![](media/image1.wmf){width="1.4979166666666666in"
height="1.4381944444444446in"}

**[United States House of Representatives]{.smallcaps}**

**[Committee on Government Reform, Minority Staff]{.smallcaps}**

**[Special Investigations Division]{.smallcaps}**

**[April 2003]{.smallcaps}**

[Proposed Restrictions on Access to VA Health Care]{.smallcaps}

[in Boston, the South Shore, and Cape Cod]{.smallcaps}

**[Prepared for]{.smallcaps}**

**[Rep. William D. Delahunt]{.smallcaps}**

**[Rep. Stephen F. Lynch]{.smallcaps}**

**[Table of Contents]{.smallcaps}**

Executive Summary i

Background 1

President Bush's VA Budget Proposals 2

Findings 3

Thousands of Veterans in Boston, the South Shore, and Cape Cod Will Be
Forced Out of VA Health Care 3

Veterans in Boston, the South Shore, and Cape Cod Who Continue to
Receive VA Care Will Pay Hundreds of Dollars Annually in Increased Costs
5

Conclusion 6

**[Executive Summary]{.smallcaps}**

> In February 2003, President Bush released his budget proposal for the
> Department of Veterans Affairs for fiscal year 2004. The budget would
> halt enrollment in VA health care for many veterans, denying them
> access to any VA care. In addition, the budget would charge other
> veterans who are currently in the VA system a \$250 annual enrollment
> fee and increase co-payments for doctor's visits and prescription
> drugs.
>
> At the request of Rep. William D. Delahunt, who represents the 10th
> Congressional District in Massachusetts, and Rep. Stephen F. Lynch,
> who represents the 9th Congressional District in Massachusetts, this
> report analyzes the impact of these changes on veterans in Boston, the
> South Shore, and
>
> Cape Cod.
>
> The report finds that the proposed changes would cause over 24,000
> Massachusetts veterans, including almost 12,000 veterans in Boston,
> the South Shore, and Cape Cod, to be denied VA health care or to drop
> out of the VA system, while increasing costs for thousands more.
> Specifically:
>
> · **The budget proposals would deny care to almost one thousand
> veterans in Boston, the South Shore, and Cape Cod.** The President's
> budget proposal would freeze VA enrollment for "Priority 8" veterans,
> preventing an estimated 1,965 veterans in Massachusetts from enrolling
> to receiving care. Locally, this provision would prevent almost 1,000
> veterans from enrolling in VA facilities in Boston, the South Shore,
> and Cape Cod.
>
> **· Increased fees would force thousands of veterans in Boston, the
> South Shore, and Cape Cod to drop out of the VA health care system.**
> An estimated 22,000 Massachusetts veterans, including almost 7,600
> veterans receiving active VA care, are unlikely to be able to afford
> the increased costs for VA health care proposed in the budget, causing
> them to drop their enrollment in the VA system. Locally, the proposals
> would force almost 11,000 veterans enrolled in VA facilities in
> Boston, the South Shore, and Cape Cod, including over 3,700 active
> patients, to drop out of the VA health care system.
>
> · **Many veterans in Boston, the South Shore, and Cape Cod would pay
> an additional \$350 or more each year for VA care.** Other veterans in
> the 2nd Congressional District would remain in the VA system but be
> forced to pay more for their health care. Veterans who receive
> prescription drugs from VA and who fill a typical number of
> prescriptions each year could face new fees of almost \$600.

