A Dire Privatization Warning
In 2017, as Washington deliberated over the future of veterans’ healthcare, the Veterans Healthcare Policy Institute (VHPI), along with the Associations of VA Psychologist Leaders and VA Social Workers, as well as the Nurses Organization of Veterans Affairs, issued an urgent warning about misguided legislation gaining momentum in Congress, which would make permanent the misguided outsourcing program created by the 2014 Choice Act. We noted:
In a fixed pot, every dollar spent on Choice would be subtracted from local VA budgets. Choice care is paid first, and the VA makes do with what’s left. Expansion of Choice sets in motion a hollowing out, in which over time, local VAs will have less money, vacant positions won’t be filled, medical services will be cut back, and clinics closed. As the availability of VA’s services diminish, more veterans will opt for or be placed into Choice, leading to more VA cuts in a vicious cycle. These models degrade the quality of options that already exist. They inexorably privatize veterans’ healthcare.
Congress proceeded full steam in this dire direction anyways, passing the VA MISSION Act in the spring 2018. In the seven years since, VHPI has continued to document the downward vicious spiral and inexorable progression toward privatization. Our forewarnings were routinely dismissed as just “scare tactics and blind loyalty.” Darin Selnick, a senior advisor for Concerned Veterans for America and a VA adviser on President Donald Trump’s Domestic Policy Council, accused us of being “chock full of misleading statistics and disinformation to create a false narrative that community care and VA care can’t exist together.”
This month, a blue-ribbon panel of public and private sector healthcare experts verified that our predictions were right all along. They echoed our warning that, thanks to exploding costs for care in the community, the VA is facing an existential crisis. They also confirmed our analysis that the rising costs for private care “creates the potential unintended consequence of reducing or eliminating choices (emphasis added) for high quality care for the millions of veterans who prefer to use the VA direct care system for all or part of their medical care needs.” VHPI senior policy analyst Suzanne Gordon broke the story of the report’s findings in a recent article for The American Prospect.
The report – entitled “The Urgent Need to Address VHA Community Care Spending and Access Strategies” – shows that community care referrals have been rising by 15-20% in recent years, on average, and that, in FY 2022, more than 40% of enrolled veterans were provided care through the Veterans Community Care Program (VCCP). The cost of the VCCP increased from $14.8 billion in FY2018 to $28.5 billion in FY2023. Costs are projected to continue to grow rapidly unless Congress and VA leaders quickly take steps to contain community care referrals and increase the accessibility of VHA’s direct care system. The report also emphasized the fact that the VCCP did not deliver more timely care than the VHA and that VCCP care was often of lower quality.
The document minced no words about the urgency of this outsourcing crisis:
Roundtable members were in unanimous agreement that VA urgently needs to take action to control community care utilization and spending if the direct care system is to continue to be available to serve the diverse, specialized, and often highly complicated health care needs of enrolled veterans.
With a fixed appropriated budget and escalating community care referrals (which must be paid), more of VHA’s clinical care budget will have to be used to support the community care program. This could create a self-perpetuating cycle in which increased community care spending results in less direct care funding that negatively impacts direct care capacity, leading to increased community care reliance, and a continuous “downward spiral” for VHA’s direct care system.
Absent additional new funding to pay for rising VCCP costs, VHA will likely be forced to consider eliminating VHA direct care services or closing VA facilities.
Beyond a major reduction in healthcare options for veterans, the report also predicted that “the increasing numbers of veterans being referred for community care and VCCP’s rapidly rising costs are eroding VHA’s direct care system and may be having untoward ripple effects in VHA’s other missions of health professional training, research, and emergency response.”
The report offered many important recommendations. Two of the most vital ones that VHPI believes need to be implemented immediately to help save the VA from collapse, are:
- Use comparative VA vs. community drive-time and wait-time standards for authorization of care. Existing eligibility criteria allow veterans to receive care from community providers that has a longer drive-time or appointment wait-time than what VA could have offered. That makes no sense when the whole basis of expanded community care options is to make appointments available with shorter drive and wait times. As an alternative, if veterans were allowed to seek care in the community only when it is closer or faster, the potential cost savings would be $424M to $1.14B annually. Relatedly, community providers should be required to report distance, time, and quality information so that veterans can make informed healthcare decisions.
- Transfer veterans to VA inpatient units after receiving their emergency care in the community. The largest category of out-of-network care (by expenditure and volume) is for emergency services, accounting for about 30% of community care spending. Of that, 84% is for inpatient care in community hospital after being transferred from their ED. VA should have those veterans transferred to the local VA hospital, if there is an available bed, once the veteran is medically stable to be transported. Then, when meeting access standards, , follow up care should also be delivered by the VHA.
Independent experts unambiguously agree on the urgency of this issue, and that’s not “scare tactics and blind loyalty.” Congress and the VA must act immediately. Time is running out for the healthcare system that the vast majority of veterans prefer. Once it’s gone, it may be very difficult to rebuild.