[Budget of the United States Government]
[III. Creating a Better Government]
[16. Veterans Benefits and Services]
[From the U.S. Government Publishing Office, www.gpo.gov]


 
                   16.  VETERANS BENEFITS AND SERVICES

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                   Table 16-1.  Federal Resources in Support of Veterans Benefits and Services
                                            (In millions of dollars)
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                                                                               Estimate
               Function 700                   2000   -----------------------------------------------------------
                                             Actual     2001      2002      2003      2004      2005      2006
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Spending:
  Discretionary Budget Authority..........    20,904    22,463    23,469    23,996    24,533    25,085    25,651
  Mandatory Outlays:
    Existing law..........................    26,330    23,004    28,142    29,725    31,319    35,407    34,054
    Proposed legislation..................  ........  ........        19       -24       -55       -87      -117
Credit Activity:
  Direct loan disbursements...............     1,451     1,712     1,724     1,923     1,962     2,008     2,045
  Guaranteed loans........................    20,159    29,548    28,969    29,577    30,198    30,838    31,458
Tax Expenditures:
  Existing law............................     3,280     3,490     3,670     3,860     4,050     4,260     4,470
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  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 wartime and peacetime veterans during 
military service. The Federal Government spends over $51 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.
  The Department of Veterans Affairs' (VA's) mission is ``to care for 
him who shall have borne the battle and for his widow and his orphan.'' 
The spirit of these words, spoken by President Lincoln over 100 years 
ago, is ingrained in the Department's statutory mandate ``to administer 
the laws providing benefits and other services to veterans and the 
dependents and the beneficiaries of veterans.'' The mandate sets forth 
VA's role as the principal advocate for veterans and charges it with 
ensuring that veterans receive the medical care, benefits, social 
support, and lasting memorials they deserve in recognition of their 
service to this Nation.
  Active duty military personnel are eligible for veterans housing 
benefits, and they can contribute to the Montgomery GI Bill program for 
education benefits that are paid later. VA employs 21 percent of the 
Federal Government's non-Department of Defense (DOD) work force--
approximately 220,000 people, about 195,000 of whom deliver or support 
medical services to veterans.
  The veteran population continues to decline and age (see Chart 16-1). 
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 quality services should continue to 
improve. The Administration will work to provide veterans with the kind 
of efficient and effective service, which has been lacking.

Veterans Health Administration (VHA)

  VA provides health care services to over four million veterans through 
its national system of 22 integrated health networks, consisting of 172 
medical centers, 781

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outpatient clinics, 135 nursing homes, 43 domiciliaries, and 206 vet 
centers. VA is an important part of the Nation's social safety net 
because over 42 percent 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.
  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. The Veterans Health Care Eligibility Reform Act 
of 1996 allowed VA, for the first time, to treat all veterans 
``enrolled'' in the system. VA was able to enroll all veterans that its 
funding level would allow. Previously, VA could provide care to lower-
priority veterans (non-disabled, high-income) only on a space-available 
basis. Many people claim that these lower-priority veterans pay for 
themselves through co-payments and insurance collections; however, VA's 
collections total only $0.6 billion annually for all categories of 
veterans--a figure that has not substantially changed over the last five 
years despite the fact that 21 percent of its users are lower-priority 
patients. VA will emphasize increasing collections from lower-priority 
veterans so that this population will eventually pay for itself.
  As a result of past problems in delivering timely, quality care, VA 
will emphasize its service and access initiative. This multi-year effort 
sets the standard to provide patients with primary and specialty care 
appointments within 30 days, and to ensure patients are seen within 20 
minutes of their scheduled appointment at a VA health care facility.
  Currently, more than 700,000 military retirees are enrolled in both 
the Department of Defense (DOD) and the VA health systems and may use 
either whenever they choose. As a result, DOD and VA encounter problems

