In 1983 a budget shortfall at the Seattle Veterans Administration Medical Center prompted termination of regular outpatient care for individuals of low legal priority deemed medically stable by administrative criteria. The authors examined the effects on health status and access to medical care of 157 discharged patients and 74 comparison subjects who met the discharge criteria but were retained. Seventeen months after termination, 41% of discharged patients reported their self-perceived health status was "much worse," compared with 8% of retained patients (p less than 0.001). Among discharged patients, 23% had seen no health care provider, 58% believed they lacked access to necessary care, and 47% had reduced prescribed medications. In contrast, all retained patients had seen a provider, 5% claimed to lack access, and 25% had reduced medications. Among discharged patients for whom complete follow-up data were available, the percentage whose blood pressures were out of control at their 13-month follow-up visits was 41%, compared with 5% at the time of discharge. This marked change contrasted with a rise from 9% to 17% among retained patients. A best-case/worse-case analysis indicated that the findings could not be fully explained by biased follow-up. Administrative criteria did not accurately identify medically stable patients. During the study interval 25% of discharged patients were hospitalized and at least 6% died. These findings suggest that federal health care programs are important to many indigent patients and that withdrawing services may have deleterious consequences.