Veterans' Health Care: Efforts to Make VA Competitive May Create Significant Risks

GAO discussed the potential effects of health reforms on veterans' health care, focusing on the: (1) legal and structural barriers that could limit the Department of Veterans Affairs' (VA) ability to restructure its health care facilities into managed care plans and compete with private-sector health plans; (2) extent to which the Health Security Act would overcome those barriers; and (3) potential risks associated with efforts to make VA competitive with private-sector managed care plans. GAO noted that: (1) there are various barriers that could hinder VA efforts to establish competitive health plans; (2) VA officials believe that legislative action to exempt VA from a series of existing laws and regulations is essential if VA is to compete with private-sector health plans; (3) most legal barriers would be addressed through the Health Security Act; (4) expanding entitlement to VA health care could add billions of dollars to VA appropriations; (5) veterans with service-connected disabilities may have more difficulty accessing VA health care; (6) exemptions from contracting requirements could heighten the potential for fraud and abuse and place both the government and veterans at risk; (7) additional funds would be needed to make VA health plans competitive; (8) inadequate cost and utilization data would increase risks in pricing and contracting decisions; (9) eligibility verification would be more difficult in VA managed care plans; and (10) further decentralization of VA management could increase risks.