[Senate Hearing 108-874]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-874
 
                          PENDING LEGISLATION

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS

                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 22, 2004

                               __________

       Printed for the use of the Committee on Veterans' Affairs


 Available via the World Wide Web: http://www.access.gpo.gov/congress/ 
                                senate






                                 _____

                 U.S. GOVERNMENT PRINTING OFFICE

21-349                 WASHINGTON : 2006
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001








                     COMMITTEE ON VETERANS' AFFAIRS


        .........................................................


                 Arlen Specter, Pennsylvania, Chairman

Ben Nighthorse Campbell, Colorado    Bob Graham, Florida
Larry E. Craig, Idaho                John D. Rockefeller IV, West 
Kay Bailey Hutchison, Texas              Virginia
Jim Bunning, Kentucky                James M. Jeffords, (I) Vermont
John Ensign, Nevada                  Daniel K. Akaka, Hawaii
Lindsey O. Graham, South Carolina    Patty Murray, Washington
Lisa Murkowski, Alaska               Zell Miller, Georgia
                                     E. Benjamin Nelson, Nebraska

           William F. Tuerk, Staff Director and Chief Counsel
                  Buddy Menn, Minority Staff Director



















                            C O N T E N T S

                              ----------                              

                         Tuesday, June 22, 2004

                                SENATORS

                                                                   Page


Specter, Hon. Arlen, U.S. Senator from Pennsylvania..............     1
    Prepared statement...........................................    11
Conrad, Hon. Kent, U.S. Senator from North Dakota................     1
    Prepared statement...........................................     2
Corzine, Hon. Jon S., U.S. Senator from New Jersey...............     4
    Prepared statement...........................................     5
Clinton, Hon. Hillary Rodham, U.S. Senator from New York.........     6
    Prepared statement...........................................     8
Graham, Hon. Bob, U.S. Senator from Florida......................    10
    Prepared statement...........................................    12
Bunning, Hon. Jim, U.S. Senator from Kentucky, prepared statement    12
Rockefeller IV, Hon. John D., U.S. Senator from West Virginia, 
  prepared statement.............................................    13

                               WITNESSES

Mansfield, Gordon H., Deputy Secretary, U.S. Department of 
  Veterans Affairs: accompanied by Tim McClain, General Counsel; 
  Jack Nicholson, Under Secretary for Memorial Affairs; Dr. 
  Michael Kussman, Acting Deputy Under Secretary for Health; and 
  Bob Epley, Associate 
  Deputy Under Secretary for Benefits............................    13
    Prepared statement...........................................    14
Mooney, Donald L., Assistant Director for Resource Development, 
  Veterans Affairs and Rehabilitation Commission, The American 
  Legion.........................................................    34
    Prepared statement...........................................    35
Hayden, Paul A., Deputy Director, National Legislative Service, 
  Veterans of Foreign Wars.......................................    41
    Prepared statement...........................................    42
Atizado, Adrian M., Assistant National Legislative Director, 
  Disabled 
  American Veterans..............................................    47
    Prepared statement...........................................    48
Blake, Carl, Associate Legislative Director, Paralyzed Veterans 
  of America.....................................................    53
    Prepared statement...........................................    55
Jones, Richard, National Legislative Director, AMVETS............    59
    Prepared statement...........................................    60
                                APPENDIX


                                                                   Page


Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, 
  prepared 
  statement......................................................    73
Murray, Hon. Patty, U.S. Senator from Washington, prepared 
  statement......................................................    73
The American Federation of Government Employees, AFL-CIO, 
  prepared statement.............................................    74
The Mortgage Bankers Association, prepared statement.............    81
The National Association of VA Physicians and Dentists (NAVAPD), 
  prepared statement.............................................    83
VetsFirst, a Division of United Spinal Association, prepared 
  statement......................................................    87
Letters from:
    The American Legion..........................................    92
    AMVETS.......................................................    93
    Blinded Veterans Association, New York, Inc..................    94
    Catholic War Veterans........................................    96
    Disabled American Veterans...................................    97
    Jewish War Veterans, U.S.A., Department of New York..........    98
    Military Order of the Purple Heart...........................    99
    Mount Sinai Hospital.........................................   101
    National Amputation Association..............................   102
    No Greater Love..............................................   103
    New York State Council of Veterans Organizations.............   104
    Paralyzed Veterans of America................................   105
    United Veterans Beacon House.................................   106
    Veterans of Foreign Wars of the United States................   107
    Veterans of the Vietnam War, Inc.............................   109
    Vietnam Veterans of America..................................   110





















                          PENDING LEGISLATION

                              ----------                              


                         TUESDAY, JUNE 22, 2004

                               U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:53 p.m., in 
room SD-628, Dirksen Senate Office Building, Hon. Arlen 
Specter, Chairman of the Committee, presiding.
    Present: Senators Specter, Bunning, Graham of Florida, and 
Rockefeller.

           OPENING STATEMENT OF HON. ARLEN SPECTER, 
                 U.S. SENATOR FROM PENNSYLVANIA

    Chairman Specter. Good afternoon, ladies and gentlemen. The 
hearing of the Committee on Veterans' Affairs will now proceed. 
We are joined by three of our colleagues today, and in order of 
seniority, we will hear from Senator Kent Conrad.

                STATEMENT OF HON. KENT CONRAD, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Conrad. Thank you, Mr. Chairman. Thank you very 
much.
    I appreciate this opportunity and appreciate the Committee 
giving some time to consider the legislation that I have 
proposed. I want to especially thank Senator Graham and Senator 
Rockefeller for co-sponsoring this legislation. Let me indicate 
that the legislation has been endorsed by the Disabled American 
Veterans and AMVETS.
    Mr. Chairman, let me just cut to the chase and ask 
unanimous consent that my full statement be made part of the 
record.
    Chairman Specter. Without objection, it will be made part 
of the record.
    Senator Conrad. Mr. Chairman, this bill is about looking at 
the question of access to health care facilities for our 
Nation's veterans. Last year, I held a hearing, and it was 
under the Budget Committee jurisdiction, to discuss in my home 
State veterans funding. What we heard at that hearing 
consistently and repeatedly was that the major problem facing 
veterans was an inability to get scheduled at an appropriate 
time, sometimes for primary care, but most of the problem was 
for specialty care. One veteran after another shared with us 
having to wait months to even get an appointment for specialty 
care and when they did get it, having to travel very long 
distances to get seen.
    In my State, it is not at all unusual for people to have to 
travel 400 miles to Fargo, North Dakota, to the VA center there 
to get care. In some cases, we had veterans telling us that 
they were told that they had to go to California to get 
specialty care, 1,000 miles from North Dakota. There has got to 
be a better way.
    And what I am proposing is a pilot program to look at this 
question and to see if we cannot do a better job of providing 
access to the 64,000 veterans in my State and the millions of 
veterans around the country. I recently learned of an instance 
where a Vietnam veteran from the Williston area of North Dakota 
was told he needed gastric bypass procedure. He is the veteran 
who was referred to a facility in California.
    In another case, a veteran told me he was forced to travel 
to Iowa for cancer treatment, a trip which involved 
extraordinary expenses for him and his family. I am very aware 
of the limitations in the VA budget to address these 
challenges. However, the waiting times for some in specialty 
care I think go beyond the pale.
    In view of these concerns, I introduced legislation that 
seeks ways to dramatically reduce waiting times for veterans. 
My bill would require the VA to undertake a 2-year pilot 
program in three VISNs to study the implementation cost and 
impact on VA services of several recent directives by the 
Secretary relating to the scheduling of medical appointments.
    Under the demonstration project, veterans would wait no 
longer than 30 days for an appointment for primary care 
evaluation, hospitalization, including specialty care, or 
outpatient care. Both new enrollees and established patients 
would be eligible. If the VA facility is unable to provide the 
medical care within a 30-day period, the Department would make 
arrangements for the care at another facility.
    Finally, my bill also requires the VA to report the waiting 
periods for appointments at facilities, including a breakdown 
of waiting periods by specialty.
    Mr. Chairman, again, I want to thank you very much for 
accommodating me here today. Thanks for giving me this 
opportunity. I hope you will take a close look at this bill. I 
think we have got to address this question of waiting times and 
do it in a way that allows us to analyze what the cost would be 
if we were to look at this on a system-wide basis.
    I understand we have got precious dollars here, and we are 
under enormous pressure. But I think we need to do a careful 
examination of what we are doing now and to run a pilot to see 
if we could not improve it and make a difference.
    I thank the Chairman.
    [The prepared statement of Senator Conrad follows:]

                Prepared Statement of Hon. Kent Conrad, 
                     U.S. Senator from North Dakota
    Mr. Chairman, Senator Graham, thank you for scheduling this hearing 
on the Veterans Specialty Care Act, S. 2063. I recently introduced this 
legislation in response to concerns that I have heard over and over 
from veterans over serious delays in scheduling medical appointments at 
VA facilities.
    Before we begin, let me also express my appreciation to Senators 
Graham, Akaka, Dorgan, Johnson and Rockefeller for their strong support 
as co-sponsors of my bill. I also want to thank the Disabled American 
Veterans and AMVETS for their guidance and support in the preparation 
of this legislation.
    Last fall, as Ranking Member of the Senate Budget Committee, I 
scheduled a hearing in my hometown of Bismarck, North Dakota to review 
funding for the Department of Veterans Affairs (VA) and to listen to 
the concerns of veterans regarding VA medical care.
    In my home State of North Dakota, more than 50 percent of veterans 
live in rural areas that are far from VA medical facilities. At my 
hearing, I heard testimony from veterans who spoke about limited access 
and delays they face to get medical treatment at VA health centers.
    Over the past few years, as the Committee is aware, there have been 
numerous reports of veterans having to wait considerable periods for 
both primary and specialty care at VA medical facilities across the 
Nation.
    Within the past year there has been some progress in reducing the 
waiting list for medical appointments, particularly for primary care. 
The expansion of community based outpatient clinics (CBOCs) in Grafton, 
Bismarck and Minot has helped reduce these waiting periods.
    Unfortunately, the same cannot be said of specialty care. Again, 
this is of special concern to me and the more than 64,000 veterans that 
I represent in my State because of the great distances that so many of 
them are forced to travel for the care they need.
    North Dakota veterans continue to tell me their own stories of 
waiting months for specialty care appointments such as eye care, 
orthopedics and cardiology. And once the appointments are made, the 
distance that veterans in North Dakota have to travel to get to the 
nearest VA Medical Center is staggering. Veterans in the western part 
of North Dakota must travel more than 400 miles to get to the VA 
Medical Center in Fargo to get their care. And in many cases, the 
distance is greater.
    I recently learned of an instance where a Vietnam veteran from the 
Williston area of North Dakota, was told he needed a gastric bypass 
procedure. News of needing this major procedure would be unsettling 
enough, but this veteran, who proudly served our Nation, was then 
informed that the only VA facility available to provide the surgery was 
more than a thousand miles away in California. In another case, a 
veteran told me that he was forced to travel to Iowa for cancer 
treatment, a trip that involved considerable expense for him and his 
family.
    Mr. Chairman, I am very much aware of the limitations on VA funding 
and of the challenges that they face in recruiting qualified medical 
specialists. However, the issue of waiting periods for specialty care 
remains an issue of concern, especially for veterans in our most rural 
areas of the country.
    In view of these concerns, I introduced legislation earlier this 
year that seeks ways to dramatically reduce waiting times for veterans. 
We owe veterans timely health care. That's the goal of my legislation. 
My bill would require the VA to undertake a 2-year pilot program in 
three VISNs to study the implementation, cost and impact on VA services 
of several recent directives by VA Secretary Principi relating to the 
scheduling of medical appointments.
    Under the demonstration project, veterans would wait no longer than 
30 days for an appointment for primary care evaluation, hospitalization 
including specialty care or outpatient care. Both new enrollees and 
established patients would be eligible. If the VA facility is unable to 
provide the medical care within the 30 day period, the Department would 
make arrangements for the care at another VA facility or non-VA 
facility. Every effort, however, would be made to provide the medical 
care for the veteran through the VA healthcare network.
    Finally, because of concerns raised by the General Accounting 
Office and by the VA's Office of the Inspector General regarding the 
accuracy of VA data on appointment periods, the bill requires the VA to 
report on waiting periods for health care appointments, primary care 
and specialty care services. The VA would also be required to report on 
the waiting periods for appointments by VA facility and VISN, including 
a breakdown of waiting periods by specialty. This detailed report would 
be submitted to Congress by FY07 with recommendations for addressing 
the waiting periods.
    Mr. Chairman, thank you again for giving me the opportunity to 
share my views on this legislation. I hope that the Committee will 
authorize the Department of Veterans Affairs to undertake a 
demonstration to help reduce the travel times and waiting periods for 
care at VA medical facilities. Such an initiative would greatly help 
our veterans living in rural areas.
    Let me also express my appreciation to you and the Members of the 
Committee for all that you do to ensure that our Nation's veterans 
receive the benefits that they have earned. Your work is so important 
not only for those who have served, but also for our veterans returning 
from Iraq, Afghanistan and from other peacekeeping deployments around 
the globe who will need the services of the VA.
    Mr. Chairman, I ask unanimous consent that the full text of my 
remarks along with the letters of endorsement from the Disabled 
American Veterans and the AMVETS be included in the hearing record.

