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is amended by redesignating subsection (h) as subsection
(i) and by adding after subsection (g) the following new
subsection:
‘‘(h) 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 59 and paid by the employer on behalf
of his employees) which an individual was eligible to re-
ceive under title II of the 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 organization described in sub-
section (b)(1)(A)(iii))’’ after ‘‘(2) A corporation, trust, or
community chest, fund, or foundation’’.
(2) Subsection (e) of section 501 of such Code (relat-
ing to cooperative hospital service organizations) is
amended by striking out the last sentence.
(e) DENIAL OF DEDUCTION FOR MEDICAL, DENTAL,
ETC., EXPENSES.—(1) Section 213 of such Code (relating
to medical, dental, etc., expenses) is repealed.
(2) The table of sections of part VII of subchapter
B of chapter 1 of subtitle A of such Code is amended by
striking out the item relating to section 213.
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(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self-employment income) is repealed.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)(A) Subsection (b) of section 3101 of such Code
(relating to rate of tax on employees under the Federal
Insurance Contributions Act) is repealed.
(B) Section 3201 of such Code (relating to rate of
tax imposed on employees under the Railroad Retirement
Tax Act) is amended by striking out ‘‘(a) plus the rate
imposed by section 3101(b)’’.
(C) Subsection (a) of section 3211 of such Code (re-
lating to rate of tax on employee representatives under
the Railroad Retirement Tax Act) is amended by striking
out ‘‘3101(a), 3101(b)’’ and inserting in lieu thereof
‘‘3101(a)’’.
(D) Subsection (e) of section 6051 of such Code (re-
lating to railroad employees) is repealed.
(g) The amendments made by this section shall apply
to taxable years beginning on or after the effective date
of health services.
EXISTING EMPLOYER-EMPLOYEE HEALTH BENEFIT
PLANS
SEC. 503. No contractual or other nonstatutory obli-
gation of any employer to pay for or provide any health
care and supplemental service to his present and former
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employees and their dependents and survivors, or to any
of such persons, shall apply on and after the effective date
of health services to the extent such individuals are eligible
to receive such health care and supplemental services
under this Act.
WORKERS COMPENSATION PROGRAMS
SEC. 504. No workers compensation program, wheth-
er established pursuant to Federal or State law or private
initiative, shall pay for or provide any health care and sup-
plemental services on and after the effective date of health
services, to the extent such health care and supplemental
services are available under this Act.
PART B—HEALTH SERVICE TRUST FUND
ESTABLISHMENT OF HEALTH SERVICE TRUST FUND
SEC. 511. (a) 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 (hereinafter 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
part.
(b) 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)
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falls, and for each fiscal year thereafter, 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 59 and 3111(b) of the Internal
Revenue Code of 1954 (as estimated by the Secretary of
the Treasury). The amount appropriated 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 determined on the basis of esti-
mates by the Secretary of the Treasury of the receipts
specified in the preceding sentence; and proper adjust-
ments shall be made in the amounts subsequently trans-
ferred to the extent prior estimates were in excess of or
were less than the receipts specified in such sentence.
TRANSFER OF FUNDS TO THE HEALTH SERVICE TRUST
FUND
SEC. 512. (a) On the effective date of health services,
there are transferred to the Trust Fund all of the assets
and liabilities of the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance
Trust Fund.
(b) 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 other-
wise appropriated, a governmental contribution equal to
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40 percent of the sums appropriated by section 511(b) for
such fiscal year. There shall be deposited in the Trust
Fund all recoveries of overpayments, and all receipts
under loans or other agreements entered into, under this
Act.
ADMINISTRATION OF HEALTH SERVICE TRUST FUND
SEC. 513. (a) With respect to the Trust Fund, there
is hereby created a body to be known as the Board of
Trustees of the Trust Fund (hereinafter in this section
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
(hereinafter 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 calendar 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
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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
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) It shall be the duty of the Managing Trustee to
invest such portion of the Trust Fund as is not, in his
judgment, required to meet current withdrawals. Such in-
vestments may be made only in interest-bearing obliga-
tions of the United States or in obligations guaranteed as
to both principal and interest by the United States. For
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such purpose such obligations may be acquired (1) on
original issue at the issue price, or (2) by purchase of out-
standing obligations at the market price. The purposes 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.
