Summary: Medicare-eligible veterans make substantial use of Department of Veterans Affairs (VA) services not extensively covered under Medicare. GAO found that many of these veterans turn to VA specifically to obtain such services, particularly prescription drugs, inpatient psychiatric care, and long-term nursing care. Also, many Medicare-eligible veterans who use VA health care facilities have lower incomes and less private insurance than those who rely solely on Medicare, suggesting that out-of-pocket costs may have influenced veterans to turn to VA for health care. Changes to Medicare or veterans health benefits made as a result of health care reform could significantly affect future demand for VA health care services. Medicare changes that would add benefits, such as outpatient prescription drugs, or reduce beneficiary cost sharing could lower demand for VA health care services. On the other hand, VA benefit changes, such as the elimination of restrictions on access to outpatient services, improved access to care, and expanded entitlement to free care, could boost demand for VA health care. Finally, the historic reluctance of Medicare beneficiaries to enroll in health maintenance organizations could reduce their willingness to enroll in VA health plans as long as traditional fee-for-service care remains available under Medicare.
