In 2006 the Department of Veterans Affairs commissioned the Altarum Institute and the RAND Corporation to do an evaluation of its mental health treatment system. We found that veterans with mental illness and substance use disorders represented 15.4 percent of all veterans using Veterans' Health Administration (VHA) services in 2007 and that they accounted for 32.9 percent ($12 billion) of VHA costs, of which the majority was for non–mental health conditions. The average cost for a veteran with mental illness and substance use in our study was $12,337, or 2.7 times the cost for an average veteran without these conditions. The quality of care for the veterans in our study, although similar to or better than the care given to comparable privately insured patients or those enrolled in Medicare or Medicaid, varied by as much as twenty-three percentage points among regional service networks. Performance on some indicators, such as whether those with alcohol dependence received pharmacotherapy, was low. There is a need for substantial improvement in the care of these veterans, particularly with respect to ensuring the delivery of evidence-based treatments.

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