Editor’s Desk

Private Insurance Plays Huge Role In Veterans Health System Reform Plan

Frank Diamond
Managing Editor

A sweeping proposal for improving veterans’ health care would use the Kaiser Permanente model of separating the insurance and payer arms of the Veterans Health Administration (VHA), making the provider an accountable care organization (ACO) and allowing vets to purchase insurance from consumer plans. Concerned Veterans for America, a bipartisan policy taskforce that is pushing the Veterans Independence Act, includes some heavy hitters such as former Republican Senator Bill Frist, and former Democratic Congressman Jim Marshall.

They agree that the health care infrastructure was sparse in 1921, when Congress created the VA’s precursor, the Veterans Bureau. Not anymore, and veterans should have the opportunity to seek care almost anywhere, not just in VHA facilities which are too often far from their homes or inadequately staffed.

The ineptitude and, on too many occasions, downright maleficence of the VHA is a result of the iron triangle of Congress, special interest groups, and government bureaucracies refusing to let an enterprise evolve and change, says the taskforce.

“Despite a $91 billion cumulative increase in the VA’s budget since 2006, and a 101,000-person increase in the VA’s staff, the timeliness of health care delivery for a shrinking veteran population has not improved,” says the report.

In 2009, there were 24 million veterans. That’s expected to shrink to 16 million in 2029 (barring future wars). The VHA is a hospital-centered health system, but technology has led to fewer hospitalizations and more visits to doctors’ offices.

The taskforce says that the way to accomplish these goals is to change the VHA into an independent, government-chartered not-for-profit corporation. This, theoretically, would create a firewall between the VHA and political considerations.

“As an independent entity—answering to its customers and balance sheet—it would be liberated to make the decisions necessary to ensure veterans who continue to choose VHA receive quality and timely care,” the report states. “In addition, we believe that separating the VHA into two functional entities—one, the provider of health care services and the other, the payer of health insurance premiums and claims—will give veterans more options.”

The insurance arm would be called the Veterans Health Insurance Program; the provider arm would be called the Veterans Accountable Care Organization.

In addition, an independent entity would have to keep better records, something the current VHA doesn’t do. In fact, the taskforce said that trying to get information from the VHA “was the most time-consuming aspect of our work and will involve the greatest challenge for policymakers.”

This information gap has been cited before, most recently by a CBO report last December, which noted that, “comparing health care costs in the VHA system and the private sector is difficult partly because the Department of Veterans Affairs … has provided limited data to Congress and the public about its costs and operational performance.”

Current veterans can be grandfathered in to the present system if they so choose. They would also have the option of taking their health care funds to the civilian health care system. “Because private health care is somewhat costlier than VHA-based care, most veterans who choose this option will be expected to share in some of the costs of such care, through co-pays and deductibles,” the report states.

Care would also be tiered: Veterans with service-connected disabilities will be top priority because “when it comes to health care obligations, not every veteran is created equal.”

The report concludes that if reforming the VHA was easy, it would have been done long ago. However, a bipartisan effort can break the iron triangle because veterans deserve the best.