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in allocating the necessary resources due to their difficulty estimating 
the number of people that will obtain health care services in each of 
the systems. The budget includes appropriations language for DOD that 
will require military retirees to choose either DOD or VA as their 
health delivery system--providing continuity of care and a more 
efficient use of resources.
  In the mid-1990s, VA 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. 
During the same time, legislation was passed that eased restrictions on 
VA's ability to contract for care and share resources with DOD 
hospitals, State facilities, and local health care providers.
  VA's efforts in reengineering its health care program have resulted in 
significant reductions in the cost per patient treated while quality of 
care increased. Reengineering efforts within VHA included restructuring 
veterans' health care (to include the organizational, financial, and 
management change associated with the VISNs), shifting to a primary care 
delivery system, and implementing clinical and administrative 
consolidations and integrations. However, VA still lags behind the 
private sector in some respects. The significant changes were:
   patients treated per year increased by over 37 percent (from 
          2.8 to 3.8 million--includes veterans and non-veterans);
   annual inpatient admissions decreased 38 percent (347,894 
          fewer admissions) in 2000 while ambulatory care visits 
          increased by 56 percent to 39.2 million (14 million increase); 
          and
   approximately 1,150 sites of care delivery have been 
          organized under 22 VISNs.
  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 a non-urgent 
          patient appointment with their primary care or other 
          appropriate provider within 30 days (baseline will be 2001; 
          strategic goal is 90 percent);
   increase the percentage of patients who receive a non-urgent 
          appointment with a specialist within 30 days of the date of 
          referral (baseline will be 2001; strategic goal is 90 
          percent); and
   increase the percentage of patients who are seen within 20 
          minutes of their scheduled appointment to 75 percent in 2002 
          (1997 baseline is 55 percent; 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 II measures VA physicians' adherence to established industry 
practice guidelines for key diseases affecting veterans. Similarly, the 
Prevention Index II measures adherence to disease prevention and 
screening guidelines. VA plans to:
   increase the scores on the Chronic Disease Care Index II to 
          78 percent by 2002 (strategic goal is 82 percent); and
   increase the scores on the Prevention Index II to 76 percent 
          by 2002 (strategic goal is 85 percent).

  Medical Research: VA's research program provides $360 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 2002, 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.
  VA will increase to 60 percent the degree of Institutional 
          Review Board compliance with National Committee for Quality 
          Assurance accreditation (strategic goal is 100 percent).

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  Health Professions Education and Training: VA conducts education and 
training programs to enhance the quality of care provided to patients 
within the health care system. Education and training efforts for health 
profession students and residents are accomplished through partnerships 
with affiliated academic institutions. Title 38 U.S.C. mandates that VA 
assist in the training of health professionals for its own needs and for 
those of the Nation. Building on the long-standing, close relationships 
between VA and the country's academic institutions, VA plays a 
leadership role in defining the education of future health care 
professions to help meet the rapidly changing needs of the Nation's 
health care delivery system. Each year, approximately 85,000 medical and 
other students receive some or all of their clinical training in VA 
facilities through affiliations with over 1,200 educational 
institutions, including 107 medical schools. Many of these trainees have 
their health professions degrees and contribute substantially to VA's 
ability to deliver cost-effective and high-quality patient care during 
their advanced clinical training at VA.
   In 2002, VA will increase medical residents' and other 
          trainees' scores to 81 on a VA survey assessing their clinical 
          training experience (strategic goal is 85 out of a possible 
          100).

Veterans Benefits Administration (VBA)

  VBA processes veterans' claims for benefits in 57 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 57 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. 
These 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. Performance remains noticeably off track in 
the timeliness and accuracy of processing claims for disability 
compensation and pensions. Claims processing has become increasing 
complex as a result of an increased number of disabilities per claim as 
veterans age. Moreover, workload suddenly increased in 2001 as the 
result of new legislation and regulatory changes. The recent duty-to-
assist-veterans legislation and the agent-orange diabetes presumption 
regulation will generate a workload increase of more than 20 percent in 
2001. In light of these changes, performance will substantially decline 
in the near term. Improving benefits delivery is a top priority of this 
Administration, so considerable attention and resources will be expended 
to ensure that this temporary setback will be overcome.
  In 2002:
  VA will process rating-related disability claims in 273 days 
          (from 173 days in 2000; strategic goal is 74 days); and
  VA's rating accuracy (for core rating work) will be 75 percent 
          (from 59 percent in 2000; strategic goal is 96 percent).

