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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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(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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(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.
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
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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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.
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;
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
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,
117 
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
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
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.
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.