180
(c) CAPITAL EXPENSES.—Funds for capital expenses
which are allocated to the regional boards under sub-
section (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, pri-
ority shall be given to regions lacking adequate health care
facilities on such effective date.
(d) ADOPTION.—A budget submitted to the regional
boards under subsection (a) shall be adopted upon the ap-
proval of such budget by a majority of such regional
boards.
SEC. 532. REGIONAL BUDGETS.
(a) PREPARATION.—Each regional board shall pre-
pare, taking into consideration the budgets submitted
under section 522(b), and, as soon as may be practicable
after the adoption under section 531 of the national health
budget for any fiscal year, shall transmit a regional budg-
et, covering operating, prevention, capital, and research
expenses for such fiscal year, to each district board in its
region. Such regional budget shall be adopted upon the
approval of such budget by a majority of such district
boards.
181
(b) CAPITAL EXPENSES.—Funds for capital expenses
shall be allocated, to the extent consistent with the effi-
cient and equitable use of resources, to the district boards
in a region in accordance with the budgets for capital ex-
penses 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, pri-
ority shall be given to districts lacking adequate health
care facilities on such effective date.
(c) DISTRICT ALLOCATIONS.—Funds to be allocated
to district boards for ordinary operating expenses, preven-
tive health measures, and research expenses shall be allo-
cated 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.
SEC. 533. DISTRICT BUDGETS.
(a) PREPARATION.—Each district board shall pre-
pare, taking into consideration the budgets submitted
under section 522 (a), and, as soon as may be practicable
after the adoption 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
community board in its district. Such district budget shall
182
be adopted upon the approval of such budget by a majority
of such community boards.
(b) CAPITAL EXPENSES.—Funds for capital expenses
shall be allocated, to the extent consistent with the effi-
cient and equitable use of resources, to the community
boards in a district in accordance 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 serv-
ices, priority shall be given to communities lacking ade-
quate health care facilities on such effective date.
(c) ALLOCATION FOR COMMUNITY BOARDS.—Funds
to be allocated to community boards for ordinary oper-
ating expenses, preventive health measures, and research
expenses shall be allocated to each community board in
the same proportion as the number of residents in such
community bears to the number of residents in the respec-
tive district.
SEC. 534. 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—
183
(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;
(5) the special health care needs of residents of
rural or frontier areas, or non-contiguous 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
184
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-
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 oper-
ating expenses associated with the care and treat-
ment of such persons and the maintenance of such
institutions.
185
(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-
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 shall be allocated to community
boards for the additional operating expenses associ-
ated with the special health care needs of commu-
nities of color to the extent that they experience dis-
parities in health status compared to white popu-
lations. The basic capitation amounts shall be deter-
mined by the National Health Board, based upon
studies of the additional operating expenses associ-
ated with providing the necessary or appropriate
health services for communities of color, and the ad-
ditional expenses associated with eliminating such
disparities in health status.
(5) Funds for the additional operating expenses
associated with the special health care needs of resi-
186
dents of rural or frontier areas, or non-contiguous
states and territories, shall be allocated to district
and community boards serving areas of low popu-
lation density and shall consist of basic capitation
amounts multiplied by the number of residents in
the respective districts and communities. The basic
capitation amounts shall be determined by the Na-
tional Health Board based upon studies of the addi-
tional operating expenses associated with the provi-
sion 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 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-
half of 1 percent of the ordinary operating expense
funds allocated in accordance 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
187
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).
(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 to the area health
boards providing such services.
SEC. 535. 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. No health board may
request or receive funds from any other source.
(b) PAYMENTS AND EXPENDITURES.—All payments
shall be made to area health boards, and shall be expended
by such boards, in accordance with 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 adopt-
ed such area health board shall continue to receive ordi-
nary operating expense funds, prevention expense funds,
and research expense funds at the rate at which it was
189
occurring or information acquired after the initial alloca-
tions to such health board were made.
(f) USE OF FUNDS.—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 Na-
tional Health Board for deposit in the Trust Fund.
SEC. 536. ANNUAL STATEMENT, RECORDS, AND AUDITS.
(a) ANNUAL STATEMENT.—Each area health board
shall prepare annually and transmit to the National
Health Board a statement which shall accurately show the
financial operations of such board and the facilities super-
vised by it for the year for which such statement is pre-
pared.
(b) RECORD KEEPING.—Each area health board
shall keep such records as the National Health Board de-
termines to be necessary for the purposes of this Act, in-
cluding for the facilitation of audits.
(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.
190
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
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.
191
(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—
(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;
192
(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) 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
193
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
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,
194
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.
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:
195
(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.
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:
196
(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.
(2) Titles V, XVIII, and XIX of the Social Se-
curity Act (relating to the maternal and child health
and crippled children’s services, Medicare, and Med-
icaid); 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-
197
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).
(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.
198
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.
(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
199
(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
(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;
200
(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;
(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;
201
(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 section
602(a) and shall determine how the Service shall
carry out the purposes of such programs.
(2) INITIAL REPORT.—Not later than one year
after the effective date of health services, the Na-
tional 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 re-
pealed by subsection (a) (other than paragraph
(1)(B) thereof).
202
(3) LATER REPORT.—Not later than 5 years
after the effective date of health services, the Na-
tional Health Board shall report to the President
and to the Congress on how the Service is carrying
out the purposes of programs described in subsection
(a)(1)(B).
(d) CODIFICATION PROPOSAL.—Not later than 2
years after the effective date of health services, the Na-
tional Health Board shall transmit to Congress a proposed
codification of all the provisions of law which contain func-
tions that are transferred or relate to the Service.
SEC. 603. TRANSITION PROVISIONS.
(a) TRANSFER OF APPROPRIATIONS.—Amounts ap-
propriated 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) 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
203
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-
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.—Section 1105 of
title 31, United States Code, is amended by adding at the
end the following new subsection:
‘‘(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
204
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