D) in the second sentence of section 
6(b)(1), by inserting ‘‘the Board and’’ after 
‘‘The Secretary shall provide’’; 
(E) in the third sentence of section 
6(b)(1), by striking ‘‘An’’ and inserting ‘‘The 
Board and an’’; 
(F) in the third sentence of section 
6(b)(1), by striking ‘‘its’’ each place it appears 
and inserting ‘‘their’’; 
(G) in the fourth sentence of section 
6(b)(6)(A), by inserting ‘‘after consultation 
with the National Health Board and’’ after 
‘‘may be granted only’’; 
(H) in the third sentence of section 6(d), 
by inserting ‘‘after consultation with the Na-
tional Health Board and’’ before ‘‘after oppor-
tunity for’’; 
(I) in section 8(g)(2), by striking ‘‘The 
Secretary’’ and all that follows through ‘‘shall 
each’’ and inserting ‘‘The Secretary shall’’; 
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(J) in section 8(g)(2), by striking ‘‘their’’ 
and inserting ‘‘his’’; 
(K) in section 16, by inserting ‘‘after con-
sultation with the National Health Board and’’ 
before ‘‘after notice and opportunity’’; 
(L) in section 18(c), by inserting ‘‘(after 
consultation with the National Health Board)’’ 
after ‘‘in his judgment’’; 
(M) in section 19(d), by inserting ‘‘and the 
National Health Board’’ after ‘‘Secretary’’ each 
place it appears; and 
(N) in section 20(a), by striking the first 
sentence of paragraph (5). 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall take effect on the effective 
date of health services. 
(c) GUIDELINES.—The National Health Board shall 
establish guidelines— 
(1) for its participation in the establishment 
and administration of occupational safety and health 
standards under the Occupational Safety and Health 
Act of 1970; and 
(2) for the establishment and operation of 
workplace health facilities under section 413. 
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SEC. 
412. 
COMMUNITY 
OCCUPATIONAL 
SAFETY 
AND 
HEALTH ACTIVITIES. 
The Occupational Safety and Health Administration, 
under the direction of the National Health Board, shall 
develop and provide staff support for local and regional 
occupational safety and health programs, to include com-
munity-based occupational safety and health councils that 
represent community workers and residents. Such pro-
grams shall— 
(1) promote and assist in the establishment of 
workplace occupational safety and health committees 
in workplaces in the community, and advise and fa-
cilitate such committees’ actions relating to safety 
and health hazards in workplaces in the community; 
(2) assist employees in determining methods of, 
and requirements for, inspections of workplaces in 
the community for safety and health hazards; 
(3) implement training programs to enhance 
the ability of employees in the region to monitor 
safety and health conditions in their workplaces and 
to assist safety and health inspectors in the conduct 
of workplace inspections; 
(4) facilitate communication among workers 
employed in similar industries in the region and the 
Nation with respect to occupational health and safe-
ty hazards they face in common; 
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(5) conduct baseline and periodic biologic 
screening of employees in the region; 
(6) develop and maintain environmental moni-
toring programs to identify and isolate hazardous 
workplaces and work areas in the region; and 
(7) analyze employment-related injuries and ill-
nesses occurring in the region. 
SEC. 413. WORKPLACE HEALTH FACILITIES. 
(a) ESTABLISHMENT.—The Occupational Safety and 
Health Administration, under the direction of the Na-
tional Health Board, shall develop a program to establish 
worksite health facilities, distributed to make available oc-
cupational and emergency health care services to individ-
uals employed in the workplace in accordance with this 
section and guidelines and standards for such facilities es-
tablished by the National Health Board. Such facilities 
may be maintained by each employer where the facility 
is located, or by the group of employers covered by a facil-
ity. 
(b) APPLICATION OF GUIDELINES.—Each workplace 
health facility established pursuant to subsection (a) shall, 
taking into account guidelines established by the National 
Health Board— 
(1) be organized in a manner so as to provide 
an appropriate number of appropriately skilled 
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health workers to meet occupational and emergency 
health care needs of employees in the workplace; and 
(2) be operated by the community for the com-
munity in which the workplace is predominantly lo-
cated, or, where the National Health Board or its 
local authority deems appropriate, by the employer, 
with the cost in either case borne by the employer 
in each workplace. 
SEC. 414. EMPLOYEE RIGHTS RELATING TO OCCUPATIONAL 
SAFETY AND HEALTH. 
(a) WORKPLACE COMMITTEES.— 
(1) 
ESTABLISHMENT.—Employees 
in 
each 
workplace having 25 or more employees shall have 
the right to establish workplace occupational safety 
and health committees (each in this subsection re-
ferred to as a ‘‘committee’’) with members of their 
choosing. 
(2) MEMBERSHIP.—Members of committees 
(composed of the greater of 3 members or one mem-
ber for each 100 employees in the workplace) shall, 
without any loss of pay or other job rights— 
(A) be permitted to spend eight hours of 
each month inspecting their workplace and con-
ducting such other functions relating to occupa-
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tional safety and health as are determined by 
the employees in the workplace; and 
(B) be permitted to accompany any safety 
and health inspectors during inspections of the 
workplace. 
(b) SAFETY-RELATED RIGHTS.—Employees in each 
workplace shall have the right, without any loss of pay 
or other job rights— 
(1) to monitor safety and health conditions in 
their workplace whenever they reasonably deem it 
necessary and with whatever reasonable scientific in-
struments and expert assistance they choose; and 
(2) to remove themselves from the site of any 
hazard to their safety or health until an authorized 
inspector has certified that the hazard has been 
eliminated. 
(c) SAFE WORKPLACES.—Employers shall adopt all 
feasible engineering measures that will minimize occupa-
tional safety and health hazards in the workplace. Where 
such measures are not adequate to protect employees from 
such hazards, employers shall furnish their employees 
with, or reimburse their employees for the reasonable cost 
of, equipment and clothing needed to protect an employee 
from any residual occupational safety and health hazards 
in the workplace. 
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(d) RIGHT TO INSPECT MEDICAL RECORDS.—Em-
ployees or their duly chosen representatives shall have the 
right to inspect all medical records maintained by their 
employers on the condition of their health, and shall have 
the right to be assisted during such inspections by persons 
of their choosing. 
(e) COPIES OF REPORTS.—Employers shall provide 
their employees with copies of all reports, studies, and 
data concerning conditions affecting the health and safety 
of employees within their workplaces, with annual reports 
on the morbidity and mortality experience of present and 
former employees, and with timely notification of the pres-
ence within the workplace of any materials, agents, or con-
ditions which may have a deleterious effect on the safety 
and health of their employees, along with relevant infor-
mation on hazards and precautions, symptoms, remedies, 
and antidotes. 
(f) RIGHT TO NEGOTIATE STANDARDS.—Employees 
shall have the right to seek, through collective bargaining, 
occupational safety and health standards, including stand-
ards relating to physical and mental stress and speed of 
work, more restrictive than such standards established 
under the Occupational Safety and Health Act of 1970. 
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SEC. 415. DEFINITIONS. 
(a) WORKPLACE.—For purposes of this subtitle, the 
term ‘‘workplace’’ means the regular location where work 
is performed by one or more employees of an employer. 
