VA Health Care:

Assessment of VA's Fiscal Year 1998 Budget Proposal

T-HEHS-97-121: Published: May 1, 1997. Publicly Released: May 1, 1997.

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Stephen P. Backhus
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GAO discussed the President's 1998 budget request for the Department of Veterans Affairs (VA) health care system.

GAO noted that: (1) while VA's budget goals may be attainable, they carry implications such as limited deficit reduction contributions and potential risks to low-income uninsured veterans; (2) achieving increased efficiency is not contingent on either increases in patients served or resources; (3) VA's ongoing efforts to restructure its health care system could yield billions of dollars in savings during the next 5 years; (4) a large part of these savings would be realized through more efficient use of it's workforce, which will allow the existing patient base to be served with fewer employees; (5) sufficient savings could be generated to afford VA an opportunity to increase patients served without new resources or increase its contribution to deficit reduction; (6) VA can significantly decrease its reliance on appropriated resources by using its existing authority to sell excess capacity to help other federal agencies meet their beneficiaries' health care needs; (7) VA's proposal to generate billions of dollars in new revenue to serve 20 percent more patients intensifies VA's direct competition with the private sector and potentially leaves low income, uninsured veterans vulnerable; (8) VA may be able to attain its revenue goals, only by attracting thousands of new users who have higher incomes or public or private insurance; (9) such new users are likely to be drawn from private providers who may see their revenue base erode as patients shift to VA care; (10) VA may spend unreimbursed resources on these veterans that could reduce the availability of resources for low-income, uninsured veterans; (11) VA faces a difficult challenge as it takes steps to implement a new resource allocation method to improve veterans' access to VA care and a decentralized management structure to improve resource utilization; (12) these initiatives promise improvements in equity and have stimulated significant changes in efficiency; and (13) however, VA's challenge will be to adequately monitor these changes to identify and correct unintended effects such as those that limit equity of access.

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