    Chairman Specter. Thank you very much, Senator Conrad.
    Senator Corzine.

               STATEMENT OF HON. JON S. CORZINE, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Corzine. Thank you, Chairman Specter.
    I am under the impression that my colleague from New York 
is senior.
    Senator Clinton. Go ahead.
    Senator Corzine. I thank the Chairman and Ranking Member 
Graham and Members of the Committee for the opportunity to 
testify on two important pieces of legislation which I have 
introduced, and I will summarize these. I have a complete 
statement I would submit for the record.
    Chairman Specter. Your full statement will be made a part 
of the record.
    Senator Corzine. Thank you.
    The two pieces of legislation I talk about are one to 
increase the VA home loan program, the size of the loan 
program, and to improve low-income veterans' access to VA 
health care services. Along with Senator Murkowski, I have 
proposed that we increase the VA home loan guarantee to comport 
with Freddie Mac's conforming loan limit which applies in the 
conventional market, and I understand the Chairman has a piece 
of his legislation that deals with the overall comprehensive 
veterans' legislation that has a recommendation very similar to 
my own which would increase the loan limit up to $333,000 and 
match up with Freddie Mac's loan limit.
    The only difference between the Chairman's recommendation 
and mine is that I would also tie this to Freddie Mac's 
automatic cost-of-living adjustment, indexing it as we go 
forward. I think it is very important that the VA limit now is 
$240,000 roughly; it does not really coincide with a number of 
high cost areas of the country. I would just cite the Newark 
Metropolitan Statistical Area has an average home price of 
$331,000, and $240,000 just does not comport with that, and so, 
I would hope that we could make this adjustment.
    This has the additional benefit of actually producing $42 
million of revenue for the Treasury, so it is self-financing as 
well as being constructive for our veterans; I think an 
important, positive step to a successful program that already 
exists.
    Along with Senator Clinton, who will also speak to the same 
issue that gets at how the VA defines low-income veterans, we 
have introduced Senate Bill 1014. This bill would replace the 
national income threshold for consideration in Priority Group 
5, which is currently $24,000, for all parts of the country. It 
is a uniform, one-shoe-fits-all with regional thresholds 
defined by the Department of Housing and Urban Development, 
kind of curious in and of itself.
    This simple but far-reaching proposal would help low-income 
veterans across the country afford quality health care and 
ensure that Veterans Integrated Services Networks or VISN's 
receive adequate funding to care for their distinct veteran 
populations.
    This is really just trying to fit the application of health 
care services for the poor, taking into account the 
significantly different cost of living elements in different 
regional differences. This has been studied by Rand and the 
General Accounting Office, which recommend that there be a 
geographical means test, something which is supported by 
studies and data, and I understand that the Veterans 
Administration made some adjustments to the medical center 
reimbursement formula, but most of those who have looked at 
this believe that we need to work on this baseline number, and 
I would recommend this as a very potent step to service our 
poor, our low-income veterans in high-cost areas and very much 
ask for the support of the Committee.
    Appreciate it very much.
    [The prepared statement of Senator Corzine follows:]

              Prepared Statement of Hon. Jon S. Corzine, 
                      U.S. Senator from New Jersey
    Thank you, Chairman Specter, Ranking Member Graham, and Members of 
the Committee for giving me the opportunity to testify today on two 
important pieces of legislation I have introduced. These bills seek to 
enable more veterans to utilize the successful VA home loan program and 
to improve low-income veterans' access to VA health care services.
    Senate bill 2522, which I introduced last week with support of 
Senator Murkowski, would increase the VA home loan guaranty to comport 
with the Freddie Mac conforming loan limit, which applies to the 
conventional mortgage market. I would also note that the House 
Veterans' Affairs Committee recently marked up comparable legislation.
    Today, potential homebuyers may borrow up to $333,700 for a 
conventional mortgage. Veterans participating in the VA home loan 
program, however, may only borrow up to $240,000. While a loan of this 
size is sufficient to assist many veterans in purchasing a home, it is 
insufficient for many other veterans, particularly those living in high 
cost areas, like my State of New Jersey. In most places in my State, 
the cost of purchasing a home exceeds $240,000. For example, the median 
home sale price in the Newark metropolitan statistical area (MSA) in 
2003, was $331,200.
    Mr. Chairman, I believe that you have introduced comprehensive 
veterans' legislation that includes a provision similar to my bill. 
Your legislation would increase the VA home loan guaranty to $83,425, 
which would allow veterans to borrow up to $333,700, as the practice 
among lenders is to loan up to 4 times the amount of the guaranty.
    Mr. Chairman, my legislation takes this increase one step farther 
by tying it to the Freddie Mac limit, which increases annually to 
account for inflation. Indexing the guaranty to this limit, therefore, 
would ensure that guaranty and available mortgage limits rise with 
housing inflation.
    Mr. Chairman and Mr. Ranking Member, I would add that according to 
the Congressional Budget Office (CBO), S. 2522 would actually raise 
approximately $42 million a year, through increased user fees 
associated with the VA home loan program.
    This legislation is simple, it's cost effective, and it would 
assist our veterans, who have traded years of traditional employment to 
serve our country, purchase a home. I hope that the Committee will work 
to pass this legislation.
    I have also introduced Senate bill 1014, with the support of 
Senator Clinton, to change the way the Veteran's Administration defines 
low-income veterans by taking into account variations in the cost of 
living in different parts the country.
    This bill would replace the national income threshold for 
consideration in Priority Group 5--currently $24,000 for all parts of 
the country--with regional thresholds defined by the Department of 
Housing and Urban Development. This simple but far-reaching proposal 
would help low-income veterans across the country afford quality health 
care and ensure that Veterans Integrated Service Networks or VISNs 
receive adequate funding to care for their distinct veteran 
populations.
    In New Jersey, HUD's fiscal year 2004 standards for classification 
as ``low-income'' exceed $24,000 per year in every single county. And 
some areas exceed the VA baseline by more than 50 percent. If Congress 
is serious about designating some veterans as ``low-income'' and 
adjusting their benefits accordingly, it seems to me that we should 
make that designation in a meaningful way that accounts for regional 
differences in the cost of living.
    Indeed, studies by both the RAND Institute and the General 
Accounting Office recommend a geographic means test like the one 
provided in this legislation to ensure the proper allocation of 
resources under VERA.
    I understand that the Veterans Administration has made some 
adjustments to the medical center reimbursement formula, and I support 
any changes that provide proper access to healthcare for high-cost and 
low-cost areas alike. However, codifying a regional means adjustment 
would go a long way to protect low-income veterans in the ways that 
Congress intended.
    Our Nation's veterans have made great sacrifices in defense of 
American freedom and values, and we owe them a tremendous debt of 
gratitude. These bills would improve existing homeownership and health 
care initiatives that have served millions of veterans so that all 
America's veterans, including those living in high cost areas, may 
participate in these programs.

    Chairman Specter. Thank you very much, Senator Corzine.
    I may have miscalculated. I calculate that Senator Clinton 
was elected in 2000. I calculate Senator Clinton from the 
Moynihan seat, and Senator Corzine was elected also in 2000 
from the Lautenberg seat.
    Senator Corzine. Yes, sir.
    Chairman Specter. The first Lautenberg seat.
    [Laughter.]
    Chairman Specter. So your seniority is the same, 2000. But 
Senator Clinton is from a bigger State.
    Senator Corzine. Bigger State.
    Senator Clinton. But in the interests of comity, Mr. 
Chairman, we like to get along with our little neighbor.
    [Laughter.]
    Chairman Specter. I should have recognized Senator Clinton 
first which I now do nunc pro tunc.

           STATEMENT OF HON. HILLARY RODHAM CLINTON, 
                   U.S. SENATOR FROM NEW YORK

    Senator Clinton. Thank you, Mr. Chairman. I also would ask 
unanimous consent that my entire statement be submitted for the 
record.
    Chairman Specter. Without objection.
    Senator Clinton. Mr. Chairman, Senator Corzine and I have 
introduced S. 1014 because of the need to recalculate the level 
of low income that makes veterans eligible for certain 
services. This is an important piece of legislation for our 
region of the country. I assume it would also affect directly 
the Chairman's State as well, because the overall level of 
appropriations for veterans' health care is one issue, and I 
join with Senator Conrad's concern about waiting periods, but 
the equitable allocation of this health care funding across 
geographic regions and the potential disenrollment of low-
income veterans is especially pressing in our part of the 
country.
    This addresses the issue of regional inequality and the 
treatment of Category 7 veterans in the VA's funding 
distribution formula. And as Senator Corzine said, the GAO 
showed the regional disparities are quite dramatic. And the 
study conducted by the GAO found that the formula adopted 
approximately 8 years ago by the VA to distribute Federal 
health dollars to veterans' health care networks unfairly 
penalized Northeastern and Midwestern States.
    Veterans' hospitals in those two regions lost approximately 
$921 million under the formula, and from 1996 to 2001, the New 
York-New Jersey network of facilities witnessed a 10 percent 
decline in funding for veterans health facilities. And as this 
Committee well knows, in 1997, the Congress implemented the 
Veterans Equitable Resource Allocation System, known as VERA. 
Unfortunately, the VERA formula was created in a way that 
failed to take into account regional differences in the cost of 
living.
    Now, when the distinction between Category 7 and Category 8 
veterans was established, it was thought that Priority 7 
veterans would be able to afford private insurance on which the 
facilities could rely on payment for care. However, because of 
the high cost of living in certain parts of our country, 
particularly in the Northeast, which we represent, even 
Priority 7 veterans, who by definition, are above the VA's low-
income threshold, often cannot afford to help defray their cost 
of care through private insurance.
    This oversight in the VERA formula dangerously shortchanges 
regions such as New York and New Jersey, Pennsylvania, the 
Midwest and elsewhere. We know that we have a higher cost of 
living. I mean, just simply heating your house during our cold 
winter months takes a significant proportion of a lot of our 
veterans' disposable income. And I am hoping that we can get 
favorable action on S. 1014 to replace the national income 
threshold currently at about $24,000, with regional thresholds, 
defined, as Senator Corzine said, by the Department of Housing 
and Urban Development.
    Now, recently--and I applaud this action--Secretary 
Principi has directed the VA to include Category 7 veterans in 
the VERA funding formula. However, we should not subject the 
vagaries of these funding formulas to a particular VA 
secretary, so to take what Secretary Principi has done through 
Senate Bill 1014, we would put it into law, and we would 
therefore guard against any risks that a future VA Secretary 
would change direction.
    So I hope that we are able to provide this change in the 
formula that really will create more equitable funding for the 
veterans that we represent in the Northeast and the Midwest.
    Finally, Mr. Chairman, I want to also bring to the 
Committee's attention S. 2133, to name the Department of 
Veterans Affairs Medical Center in the Bronx as the James J. 
Peters Department of Veterans Affairs Medical Center. Mr. 
Peters was a unique American individual who made enormous 
contributions to the advancement of health care for spinal cord 
injured veterans, and he exemplified the sacrifice of America's 
veterans.
    When he passed away on September 6, 2002, he had been 
serving as the Executive Director of the Eastern Paralyzed 
Veterans Association for over 31 years. There is widespread 
support for honoring Mr. Peters by making this change in the 
name of the VA Center in the Bronx, and so, I appreciate the 
Committee's attention to that piece of legislation as well.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Clinton follows:]

