THE BLOG
01/30/2009 05:12 am ET | Updated May 25, 2011

How the VA Could Lead the Battle for Universal Health Care

General Eric Shinseki (US Army, retired) faces two major challenges as the incoming Secretary of the Department of Veterans Affairs (VA) .

First, and above all, he must meet the needs of veterans grievously wounded in Iraq and Afghanistan. In its arrogance, the Bush administration ignored Shinseki in 2003 when, as Army Chief of Staff, he warned that it would require "something on the order of several hundred thousand soldiers" to occupy Iraq following a successful invasion. Then, compounding its arrogance with unforgivable incompetence, the administration failed to plan adequately for the inevitable damage war does to the bodies and minds of those we send into battle. The VA has been playing catch-up ever since.

Shinseki's second major challenge will be reforming the way health care is organized and paid for by his agency. With this challenge comes an opportunity that could enable Shinseki and the VA to lead the way toward redeeming President-elect Obama's pledge to bring about universal health care.

Of our nation's 23.4 million veterans, one third (7.8 million) are enrolled in health care programs managed by the Veterans Health Administration (VHA), which accounts for 204,000 of the VA's 279,000 employees and provides care nationwide through some 1,400 hospitals, clinics and other facilities.

According to a 2007 VA survey, 21 percent of veterans who receive health care through the VHA have no other insurance. About 31 percent have some form of private insurance while 77 percent have government-funded insurance such as Medicare, Medicaid or TRICARE. (The figures total more than 100 percent because many veterans have more than one type of insurance.)

During the presidential campaign, Obama pledged that his administration would seek to "guarantee affordable, accessible health care coverage for all Americans." Though his Republican opponent, John McCain, caricatured the Obama plan as "a nationalized health-care system," Obama did not propose placing practitioners and medical institutions under government control. What "Obama Care" would do is create universal insurance that includes the 47 million Americans - some 15 percent of our population - who now have no coverage.

The military and the VA do, in fact, provide "nationalized health care" in that they both pay the bills and manage practitioners who are (mostly) government employees working in government facilities. By contrast, the two largest government-funded insurance programs, Medicare and Medicaid, operate solely as paymasters and auditors for the care their patients receive from clinicians and facilities in the private sector.

If Shinseki is to lead his agency toward the goal of universal health care, he will first need to confront the tangle of laws and regulations governing who gets VA care and who does not. Instead of developing a coherent approach to veterans' programs, Congress tends to enact categorical requirements, often with the best of intentions, in response to specific problems or issues - especially those that generate embarrassing headlines. So, before veterans can get VA coverage, they need to convince the VA bureaucracy that they meet specific eligibility criteria.

How, for example, do you establish that a disability was related to military service? For a combat wound, the case is clear. What about a bad back? Or psychological problems that may, or may not, arise from post-traumatic stress disorder? Was exposure to the deadly herbicide, Agent Orange, responsible for a Vietnam veteran's cancer or diabetes? (The VA has controversial rules regarding Agent Orange to determine who is eligible for care and compensation.)

Veterans found eligible for VA health care are assigned to one of eight priority groups. Those with the most severe service-related disabilities are in Priority Group 1. At the lower end of the scale are Priority Groups 7 and 8, which encompass about 30 percent of all veterans eligible for VA health care. Veterans in these groups have no service-related disabilities and, according to VA criteria, have sufficient income to make co-payments for the care the VA provides. As a practical matter, the VA is their HMO.

The fundamental premise inherent in Obama's proposal for universal coverage is that health care should be a right for all Americans. Enacted into law, that premise would largely eliminate the need to determine whether someone's injury or illness conforms to a complicated set of rules under a government or commercial insurance program. Everyone would be guaranteed a baseline level of care.

By separating insurance financing from the care provided, universal coverage would enable the VA to expand its services to non-veterans whose care would be paid through universal insurance. Veterans in the top priority groups could continue to be treated cost-free through the VA or receive care through private practitioners or HMOs. Given that nearly four of every five veterans already have another form of insurance, the VA would likely lose some portion of its patient population. In short, it would need to compete for veterans and non-veterans alike.

Where would universal coverage leave the VHA's 204,000 employees and 1,400 facilities? In position, I would argue, to become a leading nonprofit health care network. Few institutions are as advanced as the VA, for example, in automating patients' records - an important factor in reducing medication errors, eliminating duplicative tests and containing costs.

Yet, we also know the agency has room for improvement. The VA's Office of the Inspector General (OIG) recently reported that 18 percent of VA clinic appointments currently go unused. The OIG put the value of those unused resources at $76 million. If the VA were in a position to compete for non-veterans, it would have a financial incentive to do a better job managing appointments, practitioners and facilities.

Would the VA system attract non-veterans? Absolutely. In 2003, the New England Journal of Medicine reported "the quality of care in the VA health care system substantially improved after the implementation of a systemwide reengineering and, during the period from 1997 through 2000, was significantly better than that in the Medicare fee-for-service program." (Phillip Longman's 2007 book, Best Care Anywhere, ably documents the VA's remarkable transformation from a substandard outfit into the outstanding health care organization it has become.)

Health insurance entails pooling funds from large numbers of individuals to account for the risks of all members of a group. Private insurers allocate funds for medical underwriting to determine who they will insure and wind up rejecting one in nine applicants based on medical history, age and other factors. The costs for underwriting, marketing, sales, administration and profit that go into some private insurance plans can account for 10 to 40 percent of the premiums paid by an employer or policyholder. With universal care, the pool would expand to include the entire nation, eliminating the need for many of these costs and encouraging competition for patients.

No medical institution in the U.S. can match the experience of the VA and its employees. It must budget for a risk pool that includes nearly eight million individuals and then manage its 36,000 physicians and other medical resources to treat young veterans recuperating from recent wounds as well as older veterans facing acute conditions and chronic illness.

While the VA has the potential to expand its role, formidable barriers remain. Congress would need to amend current legislation to enable the VA to compete for, and treat, non-veterans. VA bureaucrats and veterans' advocacy groups that have grown accustomed to things as they are could mount rear-guard actions to thwart a broader VA role.

In selecting Gen. Shinseki to lead the VA, President-elect Obama chose someone who understands the risks of speaking truth to power and paid a personal price for doing so. He will soon take charge of an agency second only to the Department of Defense in size and second to none in the breadth, complexity and importance of its mission.

The VA that Shinseki inherits will confront the ongoing consequences of two wars and an economy in recession. The first priority of the VA must continue to be the needs of our nation's veterans. Under Shinseki's leadership, the VA will also have an opportunity to move the nation closer to universal health care - an outcome that will benefit veteran and non-veteran alike.

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