(b) EMPLOYER; EMPLOYEE.—For the purposes of 
sections 413 and 414, the terms ‘‘employer’’ and ‘‘em-
ployee’’ have the same meanings those terms have in sec-
tion 3 of the Occupational Safety and Health Act of 1970 
(42 U.S.C. 653). 
Subtitle 
C—Health 
and 
Health 
Care Delivery Research, Quality 
Assurance, and Health Equity 
SEC. 421. PRINCIPLES AND GUIDELINES FOR RESEARCH. 
(a) CONDUCT.—On and after the effective date of 
health services, the Service shall conduct a program of re-
search concerning health and health care delivery. On and 
after 2 years after such date, such research program shall 
conform to the following principles: 
(1) The research shall, to the maximum extent 
possible, be performed under the direction of, and in 
association with, agencies representative of the popu-
lation. 
(2) No research shall be conducted within, or 
using the resources of, an area health facility until 
it has been reviewed and approved by the National 
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Health Board, or a designated local authority re-
sponsible for such facility. 
(3) Priority shall be given in health research to 
the prevention and correction of the leading causes 
of illness and death, particularly environmental, oc-
cupational, nutritional, social, and economic causes. 
(4) Priority shall be given in health care deliv-
ery research to improvement of the effectiveness and 
efficiency of ambulatory and primary health care de-
livery, including research on alternative systems of 
health care delivery and alternative conceptions of 
health and health care. 
(5) The National Health Board shall encourage 
and support the conduct of clinical trials that may 
improve the health of the public. Any clinical trial 
conducted with the intention of evaluating new pre-
ventive, diagnostic, or therapeutic methods or agents 
shall be conducted only in accordance with estab-
lished ethical procedures that protect subjects from 
undue harm. If benefit becomes apparent, by sci-
entific consensus, before the scheduled conclusion of 
any clinical trial, such trial shall nevertheless be ter-
minated, and the benefit made available to trial par-
ticipants and the public at large. 
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(6) No research shall be conducted on a human 
subject without the subject’s informed written con-
sent. 
(7) No research shall be conducted on a human 
subject while the subject is involuntarily confined to 
an institution. 
(8) The planning and conduct of research under 
the program, shall take place in cooperation with ap-
propriate officials conducting related research in the 
Federal Government and agencies and departments 
of State, territorial, and local governments. 
(9) The results of research shall be dissemi-
nated to the public and to National Health Board in 
a manner that will most readily permit the use of 
such results to improve the health of users and the 
delivery of health care services. 
(b) GUIDELINES.—The National Health Board shall 
establish guidelines for the conduct of research in con-
formance with the principles described in subsection (a). 
SEC. 422. ESTABLISHMENT OF INSTITUTES. 
(a) IN GENERAL.—On the effective date of health 
services, the agencies of the Department of Health and 
Human Services that conduct research on health and 
health care are transferred to the National Health Board. 
These include the Agency for Healthcare Research and 
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Quality, the Agency for Toxic Substances and Disease 
Registry, the Centers for Disease Control and Prevention, 
the National Institutes of Health (established under title 
IV of the Public Health Service Act), and the Substance 
Abuse and Mental Health Services Administration. In ad-
dition, the National Health Board shall establish the fol-
lowing institutes: 
(1) NATIONAL INSTITUTE OF EPIDEMIOLOGY.— 
A National Institute of Epidemiology, which shall— 
(A) gather and analyze disease-related sta-
tistics collected by the Service; 
(B) plan, conduct, support, and assist in 
epidemiologic research conducted by the Serv-
ice; 
(C) conduct and support research on epi-
demiologic methodology and experimental epide-
miology; 
(D) establish and maintain an early warn-
ing system for the detection of new diseases 
and epidemics; 
(E) assist in the formulation of policies to 
eliminate or reduce the causes of illness and in-
jury and to prevent and curtail epidemics of 
these conditions; and 
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(F) provide technical assistance and sup-
port to regional and local jurisdictions related 
to measures to prevent and curtail outbreaks of 
illness and injury. 
(2) NATIONAL
INSTITUTE
OF
EVALUATIVE 
CLINICAL RESEARCH.—A National Institute of Eval-
uative Clinical Research, which shall— 
(A) create a uniform electronic data base 
for research on quality improvement in clinical 
care and the organization and delivery of serv-
ices, and for research on outcomes of care; 
(B) assess and analyze evidence on newly 
discovered or proposed preventive, diagnostic, 
and therapeutic methods and agents, including 
new technologies, and assist the National 
Health Board, in cooperation with other bodies, 
including the National Institute of Pharmacy 
and Medical Supply, in developing guidelines 
and standards for their introduction; 
(C) analyze evidence on newly discovered 
or proposed preventive, diagnostic, and thera-
peutic methods and agents; 
(D) plan and conduct clinical trials, in con-
formance with the limitations of subtitle A of 
title II; 
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(E) assist the National Health Board, in 
cooperation with other bodies, including the Na-
tional Institute of Pharmacy and Medical Sup-
ply, in developing guidelines and standards for 
the introduction of new methods of prevention, 
diagnosis, and treatment; 
(F)(i) regularly assess and recommend 
measures to improve the health status of the 
population, which methods shall include anal-
ysis of the national health data base, regular 
surveys of the population regarding their expe-
rience and evaluation of their health and health 
services, and such other methods as designated 
by the Institute; 
(ii) identify the most effective methods of 
prevention, diagnosis and treatment, as deter-
mined by the most recent evidence, and assist 
the National Health Board, in cooperation with 
other bodies, in establishing guidelines to im-
prove clinical practice, including clinical deci-
sion criteria per section 221(f); 
(iii) regularly monitor and report to the 
National Health Board for further action the 
extent of inappropriate care, including under-
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service and overservice, and its consequences; 
and 
(iv) develop additional methods of quality 
improvement for implementation by the Na-
tional Health Board and other entities, includ-
ing systematic review of patterns of practice 
that compromise the quality of care and rec-
ommendations to redress such practices, edu-
cation for health care workers to improve the 
quality of care, and guidelines for the optimal 
organization of health services and the use of 
tertiary care facilities; 
(G) administer the periodic convening of 
the U.S. Preventive Health Services Task 
Force, which shall recommend to the National 
Health Board a schedule for preventive health 
services based on age and sex, which schedule 
shall reflect the most recent medical evidence; 
and 
(H) provide education for users on clinical 
effectiveness guidelines and the most effective 
preventive, diagnostic, and treatment practices. 
(3) NATIONAL
INSTITUTE
OF
HEALTH
CARE 
SERVICES.—A National Institute of Health Care 
Services, which shall— 
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(A) analyze data and statistics on the 
health care resources and needs of the Nation 
and on the quality of present services; 
(B) conduct comparative studies of health 
care services in the various regions of the Na-
tion, and make recommendations for the im-
provement of health care services in areas with 
inferior quality of health care services; 
(C) plan and conduct research on alter-
native methods of health care delivery, on the 
functions, tasks, performance and work rela-
tionships of various kinds and categories of 
health workers, on patterns of organization of 
health care, and on the effectiveness and bene-
fits of health care in relation to costs; and 
(D) assist the National Health Board in 
formulating national policies to improve the 
quality of health care services. 