          Prepared Statement of Hon. Hillary Rodham Clinton, 
                       U.S. Senator from New York
    I would like to thank the Chairman, Senator Specter of 
Pennsylvania, and the Ranking Member, Senator Graham of Florida, and 
the rest of the distinguished Members of the Committee, for their 
willingness to hold a hearing that includes S. 1014, the veterans 
funding legislation that I introduced with Senator Corzine in May 2003, 
as well as S. 2133, to name the Department of Veterans Affairs medical 
center in the Bronx, New York, as the James J. Peters Department of 
Veterans Affairs Medical Center.
    In Washington, we often measure our dedication to the men and women 
in uniform by how we support soldiers on active duty. While that 
support is vital, the Members of this Committee know full well that 
just as important a measure of our dedication is how we take care of 
our veterans after they have served. The experience of war is often 
just the beginning of their struggle.
    We owe to our veterans more than just words. We owe to them, as 
legislators, our active support. I have, along many of our Senate 
colleagues, worked to maintain, enhance, and guarantee an adequate 
level of health care funding for the Department of Veterans' Affairs. 
As American troops serve in harm's way in Iraq, Afghanistan, and so 
many other parts of the world, this should be time when we do more for 
our veterans not less. Our mere presence overseas will result in more 
veterans, many with life-long medical needs. To repay America's 
veterans for their sacrifice, I believe we should find a way to fully 
fund their health care. That is why I am so pleased that the Committee 
today will also address Senator Johnson's bill, S. 50, the Veterans 
Health Care Funding Guarantee Act. I am a co-sponsor of that 
legislation, and am hopeful that today's hearing will demonstrate the 
unequivocal need for full and mandatory funding for veterans' health 
care.

S. 1014

    It is a pleasure for me to sit beside Senator Corzine, my partner 
on S. 1014. It builds upon legislation that Senator Corzine and I first 
introduced in the 107th Congress in June 2002. S. 1014 focuses on one 
of the paramount challenges Congress faces. That issue is veterans' 
health care funding. As you know, the overall level of appropriations 
for veterans' health care is but one of several important facets of 
veterans' health care funding. S. 1014 zeroes in on two other important 
aspects, which are the equitable allocation of veterans health care 
funding across geographic regions and the potential disenrollment of 
low-income veterans.
    Senator Corzine and I introduced this legislation to address the 
issue of regional inequity in the treatment of category 7 veterans in 
the VA's funding distribution formula. A study showing this inequity 
was published by the U.S. General Accounting Office (GAO). The GAO 
study (GAO-02-338) is entitled ``VA Health Care, Allocation Changes 
Would Better Align Resources with Workload.'' This study found that the 
formula adopted approximately 8 years ago by the VA to distribute 
Federal health care dollars to veterans' health care networks unfairly 
penalizes Northeast and Midwest States. According to the GAO report, 
veterans' hospitals in the Northeast and Midwest lost approximately 
$921 million under the formula. From 1996 to 2001, the New York-New 
Jersey network of facilities witnessed a 10 percent decline in funding 
for veterans' health facilities.
    As you know, in 1997, Congress implemented the Veterans Equitable 
Resource Allocation system, or VERA, distributed medical care funding 
provided by the VA. The funding formula was established to better take 
into account the costs associated with various veteran populations. To 
allocate money to the Veterans' Integrated Service Networks (VISNs), 
VERA divides veterans into priority groups based on income and other 
factors. Veterans who have no service-connected disability and whose 
incomes fall below about $24,000 are considered low-income, and 
hospitals and other treating facilities are therefore reimbursed by the 
VA for their treatment.
    Unfortunately, the VERA formula that was created until recently 
failed to take into account regional differences in the cost of living, 
a significant metric in determining veteran healthcare costs. When the 
distinction between category 7 and category 8 veterans was established, 
it was thought that priority 7 veterans would be able to afford private 
insurance on which the facilities could rely for payment for care the 
facilities provided. However, because of the high cost of living in 
some areas of the United States, even priority 7 veterans who, by 
definition, are above the VA's low-income threshold, often cannot 
afford private insurance. This oversight in the VERA formula 
dangerously shortchanged regions, such as New York, with high costs of 
living and often elevated healthcare expenses. Under that veterans' 
health funding formula, New York got the short end of the stick--losing 
tens of millions of dollars. Unfairly penalizing States in the 
Northeast and Midwest, like New York, resulted in cutbacks in health 
services for veterans.
    S. 1014 replaces the national income threshold for classification 
as low-income veteran--currently about $24,000 for all parts of the 
country--with regional thresholds defined by the Department of Housing 
and Urban Development. The adjustment implemented by S. 1014 would help 
ensure that low-income veterans across the country have access to 
quality health care and help ensure that Veterans Integrated Service 
Networks (VISNs) receive adequate funding to care for their distinct 
veterans populations. Secretary Principi's decision to include category 
7 veterans in the VERA funding formula deserves praise because it meets 
this serious challenge. S. 1014 would help guard against a different 
decision in future, and would help to eliminate any doubt as to the 
low-income status of these veterans.
    In addition, S. 1014 would meet another long-term challenge for 
Category 7 veterans that has arisen in the wake of the Secretary's 
decision to freeze enrollment of veterans in priority group 8. 
Delineating low-income veterans in priority group 5 from the ``near 
poor'' veterans in priority group 7 puts priority group 7 veterans at 
risk of disenrollment from the VA health care system, as VA budgets are 
likely, in the absence of mandatory funding, to continue to be strained 
in future years. I am deeply concerned that if VA health care continues 
to be under-funded, the Secretary will decide to disenroll current 
priority group 8 veterans in a misguided effort to cut costs. From that 
decision it is easy to picture the Secretary's next cost-cutting step 
being a freeze on enrollment or the disenrollment of priority group 7 
veterans. Disenrollment would mean that veterans who cannot otherwise 
afford health care could be entirely cut out of the system, leaving 
them uninsured and unable to receive care at a VA facility.
    Moving veterans who fall below the HUD threshold and who are now in 
priority 7 into priority group 5 would help insulate them from 
enrollment restrictions and help guarantee them continued access to 
quality health care. Additionally, the Secretary's recent decision to 
include these veterans in the VERA funding distribution formula has 
removed the potential fiscal impact that reclassifying these veterans 
into priority group 5 may have had, thus removing the sole reason for 
opposition. For these reasons, I urge the Committee's approval of S. 
1014.

S. 2133

    The second piece of legislation I would like to discuss is S. 2133, 
to name the Department of Veterans Affairs medical center in the Bronx, 
New York, as the James J. Peters Department of Veterans Affairs Medical 
Center.
    I consider it an honor to have been given the opportunity to 
sponsor this legislation because James J. Peters was a uniquely 
American individual who made enormous contributions to the advancement 
of health care for spinal cord injured veterans, as well as other 
veterans and non-veterans alike. Jim Peters exemplified both the 
sacrifice of America's veterans and the unquenchable spirit of service 
that characterizes so many of our veterans after they leave military 
service.
    Jim Peters passed away on Friday, September 6, 2002, after serving 
as the Executive Director of the Eastern Paralyzed Veterans Association 
for over 31 years. There is simply no better way to honor this man, who 
worked tirelessly to improve the lives of his fellow paralyzed veterans 
then to rename in his honor the home of the VA Spinal Cord Injury 
Center that he toiled to build.
    In September 1969, Mr. Peters began his life-long career at the 
Eastern Paralyzed Veterans Association as Deputy Executive Director. 
The next year, Life magazine published a story about the deplorable 
conditions facing paralyzed Vietnam veterans at the old Bronx Veterans 
Administration Hospital. Jim had worked with the Life staff, 
coordinating photos and suggesting patients for interviews. The 
resulting article forced the VA to build a new Bronx Veterans Affairs 
Medical Center (VAMC) and to establish a stand-alone national Spinal 
Cord Injury Service that still exists today and has set the benchmark 
for SCI care to both veterans and non-veterans with spinal cord injury.
    Jim devoted his life's work to the improvement of health care for 
spinal cord injured veterans. Through his efforts, Eastern Paralyzed 
Veterans Association joined with local institutions, including the 
Mount Sinai Medical Center and the New York Medical College, to provide 
advanced methods of treatment to paralyzed veterans in the metropolitan 
area. On the national level, Mr. Peters worked tirelessly and 
successfully to have spinal cord medicine designated an official sub-
specialty by the American Board of Physical Medicine and 
Rehabilitation. He was also instrumental in establishing a 
professorship in spinal cord medicine at Stanford University, and in 
revitalizing the American Paraplegia Society, the national organization 
of physicians who provide care to persons with spinal cord injury. Jim 
was also the founder of the American Association of Spinal Cord Injury 
Nurses, and the American Association of Spinal Cord Injury 
Psychologists and Social Workers.
    Jim Peters also had a passionate commitment to spinal cord 
research. Through his leadership, Eastern Paralyzed Veterans 
Association once more joined with Paralyzed Veterans of America to 
build the PVA/EPVA Center for Neuroscience and Regeneration Research of 
Yale University, located at the West Haven VA Medical Center. At this 
facility, basic research is conducted toward a cure for spinal cord 
injury and multiple sclerosis. He also helped to establish the Spinal 
Cord Damage Research Center at the Bronx VA Medical Center, the 
facility we are seeking to rename in his honor, where scientists 
investigate the impact of spinal cord injury on other body systems. 
During Peters' tenure at Eastern Paralyzed Veterans Association, the 
Association provided $4.6 million to fund projects through the Spinal 
Cord Research Foundation.
    Additionally, Mr. Peters served on many national and local bodies 
involved in veterans and spinal cord health care. He was appointed by 
President Carter and reappointed by President Reagan to a Select 
Commission on Spinal Cord Injury. He served as special consultant to 
several chief medical directors in the Department of Veterans Affairs. 
Under VA Secretary Jesse Brown, Jim was appointed to a Task Force for 
Improved SCI Care. He also served on the Board of Directors of the 
Alliance for Aging Research. In New York, Peters was a member of the 
State Disability Prevention Council and the State Spinal Cord Injury 
Research Commission.
    Clearly, Jim's life was dedicated to improving the lives of his 
fellow paralyzed veterans. Tangible evidence of his dedication is the 
VA Spinal Cord Injury centers of excellence and the Bronx VAMC.
    The outpouring of support that this legislation has received from 
veterans service organizations (VSOs) and others is truly staggering. 
Together with this statement, I am submitting letters of endorsement 
from the following national VSOs or their New York State or regional 
organizations: American Veterans (AMVETS), Blinded Veterans 
Association, Catholic War Veterans of the United States of America, 
Disabled American Veterans, Jewish War Veterans of the United States, 
Military Order of the Purple Heart, Paralyzed Veterans of America, 
Veterans of Foreign Wars, Veterans of the Vietnam War, and Vietnam 
Veterans of America. In addition, I am submitting a letter from The 
American Legion, Department of New York, stating that the department 
does not, as a matter of record, endorse naming Federal facilities, but 
does not oppose renaming the Bronx VAMC for James J. Peters, ``honoring 
his commitment to veterans.''
    Other organizations supporting my legislation include: New York 
State Council of Veterans Organizations, Legislative Representatives; 
The Mount Sinai Hospital (affiliated with the Bronx VAMC); National 
Amputation Foundation; No Greater Love; and United Veterans Beacon 
House.

