Legislation To Authorize VA Recoveries From Private Health Insurance Would Result in Substantial Savings

HRD-85-24: Published: Feb 26, 1985. Publicly Released: Feb 26, 1985.

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GAO conducted a review to determine the potential for insurance recovery of a portion of the Veterans Administration's (VA) costs incurred for the treatment of veterans' non-service-connected medical conditions. As part of the study, GAO sent a questionnaire to a random sample of veterans who were discharged from VA hospitals and asked whether they were covered under a health insurance policy.

GAO found that about 18 percent of the veterans who answered the questionnaire had private health insurance. The care provided such veterans cost VA between $188 million and $284 million. These projections are conservative due to veterans who did not respond to the questionnaire and the exclusion of psychiatric care patients. GAO estimated that, if insurance companies reimbursed VA based on actual lengths of stay in VA hospitals, VA would recover from $150 million to $284 million. If insurance companies limited reimbursement to VA based on community hospital lengths of stay, VA could have recovered at least $98 million to $160 million. In addition, VA recoveries could have been increased to the extent that the costs incurred for outpatient care of veterans were covered by private health insurance. GAO estimated that the increased administrative costs should be less than 1.8 percent of the recoveries, and insurance companies should incur increased administrative costs of less than 6 percent of VA recoveries. Insurance companies would likely pass on these increased benefit payments and administrative costs to their policyholders. This should increase health insurance premiums by a few dollars per year for each policyholder. Furthermore, based on its review of case law, GAO believes that the insurance industry's rights would be adequately protected under proposed law and that proposed recovery legislation would be legal.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In P.L. 99-272, Congress authorized VA to recover the cost of medical care provided to non-service-connected veterans from third-party health insurance policies carried by those veterans.

    Matter: Congress should enact legislation similar to S. 759 to enable VA to recover the costs of non-service-connected care provided to privately insured veterans.


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