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                         March 8, 2002

WASHINGTON (Department of Veterans Affairs Release) -- An influx of new patients threatens to overload the Veterans Affairs Department’s health-care system, which is already strained by an aging veterans’ population, according to the department’s No. 2 official.

"We have got to find a way to moderate growth,", VA Deputy Secretary Leo Mackay Jr. told reporters in a Feb. 15 interview.

Other agencies also expect their workloads to swell because of the demands of an aging population, specifically the Social Security Administration and the Health and Human Services Department, which administers Medicare.

And like several federal agencies, such as the Customs Service and the Patent and Trademark Office, VA proposes to increase its fees to deal with the growing imbalance between resources and demands for services.

The VA is experiencing a double whammy: Aging veterans who fought in World War II and Korea are increasingly in need of care for their service-related ailments. Meanwhile, post-Korean War veterans without service-related ailments are now flooding VA hospitals and clinics seeking care, further squeezing VA’s resources.

VA views this latter group of veterans as lower priority if they do not have service-related ailments and have enough income to afford alternatives to free VA health care, including prescription drugs. Referred to as Priority 7 veterans by VA, they earn more than $24,000, $28,000 if married.

In 1996, Congress passed a law to increase their access to VA health care.

The number of Priority 7 veterans seeking care in VA facilities is projected to rise from 2 million today to 3 million by 2007. The number of other veterans seeking treatment -- 4 million today -- is rising at a much slower rate and is expected to level out in 2005. By 2010, Priority 7 veterans will comprise half of all veterans the VA treats, Mackay said

To meet increased demand from those veterans, the amount of funds budgeted for them would need to triple in five years, VA said.

Such an increase is unrealistic when most agencies are receiving little to no funding increases, Mackay said.

"We want to serve those veterans," Mackay said. "What we don’t want to do is compromise the quality of the system by virtue of overcrowding."

Thus, the VA has proposed a means of reducing its patient load. It intends to charge a $1,500 deductible to veterans above the income threshold who do not have service-connected disabilities.

Many of those Priority 7 veterans have private health insurance. The VA anticipates that up to 100,000 of them will shun VA facilities if they are forced to pay a deductible, thereby freeing resources that can be used for other patients.

The deductible would generate about $260 million in additional revenue in fiscal 2003 if implemented Oct. 1. That amounts to 1.2 percent of VA’s $21.3 billion budget.

"It’s not about raising revenue. It’s about preserving the quality of the system," Mackay said.

But veterans groups and some lawmakers decry the proposed deductible.

"We have some serious concerns about it," said Joe Violante, national legislative director of Disabled American Veterans.

"As care continues to get more expensive, will they be looking at other ways to reduce the cost to the government and shift the burden to the veteran?"

Mackay said the VA would also consider alternatives to the deductible proposal.

For instance, the VA and Defense Department are looking for ways to collaborate in such areas as health care, benefits delivery, information sharing and property management.

They are considering several options including creating a joint billing schedule, consolidating mail-order pharmacies, and exchanging patient records.

Forging such partnership agreements is an essential part of VA’s plan to improve service delivery to veterans while keeping costs down, Mackay said.