[Budget of the United States Government]
[VI. Investing in the Common Good: Program Performance in Federal Functions]
[27. Veterans Benefits and Services]
[From the U.S. Government Publishing Office, www.gpo.gov]


 
                   27.  VETERANS BENEFITS AND SERVICES

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                   Table 27-1.  FEDERAL RESOURCES IN SUPPORT OF VETERANS BENEFITS AND SERVICES
                                            (In millions of dollars)
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                                                                               Estimate
               Function 700                   1998   -----------------------------------------------------------
                                             Actual     1999      2000      2001      2002      2003      2004
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Spending:
  Discretionary Budget Authority..........    18,943    19,282    19,282    19,279    19,274    19,292    19,293
  Mandatory Outlays:
    Existing law..........................    23,280    24,322    24,680    25,313    25,851    26,981    27,628
    Proposed legislation..................  ........  ........       269       644       964       569       947
Credit Activity:
  Direct loan disbursements...............     1,344     1,959       672       N/A       N/A       N/A       N/A
  Guaranteed loans........................    39,862    32,635    31,244       N/A       N/A       N/A       N/A
Tax Expenditures:
  Existing law............................     2,990     3,120     3,265     3,415     3,560     3,715     3,875
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N/A = Not available

  ----------------------------------------------------------------------
   The Federal Government provides benefits and services to veterans and 
their survivors of conflicts as distant as the Spanish-American War and 
as recent as the Persian Gulf War, recognizing the sacrifices of war- 
and peacetime veterans during military service. The Federal Government 
spends over $42 billion a year on veterans benefits and services, and 
provides over $3 billion in tax benefits to compensate veterans and 
their survivors for service-related disabilities; provide medical care 
to low-income and disabled veterans; and help returning veterans prepare 
to reenter civilian life through education and training. In addition, 
veterans benefits provide financial assistance to needy veterans of 
wartime service and their survivors.
   About seven percent of veterans are military retirees who can receive 
both military retirement from the Department of Defense (DOD) and 
veterans benefits from the Department of Veterans Affairs (VA). Active 
duty military personnel are eligible for veterans housing benefits, and 
they can contribute to the Montgomery GI Bill (MGIB) program for 
education benefits that are paid later. VA employs 21 percent of the 
Federal Government's non-DOD workforce--approximately 240,000 people, 
about 192,000 of whom deliver or support medical services to veterans.
   VA's mission is ``to administer the laws providing benefits and other 
services to veterans and their dependents and the beneficiaries of 
veterans. To serve America's veterans and their families with dignity 
and compassion and be their principal advocate in ensuring that they 
receive medical care, benefits, social support, and lasting memorials 
promoting the health, welfare and dignity of all veterans in recognition 
of their service to this Nation.''
   The veteran population continues to decline and age (see Chart 27-1). 
The types of benefits and services needed by veterans likely will change 
as the population ages. Further, as the veteran population shrinks and 
technology improves, access to, and the quality of, service should 
continue to improve.

Medical Care

   VA provides health care services to 3.2 million veterans through its 
national system of 22 integrated health networks, consisting of 166 
hospitals, 544 ambulatory clinics, 132

