Hughes, John S. MD
From the Department of Medicine, VA Connecticut Health Care System and Yale University School of Medicine, West Haven, Conn.
Corresponding author: John S. Hughes, MD, Department of Medicine, Yale School of Medicine, New Haven, CT 06515.
Abstract: Can the Veterans Affairs (VA) health care system, long an important part of the safety net for disabled and poor veterans, survive the loss of World War II veterans—once its largest constituency and still its most important advocates? A recent shift in emphasis from acute hospital-based care to care of chronic illness in outpatient settings, as well as changes in eligibility allowing many more nonpoor and nondisabled veterans into the VA system, will be key determinants of long-term survivability. Although allowing less needy veterans into the system runs the risk of diluting services to those most in need, the long-run effect may be to increase support among a larger and younger group of veterans, thereby enhancing political clout and ensuring survivability. It may be that the best way to maintain the safety net for veterans is to continue to cast it more widely.
IN 2002, the Veterans Health Administration (VHA) provided health care to more than 4 million U.S. veterans at a cost of more than $24 billion, not quite half of the total Department of Veterans Affairs (VA) budget. Although those numbers pale in comparison to Medicaid spending ($259 billion to provide care to 51 million Americans), the VHA serves as an important part of the safety net for our veterans who are most in need. The great majority of those who used VHA services in 2002 were disabled and/or impoverished: 13% were rated as at least 50% disabled, another 4% were homebound, and 19% had disabilities rated between 10% and 50%; another 37% had incomes below the VA means test level of $24,304, or $29,168 for a veteran with one dependent (Veterans Health Administration, 2003a). Many veterans were not only economically but also psychologically disadvantaged: 17% of VA hospital spending went for psychiatric admissions. Previous surveys found that homeless veterans accounted for 13.5% of all VA hospital admissions, 24% of general psychiatric admissions, and 47% of substance abuse admissions (Wilson & Kizer, 1997). A majority of those who used VA services had no private insurance and, even for those with Medicare, a majority had no supplemental or “medigap” insurance and therefore would have difficulty affording physician services and medications otherwise.
CHANGES CURRENTLY AFFECTING THE VHA
At a time when federal spending for nonmilitary line items is jeopardized, can the VHA continue to provide safety-net services to poor and vulnerable veterans? Three large and ongoing changes will influence how well the VHA survives the next decade:
1. the attrition of the generation of World War II veterans
2. the restructuring of the VHA to emphasize ambulatory care of chronic conditions and de-emphasize inpatient care
3. a policy change that increases access to VHA services to nondisabled and nonpoor veterans
The loss of the World War II generation
The youngest of the World War II veterans are now entering their eighties, and more than two-thirds of them have already died (Committee on Veterans Affairs, 2003). As that generation fades away, the future of the VA health care system is uncertain. WWII era veterans have been not only the largest cohort of U.S. veterans ever, but also have been, and continue to be, its greatest users and most effective political supporters. Can the VHA survive once its greatest constituency has disappeared? Vietnam era veterans, who now number almost twice as many as the remaining WWII cohort, have never identified as strongly with the Veterans Administration for a variety of reasons. That allegiance may increase dramatically with the approach of old age, chronic illness, physical decline, and the increasingly uncertain availability of health insurance.
The shift from inpatient to outpatient care
A second major change is the VHA's transformation since the mid-1990s from a primarily inpatient organization to one with a focus on outpatient services and chronic disease management. The number of hospital admissions fell dramatically as a result, from 680,000 in 1995, to a low of 423,000 by 2000. The average daily census in all VA hospitals was 16,028 in 1995, but this had fallen below 8,000 by 2000. At the same time, the number of outpatient visits rose from 30.4 million in 1995 to 43.6 million in 2002. The shift in emphasis allowed for more veterans to be served: the total number of veterans who received care in the VA system rose from 3.1 million in 1995, to 4.6 million in fiscal year 2002 (Veterans Health Administration, 2003b). Despite the cost savings from the decline in inpatient services, VHA funding rose from $16 billion in 1995, to more than $24 billion in FY 2002.
Changes in enrollment eligibility
Finally, the change in enrollment eligibility that has allowed nonpoor veterans to obtain care within the VA health care system may have a major influence on the continued safety-net functioning of the VHA. Until 1997, eligibility for veterans who did not have a service-connected disability or who had incomes above the federal poverty line (Priority 7 and Priority 6—the latter being a much smaller group of veterans with a history of special exposures, such as to agent orange or radiation) was determined by the individual VA medical centers, depending on their own assessments of capacity. Since most VA centers were operating at or near capacity, very few nondisabled or nonpoor veterans were served.
