HMO Model for the VA

When critics rail against big government, the Department of Veterans Affairs is rarely mentioned, though it might seem an easy target. The VA’s primary mission is to deliver health care to America’s retired or discharged servicemen and servicewomen. It does so through a system whose rules are often, as VA Undersecretary for Health Kenneth W. Kizer put it, “the epitome of mindless bureaucracy.”

Attempts to reform the agency have daunted all comers. Edward J. Derwinski, who headed the VA after serving in the House, was forced from the VA leadership in 1991 when veterans’ groups objected to his pilot plan to open two underutilized VA facilities to provide low-cost medical care to poor non-veterans.

Now it’s Kizer’s chance. Kizer, the top VA medical care official, envisions more sweeping reforms aimed at remodeling the VA along the lines of Kaiser Permanente, the managed care company that he came to admire while director of California’s Department of Health.

Kizer’s reforms have won the quiet support of both the House and Senate Veterans Affairs committees. This is largely because what Congress was willing to accept in Derwinski’s era--an expensive, hospital-based health care system--seems anachronistic today. Kizer aims to improve efficiency and reduce costs by shifting the VA’s focus from inpatient to outpatient care, a trend among both private and public hospitals.

Kizer, however, has yet to detail how he would correct several core problems identified in recent reports from both veterans and the federal government. The VA needs to do two important things:

* Improve substance abuse treatment. Substance abuse is by far the most prevalent problem among VA patients. One out of four was treated for it in fiscal year 1995. From 1988 to 1995 the number of outpatients in VA substance abuse programs increased 78%.

The cost ($2 billion in 1995) might be justifiable if positive results were being produced, but VA officials say that 40% to 60% of the substance abusers the VA treats relapse within a year; many VA doctors privately say the figures are much worse. One reason is the failure of the VA to coordinate its substance abuse programs with assistance on related problems in addicts’ lives, primarily homelessness and unemployment. Nearly half of the veterans in substance abuse programs are homeless at the time of admission.

* Focus on providing care to those who need it most. While nine out of 10 veterans are covered by public or private health programs other than the VA’s, the system continues to offer duplicative health benefits. A recent federal oversight report offers a sensible solution: Focus VA coverage on “those veterans lacking other health insurance and [on] those services . . . not well covered under other programs,” such as paraplegic care.

Careful implementation is the key. If the VA can, for instance, develop efficient outpatient programs for substance abusers while meeting the expensive needs of paralyzed veterans and others requiring comprehensive coverage, there’s no reason why Kizer’s reforms cannot both economize and improve care.