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nursing homes, 40 domiciliaries \1\, and 206 vet centers. VA is an 
important part of the Nation's social safety net because over half of 
its patients are low-income veterans who might not otherwise receive 
care. It also is a leading health care provider for veterans with 
substance abuse problems, mental illness, HIV/AIDS, and spinal cord 
injuries because private insurance usually does not fully cover these 
conditions.
---------------------------------------------------------------------------
  \1\ Domiciliaries serve homeless veterans and veterans rehabilitation 
with special needs.
---------------------------------------------------------------------------
   VA's core mission is to meet the health care needs of veterans who 
have compensable service-connected injuries or very low incomes. By law, 
these ``core'' veterans are the highest priority for available Federal 
dollars for health care. However, VA may provide care to lower-priority 
veterans if resources allow after it meets the needs of higher-priority 
veterans.
   In recent years, VA has reorganized its field facilities from 172 
largely independent medical centers into 22 Veterans Integrated Service 
Networks, charged with providing veterans the full continuum of care. 
Recent legislation eased restrictions on VA's ability to contract for 
care and share resources with DOD hospitals, State facilities, and local 
health care providers.
  To improve veterans health care further, VA will continue to enhance 
the efficiency of, access to, and quality of care. Between 1997 and 
2002, VA is pursuing its ``30/20/10'' goal to:
   reduce the cost per patient by 30 percent from the 1997 level 
          of $5,458 (by 18 percent in 2000);
   increase the number of patients treated by 20 percent from 
          the 1997 level of 3,142,065 (by 16 percent in 2000); and
   increase resources from outside sources (primarily private 
          insurers) to 10 percent of the total operating budget from 
          less than one percent in 1997 (to five percent in 2000).

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   Also, VA formed partnerships with the National Committee on Quality 
Assurance, the American Hospital Association, the American Medical 
Association, the American Nurses Association, and other national 
associations to ensure quality patient care. The Chronic Disease Care 
Index measures VA physicians' adherence to established industry practice 
guidelines for key diseases affecting veterans. Similarly, the 
Prevention Index measures adherence to disease prevention and screening 
guidelines. VA plans to:
   increase the scores on the Chronic Disease Care Index to 95 
          percent by 2001 from the 1997 level of 76 percent (to 93 
          percent in 2000); and
   increase the scores on the Prevention Index to 95 percent by 
          2003 from the 1997 level of 67 percent (to 89 percent in 
          2000).
   The budget includes a legislative proposal to authorize VA to cover 
the cost of out-of-network emergency care for enrolled veterans with 
compensable disabilities related to military service. Under law, these 
veterans have top priority for VA medical services. This legislation 
would ensure that these veterans have access to emergency care when 
treatment in VA facilities is not an option.
   The budget also proposes a new smoking cessation program for any 
honorably discharged veteran who began smoking in the military. In 
addition, increased funding is proposed for evaluting, testing, and 
treating Hepatitis C in the veteran population and for programs that 
directly assist homeless veterans.

   Medical Research: VA's research program provides $316 million to 
conduct basic, clinical, epidemiological, and behavioral studies across 
the spectrum of scientific disciplines, seeking to improve veterans 
medical care and health and enhance our knowledge of disease and 
disability. In 2000, VA will focus its research efforts on aging, 
chronic diseases, mental illness, substance abuse, sensory loss, trauma-
related impairment, health systems research, special populations 
(including Persian Gulf War veterans), and military occupational and 
environmental exposures.
   In 2000, at least 99 percent of funded research projects will 
          be reviewed by appropriate peers and selected through a merit-
          based competitive process (1997 base of 99 percent).

   Health Care Education and Training: The Veterans Health 
Administration (VHA) is the Nation's largest trainer of health care 
professionals. About 91,000 students a year get some or all of their 
training in VA facilities through affiliations with over 1,200 
educational institutions. The program trains medical, dental, nursing, 
and related health professionals to ensure an adequate supply of 
clinical care providers for veterans and the Nation. The program will 
continue to realign its academic training and update its curriculum, 
focusing more on primary care to meet more effectively the needs of the 
VHA and its patients, students, and academic partners.
   By 2000, 46 percent of VA's residents will be trained in 
          primary care and, in 2004, that figure will increase to 48 
          percent (from the 1997 level of 39 percent).