After 1996, all veterans regardless of income were allowed to enroll, although nonemergency services were to be provided on a first-come, first-served basis, as openings became available. That ruling produced an onslaught of new enrollees, many of whom continued to obtain care outside the VHA but were attracted by the prospect of low-cost medications. Priority 6 and 7 users increased 500% after 1996, to make up more than one-quarter of all VHA users by 2002 (Committee on Veterans Affairs, 2003). At the same time, the number of Priority 5 veterans—those with incomes below the poverty line—increased more slowly and actually fell as a proportion of the total users. More than half the increase of 1.1 million recipients of VHA services between 1999 and 2002 came from the Priority 7 group.
THE VHA MISSION
What will happen to the VHA mission of caring for the disabled and poorest veterans as more of the users come from the least needy group? Many who work in the VA system thought that to expand services to the relatively well-off, while so many of the poorer veterans remained unserved, was unfair. But, ironically, rather than displacing the veterans most in need of VHA services, the expansion of service to veterans least in need may actually ensure a longer survival for the VHA system as a whole, and with it, the services for those most in need. Data on the changes in VHA usage and funding since the mid-1990s give reason for hope.
Table 1 shows the definitions for the seven priority levels for the VHA, the percentage of veterans at each priority level by self-report, and the percentage of veterans at each level who actually used VHA services in 2001. Although the VHA has provided services to increasing numbers of veterans since the mid-1990s, it still served less than one-quarter of all veterans by 2001. There were dramatic differences in usage by priority level, however. Veterans in priority levels 1 and 4—the two most disabled groups—reported VHA use at 87% and 79% respectively. Priority 5 veterans—who are not disabled but fall below the means-test level—used VHA services at a 32% rate, while only 12% of Priority 7 veterans—who make up a majority of all veterans—used any VHA services. Despite the changes, those most in need were still most likely to be served.
Table 2 shows the changes in number of users and the total spending for three aggregated priority groups for fiscal years 1999 and 2002. While the number of users and the total spending for Priority 6 and 7 veterans have increased far greater than any other priority level, the number of users and the total spending for all other levels have steadily increased (although not nearly as dramatically) over the same time period. The increase in spending for Priorities 6 and 7 did not occur at the expense of the other priority levels. Furthermore, the average amounts spent for the disabled and poor veterans remained much higher than for Priority 7 veterans. So far, at least, the influx of less needy veterans has been matched by increased VHA funding and has not shifted resources away from the poor and the disabled.
In fact, the increased spending may have a politically protective effect. If increased numbers of veterans are invested in the VHA by virtue of their newfound benefits, and particularly if they are more politically active by virtue of their higher socioeconomic status, political support for sustained VHA funding will naturally increase. It seems logical that, in the face of a dwindling constituent base, the best strategy for maintaining continued political support is to attract more of the surviving constituents to become active users and beneficiaries of the VA health care system.
Congressional maneuvering on the most recent VA budget provides an example of the pressures the VHA will encounter in coming years. The Department of Veterans Affairs, concerned with the rapid rise in spending for Priority 7 veterans, came to Congress with a proposal for a $1,500 deductible for this group in FY 2003, anticipating a savings of more than $1 billion from the combination of fee collections and reduced demand. The House Veterans Affairs Committee—concerned that the deductible system could not be implemented in time and not eager to cut a benefit that had been fairly recently mandated—allocated an extra $1 billion to cover the cost of services for the Priority 7 veterans (Committee on Veterans Affairs, 2003).
Given the rising cost of all health care, particularly for medications, plus the continued influx of Priority 7 veterans (expected to exceed 40% of enrollees by 2010) and declining federal revenues, the issues of deductibles, priorities, and overall funding will reappear with greater urgency in each congressional session. At those times there will be no substitute for broad and committed support for the VA health care system from the country's remaining veterans. It may be that the best way to maintain the safety net for veterans is to continue to cast it more widely.
Department of Veterans Affairs. (2001). National Survey of Veterans, 2001
. Accessed May 30, 2003, at www.va.gov/vetdata/SurveyResults/index.htm
Wilson, N.J., & Kizer, K.W. (1997). The VA health care system: An unrecognized national safety net. Health Affairs, 16(4): 200–204.
chronic illness; eligibility changes; safety net; Veterans Affairs
© 2003 Lippincott Williams & Wilkins, Inc.