(c) Any obligations acquired by the Trust Fund (ex-
cept public-debt obligations issued exclusively to the Trust
Fund) may be sold by the Managing Trustee at the mar-
ket price, and such public-debt obligations may be re-
deemed at par plus accrued interest.
(d) The interest on, and the proceeds from the sale
or redemption of, any obligations held in the Trust Fund
shall be credited to and form a part of the Trust Fund.
(e) 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.
PART C—PREPARATION OF PLANS AND BUDGETS
DETERMINATION OF FUND AVAILABILITY
SEC. 521. (a)(1) 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 begin-
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ning on October 1 of such year for expenditure from the
Trust Fund.
(2) Such amount shall not exceed for a fiscal year
the lesser of—
(A) 140 percent of the expected net receipts
during the fiscal year (as estimated by the Secretary
of the Treasury) from the taxes imposed by sections
59 and 3111(b) of the Internal Revenue Code of
1954;
(B) the amount of the aggregate obligations
that the National Health Board determines 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 capacity of the Service to provide services
under this Act, as such changes are reflected in the
plans and budgets prepared and submitted by area
health boards under this part; or
(C) the amount fixed under subsection (b).
(3) 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. The National Health Board shall
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promptly report to Congress any increase made in such
amount and the reasons therefor.
(b) 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) The National Health Board may obligate for ex-
penditure from the Trust Fund, in addition to the maxi-
mum amount which may be obligated in a fiscal year
under subsection (a), such funds as are necessary to pro-
vide 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 534(b)(6) is insufficient. The National Health
Board shall promptly report to Congress any obligation
made pursuant to this subsection and the reasons therefor.
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(d) In addition 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 appropriate.
PREPARATION OF AREA PLANS AND BUDGETS
SEC. 522. (a) Each community board shall, not later
than January 1 of each year, submit to its respective dis-
trict board a plan and budget for the fiscal year beginning
on October 1 of such year. In preparing such plan and
budget, each community board shall consult with users
and health workers in the community to assure effective
and coordinated planning for the efficient use of resources
in its community.
(b) Each district board shall, not later than February
1 of each year, submit to its respective regional board a
plan and budget for the fiscal year beginning on October
1 of such year. In preparing such plan and budget, each
district board shall consult with the users, health workers,
and community boards in its district to assure effective
and coordinated planning for the efficient use of resources
in its district.
(c) Each regional board shall, not later than March
1 of each year, submit to the National Health Board a
plan and budget for the fiscal year beginning on October
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1 of such year. In preparing such plan and budget, each
regional board shall consult with the users, health work-
ers, and district boards in its region to assure effective
and coordinated planning for the efficient use of resources
in its region.
(d) In preparing the budgets required by this section,
each area health board shall specify its operating, preven-
tion, capital, and research expenses anticipated for the fis-
cal year covered by the budget and for the 5-year period
beginning with such fiscal year.
PART D—ALLOCATION AND DISTRIBUTION OF FUNDS
NATIONAL BUDGET
SEC. 531. (a) The National Health Board shall pre-
pare, taking into consideration the budgets submitted
under section 522(c), and, as soon after April 1 of each
year as is practicable, shall transmit to the regional boards
a national health budget for the fiscal 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—
(1) funds for ordinary operating expenses,
which shall be further divided into funds for use by
the National Health Board, and funds to be allo-
cated (in accordance with subsection (b)) to the re-
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gional boards for use by the regional boards and the
district and community boards within their regions;
(2) funds for preventive health measures, which
shall be further divided into funds for use by the
National Health Board and funds to be allocated (in
accordance with subsection (b)) to the regional
boards for use by the regional boards and the dis-
trict and community boards within their regions;
(3) funds for capital expenses, which shall be
further divided into funds for use by the National
Health Board and funds to be allocated (in accord-
ance with subsection (c)) to the regional boards for
use by the regional boards and district and commu-
nity boards within their regions;
(4) funds for research expenses, which shall be
further divided into funds for the conduct of re-
search under the supervision of the National Health
Board and funds to be allocated (in accordance with
subsection (b)) to the regional boards for the con-
duct of research under the supervision of the re-
gional, district, and community boards; and
(5) funds for special operating expenses, as de-
scribed in section 534.
