Veterans' Health Care

Medicare-eligible veterans make substantial use of Department of Veterans Affairs (VA) services not extensively covered under Medicare. GAO found that many of these veterans turn to VA specifically to obtain such services, particularly prescription drugs, inpatient psychiatric care, and long-term nursing care. Also, many Medicare-eligible veterans who use VA health care facilities have lower incomes and less private insurance than those who rely solely on Medicare, suggesting that out-of-pocket costs may have influenced veterans to turn to VA for health care. Changes to Medicare or veterans health benefits made as a result of health care reform could significantly affect future demand for VA health care services. Medicare changes that would add benefits, such as outpatient prescription drugs, or reduce beneficiary cost sharing could lower demand for VA health care services. On the other hand, VA benefit changes, such as the elimination of restrictions on access to outpatient services, improved access to care, and expanded entitlement to free care, could boost demand for VA health care. Finally, the historic reluctance of Medicare beneficiaries to enroll in health maintenance organizations could reduce their willingness to enroll in VA health plans as long as traditional fee-for-service care remains available under Medicare.

GAO found that: (1) Medicare-eligible veterans make substantial use of VA services not extensively covered under Medicare; (2) many Medicare-eligible veterans use VA specifically to obtain prescription drugs, inpatient psychiatric care, and long-term nursing home care services; (3) Medicare-eligible veterans who use VA health care facilities generally have lower incomes and less private insurance than veterans who rely solely on Medicare; (4) significant out-of-pocket costs have influenced veterans' decisions to use VA health care services; (5) adding Medicare benefits or reducing beneficiary cost sharing could reduce the demand for VA health care services; (6) changes in VA benefits including eliminating access restrictions to outpatient services, improving access to care, and expanding entitlement to free care, could increase the demand for VA health care services; and (7) the continued availability of traditional fee-for-service care under Medicare and the reluctance of Medicare beneficiaries to enroll in health maintenance organizations could reduce veterans' willingness to enroll in VA health plans.