Native American Bank, NA supports the healthcare of the Chippewa Cree Tribe
July 13, 2006

(Rocky Boy, MT) The Native American Bank, NA (NAB), with the bank participatory help of Woodlands National Bank and National Cooperative Bank, closed a $2.8 million loan with the Chippewa Cree Tribe (CCT) for contract health care shortfalls. The loan transaction was entered into by the Tribe and pledges future tobacco tax revenue sharing from the State of Montana.

“This new source of revenue proved to be useful when we needed it most,” stated CCT Chairman John “Chance” Houle. Chairman Houle and the council unanimously approved the transaction and are excited about being able to clean-up previous obligations to health care providers across the state of Montana.

Jon Swan, an Assistant Vice President with NAB and member of the CCT, stated, “we were happy to work with the Chippewa Cree Tribe and our participating banks to get this deal closed. Mike Novak with the National Cooperative Bank and Lew Anderson with Woodlands National Bank really came through for both NAB and the Tribe.”

Health care is a heavily debated topic in many Indian communities across the country. The topic, in many cases, goes back to treaty making and promises by the US federal government. Since colonialism, American Indians have ceded over 400 million acres of land in exchange for various promises that included commitments to provide health care.

Local reservation clinics have operated since 1955 under the veil of the Indian Health Services (IHS). In 1976, Congress passed the Indian Health Care Improvement Act (IHCIA), which expanded the reach of IHS to bill for Medicaid and Medicare. Under the funding protocols of IHS, Indian Country has unfortunately been the recipient of stagnant federal funding. It is often cited that American Indians receive approximately $1,500 annually in funding for healthcare needs, while federal prisoners receive close to $3,000. This disparate treatment of Indians has raised this issue to the forefront of national Indian politics, and increased IHS funding is often a paramount objective of tribal leaders who lobby in Washington, DC.

At the same time as stagnant funding, healthcare costs across the board have increased dramatically. According to the National Coalition on Healthcare, health insurance premiums have increased by a whopping 73% since 2000. Additionally, a Harvard study cites that over 50% of all bankruptcies are related to healthcare costs. The study also concluded that every 30 seconds, someone files for bankruptcy after a serious health problem.

In 1999, IHS conducted a study that compared mainstream American health care plans with that of coverage provided by IHS. The results revealed that Congress only supplied 59% of the funding necessary to provide the same level of care. In dollars, this shortfall amounted to $1.3 billion. One of the areas funded by IHS, and offered by the RBHB, is contract care. Contract care support is necessary when certain health services cannot be rendered in Rocky Boy. When members of the Tribe use an outside hospital, the costs for services is passed back to the RBHB. With a very limited budget and increasing healthcare costs, it was quite easy for the RBHB to build a deficit.

Two primary factors contributed to deficit payables balance to healthcare providers. First, the increasing cost of healthcare and relatively stagnant funding pool from IHS hampered the RBHB’s ability to fund everyone’s needs. Second, the RBHB had been covering services with contract health care above & beyond the IHS restrictive funding levels.

To remedy the first problem, the Tribe is currently building a new facility that will allow for more services to be provided on reservation. Additionally, the elected officials of the tribe remain diligent on petitioning for increased funding from the federal government.

With regards to the second problem, the RBHB has implemented a more stringent policy for usage of contract care dollars. This was necessary to ensure that serious medical needs are covered by contracted providers and not refused because the Tribe is past due on contract care payments.

With funding deficits building in contract care, the leaders of the CCT on the tribal business committee took upon themselves to solve the problem with new revenue streams.

In December of 2005, the CCT signed a new tobacco tax revenue sharing agreement with the State Montana. Under the new agreement, all tobacco products sold on the reservation are subject to state taxes. On a quarterly basis, the State will refund these dollars back to the Tribe based on an equation of the percapita spending of Montanans on Tobacco and the population of the reservation adjusted 150%.

The approximate annual loan payments required on a $2.8 million note over a 10 year period total $475,000. This amount matches the estimated receipts from the new tobacco tax revenue stream, which allowed the Tribe to leverage the agreement to obtain a loan. In the event that the Tribe is paid more than it is expecting from the State on the revenue sharing agreement, the Tribe has agreed to pay off the debt first. This will reduce interest expense for the Tribe and payoff the debt sooner.

Tim Guardipee from NAB’s Rocky Boy Office stated; “the loan was the result of a lot of work from the Tribe, NAB, and the RBHB. It was a pleasure getting it closed, and we are looking forward to helping the Tribe in the near and on-going future with other financing needs.”

The Chippewa Cree own almost 10% of the Native American Bank. It is thus fair to say that the Tribe is receiving a double-bottom line return on the loan. Not only did they receive the cash they needed to catch up contract payables, but any interest they pay directly benefits them as an owner of the bank.

“We applaud the efforts of the Chippewa Cree to do more business with NAB. In the near future, we are also excited about the prospect of opening a full service branch bank on the reservation. It is partnerships like this one that will help us justify that move to our directors and other shareholders,” stated JD Colbert, President and CEO of NAB.

Native American Bank is a $74 million dollar bank with its corporate headquarters in Denver, CO, a retail branch in Browning, Montana and loan production offices in Rocky Boy, Montana and Anchorage, Alaska. The bank is owned by twenty-six federally-recognized Indian Tribes, Alaska Native corporations and tribal organizations. For more information about Native American Bank, please visit the bank’s website at www.nabna.com.

Native American Bank's corporate offices are in Denver, Colorado, 999 18th Street, Suite 2460, Denver, CO 80202; (303) 988-2727; fax: (303) 988-5533, and its principal banking office is located in Browning, Montana, 125 North Market Square, P.O. Box 730, Browning, MT 59417; (406) 338-7000; fax (406) 338-7008; toll free (800) 307-9199. A loan and deposit production office is located at Stone Child Community College on the Rocky Boy Reservation in Montana; phone (406) 395-4355.