The Cost of Care
Written by MATTHEW S. GOLDBERG
PROJECTING THE COSTS TO CARE FOR VETERANS OF U.S. MILITARY OPERATIONS IN IRAQ AND AFGHANISTAN.
As of December 2006, more than 1 million active-duty military personnel and over 400,000 reservists had deployed to combat operations in the Iraq and Afghanistan theaters. Of those, 690,000 have either separated from the active component or become eligible for VA health care as reservists. In turn, one third of those personnel (numbering 229,000) have sought VA medical care since 2002.
About 3,800 U.S. troops have died while serving in OIF, and over 400 have died in OEF. A total of almost 30,000 troops have been wounded in action during those two operations.
The survival rate among all wounded troops has averaged 90.2 percent during OIF and OEF combined. By comparison, the survival rate during the Vietnam conflict was 86.5 percent. Among seriously wounded troops, the survival rate was lower—76.4 percent—during the Vietnam conflict and has also been lower—80.6 percent—for OIF and OEF combined. Higher survival rates during OIF and OEF reflect the widespread use of body armor, as well as advances in battlefield medical procedures and aeromedical evacuation.
A census conducted by the DoD indicates 749 amputations from OIF and 42 amputations from OEF through January 2007. The amputation rate is 3.3 percent among all wounded troops.
Through December 2006, DoD physicians had diagnosed a total of 1,950 traumatic brain injuries (TBIs), of which over two-thirds were classified as mild. The rate of TBI diagnosis is 8.2 percent among all wounded troops. Some TBIs, however, are difficult to diagnose and may go unrecognized unless screening is performed after a soldier returns to the United States from deployment.
Post-traumatic stress disorder (PTSD) is also difficult to diagnose. Among OIF and OEF veterans who have received VA medical care, about 37 percent have received at least a preliminary diagnosis of mental health problems, and about half of those (17 percent) have received a preliminary diagnosis of PTSD. The overall mental health incidence rate may be lower to the extent that OIF and OEF veterans who have not sought VA medical care do not suffer from those conditions. On the other hand, some veterans with PTSD or other mental health problems may not seek care because they fear being stigmatized.
Of the total 229,000 OIF/OEF patients seen by the VA, 3 percent (fewer than 8,000) have been hospitalized in a VA facility at least once since 2002; the other 97 percent were seen on an outpatient basis only. Not all of those patients visit VA medical facilities in any single year; in 2006, for example, 155,000 OIF/ OEF patients were treated by VA, accounting for 3 percent of the total veteran patient load. VA estimates an average annual cost of $2,610 per OIF/OEF veteran who used VA health care in 2006, versus an overall average of $5,765 per year for all VA patients.
VA’s medical budget is discretionary (that is, lawmakers appropriate funds on an annual basis); it is not possible to project definitively VA’s future medical appropriations because they depend on future acts of the Congress. However, depending on the future force levels deployed to OIF and OEF, if the Congress chooses to fully fund medical care for veterans of those operations, VA medical costs explicitly associated with those operations could total between $7 billion and $9 billion over the 10-year period, 2008 through 2017, CBO projects. The costs of disability compensation and survivors’ benefits could add another roughly $3 billion to $4 billion over the same period.
VA’S HEALTH CARE SYSTEM
The Department of Veterans Affairs, through the Veterans Health Administration, operates a system consisting of 153 medical centers, 882 ambulatory care and community-based outpatient clinics (CBOCs), 207 Vet Centers, 136 nursing homes, 45 residential rehabilitation treatment programs, and 92 comprehensive home-care programs providing medical services to eligible veterans. Those facilities provide inpatient hospital care, outpatient care, laboratory services, pharmaceutical dispensing, rehabilitation for a variety of disabilities and conditions, mental health counseling, and custodial care provided in either VA or contracted nursing homes. In total, VA facilities employ about 200,000 full-time-equivalent employees, including over 13,000 physicians and nearly 55,000 nurses.
VA estimates that in 2006 there were about 24 million living veterans of the U.S. military. In that year, VA provided medical services to over 5 million veterans and more than 400,000 other patients. An additional 2.9 million veterans were enrolled in the VA medical system in 2006 but did not seek care from VA facilities that year.