Conclusion

    In conclusion, I would like to State that I believe providing fully 
for our veterans health care needs is a moral obligation. The 
Committee's approval of S. 1014 would be an important step toward the 
correction of regional inequities and would help protect near poor 
veterans from disenrollment. Likewise, the Committee's approval of S. 
2133 would be an important step toward honoring James J. Peters, a 
truly extraordinary veterans advocate who is linked so closely with the 
Bronx VAMC's delivery of quality medical care to the region's veterans. 
I thank the Committee for including S. 1014 and S. 2133 in the hearing 
today, and for allowing me the opportunity to submit this statement.

    Chairman Specter. Thank you very much, Senator Clinton.
    We have a long list of witnesses, and Senator Stevens has 
scheduled a full markup of the Department of Defense 
appropriations bill at 3:30.
    I am going to waive my opening statement and go right to 
the witnesses. Does anyone--Senator Graham, as Ranking, do you 
care to make an opening statement?

                 STATEMENT OF HON. BOB GRAHAM, 
                   U.S. SENATOR FROM FLORIDA

    Senator Graham of Florida. Thank you, Mr. Chairman. I do 
not. I would like to put a statement in the record, and I would 
like to recognize the special significance of today. Today is 
the 60th anniversary of the signing by President Franklin 
Delano Roosevelt of what became known as the GI Bill of Rights.

    I do not think there have been many pieces of legislation 
in the over 200 year history of this country that have had such 
a transformational effect as the opportunity for millions of 
young Americans who had served their Nation at wartime to then 
return and secure a college education and provide to this 
country the human power which has been responsible for our 
phenomenal growth and prosperity since the end of World War II.

    So I would just like to recognize this significant 
anniversary and to commend those wise enough to develop this 
program and those wise enough to take advantage of it.

    Chairman Specter. Does anybody else wish to make an opening 
statement?

    Senator Bunning. I have one for the record.

    Chairman Specter. All will be made a part of the record, 
including mine.

    [The prepared statements of Senators Specter, Graham, 
Bunning and Rockefeller follow:]
    Prepared Statement of Hon. Alan Specter, Chairman, U.S. Senator 
                           from Pennsylvania
    Good afternoon, ladies and gentlemen.
    The purpose of the Committee's hearing this afternoon is to develop 
a record on a number of legislative proposals that are pending before 
the Committee.
    The range of subjects covered by the bills that are on today's 
agenda is extensive and eclectic, and we will hear from a number of 
witnesses. Because we have many bills to consider, and we have many 
witnesses to hear--and because time is, as always, short--I will not 
make an extended statement. I will just hit on a few highlights and, 
after giving the Committee's other members an opportunity to comment 
briefly, I will then turn to the witnesses who are with us this 
afternoon.
    First, I note that the Committee is pleased to have two United 
States Senators before it. Welcome, Senators Conrad and Corzine. These 
two distinguished witnesses will be the first to testify, and they will 
offer testimony on bills before the Committee that they have 
introduced: Senator Conrad will comment on S. 2063, relating to a 
proposed pilot project to speed the scheduling of medical appointments 
at VA hospitals and clinics; and Senator Corzine will testify on S. 
2522, a bill to increase the amount of home loan mortgages that VA is 
authorized to guarantee. We look forward to the testimony of these 
distinguished witnesses.
    Our other witnesses will also comment on these two bills--and on 
numerous other bills on the agenda that cover a broad range of 
important policy issues. Among the legislative changes proposed in 
bills before the Committee are these:
     Proposed increases in Montgomery GI Bill benefits that I 
(and Senator Miller of Georgia) have introduced;
     A bill that I have introduced to provide VA-purchased 
prescription drugs to all Medicare-eligible veterans--and thus give 
elderly veterans access to the significant discounts on needed 
medications that VA is able to negotiate;
     A bill to provide that, henceforth, VA-provided medical 
care will be funded by mandatory, as distinguished from discretionary, 
budget accounts; and
     Bills supported by the Administration to provide cost-of-
living increases in VA compensation benefits; to revamp VA's physician 
pay system; and to provide VA-
financed neo-natal care to in cases where VA is providing (or paying 
for) a veteran-mother's maternity care.
    We look forward to the oral and written testimony of the witnesses 
that will appear today on these--and other--issues. And the Committee 
will, of course, very much take those views into account as it develops 
its markup agenda. I hope to be able to proceed with a markup in the 
relatively near future.
        Prepared Statement of Hon. Bob Graham, Ranking Member, 
                 U.S. Senator from the State of Florida

    Thank you, Mr. Chairman, for holding this hearing today. We 
certainly have a full legislative agenda before us today, so I will be 
brief.

    Before turning to the agenda, however, I would like to note the 
milestone in American history that we have reached today. Sixty years 
ago today, President Roosevelt signed the Servicemen's Readjustment Act 
of 1944 into law. Better known as the ``G.I. Bill,'' it changed the 
Nation by enabling millions of veterans to purchase homes and receive a 
college education. It is appropriate that on this anniversary we are 
discussing my ``Montgomery G.I. Bill for the 21st Century'' that 
continues the intent of the original ``G.I. Bill'' by increasing the 
ability of our veterans to acquire higher education and purchase homes 
into today's competitive housing market.
    I am pleased that legislation for mandatory funding is receiving 
some attention today, as it assures sufficient funding for health care 
in the same manner that the GI Bill assures sufficient funding for 
veterans' education and housing needs. Veterans groups--like many of 
us--have become frustrated with the yearly battle for VA health care 
funding. Continuing Resolutions have unfortunately become the norm. 
This funding uncertainty has veterans caught in the middle, health care 
providers held hostage, and VA managers unable to plan for the 
following year. Without a budget resolution as a starting point again, 
it appears we are headed down a similar track.
    The issue of entitlements is undoubtedly controversial. From a 
budgetary point of view, the significance of such programs as Medicare 
and Social Security is that costs cannot generally be controlled in the 
short term. From a policy perspective, entitlements generate a reliable 
funding stream. Yet the mandatory funding proposals under consideration 
seek to create a global entitlement for the program, rather than an 
individual entitlement. I am interested in learning more about the net 
effect of this choice. What we know for sure is that we cannot continue 
to put the financial vise on a health system that requires people to 
deliver services.
    Also on the agenda today is the Chairman's legislation to obviate 
the need for VA doctors to re-diagnose patients who seek affordable 
prescription drugs. Today, ten million Medicare beneficiaries are also 
eligible for VA health care. Requiring the government to pay twice to 
issue prescriptions--once under Medicare and then again under VA--is a 
waste of taxpayer dollars.
    It is no secret to anyone on Capitol Hill that VA is able to obtain 
discounts for prescription drugs which are unparalleled in the 
marketplace. I fully support the premise of this legislation as it will 
allow millions of Medicare-eligible veterans to have access to VA's 
drug benefit--a benefit which is borne out of strong negotiations with 
drug manufacturers.
    When it comes to the future of veterans' health care and benefits, 
we know we have some challenging policy decisions ahead of us. These 
issues require full and open discussions, and I look forward to them.
    Thank you, Mr. Chairman.

                               __________


                Prepared Statement of Hon. Jim Bunning, 
                       U.S. Senator from Kentucky
    Thank you, Mr. Chairman, for holding this hearing during this very 
busy week. I appreciate you placing my bill on the agenda.
    We have a full agenda and a good number of witnesses, so I will 
keep my remarks short and limit them to my bill.
    Recently, the final CARES decision was announced, and in Kentucky 
we are pleased with the results. VA wisely decided not to close either 
of our Lexington hospitals and to replace the aging hospital in 
Louisville. Nearly a dozen new clinics are planned as well.
    While I have representatives from the VA in the audience, let me 
say I support those recommendations and I encourage the VA to move as 
quickly as possible--especially on opening new clinics.
    Veterans throughout Kentucky are very excited about the new 
hospital coming to Louisville. But a new hospital is not all that is 
needed in the area. Jefferson County is the largest county in the 
Commonwealth, but there is not a nursing home for veterans nearby and 
the area needs more space for homeless veterans.
    My bill--S. 2296--will help the Kentucky Department of Veterans 
Affairs address those needs. Once the new hospital is open, the 
Kentucky VA wants to modify the old hospital to provide nursing home 
care, adult day care, and homeless services for the more than 100,000 
veterans in the area.
    My bill requires VA to offer the existing VA Medical Center campus 
to Kentucky once the new hospital is opened. The Commonwealth will have 
1 year to negotiate a lease or purchase of the facility before it can 
be offered to any other buyers.
    This is not a great change from current law, but it shows a Federal 
commitment to keep this historic building available to serve veterans. 
It will also strengthen the hand of the Commander of the Kentucky VA in 
securing State funds to open and run this much-needed facility.
    Again, Mr. Chairman, thank you for the opportunity to talk about my 
bill.

                               __________

          Prepared Statement of Hon. John D. Rockefeller IV, 
                    U.S. Senator from West Virginia
    Chairman Specter and Senator Graham, I want to thank you for your 
leadership and commitment to veterans. I appreciate your holding this 
hearing to review a long list of pending legislation which is very 
important for veterans, especially health care.
    Since I am a co-sponsor of S. 50 the Veterans' Health Care Funding 
Guarantee Act, I am particularly grateful that this important bill is 
under consideration at today's hearing.
    This legislation is designed to ensure that our VA health care 
system gets the funding it needs and deserves in a timely fashion. Each 
year, we have tended to have a major battle over the amount of funding 
for VA health care, and we are debating it again. In addition to the 
amount of funding, I am equally concerned about how VA health care 
funds get caught in annual budget fights, and delayed. Our VA medical 
directors are supposed to get their budgets on October 1st every year. 
This year, the budget was delayed until January 22nd. The year before, 
it was February 13th. A delay of four or more months is harsh and 
harmful--and unnecessary.
    The Veterans' Health care Funding Guarantee Act would address both 
concerns. It would provide the amount of funding needed to service our 
veterans in a timely manner. It would protect VA health care funding 
from becoming a pawn in partisan fights, and most importantly ensure 
that every year, VA health care funding is guaranteed.
    I support the Veterans' Health Care Guaranteed Funding Act. This 
bill would ensure that every October 1st, funding for VA health care 
would be secure and the level of funding adjusted for inflation. It is 
not an individual entitlement, but it is a meaningful assurance that we 
will have adequate funding for VA health care. All of our national 
veterans groups have endorsed this plan, and it is a much needed 
change.
    The veterans who served bravely in our military to guarantee our 
freedom and security deserved guaranteed funding for their VA health 
care system. It is that simple.

    Chairman Specter. We turn now to our first witness, Deputy 
Secretary of Veterans Affairs, the Hon. Gordon H. Mansfield.
    Welcome, Mr. Secretary.

