VA Health Care Reform:

Financial Implications of the Proposed Health Security Act

T-HEHS-94-148: Published: May 5, 1994. Publicly Released: May 5, 1994.

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GAO discussed the financial and policy implications of the proposed Health Security Act's provisions for veterans' health care, which would: (1) transform Department of Veterans Affairs (VA) facilities into a series of managed care plans to compete with private-sector plans; (2) expand entitlement to comprehensive health care services for veterans choosing to enroll in a VA health plan; (3) authorize VA to provide services to veterans' dependents and establish supplemental benefits and cost-sharing policies; (4) deem VA facilities as Medicare providers; and (5) provide several new financing mechanisms to offset the costs of VA health care. GAO noted that: (1) many veterans use VA health care as a safety net for health care not provided by private insurance or Medicare; (2) veterans using VA health care tend to have lower incomes and less insurance coverage; (3) VA ability to attract enrollees to its health plans will be influenced by out-of-pocket costs, convenience, and customer service; (4) under the proposed Health Security Act, about 9 million veterans would be entitled to free comprehensive benefits if they enroll in VA health plans; (5) VA appropriations and some Medicare funds would be used to pay the costs of VA health care; (6) supplemental benefits such as long-term care could cost the government billions of dollars; and (7) inaccurate premiums could lead to improper denial of needed health care services or cutbacks in availability of VA services.

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