Income Security

  Several VA programs help disabled veterans and their survivors 
maintain their income. The Federal Government will spend over $24 
billion for these programs in 2002, including the funds the Congress 
approves each year to subsidize life insurance for veterans who are too 
disabled to obtain 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.

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  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 2002.
  The number of veterans and survivors receiving compensation benefits 
will total an estimated 2.7 million in 2002. While the veteran 
population will decline, the compensation workload is expected to 
increase due mainly to numerous changes in eligibility such as the new 
duty-to-assist legislation and the agent-orange diabetes presumption. 
COLAs and increased payments to aging veterans will increase 
compensation spending by more than $5 billion from 2002 to 2006.

  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 cost-of-living adjustments, 
will cost nearly $3 billion in 2002. The number of pension cases will 
continue to fall from an estimated 587,000 in 2002 to less than 522,000 
in 2006 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 
$554 billion in insurance coverage to over 4.2 million veterans and 
service members in 2002. 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, military personnel, 
reservists, and survivors and dependents 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 $2.4 billion in 2002.
   In 2002, VA will increase to 67 percent the percentage of 
          VR&E participants who acquire and maintain suitable employment 
          and are considered to be rehabilitated (from the 2000 level of 
          65 percent; strategic goal is 70 percent).

  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. Legislation enacted in 2000 
dramatically increased these benefits by more than 20 percent and 
authorized MGIB payments to active-duty personnel to supplement their 
military tuition assistance. Basic benefits available now total over 
$23,000 per recipient, and program participants may receive additional 
benefits if they contribute more of their own pay.

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  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. VA estimates that nearly 650,000 veterans and service 
members will use these benefits in 2002. The MGIB also provides 
education benefits to reservists while they are in service. DOD pays 
these benefits, and VA administers the program. In 2002, more than 
70,000 reservists will use the program. Over 90 percent of MGIB 
beneficiaries use their benefits to attend a college or university.
   In 2002, VA will increase the MGIB usage rate by eligible 
          veterans to 60 percent (from 55 percent in 2000; strategic 
          goal is 70 percent).

Veterans' Housing

  In 2002, VA will guarantee an estimated 240,000 loans totaling $28.9 
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 $197 million in 2002 on this program. 
This amount 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 2002, of the loans headed for foreclosure, VA will be 
          successful 34 percent of the time in ensuring that veterans 
          avoid foreclosure.
  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 
completed in 2001. The Administration proposes to eliminate the vendee 
home loan program--a program unrelated to VA's mission. Vendee loans are 
awarded to the general public when purchasing a home acquired by the 
Federal Government after a veteran defaults on a VA-guaranteed home 
loan.

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 
$121 million in 2002 for VA cemetery operations, excluding 
reimbursements from other accounts. Over 82,700 veterans and their 
family members were buried in national cemeteries in 2000. In addition, 
VA has jointly funded 45 State veterans cemeteries through its State 
Cemetery Grants Program. In 2000, VA provided 327,514 headstones and 
markers for eligible veterans, who were buried in national, State, and 
private cemeteries. In addition, NCA installed 24 information kiosks and 
encouraged non-VA national and State veterans cemeteries to place 
headstone orders on-line.
  In 2002, 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 2000 level of 75 
          percent; strategic goal is 88 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. The 
Administration inherited some duplication and often redundant Government 
programs, but it will work to reduce these inefficiencies wherever 
possible. 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. 
All cash benefits that VA administers (i.e., disability compensation, 
pension, and MGIB benefits) are excluded from taxable income. Together, 
these three exclusions will cost nearly $4 billion in 2002, and over $20 
billion between 2002 and 2006.