(4) NATIONAL INSTITUTE OF PHARMACY AND 
MEDICAL SUPPLY.—A National Institute of Phar-
macy and Medical Supply, which shall— 
(A) recommend to the National Health 
Board standards regarding the quality, dis-
tribution, and price of all drugs, therapeutic de-
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vices, appliances and equipment to be used by 
the Service; 
(B) certify drugs, therapeutic devices, ap-
pliances, and equipment for use in the health 
facilities of the Service, and for furnishing to 
users of such health facilities; 
(C) assist the National Health Board in 
issuing a National Pharmacy and Medical Sup-
ply Formulary; and 
(D) conduct a comprehensive program of 
pharmaceutical and medical supply research 
and utilization education using regional facili-
ties to the maximum extent possible. 
(5) NATIONAL
INSTITUTE
OF
SOCIOLOGY
OF 
HEALTH AND HEALTH CARE.—A National Institute 
of Sociology of Health and Health Care, which 
shall— 
(A) conduct ongoing analyses of the basic 
epistemological assumptions of health and 
health care; 
(B) assess critically the effects of scientific 
medicine and of divisions in institutional and 
technical skills in health care; 
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(C) evaluate the effects of health care 
measures and policies upon population groups 
and subgroups in the Nation; 
(D) identify and analyze the social, cul-
tural, economic, occupational, distributional, 
and environmental factors in modern society af-
fecting health and well-being; 
(E) analyze alternative, holistic approaches 
to the human body, health, and causality of ill 
health and the lack of social and psychological 
well-being; and 
(F) assist the National Health Board in 
formulating national policies relating to the pro-
motion of health and the provision of health 
care. 
(b) COORDINATION
OF
EFFORT.—The National 
Health Board will establish mechanisms for internal co-
ordination of research among the five Institutes, and will 
also coordinate effort with agencies under the Department 
of Health and Human Services, including the Food and 
Drug Administration and the Health Resources and Serv-
ices Administration. 
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Subtitle D—Health Planning, Dis-
tribution of Drugs and Other 
Medical Supplies, and Miscella-
neous Functions 
SEC. 431. HEALTH PLANNING AND BUDGETING. 
(a) IN GENERAL.—The National Health Board shall 
develop and implement guidelines to collect data on the 
supply of and demand for health workers in facilities 
under its supervision, and on the delivery of health care 
and supplemental services in health care facilities under 
its supervision, shall evaluate such data in relation to the 
health care needs of their respective area, and shall trans-
mit such data and evaluation as necessary for implementa-
tion, and shall make available such data and evaluations 
to residents of their respective area. 
(b) COORDINATION.—The National Health Board 
shall coordinate the planning and administration of the 
delivery of health care services, health worker education, 
and health research within regions, and shall facilitate the 
planning and administration of such programs. 
(c) PLANS.—The National Health Board shall formu-
late a 1-year and 5-year national health plan and budget, 
taking into account the regional budgets prepared in ac-
cordance with section 522. 
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SEC. 432. DISTRIBUTION OF DRUGS AND OTHER MEDICAL 
SUPPLIES. 
(a) NATIONAL FORMULARY.— 
(1) 
PUBLICATION.—The 
National 
Health 
Board, shall, not later than the effective date of 
health services, publish and disseminate a National 
Pharmacy and Medical Supply Formulary (in this 
section referred to as the ‘‘Formulary’’). 
(2) CONTENTS.—The Formulary shall contain a 
listing of drugs, therapeutic devices, appliances, 
equipment, and other medical supplies (including 
eyeglasses, other visual aids, hearing aids, and pros-
thetic devices) (in this section referred to as ‘‘drugs 
and other medical supplies’’). For each item on such 
listing the Formulary shall contain (A) the stand-
ards of quality for the production of such item, (B) 
the medical conditions for which the item is certified 
as effective for purposes of the provision of health 
care services under this Act, and (C) such other in-
formation on such item as the National Health 
Board determines to be appropriate for the effective 
and efficient delivery of health care services under 
this Act. 
(3) UPDATING.—The National Health Board 
shall, at regular intervals, update the contents of the 
Formulary and publish a price list for items listed 
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in the Formulary, which prices shall reflect the ac-
tual costs of manufacture. 
(b) DRUG PURCHASE PROGRAMS.— 
(1) IN GENERAL.—The National Health Board 
shall establish a program, in accordance with this 
subsection for the purchase and distribution of 
drugs and other medical supplies for use in health 
care facilities. 
(2) PRICING.—Such program shall provide for 
the purchase of each drug or other medical supply 
item only (A) following competitive bidding on such 
item or (B) based on the price listed for such item 
in the price list published under subsection (a)(3). 
(3) GENERIC
DISTRIBUTION.—Such program 
shall provide for the distribution and dispensing of 
drugs under their generic names. 
(4) GENERIC NAMES DEFINED.—For purposes 
of paragraph (3), the term ‘‘generic names’’ means 
the established names, as defined in section 
502(e)(2) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 352(e)(2)). 
(c) AUTHORITY TO MANUFACTURE.—The National 
Health Board is authorized to establish and operate drug 
and medical supply manufacturing facilities, if it deter-
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mines that such operation will result in reduced expendi-
tures by the Service. 
SEC. 433. MISCELLANEOUS FUNCTIONS OF THE NATIONAL 
HEALTH BOARD. 
(a) ANNUAL REPORT.—The appropriate National 
Health Board shall publish, not later than December 31 
of each year, a report presenting and evaluating oper-
ations of the Service during the fiscal year ending in such 
year and surveying the future health needs of the Nation 
and plans the Board has for the Service to meet such 
needs. 
(b) DISSEMINATION.—The National Health Board 
shall, not later than the effective date of health services, 
prepare and disseminate, for use by users, information 
about health and health services deemed essential to en-
sure users’ active and informed participation in the health 
care system, including information that is culturally ap-
propriate for each area’s principal cultural and ethnic 
groupings, a comprehensive dictionary of terms used in 
health care records and services maintained or provided 
by the Service. Such dictionary shall explain terms related 
to symptoms, signs, diagnoses, etiologic agents and condi-
tions, diagnostic procedures, and the treatment and pre-
vention of, and rehabilitation following, illnesses, and shall 
include extensive citations of lay and professional sources 
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100 
which a user might consult for additional information on 
such terms. 
TITLE V—FINANCING OF THE 
SERVICE 
Subtitle A—Health Service Taxes 
SEC. 501. INDIVIDUAL AND CORPORATE INCOME TAXES. 
(a) HEALTH SERVICE TAXES.— 
(1) IN GENERAL.—Subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to 
normal taxes and surtaxes) is amended by adding at 
the end the following new part: 
‘‘PART VIII—HEALTH SERVICE TAXES 
‘‘Sec. 59B. Tax imposed. 
‘‘SEC. 59B. TAX IMPOSED. 
‘‘(a) INDIVIDUALS, ESTATES, AND TRUSTS.—In ad-
dition to other taxes, there is hereby imposed for each tax-
able year on the taxable income of every individual and 
of every estate and trust taxable under section 1(d), a tax 
in an amount equal to 10 percent of the total tax imposed 
by section 1 for such taxable year. 
‘‘(b) CORPORATION.—In addition to the other taxes, 
there is hereby imposed for each taxable year on the tax-
able income of every corporation, a tax in an amount equal 
to 90 percent of the total amount of the normal tax and 
surtax imposed by section 11 for such taxable year.’’. 
