Cost-saving proposals target VA

The House Budget Committee, chaired by Rep. Paul Ryan, R-Wis., has told a veterans’ group it is studying a plan to save $6 billion annually in VA health care costs by cancelling enrollment of any veteran who doesn’t have a service-related medical condition and is not poor.

Committee Republicans, searching for ways to curb federal deficits and rein in galloping VA costs, are targeting 1.3 million veterans who claim priority group 7 or 8 status and have access to VA care.

Priority group 8 veterans have no service-connected disabilities and annual incomes, or net worth, that exceed VA means-test thresholds and VA “geographic income” thresholds, which are set by family size. Priority Group 7 veterans also have no service-connected disabilities and their incomes are above the means-test thresholds. But their incomes or net worth fall below the geographic index. In other words, because of where they live, in high cost areas, they likely struggle financially.

Proponents for opening VA health care to all veterans had argued it would be cost neutral to VA.

That’s because VA would charge these vets modest co-payments for their care. Also VA would bill these veterans’ private health insurance plans for the cost of their VA care.

That argument from 1996 turned out to be wrong. Co-payments collected from low-priority veterans and private insurance plan billings today cover only 18 percent of the cost of care for group 7 and 8 veterans. By 2009, the annual net cost to VA to treat these veterans totaled $4.4 billion or 11 percent of VA’s annual medical appropriation.

The figures come from the Congressional Budget Office’s annual report to Congress, “Reducing the Deficit: Spending and Revenue Options.” Among options it presented this year to the new Congress for reducing VA spending is one to close enrollment in VA care for all veterans in groups 7 and 8 and to cancel the enrollment of veterans currently in two low priority groups.

CBO said this would save VA $62 billion in the first 10 years, from 2012 to 2021. But the net savings to the government over the same period, CBO said, would be about half that amount. That’s because many of the veterans bumped from VA are old enough or poor enough to use Medicare or Medicaid, which would drive up the cost of those programs.

We asked a committee spokesman for comment, both by e-mail and voice mail, but none came in time for this column’s deadline.

Until the mid-1990s, VA had denied health care to priority 7 and 8 veterans. Congress changed that during the Clinton administration, enacting the Veterans’ Health Care Eligibility Act of 1996. The law directed VA to build many more clinics across the country. To ensure enough patients to fill these clinics, the VA secretary was given authority to expand care eligibility.

The ban on group 7 and 8 veterans was ended by 1999. Over the next three years their enrollment climbed to 30 percent of total enrollees. By 2003, then-VA Secretary Anthony Principi stopped allowing any more group 8 enrollments, saying their numbers strained the system for higher priority veterans, including wounded returning from Afghanistan and Iraq.

Group 8 and 7 veterans using VA care pay $15 per outpatient visit and a little more for specialty care. Inpatient fees also are modest. The most popular benefit for many of enrollees is discounted prescription drugs.

The co-pay usually is $8 for a 30-day supply.