         STATEMENT OF HON. GORDON H. MANSFIELD, DEPUTY 
         SECRETARY OF VETERANS AFFAIRS, UNITED STATES 
  DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY TIM McCLAIN, 
 GENERAL COUNSEL; JACK NICHOLSON, UNDER SECRETARY FOR MEMORIAL 
AFFAIRS; DR. MICHAEL KUSSMAN, ACTING DEPUTY UNDER SECRETARY FOR 
         HEALTH; AND BOB EPLEY, ASSOCIATE DEPUTY UNDER 
                     SECRETARY FOR BENEFITS

    Mr. Mansfield. Thank you, Mr. Chairman for inviting the 
Department's testimony on the many bills being considered 
today.
    With me today are General Counsel Tim McClain; Under 
Secretary for Memorial Affairs, Jack Nicholson; Acting Deputy 
Under Secretary for Health, Dr. Michael Kussman; and Associate 
Deputy Under Secretary for Benefits, Bob Epley.
    Understanding the time element, I would request that my 
formal statement be admitted for the record, and I would 
summarize our testimony briefly.
    And to summarize, I would mention that we support enactment 
of S. 2483, your compensation COLA bill; S. 2484, our physician 
and dentist pay bill that you kindly introduced at our request; 
and provisions in S. 2485 to allow the VA to dispose of excess 
real property directly and to retain the proceeds for future 
property dispositions and nonrecurring capital projects and to 
permit NCA to lease its underutilized property.
    We also support a number of provisions in S. 2486 which 
would, No. 1, exempt veterans' education benefits from 
consideration in determining their eligibility for Department 
of Education loans and grants; No. 2, modify the rules 
regarding the so-called hybrid arms home loans that we 
guarantee; No. 3, waive requirements for home loan fees for 
separating servicemembers who will qualify for disability 
compensation; No. 4, exempt veterans for paying co-payments for 
VA hospice care; and finally, make permanent our authority to 
provide sexual trauma care and counseling.
    In addition, we support S. 2417, authorizing limited VA 
health care for the newborns of women veterans receiving VA-
furnished maternity and delivery care, and we favor, in 
concept, the various bills to increase the limitation on the 
size of home loans VA can guarantee, but we need to finish 
analyzing a recent program review before we can officially 
endorse a new limit. And we ask that you introduce and 
favorably consider a draft bill that we sent over only recently 
to make a number of other improvements in our benefits 
programs.
    Mr. Chairman, we cannot lend our support to provisions in 
S. 2486 reviving the adjustable rate mortgage guarantee, due to 
the historically high foreclosure rates; S. 1150, the 
prescription drug bill; S. 1014, a bill to move all Category 7 
vets to Category 5; S. 2063, regarding health care appointment 
scheduling; and S. 1059, the proposed new benefit for certain 
HIV-infected veterans and family members.
    We do not yet have cleared views and estimates on some of 
the other proposals on today's agenda, and we will supply them 
when they are available.
    Mr. Chairman, thank you again for inviting our testimony. 
We will be happy to answer your questions.
    [The prepared statement of Mr. Mansfield follows:]

   Prepared Statement of Hon. Gordon H. Mansfield, Deputy Secretary, 
                     Department of Veterans Affairs
    Good Afternoon Mr. Chairman and Members of the Committee: Thank you 
for inviting me here today to present the Administration's views on a 
number of bills that would primarily affect Department of Veterans 
Affairs (VA) programs of veterans benefits and services.

S. 2483--Compensation Cost-of-Living Adjustment

    Mr. Chairman, I will begin by addressing S. 2483. This bill would 
increase administratively the rates of disability compensation for 
veterans with service-connected disabilities and of dependency and 
indemnity compensation for certain survivors of veterans, effective 
December 1, 2004. As provided in the President's fiscal year (FY) 2005 
budget request, the rate of increase would be the same as the cost-of-
living adjustment (COLA) that will be provided under current law to 
Social Security recipients, which is currently estimated to be 2.4 
percent. We believe this proposed COLA is necessary and appropriate to 
protect the affected benefits from the eroding effects of inflation. 
Therefore we support S. 2483.
    Because revised economic assumptions for fiscal year 2005 were 
released on June 15, 2004, we cannot yet provide accurate cost 
estimates for fiscal year 2005 and for the period fiscal year 2005 
through fiscal year 2014. We will provide a cost estimate to the 
Committee as soon as it is available.

S. 2484--Physicians/Dentists Special Pay

    Mr. Chairman, we very much appreciate your having introduced, by 
request, S. 2484. S. 2484 is an important VA proposal to overhaul 
physician and dentist pay to greatly enhance VA's ability to recruit 
and retain high quality physicians and dentists, particularly high-cost 
medical specialists, to treat the Nation's veterans. It would 
completely revise the VA physician and dentist pay system to allow VA 
to adjust physician and dentist compensation levels according to market 
forces. The system's simplicity and flexibility would ensure that VA 
physician and dentist compensation levels and practices do not become 
outdated over time due to statutory limits.
    The VA compensation structure for physicians and dentists has not 
changed since 1991. The current system is extremely complex, comprising 
seven or eight different special pay components in addition to basic 
pay. The system offers insufficient flexibility to respond to the 
changing competitive market for many of the medical specialties, 
especially for the highest paid medical subspecialties. VA is unable to 
offer competitive positions for critical subspecialties, such as 
Anesthesiology, Radiology, Cardiology, Urology, Gastroenterology, 
Oncology, and Orthopedic Surgery. National shortages of qualified 
physicians in these specialties have driven compensation levels 
dramatically upward. In these shortage specialties, VA total 
compensation lags behind the private or academic sectors by 35 percent 
or more. Although Congress did increase the amounts of special pay for 
dentists in 2000, those increases did not bring VA pay up to the levels 
in private dental practice. The effects of noncompetitive pay and 
benefits are reflected in dramatic increases in VA's reliance on 
expensive scarce medical specialist contracts and fee-basis care.
    S. 2484 would establish a three-tiered system of base pay, market 
pay, and performance-based pay. The first tier, a uniform base pay 
band, would apply to all positions in VHA without grade distinctions. 
The proposed range is Chief grade, step 10 of the VA Physician/Dentist 
Schedule to Level V of the Executive Schedule, from roughly $110,000 to 
$125,000. This change would dramatically simplify hiring and employment 
and facilitate reassignments and position changes. Placement in this 
band would be based on the individual's qualifications. The second 
tier, the market pay band, would be determined according to geographic 
area, specialty, assignment, personal qualifications and individual 
experience. It would be indexed to the salaries of similarly qualified 
non-Department physicians, dentists, and health-care executives. The 
flexibility of this tier would allow VA to keep pace with the market, 
both on upward and downward trends. The third tier would be linked to 
performance, and would be paid for discrete achievements in quality, 
productivity, and support of corporate goals. VA facilities would be 
able to authorize performance pay of up to $10,000 for physicians and 
dentists below the Chief of Staff (CoS) level. VA would benchmark the 
sum of all three bands to the 50th percentile of the Association of 
American Medical Colleges (AAMC) Associate Professor compensation (for 
physicians) and 75 percent of American Dental Association (ADA) net 
private practice income (for dentists).

Flexible Schedules for Registered Nurses

    S. 2484 also includes provisions to help make VA more competitive 
in its ongoing efforts to recruit and retain registered nurses and 
other health care personnel. I am especially pleased that the bill 
would permit enhanced flexibility in scheduling tours of duty for 
registered nurses. Such flexibility would permit our facilities to 
offer our registered nurses schedule options comparable to those often 
available at private and other non-VA hospitals and medical centers. In 
prior testimony before this Committee, we have noted the projected 
increase in the number of aging veterans and increased enrollment in 
the VA health care system by veterans of all ages over the next several 
years and the projected national shortage of registered nurses. VA's 
health care providers are its most important resource in delivering 
high-quality, compassionate care to our Nation's veterans. VA's nurses 
are critical front-line components of the VA health care team. We must 
be able to recruit and retain well-qualified nurses. The ability to 
offer compensation, employment benefits and working conditions 
comparable to those available in their communities is critical to our 
ability to recruit and retain nurses, particularly in highly 
competitive labor markets and for hard-to-fill specialty assignments. 
Thanks to the efforts of this Committee and the House Veterans' Affairs 
Committee, VA has been able to offer generally competitive pay for 
nurses in most markets. Enactment of S. 2484 would permit VA to 
continue meeting the increasing challenge of recruiting and retaining 
sufficient nurses and other health care professionals to meet its 
patient care needs.

S. 2485--Enhanced-Use Lease Program Improvements

    This bill contains provisions designed to improve VA's enhanced-use 
lease program under 38 U.S.C. Sec. Sec. 8161 et seq. We acknowledge the 
need to reform the enhanced-use (EU) leasing process to make it more 
efficient, as recommended by the Capital Asset Realignment for Enhanced 
Services (CARES) Commission's February 2004 report to the Secretary, 
and we appreciate the Committee's interest in this subject. We note 
that such interest already has led to inclusion of many of this bill's 
provisions in legislation enacted as Public Law 108-170 (i.e., 
requiring only one notice to Congress of VA's intent to enter into an 
EU lease, reducing the congressional notice and review period before 
executing such lease from 90 to 45 days, reducing by the same number of 
days the congressional notice and review period regarding a planned 
disposal of EU leased property, giving the Secretary sole discretion 
and control of such property disposal by eliminating GSA involvement in 
the process, and authorizing use of EU lease proceeds to reimburse VA 
appropriations for expenses incurred in developing additional EU 
leases). That legislation, together with other initiatives we are 
pursuing, will help us to significantly reduce the time required to 
consummate these lease transactions.
    Mr. Chairman, we also appreciate the provisions that recognize our 
EU lease projects can and do involve initiatives not only of the 
Veterans Health Administration, but also of the Veterans Benefits 
Administration (VBA) and National Cemetery Administration (NCA). In 
this regard, section 3 would authorize EU leases implementing VBA and 
NCA business plans providing for applying lease consideration to 
programs and activities of those Administrations. Further, it would 
direct that net proceeds from VBA or NCA EU leases be credited to 
applicable appropriations of the affected Administration. We are 
studying the budgetary impact of the latter provision and, following 
executive-branch review, will advise the Committee of our views.
    Finally, should a Capital Asset Fund be established (as proposed 
under this bill), we would support having the proceeds from a disposal 
of EU lease property deposited into such fund as provided by this bill.

Disposal of VA Property

    S. 2485 would authorize VA to dispose of its excess real property 
by sale, transfer or exchange to a Federal agency, a State or political 
subdivision of a State or to any public or private entity and to retain 
the proceeds generated by the disposals. Under the proposal, the 
disposal of real property would be exempt from GSA's requirements in 40 
U.S.C. Sec. Sec. 521-522 and 541-545 and those in the McKinney-Vento 
Homeless Assistance Act (which provides that unused or underutilized 
Federal real property may be used to assist the homeless). VA would 
receive compensation equal to the fair market value of the property, 
and the proceeds would be deposited in a Capital Asset Fund (the 
``Fund''), as provided for by this legislation. The bill would also 
terminate the Nursing Home Revolving Fund and deposit funds therein 
into the Fund.
    Amounts in the Fund would have to be used for the costs of actual 
or planned disposals of real estate, including demolition, 
environmental cleanup, necessary improvements to facilitate the sales, 
transfers or exchanges, and administrative expenses. They could also be 
used for non-recurring VA capital projects.
    We support S. 2485 because it would eliminate an existing 
disincentive to the disposal of Departmental real property. Currently, 
VA must report all transfers of real property valued in excess of 
$50,000 (to another Federal agency or to a State or a political 
subdivision of a State for fair market value) in its annual budget 
document. This is administratively burdensome. Further, absent 
extension of current appropriations law allowing proceeds from the 
disposal of excessed property to be deposited in the Medical Care 
Collections Fund, provisions in title 38, United States Code, require 
such proceeds to be deposited into the Nursing Home Revolving Fund. S. 
2485 would enhance VA's ability to manage Departmental capital 
resources, while promoting efficiencies and cost savings. However, we 
suggest the proposal be amended to provide that VA receive 
consideration not less than the fair market value of the disposed 
property to maximize the Government's return.
Limits on Disposal Authority

    S. 2485 would also limit VA's authority to dispose of real property 
in excess of the major medical facility project dollar limitation 
unless the disposal has been in the budget justification documents for 
the current fiscal year. The bill would also require VA to receive 
consideration equal to the fair market value of the property. Proceeds 
from disposals would be similarly deposited in the Fund.
    VA supports this proposal. However, we again recommend that the 
bill language be amended to require VA receive consideration that is 
not less than the fair market value of the property.

