Does the VA offer good health care value?

We sought to determine whether the VA provides health care at a low cost.

For fiscal years 2001-2007, we used data from the National Center for Health Statistics to calculate the VA's average per capita health care costs. We used data from the Medical Expenditure Panel Survey to calculate the average market value of health care received by patients who used the VA for health care. Finally, we examined several measures of health care quality provided by the VA and the private sector.

Overall, VA health care costs 33 percent more than it would if purchased in the private sector (95 percent Confidence interval: 19 percent - 52 percent more); VA inpatient care costs were 56 percent higher (95 percent Confidence interval: 27 percent - 105 percent higher). The VA maintains a quality advantage in outpatient care, but its inpatient advantage has narrowed over recent years, and there is evidence that VA surgical care has worse outcomes than private sector surgical care.

The VA's health care costs are considerably higher than could be purchased in the private sector. The VA should consider outsourcing inpatient services to high performance private sector hospitals.