To better care for the injuries suffered by veterans returning from OIF and OEF, VA, in 2005, established a Polytrauma System of Care, which includes four Polytrauma Rehabilitation Centers and additional secondary sites and support. Those facilities provide rehabilitation and treatment for veterans or returning servicemembers recovering from polytraumas and traumatic brain injuries. VA also provides readjustment services and counseling through its Vet Centers. In addition, in recent years, VA has added about 3,000 new mental health professionals to its staff as part of a mental health initiative.
Under funding provided by continuing resolution in 2007, VA expected to obligate $573 million that year for veterans of OIF and OEF before considering any supplemental funding. VA received additional supplemental appropriations in 2007 for medical administration costs, medical and prosthetics research, medical services for veterans of OIF and OEF, and other related purposes.
FUNDING
The President’s budget proposal for 2008 requests budget authority of $34.6 billion for VA health care services and research (excluding construction costs and net of collections), an increase of 5.9 percent over 2007 levels (the latter excluding supplemental appropriations). The vast majority of the 2008 obligations, $29.7 billion, would be allocated to providing health care services such as ambulatory care, inpatient acute care, and pharmacy services.
The remainder is allocated for long-term care ($4.6 billion), other health care programs such as the Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA) and dental care ($2.1 billion), and the mental health and other initiatives ($0.4 billion). The portion of VA’s 2008 budget request specifically designated for the health care needs of service members returning from OIF and OEF—including their share of VA’s total obligations for dental care, readjustment counseling, and VA’s mental health initiative—is $752 million.
CASUALTY STATISTICS FOR U.S. MILITARY FORCES
The number of fatalities among troops serving in Operation Iraqi Freedom reached 3,000 in January 2007. Those deaths in Iraq were accompanied by 22,834 troops who were wounded in action. Wounded troops can be classified in two ways: whether or not they return to their units for duty within 72 hours; and, among those who do not return to duty, whether or not they require aeromedical evacuation.
Troops wounded in action are distinct from those with nonhostile injuries or disease; the latter are often combined as disease/nonbattle injuries (DNBI). The total number of troops medically evacuated includes those who were wounded as well as others with nonhostile injuries or disease.
Through January 2007, woundedto- fatality counts stood at a ratio of 7.6 to 1. That oft-cited ratio is higher than the ratios recorded during earlier U.S. military conflicts, reflecting the effects of the widespread use of body armor in Iraq as well as advances in battlefield medical procedures and aeromedical evacuation. However, differences in statistical treatment have hindered some comparisons between the wounded-to-fatality ratio for OIF and those for the Vietnam conflict or other previous conflicts.
UTILIZATION OF VA MEDICAL CARE
Of the 320,000 active-duty veterans of OIF and OEF who have separated from military service through April 2007, 112,000 have received health care from VA. In addition, 370,000 members of the Reserve or National Guard have returned from OIF or OEF and become eligible for VA health care, of which 117,000 have received care. Among that total of 229,000 patients, 3 percent (fewer than 8,000) have been hospitalized at least once in a VA facility since 2002; the other 97 percent were seen on an outpatient basis only.
Not all of the 229,000 OIF/OEF patients visit a VA medical facility during any single year. In 2006, for example, VA treated over 5 million veterans, including 155,000 OIF/OEF veterans, who accounted for 3 percent of the total veteran patient load.
VA is treating a certain number of recent veterans for the amputations and severe brain injuries discussed above, as well as for other serious injuries, although those veterans may be treated for many months by DoD (for example, at Walter Reed Army Medical Center) before being released to VA. VA estimates an average annual cost of $2,610 per OIF/OEF veteran who used VA health care in 2006, versus an overall average of $5,765 per year for all VA patients.
PROJECTIONS OF VA’S COSTS
CBO has developed projections of VA’s costs to treat all veterans of OIF and OEF who are eligible for VA medical care and who demand that care. However, some of those veterans would have been eligible for such care and would have used the VA medical system even if they had not deployed to Iraq and Afghanistan (for example, for treatment of normal age- or training-related injuries to the musculoskeletal system).