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101 
(2) CLERICAL
AMENDMENT.—The table of 
parts of such subchapter A is amended by adding 
after the item relating to part VII the following new 
item: 
‘‘PART VIII. HEALTH SERVICE TAXES’’. 
(b) EFFECTIVE DATE.—The amendments made in 
this section shall apply to taxable years beginning on or 
after the effective date of health services. 
SEC. 502. OTHER CHANGES IN THE INTERNAL REVENUE 
CODE OF 1986. 
(a) DENIAL OF EXCLUSION FROM GROSS INCOME 
FOR AMOUNTS PAID BY THIRD PARTIES FOR MEDICAL 
CARE.—Section 105 of the Internal Revenue Code of 1986 
(relating to amounts received under accident and health 
plans) is amended by striking subsection (b). 
(b) DENIAL OF EXCLUSION FROM GROSS INCOME OF 
CERTAIN
CONTRIBUTIONS
BY
THE
EMPLOYER
TO 
HEALTH PLANS.—Subsection (a) of section 106 of such 
Code (relating to contributions by employer to accident 
and health plans) is amended to read as follows: 
‘‘(a) GENERAL RULE.—Except as otherwise provided 
in this section, gross income does not include contributions 
by the employer to accident or health plans for compensa-
tion (through insurance or otherwise) to his employees for 
personal injuries or sickness to the extent that such con-
tributions do not provide for health care and supplemental 
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102 
services available to such employees under the Josephine 
Butler United States Health Service Act.’’. 
(c) DENIAL OF DEDUCTION OF HEALTH CARE EX-
PENSES AS TRADE OR BUSINESS EXPENSES.—Section 
162 of such Code (relating to trade or business expenses) 
is amended by redesignating subsection (p) as subsection 
(q) and by adding after subsection (o) the following new 
subsection: 
‘‘(p) PAYMENTS FOR HEALTH CARE.—No deduction 
shall be allowed under subsection (a) for any amount paid 
for health care services (other than any amount of tax im-
posed by section 59B and paid by the employer on behalf 
of his employees) which an individual was eligible to re-
ceive under title II of the Josephine Butler United States 
Health Service Act.’’. 
(d) DENIAL OF DEDUCTION FOR CONTRIBUTIONS TO 
CERTAIN MEDICAL AND HOSPITAL FACILITIES.— 
(1) Paragraph (2) of section 170(c) of such 
Code (relating to charitable, etc., contributions and 
gifts) is amended by inserting ‘‘(other than an orga-
nization described in subsection (b)(1)(A)(iii))’’ after 
‘‘(2) A corporation, trust, or community chest, fund, 
or foundation’’. 
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103 
(2) Subsection (e) of section 501 of such Code 
(relating to cooperative hospital service organiza-
tions) is amended by striking the last sentence. 
(e) DENIAL OF DEDUCTION FOR MEDICAL, DENTAL, 
ETC., EXPENSES.— 
(1) Section 213 of such Code (relating to med-
ical, dental, etc., expenses) is repealed. 
(2) The table of sections of part VII of sub-
chapter B of chapter 1 of such Code is amended by 
striking the item relating to section 213. 
(f) HOSPITAL INSURANCE TAX.— 
(1) Subsection (b) of section 1401 of such Code 
(relating to rate of tax on self-employment income) 
is repealed. 
(2) Subsection (b) of section 3101 of such Code 
(relating to rate of tax on employees under the Fed-
eral Insurance Contributions Act) is repealed. 
(3) Section 3201(a) of such Code (relating to 
rate of tax imposed on employees under the Railroad 
Retirement Tax Act) is amended by striking ‘‘the 
sum of the rates of tax in effect under subsections 
(a) and (b) of section 3101’’ and inserting ‘‘the rate 
of tax in effect under section 3101(a)’’. 
(4) Section 3211(a)(1) of such Code (relating 
to rate of tax on employee representatives under the 
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104 
Railroad Retirement Tax Act) is amended by strik-
ing ‘‘subsections (a) and (b)’’ the first place it ap-
pears and inserting ‘‘subsection (a)’’. 
(5) Subsection (e) of section 6051 of such Code 
(relating to railroad employees) is repealed. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after the effective date of health services. 
SEC. 503. EXISTING EMPLOYER-EMPLOYEE HEALTH BEN-
EFIT PLANS. 
No contractual or other nonstatutory obligation of 
any employer to pay for or provide any health care and 
supplemental service to his present and former employees 
and their dependents and survivors, or to any of such per-
sons, shall apply on and after the effective date of health 
services to the extent such individuals are eligible to re-
ceive such health care and supplemental services under 
this Act. 
SEC. 504. WORKERS COMPENSATION PROGRAMS. 
No workers compensation program, whether estab-
lished pursuant to Federal or State law or private initia-
tive, shall pay for or provide any health care and supple-
mental services on and after the effective date of health 
services, to the extent such health care and supplemental 
services are available under this Act. 
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105 
Subtitle B—Health Service Trust 
Fund 
SEC. 511. ESTABLISHMENT OF HEALTH SERVICE TRUST 
FUND. 
(a) ESTABLISHMENT.—There is hereby created on 
the books of the Treasury of the United States a trust 
fund to be known as the Health Service Trust Fund (in 
this title referred to as the ‘‘Trust Fund’’). The Trust 
Fund shall consist of such gifts and bequests as may be 
made to the Service and such amounts as may be depos-
ited in, or appropriated to, such fund as provided in this 
subtitle. 
(b) APPROPRIATION.—There is hereby appropriated 
to the Trust Fund for each fiscal year beginning in the 
fiscal year in which the effective date of health services 
(as defined in title VI) falls, and for each fiscal year there-
after, out of any moneys in the Treasury not otherwise 
appropriated, an amount equal to 100 percent of expected 
net receipts from the taxes imposed by sections 59B and 
3111(b) of the Internal Revenue Code of 1986 (as esti-
mated by the Secretary of the Treasury). The amount ap-
propriated by the preceding sentence shall be transferred 
from time to time from the general fund in the Treasury 
to the Trust Fund in such smaller amounts to be deter-
mined on the basis of estimates by the Secretary of the 
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106 
Treasury of the receipts specified in the preceding sen-
tence; and proper adjustments shall be made in the 
amounts subsequently transferred to the extent prior esti-
mates were in excess of or were less than the receipts spec-
ified in such sentence. 
SEC. 512. TRANSFER OF FUNDS TO THE HEALTH SERVICE 
TRUST FUND. 
(a) OF MEDICARE TRUST FUNDS.—On the effective 
date of health services, there are transferred to the Trust 
Fund all of the assets and liabilities of the Federal Hos-
pital Insurance Trust Fund and the Federal Supple-
mentary Medical Insurance Trust Fund. 
(b) ADDITIONAL AMOUNTS.—In addition to the sums 
appropriated by section 511(b), there is appropriated to 
the Trust Fund for each fiscal year, out of any moneys 
in the Treasury not otherwise appropriated, a govern-
mental contribution equal to 40 percent of the sums ap-
propriated by section 511(b) for such fiscal year. There 
shall be deposited in the Trust Fund all recoveries of over-
payments, and all receipts under loans or other agree-
ments entered into, under this Act. 
SEC. 513. ADMINISTRATION OF HEALTH SERVICE TRUST 
FUND. 
