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Even More Duplicative Government Spending

Many politicians lament wasteful government spending. The authors of a recent study point out billions of dollars paid to private health insurance companies for patients who received care within the public Veterans’ Affairs system.

Guest post by Dr. Andrew Gonzalez

With , issues of cost containment have again come to the forefront of the national dialog on health care.  A recent retrospective analysis explored patient-level data on patients who were simultaneously enrolled in the Veterans’ Affairs (VA) health system and in the Medicare Advantage (MA) program, a privately-run offshoot of the public program for the elderly.  Because section 1862 of the Social Security Act prohibits the VA from collecting any reimbursements from Medicare, the federal government pays twice for certain services (first to private health insurers administering MA plans, secondly to the VA for supplying the actual service).

The data were created via a two step process.  First, researchers merged the 2004 through 2009 Medicare denominator files with VA enrollment records for corresponding years.  This determined the “national population of veterans with at least 1 month of simultaneous enrollment” or roughly 1.2 million individuals.  Secondly, researchers linked the Medicare Healthcare Effectiveness Data and Information Set (HEDIS) with the VA’s Medical Care Cost Recover file (which includes cost data on claims submitted and recovered from third-party insurers on behalf of care provided by the VA).  This dataset yielded a population of 1.1 million persons upon which to perform analyses regarding health care utilization.

Among these dual enrollees, 50 percent utilized both VA and MA acute inpatient and outpatient services (dual users).  The researchers found an increasing pattern of spending for dual users of care. By 2009, the total cost of VA care for dual users was $3.2 billion; per capita, this amounted to $5,696 per dual user.  The total estimated cost of VA care for MA enrollees from 2004-2009 was $13 billion.

Overall, the VA submitted collection requests totaling over $52 million to private insurers in 2009. However, the VA only successfully recouped 18 percent of that total.

There were some interesting demographic findings within the study populations.  First, exclusive users of the Veterans’ Affairs health system were more likely to be younger, Black, and from the South.  Secondly, of the 10 Medicare Advantage contracts with the highest proportion of dual enrollees, 5 were based in Florida.  Additionally, the single plan with the highest proportion (15.6 percent) of dual enrollees, Optimum Healthcare, was also based in Florida.


One of the major benefits of using the Veterans’ Affairs (VA) system or an (ACO) under the (MA) program is that a single entity provides coordinated care for its patient population.  However, under the current model, “the federal government spent a substantial [$13 billion over 6 years] and increasing amount of funds in 2 separate managed care programs for care of the same individual.”

In 2009 alone, the VA spent $3.2 billion to provide care for MA enrolled veterans.  By way of comparison, according to, all Medicare anti-fraud efforts for the year of 2010 yielded only $4B in lost revenue.

The cost of the VA’s care to dual enrollees is neither reimbursed by Medicare nor deducted from the funds given to the private insurance companies who administer MA plans.  Therefore, private companies are enriched at the expense of the VA and ultimately the taxpayer.

This article highlighted the in the age of organized health systems.  Regardless of the exact mechanism by which industry, Medicare, and voters ultimately resolve this redundancy, we can all agree that something must be done.  The only remaining questions are: (1) How much will it cost? (2) How will it influence the quality of care for those who suffered in the service of our country? (3) Why is the state of Florida uniquely prone to this overspending?

Trivedi, AN et al.  “Duplicate Federal Payments for Dual Enrollees in Medicare Advantage Plans and the Veterans Affairs Health Care System.”  JAMA. 2012; 308(1): 67-72.


Andrew A. Gonzalez, MD, JD, MPH

Andrew A. Gonzalez , MD, JD, MPH
About Andrew A. Gonzalez , MD, JD, MPH

Andrew A. Gonzalez, MD, JD, MPH is a general surgery resident at the University of Illinois Hospital and Health Sciences System in Chicago and a lecturer in health policy at the University of Illinois at Chicago (UIC) College of Medicine. Contact: Facebook | Twitter | More Posts

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