The Department of Veterans Affairs (VA) spends the fifth most of all federal agencies, accounting for 5% of federal spending. VA expenditures have almost tripled in the last 20 years, from $70 billion in fiscal year 2000 to $200 billion in fiscal year 2019, adjusted for inflation. This makes the VA the second fastest federal agency for expenditure growth over that time.
The veteran population in the US is shrinking and getting older, increasing the costs for care. The number of veterans decreased by one-third from 26 million to 17 million from 2000 to 2019, according to the US Census Bureau. Veterans went from 9% of the population in 2000 to 5% in 2019.
Half of all veterans in the US are 65 and older as of 2019, compared to 39% in 2005. With this aging population, total annual VA spending per veteran increased from about $2,700 annually in 2000 to $11,800 in 2019.
The VA spends money on veterans through two programs, the Disability Compensation program and the Veterans Health Administration (VHA). The Disability Compensation program provides monthly benefits to veterans with service-related disabilities. The level of benefits each veteran receives varies according to the veteran’s degree of service-connected disability and number of dependents. The disability program accounted for 41% of VA expenditures in fiscal year 2019.
Spending for the disability program almost quadrupled, from $22 billion in 2000 to $85 billion in 2019, according to the Veterans Benefits Administration. Two factors are driving this spending growth — the overall number of veterans receiving disability compensation and the number of veterans classified with the most severe service-connected disabilities and receiving the highest level of benefits. The share of veterans receiving disability compensation rose to 28% in 2019, more than triple the 8% of veterans in 2000.
A veteran's disability compensation is based on a Combined Disability Rating. The rating measures the degree of disability from 0% to 100%, with 0% meaning a veteran does not need disability compensation and 100% meaning the veteran is fully disabled from service. The rating covers all of a veteran’s service-connected disabilities. While the number of veterans with a rating between 0% to 20% has remained roughly constant in the last 20 years, the number of veterans with a rating between 70% and 100% is six times higher, according to the VA. As the number of more severely disabled veterans has increased, so has Disability Compensation program spending — from $9,500 per enrolled veteran in 2000 to more than $17,000 in 2019.
The VHA oversees all medical care for the VA. It is the largest integrated health care system in the US. Medical care for veterans was more than one-third of all VA expenditures in 2019. VA spending on medical care more than tripled from 2000 to 2019, growing from $33 billion to $78 billion, outpacing the increase in private health insurance spending.i
The VA categorizes veterans into healthcare priority groups. The highest priority group is for veterans who cannot work due to severe service-related disabilities, and those with a Medal of Honor.
The rise in VHA spending coincides with an increase in the number of patients and the number of veterans categorized in the highest priority group for healthcare. Unique VHA patients doubled from 3.7 million veterans to more than 6 million veterans in the last 20 years.ii
The number of veterans in that group was almost five times larger in fiscal year 2018 than fiscal year 2000, according to the National Center for Veterans Analysis and Statistics.
The VHA spent $13,283 a year on the average patient in priority group 1 in 2018, nearly identical to the average spent per Medicare patient in 2019. Spending on the group was five times larger in 2000 compared to 2018, going from $5.6 million to $28.7 million.
VHA spending per patient in priority group 1 is higher than for most other groups. Because it is also the largest priority group, almost 50% of VHA patient spending went to priority group 1 in 2018. Group 4 — which includes veterans who are "catastrophically disabled" for reasons other than service — has the highest average expenditure per patient, though it also has the lowest enrollment of any priority group. It accounted for 7% of VHA spending in fiscal year 2018.
Check out the veterans affairs data page for more details on the veteran population and get the facts every week by signing up for our newsletter.