Those costs that are not specifically attributable to deployments to Iraq or Afghanistan should be subtracted from the gross cost estimates. Conversely, some veterans may develop service-connected conditions during their tours in Iraq and Afghanistan, yet not present for VA medical care until many years after they separate from active duty. CBO is continuing to refine its projection model to account for those possibilities.
Along with medical care, the Department of Veterans Affairs provides compensation and various other benefits, including life insurance and educational benefits, to veterans. Calculations of the cost of the war to VA should include the costs of these other benefits over and above the costs that would have been incurred had the war not been fought. The two programs most likely to be significantly affected by the current operations are disability compensation paid to veterans with service-connected disabilities, and dependency and indemnity compensation benefits paid to survivors of servicemembers.
Disability compensation is a monetary payment made to veterans who have become disabled as a result of a medical condition incurred or aggravated during their active-duty service. The level of a veteran’s disability is rated between 0 and 100 percent, in increments of 10 percent. Compensation is based on the veteran’s disability rating, with special payments for the most severely injured veterans. In 2007, those tax-free payments ranged from $115 per month for veterans with a 10 percent disability to $2,471 per month for those rated 100 percent disabled.
Special payments could range up to $7,070 per month. CBO estimates that VA paid a total of $26.6 billion in disability compensation in 2007, of which $126 million was paid to veterans of OIF and OEF. DIC, or survivors,’ benefits are monthly payments made to survivors of certain deceased veterans, including those who died while on active duty and those who died of service-connected disabilities. In 2007, surviving spouses were awarded a base monthly payment of $1,067, although additional payments could be made depending on the circumstances. CBO estimates that VA paid a total of $4.4 billion in survivors’ benefits in 2007, of which $35 million went to survivors of veterans of OIF and OEF.
CBO has projected VA’s potential costs for medical care, disability compensation, and survivors’ benefits under the assumption that historical casualty rates for operations in Iraq and Afghanistan over the 2003–2006 period will continue into the future and that the necessary funds are appropriated. CBO presents two broad illustrative scenarios for the force levels in-theater over the coming years. Under the first scenario, the number of deployed troops would decline from an average of approximately 210,000 active-duty, Reserve, and National Guard personnel on the ground in fiscal year 2007 to 30,000 in 2010 and would remain at that level over the 2010–2017 period, though not necessarily in Iraq and Afghanistan. In the second scenario, the number of deployed troops would decline more gradually over a six-year period, until 75,000 remained overseas in 2013 and each year thereafter.
Because VA’s costs could also depend on how long DoD sustains the increase in force levels currently in the Iraq theater, CBO estimated the costs for both scenarios under the assumption that the current force level in Iraq would be sustained for periods of, respectively, 12 or 24 months. CBO found that the costs to VA over the 10-year period would not vary substantially with the number of months that deployed forces were maintained at the current level before troop levels began to decline. Consequently, in this testimony, CBO presents solely the estimates for VA’s costs based on the larger troop presence lasting 12 months.
Under the first scenario, in which the number of deployed troops drops to 30,000 by 2010, VA would incur costs of about $9.7 billion over the 2008–2017 period for medical care, disability compensation, and survivors’ benefits. Alternatively, if deployed forces declined more slowly to 75,000 by 2013, as in the second scenario, VA’s costs would reach almost $13 billion for those purposes over the next 10 years, CBO estimates.
COSTS FOR MEDICAL CARE
Under the assumptions in the first scenario, CBO estimates, VA’s costs would reach almost $7 billion from 2008 through 2017 for medical care for veterans with service-connected conditions incurred in Iraq and Afghanistan. Under the second scenario, VA’s costs would be over $9 billion.
For 2008 through 2017, CBO projects that VA’s costs to treat veterans of OIF and OEF will be related to the number of servicemembers wounded in action, with most veterans presenting for care at VA medical facilities shortly after they separate from active duty. Because the majority of veterans return to work and obtain employer-sponsored insurance that they may prefer to use, CBO anticipates that those veterans will move out of the VA medical system over time, although some will continue to seek part or all of their care from VA. CBO projects that VA’s per capita cost of care will grow at the same rate as national health expenditures, with nominal growth rates at about 7 percent per year from 2008 through 2017. ♦