**[background]{.smallcaps}**

> The Department of Veterans Affairs runs the nation's largest health
> care system, providing care to over four million veterans through a
> nationwide network of hospitals, nursing homes, and outpatient
> clinics. The VA serves as a critical health care resource for veterans
> in Massachusetts. In 2003, the VA will provide care for an estimated
> 126,000 veterans in the state .[^1] In Boston, the South Shore, and
> Cape Cod, veterans receive care at VA medical centers in Boston and
> Brockton, and at smaller clinics in Hyannis, Martha's Vineyard,
> Nantucket, New Bedford, and Quincy.
>
> The Department of Veterans Affairs has had long-standing problems
> providing care for eligible veterans. Nationwide, there were almost
> 300,000 veterans in 2002 who were either placed on waiting lists or
> forced to wait for over six months in order to receive an appointment
> for necessary care.[^2] These problems providing care can be traced to
> the failure to provide adequate funding for the VA. In 1996, Congress
> passed the Veterans Health Care Reform Act, which expanded eligibility
> for VA care to all veterans. Since the legislation was passed,
> enrollment in VA health care facilities has increased by over 200%,
> from 2.9 million in 1996 to an estimated 7.0 million in 2003.[^3]
> Funding for the VA, however, increased by less than 60% during this
> period,[^4] leading to shortages of capacity and long waiting times
> for many veterans.
>
> Under the 1996 legislation, the VA was required to establish several
> categories for enrollment, with the highest priority given to veterans
> who have service-related disabilities and low incomes. The lowest
> priority is given to veterans who do not have service-connected
> disabilities and have higher incomes.
>
> The two veterans groups with the lowest priority are known as Priority
> 7 and Priority 8 veterans. Priority 8 veterans are veterans who do not
> have service-related disabilities and who have incomes that exceed the
> Department of Housing and Urban Development's cutoff level for
> eligibility for public housing programs. This is a
> geographically-based income level, set at 80% of the median income
> level for a given community. In Boston, the South Shore, and Cape Cod,
> for a single veteran, this annual income level ranges from \$33,750 to
> \$43,850(for a veteran with a single dependent, this income level
> ranges from \$38,600 to \$50,100). Priority 7 veterans are those who
> do not have service-related disabilities and who have incomes that are
> below the HUD means test income, but above a VA-established threshold
> of \$24,644 for a single veteran (\$29,576 for a veteran with a single
> dependent).

**[President Bush's VA Proposals]{.smallcaps}**

> President Bush's fiscal year 2004 VA budget contains several
> provisions that would either restrict access to care for veterans or
> increase the cost of VA care for Priority 7 and Priority 8
> veterans.[^5] These provisions were also included in FY 2004 budget
> legislation that narrowly passed the House of Representatives on March
> 21, 2003.[^6] The first provision would halt enrollment of new
> Priority 8 veterans, denying them access to any VA care. This
> provision was first announced by the Administration on January 17,
> 2003, and would be made permanent in the FY 2004 budget. Under this
> proposal, all Priority 8 veterans who had enrolled in the VA system
> prior to January 17, 2003, would continue to receive care. But no new
> enrollments from Priority 8 veterans would be allowed.
>
> The second provision would charge all Priority 7 and Priority 8
> veterans who are in the VA system a \$250 annual enrollment fee in
> order to receive care. This would represent a new policy for VA, which
> to this date has never charged veterans an enrollment fee for care.
> Finally, a third set of provisions would increase co-payments for
> Priority 7 and Priority 8 veterans who are receiving VA care. The
> co-payments for primary care payments would increase by 33%, from \$15
> per visit to \$20 per visit. The co-payments for prescription drugs
> would more than double, increasing from \$7 to \$15 per 30-day
> prescription.

