This article analyzes the effects of federal fiscal policy in the Reagan administration on primary care programs. Within the context of the national economy and federal policy priorities, states responded to budget cuts and block grants with fiscal and administrative restrictions that fell disproportionately on disadvantaged groups. A wide array of primary care services became less available and accessible, thereby limiting their cost-savings potential and their effectiveness in supporting people's health. These program deficits, together with lowered living standards among large segments of the population, resulted in rising rates of infant mortality in many states. A perspective that can interrelate federal and state policy actions, and broad public policies with traditional health policies, will improve public health nurses' understanding of policy-making and policy impacts, and thereby can guide renewed efforts toward health improvement.