In 1957, the Secretary of DHEW submitted his “Health Services for the American Indian” survey report to Congress.  It reported that health services for the American Indian began in the War Department. At first, Army physicians acted to curb smallpox in the vicinity of military posts in order to protect soldiers from infection. In 1819, Congress appropriated $10,000 to the Civilization Fund to be used for health care among many other purposes. By 1832 large-scale smallpox vaccinations of Indians had commenced, but the program only reached a small percentage of the population. The program did not prevent an epidemic in 1838 from killing an estimated 17,200 Indians in the Northwest, alone.
In 1849, the Bureau of Indian Affairs was relocated from the War Department to the Department of the Interior. From 1849 to 1871, most of the funds that had been appropriated for Indian health care in nearly two-dozen treaties had been expended.  Notwithstanding the exhaustion of treaties, the Interior Department adopted a policy of continuing health services. By 1900 the Indian Medical Service employed 83 physicians and 25 nurses. By 1911, appropriations earmarked for general health services to Indians were $40,000. 
Until 1921, the House Committee on Indian Affairs had made appropriations for Indian health into the Bureau’s miscellaneous fund. In 1921, Congress enacted the Snyder Act, which authorized appropriations for nine purposes, one of which is Indian health. 
Using appropriations authorized by the Snyder Act and the discretion of the Act for rulemaking, the Bureau of Indian Affairs created a Federalized Indian health program that either provided direct care by the Indian Bureau, or relied upon standard Public Contract or Cooperative Agreement Act authorities to purchase health care services from physicians and public hospitals for the benefit of Indians. 
In 1954 the Indian Health Transfer Act  authorized the transfer of all functions, responsibilities, duties and authorities of the Interior Department relating to the maintenance and operation of hospital and health facilities, and the conservation of health for Indians, to the Public Health Service.  The Senate report stated that the proposed legislation was in line with the policy of Congress to enact legislation “having as its purpose to repeal laws, which set Indians apart from other citizens.”  The House report noted that the Public Health Service was in a better position to know what services were available to Indians as citizens than the Indian Bureau.  The Indian Health Service was transferred effective July 1, 1955.
In 1954, Congress had also directed the Department of Health, Education and Welfare to make a careful and comprehensive evaluation of the Indian health problem and to submit a survey report on Indian health deficiencies, with recommendations.  The report submitted by Secretary M.B. Folsom, known as the “Gold Book,” provided a factual basis for making numerous concrete recommendations.  In order to achieve the government’s goal of achieving economic self-sufficiency for its Indian citizens on the basis of equality in the life of the country and the community, the Administration sought to overcome long-standing health deficiencies while simultaneously advancing the integration of Indian and non-Indian health programs and services. The Secretary’s Gold Book report and recommendations requested substantial additional appropriations for Indian health and sanitation facilities and for a considerable increase in operating costs.  The report requested that future appropriations be raised from the then current $18 million to as much as $65 million. The report also outlined a strategy for integrating the 280,000 Indians still living on reservations into mainstream America. This could be done by providing substantial additional appropriations to overcome long-standing health deficiencies, and by using public contract and cooperative agreement authorities to obtain physician and public hospital services.  In this manner, Indian and non-Indian health programs and services could be integrated. Secretary Folsom’s report was fully consistent with the “Administration’s objective of an orderly termination of the Federal trusteeship over the affairs of the American Indian…” 
The Indian Health Service (IHS), like the Bureau of Indian Affairs before it, received its appropriations through the Snyder Act and continued to use the same Public Contract and Cooperative Agreement authorities to continue BIA contracting with the same State and local hospitals and facilities.  Notwithstanding the Administration’s objective of integrating Indian and non-Indian health care systems, this objective was subject to a restriction. Section 2 of the Indian Health Transfer Act had encouraged Secretarial discretion in contracting to State, local, and nonprofit entities only: “Whenever the health needs of the Indians can be better met.”  This was a clear challenge to the new Indian Health Service to provide health care services more effectively than what could be obtained through contracting. Secretary Folsom’s Gold Book had been clear that cost savings and effectiveness were important objectives to be achieved by the Transfer.
Consistent with movement toward assimilation of Tribal citizens, Congress made financial assistance available to assist public and private nonprofit health care agencies and organizations, when Indians would benefit.  As a result, DHEW provided financial assistance for the construction of community hospitals, if the Surgeon General determined that doing so would make needed facilities available to Indians. Congress apparently believed that by adding appropriations support for health facility construction funded by State, local, and nonprofit organizations, Indian health care services could be acquired more effectively.