Advance Planning Funding for Major Medical Facilities

    S. 2485 would also exempt projects that have already been 
authorized by law from current statutory notice and wait requirements 
that apply to certain major medical facility projects. It would also do 
so for such projects that are included in the President's budget. VA 
supports this proposal.

National Cemetery Administration Property

    We are pleased that S. 2485 also includes VA's proposal to permit 
the leasing of unused or underutilized real property that is 
administered by the National Cemetery Administration. These leases 
would be limited to a maximum term of 10 years. Leases to a public or 
non-profit organization would not be required to be advertised. 
Consideration for these leases could be monetary or, in whole or in 
part, maintenance, protection or restoration of the leased property. 
Proceeds would be deposited in a special account in the Treasury, The 
National Cemetery Administration Facilities Operation Fund (the ``NCA 
Fund''), and available until expended. The NCA Fund would consist of 
amounts appropriated by law, the proceeds from the leases of land or 
buildings or agricultural licenses, and any other amounts authorized by 
law. Again, we appreciate your inclusion of this VA proposal in the 
bill and strongly urge its enactment.

S. 2486--Omnibus Education, Housing, Health Care, and other Benefits

    Mr. Chairman, with one exception, we do not yet have cleared 
positions or cost estimates on the education benefit provisions in S. 
2486. We will supply those for the record.

Title I--Education Provisions

    S. 2486 would increase to $2,000 dollars the maximum amount of 
contribution an individual may make under the Montgomery GI Bill 
(MGIB)-Active Duty Program to augment the monthly amount of basic 
educational assistance he or she may receive under that program.
    Under current law, servicemembers who elect to participate in the 
MGIB agree to have their basic pay reduced by $1200 (i.e., $100 per 
month for the first 12 months of active service) to establish 
entitlement under that program. Participants are allowed to increase 
the monthly rate of MGIB educational benefits they will receive after 
service by making contributions beyond the initial $1200 basic pay 
reduction, at any time prior to leaving service but not more frequently 
than monthly, in an amount up to an additional $600 in multiples of 
$20. The monthly rate of basic educational assistance is thereby 
increased by $5 per month for each $20 so contributed, yielding an 
additional $150 in benefits per month for the maximum $600 in-service 
contribution, or an additional $5,400 for the full 36 months of MGIB 
entitlement.
    If this proposal were enacted, the maximum in-service contribution 
would increase to $2,000 yielding $18,000 of MGIB benefits.

Pilot Program to Assess Feasibility of Extending the Delimiting Period 
for Using Chapter 30 MGIB Education Benefits

    S. 2486 would also require VA to establish a 4-year pilot program 
to determine the feasibility and advisability of extending the 
delimiting period for using chapter 30 MGIB education benefits an 
additional 2 years for certain individuals whose delimiting period 
otherwise would expire before they had used all of their remaining MGIB 
entitlement.
    Under current law, an individual's entitlement to education 
benefits, with certain exceptions, expires at the end of the 10-year 
period beginning on the date of such individual's last discharge or 
release from active duty.
    The bill would grant a 2-year delimiting date extension to 
individuals who have remaining entitlement at the end of their 10-year 
delimiting period and apply for the extension while accepted, enrolled 
or otherwise participating, as determined by VA, in the following 
instruction or training: (a) education leading to employment in a high 
technology industry as described in chapter 30, (b) a full-time program 
of apprenticeship or other on-job training as approved in chapter 36, 
(c) a cooperative program as defined in chapter 34, (d) a licensing or 
certification test approved under chapter 36, or (e) SAA-approved 
training or education leading to a professional or vocational 
objective, as identified by VA regulation.
    Individuals eligible to receive an extension of their delimiting 
dates would be authorized educational and vocational counseling under 
chapter 36 in connection with the use of the entitlement under this 
section. However, individuals could not use their entitlement during 
the 2-year period for general education leading to a standard college 
degree unless it would result in an associate degree necessary to 
obtain a professional or vocational objective or for college 
preparatory courses. Individuals participating in the pilot program 
could not receive supplemental educational assistance under chapter 30 
or a work-study allowance.
    The pilot program would begin 6 months after the date of enactment 
of this section and terminate 4 years later. Individuals granted the 2-
year delimiting date extension during the pilot program would be able 
to complete that 2-year extension even if the program terminated during 
the extension.

Exemption of VA Education Benefits

    The bill contains a VA proposal to exempt VA education benefits 
provided under chapters 30, 32, 35, and 36 of title 38 and under 
chapter 1606 of title 10, United States Code, from inclusion as income 
or assets for the purpose of determining eligibility for, or the amount 
of, student assistance under any program administered by the Secretary 
of Education.
    Currently, the Higher Education Act of 1965 (20 U.S.C. 
Sec. Sec. 1070 et seq.) requires that VA education benefits be counted 
as a resource when determining a veteran's or a beneficiary's 
entitlement to certain unsubsidized loans and campus-based aid.
    We believe strongly that Department of Education benefits should 
not have the effect of penalizing persons whose VA benefits have been 
earned through service in our Nation's Armed Forces. Rather, except for 
the campus-based aid programs, those benefits should be made fully 
available, without reduction, to such VA beneficiaries. A more limited 
application of this concept is appropriate for campus-based aid. Under 
this section, the amount of such aid (determined without considering VA 
education benefits) together with the VA education benefits and any 
Federal Pell Grant funds awarded could not exceed the individual's cost 
of attendance.
    Mr. Chairman, we appreciate your inclusion of this proposal in your 
bill and strongly urge its enactment. However, the Department of 
Education has indicated that this proposal would work best if the 
legislation amended the Higher Education Act itself. We would be 
pleased to work with your Committee staff to modify this proposal.

Reservists--MGIB Program

    S. 2486 would require the VA Secretary to collect $1200 from 
certain Reservists who wish to participate in the chapter 30 MGIB 
program before such individuals begin to receive educational assistance 
benefits under that program.

Title II of S. 2486 and S. 2522--Housing Benefits

    Title II of S. 2486 would make several amendments to the VA housing 
loan program authorized by chapter 37 of title 38, United States Code.

Maximum Loan Guaranty

    Both S. 2486 and S. 2522 would increase the maximum VA housing loan 
guaranty, which is currently $60,000. S. 2486 proposes to increase the 
guaranty to $83,425. S. 2522 would index the maximum guaranty to 25 
percent of the Federal Home Loan Mortgage Corporation (also known as 
``Freddie Mac'') single family conforming loan limit. Because the 
current Freddie Mac conforming limit is $333,700, S. 2522 would also 
increase the VA guaranty to $83,425. However, under S. 2522, the VA 
guaranty would be automatically adjusted annually in tandem with the 
Freddie Mac loan limit.
    Neither the law nor regulations sets a maximum principal amount for 
a VA guaranteed home loan, so long as the total loan amount does not 
exceed the reasonable value of the property securing the loan, and the 
veteran's present and anticipated income is sufficient to afford the 
loan payments. As a practical matter, requirements set by secondary 
market institutions limit the maximum VA loan to four times the 
guaranty. The current maximum guaranty of $60,000 effectively limits VA 
housing loans to $240,000. Increasing the maximum guaranty to $83,425 
would have the effect of increasing the maximum amount lenders are 
willing to finance to $333,700. If the guaranty were indexed as 
proposed by S. 2522, in future years the effective maximum VA loan 
would remain at the Freddie Mac conforming limit.
    VA is currently reviewing the results of an independent program 
evaluation of the VA Home Loan program. The maximum home loan guaranty 
was an element of this evaluation. We support the concept of increasing 
the guaranty level but reserve our opinion on this proposal until we 
can complete our analysis of the contractor's final report.
    VA estimates that increasing the guaranty to $83,425 as proposed by 
S. 2486 would produce a loan-subsidy savings to the Veterans Housing 
Benefit Program Fund of approximately $23.3 million in fiscal year 
2005, and a 10-year savings of approximately $82.4 million. Indexing 
the guaranty as proposed by S. 2522 would produce similar savings.

Adjustable Rate Mortgage (ARM) Program

    S. 2486 would revive and make permanent the Adjustable Rate 
Mortgage (ARM) program authorized by section 3707 of title 38, United 
States Code. Originally enacted in 1992, section 3707 authorized a 3-
year demonstration program for VA to carry out an ARM program similar 
to the one administered by the Department of Housing and Urban 
Development under section 251 of the National Housing Act.
    Due to concerns about the high cost of ARMs, the Congress allowed 
section 3707 to sunset on September 30, 1995. Similar concerns prevent 
VA from supporting enactment of this proposal. VA's past experience was 
that such ARMs had a 50 percent increased risk of default over fixed-
rate VA guaranteed home loans.
    We estimate that enactment of this provision would increase loan 
subsidy costs by $4.0 million in Fiscal Year 2005, and have a 10-year 
cost of $261.3 million.

Hybrid ARM Demonstration Program

    S. 2486 would also make permanent the Hybrid ARM demonstration 
program authorized by section 3707A of title 38. Unlike traditional 
ARMs authorized by section 3707, which have an annual interest rate 
adjustment, Hybrid ARMs bear a fixed rate of interest for an initial 
period of at least 3 years. Thereafter, the interest rate is adjusted 
annually.
    The current Hybrid ARM program was authorized for 2 years and will 
sunset September 30, 2005. VA only began guaranteeing Hybrid ARMS in 
the current fiscal year. These loans will not have an interest rate 
adjustment until late calendar year 2006 or early 2007 at the earliest. 
We do not believe VA has had sufficient experience to judge the 
viability of the Hybrid ARM program or assess its performance. 
Accordingly, we do not favor making this program permanent at this 
time. Rather, we suggest that the current Hybrid ARM demonstration 
program be extended by 4 years, i.e., through Fiscal Year 2009, to 
allow VA time to assess this new program.
    This bill would modify the rules for interest rate adjustments on 
VA hybrid ARMs. Under current law, annual adjustments are limited to 1 
percentage point, and the interest rate may never exceed 5 percentage 
points above the initial interest rate.
    S. 2486 would limit the initial interest rate adjustment to 1 
percentage point if the interest rate had remained fixed for 3 or fewer 
years. The bill would also provide that the maximum interest rate 
increase over the life of the loan would be set by VA. S. 2486 does not 
provide for any limit on individual annual interest rate adjustments 
after the initial one. Although we have no objection to providing more 
flexibility in interest rate adjustments, we do not favor the language 
of this proposal as drafted.
    The initial interest rate for VA Hybrid ARMs must remain fixed for 
at least 3 years. As a practical matter, virtually no hybrid ARMs have 
the initial fixed interest rate period of exactly 3 years. Interest 
rate adjustments are normally made at the beginning of a month. To ease 
pooling of loans in the secondary market, it is very likely that VA 
hybrid ARMs closed by a particular lender over a period of several 
months would all have the same initial adjustment date. An initial 
fixed interest rate term such as 3 years, 2 months, and 18 days would 
be common. Therefore, limiting the initial adjustment to 1 percentage 
point only if the interest rate was fixed for 3 or fewer years is 
virtually meaningless. Further, this section makes no mention of a 
limit on the initial adjustment if the fixed rate period exceeds 3 
years.
    We also believe the statute should limit the size of annual 
adjustments, or clearly provide that VA has the authority to set such 
limits by regulation. We would be pleased to work with your Committee 
staff to modify this proposal. VA estimates that enactment of this 
proposal would have a 10-year cost of approximately $24.8 million.
Waiver of VA Loan Fee

    S. 2486 would waive collection of the VA loan fee from veterans who 
are rated as eligible to receive compensation as a result of a pre-
discharge disability examination. Currently, section 3729 of title 38, 
United States Code, imposes a fee on most persons who obtain or assume 
a loan guaranteed or made by VA. The fee is waived, however, for 
veterans who are receiving compensation or who, but for the receipt of 
retirement pay, would be entitled to compensation, and for surviving 
spouses of a veteran who died from a service-connected disability.
    We believe waiving the fee for a veteran or service member who has 
been rated eligible for compensation but who purchases a home before 
payment of the benefit has begun is a logical extension of existing 
law. Therefore, VA supports enactment of this proposal. We estimate the 
associated costs of its enactment would be insignificant.