(a) BOARD
OF TRUSTEES.—With respect to the 
Trust Fund, there is hereby created a body to be known 
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107 
as the Board of Trustees of the Trust Fund (in this sec-
tion referred to as the ‘‘Board of Trustees’’) composed of 
the Secretary of the Treasury, the Secretary of Health and 
Human Services, and the Chairperson of the National 
Health Board, all ex officio. The Secretary of the Treasury 
shall be the Managing Trustee of the Board of Trustees 
(in this section referred to as the ‘‘Managing Trustee’’). 
The Chairperson of the National Health Board shall serve 
as the Secretary of the Board of Trustees. The Board of 
Trustees shall meet not less frequently than once each cal-
endar year. It shall be the duty of the Board of Trustees 
to— 
(1) hold the Trust Fund; 
(2) report to the Congress not later than the 
first day of April of each year on the operation and 
status of the Trust Fund during the preceding fiscal 
year and on its expected operation and status during 
the current fiscal year and the next 2 fiscal years; 
(3) report immediately to the Congress when-
ever the Board is of the opinion that the amount of 
the Trust Fund is unduly small; and 
(4) review the general policies followed in man-
aging the Trust Fund, and recommend changes in 
such policies, including necessary changes in the 
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108 
provisions of law which govern the way in which the 
Trust Fund is to be managed. 
The report provided for in paragraph (2) shall include a 
statement of the assets of, and the disbursements made 
from, the Trust Fund during the preceding fiscal year, 
an estimate of the expected income to, and disbursements 
to be made from, the Trust Fund during the current fiscal 
year and each of the next 2 fiscal years, and a statement 
of the actuarial status of the Trust Fund. Such report 
shall be printed as a House document of the session of 
the Congress to which the report is made. 
(b) INVESTMENT.—It shall be the duty of the Man-
aging Trustee to invest such portion of the Trust Fund 
as is not, in his judgment, required to meet current with-
drawals. Such investments may be made only in interest 
bearing obligations of the United States or in obligations 
guaranteed as to both principal and interest by the United 
States. For such purpose such obligations may be acquired 
(1) on original issue at the issue price, or (2) by purchase 
of outstanding obligations at the market price. The pur-
poses for which obligations of the United States may be 
issued under the Second Liberty Bond Act, as amended, 
are hereby extended to authorize the issuance at par of 
public debt obligations for purchase by the Trust Fund. 
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109 
(c) ISSUANCE OF OBLIGATIONS.—Any obligations ac-
quired by the Trust Fund (except public debt obligations 
issued exclusively to the Trust Fund) may be sold by the 
Managing Trustee at the market price, and such public 
debt obligations may be redeemed at par plus accrued in-
terest. 
(d) PAYMENT OF INTEREST.—The interest on, and 
the proceeds from the sale or redemption of, any obliga-
tions held in the Trust Fund shall be credited to and form 
a part of the Trust Fund. 
(e) PAYMENTS.—The Managing Trustee shall pay 
from time to time from the Trust Fund such amounts as 
the National Health Board certifies are necessary to carry 
out this Act. 
Subtitle C—Preparation of Plans 
and Budgets 
SEC. 521. DETERMINATION OF FUND AVAILABILITY. 
(a) MAXIMUM FUNDS.— 
(1) FIXING.—The National Health Board shall, 
not later than January 1 of each year, initially fix 
the maximum amount of funds which may (except as 
provided in subsection (c)) be obligated during the 
fiscal year beginning on October 1 of such year for 
expenditure from the Trust Fund. 
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110 
(2) LIMITATION.—Such amount shall not ex-
ceed for a fiscal year the lesser of— 
(A) 140 percent of the expected net re-
ceipts during the fiscal year (as estimated by 
the Secretary of the Treasury) from the taxes 
imposed by sections 59 and 3111(b) of the In-
ternal Revenue Code of 1986; 
(B) the amount of the aggregate obliga-
tions that the National Health Board deter-
mines were (or will be) incurred by the Service 
from the Trust Fund during the previous fiscal 
year, adjusted to reflect changes in the cost of 
living, in the number of users, and in the capac-
ity of the Service to provide services under this 
Act; or 
(C) the amount fixed under subsection (b). 
(3) REFIXING.—The National Health Board 
may at any time refix such amount to reflect 
changes— 
(A) of one percent or more in the expected 
net tax receipts (described in paragraph 
(2)(A)); or 
(B) of five percent or more in the cost of 
living, number of users, or the capacity of the 
Service to provide services under this Act. 
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111 
The National Health Board shall promptly report to 
Congress any increase made in such amount and the 
reasons therefor. 
(b) LESSER AMOUNT.—The National Health Board 
shall fix in a fiscal year an amount, which the maximum 
amount described in subsection (a)(1) may not exceed in 
the fiscal year, which is less than the amount described 
in subsection (a)(2)(A) if the Board determines that— 
(1) restriction of the amount to be made avail-
able for obligation will not materially impair the ade-
quacy or quality of health care and supplemental 
services provided to users, or 
(2) improvement in the organization, delivery, 
or utilization of such services has lessened their ag-
gregate cost (or increase in such cost). 
(c) OBLIGATION.—The National Health Board may 
obligate for expenditure from the Trust Fund, in addition 
to the maximum amount which may be obligated in a fis-
cal year under subsection (a), such funds as are necessary 
to provide health care and supplemental services needed 
because of an epidemic, disaster, or other occurrence 
which was not, and could not have been, reasonably 
planned for by the Board and for which the contingency 
fund provided in section 532(b)(7) is insufficient. The Na-
tional Health Board shall promptly report to Congress any 
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112 
obligation made pursuant to this subsection and the rea-
sons therefor. 
(d) OBLIGATION OF BORROWED AMOUNTS.—In addi-
tion to the maximum amounts which may be obligated 
pursuant to subsection (a), the National Health Board 
may allocate funds borrowed in accordance with section 
541 for such purposes as it deems necessary and appro-
priate. 
SEC. 522. PREPARATION OF REGIONAL BUDGETS. 
(a) POPULATION NEED.—In preparing its annual 
budget the National Health Board, in coordination with 
its local and regional authorities, shall determine the pro-
jected per capita health expenditures for each region, 
based on the evaluation of health care needs described in 
this Act. 
(b) BUDGET BREAKDOWNS.—In preparing its annual 
budget the National Health Board shall specify its oper-
ating, prevention, capital, and research expenses antici-
pated for the fiscal year covered by the budget and for 
the 5-year period beginning with such fiscal year for each 
such region. 
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113 
Subtitle D—Allocation and 
Distribution of Funds 
SEC. 531. NATIONAL BUDGET. 
(a) PREPARATION.—The National Health Board 
shall prepare, taking into consideration the budgets pre-
pared under section 522, as soon after April 1 of each 
year as is practicable, a national health budget for the fis-
cal year beginning on October 1 of such year. Such budget 
shall divide the total funds available for obligation in such 
year, as determined under section 521, into funds for— 
(1) ordinary operating expenses; 
(2) preventive health measures, and which 
measures shall include primary prevention to im-
prove the conditions under which people live that af-
fect health status; 
(3) capital expenses; 
(4) research expenses; and 
(5) special operating expenses, as described in 
section 532. 
(b) ORDINARY OPERATING EXPENSES.—Funds for 
ordinary operating expenses, for preventive health meas-
ures, and for research expenses shall be divided among 
regions in the proportion which the number of residents 
in each region bears to the total population of the Nation, 
adjusted for population need as defined in this Act. 
