Summary: The evolution of the Department of Veterans Affairs (VA) during the past 60 years has resulted in a maze of complex eligibility rules. These rules frustrate veterans, who cannot understand what services they can get from VA, and VA physicians and administrative staff, who have to interpret the eligibility provisions. Proposals to simplify and expand eligibility for veterans' health care benefits have been put forth by Congress, the administration, and leading veterans service organizations. This report discusses (1) the evaluation of the VA health care system and VA eligibility; (2) the problems that VA's current eligibility and health services contracting provisions create for veterans and providers; (3) the extent to which VA provides veterans with health care services for which they are not eligible; (4) legislative proposals to reform VA eligibility and contracting rules and their potential effect on ease of administration, equity to veterans, costs to VA, and clarity of eligibility for veterans' health benefits; and (5) approaches that could be used to limit the budgetary effects of eligibility reforms.