(b) Funds for ordinary operating expenses, for pre-
ventive health measures, and for research expenses which
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are allocated to the regional boards under subsection (a)
shall be divided among the regions in the proportion which
the number of residents in each region bears to the total
population of the Nation.
(c) Funds for capital expenses which are allocated to
the regional boards under subsection (a) shall be allocated,
to the extent consistent with the efficient and equitable
use of resources, to the regional boards in accordance with
the budgets for capital expenses submitted by such boards
to the National Health Board under section 522(c), 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.
(d) A budget submitted to the regional boards under
subsection (a) shall be adopted upon the approval of such
budget by a majority of such regional boards.
REGIONAL BUDGETS
SEC. 532. (a) Each regional board shall prepare, tak-
ing into consideration the budgets submitted under section
522 (b), and, as soon as may be practicable after the adop-
tion under section 531 of the national health budget for
any fiscal year, shall transmit a regional budget, covering
operating, prevention, capital, and research expenses for
such fiscal year, to each district board in its region. Such
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regional budget shall be adopted upon the approval of such
budget by a majority of such district boards.
(b) Funds for capital expenses shall be allocated, to
the extent consistent with the efficient and equitable use
of resources, to the district boards in a region in accord-
ance with the budgets for capital expenses submitted by
such boards to the regional board under section 522(b),
except that during the first 10 fiscal years following the
effective date of health services, priority shall be given to
districts lacking adequate health care facilities on such ef-
fective date.
(c) Funds to be allocated to district boards for ordi-
nary operating expenses, preventive health measures, and
research expenses shall be allocated to each district board
in the same proportion as the number of residents in such
district bears to the number of residents in the respective
region.
DISTRICT BUDGETS
SEC. 533. (a) Each district board shall prepare, tak-
ing into consideration the budgets submitted under section
522 (a), and, as soon as may be practicable after the adop-
tion under section 532 of the regional health budget for
any fiscal year for the respective region, shall transmit a
district budget, covering operating, prevention, capital,
and research expenses for such fiscal year, to each commu-
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nity board in its district. Such district budget shall be
adopted upon the approval of such budget by a majority
of such community boards.
(b) Funds for capital expenses shall be allocated, to
the extent consistent with the efficient and equitable use
of resources, to the community boards in a district in ac-
cordance with the budgets for capital expenses submitted
by such boards to the district board under section 522(a),
except that during the first 10 fiscal years following the
effective date of health services, priority shall be given to
communities lacking adequate health care facilities on
such effective date.
(c) Funds to be allocated to community boards for
ordinary operating expenses, preventive health measures,
and research expenses shall be allocated to each commu-
nity board in the same proportion as the number of resi-
dents in such community bears to the number of residents
in the respective district.
SPECIAL OPERATING EXPENSE FUND
SEC. 534. (a) A fund for special operating expenses
shall be incorporated into each budget prepared by the Na-
tional Health Board. For the purposes of this title, the
term ‘‘special operating expenses’’ means operating ex-
penses associated with—
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(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 residents of
rural areas;
(5) special health care needs arising from envi-
ronmental or occupational health conditions;
(6) special health care needs arising from unex-
pected occurrences, including epidemics and natural
disasters; and
(7) the conduct of environmental health inspec-
tion and monitoring services.
(b) The special operating expense fund shall be allo-
cated 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 to district
and community boards and shall consist of uniform
basic capitation amounts multiplied by the number
of residents 65 years of age or older in the respec-
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tive districts and communities. The basic capitation
amounts for districts and for communities shall be
determined by the National Health Board, based
upon studies of the additional operating expenses as-
sociated with the care and treatment of such resi-
dents in such districts and communities.