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114 
(c) CAPITAL EXPENSES.—Funds for capital expenses 
shall be allocated, to the extent consistent with the effi-
cient and equitable use of resources, except that during 
the first 10 fiscal years following the effective date of 
health services, priority shall be given to regions lacking 
adequate health care facilities on such effective date. 
SEC. 532. SPECIAL OPERATING EXPENSE FUND. 
(a) IN GENERAL.—A fund for special operating ex-
penses shall be incorporated into each budget prepared by 
the National Health Board. For the purposes of this title, 
the term ‘‘special operating expenses’’ means operating ex-
penses associated with— 
(1) the care and treatment of users 65 years of 
age or older; 
(2) the care and treatment of persons confined 
to full-time residential care institutions, including 
nursing homes and facilities for the treatment of 
mental illness; 
(3) the special health care needs of low-income 
users; 
(4) the special health care needs of communities 
of color that experience disparities in health status 
compared to White populations; 
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115 
(5) the special health care needs of residents of 
rural or frontier areas, or noncontiguous States and 
territories; 
(6) special health care needs arising from envi-
ronmental or occupational health conditions; 
(7) special health care needs arising from unex-
pected occurrences, including epidemics and natural 
disasters; and 
(8) the conduct of environmental health inspec-
tion and monitoring services. 
(b) ALLOCATION.—The special operating expense 
fund shall be allocated as follows: 
(1) Funds for the additional operating expenses 
associated with the care and treatment of users 65 
years of age or older shall be allocated and shall con-
sist of uniform basic capitation amounts multiplied 
by the number of residents 65 years of age or older 
in the respective areas. The basic capitation 
amounts for areas shall be determined by the Na-
tional Health Board, based upon studies of the addi-
tional operating expenses associated with the care 
and treatment of such residents in such areas. 
(2) Funds for the additional operating expenses 
associated with the care and treatment of persons 
confined to full-time residential care institutions 
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116 
shall be allocated and shall consist of a uniform 
basic capitation amount for each kind of institution, 
multiplied by the number of residents in such insti-
tutions in the respective areas. The basic capitation 
amounts shall be determined by the National Health 
Board, based upon studies of the additional oper-
ating expenses associated with the care and treat-
ment of such persons and the maintenance of such 
institutions. 
(3) Funds shall be allocated to areas for the ad-
ditional operating expenses associated with the spe-
cial health care needs of low-income persons. Such 
payments shall be allocated in proportion to the 
number of residents in these areas having incomes 
below the poverty level (as defined by the Secretary 
of Commerce). The total funds allocated for this 
purpose shall be no less than 2 percent of the ordi-
nary operating expense funds allocated in accord-
ance with section 531(a). 
(4) Funds shall be allocated for the additional 
operating expenses associated with the special health 
care needs of communities of color to the extent that 
they experience disparities in health status compared 
to White populations. The basic capitation amounts 
shall be determined by the National Health Board, 
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based upon studies of the additional operating ex-
penses associated with providing the necessary or 
appropriate health services for communities of color, 
and the additional expenses associated with elimi-
nating such disparities in health status. 
(5) Funds for the additional operating expenses 
associated with the special health care needs of resi-
dents of rural or frontier areas, or noncontiguous 
States and territories, shall be allocated to commu-
nities serving areas of low population density and 
shall consist of basic capitation amounts multiplied 
by the number of residents in the respective areas. 
The basic capitation amounts shall be determined by 
the National Health Board based upon studies of 
the additional operating expenses associated with the 
provision of health care in areas of low population 
density or extreme geographic access barriers, or 
both. 
(6) Funds for the additional operating expenses 
associated with special regional health care needs 
arising from environmental and occupational health 
problems shall be allocated by the National Health 
Board in accordance with its determination of such 
special needs. The total funds allocated for this pur-
pose shall be no greater than 1⁄2 of 1 percent of the 
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118 
ordinary operating expense funds allocated in ac-
cordance with section 531(a). 
(7) Funds for the additional operating expenses 
associated with special health care needs arising 
from unexpected occurrences shall be retained by the 
National Health Board in a contingency fund and 
shall be allocated by the National Health Board in 
accordance with its determination of such needs. 
The total funds retained for this purpose in any one 
fiscal year shall be no greater than 1⁄2 of 1 percent 
of the ordinary operating expense funds allocated in 
such year in accordance with section 531(a). 
(8) Funds for the additional operating expenses 
associated with the conduct of environmental health 
inspection and monitoring services shall be allocated 
by the National Health Board for providing such 
services. 
SEC. 533. DISTRIBUTION OF FUNDS. 
(a) IN GENERAL.—Funds allocated under the na-
tional health budget shall be distributed by the National 
Health Board from the Trust Fund. Participating pro-
viders may not request or receive funds from any other 
source. 
(b) PAYMENTS AND EXPENDITURES.—All payments 
shall be expended in accordance with the budget adopted 
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119 
under section 531. If the budget for any fiscal year is not 
adopted before the beginning of the fiscal year, until such 
budget is adopted the National Health Service shall con-
tinue to receive ordinary operating expense funds, preven-
tion expense funds, and research expense funds at the rate 
at which it was receiving such funds during the preceding 
fiscal year, and it shall receive special operating expense 
funds in accordance with section 532. 
(c) ACCOUNTS.—The National Health Board shall 
maintain separate accounts for— 
(1) funds for operating expenses, including or-
dinary operating expenses and special operating ex-
penses; 
(2) funds for preventive health measures; 
(3) funds for capital expenses; and 
(4) funds for research expenses. 
Funds in a capital expense account shall be expended only 
for capital expenses. Funds in a research expense account 
shall be expended only for operations, equipment, and fa-
cilities for health and health care delivery research con-
ducted in accordance with subtitle C of title IV. Separate 
accounts shall not be required for funds for ordinary oper-
ating expenses and for special operating expenses. 
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120 
(d) PAYMENT FREQUENCY.—Service providers under 
this Act shall be paid at such time or times as the National 
Health Board finds appropriate. 
(e) ALLOCATION OF SUPPLEMENTARY PAYMENTS.— 
Before and during any fiscal year, supplementary funds 
may be allocated to any Service provider if the National 
Health Board finds that such funds are required by events 
occurring or information acquired after the initial alloca-
tions were made. 
(f) USE OF FUNDS.—Service providers may retain 
funds received from the National Health Board for 2 years 
following the receipt of such funds. Any funds which are 
unexpended after such time shall be returned to the Na-
tional Health Board for deposit in the Trust Fund. 
SEC. 534. ANNUAL STATEMENT, RECORDS, AND AUDITS. 
(a) ANNUAL STATEMENT.—Each Service provider 
shall prepare annually and transmit to the National 
Health Board a statement which shall accurately show its 
financial operations and for the year for which such state-
ment is prepared. 
(b) RECORDKEEPING.—Each Service provider shall 
keep such records as determined to be necessary for the 
purposes of this Act, including for the facilitation of au-
dits. 
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121 
(c) AUDITS.—The National Health Board and the 
Comptroller General of the United States, or their duly 
authorized representatives, shall, for the purpose of au-
dits, have access to any books, documents, papers, and 
records which in their opinion are related or pertinent to 
the operation of the Service. 
