Tom Williams/CQ Roll Call via AP Images
Sens. Jon Tester (D-MT) and Kyrsten Sinema (I-AZ), seen here at a January 2019 Senate Commerce Committee meeting, support measures to privatize veterans' health care.
This article appears in the August 2023 issue of The American Prospect magazine. Subscribe here.
Funding for the Department of Veterans Affairs (VA) was one of many federal budget items that suddenly became uncertain during the debt ceiling showdown this spring. Despite their oft-professed love for veterans, House Republicans voted for the Limit, Save, Grow Act in late April, which would have cut VA spending by 22 percent.
This threat to essential services—and the appearance that former soldiers had become political pawns—drew an angry response from veterans organizations, putting House Republicans on the defensive. In a May 11 opinion piece in Military Times entitled “Our Budget-Cutting Plan Doesn’t Harm Veterans,” Veterans Affairs Committee Chair Rep. Mike Bost (R-IL) reassured former service members that their “earned benefits will never be scrutinized” and “their healthcare will never be compromised.”
The eventual debt ceiling deal preserved the VA budget, thanks in part to public outcry. In a Wall Street Journal article after the dispute was settled, House Speaker Kevin McCarthy boasted that Republicans were not only “meeting our obligations to veterans,” but fully funding their programs.
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On Capitol Hill, veterans’ entitlements went, in a matter of weeks, from being a political football to a sacred cow once again—to the relief of many. But now, congressional leaders are signaling that any temporary cease-fire over veterans’ health care and how to fund it is over.
The Senate Veterans’ Affairs Committee will soon be considering new bills that would force the VA-run Veterans Health Administration (VHA) to divert an even bigger share of its $128 billion annual budget from direct care to Medicare-style reimbursement of private-sector doctors and hospitals enrolled in a Veterans Community Care Program (VCCP), which was created by the Trump administration’s MISSION Act five years ago.
Bipartisan fans of that privatization scheme are now trying to amend the MISSION Act of 2018, which opened the floodgates for outsourcing, in ways that would ensure they will never be closed. Leading the charge are right-wing Republicans, an embattled Democrat seeking re-election from Montana, and a recently rebranded “independent” from Arizona who has reeled in millions of dollars from Big Pharma and other health care industry donors.
A System Worth Saving
The VA’s undersecretary for health, Dr. Shereef Elnahal, recently urged nine million VHA patients to stick with their primary health care system, because “study after study shows that quality and patient safety is at least as good if not better than our private-sector counterparts.” The American Legion expressed the same sentiment when they called the VHA “a system worth saving,” because of its unique expertise and vet-centric culture.
That professional advice will not be followed if Congress passes any part of S.1315, the Veterans’ Health Empowerment, Access, Leadership, and Transparency for Our Heroes (HEALTH) Act, co-sponsored by Sens. Kyrsten Sinema (I-AZ) and Jerry Moran (R-KS). A companion bill in the House is sponsored by Rep. Mariannette Miller-Meeks (R-IA). Sen. Jon Tester (D-MT), who chairs the Senate Veterans’ Affairs Committee, has a yet-to-be-named or -numbered bill that, reports indicate, would similarly enrich 1.2 million federal contractors, while not doing much to improve their own service delivery as unnecessary competitors with almost 1,300 VHA facilities around the country.
Sinema, Moran, and to some extent Tester all cater to the popular fantasy that VHA patients—unlike any other health care consumers in America—should be able to self-refer to doctors, hospitals, or clinics outside their own federally funded “network,” the in-house care delivered by the VHA, which has been constructed to serve very particular military-related health care needs. Supporters have constantly assured former service members that the resulting bills for a newly created private care program (in 2023, over $40 billion) will be paid by the VA. At the same time, they promise, the VHA will have the money to adequately staff and maintain its own system, so it can continue to provide all eligible veterans the high-quality care they originally signed up for.
