Obama's healthcare reforms: First, vets. Next, the nation.

President Obama's plan to track the health records of military personnel electronically, announced Thursday, advances several goals of his administration.

The streamlined record-keeping system is intended to improve the care of both active-duty troops and veterans – a key theme of Mr. Obama’s presidential campaign. But the program will also “serve as a model for the nation,” according to a White House statement. As part of his plan for universal health insurance, Obama has argued that the nation should move to a system where medical records are kept on computer networks.

Such a system would lower healthcare costs and reduce medical errors, he says. The “Joint Virtual Lifetime Electronic Record” announced Thursday is “a huge step toward modernizing the way healthcare is delivered and benefits are administered for our nation’s veterans,” Obama said at a briefing.

“It is time to give our veterans a 21st-century VA [Department of Veterans Affairs],” he added.

When operational, the proposed system would gather the medical and administrative records for members of the military and seamlessly transfer them from the Defense Department to the Veterans Affairs Department when a person’s military career ends. That should help reduce the current six-month backlog in disability claims at the VA and lower other bureaucratic hurdles veterans now face.

The Obama administration had hinted at Thursday’s announcement in its 2010 budget. It proposed increasing spending at the VA by 11 percent to $55.9 billion, the largest increase in three decades. One key component of the spending plan outlined in the budget was investment in information technology.

In its early days, the administration has repeatedly emphasized its desire to take better care of American troops before and after they leave active service. During an April 8 address at Fort Bragg to soldiers returning from Iraq, Vice President Joe Biden said: "Ladies and gentlemen, if we only have $10 to spend in the entire federal government, then we are convinced that we have to spend six of it caring for those who come home in need. We will spend all six before we spend it on anything else – on the elderly, on children, on the poor, on our roads, on our security – because this is the only genuinely sacred obligation this nation has."

The VA’s increased budget supports a vast enterprise. The VA sends benefit checks to 3.2 million former military personnel. An additional 440,000 vets receive GI Bill benefits to help with the costs of their education. Some 5.5 million vets use VA hospitals or clinics at least once a year.

The department faces a lot of pent-up demand. More than 1.6 million troops have been deployed in support of the wars in Iraq and Afghanistan. Some 33,000 have been wounded. In addition to the wars the nation is currently fighting, demand for VA medical services is rising from millions of aging veterans from World War II, Korea, Vietnam, and the first Gulf War.

Despite rising budgets during the Bush administration, demand for services outstripped the VA’s resources. To deal with that demand, nondisabled, pre-9/11 veterans who make more than $29,000 have been prohibited from even applying for medical care since 2003. The Obama budget proposes to lift that ban gradually, bringing an additional 500,000 nondisabled vets with modest incomes into the healthcare system by 2013.

Dealing with the cost of veterans’ healthcare is a highly sensitive political issue. Earlier this year, the Obama administration proposed authorizing the VA to bill private insurance companies for the treatment of amputations, post-traumatic stress disorder, and other combat-related medical problems. The veterans’ community exploded in protest and within days the Obama team dropped the billing proposal.

The president was fulsome in his praise for vets at the Thursday event. “We must serve them as well as they have served us,” he said. “When you come home to America, America will be there for you.”