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

    [[Page 267]]

                       25.  VETERANS BENEFITS AND SERVICES

      ----------------------------------------------------------------------

                       Table 25-1.  Federal Resources in Support of Veterans Benefits and Services
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Estimate
                   Function 700                   1999   -----------------------------------------------------------
                                                 Actual     2000      2001      2002      2003      2004      2005
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Discretionary Budget Authority \1\......    19,261    20,913    22,061    22,061    22,328    22,878    23,382
      Mandatory Outlays:
        Existing law..........................    23,838    25,075    25,589    26,292    27,641    28,395    30,989
        Proposed legislation..................  ........     1,800    -1,484       772     1,020     1,490     1,951
    Credit Activity:
      Direct loan disbursements...............     1,660     2,003       659       N/A       N/A       N/A       N/A
      Guaranteed loans........................    43,091    32,136    29,548       N/A       N/A       N/A       N/A
    Tax Expenditures:
      Existing law............................     3,120     3,265     3,405     3,545     3,710     3,880     4,065
    ----------------------------------------------------------------------------------------------------------------
    N/A = Not available.

    \1\ VA's total available discretionary resources for 2001 will be $380 million higher than shown because of
      discretionary changes in mandatory accounts.

      ----------------------------------------------------------------------
      The Federal Government provides benefits and services to veterans and
    their survivors of conflicts as long ago as the Spanish-American War
    recognizing the sacrifices of war- and peacetime veterans during
    military service. The Federal Government spends over $46 billion a year
    on veterans benefits and services, including medical care to low-income
    and disabled veterans and education and training for veterans reentering
    civilian life. In addition, veterans benefits provide financial
    assistance to needy veterans of wartime service and their survivors, and
    over $3 billion in tax benefits to compensate veterans and their
    survivors for service-related disabilities.
      About seven percent of veterans are military retirees who can receive
    either military retirement from the Department of Defense (DOD) or
    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 work force--approximately 220,000 people,
    about 195,000 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 25-1).
    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 3.3 million veterans through its
    national system of 22 integrated health networks, consisting

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    of 172 hospitals, 691 ambulatory clinics, 140 nursing homes, 87
    domiciliaries, and 206 vet centers. VA is an important part of the
    Nation's social safety net because almost 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.

    Millennium Act

      The President signed the Veterans Millennium Health Care and Benefits
    Act (Public Law. 106-117) on November 30, 1999. This comprehensive
    legislation improves a broad array of health services for our Nation's
    veterans. It firmly establishes a high priority for nursing home care to
    the most severely disabled veterans and those needing nursing home care
    for a service-connected disability, and enhances VA's home and community
    based extended care programs. The legislation authorizes VA to reimburse
    certain veterans as payor of last resort for emergency care, expands
    programs for homeless veterans and sexual trauma counseling, expands
    enhanced-use leasing authority, and enhances other VA medical programs.
      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. VA may provide care to lower-priority veterans
    if resources allow after it meets the needs of higher-priority veterans.
    Since 1997, VA has pursued its ``30/20/10'' goal to reduce the cost per
    patient (inflation adjusted) by 30 percent from the 1997 level of
    $5,458; to increase the number of patients treated by 20 percent from
    the 1997 level of 3,142,075; and, to increase resources from outside
    sources to 10 percent of the total

    [[Page 269]]

    operating budget from less than one percent in 1997.
      In recent years, VA has reorganized its field facilities from 172
    largely independent medical centers into 22 Veterans Integrated Service
    Networks (VISNs), 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.

    Veterans Health Administration

      VA's efforts in reengineering its health care program have resulted in
    significant reductions in the cost per patient treated over the last
    five years (1994-1999) while quality of care increased. Reengineering
    efforts within the Veterans Health Administration (VHA) included
    restructuring veterans' health care (to include the organizational,
    financial and management change associated with the VISNs), shifting
    care to more appropriate care settings (with an emphasis on primary
    care) and implementing clinical and administrative efficiencies
    including consolidations and integrations. More specifically, since
    1993/1994:
       patients treated per year increased by over 29 percent (from
              2.8 to 3.6 million--includes veterans and non-veterans).
              Further, 83 percent more homeless patients were treated in
              1999 compared to 1993;
       annual inpatient admissions decreased 35 percent (317,688
              fewer admissions) by 1999 while ambulatory care visits
              increased by 50 percent to 37.7 million (12.6 million
              increase);
       approximately 1,300 sites of care delivery have been
              organized under 22 Veterans Integrated Service Networks; and,
       over 250 new community-based outpatient clinics have been
              established.
      Because of VHA's increased emphasis on service delivery and access,
    the following specific performance goals have been developed:
      Increase the percentage of patients who receive an initial or
              first-time appointment with their primary care or other
              appropriate provider within 30 days (baseline will be 2000;
              strategic goal is 95 percent).
      Increase the percentage of patients who receive a specialty
              appointment when referred by a primary care provider within 30
              days (baseline will be 2000; strategic goal is 95 percent).
      Increase the percentage of patients who are seen within 20
              minutes of their scheduled appointment to 79 percent in 2001
              from a l997 baseline of 55 percent (to 75 percent in 2000;
              strategic goal is 90 percent).
      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; and,
      increase the scores on the Prevention Index to 90 percent by
              2001 from the 1997 level of 67 percent.

