Last June, during a hearing before the U.S. Senate Veterans Affairs Committee, Sen. Patty Murray, D-Wash., declared that there were no serious legislative proposals on the table to enrich or ensure the quality of care at the Department of Veterans Affairs. She noted that the only bills in play would further weaken the agency by steering more dollars, and veterans, into the private healthcare market.

“What’s missing from the conversation,” Murray said to Veterans Affairs Secretary David Shulkin, “is how you plan to actually build and strengthen the VA system for the long term. You’ve not put forward a comprehensive plan to do some of the things the VA really needs to do, (to) get more frontline providers, increase appointments, expand services, build and upgrade facilities, and bring more veterans into the system.”

In response, Shulkin repeated his belief that the VA should not be privatized, before awkwardly defending the agency’s mission under President Trump — which is largely built on contracting out veterans care to private interests.

“You make a stronger system by giving your patients — your customers — more choice,” Shulkin responded. “That’s how I believe every company has improved their product.”

Murray was unsatisfied. “If you only give your customers the option to get out, you are going to rob the resources from the system,” she shot back.

While VA policymaking has historically been marked by bipartisan cooperation, the now-embattled Shulkin took office amid a highly politicized fight over the future of veterans’ healthcare. This conflict — which may outlast Shulkin at VA — is now focused on the future of the Choice Act, a deeply flawed 2014 law that accelerated privatization and increased access to care but brought few, if any, measurable quality improvements for veterans’ health care.

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The act was hurriedly passed and sloppily written. It had to be amended by Congress four times within a year of its passage.

Many lawmakers and an overwhelming majority of veterans appreciate the work of the VA and simply want to improve its services. On most measures, the Veterans Health Administration performs the same or significantly better than the private market. Recent surveys strongly reinforce veterans’ preference for VA care over having to navigate the complicated morass of the private healthcare system with its short appointments, extensive and complicated co-pays, and lack of experience and research into unique veteran issues including PTSD, chemical exposures and other battle-related injuries and illnesses.

Despite this, powerful actors in federal government and the private sector have helped delegitimize the agency by highlighting its bureaucratic bungles and bad behavior, with goals of steering billions of federal dollars for veteran care into the private market.

The leading pro-private sector voice, a conservative group called Concerned Veterans For America (CVA), has conducted polls showing vets also favor reforms and care choice, but even CVA’s director, Dan Caldwell, recognizes full-on privatization is a third rail in veterans politics: “We think you shouldn’t dismantle the VA, you shouldn’t privatize the VA, but it should be integrated better with the private sector and Choice should be part of that,” he told USA Today last August.

Still, Caldwell and his group are pushing a Republican bill they helped craft, The Veterans Empowerment Act, that calls for the “termination of functions of the Veterans Health Administration directly related to the furnishing of hospital care, medical services, and other health care.” (“It’s not terminating the VA,” Caldwell said in an interview with Task & Purpose. “The legal language is such that it would turn it into a non-profit corporation, but it would still have a government charter. It wouldn’t be run by Kaiser or another big insurance company, it just would restructure the VA so it can do things a private healthcare system can without being constrained by red tape.”)

In an attempt to appease both sides of the debate, Shulkin has tried to thread a needle when asked about the future of the VA. He is quick to defend the quality of care at the VA, and he has scaled back or altogether abandoned a number of conservative proposals decried by veterans’ organizations, including the slashing of benefits for the country’s most disabled veterans.

But Shulkin simultaneously pledges a firm allegiance to the power of the private sector, and he has endorsed a slate of policies that would further accelerate privatization. “I don’t think this new narrative that Shulkin is now a moderate or standing in the way of privatization is accurate,” said Caldwell. “In the past he’s wanted to go to a full Choice model like the president proposed, and we thought he was an ally in that.”

A potential gravy train for private providers

Shulkin’s career has largely been spent as a healthcare executive; his financial disclosure forms reveal millions of dollars in private healthcare investments and stock options. His ethics agreement discloses potential conflicts of interest with five health-related companies in which he has a financial stake, including Imacor Inc., which has contracted with VA in the past. Still, at the time of his swearing in, the VA determined it was not necessary for Shulkin to divest his interests in these companies.