(2) Funds for the additional operating expenses
associated with the care and treatment of persons
confined to full-time residential care institutions
shall be allocated to the district and community
boards responsible for such institutions and shall
consist of a uniform basic capitation amount for
each kind of institution, multiplied by the number of
residents in such institutions in the respective dis-
tricts and communities. The basic capitation
amounts shall be determined by the National Health
Board, based upon studies of the additional operat-
ing expenses associated with the care and treatment
of such persons and the maintenance of such institu-
tions.
(3) Funds shall be allocated to community
boards for the additional operating expenses associ-
ated with the special health care needs of low-income
persons. Such payments shall be allocated to com-
munity boards in proportion to the number of resi-
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dents in their communities having incomes below the
poverty level (as defined by the Secretary of Com-
merce). The total funds allocated for this purpose
shall be no less than 2 percent of the ordinary oper-
ating expense funds allocated in accordance with
section 531(a).
(4) Funds for the additional operating expenses
associated with the special health care needs of resi-
dents of rural areas shall be allocated to district and
community boards serving areas of low population
density and shall consist of basic capitation amounts
multiplied by the number of residents in the respec-
tive districts and communities. The basic capitation
amounts shall be determined by the National Health
Board based upon studies of the additional operat-
ing expenses associated with the provision of health
care in areas of low population density.
(5) Funds for the additional operating expenses
associated with special regional health care needs
arising from environmental and occupational health
problems shall be allocated to regional boards by the
National Health Board in accordance with its deter-
mination of such special needs. The total funds allo-
cated for this purpose shall be no greater than one-
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half of 1 percent of the ordinary operating expense
funds allocated in accordance with section 531(a).
(6) 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 one-half of 1 per-
cent of the ordinary operating expense funds allo-
cated in such year in accordance with section
531(a).
(7) 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 to the area health
boards providing such services.
DISTRIBUTION OF FUNDS
SEC. 535. (a) Funds allocated under the national
health budget shall be distributed by the National Health
Board from the Trust Fund. No health board may request
or receive funds from any other source.
(b) All payments shall be made to area health boards,
and shall be expended by such boards, in accordance with
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the budgets adopted under sections 531 through 533. If
the budget for any area health board for a fiscal year is
not adopted before the beginning of the fiscal year, until
such budget is adopted such area health board 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 534.
(c) Each area 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 part C of title IV. Separate ac-
counts shall not be required for funds for ordinary operat-
ing expenses and for special operating expenses.
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(d) Area health boards shall be paid at such time or
times as the National Health Board finds appropriate.
(e) Before and during any fiscal year, supplementary
funds may be allocated to any area health board if the
National Health Board finds that such funds are required
by events occurring or information acquired after the ini-
tial allocations to such health board were made.
(f) Area health boards 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 National Health
Board for deposit in the Trust Fund.
ANNUAL STATEMENT, RECORDS, AND AUDITS
SEC. 536. (a) Each area health board shall prepare
annually and transmit to the National Health Board a
statement which shall accurately show the financial oper-
ations of such board and the facilities supervised by it for
the year for which such statement is prepared.
(b) Each area health board shall keep such records
as the National Health Board determines to be necessary
for the purposes of this Act, including for the facilitation
of audits.
(c) The National Health Board and the Comptroller
General of the United States, or their duly authorized rep-
resentatives, shall, for the purpose of audits, have access
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to any books, documents, papers, and records which in
their opinion are related or pertinent to the operation of
the Service.
PART E—GENERAL PROVISIONS
ISSUANCE OF OBLIGATIONS
SEC. 541. (a) The National Health Board is author-
ized to borrow money and to issue and sell such obliga-
tions 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 outstanding at any one
time shall not exceed $10,000,000,000.
(b) 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 authorized to enter into binding cov-
enants with the holders of such obligations, and with the
trustee, if any, under any agreement entered into in con-
nection with the issuance thereof with respect to the estab-
lishment of reserve, sinking, and other funds, stipulations
concerning the issuance of obligations or the execution of
leases or lease purchases relating to properties of the Serv-
ice and such other matters as the National Health Board
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deems necessary or desirable to enhance the marketability
of such obligations.