      Medical Research: VA's research program provides $321 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. If all funding sources are included, VA spends more than $1
    billion on research. In 2001, 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.

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      In 2001, VA will maintain its standard that at least 99
              percent of funded research projects will be reviewed by
              appropriate peers and selected through a merit-based
              competitive process.

      Health Care Education and Training: The Veterans Health Administration
    (VHA) is the Nation's largest trainer of health care professionals.
    About 91,000 students and residents 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 2001, 48 percent of VA's residents will be trained in
              primary care 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, generally the
    number of new compensation and pension claims and appeals from veterans
    is expected to decline. VBA anticipates a slight increase in new claims
    from survivors and claims for burial benefits. Since 1993, VBA has
    realigned 58 regional offices into nine service delivery networks. It
    has established nine Regional Loan Centers and four Regional Processing
    Offices for education claims in an effort to improve efficiency and
    quality of services to its customers. VBA has also taken steps to
    integrate information technology into claims processing to improve
    timeliness and quality of service delivery. It has also implemented a
    ``balanced scorecard,'' a tool that has helped 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 2001, VA will process rating-related disability claims in
              142 days (from 166 days in 1999; strategic goal is 74 days).
      In 2001, VA will improve its rating accuracy (for core rating
              work) to 85 percent (from 68 percent in 1999; strategic goal
              is 96 percent).

    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 2001, 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 outcome 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 2.5 percent for 2001.

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      The number of veterans and survivors receiving compensation benefits
    will total an estimated 2.6 million in 2001. 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 2001 to 2005.

      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
    2001. The number of pension cases will continue to fall from an
    estimated 616,000 in 2001 to less than 555,000 in 2005 as the number of
    veterans declines.
      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
    $447 billion in insurance coverage to over 4.4 million veterans and
    service members in 2001. The program provides insurance protection to
    veterans who cannot purchase commercial policies at standard rates
    because of their service-connected disabilities. 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--which is the largest--the post-Vietnam-era education program, the
    Vocational Rehabilitation and Employment (VR&E) program, and the Work-
    Study program. Spending for all these VA programs will total an
    estimated $1.7 billion in 2001. One of the program's goals is:
      In 2001, VA will increase to 70 percent the number of VR&E
              participants who acquire and maintain suitable employment and
              are considered to be rehabilitated (from the 1999 level of 53
              percent; strategic goal of 70 percent will be achieved in
              2001).

      The Montgomery GI Bill (MGIB): 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 becomes eligible. Basic benefits available 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 310,000 veterans and service members will use
    these benefits in 2001. The MGIB also provides education benefits to
    reservists while they are in service. DOD pays these benefits, and VA
    administers the program. In 2001, over 70,000 reservists will use the
    program. Over 90 percent of MGIB beneficiaries use their benefits to
    attend a college or university. VA has set the following goal:
       In 2001, VA will increase the usage rate of eligible veterans
              in the MGIB to 60 percent (from 53 percent in 1997; strategic
              goal is 70 percent).

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    Veterans' Housing

      In 2001, VA will guarantee an estimated 250,000 loans totaling
              $29.5 billion. Approximately 80 percent of these loans will
              have no downpayment, with over half going to first-time
              homebuyers. The Federal Government will spend an estimated
              $332 million in 2001 on this program. This represents the
              subsidy necessary to help offset costs due to foreclosures, as
              well as administrative expenses.
      Avoiding foreclosure is critical to VA and veterans. VA's goal is to
    reduce the likelihood of foreclosure through aggressive intervention
    actions when loans are referred to VA as a result of three payments in
    default. Costs to the government are reduced when VA is able to pursue
    an alternative to foreclosure. Veterans are helped either by saving
    their home or avoiding the expense and damage to their credit rating
    caused by foreclosure.
      In 2001, 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). (See
              Chapter 17, Commerce and Housing Credit for more information
              on mortgage credit).
      As part of a continuing effort to reduce administrative costs, in
    addition to restructuring and consolidations, VA is conducting a study
    of the property management function to determine whether it would be
    more cost effective to contract this activity. The study will be
    complete at the end of fiscal year 2000.

    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
    $110 million in 2001 for VA cemetery operations, excluding
    reimbursements from other accounts. Over 77,700 veterans and their
    family members were buried in national cemeteries in 1998. In addition,
    VA has jointly funded 45 State veterans cemeteries through its State
    Cemetery Grants Program (SCGP). In 1999, VA provided 345,389 headstones
    and markers for eligible veterans, who were buried in national, state,
    and private cemeteries. Since 1993, NCA has expanded service by opening
    three new national cemeteries, providing grants to states to build 14
    new state veteran cemeteries, and acquiring 3,000 acres of land to meet
    burial demands. In addition, NCA improved service by installing 14
    information kiosks and by encouraging non-VA national and state veterans
    cemeteries to place headstone orders on-line. VA has established this
    measure:
      In 2001, VA will increase the percentage of veterans served by
              a burial option within a reasonable distance of the veteran's
              place of residence to 76 percent (from the 1999 level of 67
              percent; strategic goal is 82 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.

    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 $3.4 billion in 2001, and about $18
    billion between 2001 and 2005.