Veterans Health Administration benefit value has little effect on reliance

US military veterans have multiple options for health insurance coverage, including the Veterans Health Administration (VHA) and Medicare programs, which can lead to strategic selection of coverage and potentially inefficient budgetary allocations. Because coverage choices are likely to be a function of coverage availability and benefit value, understanding the relationship between benefit value and reliance on coverage is critical.

Analysis of cross-sectional, nationally representative survey data.

This analysis relied on a novel measure of benefit value for the VHA and Medicare Advantage (MA) programs and nationally representative survey data of veterans and their health care use for 2016 through 2019. Linear regressions controlling for beneficiary and market characteristics with state and year fixed effects were used to first estimate the effect of VHA benefit value relative to MA benefit value on MA enrollment, and then on veteran reliance on VHA-paid care conditional on MA enrollment.

We found that a $1 increase in relative VHA benefit value leads to at most a 0.2% (SE = 0.04) reduction in the probability of MA enrollment and a 0.3-percentage point (SE = 0.1) increase in reliance on VHA-paid care. Results were consistent across subgroups of enrollees, with slightly larger effects for enrollees with less generous benefits.

For most veterans, benefit value has a small, often nonsignificant, effect on reliance. These results imply that changes in VHA benefit value are unlikely to have major effects on veteran reliance on the VHA.