Subtitle E—General Provisions 
SEC. 541. ISSUANCE OF OBLIGATIONS. 
(a) BORROWING AUTHORITY.—The National Health 
Board is authorized to borrow money and to issue and 
sell such obligations as it determines necessary to carry 
out the purposes of this Act, but only in such amounts 
as may be specified from time to time in appropriation 
Acts. The aggregate amount of any such obligations out-
standing 
at 
any 
one 
time 
shall 
not 
exceed 
$10,000,000,000. 
(b) PLEDGING OF ASSETS.—The National Health 
Board may pledge the assets of the Trust Fund and 
pledge and use its revenues and receipts for the payment 
of the principal of or interest on such obligations, for the 
purchase or redemption thereof, and for other purposes 
incidental thereto. The National Health Board is author-
ized to enter into binding covenants with the holders of 
such obligations, and with the trustee, if any, under any 
agreement entered into in connection with the issuance 
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thereof with respect to the establishment of reserve, sink-
ing, and other funds, stipulations concerning the issuance 
of obligations or the execution of leases or lease purchases 
relating to properties of the Service and such other mat-
ters as the National Health Board deems necessary or de-
sirable to enhance the marketability of such obligations. 
(c) FORM OF OBLIGATIONS.—Obligations issued by 
the Service under this section— 
(1) shall be in such forms and denominations; 
(2) shall be sold at such times and in such 
amounts; 
(3) shall mature at such time or times; 
(4) shall be sold at such prices; 
(5) shall bear such rates of interest; 
(6) may be redeemable before maturity in such 
manner, at such times, and at such redemption pre-
miums; 
(7) may be entitled to such relative priorities of 
claim on the assets of the Service with respect to 
principal and interest payments; and 
(8) shall be subject to other terms and condi-
tions, as the National Health Board determines. 
(d) CHARACTER
OF
OBLIGATIONS.—Obligations 
issued by the Service under this section shall— 
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(1) be negotiable or nonnegotiable and bearer 
or registered instruments, as specified therein and in 
any indenture or covenant relating thereto; 
(2) contain a recital that they are issued under 
this section, and such recital shall be conclusive evi-
dence of the regularity of the issuance and sale of 
such obligations and of their validity; 
(3) be lawful investments and may be accepted 
as security for all fiduciary, trust, and public funds, 
the investment or deposit of which shall be under 
the authority or control of any officer or agency of 
the Government of the United States, and the Sec-
retary of the Treasury or any other officer or agency 
having authority over or control of any such fidu-
ciary, trust, or public funds, may at any time sell 
any of the obligations of the Service acquired under 
this section; 
(4) be exempt both as to principal and interest 
from all taxation now or hereafter imposed by any 
State or local taxing authority except estate, inherit-
ance, and gift taxes; and 
(5) not be obligations of, nor shall payment of 
the principal thereof or interest thereon be guaran-
teed by, the Government of the United States, ex-
cept as provided in subsection (g). 
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124 
(e) CONSULTATION WITH TREASURY.—At least 15 
days before selling any issue of obligations, the National 
Health Board shall advise the Secretary of the Treasury 
of the amount, proposed date of sale, maturities, terms 
and conditions, and expected maximum rates of interest 
of the proposed issue in appropriate detail and shall con-
sult with him or his designee thereon. The Secretary may 
elect to purchase such obligations under such terms, in-
cluding rates of interest, as he and the National Health 
Board may agree, but at a rate of yield no less than the 
prevailing yield on outstanding marketable Treasury secu-
rities of comparable maturity, as determined by the Sec-
retary. If the Secretary does not purchase such obliga-
tions, the National Health Board may proceed to issue 
and sell them to a party or parties other than the Sec-
retary upon notice to the Secretary and upon consultation 
as to the date of issuance, maximum rates of interest, and 
other terms and conditions. 
(f) PURCHASE
OF OBLIGATIONS.—Subject to the 
conditions of subsection (e), the National Health Board 
may require the Secretary of the Treasury to purchase ob-
ligations of the Service in such amounts as will not cause 
the holding by the Secretary of the Treasury resulting 
from such required purchases to exceed $2,000,000,000 
at any one time. This subsection shall not be construed 
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125 
as limiting the authority of the Secretary to purchase obli-
gations of the Service in excess of such amount. 
(g) FULL FAITH
AND CREDIT.—Notwithstanding 
subsection (d)(5), obligations issued by the Service shall 
be obligations of the Government of the United States, 
and payment of principal and interest thereon shall be 
fully guaranteed by the Government of the United States, 
such guaranty being expressed on the face thereof, if and 
to the extent that— 
(1) the National Health Board requests the 
Secretary of the Treasury to pledge the full faith 
and credit of the Government of the United States 
for the payment of principal and interest thereon; 
and 
(2) the Secretary, in his discretion, determines 
that it would be in the public interest to do so. 
(h) PUBLIC DEBT TRANSACTION.—For the purpose 
of any purchase of the obligations of the Service, the Sec-
retary of the Treasury is authorized to use as a public 
debt transaction the proceeds from the sale of any securi-
ties issued under the Second Liberty Bond Act, as now 
or hereafter in force, and the purposes for which securities 
may be issued under the Second Liberty Bond Act, as now 
or hereafter in force, are extended to include any pur-
chases of the obligations of the Service under this subtitle. 
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The Secretary of the Treasury may, at any time, sell any 
of the obligations of the Service acquired by him under 
this chapter. All redemptions, purchases, and sales by the 
Secretary of the obligations of the Service shall be treated 
as public debt transactions of the United States. 
SEC. 542. DEFINITIONS. 
For purposes of this title: 
(1) OPERATING EXPENSES.—The term ‘‘oper-
ating expenses’’ means the cost of providing, plan-
ning, operating, and maintaining services, facilities, 
programs, and boards (other than those associated 
with research) established or furnished under this 
Act, and of capital buildings and equipment (other 
than those associated with research) costing less 
than $100,000, except for funds associated with the 
conduct of preventive health measures and research. 
(2) CAPITAL EXPENSES.—The term ‘‘capital ex-
penses’’ means expenses which under generally ac-
cepted accounting principles are not properly charge-
able as expenses of operation and maintenance, 
which exceed $100,000, and which are not associ-
ated primarily with the conduct of research. 
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127 
TITLE VI—MISCELLANEOUS 
PROVISIONS 
SEC. 601. EFFECTIVE DATE OF HEALTH SERVICES. 
The effective date of health services under this Act 
is January 1 of the fourth calendar year after the year 
in which this Act is enacted. 
SEC. 602. REPEAL OF PROVISIONS. 
(a) IN GENERAL.—Effective on the effective date of 
health services, the following provisions of law are re-
pealed: 
(1) The Public Health Service Act, except for— 
(A) title I (relating to short title and defi-
nitions), parts F and G of title III (relating to 
licensing and quarantine authority), and title 
XIV (relating to safety of public water sys-
tems); and 
(B) titles VII and VIII, which shall remain 
effective, during the period beginning on such 
effective date and ending on the date occurring 
4 years after such effective date, with respect to 
the provision of assistance to educational insti-
tutions, and students thereof, in areas which 
have not established health team schools under 
subtitle A of title III of this Act. 