Title III--Medical and Other Amendments

    Title III of S. 2486 contains a number of amendments to various 
medical and other program authorities.

Technical Amendments to Title 5 of the United States Code

    S. 2486 would also make technical amendments to title 5, United 
States Code, to afford veterans with preference status the right to 
certain administrative and judicial redress in cases where an agency 
has allegedly violated their rights under a statute or regulation 
relating to veterans' preference. Although in principle we support this 
proposal inasmuch as it would generally enhance veterans' employment 
related rights, we defer to the views of the Office of Personnel 
Management.

Co-Payment Exemption for Hospice Care

    S. 2486 would exempt veterans receiving hospice care under VA's 
extended care services program from the requirement to agree to pay co-
payments. We support section 311 but recommend that its scope be 
broadened to include hospice care provided in any treatment setting. 
Currently, veterans receiving hospice care through the Department may 
be subject to a co-payment, which can vary depending upon the type of 
VA facility or setting in which the care is given.

Permanent Authority for Sexual Trauma Care and Counseling Program

    This bill would also permanently authorize VA's sexual trauma care 
and counseling program. We strongly support this proposal, noting that 
it is identical to a legislative proposal we submitted to Congress in 
2003. Making this particular treatment authority permanent is 
essential. The number of veterans seeking VA counseling and treatment 
for military sexual trauma continues to increase. Likewise, the number 
of women who serve in the Armed Forces, the Reserves, and the National 
Guard continues to grow. VA must be able to provide needed sexual 
trauma counseling and related health care to these current and future 
veterans without any lapse in program authority. We estimate there 
would be no additional costs associated with enactment of this section.

Extensions of Certain Reporting Requirements

    S. 2486 would extend through July 1, 2009, the biennial reporting 
requirement of the Advisory Committee on Former Prisoners of War. It 
would also extend through December 31, 2009, the reporting requirements 
of VA's Special Medical Advisory Group. VA supports these proposals.

Amendment to VA Definition of Minority Veterans

    Finally, S. 2486 would amend VA's definition of minority veterans 
in section 544 of title 38, United States Code, to comport with the 
Office of Management and Budget's (OMB) revised Standards for the 
Classification of Federal Data of Race and Ethnicity (1997). We support 
this proposal, which is identical to one submitted by the Department 
last year. The proposal is needed to bring the definitions applicable 
to minority veterans in line with those used in the Census 2000. The 
proposed changes would not change minority veterans' eligibility or 
entitlement to existing or future benefits.

S. 2417--Newborn Care

    S. 2417 would authorize VA to provide care to newborn children of 
women veterans for whom VA furnishes maternity and delivery care. To 
receive this benefit, the mother must be enrolled in the VA health care 
system. Currently, VA has no authority to provide care to newborns, 
although VA provides maternity benefits as part of its medical benefits 
package.
    We strongly support this bill, which is identical to a legislative 
proposal we submitted to Congress in 2003. After childbirth, some 
veterans may need this limited benefit to give them time to apply for 
medical assistance. Offering this care would also be consistent with 
the normal pregnancy and delivery coverage in the community. The modest 
cost of the proposal was included in the President's Budget submitted 
earlier this year.

S. 1153--Prescription Benefit for Medicare-Eligible Veterans

    Mr. Chairman, I will next address S. 1153, a bill that you 
introduced to provide all Medicare-eligible veterans with a new 
prescription drug benefit through the VA. As we know, the availability 
of prescription drugs to our seniors has been an extremely important 
issue for America, and one that was debated extensively last year by 
the Congress.
    Your bill would provide Medicare-eligible veterans with a 
compensable service-connected disability this new benefit in addition 
to the health care benefits they are currently eligible to receive from 
VA. Those who do not have a compensable service-connected disability 
could choose to receive the new prescription drug benefit in lieu of 
all other VA health care benefits. The bill would require that these 
veterans make an irrevocable election of drug or health benefits for 
each calendar year. The costs for this bill could be defrayed by any 
combination of annual enrollment fees, co-payments, and charges for the 
actual cost of the medication.
    In December 2003, the President signed the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003 to add a prescription 
drug benefit to Medicare. Starting in 2006, seniors without coverage 
will be able to join a Medicare-approved plan that will cut their 
yearly drug costs roughly in half, in exchange for a monthly premium of 
about $35. Under this new law, every Medicare beneficiary will be able 
to choose from at least two drug coverage options, and Medicare-
approved prescription drug plans also will also be able to offer their 
enrollees supplemental insurance to further enhance their coverage. It 
is not clear how the expanded VA benefit proposed in S. 1153 would 
interact with this new Medicare benefit, and we are concerned that this 
proposal could have significant effects on other public and private 
health care programs by jeopardizing the current discount prices VA 
receives on pharmaceuticals. While we appreciate your novel approach 
and share your concern that veterans and all Americans have access to 
affordable prescription drugs, we cannot support this bill.

S. 50--Guaranteed Level of Funding for VHA

    S. 50 would establish, by formula, the annual level of funding for 
all programs, activities, and functions (except for grants to States 
for the construction or acquisition of State homes for veterans) of the 
Veterans Health Administration (VHA) for fiscal year 2005 and fiscal 
years thereafter. The formula contains detailed terms by which to 
calculate the requisite annual funding level.
    We recognize the appeal of such an approach. However, it could very 
well prove to be an unworkable mechanism for funding a dynamic health 
care system like VA's.
    As you know, health care evolves continually to reflect advances in 
State of the art technologies (including pharmaceuticals) and medical 
practice. It is very difficult to estimate both the costs and savings 
that may result from such changes. Moreover, patients' health status, 
demographics, and usage rates are all subject to variable trends that 
are difficult to predict. A formula, such as that proposed in S. 50, 
could not take changes in such trends into account. As such, there is 
no certainty that the funding dictated by the proposed formula would be 
adequate or appropriate to meet the demands that will be placed on VA's 
health care system in the upcoming years.
    Moreover, if the demand for care that such an approach creates 
would overwhelm VA's capacity to provide care in-house, we could 
transform into more of a payer than provider of veterans' health care. 
That would not bode well for our long-term prospects of remaining an 
independent system uniquely capable and structured to respond to the 
specialized needs of veterans of military service.
    Use of an automatic funding mechanism would also diminish the 
valuable opportunity that Members of the Congress and the executive 
branch now have to identify and directly address the health care needs 
of veterans through the funding process. It may also diminish the 
Department's strong incentive to improve program operations and 
efficiency.
    Finally, references to ``guaranteed funding'' may give the public 
the false impression that VA would be fully funded to enroll all 
veterans and to furnish care for all their needs. We do not believe 
this proposal would ensure open enrollment. VA would still be required 
to make an annual enrollment decision, and that decision would directly 
affect the number of enrolled veterans and thus the amount of funding 
calculated under the formula.
    Be assured we share the desire by many in Congress to ensure stable 
funding for VA's health care system. However, until there is a more 
complete understanding of all consequences that could flow from this 
approach, both intended and unintended, we are unable to lend our 
support.

S. 2327--State Home Per Diem Payment--Relation to Medicaid

    For many years, a number of State homes have accepted both VA per 
diem payments for the care of veterans and Medicaid payments for those 
veterans without reducing the Medicaid payments by the amount of per 
diem payments. The Department of Health and Human Services (HHS) has 
determined that this practice violates its rules and is investigating 
whether to seek reimbursement. S. 2327 appears aimed at rectifying this 
situation by deeming that VA State home per diem payments ``shall not 
be considered a liability of a third party, or otherwise be utilized to 
offset or reduce any other payment made to assist veterans.'' Because 
this bill would primarily impact the Medicaid program, we defer to the 
views of HHS on the matter.

S. 1014--Changes to VERA allocations

    S. 1014 would amend the Department's statutory enrollment system by 
creating two groups within enrollment priority category (5). The first 
group would be those veterans currently in category (5), veterans whose 
income falls below VA's national ``means test'' income threshold. The 
second group would include those veterans currently in priority 
category (7), veterans whose incomes are above VA's national ``means 
test'' level but below VA's geographic ``means test'' threshold. The 
second group would remain subject to co-payment requirements that 
currently apply to veterans in priority category (7). Finally, the bill 
would also re-designate priority category (8) as priority category (7).
    We understand that the bill's sponsors introduced this measure to 
ensure that VA facilities in locations with a high cost of living 
receive an appropriate level of funding under VA's Veterans Equitable 
Resource Allocation System (VERA). When the sponsors introduced the 
bill over a year ago, the VERA system allocated funds to VISNs based 
upon the number of veterans treated in the facility who were in VA 
enrollment priority categories (1-6), and did not allocate basic care 
funds for those veterans in priority categories (7) and (8). The 
sponsors may believe that facilities located in high-cost areas of the 
country tend to treat a greater number of category (7) enrollees than 
do facilities in lower-cost areas because veterans in the former 
locations generally have higher incomes. Priority category (7) takes 
into account the cost-of-living by use of a geographic ``means test'' 
that varies depending on the cost-of-living in each geographic area. 
Because the VERA system was not providing basic care funding for 
priority category (7) veterans, the sponsors apparently believed high-
cost areas of the country receive less funding than needed when 
compared to lower-cost areas of the country. To rectify that perceived 
problem, S. 1014 would combine the current category (5) with category 
(7), thereby ensuring that the VERA allocation system provides funding 
for all veterans with income below a geographically adjusted means 
test.
    S. 1014 is unnecessary and we oppose its enactment. Since the 
introduction of the bill, VA has changed the VERA allocation system to 
provide funding for both priority category (7) veterans and category 
(8) veterans, completely negating any need for this legislation. The 
VERA model also takes into consideration the actual costs for providing 
care to those in categories (7) and (8), as well as categories (1) 
through (6), and provides funding accordingly.

