Obama May Charge Veterans' Private Health Insurance for Service-Related Ailments

By Fred Lucas | March 17, 2009 | 4:38 AM EDT

President Barack Obama at the White House on Monday, Mar. 16, 2009. (AP Photo/Ron Edmonds)

(CNSNews.com) – The Obama administration is considering a plan to charge the private health insurance of veterans for treatment of service-related ailments that currently are paid for by the Department of Veterans Affairs -- a potential change that has veterans’ groups outraged.

“Such a consideration is wholly unacceptable and a total abrogation of our government’s moral obligation and legal responsibility to the men and women who have sacrificed so much for our freedom,” said a letter to President Barack Obama signed by the leaders of 11 prominent veteran organizations.

Several leaders of veteran groups met with Obama administration officials Monday at the White House about the overall budget for the Department of Veterans Affairs (VA).

Last week, Veterans Affairs Secretary Eric Shinseki confirmed to the House and Senate committees on veterans’ affairs that the idea to bill veterans’ private individual insurance was being considered by the administration but was not yet a formal proposal.

“It is a consideration. It is not in the budget, but it is a consideration, and I'll be sure that your concerns are delivered,” Shinseki told the House Veterans’ Affairs Committee. “And again, we’re talking -- in health care -- the two aspects of this are delivery of health care and the financing of it. This is about the financing. I want to assure you that there should be no concern about the delivery.”

Currently, the VA covers the full cost of medical ailments related to military service and bills third-party insurers for non-service related injuries. For example, if an injured veteran is treated for the flu, the veteran’s personal insurance is billed. If the injured veteran is treated for a service-related injury and requires hearing aids or prosthetics, for example, the VA covers the cost.

Veteran groups fear that shifting more of the cost to private insurance will do several things: 1) drive up premiums for veterans; 2) make it more difficult for injured veterans to find and retain health insurance; 3) discourage employers from hiring disabled veterans; and 4) possibly make a war injury a pre-existing condition.

The White House did not directly address those points when asked about the possible proposal on Monday. 

“The details of specific proposals will be transmitted with the full submission in April,” White House spokesman Nick Shapiro told CNSNews.com in a statement. “The president has made it clear that meeting the needs of veterans is one of his priorities and, as a result, has requested an 11 percent increase in discretionary funding for 2010, and the administration is actively working with the veterans community to ensure we get the details of this budget right.”

If the idea blooms into a formal proposal, it could face strong opposition in Congress.

“If this proposal reaches the Senate, I will strongly oppose it,” Sen. Richard Burr (R-N.C.), the ranking member on the Senate Veterans’ Affairs Committee, told CNSNews.com in a statement Monday. “The VA was created for the purpose of caring for those who have fought and sacrificed for our country, and the care for injuries sustained while serving is our responsibility.”

Sen. Patty Murray (D-Wash.) (Photo from Sen. Murray's Web site)

Meanwhile, committee member Sen. Patty Murray (D-Wash.), told Shinseki during the Senate hearing last week, “Our vets already paid, and proposals that balance the VA budget on their backs are -- as far as I’m concerned -- dead on arrival.”

During her opening comments at the Senate hearing, Murray said, “I believe that veterans with service-connected injuries have already paid by putting their lives on the line for our safety. When our troops are injured while serving this country, we should take care of those injuries completely. We shouldn’t nickel and dime them with their care.”

In another hearing on Mar. 10 about the president’s budget proposal for 2010, Office of Management and Budget Director Peter Orszag also was questioned by Sen. Murray about the third-party payer proposal.  Part of the exchange reads as follows:

Sen. Patty Murray (D-Wash.): “Can you tell me if you are planning to include a third party billing proposal in the VA budget?”

Peter Orzsag: “Well, there will be more details about the VA budget in April, but let me state very clearly that there won't be increases in out-of-pocket costs or premiums for veterans. And, in fact, the budget adds $25 billion over five years for veterans and covers more than -- covers roughly a half a million more veterans under the VA system.”

Sen. Murray: “But is this specific proposal one that you're looking at?”

Peter Orzsag: “There are lots of proposals that are being examined. I think it would be premature to be discussing specifics.”

Sen. Murray: “Okay. Have you looked at the revenue impact of a proposal like that?”

Peter Orzsag: “Again, I'm going to just say it's premature to be discussing specifics. That will be part of the April budget.”

In comments directed to Shinseki at the Mar. 10 House Veterans Affairs Committee Rep. Michael Michaud (D-Me.) said:

“I've heard the same rumors that I'm sure a lot of members here have heard about the administration, whether it is OMB, whether it is the president, whoever it is, I don't know, want to have third party payment on service connected disability.