**[Findings]{.smallcaps}**

> **Thousands of Veterans in Boston, the South Shore, and Cape Cod Will
> Be Forced Out of VA Health Care**
>
> President Bush's proposal to increase the cost of VA care and restrict
> access will impact thousands of veterans in Boston, the South Shore,
> and Cape Cod. First, it will mean that veterans who otherwise would
> have received care will no longer be able to enroll in the VA system.
> According to data from the Department of Veterans Affairs, the
> suspension of enrollment of Priority 8 veterans will deny care to
> 173,000 veterans nationwide.[^7] Of these 173,000 veterans who will be
> denied care, an estimated 1,965 reside in Massachusetts.[^8] This
> includes an
>
> estimated 960 Priority 8 veterans who would have enrolled at VA
> facilities in Boston, the South Shore, and Cape Cod.[^9]
>
> In addition, many more veterans will lose access to care because of
> the new requirement that they pay an additional annual enrollment fee
> of \$250. The VA estimates that the new fee will force an estimated
> 55% of enrolled Priority 7 and 8 veterans --- over half --- to drop
> out of the VA system.[^10] Overall, VA estimates that 1.25 million
> enrolled veterans in the United States, including 425,000 active
> patients, will be forced out of the VA health care system care because
> of the increased costs.[^11]
>
> Thousands of these veterans will be Massachusetts residents.
> Presently, there are an estimated 24,332 Priority 7 and an estimated
> 16,228 Priority 8 veterans enrolled in the VA health care system in
> Massachusetts.[^12] If 55% of these veterans are forced to drop out of
> the VA system, it will mean that over 22,000 Massachusetts veterans
> will no longer have access to VA care. This includes almost 7,600
> Massachusetts veterans who are active patients.[^13]
>
> Many of these veterans would receive care at VA facilities in Boston,
> the South Shore, and Cape Cod. Locally, an estimated 10,900 veterans
> enrolled at VA facilities in the region would be forced to drop VA
> enrollment due to the new fees. This includes over 3,700 veterans who
> are active patients.
>
> Overall, including veterans who are precluded from signing up for VA
> care and veterans who will be forced to drop out of the VA system
> because of the increased fees, over 24,000 Massachusetts veterans,
> including almost 12,000 veterans in Boston, the South Shore, and Cape
> Cod, will lose access to VA health care under the President's
> proposal.

**Veterans in Boston, the South Shore, and Cape Cod Who Continue to
Receive VA Care Will Pay Hundreds of Dollars Annually in Increased
Costs**

For many veterans in Boston, the South Shore, and Cape Cod who do stay
enrolled in the VA program, there will be significant new costs. Not
only will Priority 7 and Priority 8 veterans be forced to pay the annual
\$250 enrollment fee, but they will also have to pay increased copays
for physician visits and prescription drug fees. The increased fees are
anticipated to cost veterans in the program an average of \$97
annually.[^14] Overall, between the increased copays and the \$250
annual enrollment fee, Priority 7 and Priority 8 veterans who remain in
the VA health care program will pay a total average increase of \$347
annually.

Many veterans will pay even more. A recent report by the General
Accounting Office found that among Priority 7 veterans who use VA
outpatient prescription drug services, the average veteran uses 38
monthly prescriptions per year.[^15] A Priority 7 veteran that fills
this many prescriptions will pay an additional \$304 annually just for
prescription drugs, plus the increased fees for doctor visits, plus the
\$250 annual enrollment fee. Total increased costs for these veterans
would be almost \$600 annually.

Statewide, if the President's proposal does go into effect, almost
18,000 Priority 7 and Priority 8 veterans in Massachusetts are likely to
remain in the VA health care system in the state. These veterans will
pay an estimated \$6.3 million annually in increased costs for VA care.
Approximately 8,900 Priority 7 and Priority 8 veterans enrolled at VA
healthcare facilities in Boston, the South Shore, and Cape Cod are
likely to remain in the VA health care system. These veterans will pay
an estimated \$3.1 annually in increased costs for VA care.

[**Conclusion**]{.smallcaps}

This report analyzes the impact of President Bush's proposed budget on
VA health care in Boston, the South Shore, and Cape Cod. The budget
proposes restricting access to care for many veterans and increasing the
cost of care for others. These proposals would deny care to an estimated
1,965 veterans in the state and force over 22,000 additional enrolled
Massachusetts veterans, including almost 7,600 active patients, to drop
out of the VA health care system. Locally, the proposals would deny care
to almost 1,000 veterans and force an estimated 10,900 veterans enrolled
in VA facilities in Boston, the South Shore, and Cape Cod, including
over 3,700 active patients, to drop out of the VA health care system.
The proposals would also increase the cost of health care for many
veterans who remain in the program by an average of \$350 annually and
would cost many veterans as much as \$600 or more annually.

