Primary Care Spending Very Low for Veterans Health Administration

Despite the better health outcomes and lower costs that often result from consistent primary care, only 9 percent of total Veterans Health Administration (VHA) spending went toward primary care, and those numbers decreased further by 2018, according to a research letter published in JAMA Network Open.

Researchers used VHA administrative files along with the Health Economics Resource Center Average Cost files to reach conclusions about VHA primary care spending between 2014 and 2018. The researchers split up total VHA spending into six categories: primary care, specialty mental health, inpatient care, medical and surgical outpatient care, pharmacy, and diagnostic or other spending.

Primary care spending accounted for 9 percent of the VHA’s $50.9 billion total spending in 2014, according to the research letter’s estimates. Over 35 percent of 2014 spending went to inpatient care, 21 percent to medical and surgical outpatient care, 13 percent to pharmacy, and 13 percent to diagnostic and other forms of care.

Total spending increased to $58.5 billion by 2018, but primary care accounted for only 8 percent of total spending.

In addition, primary care spending fluctuated depending on certain demographic characteristics. In 2014, primary care spending accounted for 6 percent of spending among patients between the ages of 55 and 64, and 10.5 percent for patients younger than 40.

Spending for primary care was slightly higher among female patients compared to male patients. The lowest primary care spending was among Black patients, at 6.3 percent, and the highest was among Asian patients, at 11.3 percent. Primary care spending proportionally decreased among all demographic groups between 2014 and 2018.

“The proportion of primary care spending in the VHA was low in both 2014 and 2018. In addition, we found substantial variation in primary care spending by veterans’ demographic characteristics,” the research letter stated.

“Although direct comparison to other systems differs because of methods, our estimates suggest that primary care spending by the VHA may be higher than that by other US payers but lower than that by health systems outside the US.”

The estimated VHA spending was also below what most states have set as targets for primary care spending, the study explained. However, the research did not account for healthcare services that veterans may receive outside of the VHA. While specific non-VHA primary care spending for veterans is unknown, veteran care beyond the VHA added up to approximately $8.2 billion in 2014 to $14.9 billion in 2018, the letter explained.

US primary care investments have always been on the lower side compared to other nations.  

“Primary care makes up just under 6 percent of total health care spending for non-elderly adults with employer-sponsored insurance ($430 per enrollee), and a similar share of Medicare spending for people 65 and older. This amounts to only about half the OECD country average of 12 percent,” The Commonwealth Fund data suggests.

Primary care spending also varies drastically state-by-state. More than 11.2 percent of Alaska’s employer health spending is funneled into primary care, while only 3.6 percent of West Virginia’s employer health spending goes toward primary care, The Commonwealth Fund found.

Some of the lowest performing states in terms of primary care spending include California, Nevada, Florida, and New York. Massachusetts, Tennessee, Alabama, and Alaska were all identified as top-performing states.

Research has shown that primary care can improve health outcomes and lower costs across the board. A report from the National Academies of Sciences, Engineering, and Medicine found that 85 deaths per day are associated with a declining primary care workforce.

The report concluded that expanded telehealth capabilities, healthcare payment reform, and team-based care are crucial to implementing high-quality primary care and improving health outcomes.