“If that is in the budget, I will not be supporting the budget. It is unconscionable and is an insult to our veterans who've been hurt overseas. So hopefully, you will give that message to OMB as it relates to third party collections for disabled veterans, which is just unbelievable that anyone would ever think of doing that in this budget,” Michaud said.

Signatories to the Feb. 27 letter to the president included the leaders of the American Legion, Veterans of Foreign Wars, Disabled Veterans of America, Blinded Veterans Association, Iraq and Afghanistan Veterans of America, Jewish War Veterans of the USA, Military Officers Association of America, and Military Order of the Purple Heart of the USA, Paralyzed Veterans of America and Vietnam Veterans of America. 

The veterans’ letter to Obama said, “There is simply no logical explanation for billing a veteran’s personal insurance for care that the VA has a responsibility to provide. While we understand the fiscal difficulties the country faces right now, placing the burden of those fiscal problems on the men and women who have already sacrificed a great deal for this country is unconscionable.”

Currently, the amount of money for veterans’ health services that the federal government seeks reimbursement for from third-party payers, the private insurers, is $2.5 billion. Obama’s proposed fiscal year 2010 budget would boost that reimbursement collectible to $3.4 billion, roughly a 36 percent increase. However, the budget summary did not provide information about where those collections would come from – from what health care services.

“Logically there is no other way to increase collectibles but to bill private insurance for service-related injuries,” VFW spokesman Joe Davis told CNSNews.com. “We kept asking, and we kept getting deferred and told to wait until April. Finally, Secretary Shinseki confirmed to Congress the administration was considering it.”

In all, the Obama budget proposal increases funds for the Department of Veterans Affairs from $98 billion now to $113 billion in 2010, according to the White House budget summary. It also expands eligibility to about 500,000 veterans that are not currently eligible for VA health benefits.

House Veterans Affairs Committee Chairman Bob Filner (D-Calif.) proposed increasing the funding by $800 million from what the Obama administration proposed though, in a statement, he did not address whether that was to offset the increased collections considered in the Obama budget.

“The House Committee on Veterans’ Affairs supports the president’s budget and has recommended an additional $800 million above the administration proposal,” said Filner in his statement. “This increase included $600 million to safeguard veterans’ medical care funding and $200 million to assist the VA as it begins its transformation into an organization more aligned with the needs of veterans.”

In the House hearing last week, Filner said, “From looking at your Senate testimony and the testimony of some of the veterans’ organizations, there is, I guess, a controversial policy recommendation in the budget concerning collection -- third party collections. We believe, Mr. Secretary, that we can meet your numbers for revenue income, third party, without any policy change that is using existing authority. We believe that we can do that with the numbers you have created and that we don't have to get into policy recommendations on third party collections but still meet your revenue needs that you have forecasted in your budget, and we'll be talking about that.”

Ranking member Steve Buyer (R-Ind.) also expressed concerns about the idea.

“I’ll be a good listener to your proposal. However, I believe that the proposal is contrary to our basic national obligation,” Buyer told Shinseki.

Veteran groups asked Congress to oppose the consideration. 

“I'd like to express our serious concerns that we have regarding the policy proposal that's been discussed here today, elegantly referred to as third-party reimbursement for veterans with service connected conditions,” Carl Blake, national legislative director for Paralyzed Veterans of America, said in his statement to the Senate committee.
“I think the secretary's testimony before the Senate this morning sort of affirmed our worst fears that this is something that the administration is seriously considering. We just simply find it unacceptable that a veteran would have his third-party insurance billed for conditions and in disabilities and injuries that were incurred while in service to this nation,” said Blake.
“We understand the fiscal difficulties that this country faces right now; I think we all understand that. But placing the burden of those fiscal problems on the men and women who have already served and sacrificed a great deal for this country is … unconscionable. We strongly urge Congress to investigate whether such a proposal is actually moving forward. I get the sense that it is, and to forcefully reject it if it is brought before you.”

The American Legion said it also has “grave concerns” about the proposal, according to its legislative director Steve Robertson.

“Depending on the severity of the medical conditions, those medical insurance policies with a calendar year benefit maximum or a life-time benefit maximum could result in the rest of the family not receiving any health care benefits. Many health insurance companies require deductibles to be paid before any benefits are covered,” Robertson told the Senate Veterans Affairs Committee last week.

“In addition, there is concern as to what premiums would be to cover service-connected disabled veterans and their families with private health insurance, especially those who are small business owners or self-employed,” he said.
“The American Legion is also concerned with employers who would be reluctant to hire service-connected disabled veterans because of the impact their employment might have on company health care benefits.”