End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8

Background

The Department of Veterans Affairs (VA) offers a wide range of medical care to veterans, including providing inpatient and outpatient care, filling prescriptions, and offering assistive devices to veterans. That care is provided at little or no charge to enrolled veterans. Veterans who seek medical care from VA are assigned to one of eight priority groups on the basis of disability status and income, among other factors. For example, enrollees in priority groups 1, 2, and 3 generally have service-connected disabilities (as determined by VA), and their income does not affect eligibility for VA medical care. Veterans in priority group 7 do not have service-connected disabilities, and their annual income is above a national threshold (about $32,000 for a household of one in 2017) set by VA but below a (generally higher) geographically adjusted threshold. Those in priority group 8 do not have service-connected disabilities, and their income is above both the national and the geographic thresholds. In 2017, about 2 million veterans were in priority groups 7 and 8.

Although veterans in priority groups 7 and 8 do not pay enrollment fees, they make copayments, and VA can bill their private insurance plans for reimbursement. Together, the copayments and reimbursements cover about 14 percent of VA's costs of care for those groups. In 2017, VA incurred $6 billion in net costs for those patients, or about 9 percent of the department's net spending for veterans' medical care. When priority groups were established in 1996, the Secretary of the Department of Veterans Affairs was given the authority to decide which groups VA would serve each year. Because of budgetary constraints, VA ended enrollment of veterans in priority group 8 in 2003. Veterans who were enrolled at that time were allowed to remain in VA's health care system. In 2009, enrollment was reopened to certain veterans in that group.

Option

This option would end enrollment in VA's health care system for veterans in priority groups 7 and 8: No new enrollees would be accepted, and current enrollees would be disenrolled starting in October 2019.

Effects on the Budget

The Congressional Budget Office estimates that ending enrollment for veterans without service-connected disabilities and whose income exceeds the national threshold would reduce discretionary spending by $57 billion from 2020 through 2028. Under this option, about 2 million fewer veterans would be enrolled in VA's health care system each year. Because not all enrolled veterans use VA medical care each year, an average of about 1 million veterans would no longer be treated by VA in any given year. The result would be an average annual savings of about $6,000 per disenrolled patient over that period.

Mandatory spending for other federal health care programs—such as Medicare and Medicaid and federal subsidies provided through the health insurance marketplaces established under the Affordable Care Act—would increase because enrollees would seek medical care through other sources. (More than half of the enrollees in priority groups 7 and 8 are over the age of 65.) CBO estimates that, overall, mandatory spending would rise by $29 billion between 2020 and 2028 under this option.

The greatest sources of uncertainty in this estimate of savings over the next 10 years are CBO's estimates of the number of veterans affected by the option and how their reliance on other forms of health care might change. Under current law, enrollees in priority groups 7 and 8 receive nearly 20 percent of their medical care from VA. As the health care delivery and insurance markets evolve over the projection period, that pattern of reliance might change.

Other Effects

An advantage of this option is that VA could focus on veterans with the greatest service-connected medical needs and the fewest financial resources. In 2017, nearly 90 percent of enrollees in priority groups 7 and 8 had other health care coverage, mostly through Medicare or private health insurance. As a result, the vast majority of veterans who would lose access to VA health care would have other sources of coverage, including the health insurance marketplaces.

A disadvantage of the option is that veterans in priority groups 7 and 8 who have come to rely on VA, even in part, might find their health care disrupted. Some veterans—particularly those with income just above the thresholds—might find it difficult to obtain other care.