(c) Obligations issued by the Service under this sec-
tion—
(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) Obligations issued by the Service under this sec-
tion shall—
(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-
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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).
(e) At least 15 days before selling any issue of obliga-
tions, the National Health Board shall advise the Sec-
retary of the Treasury of the amount, proposed date of
sale, maturities, terms and conditions, and expected maxi-
mum rates of interest of the proposed issue in appropriate
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detail and shall consult with him or his designee thereon.
The Secretary may elect to purchase such obligations
under such terms, including 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 mar-
ketable Treasury securities of comparable maturity, as de-
termined by the Secretary. If the Secretary does not pur-
chase such obligations, the National Health Board may
proceed to issue and sell them to a party or parties other
than the Secretary upon notice to the Secretary and upon
consultation as to the date of issuance, maximum rates
of interest, and other terms and conditions.
(f) Subject to the conditions of subsection (e), the
National Health Board may require the Secretary of the
Treasury to purchase obligations 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 as limiting the authority of the Sec-
retary to purchase obligations of the Service in excess of
such amount.
(g) Notwithstanding subsection (d)(5), obligations is-
sued by the Service shall be obligations of the Government
of the United States, and payment of principal and inter-
est thereon shall be fully guaranteed by the Government
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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) For the purpose of any purchase of the obliga-
tions of the Service, the Secretary of the Treasury is au-
thorized to use as a public debt transaction the proceeds
from the sale of any securities issued under the Second
Liberty Bond Act, as now or hereafter in force, and the
purposes for which securities may be issued under the Sec-
ond Liberty Bond Act, as now or hereafter in force, are
extended to include any purchases of the obligations of
the Service under this part. 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, pur-
chases, and sales by the Secretary of the obligations of
the Service shall be treated as public debt transactions of
the United States.
DEFINITIONS
SEC. 542. For purposes of this title:
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(1) The term ‘‘operating expenses’’ means the
cost of providing, planning, operating, and maintain-
ing 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 re-
search) costing less than $100,000, except for funds
associated with the conduct of preventive health
measures and research.
(2) The term ‘‘capital expenses’’ means ex-
penses which under generally accepted accounting
principles are not properly chargeable as expenses of
operation and maintenance, which exceed $100,000,
and which are not associated primarily with the con-
duct of research.
TITLE VI—MISCELLANEOUS PROVISIONS
EFFECTIVE DATE OF HEALTH SERVICES
SEC. 601. 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.
REPEAL OF PROVISIONS
SEC. 602. (a) Effective on the effective date of health
services, the following provisions of law are repealed:
(1) The Public Health Service Act, except for—
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(A) title I (relating to short title and defini-
tions), parts F and G of title III (relating to licens-
ing and quarantine authority), and title XIV (relat-
ing to safety of public water systems); and
(B) titles VII and VIII, which shall remain ef-
fective, 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 institutions, and students
thereof, in areas which have not established health
team schools under part A of title III of this Act.
(2) Titles V, XVIII, and XIX of the Social Security
Act (relating to the maternal and child health and crippled
children’s services, Medicare, and Medicaid); part B of
title XI of such Act (relating to professional standards re-
view); sections 226, 1121 through 1124, and 1126 of such
Act (relating to entitlement to hospital insurance benefits,
uniform health reporting systems, limitation on Federal
participation for capital expenditures, program for deter-
mining qualification for certain health care personnel, dis-
closure of ownership and related information, and disclo-
sure of certain convictions); and so much of title XX of
such Act (relating to grants to States for services) as pro-
vides for payments to States for health care and supple-
mental services.
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(3) Chapter 89 of title 5, United States Code (relat-
ing 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 uniformed services).
(6) The Comprehensive Alcohol Abuse and Alcohol-
ism Prevention, Treatment, and Rehabilitation Act of
1970; the Comprehensive Alcohol Abuse and Alcoholism
Prevention, Treatment, and Rehabilitation Act Amend-
ments of 1974; and section 4 of the Comprehensive Drug
Abuse Prevention and Control Act of 1970 (relating to
medical treatment of narcotic addiction).
