Privatizing the VA: The Unseen Costs to Veterans and Taxpayers Alike

In 2018, Congress passed the VA MISSION Act, which was celebrated as a pathway to expanding veterans' access to health care, theoretically giving them a choice to see private providers when the VA couldn’t meet their needs. However, the reality of this privatization effort has been less about expanding choices and more about lining corporate pockets at the expense of veterans, their families, and American taxpayers. If you look closely, you’ll see how some of the very same companies behind the Medicare Advantage scheme — like Optum, a subsidiary of UnitedHealth Group — are cashing in on both fronts.

A Privatized Health Care Loop

The MISSION Act opened the doors to the Veterans Community Care Program (VCCP), enabling veterans to receive care from private providers if they couldn't access VA services within certain time or distance constraints. In principle, this might sound like a good idea, but, in practice, the implementation has drained funds from VA facilities, creating a vicious cycle. The more funding diverted from the VA, the harder it is for veterans to get the care they need within the VA system. This drives even more veterans into private care, feeding the expansion of a system that has proven to be more costly, fragmented, and, as research now shows, riddled with fraud.

Consider the role of UnitedHealth Group’s Optum in this arrangement. Optum is one of the third-party administrators for the VCCP tasked with managing this vast network of private providers, a role that earns UnitedHealth billions of taxpayer dollars. Yet that’s not the only way this huge corporation profits from veterans' health care. For veterans enrolled in private Medicare Advantage (MA) plans run by UnitedHealth, Optum effectively double dips — collecting full payments from Medicare for the expected medical costs of that enrollee for the entire year while simultaneously charging the VA for coordinating private care for the same patient. According to a recent study from Harvard, as much as $1.3 billion in excess funding went to Medicare Advantage plans for veterans who, by and large, relied on VA care instead. Opening the door for Big Insurance to administer VA health coverage has created three interconnected issues: 

1. It allows insurance companies to get payments from the government for care they exaggerated or did not provided

2. It allows insurers to use the same playbook they use in MA

3. It drains funding from the publicly administered VA health system

The Medicare Advantage and VA Connection

To understand why this matters, consider how Medicare Advantage has become a profit engine for private insurers, often without delivering adequate care to its members. These plans receive large per-patient payments from the government, intended to cover care for the year. However, the Harvard study found that nearly one in five veterans enrolled in Medicare Advantage plans received no Medicare-covered services despite these plans collecting full payments. When companies can make billions for services they aren’t providing, there’s little incentive to improve care. Big Insurance has caught on to this trend and has created plans that insurers specifically market to veterans to increase the number of veterans in their MA plans. Big Insurance perversely markets these plans as a benefit you can get because you served your country, but the plans are really just a way for insurers to make more money.

Optum’s role as a third-party administrator for the Veterans Community Care Program takes the same troubling trend in a new direction. Optum assembles and oversees private providers who often bill high rates for simple services or engage in“upcoding” to inflate charges. These are the same tactics we and others have been sounding the alarm about in Medicare Advantage for years.

In 2022, Suzanne Gordon, senior policy analyst at the Veterans Healthcare Policy Institute and co-author of  ‘Our Veterans: Winners, Losers, Friends, and Enemies on the New Terrain of Veterans Affairs,’ wrote in The American Prospect that between 2017 and 2020, spending on non-VA evaluation and management services under the Veterans Community Care Program surged by 500%, with rampant upcoding uncovered by the VA’s Office of the Inspector General (OIG).

Profits over Vets

The problem with turning veterans’ health care into a corporate profit center is that private corporations, like UnitedHealth, are accountable first to their shareholders, not to the veterans they serve. Studies have shown that veterans enrolled in VA health care generally fare better in terms of outcomes and patient satisfaction than those seeking care in the private sector. Yet, by shifting more veterans into private care networks, we are reducing funding for the VA’s dedicated facilities and staff, eroding the very system that was built to serve veterans and leaving them vulnerable to profiteering by companies that view them as revenue sources.

Moreover, private providers working within the Veterans Community Care Program have few quality controls or accountability measures, as highlighted by the OIG. Many of these providers, shielded by a fragmented system, bill the VA without providing the expected standard of care, and no one is there to stop them. The OIG’s recommendation for more training in billing accuracy falls woefully short of addressing the systemic exploitation at play.

Looking Ahead: Protecting Veterans and Taxpayers

Privatization in veterans’ health care reflects a larger trend in the American health care system — one in which privatized entities reap maximum profits from government funds while taxpayers foot the bill and patients face gaps in care. It’s a phenomenon we see in Medicare Advantage, with private companies skimming billions by exploiting loopholes. We are now witnessing the same strategy in veterans’ health care.

Veterans deserve a health care system that is centered on them, not corporate profits. It’s time for Congress to take a hard look at the MISSION Act’s consequences, with an eye toward reining in abuses and restoring the VA’s core funding and capabilities. Veterans did not sign up to become another line item on UnitedHealth’s balance sheet. They deserve better than a system in which the government hands over billions without meaningful oversight or accountability.

As taxpayers and citizens, we must insist that our government protects veterans and honors their service by safeguarding the very system meant to care for them. Congress should take steps to stop these harms to the VA, starting with ensuring that Big Insurance companies do not receive full MA annual payments for their veteran enrollees who get their care at the VA.  It’s time to end the privatization experiment in VA health care and return to the vision of a well-funded, publicly accountable system that values health over profits.