Veterans Benefits Administration (VBA)

   VBA processes veterans' claims for benefits in 58 regional offices 
across the country. As the veteran population declines, the number of 
new claims and appeals is expected to decline. VBA is implementing a 
``balanced scorecard,'' a tool that will help management to weigh the 
importance of and measure progress toward meeting VBA's strategic goals, 
which include:
   improving responsiveness to customers' needs and 
          expectations;
   improving service delivery and benefit claims processing; and
   ensuring best value for the available taxpayers' dollar.
  VBA monitors its performance in deciding disability benefits claims 
through measures of accuracy, customer satisfaction, processing 
timeliness, and unit cost. The following key measures have been 
established for disability claims requiring a rating:
   In 2000, VA will process rating-related disability claims in 
          95 days, improving to 74 days by 2004 (from 128 days in 1998).

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   In 2000, VA will improve its rating accuracy (for core rating 
          work) to 81 percent, improving to 96 percent by 2004 (from 64 
          percent in 1998).

Income Security

   Several VA programs help veterans and their survivors maintain their 
income when the veteran is disabled or deceased. The Federal Government 
will spend over $23 billion for these programs in 2000, including the 
funds the Congress approves each year to subsidize life insurance for 
veterans who are too disabled to get affordable coverage from private 
insurers. Veterans may receive these benefits in addition to the income 
security benefits available to all Americans, such as Social Security 
and unemployment insurance. VBA is developing strategic goals for the 
compensation and pension programs.

   Compensation: Veterans with disabilities resulting from, or 
coincident with, military service receive monthly compensation payments 
based on the degree of disability. The payment does not depend on a 
veteran's income or age or whether the disability is the result of 
combat or a natural-life affliction. It does depend, however, on the 
average fall in earnings capacity that the Government presumes for 
veterans with the same degree of disability. Survivors of veterans who 
die from service-connected injuries receive payments in the form of 
dependency and indemnity compensation. Compensation benefits are indexed 
annually by the same cost-of-living adjustment (COLA) as Social 
Security, which is an estimated 2.4 percent for 2000.
   The number of veterans and survivors receiving compensation benefits 
will total an estimated 2.6 million in 2000. While the veteran 
population will decline, the compensation caseload is expected to remain 
relatively constant due to changes in eligibility and better outreach 
efforts. COLAs and increased payments to aging veterans will increase 
compensation spending by about $3 billion from 2000 to 2004.

   Pensions: The Government provides pensions to lower-income, wartime-
service veterans or veterans who became permanently and totally disabled 
after their military service. Survivors of wartime-service veterans may 
qualify for pension benefits based on financial need. Veterans pensions, 
which also increase annually with COLAs, will cost over $3 billion in 
2000. The number of pension recipients will continue to fall from an 
estimated 650,000 in 2000 to less than 585,000 in 2004 as the number of 
veterans drops.
   Insurance: VA has provided life insurance coverage to service members 
and veterans since 1917 and now directly administers or supervises eight 
distinct programs. Six of the programs are self-supporting, with the 
costs covered by policyholders' premium payments and earnings from 
Treasury securities investments. The other two programs, designed for 
service-disabled veterans, require annual congressional appropriations 
to meet the claims costs. Together, these eight programs will provide 
$460 billion in insurance coverage to over 4.5 million veterans and 
service members in 2000. The program is designed to provide insurance 
protection and best-in-class service to veterans who cannot purchase 
commercial policies at standard rates because of their service-connected 
disabilities. To reach this goal, the program is designed to provide 
disbursements (e.g., death claims, policy loans, and cash surrenders) 
quickly and accurately, meeting or exceeding customers' expectations.

Veterans' Education, Training, and Rehabilitation

   Several Federal programs support job training and finance education 
for veterans and others. The Department of Labor runs several programs 
for veterans. In addition, several VA programs provide education, 
training, and rehabilitation benefits to veterans and military personnel 
who meet specific criteria. These programs include the Montgomery GI 
bill (MGIB)--which is the largest--the post-Vietnam-era education 
program, the Vocational Rehabilitation and Counseling (VR&C) program, 
and the Work-Study program. Spending for all these VA programs will 
total an estimated $1.5 billion in 2000. One of the program's strategic 
goals is:
   In 2000, VA will increase to 50 percent the number of VR&C 
          participants who acquire and maintain suitable employment and 
          are considered to be rehabilitated, and

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          further increase it to 55 percent in 2004 (from the 1998 level 
          of 41 percent).

