A Congressional Budget Office report released this week looks at the Veterans Health Administration (VHA) and examines the difficulties in comparing the cost effectiveness of federal and private health care. At first, the CBO assumed – based upon earlier studies – that VHA care costs less than equivalent care provided in the private sector. Now, the budget agency is no longer so sure.
Changes at the VHA, the complexities of cost comparisons and the paucity of new studies make a current comparison difficult. Meanwhile, the VHA is expanding the use of private health care services to compensate for highly publicized and very long treatment waiting times.
Factors favoring lower costs for veterans care include lower prices for pharmaceutical products and likely lower pay rates for doctors. Also, the private sector’s favoring of fee-for-service payments probably hikes the cost of private care. However, the report notes in conclusion: “even if VHA currently provided care at a lower cost than the private sector, expanding the VHA system might not be cheaper in the longer term than increasing the use of private-sector providers.”
And as my colleague Connor O’Brien wrote recently in CQ Weekly (subscription), some health care experts say it might be better to subsidize private heath care for veterans than to keep up the current government-run system.