The Department of Veterans Affairs healthcare system is taking a big risk in relying on revenues from public and private payers for future budget growth, congressional sources and veterans groups say.
As part of the Clinton administration's plan to balance the federal budget by 2002, the VA is taking an unusual step for a federal agency. It wants $54 million less in federal appropriations for veterans care in fiscal 1998 and no increase for the next four years (See chart).
To replace the money, the VA is pushing legislation that will allow the healthcare system to retain the money it collects from third-party payers and, eventually, Medicare. Except to offset the cost of collections, those third-party collections now are returned to the Treasury Department.
In fact, the VA projects it can collect nearly $4.2 billion from third-party payers and Medicare over the five years of the budget plan.
The goal of collecting that much money is part of an effort to increase by 20% the number of veterans the VA's 776 facilities serve by decreasing inflation-adjusted per-patient costs by 30% and getting one-tenth of the healthcare system's total budget from outside sources.
But with the current focus on balancing the budget, congressional sources and veterans groups were skeptical of whether the VA could get such a bill passed.
In addition, congressional budget-writing rules could force the VA to offset the Treasury Department's losses of the VA's third-party collections from elsewhere in the VA's budget.
VA Secretary Jesse Brown acknowledged he is apprehensive Congress might say no.
"There are two things I'm worried about: No. 1, if they try to make us offset it or pay for it by taking benefits from some other veteran or widow, I don't want to do that," Brown said. "The second thing I'm worried about is if they just simply say, `We're not going to give it to you.' If they do not give it to us it would have a catastrophic impact on VA because . . . that would drop us below the 1997 base."
Meanwhile, veterans groups, which have been supportive of legislation to allow the VA to keep third-party payments, objected to using those collections as a way to avoid asking for more federal money.
"It should supplement the appropriation, not supplant it," said Richard Fuller, health policy program development director with the Paralyzed Veterans of America.