The Reagan administration will propose denying free Veterans Administration health care to veterans with income above $15,000 a year unless they have service-connected disabilities, the Office of Management and Budget informed veterans' groups and Congress last week.
Details of the proposal on veterans came as the White House put finishing touches on its fiscal 1986 budget and Cabinet members made final appeals against some of the proposed cuts. The administration also:
Yielded to pleas from Secretary of Agriculture John R. Block to modify a plan for sudden cuts in farm subsidies. Federal dairy supports would be phased out over three years instead of one year, in the latest OMB budget proposals. Direct crop subsidies would be limited to $20,000 per farm in fiscal 1986, to $15,000 the next year and then to $10,000. The current limit is $50,000 per farm. The OMB's original proposal would have cut it to $10,000 in 1986.
* Decided to allow students whose family income is over $30,000 to obtain guaranteed student loans -- but without federal subsidy in the interest rate. Under the administration student-aid proposal, eligibility for various types of student grants and subsidized guaranteed student loans would be limited to those with family adjusted gross income of $30,000 or less, and the grants and loans would be limited to $4,000 per student, per year.
* Decided to proceed with a previously reported plan to make sharp cuts in benefits to future retirees under the existing civil service retirement system, including eventually raising the normal retirement age to 65. (Federal workers with 30 years of service now may retire at age 55 without any loss of pension benefits.) However, the administration may drop the part of that plan calling for an increase in employe contributions from 7 percent to 9 percent.
The restrictions on free health care to many veterans would require the approval of Congress. At present, veterans with medical problems that are not service-related can receive free care if they are at least 65 regardless of income. If they are under 65, there is no income test, but they must certify that they can't pay for the services. The VA does not attempt to verify the certification.
The administration also will seek to force private health-insurance firms to pay the VA when a person insured by the company receives VA health care, except for the treatment of service-connected disabilities, according to administration documents. It would also seek to require private insurance companies to drop standard clauses in many policies that declare that the policy will not pay for care in a government hospital. Similiar insurance proposals have failed to get through Congress.
Meanwhile, the OMB revealed plans to cut the number of VA hospital beds from 78,805 in 1985 to 65,000 in 1990. Some of the beds would be converted from acute-care to nursing-home care, so that the latter would rise from 10,765 in 1985 to 20,000 in 1990. Even so, the total of all hospital, nursing-home and domiciliary-care beds would go down over that period from 97,211 to 92,200.
The proposed cuts became known when the VA received its "passback" document from the OMB containing OMB's answer to the agency's fiscal 1986 budget request. The VA request for new budget authority for construction of medical facilities was cut from $955 million for 1986 to $543 million (which includes some leftover authority from earlier years). A 1987 request for $1.7 billion was cut to $554 million, and requests of $1.5 billion to $1.7 billion for each of the next three years were cut to about $600 million each.
The eligibility and insurance provisions plus other changes in VA medical programs would save the government an estimated $435 million in fiscal 1986, rising to $948 million annually by 1988 compared with projected outlays under current policies, according to a document sent to Congress Wednesday.
Veterans' groups say the proposed cuts would slash services as huge numbers of World War II and Korean War veterans are approaching their 60s and in, the normal course of aging, will need more care. By 1995, according to figures commonly used in the veterans' community, two-thirds of all men over 65 will be veterans, and those over 65 normally need hospitalization two to three times as often as younger men.
"We share the administration's concern for reducing the national budget deficit, and we do believe that there are, in fact, ways in which federal outlays can be reduced and yet still be both fair to veterans and honor the commitment made by this country to those veterans at the time they fought to defend our freedoms," said R. Jack Powell, executive director of the Paralyzed Veterans of America.
"Unfortunately, what we see in this proposal is a shell game. A substantial number of the veterans excluded from health care under this proposal would, in fact, show back up at the government door qualified and eligible for federal subsidy under Medicaid or Medicare, the trust fund for which is already greatly in trouble," Powell added.
In addition, he said, the idea of converting hospital beds to nursing beds would not work because unused hospital beds are mainly in the North. "Converting beds in Buffalo, N.Y., doesn't do any good when the nursing-home needs are in Florida," he said.
Details of how the $15,000 cutoff would work were not available, but administration documents indicated that free medical care would continue to be available to veterans with service-connected disabilities and former prisoners of war.
For all others, regardless of age, a means test would be applied based on twice the VA pension ceiling, which the documents indicated meant a $15,000 cutoff. Those with incomes under $15,000 could get care; those above it could get it only after they had spent all income in excess of $15,000 on non-VA care.
Powell said another possible scenario being discussed within the administration is to establish a scale showing how much people with incomes above $15,000 could afford to pay for various services; they would then have to pay that much for medical services before free VA services were provided.