[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[16.  Veterans Benefits and Services]
[From the U.S. Government Printing Office, www.gpo.gov]


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                   16.  VETERANS BENEFITS AND SERVICES

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                   Table 16-1.  Federal Resources in Support of Veterans Benefits and Services
                                          (Dollar amounts in millions)
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                                                                                                        Percent
                                Function 700                                     1993        2001       Change:
                                                                                Actual     Estimate    1993-2001
----------------------------------------------------------------------------------------------------------------
Spending:
  Discretionary budget authority............................................     16,235      22,512         39%
  Mandatory outlays.........................................................     19,848      22,918         15%
Credit Activity:
   Direct loan disbursements................................................      2,211       1,709        -23%
   Guaranteed loans.........................................................     35,434      29,548        -17%
Tax expenditures............................................................      1,980       3,490         76%
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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 and 
as recent as the Gulf War, recognizing the sacrifices of wartime and 
peacetime veterans during military service. The Federal Government 
spends over $45 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; provides medical care 
to veterans including lower-income and disabled veterans; and helps 
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. 
Along with direct Federal funding, certain tax benefits help veterans. 
The law keeps all cash benefits that the Department of Veterans Affairs 
(VA) administers (i.e., disability compensation, pension, and Montgomery 
GI Bill benefits) free from tax.
  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 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 
civilian 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). 
These demographic shifts result in changes in the types of benefits and 
services needed by veterans. Further, as technology improves, access to, 
and the quality of service improves.

                                     


Veterans Health Administration (VHA)

  Over the last eight years, VA has undergone sweeping reform that 
enabled its health care delivery system to provide medical care in a 
more efficient, outpatient-oriented system emphasizing continuity of 
care. VA provides health care services to 3.5 million veterans through 
its national system of 22 integrated health networks, consisting of 172 
medical centers, 766 ambulatory clinics, 134 nursing homes, 40 
domiciliaries, and 206 veteran centers. VA is an important part of the 
Nation's social safety net because over half of its patients are lower-
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

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because private insurance usually does not fully cover these conditions.
  Despite obstacles, VHA has dramatically transformed itself into a more 
efficient health care provider, with increased emphasis on quality and 
continuity of care. Early in the Clinton-Gore Administration, VHA began 
realigning 172 separate hospital campuses into 22 Veterans Integrated 
Service Networks (VISNs). This reorganization provided a new framework 
for management and change. The 22 network directors were empowered and 
held accountable to provide improved access and quality to needed health 
care services, while eliminating redundancy. In 1996, the Administration 
worked with the Congress to enact the Eligibility Reform Act. This 
allowed for the dramatic modernization of the system by allowing VA to 
treat patients in the most appropriate care setting, prioritizing 
veterans for eligibility, and allowing liberal contracting and sharing 
authorities (e.g., VA provides medical care services to DOD active duty 
military on a contract basis). Prior to eligibility reform, VA had to 
provide care as defined in statute. In many cases, it could only provide 
care on an inpatient basis. This requirement proved to be extremely 
costly, inefficient, and burdensome to VA and its veteran patients. Even 
simple procedures were being performed in hospitals. The shift from 
inpatient to outpatient care has allowed VHA to evolve into a more 
responsive health care delivery system.
  Under this Administration, VA has aggressively shed unnecessary 
personnel and replaced them with direct patient care services, expanded 
contract services and sharing agreements, and centralized procurement to 
capitalize on its buying power. In addition, VA has implemented national 
pharmaceutical formularies, realigned clinical support services, and 
consolidated, privatized, or franchised some ancillary services, such as 
laundry,

