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President Biden listens to Veterans Affairs Secretary Denis McDonough before signing into law nine bipartisan bills for veterans, at the White House in Washington, June 7, 2022.
Four years ago, a bill called the VA MISSION Act, which partly moved health care for military veterans out of the Department of Veterans Affairs (VA) and into private hands, passed through Congress and was signed by President Trump. It built on a costly and wasteful legacy of the Obama administration.
Today, there is marked bipartisan reluctance to continue that approach. But instead of reversing course, the Biden administration seems to be doubling down on its bad bet that millions of veterans will be better off with less public provision of their care.
If Biden’s stance seems a bit askew, the lineup of recent VA defenders and detractors doesn’t follow the usual political scorecard either. As the Prospect previously reported this spring, VA Secretary Denis McDonough, a former White House chief of staff under Obama, triggered widespread protests against his recommended closing or downsizing of scores of veterans health care facilities.
McDonough’s initial instrument for scaling back the VA—America’s largest public health care system—was the MISSION Act–created Asset and Infrastructure Review (AIR) Commission. While the White House was awaiting Senate approval of its conflict-of-interest-ridden nominees to the AIR panel, both Democrats and Republicans were hearing from constituents about threatened shutdowns of local hospitals or clinics operated by the Veterans Health Administration (VHA), a subagency of the VA.
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On June 27, 12 senators, including Veterans’ Affairs Committee Chair Jon Tester (D-MT), sharply rebuffed McDonough in a statement announcing their “collective opposition to the AIR Commission process moving forward.” Opponents included members of both parties who had, with few exceptions, supported the MISSION Act, like Sens. Joe Manchin (D-WV), John Thune (R-SD), and Rob Portman (R-OH). They accused McDonough of putting “veterans in both rural and urban areas at a disadvantage,” and argued the commission was “not necessary for our continued push to invest in VA health infrastructure.” They pledged to provide the VA with “the resources and tools it needs to continue delivering quality care … now and into the future.” As a result, the still unnominated AIR panel members were not able to meet, or review or approve McDonough’s proposals.
Some congressional representatives, like Rep. Debbie Wasserman Schultz (D-FL), fought back by proposing to provide funding that could be used to resurrect the commission. Wasserman Schultz has received donations from Cerner, UnitedHealth Group, and the American Hospital Association, among others.
But Rep. Jim McGovern (D-MA) countered with an amendment to the National Defense Authorization Act (NDAA) to defund the commission, which passed on July 14. For good measure, McGovern got an amendment to the VA Military Construction Act (VA MIL CON) added to eliminate the $5 million for the commission Wasserman Schultz had proposed and have it directed to homeless veterans instead, which also passed.
McGovern explained his reasoning in a speech on the floor of the House, where he warned that the AIR process would lead to the “closure or downsizing of nearly one-third of this country’s VA medical facilities and outpatient clinics. McGovern reminded his colleagues that Secretary McDonough had, by his own admission, used outdated “market assessments” of private-sector capacity to care for veterans—data collected by Trump administration consultants—and noted that “hundreds of millions of dollars of new investment in VHA infrastructure” was potentially at risk.
Secretary McDonough himself expressed alarm over the fact that the budget for private-sector care had jumped by 8 percent in one single year.
Fortunately, the majority of House Democrats, with only 27 dissenters, agreed with McGovern, joined by 43 Republicans. Defunding of the AIR Commission now awaits Senate approval.
Just after the Senate and House underscored their determination to kill AIR, Tester and other senators introduced their own vision of how to deal with VA’s infrastructure needs. The BUILD for Veterans Act promises to “modernize” the processes through which VA implements infrastructure improvements and new construction. Now, the term “modernization” is always worrisome, as it often signals public-private partnerships that turn out disastrously—like the Cerner Corporation–led modernization of VA’s information technology or the Trump-era Human Resources Modernization Project, or indeed the secretary’s current outsourcing scheme. It is not clear whether the new legislation will streamline the construction process or merely create another layer of bureaucracy that hinders VA’s ability to carry out a long-term plan to care for its patients.
Forward Momentum?
Such a plan, of course, will require the cooperation of VA leadership. But Secretary McDonough still seems committed to the AIR process. At a high-level labor-management meeting in Washington on July 20, VA leaders unveiled a new plan “to continue the forward momentum of improving our infrastructure.” Al Montoya, a VA senior adviser previously tasked with supporting the AIR Commission, delivered a PowerPoint presentation entitled “An AIR Update,” in which he informed representatives of the agency’s unionized workers—who had just mobilized successfully against the AIR Commission—that McDonough was continuing his infrastructure review with in-house help, rather than White House nominees.