[^1]: Department of Veterans Affairs, *FY 2003 End of Year Enrollment
    Projection* (Mar. 2003).

[^2]: Memorandum from Department of Veterans Affairs to **Chairs and
    Ranking Members of Senate and House Veterans' Committees and VA-HUD
    Appropriations Sub-Committees** (July 2002).

[^3]: Department of Veterans Affairs, *VA Health Care: Systemwide
    Workload, FY 1996-2001* (2002) (online at
    http://www.va.gov/vetdata/ProgramStatics/index.htm). *FY 2003 End of
    Year Enrollment Projection, supra* note 1.

[^4]: Department of Veterans Affairs, *VA Health Care: Systemwide
    Obligations, FY 1996- 2001* (2002) (online at
    http://www.va.gov/vetdata/ProgramStatics/index.htm). Department of
    Veterans Affairs, *FY 2004 Budget Submission* (Feb. 2003).

[^5]: Overall, the President proposed a budget of \$27.5 billion for VA
    health care, an increase of 7.7%. Most of this increase is offset by
    medical inflation, which was 4.7% last year. Bureau of Labor
    Statistics, *Consumer Price Index: All Urban Consumers* (2003). Some
    of the increase would pay for decreasing pharmacy co-pays for some
    low- income veterans (those with incomes between \$9,690 and
    \$16,169) and for reducing the backlog for care. The
    Administration's own figures indicate that the proposed budget is
    approximately \$2.5 billion less than is needed to provide adequate
    health care to veterans. Department of Veterans Affairs, *Veterans
    Health Care Enrollment and Expenditure Projections* (Sep. 2002).
    Leading veterans groups have also indicated that the budget is
    inadequate to provide all necessary care. Disabled American
    Veterans, Paralyzed Veterans of America, VFW of the United States,
    AMVETS, *The Independent Budget for Fiscal Year 2004: A
    Comprehensive Budget and Policy Document Created by Veterans for
    Veterans* (2003).

[^6]: H. Con. Res. 95, 108th Cong. (2003). The budget resolution passed
    by 3 votes, 215 to 212, with 214 Republicans supporting the
    resolution and 199 Democrats opposing it.

[^7]: Department of Veterans Affairs, *Impact of Suspending Enrollment
    of Priority 8 Veterans by State for FY 2003* (2003).

[^8]: *Id.*

[^9]: Based on VA data indicating that approximately 49% of Priority 7
    and Priority 8 veterans

    in Massachusetts will receive care at VA facilities in Boston, the
    South Shore, and Cape Cod. Department of Veterans Affairs, *VHA
    Priority 7 Patients: Fiscal Year 2002* (Feb. 2003). Prior to FY
    2003, there were no Priority 8 veterans; all veterans now classified
    as Priority 8 veterans were instead placed in the Priority 7
    category.

[^10]: *FY 2004 Budget Submission*, *supra* note 4.

[^11]: At any given time, not all enrolled veterans are actively
    receiving care from VA. VA estimates that approximately half of all
    enrolled Priority 7 and Priority 8 veterans are active patients, and
    that 34% of all Priority 7 and Priority 8 veterans who will drop
    enrollment because of increased fees are active patients. *Id.*

[^12]: *FY 2003 End of Year Enrollment Projection, supra note 1*.

[^13]: *See* note 11.

[^14]: Based on VA estimates that the increased copays will impact
    approximately 750,000 veterans and will cost veterans a total of
    \$73 million. *FY 2003 End of Year Enrollment Projection, supra note
    1*.

[^15]: General Accounting Office, *VA Health Care: Expanded Eligibility
    Has Increased Outpatient Pharmacy Use and Expenditures* (Nov. 2002).