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128 
(2) Titles V, XVIII, XIX, and XXI of the So-
cial Security Act (relating to the maternal and child 
health and crippled children’s services, Medicare, 
Medicaid, and State children’s health insurance pro-
gram); part B of title XI of such Act (relating to 
professional standards review); sections 226, 1121 
through 1124, and 1126 of such Act (relating to en-
titlement to hospital insurance benefits, uniform 
health reporting systems, limitation on Federal par-
ticipation for capital expenditures, program for de-
termining qualification for certain health care per-
sonnel, disclosure of ownership and related informa-
tion, and disclosure of certain convictions); and so 
much of title XX of such Act (relating to grants to 
States for services) as provides for payments to 
States for health care and supplemental services. 
(3) Chapter 89 of title 5, United States Code 
(relating to health insurance for Federal employees). 
(4) Chapters 17, 73, and 81 and section 1506 
of title 38, United States Code (relating to medical 
benefits and programs relating to veterans). 
(5) Sections 1079 through 1083 and section 
1086 of title 10, United States Code (relating to the 
civilian health and medical program of the uni-
formed services). 
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(6) The Comprehensive Alcohol Abuse and Al-
coholism Prevention, Treatment, and Rehabilitation 
Act of 1970; the Comprehensive Alcohol Abuse and 
Alcoholism Prevention, Treatment, and Rehabilita-
tion Act Amendments of 1974; and section 4 of the 
Comprehensive Drug Abuse Prevention and Control 
Act of 1970 (relating to medical treatment of nar-
cotic addiction). 
(7) Public Law 83–568 (42 U.S.C. 2001– 
2004b) (relating to hospital and other health facili-
ties for Indians) and Public Law 85–151 (42 U.S.C. 
2005–2005f) (relating to community hospitals for 
Indians). 
(8) The District of Columbia Medical Facilities 
Construction Act of 1968 and the District of Colum-
bia Medical and Dental Manpower Act of 1970. 
(9) Sections 232 and 242 and title XI of the 
National Housing Act (relating to mortgage insur-
ance for nursing homes, hospitals, and group prac-
tice facilities). 
(10) The Mental Retardation Facilities and 
Community Mental Health Centers Construction Act 
of 1963. 
(11) The Family Planning Services and Popu-
lation Research Act of 1970. 
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130 
(12) The National Arthritis Act of 1974 and 
the National Diabetes Mellitus Research and Edu-
cation Act. 
(13) Titles I and II and section 301 of the 
Lead-Based Paint Poisoning Prevention Act (42 
U.S.C. 4801, 4811, 4821) (relating to grant pro-
grams for lead-based paint poisoning prevention). 
(14) The Act of March 2, 1897 (21 U.S.C. 41– 
50) (relating to tea importation). 
(15) Subsection (e) of section 20 and section 22 
of the Occupational Safety and Health Act of 1970 
(relating to the National Institute for Occupational 
Safety and Health). 
(b) PREPARATION OF ADDITIONAL LIST.— 
(1) IN GENERAL.—Not later than three years 
after the date of enactment of this Act, the Presi-
dent shall prepare, in consultation with the appro-
priate National Health Board, and transmit to Con-
gress legislation— 
(A) to repeal or amend such provisions of 
law as are inconsistent with the purposes of this 
Act or the provision of health care and supple-
mental services by the Service under this Act; 
and 
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131 
(B) to make such conforming and technical 
amendments in provisions of law as may be nec-
essary to properly effect the repeal of provisions 
described in subsection (a) and the repeal or 
amendment of provisions described in subpara-
graph (A) of this paragraph. 
(2) TRANSFER
AUTHORITY.—Such legislation 
shall include the transfers of such authority of the 
Secretary of Health and Human Services under the 
provisions of— 
(A) the Controlled Substances Act; 
(B) chapter 175 of title 28, United States 
Code (relating to civil commitment and rehabili-
tation of narcotics addicts); 
(C) chapter 314 of title 18, United States 
Code (relating to sentencing of narcotic addicts 
to commitment for treatment); 
(D) the Narcotic Addict Rehabilitation Act 
of 1966; 
(E) the Drug Abuse Office and Treatment 
Act of 1972; 
(F) the Occupational Safety and Health 
Act of 1970; 
(G) the Lead-Based Paint Poisoning Pre-
vention Act; 
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132 
(H) the Federal Cigarette Labeling and 
Advertising Act; 
(I) the Federal Food, Drug, and Cosmetic 
Act; 
(J) the Fair Packaging and Labeling Act; 
(K) the Act of March 4, 1923 (21 U.S.C. 
61–64) (relating to filled milk); 
(L) the Act of February 15, 1927 (21 
U.S.C. 141–149) (relating to milk importation); 
(M) the Federal Caustic Poison Act; 
(N) the Federal Coal Mine Health and 
Safety Act of 1969 (other than title IV there-
of); and 
(O) the Solid Waste Disposal Act, 
to the Service as the President determines, after 
consultation with the National Health Board, to be 
appropriate. 
(c) REVIEW OF PROGRAMS.— 
(1) IN GENERAL.—The National Health Board 
shall, immediately upon its initial appointment, and 
in consultation with the Secretary of Health and 
Human Services, review the programs conducted 
under the specified provisions of the Public Health 
Service Act and the other Acts described in sub-
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134 
of such repeal shall be transferred on such date to the 
Health Service Trust Fund (established under section 511 
of this Act). 
(b) TRANSFER OF PERSONNEL, ASSETS, ETC.—The 
President is authorized to transfer so much of the posi-
tions, personnel, assets, liabilities, contracts, property, and 
records employed, held, used, arising from, available to or 
made available in connection with the functions or pro-
grams repealed by this Act to the Service as may be 
agreed upon by the President and the National Health 
Board. 
(c) LAPSES OF OFFICES.—In the case where the au-
thority for the establishment of any office or agency, or 
all the functions of such office or agency, are repealed 
under section 602, such office or agency shall lapse. 
(d) APPLICATION OF AMENDMENTS.—The amend-
ments made by section 602— 
(1) shall not apply with respect to any contract 
entered into before the effective date of such amend-
ments, and 
(2) shall not affect (A) any right or obligation 
arising out of any matter occurring before the effec-
tive date of such amendments, or (B) any adminis-
trative or judicial proceeding (whether or not initi-
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135 
ated before that date) for the adjudication or en-
forcement of any such right or obligation. 
SEC. 604. AMENDMENT TO BUDGET AND ACCOUNTING ACT. 
(a) HEALTH SERVICE BUDGET.—Subsection (h) of 
section 1105 of title 31, United States Code, is amended 
to read as follows: 
‘‘(h) The Budget transmitted pursuant to subsection 
(a) shall set forth the items enumerated in paragraphs (4) 
through (9) and (12) of subsection (a) with respect to ex-
penditures from and appropriations to the Health Service 
Trust Fund (established under section 511 of the Jose-
phine Butler United States Health Service Act) separately 
from such items with respect to expenditures and appro-
priations relating to other operations of the Government.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to fiscal years be-
ginning more than 1 year after the date of enactment of 
this Act. 
SEC. 605. SEPARABILITY. 
If any provision of this Act, or the application of such 
provision to any person or circumstance, shall be held in-
valid, the remainder of this Act, or the application of such 
provision to persons or circumstances other than those as 
to which it is held invalid, shall not be affected thereby. 
Æ 
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