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food preparation, payroll/human resource administration, and fire 
protection.
  VA's quality of care, based on industry standards, is very high and 
continually improving. VA has become a leader in such patient-safety 
techniques as bar-coding, which ensures that patients receive the 
correct drugs, and a comprehensive medical-error reporting system that 
helps find common errors and develop prevention processes. Over the last 
four years, VA has completely shifted to coordinated care by 
establishing clinical teams--consisting of physicians, nurses, 
pharmacists, etc.--to provide care in a more consistent and thorough 
manner. Prior to 1997, patients were randomly assigned to available 
medical staff. Today, each veteran is assigned to a team and continually 
sees the same providers, improving continuity of care and patient 
satisfaction.
  VA also 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. It has increased from 44 
percent to 90 percent over the past six years. Similarly, the Prevention 
Index measures adherence to disease prevention and screening guidelines 
and has seen an increase from 34 percent to 81 percent over the past six 
years.
  In summary, the reengineering of VA health care has resulted in 
significant reductions in the cost per patient while quality of care 
increased. This 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:
  patients treated per year increased by over 35 percent (from 
          2.8 to 3.8 million). Further, 107 percent more homeless 
          patients were treated in 2000 compared to 1993;
  annual inpatient admissions decreased 38 percent (317,688 
          fewer admissions) by 2000 while ambulatory care visits 
          increased by 56 percent to 39.3 million (14.1 million 
          increase);
  approximately 1,300 sites of care delivery have been organized 
          under 22 Veterans Integrated Service Networks; and,
  over 350 new community-based outpatient clinics have been 
          established.

Veterans Benefits Administration (VBA)

  VBA processes veterans' claims for benefits in 57 regional offices 
across the country. These benefits include compensation for service-
connected disabilities, pensions for low-income veterans, vocational 
rehabilitation, education, home loans, and life insurance. Since 1993, 
VBA has realigned 57 regional offices into nine service delivery 
networks. It has established nine Regional Loan Centers for housing 
loans 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 awarding disability benefits claims 
through measures of accuracy, customer satisfaction, processing 
timeliness, and unit cost.

  Disability 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 decline

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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 as Social Security. While the veteran 
population is declining, the compensation caseload is currently 
remaining relatively constant due to changes in eligibility, better 
outreach efforts, and increasingly complicated disabilities as veterans 
age.
  Since 1993, compensation benefits have been expanded for Gulf War- and 
Vietnam-era veterans. Initially, VA established six ``presumptive'' 
service-connected disabilities for Vietnam veterans for herbicide 
exposure under the Agent Orange Act; there are currently nine 
presumptive conditions. The development of presumptive disabilities 
makes it easier for disabled veterans to obtain compensation benefits by 
eliminating the burden to prove that the disabling event occurred during 
military service. In 1994, VA designed and implemented criteria for the 
first time to compensate veterans with chronic disabilities resulting 
from undiagnosed illnesses (otherwise known as Gulf War Syndrome). In 
1997 and 2000 respectively, the Administration worked with the Congress 
to impart monetary benefits, heath care, and vocational rehabilitation 
to the children of Vietnam veterans who suffered from spina bifida or 
birth defects--extending benefits to children for the first time.

  Education Benefits: The Government originally created the 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. Since 1994, the benefit 
automatically increases each year in relation to the general inflation 
rate. Moreover, the Veterans Benefits and Health Care Improvement Act of 
2000 allows servicemembers to increase their benefits by up to $150 over 
the basic monthly amount by contributing an additional $600.
  MGIB beneficiaries receive a monthly check based on whether they are 
enrolled as full-time 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. The MGIB also provides education 
benefits to members of the Selected Reserves. DOD funds these benefits, 
and VA administers the program. Over 90 percent of MGIB beneficiaries 
use their benefits to attend a college or university. Basic benefits 
available now total over $23,400 per recipient, compared to $12,600 in 
1992 (an 86-percent increase).

National Cemetery Administration (NCA)

  VA provides burial in its national cemeteries for eligible veterans, 
active duty military personnel, and their dependents. VA manages 119 
national cemeteries across the country. In addition, VA has jointly 
funded 47 State veterans cemeteries through its State Cemetery Grants 
Program. Since 1993, NCA has expanded service by opening five new 
national cemeteries (Kent, Washington; Schuylerville, New York; Elwood, 
Illinois; Dallas, Texas; Rittman, Ohio), provided grants to States to 
establish 25 new State veteran cemeteries, and acquired 3,000 acres of 
land to meet burial demands. NCA improved service by installing 24 
information kiosks and by encouraging non-VA national and State veterans 
cemeteries to place headstone orders on-line. In addition, VA will 
establish six additional national cemeteries in areas of the United 
States in which the need for burial space is greatest. Those areas are: 
Atlanta, Georgia; Detroit, Michigan; Miami, Florida; Sacramento, 
California; Pittsburgh, Pennsylvania; and, Oklahoma City, Oklahoma.
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