Paying simultaneously for in- and out-of-system care is not a business model any reputable health care economist would ever endorse, not to mention any multistate health care system seeking to avoid bankruptcy. At Kaiser Permanente, for example, bean counters would quickly point out that steering Kaiser’s slightly larger patient population—with no threat of financial penalties—to competitors in eight states and the District of Columbia would soon lead to in-house service cuts, staff layoffs, and widespread facility closings.
Helping “Our Heroes”?
Under the guise of expanding “veteran choice,” the HEALTH Act would, according to its co-sponsors, “codify and expand the current criteria … for determining when a veteran is eligible to receive [non-VA] care.” Where did those “criteria” come from? The Trump administration.
Robert Wilkie, Trump’s second VA secretary, used federal rulemaking to implement the MISSION Act with a set of “access standards” that steered patients outside the VHA based on their “drive times” to and “wait times” for appointments. As reported previously in the Prospect, current VA Secretary Denis McDonough has had the opportunity to undo the institutional damage done by his predecessor since early 2021. A relatively easy first step would be to reverse Wilkie’s decision not to count telehealth, when delivered by the VHA, as a form of “access to care.” This has led to annual expenditures of up to $1 billion or even more on appointments outside the VHA, where telehealth is deemed to be “access.”
McDonough has yet to initiate his own broad administrative rulemaking process, or even a narrower rewrite that would eliminate the telehealth double standard. If adopted, the HEALTH Act would make that impossible, by turning Wilkie’s drive and wait time standards into federal law, amendable in the future only by Congress. The legislation also specifically prohibits VHA telehealth services from counting as access to care.
The most pernicious provision in the Moran-Sinema bill adds “veteran preference” as a reason to seek private-sector care. According to this provision, even if the VA can provide high-quality care in-house, in a timely fashion and at lower cost, veterans can choose to get out of the system because, well, they just want to. The bill would also set up a pilot program allowing veterans to receive outpatient mental health or substance abuse treatment in five test locations, without any prior authorization or oversight by their VHA clinicians. As an analysis of the bill by the Veterans Healthcare Policy Institute (VHPI) points out, the VA secretary could be empowered to quickly expand the program nationwide.
Paying VA Vendors More
While the proposed HEALTH Act does not impose much-needed wait time standards, quality measures, or training requirements on private-sector providers, it would allow the VHA’s third-party administrators—TriWest and Optum, a UnitedHealth subsidiary—to pay more money to private doctors and hospitals that join the VCCP. Some providers have been reluctant to enter the VCCP because they would be reimbursed based on Medicare rates, which some consider too low, particularly given the complex nature of VHA patients.
One enthusiastic backer of the HEALTH Act is Concerned Veterans for America (CVA), an astroturf group with Koch brothers funding and close ties to Donald Trump. CVA just launched a website to help veterans access private-sector care—but that requires first establishing eligibility for the VHA itself, which CVA has long wanted to dismantle and replace with a voucher system.
Sadly, the American Legion and the Veterans of Foreign Wars have both signed on as HEALTH Act endorsers, even though—in their official statements—neither favors privatization, and the VFW is on the record objecting to the very access standards the bill codifies into law.
Value-Based Care?
The HEALTH Act’s embrace of for-profit health care is also reflected in its announced goal of “transitioning the current VA health care system to a ‘value-based care model,’ which has been shown to … improve patient outcomes.” In their various private-sector iterations, value-based care and payment models were similarly touted as a way to rein in ballooning costs, improve quality and patient outcomes, and increase physician and patient satisfaction.
According to a recent analysis by the Medicare Payment Advisory Commission (MedPAC), these schemes have not cut costs or enhanced the quality of patient care. But they do end up penalizing hospitals and providers that care for poorer and more complex patients, as well as patients of color (a good description of many VHA patients). One article in The New England Journal of Medicine found that these models “hampered the pursuit of health equity” and “perpetuated structural racism.” They also encouraged “gaming” reimbursement systems through upcoding and other fraudulent billing practices, and led private health systems to squander even more resources on “external consultants.” It’s unclear what “value” the Sinema-Moran plan will add to a public system that already outperforms its private-sector competition in almost every way.
