This study examined the relationship between the use of VA health care services by veterans and labor market conditions in their county of residence, measured using the county-level unemployment rate. After controlling for individual covariates and random county and state effects, we found that poorer local area labor market conditions were associated with significant increases in the likelihood of VA health service use and significant decreases in the likelihood of receiving no VA care at all.
Our results are consistent with other prior studies finding an increased burden on public payers during periods of economic downturn [31
]. During the most recent recession in 2009, Martin and colleagues found a decrease in private health insurance enrollment, growth in out-of-pocket spending and an increase in per enrollee Medicare spending growth [33
]. In the general population, use of medical services (as measured by hospitalization and doctor visits) were also found to increase when the economy weakens [12
]. These results were attributed to deteriorating health during times of low unemployment. Other studies have found increased mental health utilization including psychiatric emergency services [34
] and admissions to mental health facilities for alcohol-related disorders [35
We conducted several sensitivity analyses to provide evidence that poorer labor market conditions increase VA health service use through reductions in veterans’ enabling resources. Based on the stratification analysis by individual employment status, the results show similar significant marginal effects among veterans who were unemployed, which suggest that the increased use of VA health care was in part due to loss of employer sponsored health insurance. Furthermore, we adjusted for individual income in the sample of employed veterans and the results show income mediated the impact of the county-level unemployment rate on use of VA care. Finally, we found Veterans reporting cost barriers to receiving care were more likely to obtain at least some of their care from VA. Overall, our results suggest that the county-level unemployment rate is an important metric of veterans’ enabling resources and has impacts relevant to VA policymakers with regard to demand projections.
Intraclass correlation estimates for state and county random effects suggest that up to 5% of the variation in VA health service use is affected by local area resources. These estimates are at the upper range of values found in previous studies examining the correlation in utilization measures within geographical units [36
]. State random effect estimates also suggest that variation in health policies across states, including Medicaid, is an important determinant of whether veterans use VA care.
Use of VA health services does not preclude veterans from enrolling in other health plans and obtaining care from other sources. In particular, nearly all Americans are eligible for health benefits from Medicare starting at age 65. Our study showing the association between local area unemployment rates and use of VA health services was stronger among veterans above age 65 compared to those under 65, reflects the importance of the VA even among Medicare eligible veterans. This result is consistent with prior findings showing a substantial number of veterans are dual users of VA and non-VA health services [39
]. There are several possible reasons for this result. First, as the overall demand for health services increases with age, veterans may selectively choose to obtain some of their care from the VA. For example, veterans selectively seek mental health care in VA as such services with limited coverage by Medicare and other payers [17
]. VA also provides services to meet veterans’ special health care needs, such as spinal cord injuries, amputations and post-traumatic stress disorder. Second, this finding may stem from the fact that many counties with high unemployment have persistent poverty [41
]. Veterans in these counties would have lower accumulated wealth resources and retirement income making them more likely to qualify for VA care. Finally, some veterans age 65 and above may not receive Medicare benefits or are unable to pay expenses not covered by Medicare. A recent study found that over 80% of VA enrollees older than 65
years of age were covered by Medicare in 2011 [42
]. Also, in our sample, 3.56% of Medicare eligible veterans in our sample reported cost barriers to obtaining care.
Collectively, our results suggest that veterans were more likely to shift care to the VA, potentially as a health care source of last resort in areas where labor market conditions are poor. However, a substantial number of veterans have access to other sources of health care, suggesting that VA use is a choice for many [17
]. Our results showing that over 76% of veterans reporting cost barriers also do not receive any care from the VA suggest that these disadvantaged veterans may be receiving care from other safety net providers, such as Medicaid.
The VA healthcare system has traditionally served as a safety net provider [2
]. Our findings provide evidence that the role of the VA is magnified in locations and during periods where unemployment is high. In times when the economy weakens, safety net facilities such as those in the VA are susceptible to budget cuts, which may undermine the ability to provide quality health services to eligible veterans who require care. Our results further indicate that the determination of the VA health care budget should weigh the impact of macroeconomic conditions in order to provide the highest quality of care while minimizing costs. Areas hardest hit by the business cycle may require the most funding to ensure quality. The estimated marginal effects, while small, translate into substantial costs given an increasingly large veteran population and the VA mandate of serving veterans for life. For example, in 2010, the veteran population in the United States was 22,568,578 and the average annual VA medical care expenditure per patient was $7,970 [46
]. We estimated a 1% increase in the unemployment rate was associated with a 0.63% increase in the likelihood that a veteran would receive some or all care from the VA. Based on the 2010 veteran population, our estimated effect size translates into 142,182 additional patients at an additional cost of $1.1 billion.
This study has several limitations. First, unemployment was measured at the county level, which is the smallest geographical unit publicly available in BRFSS. It is possible that unemployment is not homogenous within a county. Also, respondents may be employed in a county adjacent to their county of residence. Therefore, the county-level unemployment rate may not reflect the true labor market conditions a respondent is subject to. Second, the available BRFSS data lack detailed VA specific characteristics, such enrollment priority groups and military service related disability previously shown to impact VA utilization [2
]. Third, because of limitations in data, we were unable to use sampling weights to adjust for the BRFSS sampling design. As a result, if the sample of veterans captured in data is not a random sample of veterans in each county then our standard error estimates for unemployment may be underestimated. Finally, all data in BRFSS is self-reported and subject to recall bias.