[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]


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                   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

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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.
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