Consolidated Statement of Net Cost

For the Years Ended September 30, 2007 and 2006
(In Millions)

Responsibility Segments	2007	2006
Centers for Medicare & Medicaid Services (CMS)
Gross Cost	$ 612,411	$ 574,245
Exchange Revenue	(50,304)	(49,847)
CMS Net Cost of Operations	$ 562,107	$ 524,398

Other Segments:
Administration for Children & Families (ACF)	$ 47,336	$ 47,123
Administration on Aging (AoA)	1,373	1,388
Agency for Healthcare Research & Quality (AHRQ)	131	15
Centers for Disease Control & Prevention (CDC)	8,105	6,555
Food & Drug Administration (FDA)	1,913	1,906
Health Resources & Services Administration (HRSA)	6,897	6,205
Indian Health Service (IHS)	4,250	4,093
National Institutes of Health (NIH)	28,489	28,147
Office of the Secretary (OS)	2,169	2,598
Program Support Center (PSC)	1,414	872
Substance Abuse & Mental Health Services Administration (SAMHSA)	3,320	3,343
Other Segments Gross Cost of Operations	$ 105,397	$ 102,245
Exchange Revenue	(2,905)	(2,706)
Other Segments Net Cost of Operations	$ 102,492	$ 99,539

Net Cost of Operations	$ 664,599	$ 623,937

The accompanying "Notes to the Financial Statements"are an integral part of these statements.

Report Date: November 15, 2007