He called the nation's commitment to its veterans a "sacred covenant."
"I don't use those words lightly. It's sacred because there is no more solemn request than to ask someone to risk their life, to be ready to give their life on our behalf," Obama said at the annual convention of the Disabled American Veterans.
It was Obama's final major address to a gathering of veterans before he leaves office in January after eight years as president. He was greeted with a rousing welcome, including cheers and a standing ovation.
Obama said the Department of Veterans Affairs has hired more doctors, nurses and staff and opened more clinics since the recent scandal over long wait-times for VA services, the demand for which keeps growing as more veterans come into the pipeline.
Benefits are available to more than 2 million veterans who didn't have them before, he said.
Services are reaching more veterans, including those who live in rural areas through telemedicine. Homelessness has been cut nearly in half, by 47 percent, though still far short of the president's long-held goal of reducing it to zero. More veterans are finding jobs.
More than a half-million veterans have donated their health and genetic data to a research database that Obama said eventually will benefit not just former military members, but all Americans.
But shortcomings remain, Obama said. He cited mental care for veterans, including the 20 per day who commit suicide.
Quicker processing of disability claims and appeals is also needed. A staggering backlog of disability claims has been whittled from more than 600,000 three years ago to below 80,000, but some 450,000 appeals are pending. Veterans wait an average of three years for a decision, which the White House called "unacceptable." Obama called on Congress to pass legislation to overhaul the system.
Care for America's veterans is a top issue in the presidential campaign, with the nearly 21 million veterans in the U.S. making up a critical voting bloc. Republican Donald Trump has repeatedly blasted the VA under Obama; Democrat Hillary Clinton has been less harsh.
Both candidates promise to overhaul the department, including its health care system. Trump has proposed allowing veterans eligible for VA health care to take their ID cards to any doctor or facility that accepts Medicare. Clinton would make changes to the existing system.
Despite the problems, demand for VA health care grew 13 percent in the past year, said DAV Executive Director Garry Augustine.
"We know that even though the access is a problem, health care in the VA is very good," Augustine said in an interview.
The health care side "remains to be fixed," Augustine said. A congressionally mandated commission recently concluded that the department continues to have "profound deficiencies" in delivering health care to veterans. VA already has been making changes in line with the commission's recommendations, including helping more veterans get care outside the VA.
Augustine said he'd like to see VA establish an approved network of private doctors who know how to treat veterans. He also expressed concern, shared by the White House, over a backlog of appeals but said that overall, veterans appreciate the support they have received from Obama.
Among other issues, Augustine cited increased spending on veterans, expanded and better health care for female veterans, tax credits for hiring veterans and strides toward reducing veterans' homelessness.