In a House Veterans’ Affairs Committee hearing on the Miller-Meeks bill, VA assistant undersecretary for health for clinical services Erica Scavella voiced the VA’s strong opposition to a number of the bill’s provisions, including the codification of access standards. This opposition is based on oft-expressed worries about the potential consequences of unrestrained growth of the VCCP. Scavella, however, stated that the VA supports the value-based care provisions. VA leaders have also prepared similar testimony for the Senate hearing.
Contractor Training and Accountability?
On July 12, the Senate Veterans’ Affairs Committee will hold a hearing to look at another bill that shares similar goals to Sinema and Moran’s effort.
Tester, who faces a tough re-election fight back home in Montana, has drafted an equally dubious bill. The Democratic chair has a long history of complicity with VHA privatization, followed by occasional second thoughts about how it’s going, followed by waffling on even small steps to ensure greater accountability by non-VHA health care providers.
In June 2018, Tester proudly co-sponsored the VA MISSION Act, which President Trump regarded as one of his biggest legislative triumphs. Seven months later, Tester led 28 Senate colleagues in a public expression of concern that the projected cost of patient referrals to non-VHA providers was not being “adequately assessed” or properly funded by the Trump administration. Their letter warned that the MISSION Act, as implemented by Wilkie and Trump appointees from CVA, would expand privatization “at the expense of VA’s direct system of care … something we cannot support.”
Tester’s new bill, like Sinema and Moran’s, would give Wilkie’s outsourcing rules statutory authority, tying McDonough’s already reluctant hands. At the same time, it fails to give VHA officials the tools they need to make sure that VCCP participants are well prepared to handle veterans’ health care needs, and subject to effective monitoring of their performance. Tester’s draft legislation offers financial incentives to doctors who do a better job, but sets no minimum standards or mandatory training requirements.
Five years after passage of the MISSION Act, the VHA’s outside contractors are still not getting the same training that is required for VHA providers on service-related health conditions, like PTSD, military sexual trauma, or toxic exposures.
Tester seems so solicitous of the VHA’s 1.2 million private contractors that language in his bill designed to promote better medical record-sharing is undercut by an exemption, if that “constitutes too heavy of a burden on the provider’s time and resources.” The VHPI critique of this glaring loophole notes that data collection is, by its very nature, “burdensome.” But it’s absolutely essential for improved coordination between VHA caregivers and outside contractors. As VHPI argues, VHA staff are “not exempt from data collection requirements, burdensome as they may be,” so similar “accountability and transparency should be mandatory for those who participate in VCCP and are paid to do so.”
The Real Choice Facing Vets
The bottom line for veterans is pretty clear, if regularly obscured by deceptively labeled bills that promise to better serve them. When it comes to taxpayer-funded health care, former service members can’t have their cake and eat it too. It will be impossible to ensure millions of veterans access to a properly staffed and well-maintained health care system, devoted to their special needs, if the VHA’s patient population is cannibalized by outsourcing.
VA-run medical centers across the country are already under severe financial strain. In San Francisco, the Prospect was told that the VHA now has a $51 million budget deficit, in large part because of 37 percent growth in the number of its patients who have been redirected to the private sector; that facility will pause new recruitments. As a VHA administrator in the Southwest told the Prospect, “We are, by law, forced to prioritize paying for escalating amounts of community care, which means the money has to come from somewhere, which is our operating budget.”
Even Secretary McDonough has warned that, if outsourcing costs continue to rise, “VA medical facilities, particularly those in rural areas, may not be able to sustain sufficient workload to operate in their current capacity.” At the end of June, a headline in The Philadelphia Inquirer announced that Undersecretary for Health Elnahal made an agreement to replace VA centers in Philadelphia and Coatesville, and work more closely with the University of Pennsylvania Health System to care for VA patients. To VA employees, the move sounded like a rerun of McDonough’s plans to shutter those facilities.
The big decision facing veterans today is whether they want to chase the chimera of choice or stop the dismantling of their own 158-year-old hospital network. In short, it’s “use it or lose it” time at the VA.
