Healthcare Business News

Senate proposal to give veterans private care carries big price tag

By Virgil Dickson
Posted: June 13, 2014 - 7:30 pm ET

The Senate moved quickly this week to pass a measure that lowers the barrier for veterans to seek healthcare in private settings, in response to the ongoing wait list scandal at Veterans' Affairs facilities. But now a Congressional Budget Office estimate that the measure will cost $50 billion is fueling speculation and concern about how the measure will be paid for.

Roughly 8.4 million veterans already receive healthcare from the VA, and another 8 million are eligible, but aren't enrolled, according to the CBO. But as word gets out that there is greater access to private care available, not only could those currently getting care at VA hospitals increase their utilization, but those currently eligible and not using it could jump into the system as well. Such a scenario could ultimately lead to the $50 billion-a-year scenario the CBO projects if the legislation becomes permanent, up from the $35 billion the provision is expected to cost over its first three years, the CBO said. Experts are split as to where such funds could come from.

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For instance, any attempt to pull it from Medicare's $526 billion fiscal 2015 budget will meet resistance. “With Medicare, there isn't the low-hanging fruit there used to be,” said former CMS administrator Tom Scully, a general partner at private-equity firm Welsh Carson Anderson & Stowe. Further, there would likely be a major pushback from physician members of the House of Representatives who have been unable to pull funds from that budget to permanently eliminate Medicare's sustainable growth-rate formula, he said.

Taking funds from Patient Protection and Affordable Care Act programs would spark Democratic opposition, just as passing a new tax on wealthy Americans would antagonize Republicans, so those partisan bromides seem out of play, said Ed Lorenzen, a senior advisor to the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group.

The revenue could come from the Veterans Affairs Department itself, following a major restructuring, according to economist Chris Edwards of the libertarian Cato Institute. “If they want to offer veterans the option of going to private facilities, than they should start closing government facilities,” Edwards said, suggesting that underutilized centers should be targeted. But restructuring a federal agency takes time, and will likely mean major political battles, as groups such as the Veterans of Foreign Wars and others weigh in to protect what they see as a valuable VA healthcare system for their members.

Another possibility is that the non-VA care provision of the measure will be rewritten to be more restrictive, to lower overall costs and so dampen objections, says Paul Van de Water, a senior fellow at the Center for Budget and Policy Priorities, a left-of-center research group.

Others see Congress and the president agreeing to waive federal pay-for rules that require any new spending measure to be offset with a cut or new revenue from elsewhere. Given the history of budget battles between the administration and Congress, this also is difficult to imagine.

“It would be a general obligation of government. Without new revenue, it would add to the deficit and require increased borrowing,” explains Henry Aaron, a senior fellow at the Brookings Institution, a liberal-leaning think tank.

The Senate appeared open to the option, voting 75-19 to bypass pay-for regulations in a separate procedural vote before the bill hit the Senate floor and passed 93-3. However, experts noted that many lawmakers had not yet seen the CBO cost estimate before they voted. And the Republican-controlled House will be expected to be more concerned about any effort to add to the federal deficit, no matter how well-meaning.

The Committee for a Responsible Federal Budget, which calls itself non-partisan, Friday had begun the likely chorus against new an unfunded VA bill, saying on its blog “any new spending must be fully offset elsewhere in the budget, both for fiscal reasons and to reflect a real commitment to this program. If something is worth doing, it is worth paying for, and failing to do so leaves that program more vulnerable.”

Once a compromise bill is written, and if there is no pay-for solution, the House and Senate would have to vote to waive pay-for rules and then vote on the new bill. Lawmakers are hoping to accomplish all of that by the end of June. The president has indicated he will sign any bill Congress sends him.

The three senators who voted against the Senate bill, Bob Corker (R.-Tenn.), Ron Johnson (R-Wis.) and Jeff Sessions (R-Ala.), have been slammed by the powerful Veterans of Foreign Wars for citing concerns about cost.

“There is a cost of going to war that includes taking care of those who come home wounded, ill and injured, and if these three senators have determined that we can't afford to properly care for our veterans, then they should seek employment elsewhere!” VFW National Commander William Thien said in a statement.

Some hospitals are suggesting that the price tag for non-VA healthcare could be cut if some non-elderly veterans, who are currently not able to get treatment at a VA facility, instead join Medicaid.

To that end, Tom Bell, president and CEO of the Kansas Hospital Association and Herb Kuhn, president and CEO of the Missouri Hospital Association have teamed up, using the VA scheduling crisis as a chief talking point in a series of editorials in local newspapers that are aimed at getting their state officials to pass Medicaid expansion laws. They estimate that 37,576 Kansas and Missouri veterans and family members would be eligible for Medicaid coverage under the expansion.

“It's the job of elected state officials to help the nearly 40,000 veterans and their family members gain access to that line,” they said in one of the op-ed pieces. “That could easily be done by expanding coverage and access to care for our veterans and for thousands of other hard-working individuals.”

The American Legion contends that any provision allowing private care for veterans should only last for a short time.

“The next time anyone proclaims that veterans might be better off if we privatized their VA-authorized healthcare, all we have to do is hold up this report [from the CBO] and ask—and who's going to pay for it?,” said Louis Celli Jr., director of the national legislative division of the American Legion. “There's no better bargain or emphasis on quality of [service] specific conditions—on a national scale—than the VA,” he said.

Follow Virgil Dickson on Twitter: @MHvdickson

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