Shulkin has rubbed shoulders with private healthcare executives in his role as secretary, including at an August summit in the Hamptons hosted by Steven Cohen, a major Trump donor with a shadowy business past, whose Cohen Veterans Network has begun offering private mental healthcare services to veterans.

Department of Veterans Affairs
“I don’t think this new narrative that Shulkin is now a moderate or standing in the way of privatization is accurate,” one activist said of the VA secretary.

Anthony Hassan, President of the Cohen Veterans Network, brushed off questions about Cohen’s influence campaign to forge a partnerships with the VA. Hassan said the network would soon participate in the Choice program, and that employees have been learning VA’s best practices to ensure the Cohen care is exceptional.

“We have no ambition to take over all mental health care from the VA, we just want to fill a gap,” Hassan said. “This isn’t about money, it’s about giving veterans and their families mental health care when they need it. That’s what makes us different.”

Cohen is just one of the many private interests lobbying the VA and Congress in hopes of peeling off patients from the veterans healthcare system. Lobbyists for national healthcare companies — including CVS Centene Corporation, Quality Health Strategies, Ascension Health, and Christus Health Systems — have been making the rounds in Congress to influence veterans legislation.

In recent months, Shulkin’s VA has entered into a number of puzzling public-private partnerships, from a privately funded VA hospital in Nebraska being built on the cheap to a pilot project in Phoenix that allows veterans to seek care at CVS “Minute Clinics.” Shulkin is mulling other measures that portend further privatization, including merging the VA’s health system with the Pentagon’s TRICARE system, which facilitates government payments to private providers.

Perhaps most consequentially, Shulkin has endorsed making the VA Choice Act permanent.

VA Choice: a temporary measure that became a permanent headache

Passed in 2014 as a stopgap to provide continuous care to veterans as the agency worked through its massive backlogs and a wait-time scandal at a VA hospital in Phoenix — during which allegations emerged that dozens of veterans died waiting for care — the VA Choice Act allowed veterans to seek federally funded treatment outside the VA if they faced wait times longer than 30 days or lived more than 40 miles from a VA facility. This statute did little to improve veteran wait times at critical facilities, but it greatly expanded the number of veterans seeking care in the private market.

The act was hurriedly passed and sloppily written. It had to be amended by Congress four times within a year of its passage, according to a VA official involved in Choice administration. Its chief purpose was to reduce wait times for veterans, but the VA inspector general revealed in 2017 that veterans who sought private care through the law did not receive an appointment within the promised time frame. Veterans waited an average of 45 days from the time they sought a Choice appointment to the day they recieved care.

The law hoisted new bureaucratic tasks on the already beleaguered VA, including the processing of payments to private providers. Because the VA was new to its role of private insurance company, veterans were often billed directly for some or all of their care. In some cases, those bills hurt veterans’ credit reports and collection agencies came knocking.

The two contractors hired by the VA to coordinate private care were comically inept, as demonstrated by the case of an Idaho veteran with a herniated disk who was given an appointment with a primary care doctor in New York. These two private companies are now under investigation for over-billing the federal government by at least $89 million.

The Choice Act has also been incredibly expensive. The 2014 law directed $10 billion towards the implementation of the law, much of which was spent on administering complex new administrative tasks. President Trump extended the law last April so that the law’s remaining $950 million appropriation could be spent. Then, in August, Trump signed a measure providing an additional $2.1 billion in emergency funding to keep Choice afloat.

Congressional debate over the next iteration of Choice has been greatly complicated by the program’s unpopularity among veterans and general skepticism from healthcare wonks.

“There are a lot of unknowns about VA Choice that mean we don’t know whether it is an effective program,” said Carrie Farmer, who has extensively studied VA care for the Rand Corporation. “Currently, VA is not tracking the timeliness or quality of Choice care, so we know very little about whether the private sector is meeting the same standards that the VA sets for itself.”

