Abstract
M. Evangeline "Evie" Lopoo on the threat of austerity at the VA.
The second Trump Administration’s efforts to privatize the Department of Veterans Affairs could deliver a fatal blow to veterans benefits, one of the few nationalized social provisions in the United States. While privatization efforts claim to reduce government spending and inefficiency, as well as improve access to healthcare, in reality they do none of these things. Instead, the attack on veterans’ benefits perpetuates a recent political trend of systemic retrenchment, redirecting social spending to corporate interests under the guise of fiscal austerity.
Guided by Concerned Veterans of America (CVA), a veterans organization described by the Washington Post as “one of the most muscular arms of the conservative Koch network,” and the Heritage Foundation’s Project 2025 (another Koch-backed initiative), Trump political appointees advise privatizing core functions of the VA. Project 2025 outlines this agenda, contending that veterans struggle to receive efficient healthcare at VA-run facilities due to long wait times and geographical distance. To address this, the report urges the strengthening of Community Care for Veterans, a system that outsources veteran healthcare to private providers through referrals, and disinvestment from Veterans Health Administration medical campuses. The Veterans’ Benefits Administration (VBA), charged with administering monetary benefits like disability compensation, home loans, and the G.I. Bill, should both “build a more blended workforce with more contractors to process claims” and “establish a knowledge exchange program with top-tier private sector companies that do similar work.” The attack on veterans benefits perpetuates a recent trend of systemic retrenchment, redirecting social spending to corporate interests under the guise of fiscal austerity.
This agenda ignores that preexisting VA privatization efforts have massively failed to address challenges related to healthcare efficiency and may actually exacerbate them. While referrals to private providers may improve care access for some veterans, including those in rural settings, the system introduced high variability in patient experience. Private providers do not have to demonstrate faster delivery time or equivalent care quality to the VA healthcare system for referral eligibility. As a result, veterans utilizing Community Care options reported challenges with care coordination between the VA and private providers. Private providers failed to share test results and patient records, and they introduced unexpected care costs and billing confusion.
Further, veterans do not receive better care when forced to see private providers. VA system healthcare consistently performs equal to or better than its private healthcare counterpart and maintains high trust ratings. Not one research study concludes that patient experience is worse in VA settings in comparison to VA-paid Community Care, and VA care is more equitable: racial disparities in quality of care have been found to be much lower in VA hospitals than in private systems.
Conservative policymakers often suggest that privatization is a cheaper alternative to nationalized social provision, but there is also no clear evidence that Community Care is less expensive than VA healthcare facilities. In fact, it may be more expensive. A 2023 journal article published in RAND Health Quarterly reports that “although comparisons between the cost of VHA-delivered and community care are limited, there are some indications that community care may be more expensive than VHA-delivered care.” Other research confirms there is no compelling evidence that non-VA care is more cost-efficient. One study showed that for veterans who qualified for care at both VA facilities and private hospitals funded by Medicare, VA hospital utilization reduced 28-day mortality by almost half and spending by 21%.
Noticeably absent from these conservative efforts is any discussion of the VA’s capacity to address access issues from within. Indeed, many of the modernization challenges that VA infrastructure faces stem from preexisting privatization efforts imposed by policymakers. Privatization supporters call VA-run facilities “underutilized and inadequately staffed,” yet contribute to this condition. Increasingly, government spending earmarked for the VA is reallocated away from maintaining VA hospitals and healthcare campuses to reimbursing private referrals. Staff positions for physicians, nurses, and technicians frequently go unfilled given scarce federal resources for recruiting and retaining staff, further limiting the system’s capacity to see patients in a timely manner. Project 2025 urges increased use of private referrals if a VA hospital uses them less than counterparts in similar markets, creating for VA facilities a perverse race to obsolescence.
The rapidly privatizing VA system has neither improved patient experience nor reduced government expenditures. Why then, is acceleration being proposed? Social scientists locate this effort within a larger policy project of systemic retrenchment beginning at the end of the 20th century. Policymakers invoking retrenchment logics ostensibly aim to cut government social expenditures in the name of fiscal responsibility. However, these efforts rarely lower overall costs, but instead change the rules of engagement and beneficiaries of funding. Government funds are redirected to intermediaries, often private contractors, with little oversight to guarantee responsible conduct or consistent quality of provisions. In the case of the veterans benefits, outsourcing care to private providers shifts funding away from state administration and toward private healthcare providers, with little assurance that the care is competent or cost-efficient.
iStockPhoto // Julio Tamayo
To understand what could happen to veterans’ benefits should systemic retrenchment continue, look no further than the Temporary Aid to Needy Families (TANF) provision, another eligibility-based social program. The welfare predecessor to TANF, Aid to Families with Dependent Children (AFDC) was state-administered but subject to federal regulation. At the end of the 20th century, policymakers became increasingly outraged by rising AFDC enrollment and benefit levels, the result of massive working-class unemployment and recipient advocacy efforts. They replaced the program with TANF, which awarded federal block grants to states with minimal oversight. States were allowed far more discretion in fund utilization under TANF than under AFDC, and many chose to outsource provision. Private contractors in some states, many of which conspicuously subsidized local employers’ recruitment of low-wage workers, were awarded enormous contracts with few strings attached. Corporate malfeasance ensued. As a consequence, in the last 20 years TANF recipients have received drastically lower real benefit levels, as well as shorter periods of eligibility, while total TANF spending has remained relatively stable. In other words, money meant to be distributed to the neediest was instead absorbed by administrative outsourcing.
Conservative media outlets have attempted to frame veterans benefits, especially rising disability compensation, as a matter of “absurd generosity” (reminiscent of the controversy that surrounded AFDC at the time of its abolition). Of course, this obscures the larger picture. Disability compensation could certainly be recalibrated, but spending cuts are not the endgame for the Trump Administration. Their agenda is primarily concerned with system transformation, to encourage state funding of corporate expansion into social provision. Project 2025’s recommendation to outsource most VBA functions to external financial institutions says as much.
The VA is the United States’ sole administrator of socialized medicine and, with the Social Security Administration, only one of two nationalized social policy providers. It has withstood 40 years of bipartisan policy regime change, during which most eligibility-based U.S. social programs, like TANF, have become threadbare and subject to state discretion. Defunding state administration efforts and privatizing VA functions now not only risks the health and livelihoods of veterans, but also diminishes political capacity to course-correct away from pro-corporatist “austerity” measures. For these reasons, the attack on veterans benefits deserves loud and lasting condemnation.