Casualties of Care
As it turns out, the origins of Project HERO come from suggestions made by people who are now among its harshest critics: veterans' advocates. In 2005 a group of advocates started to complain about the way VA employees were handling the relatively small number of patients who were seeing private providers. The medical care was uneven, said the advocates, and the providers sometimes failed to send the patients' medical information back to the VA so that the records could be stored in the agency's database. The system needed to be improved, they told Congress.
VA staffers were beset at the time by a budgetary crisis and were trying to meet the needs of an increasing number of wounded warriors. Yet administration officials and Republican leaders on Capitol Hill were clear about their views: they did not want the VA to have a bigger budget. In January 2005 Chris Smith, a Republican Congressman from New Jersey, was removed from his position as chair of the House Veterans Affairs Committee, apparently because he was trying to get more money for the agency. "He pushed hard and drew a great deal of anger from Republican leadership because he refused to back down," one of his former staff members, Loretta Charbonneau, who had served as regional director in New Jersey, tells me. "The result is that he lost his seat."
Republicans at the state and county levels were disappointed. Doug LeValley, who represents the National Association of County Veterans Service Officers and is based in Springfield, Ohio, says he had been impressed with Smith and felt frustrated over the way Smith was treated on Capitol Hill. "Veterans' issues are not Republican or Democratic. It's what's right and what's wrong," LeValley tells me. Yet, he says, "politics seems to play a role."
"Smith was probably one of our strongest veterans' advocates in Congress," says Joseph Violante, national legislative director of Disabled American Veterans. (Violante, a Vietnam veteran, worked as a staff attorney for the VA from 1985 to 1990.) "Chairman Smith fought for that additional funding level, and that put him at odds with his leadership," including House Speaker Dennis Hastert and House majority leader Tom DeLay.
The changes in leadership on the committee, as well as the Bush administration priorities with regard to privatization, had profound implications for the agency. Smith was replaced by Hastert's friend Steve Buyer, a Republican from Indiana. Buyer was seen as someone who would stand up to, rather than defend, the veterans' community. "Republicans believe in a smaller government, and it looked like that was where he [Buyer] was trying to go," Violante explains.
Buyer was soon railing against the agency. At a June 2005 House Veterans Affairs Committee hearing on veterans' healthcare, for example, he said that VA officials had mishandled their budget predictions. "We have to think and be more like a business," he told The American Legion Magazine in February 2006. He wanted the VA to "tap into the great minds in the private sector and utilize the best business practices." But that wasn't so easy. "I have the bureaucracy in VA fighting my efforts to bring these efficiencies," he explained. Meanwhile, staffers in Buyer's office were hearing from healthcare lobbyists, many of whom had clients with a keen interest in the outsourcing of government work.
From 1998 to 2004, Humana spent more than $4 million on lobbying efforts. In 2004 alone, not long before plans for Project HERO got under way, it spent $360,000 on lobbying. In 1998 the company hired Greenberg Traurig, the Washington firm where Jack Abramoff worked, and gave small amounts of money to key members of Congress. (In 2005, for example, Humana Inc. PAC gave Buyer $1,000.) The Greenberg Traurig staff was connected. One lobbyist working on the Humana account was Nancy Taylor, a former senior aide to Senator Orrin Hatch. Another was Michael Bromberg of Capitol Health Group, who was included in a March 2003 article in The Hill about the top twenty lobbyists in Washington; he was described as "the cream of the crop," one of DC's "top power brokers."
Members of the Republican-led Congress jumped on the issue and crafted a proposal to farm out a significant amount of administrative work to the private sector. The announcement of the program was easy to miss: it appeared as a 152-word section in a conference report accompanying the Military Quality of Life and Veterans Affairs Appropriations Act of 2006. In February 2007 Humana established a new unit, Humana Veterans, and hired a former VA deputy assistant secretary, Alonzo Poteet, to head it up. There were seven competitive bids, according to Baker, and Humana Veterans Healthcare Services was awarded the contract in October 2007.
At first there was little opposition to Project HERO from veterans' groups--who, after all, had inadvertently created the situation by pointing out the flaws in the VA's fee-based system. But once Buyer and his colleagues started working on the prototype for the program, veterans' advocates seemed to be shut out of the process. They grew frustrated when they saw that the issues they had raised were being "manipulated to allow large-scale privatization of VA services," writes Tom Zampieri, director of government relations for the Blinded Veterans Association, in the Summer 2006 issue of The BVA Bulletin. Randy Pleva, national president of Paralyzed Veterans of America, told the Senate Committee on Veterans Affairs in early March 2006, "Contract care is not more cost-effective or cost-efficient than care provided by the VA, and we certainly do not believe that the VA will find the same level of high-quality care in the private sector."