According to a Rand study released this month, a new version of the Choice Act could further complicate healthcare delivery for veterans and divert precious VA resources into solving administrative problems. It will deputize more private doctors – who are generally unaware of military culture and common health problems – to treat a unique patient population. This could result in degraded doctor-patient relationships and fewer crucial health screenings. There’s already clear documentation that the private sector overprescribes opioids and provides substandard mental health care to veterans. (Congressional Choice proposals would require any private hospital that serves veterans to adopt the VA’s groundbreaking opioid prescription regulations.)

Champions of Choice say that while more money is being steered into the private market, internal VA care budgets continue to rise. But as these appropriations have increased, so, too, has the number of veterans seeking VA care. For years, veterans service organizations have made the case that budget increases are appreciated, but inadequate. A 2018 VA budget recommendation drafted by the Veterans of Foreign Wars, Disabled American Veterans, and Paralyzed Veterans of America called for an 8% increase in VA medical spending and a nearly 10% hike in benefits processing funds. While Trump pushed for a significant increase in the VA budget for 2018, much of the money is expected to be directed to private care through Choice.

Farmer, of Rand Corp., warned that as more resources are directed to the private sector, the VA’s exceptional care would likely suffer.

There is a certain volume of care that is necessary to keep VA facilities open and provide certain services,” she said. “If more veterans are getting care in the community, leaving a smaller population getting care from VA facilities, the quality and safety of that care would be jeopardized.”

An unclear path forward

While the legislative process over Choice has been dysfunctional and, at times, heated, lawmakers are poised to soon pass a new law that will push even more veterans into a private system with worse healthcare outcomes and less accountability than what currently exists at VA.

All of the serious Choice proposals in Congress today would scrap the 30-day, 40-mile requirements, unleashing a whole new population of potential patients for the private sector. The two most viable Choice proposals were drafted in the Senate and contain many similar provisions, but diverge in significant ways.

The more conservative bill is The Veterans Community Care and Access Act, which was penned by Republican Sens. John McCain and Jerry Moran. The legislation is supported by a handful of veterans service organizations, including the American Legion and CVA. The law would deputize veterans as the primary decision-makers over where they receive care, which could potentially result in a rush of veterans to the private market without the VA weighing in. Those anxious over privatization also point to Section 402 of the bill, which would establish a “Center for Innovation and Care Payment” that gives broad authority to the VA Secretary to test new care and payment models in the private sector.

A more moderate bill, The Caring For Our Veterans Act, was drafted by a bipartisan group on the Senate Veterans Affairs Committee. This bill has support from 25 veterans service organizations, and clearly keeps the VA in charge of coordinating care. It also includes money to enhance VA care and would expand eligibility for caregiver benefits.

“We don’t want VA to gradually erode and disappear,” said Kayda Keleher, a lobbyist for the Veterans of Foreign Wars, which supports the bipartisan bill. “But that will happen if we funnel millions of dollars into the private sector. If money is going into the private market, we want a dollar-for-dollar match into VA. We haven’t been able to get an exact match, but we’ve come close. That’s why we support the Senate committee bill.”

While the bills lay out starkly different visions for the VA, the department has not identified its preferred legislation. In a move that has confounded lawmakers, the VA has instead vaguely endorsed a number of bills, including a stalled proposal in the House.

Shulkin initially agreed to speak with Task & Purpose about Choice, but backed out in mid-March, following press reports that Trump was mulling his dismissal. (Trump’s rumored replacements include Energy Secretary Rick Perry or former CVA president Pete Hegseth, both of whom are to the right of Shulkin on privatization.)

As oblique threats to Shulkin’s job emerge, veterans advocates and a number of key congressional leaders have voiced support for him. While Shulkin’s approach to private care frustrates many, there’s consensus that a replacement secretary would be significantly more aggressive in pushing for privatization.

From his perch on the House Veterans Affairs Committee, Rep. Mark Takano, D-Calif., has been critical of privatization efforts at the VA, and of Shulkin. But he sees the secretary as facing fiercely partisan political pressure from both sides.

“I don’t see Dr. Shulkin as an ideologue, I see him between a rock and a hard place,” Takano told Task & Purpose. “He’s under tremendous pressure from those on the right to privatize and then he has to deal with Congress and veterans service organizations who, for the most part, are not into privatization. As a result, he’s been very squishy on the issue.”

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