(7) Public Law 83–568 (42 U.S.C. 2001–2004b) (re-
lating to hospital and other health facilities 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 Con-
struction Act of 1968 and the District of Columbia Medi-
cal and Dental Manpower Act of 1970.
(9) Sections 232 and 242 and title XI of the National
Housing Act (relating to mortgage insurance for nursing
homes, hospitals, and group practice facilities).
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(10) The Mental Retardation Facilities and Commu-
nity Mental Health Centers Construction Act of 1963.
(11) The Family Planning Services and Population
Research Act of 1970.
(12) The National Arthritis Act of 1974 and the Na-
tional Diabetes Mellitus Research and Education 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 programs 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)(1) Not later than three years after the date of
enactment of this Act, the President shall prepare, in con-
sultation with the appropriate National Health Board, and
transmit to Congress legislation (A) to repeal or amend
such provisions of law as are inconsistent with the pur-
poses of this Act or the provision of health care and sup-
plemental services by the Service under this Act, and (B)
to make such conforming and technical amendments in
provisions of law as may be necessary to properly effect
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the repeal of provisions described in subsection (a) and
the repeal or amendment of provisions described in clause
(A) of this paragraph.
(2) 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 rehabilitation of
narcotics addicts);
(C) chapter 314 of title 18, United States Code
(relating to sentencing of narcotic addicts to com-
mitment 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 Prevention
Act;
(H) the Federal Cigarette Labeling and Adver-
tising Act;
(I) the Federal Food, Drug, and Cosmetic Act;
(J) the Fair Packaging and Labeling Act;
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(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 thereof); and
(O) the Solid Waste Disposal Act,
to the Service as the President determines, after consulta-
tion with the National Health Board, to be appropriate.
(c)(1) The National Health Board shall, immediately
upon its initial appointment, and in consultation with the
Secretary of Health and Human Services, review the pro-
grams conducted under the specified provisions of the
Public Health Service Act and the other Acts described
in section 602(a) and shall determine how the Service shall
carry out the purposes of such programs.
(2) Not later than one year after the effective date
of health services, the National Health Board shall report
to the President and to the Congress on how the Service
is carrying out the purposes of the programs authorized
to be conducted under provisions of law which are repealed
by subsection (a) (other than paragraph (1)(B) thereof).
(3) Not later than 5 years after the effective date
of health services, the National Health Board shall report
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to the President and to the Congress on how the Service
is carrying out the purposes of programs described in sub-
section (a)(1)(B).
(d) Not later than 2 years after the effective date of
health services, the National Health Board shall transmit
to Congress a proposed codification of all the provisions
of law which contain functions that are transferred or re-
late to the Service.
TRANSITION PROVISIONS
SEC. 603. (a) Amounts appropriated to carry out the
purposes of any provisions of law repealed by this Act and
available on the effective date of such repeal shall be
transferred on such date to the Health Service Trust Fund
(established under section 511 of this Act).
(b) The President is authorized to transfer so much
of the positions, personnel, assets, liabilities, contracts,
property, and records employed, held, used, arising from,
available to or made available in connection with the func-
tions or programs repealed by this Act to the Service as
may be agreed upon by the President and the National
Health Board.
(c) In the case where the authority for the establish-
ment of any office or agency, or all the functions of such
office or agency, are repealed under section 602, such of-
fice or agency shall lapse.
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(d) The amendments 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-
ated before that date) for the adjudication or en-
forcement of any such right or obligation.
AMENDMENT TO BUDGET AND ACCOUNTING ACT
SEC. 604. (a) Section 201 of the Budget and Ac-
counting Act, 1921 (31 U.S.C. 11) is amended by insert-
ing after subsection (j) the following new subsection:
‘‘(k) 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 Health
Service Act) separately from such items with respect to
expenditures and appropriations relating to other oper-
ations of the Government.’’.
(b) The amendment made by subsection (a) shall
apply with respect to fiscal years beginning more than 1
year after the date of enactment of this Act.