Bill Would Turn Veterans Health Administration Into Nonprofit Corporation

A member of the House Republican leadership on Tuesday released draft legislation to completely overhaul the way veterans receive health care, in part by turning the Veterans Affairs Department’s health care component into a government-chartered nonprofit corporation.

The Caring for our Heroes in the 21st Century Act, introduced by Rep. Cathy McMorris Rodgers, R-Wash., the chairwoman of the House Republican Conference, would create the Veterans Accountable Care Organization to manage the VA’s brick and mortar health care facilities. It also would launch the Veterans Health Insurance Program to manage VHA’s insurance programs, creating two separate entities to handle VA’s payer and provider functions.

The bill, which she introduced as a "discussion draft," would seek to expand choice for veterans by creating a “premium support” model to receive care from non-VA sources. Critics contend that premium support is a voucher system that cuts benefits and leaves veterans on their own to receive care.

The measure also would create significant changes for the 330,000 employees of the Veterans Health Administration. The new government corporation would have “more latitude to reward high performers, fire poor performers and monitor the quality of overall veteran health care delivery,” an individual briefed on the bill told Government Executive.

Veterans would be able to choose either the VetsCare Federal program -- allowing them to continue receiving care exclusively though the traditional VA system -- or VetsCare Choice -- which would provide them with subsidized private care. Those choosing the latter option could still opt to go to facilities run by the corporation (VACO) to receive care for service-related injuries.

The bill would also open up the Federal Long Term Care Insurance Program, currently only available to federal employees and administered by the Office of Personnel Management, to the entire veteran population.

McMorris Rodgers also wants an independent commission to identify underutilized VA facilities for closure, while giving Congress final veto power. The commission would have to ensure that veterans located in areas with scheduled facility closures would not experience diminished access to care.

The 15-member commission would oversee the implementation of the law generally and continuously monitor veterans health care to make recommendations to Congress and VA for future reforms.

The proposal in many ways mirrors a “strawman report” issued by seven members of the Commission on Care, a panel created by the 2014 Veterans Access, Choice and Accountability Act to suggest a new path forward for VHA. The full commission is holding its final meeting this week before it issues its recommendations at the end of the month.

While the authors of the strawman report say they were simply seeking to align the VA with the needs and desires of veterans, most veterans service organizations -- such as the American Legion and Veterans of Foreign Wars -- oppose the proposals.

Garry Augustine, executive director of the group Disabled Veterans of America, told Government Executive in April that a focus on private care would rob future veterans of the all-inclusive assistance he received upon returning from Vietnam, ranging from vocational training to educational assistance to rehabilitation.

“If I was just given a card and told to go get this taken care of, I would’ve been lost,” Augustine said. He also suggested the proposals would lead to a deficiency of hospitals and clinicians equipped and trained to deal with issues specific to veterans.

“Some of these injuries don’t show up in the private sector that often,” he said. Augustine added that he does not philosophically oppose augmenting integrated care, but cautioned that the providers must become familiar with the intricacies of receiving government reimbursements before accepting veteran patients.

Concerned Veterans for America, a conservative-aligned group controversial for its ties to Republican mega-donors Charles and David Koch, threw its support behind the measure. CVA’s Vice President for Political and Legislative Action Dan Caldwell said the bill would “give every veteran eligible for VA care the ability to choose where he or she receives care.”

“The reality of the VA’s failure is undeniable,” Caldwell said. “The department is not structured to provide timely, sustainable care to veterans, and is in desperate need of ‘system-wide’ reform. The Caring for Our Heroes in the 21st Century Act will reverse the tide of inefficiency and failure at the VA while offering veterans the health care choice they deserve.”

He said he expects dissension from the “usual chorus” of special interests and “entrenched bureaucrats” but called on Congress to “do the right thing” and support the bill.

John Cooper, a CVA spokesman, said the bill would enable veterans to use the same facilities and see the same doctors, “with the only difference being how those clinics and doctors are managed.”

Congress would continue its oversight and funding responsibility for the newly created government corporation.

The reforms are unlikely to receive President Obama’s support or a veto-proof majority, making the chances for passage of McMorris Rodgers’ bill dim. Obama told The Colorado Springs Gazette earlier in June he would not support any move toward VHA privatization.

"The notion of dismantling the VA system would be a mistake," Obama said, touting the progress he said his administration has made in improving the department since the waitlist scandal was unearthed in 2014.

Nevertheless, that the third-ranking House member in the Republican Party would throw her weight behind the transition shows the political winds may be blowing in that direction. 

Clarification: Rep. McMorris Rodgers has not formally introduced the legislation in the House. She released a draft. The story has been updated to reflect that.