Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion

veterans could enroll without utilizing VA health care, but enrollment guaranteed
the ability to use VA services in the future. Additionally, during the time period
of our study, not enrolling did not imply that veterans would not be able to fill out
paperwork and enroll in the future should they need VA services. In that respect,
VA functioned as insurance for veterans even in the absence of enrollment,
similar to the way that COBRA serves as insurance for the first 60 days after job
separation regardless of whether the job leaver chooses to pay a premium.
Nevertheless, 6.6 million veterans had enrolled by 2002 and VA’s patient load
had increased from 2.6 million veterans in 1995 to 4.3 million in 2002 (GAO
1996, GAO 2003).³

During our study period, enrolled veterans were sorted into one of seven
priority groups. Those with service-related conditions resulting in disability of 50
percent or higher were considered the highest priority for treatment and were
placed in group one. Those with incomes above VA determined thresholds and
no service-connected disabilities were considered the lowest priority and placed in
group seven. Priority groups 1-6 consisted of previously-eligible veterans and
care remained free for them. Group 7 veterans were newly-eligible and were
charged modest copayments.⁴ The priority groups were used only for enrollment

³ Prior to the reorganization, there was no formal enrollment system, so we cannot examine
changes in enrollment, only changes in users.

⁴ The copay was $2 for each prescription for a 30-day supply in 2001 and $7 in 2002. In 2002,
copays for outpatient visits were $15 for primary care, and $50 for specialty care outpatient visits

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