Private Insurance is Seeping Into Every Public He...

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It is widely known that private insurance companies play a major role in Affordable Care Act health plans and public health programs like Medicare and Medicaid. Far less understood is that private insurance is now steadily creeping into the Veterans Health Administration (VHA) through the Veterans Community Care Program (VCCP). Created under the 2018 VA MISSION Act, the VCCP relies on private contractors to build provider networks and administer payments for veterans receiving care outside the VA. The proposed expansion of this program — Community Care Network (CCN) Next Generation – would scale this model to as much as $1 trillion over the next decade without addressing serious, well-documented failures in the current system.

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What is happening at the VA is not a one-off mistake, it is part of a deliberate and deeply entrenched strategy. Private insurance companies have learned how to turn public health programs into profit centers. They insert themselves as middlemen, collect guaranteed taxpayer payments and then increase profits by restricting care, manipulating payment systems and minimizing their own risk. Over time, public programs are hollowed out while private insurers capture more money and more control. This is the playbook that transformed half of Medicare into Medicare Advantage, shifted Medicaid into insurer-run managed care programs, and allowed insurers to siphon billions from ACA subsidies. The VHA, long one of the most effective public health systems in the country, is now being targeted by the same model.

I was invited to testify before the House Veterans’ Affairs Committee on the risks posed by private insurance involvement in veterans’ care. In my testimony, I warned that VCCP and its proposed expansion would dramatically accelerate the privatization of veterans’ health care, despite strong evidence that this approach leads to higher costs, weaker oversight and no improvement, and often deterioration, in patient outcomes. Entrusting veterans’ care to corporations whose fiduciary duty is to shareholders, not patients, is misguided at best and dangerous at worst.

Decades of research show that VA care often outperforms private-sector care, including lower mortality in emergency, ICU, and surgical settings. The VA also delivers care more efficiently with shorter wait times for many high-volume services, less use of low-value and unnecessarily expensive care, and far lower administrative overhead, mirroring the efficiency of traditional Medicare compared with private insurance.

Beyond inferior performance on quality and efficiency, CCN Next Generation raises serious conflict-of-interest concerns. One current VCCP contractor, OptumServe, administers the program in roughly half the country. Its parent company, UnitedHealth Group, owns more than 2,000 clinical organizations nationwide. OptumServe is responsible for building the provider networks veterans use, creating the potential to favor affiliated providers over unaffiliated ones, a practice that is well documented in the commercial market. Yet the data needed to assess whether this is happening in VCCP is not publicly available.

At the hearing, when asked what safeguards exist to prevent this type of conflict, the VA Assistant Secretary for Management Richard Topping could not provide a clear answer. He also stated that contractors cannot steer patients because they are not involved in appointment scheduling. However, the CCN Next Generation request for proposals explicitly requires contractors to collaborate with the VA on appointment scheduling, booking and management, creating an additional avenue for steering veterans toward contractor-owned providers.

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It is also notable that Topping, who is leading the CCN Next Generation initiative, previously served as Chief Legal Officer at CareSource, a private insurer that operates Medicare Advantage, ACA, and Medicaid plans, an illustration of how deeply intertwined private insurance has become with the administration of public programs.

Aside from conflicts of interest, I also warned during my testimony that CCN Next Generation would import some of the most harmful features of Medicare Advantage (MA) into veterans’ care, including capitated “value-based” payment models and risk adjustment systems that have been repeatedly manipulated by insurers to generate massive overpayments. There is broad bipartisan agreement that Medicare Advantage’s risk-adjusted payment system results in tens of billions of dollars in excess payments each year while beneficiaries face delays and denials of care. Expanding these models into the VCCP without first fixing these flaws is reckless and puts both veterans and taxpayers at risk.

Members of Congress on the House and Senate Committees on Veterans Affairs echoed these concerns. Rep. Mark Takano of California, the senior Democrat on the committee, raised alarms about privatization and conflicts of interest, while Reps. Maxine Dexter (D-Ore.), a physician, and Julia Brownley (D-Calif.) expressed skepticism about accelerating private control of veterans’ care. Similar concerns were voiced in a Senate Veterans’ Affairs Committee hearing, where senators questioned the VA’s oversight capacity for such a massive expansion. Sen. Tammy Duckworth (D-Ill.), in particular, pressed VA leadership on plans to fully staff oversight of VCCP. Her questions went without concrete answers.

I concluded my testimony by urging a different path: Reinvest in VA facilities, staffing and direct care and use traditional Medicare’s trusted infrastructure to administer the limited amount of specialized community care veterans truly need. As experience across public health programs has shown, when health care is administered by private insurers, the incentive to maximize profit inevitably conflicts with the delivery of high-quality care. In those conflicts, profit consistently wins.

Rachel Madley, PhD, is the Executive Director of the Center for Health & Democracy. She previously worked for Congresswoman Pramila Jayapal. She received her PhD from Columbia University and has written for publications including The New York Times.

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Private Insurance Is Seeping Into Every Public Health Program: Warning Signs From the Veterans Health Administration

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