A copy of the review leaked to the Prospect shows that VA has created eight new internal “working groups” to develop a “Healthcare Strategic Capital Way Forward Plan.” VA officials serving on these working groups will “review and refine” McDonough’s recommendations to the Air Commission, “based on updated data and engagement with external stakeholders and potential partners.” Some officials involved will focus on developing “a consolidated restructuring checklist for facilities” and “a flexible framework … for use by leadership to prioritize AIR recommendations and additional capital-related items.”
One management team is assigned the critical task of assessing VHA outsourcing under the MISSION Act. This working group will report back on the various “types of partnering arrangements” with the “commercial sector” that now consume one-third of the VHA’s entire direct-care budget of about $100 billion a year.
Already, what the VA calls its “Community Care Program” has enlisted more than 1.2 million private-sector providers to treat veterans, referred outside the VHA system, at government expense. But McDonough’s newly appointed “Partnership Development” team will apparently be exploring the “feasibility” of expanding that network, within the framework of existing statutory authority to do so and administrative rules inherited from McDonough’s Trump-era predecessor, Robert Wilkie, who favored VHA privatization.
When queried about how this plan differs from AIR 1.0, the VA told the Prospect that “this new health care modernization process is built upon refreshed data, stakeholder engagement, and transparency, and it will prioritize Veteran outcomes at every step of the way”—promises also made under the previous AIR process.
McDonough’s commitment to AIR under another name risks alienating potential allies. While his new plan calls for “engagement” and “discussions” with other “stakeholders,” like veterans service organizations, VHA unions, and elected officials, one former high-ranking VA official told the Prospect that “this is a sophomoric approach to a complex problem with many false assumptions emanating from the AIR’s market assessments. A smart leader would let this sit. There is no way Congress even wants to hear about this.”
Time for a Rules Change
Rather than spending further institutional time and energy on AIR 2.0, McDonough should focus instead on undoing some of the damage the MISSION Act inflicted on the VHA’s ability to provide care. As Rep. Julia Brownley (D-CA) noted in a July 14 hearing of the House Veterans’ Affairs Health Subcommittee, “spending on community care has increased by 116 percent over five years while investments in direct staff of VA medical facilities grew by only 32 percent. Why are VA’s investments in community care so vastly outpacing investments in in-house care?” she asked.
Indeed, during an earlier appearance before the Senate Veterans’ Affairs Committee, McDonough himself expressed alarm over the fact that the budget for private-sector care had jumped by 8 percent in one single year—increasing from 26 percent of the VHA’s total annual spending on clinical care to 33 percent. He even acknowledged that there was only one administrative way to stop this unsustainable drain on VHA resources, namely, revise the Wilkie-era rules governing referral of VHA patients to private-sector providers. “My hunch is that we should change the access standards,” he said.
Under Wilkie’s standards, any veteran who had to wait more than 28 days or drive more than a mere 30 minutes for a VHA primary-care or mental-health appointment (or drive more than 60 minutes for a specialty appointment) could opt for private doctors and hospitals instead at VHA expense. McDonough can revise these standards so that such referrals are based on medical need, per the original intent of the MISSION Act.
As early as January 2019, MISSION Act co-sponsor Jon Tester and 27 other senators, including Joe Manchin, warned that the projected cost of expanded outsourcing was not being “adequately assessed.” In a similar letter of protest sent one month later, another group of senators predicted that Wilkie’s access standards would “cause too much care to shift to the private sector, crippling the largest integrated health care system in the country for those veterans who rely on its services.”
In June, McDonough told the Senate Veterans’ Affairs Committee that he was waiting for the full Senate to approve Dr. Shereef Elnahal as the VA’s new undersecretary for health so he could consult with Elnahal about any needed rulemaking changes. That happened on July 26, giving the VHA its first permanent appointed leader in the last six years. Five years ago, Elnahal, then a VA deputy undersecretary for health, helped his then-boss David Shulkin produce a 440-page book entitled Best Care Everywhere.
In the book, 120 VHA doctors, nurses, social workers, and psychologists described how their research and innovative treatments were “changing veterans’ lives” and “leading American health care.” In Elnahal’s own contribution to the book, he asserted that no other health care system “to our knowledge, has achieved the diffusion or consistency of best practices on a scale comparable to what we are seeing at the VA.”
Elnahal now has a chance to defend and build on that institutional legacy, before veterans’ health care is undermined any further.
Suzanne Gordon, Steve Early, and Jasper Craven are the co-authors of the newly released book Our Veterans: Winners, Losers, Friends, and Enemies on the New Terrain of Veterans Affairs (Duke University Press). They can be reached at Lsupport@aol.com.