   The Montgomery GI Bill: The Government originally created MGIB as a 
test program, with more generous benefits than the post-Vietnam-era 
education program, to help veterans move to civilian life and to help 
the Armed Forces with recruitment. Service members who choose to enter 
the program have their pay reduced by $100 a month in their first year 
of military service. VA administers the program and pays basic benefits 
once the service member leaves the military. Basic benefits now total 
over $19,000 per recipient.
   MGIB beneficiaries receive a monthly check based on whether they are 
enrolled as full-or part-time students. They can get 36 months worth of 
payments, but they must certify monthly that they are in school. DOD may 
provide additional benefits to help recruit certain specialties and 
critical skills. Nearly 284,000 veterans and service members will use 
these benefits in 2000. The MGIB also provides education benefits to 
reservists while they are in service. DOD pays these benefits, and VA 
administers the program. In 2000, over 72,000 reservists will use the 
program. Over 90 percent of MGIB beneficiaries use their benefits to 
attend a college or university. In 1999, MGIB beneficiaries, dependents, 
and survivors got a one-time 20 percent increase in their benefit rate. 
VA has set the following goal:
   In 2000, VA will increase the usage rate of eligible veterans 
          in the MGIB from to 57 percent, and increase the figure to 70 
          percent in 2004 (from 53 percent in 1997).

Veterans' Housing

   Along with the mortgage assistance that veterans can get through the 
Federal Housing Administration insurance program, in 2000 the VA-
guaranteed loan program will help an estimated 280,000 veterans get 
mortgages totaling almost $31.2 billion. The Federal Government will 
spend an estimated $264 million on this program in 1999, reflecting the 
Federal subsidies implicit in loans issued during the year. Slightly 
over 40 percent of veterans who have owned homes have used the VA loan 
guaranty program. To increase veteran home ownership and the program's 
efficiency, VA will cut its administrative costs. Improving loan 
servicing to avoid veteran foreclosures also is a key goal.
   In 2000, of the loans headed for foreclosure, VA will be 
          successful 40 percent of the time in ensuring that veterans 
          retain their homes (from the 1998 level of 37 percent).

National Cemetery Administration (NCA)

   VA provides burial in its national cemetery system for eligible 
veterans, active duty military personnel, and their dependents. VA 
manages 119 national cemeteries across the country and will spend over 
$97 million in 2000 for VA cemetery operations, excluding reimbursements 
from other accounts. Over 76,700 veterans and their family members were 
buried in national cemeteries in 1998. In addition, VA has jointly 
funded 38 state veterans cemeteries through its State Cemetery Grants 
Program (SCGP). The program will open four new national cemeteries in 
1999 and 2000, expand existing cemeteries, make more effective use of 
available burial space, and encourage States' participation in the SCGP. 
VA has established this measure:
   In 2000, VA will increase the percentage of veterans served 
          by a burial option within a reasonable distance of the 
          veteran's place of residence to 77 percent (from the 1998 
          level of 69 percent).

Related Programs

   Many veterans get help from other Federal income security, health, 
housing credit, education, training, employment, and social service 
programs that are available to the general population. A number of these 
programs have components specifically designed for veterans. Some 
veterans also receive preference for Federal jobs.

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Tax Incentives

   Along with direct Federal funding, certain tax benefits help 
veterans. The law keeps all cash benefits that VA administers (i.e., 
disability compensation, pension, and MGIB benefits) free from tax. 
Together, these three exclusions will cost about $3.2 billion in 2000. 
The Federal Government also helps veterans obtain housing through 
veterans bonds that State and local governments issue, the interest on 
which is not subject to Federal tax. In 2000, this provision will cost 
the Government an estimated $40 million.