S. 2063--Access to Care Demonstration Project

    S. 2063 would require VA to carry out a 2-year demonstration 
project to study the feasibility and advisability of requiring VA to 
schedule appointments within specified timeframes and take into 
consideration whether a veteran has a service-connected disability 
rated at least 50 percent, or is receiving care for a service-connected 
disability. In 2000, VA established a goal--referred to as the 30-30-
20--under which veterans would be able to schedule initial non-urgent 
primary care appointments and non-urgent appointments with a specialist 
with 30 days, and would be seen within 20 minutes of their appointment 
times. The demonstration project would require VA to meet this goal in 
three Veterans Integrated Service Networks (VISNS)--one urban, one 
rural, and one highly rural. Veterans covered by the project would 
include any veteran residing in the covered network. Under the project, 
each appointment would be scheduled in a VA facility unless the cost of 
doing so exceeds the cost of scheduling in a non-Department facility to 
an unreasonable degree, or unless scheduling in a non-VA facility is 
required for medical or other reasons, in which event VA would have to 
contract for the care. The bill also includes an annual reporting 
requirement on the waiting times of veterans for appointments. 
Information regarding the demonstration would be included in the 2007 
annual report.
    We strongly oppose S. 2063. It has the potential to dramatically 
increase demand for VA care and overwhelm our ability to provide care 
in VA facilities participating in the demonstration project.
    In 2000, our goal was to achieve a national average waiting time of 
30 days or less for both primary care and specialty clinics. The 
current May 2004 data reveal that 95.7 percent of appointments for 
primary care were within 30 days and 94.2 percent of appointments for 
specialty care were within 30 days of the desired date. At this time, 
however, we do not believe any of our VISNs would be able to comply 
with the 30-day standard for all appointments that would be required 
under the demonstration project. Thus, if the bill were enacted, every 
VA facility in the covered networks would be forced to offer any 
veteran desiring a primary care visit the opportunity to receive that 
care in the private sector on a contractual basis if VA cannot provide 
the care in a VA facility within the mandated time-frame. Providing 
contract care for all veterans waiting 30 days or more for an 
appointment would be more expensive than providing that care in VA 
facilities. We believe that huge numbers of veterans who now choose to 
receive their primary care in the private sector would likely avail 
themselves of this new benefit in the demonstrationsites. This enhanced 
demand would have the effect of draining appropriated funds out of VA-
operated facilities to pay for contract care. These additional costs 
would threaten our ability to provide services to our core 
constituency--service-connected and indigent veterans.
    Mr. Chairman, the appointment goals set in 2000 included a goal of 
increasing the percentage of veterans who report seeing a provider 
within 20 minutes to 78 percent over the 3 years, and to 82 percent 
over 6 years. By referencing this strategic goal, the bill appears to 
direct that we create a standard for the length of time a veteran would 
have to wait to see a provider on the day an appointment is scheduled, 
and require contracting for care when we are unable to comply with the 
standard. The rationale for this is unclear. Unanticipated delays while 
waiting to see the provider are commonplace in the health care arena. 
For example, if a provider is unexpectedly delayed while treating a 
patient with an earlier appointment, or while responding to an 
emergency, another patient may have to wait 40 minutes instead of 20 
minutes. We would not ordinarily turn a patient away or reschedule the 
appointment time on the basis of such an unanticipated delay. It is not 
clear how this day-of-service standard would or could be implemented or 
satisfactorily monitored in a demonstration project. Waiting times on 
the day of appointment are better addressed through performance 
measures than through a standard arbitrarily designated in law or 
regulation.
    We would encounter several additional problems implementing the 
demonstration project. These would include difficult issues with 
patient medical records caused by the fragmentation of care between VA 
and the private sector, and problems associated with having the non-VA 
providers access VA patient records and make referrals. Implementation 
would compromise the continuity of care for a vulnerable veteran 
population, and create problems coordinating ancillary follow-up care. 
The bill also assumes that needed care can be obtained in the community 
within 30 days; however, there are shortages in certain specialty care 
areas in the private sector that mirror VA's difficulty in hiring. 
Further, some geographic areas do not have certain specialty providers, 
while in other areas the available specialists are already under 
contract with VA. The bill sets a 30-day timeframe for receiving a 
primary or specialty appointment and provides no flexibility or 
latitude for patient or provider preference in determining when an 
appointment is needed. It is more appropriate to use the patient or 
provider's desired appointment date for determining whether timeframe 
goals are met.
    As you know, VA has, in recent years, faced unprecedented new 
demand for services, and has been forced to place many veterans on wait 
lists. However, we have made remarkable progress in reducing the number 
of veterans on the wait list and improving waiting times. This is in 
part attributable to our emphasis on performance measures, the Advanced 
Clinic Access initiative and redirecting resources to hire additional 
providers. VHA will continue employing these strategies.
    VA has established strategic goals to achieve the level of 
timeliness indicated in the bill, and we have implemented strategies to 
reach those goals. Enacting the demonstration project proposed in S. 
2063 would make achievement of those goals more difficult.

S. 1509--Payment of a Monetary Benefit to Persons who Contract HIV or 
AIDS from a Transfusion

    S. 1509 would provide a $100,000 gratuity to veterans, their 
spouses, and their children who contract HIV or AIDS following a blood 
transfusion or organ transplant received in treatment of a service-
connected disability. The gratuity would be available to individuals 
who can provide medical evidence acceptable to the Secretary of 
Veterans Affairs indicating a reasonable certainty that the 
transmission of HIV resulted from such treatment. The bill would 
provide that, if an individual entitled to the gratuity is deceased at 
the time of payment, payment will be made to the individual's 
survivors. The survivors of an eligible individual who dies before 
applying for the gratuity may apply on behalf of the deceased 
individual, and the deceased individual's gratuity may then be paid to 
the survivors in the same manner as if the deceased individual had 
applied for the gratuity and died before payment was made.
    There are already mechanisms in place under title 38, United States 
Code, for provision of disability compensation to veterans who suffer 
disabilities as a result of contracting HIV or AIDS from VA treatment 
for a service-connected disability and dependency and indemnity 
compensation to the survivors of such veterans. Further, VA currently 
pays additional compensation to service-disabled veterans whose spouses 
require regular aid and attendance. Such benefits could be payable to 
veterans whose spouses contract AIDS through contact with the veteran. 
Also under current law, if the Government is responsible for 
transmission of HIV through its negligence, the Federal Tort Claims Act 
provides an available remedy for injured veterans, family members, and 
survivors. State law affords similar remedies against non-VA providers. 
The availability of these remedies renders unnecessary the relief 
contemplated by this bill. Also, the bill contains no provision for 
offset of the contemplated gratuity against any compensation or award 
received under title 38 or the Federal Tort Claims Act for the same 
injury. Thus, the bill would result in duplicate payments for the same 
harm.
    Further, S. 1509 would result in inequitable treatment of similarly 
situated veterans. Veterans who contract hepatitis or other blood-borne 
illness as a result of treatment for service-connected disability would 
be ineligible for the gratuity. Such veterans would seem to be equally 
deserving of compensation as those who contract HIV or AIDS.
    Moreover, VA would be required to pay the gratuity even if a 
private health-care provider were responsible for the transfusion of 
tainted blood. The Federal Government generally should not assume 
responsibility for harm caused by private entities.
    For all of these reasons, we cannot support enactment of S. 1509.
    VA lacks the information needed to develop a reasonable estimate of 
the cost of this legislation.

S. 1745--Prisoner of War/Missing in Action National Memorial Act

    S. 1745 would designate the memorial to former prisoners of war 
(POW) and members of the Armed Forces listed as missing in action to be 
constructed at the Riverside National Cemetery in Riverside, 
California, as the Prisoner of War/Missing in Action National Memorial. 
It would also prescribe that the national memorial is not a unit of the 
National Park System and that the designation of the memorial shall not 
be construed to require or permit Federal funds, other than any funds 
provided for as of the date of enactment of the bill, to be expended 
for any purpose related to the memorial.
    The memorial will be comprised of a circular plaza located on the 
east side of the upper lake just inside the entrance to the national 
cemetery. The centerpiece of the memorial will be a figurative bronze 
statue of a Vietnam POW. Black granite panels standing on end will be 
placed to the rear of the circular plaza. The names of all known POW 
sites, including the total number of prisoners at each location, will 
be engraved on these panels. The POW sites will be displayed by major 
conflict or campaign.
    The Riverside National Cemetery Memorials and Monuments Commission 
(Commission) is a private organization that has proposed to erect the 
memorial and donate it to the National Cemetery Administration (NCA). 
The Commission is responsible for funding and contracting issues 
related to this project. The Commission is currently raising funds for 
the construction and future maintenance of the memorial through 
donations. The statue for the memorial is finished and is ready for 
installation once the plaza is completed. NCA approved plans for the 
project in March 2004 and designated a location for the memorial within 
cemetery grounds. The Commission anticipates that construction of the 
plaza will commence this summer and plans to dedicate the memorial 6 
months after construction begins.
    The National Park Service (NPS) currently maintains and operates 
the National POW Museum located at the Andersonville National Historic 
Site in the State of Georgia. In 1970, Congress authorized the 
establishment of the Andersonville National Historic Site pursuant to 
Public Law 91-465, 84 Stat. 989, in order to ``provide an understanding 
of the overall prisoner-of-war story of the Civil War, to interpret the 
role of prisoner-of-war camps in history, to commemorate the sacrifice 
of Americans who lost their lives in such camps, and to preserve the 
monuments located therein.'' The park and the National POW Museum 
currently serve as a national memorial to all American POWs. 
Accordingly, we recommend that NPS have an opportunity to comment on 
this legislation.
    We have no objection to designation of a national memorial at 
Riverside National Cemetery, and we estimate that there would be no 
costs to VA associated with designation of the memorial. However, we 
are concerned that the bill would restrict use of Federal funds to 
maintain the memorial in the event that private funds are not adequate 
for this purpose. It would also apparently preclude VA from expending 
any Federal funds for future maintenance of the memorial under any 
circumstances. Although the Commission is raising funds to cover the 
future costs to operate and maintain the memorial, should the donating 
organization become unable to meet the future costs associated with 
maintenance and repair of the memorial, VA would be prohibited from 
using Federal funds to provide such maintenance or repairs.
    Without authority to use Federal funds for the care and maintenance 
of the memorial, we do not support this legislation.

S. 2099--Selected Reservists Entitled to Montgomery GI Bill Benefits

    S. 2099 would entitle Selected Reservists who, on or after 
September 11, 2001, serve on active duty in the Armed Forces for not 
less than 2 years in any 5-year period, and who meet the other 
eligibility criteria, to basic educational assistance under the chapter 
30 Montgomery GI Bill program. The 2-year period required for 
eligibility would not have to be continuous service, but could be an 
aggregate of one or more periods of service. These MGIB participants 
would receive 1 month of educational assistance benefits for each month 
of active duty served after September 11, 2001, as part of the 2-year 
eligibility criteria. The amount of the benefit paid would be the same 
as that of an individual whose entitlement is based on an obligated 
active duty period of 2 years, currently $800 monthly for a program of 
education pursued on a full-time basis. The Secretaries of the various 
military components of the Armed Forces are charged with informing 
Selected Reservists of the availability of the benefits provided by 
this bill.
    Mr. Chairman, the Department has already implemented provisions of 
chapter 30 MGIB education benefits in a manner that recognizes benefits 
for Reservists called or ordered to active duty and who serve a 
continuous period of active duty aggregating 2 years or more, provided 
they otherwise meet the MGIB eligibility criteria. However, we do not 
yet have a cleared position or cost estimate on this specific proposal, 
but will supply those to the Committee as soon as possible.

S. 2296--Option for Commonwealth of Kentucky for Certain Property

    Mr. Chairman, S. 2296 would grant the Commonwealth of Kentucky a 
first option should the VA decide to convey, lease or otherwise dispose 
of the Louisville, KY Veterans Affairs Medical Center. This bill would 
require the VA to negotiate with the Commonwealth of Kentucky and 
restrict for 1 year the Department from negotiating with any other 
party.
    Let me note first of all that because VA does not presently have 
direct disposal authority, we do not currently have the authority to 
negotiate with the Commonwealth. However, as discussed earlier in my 
statement, we do support being given such disposal authority. Having 
said that, we, nonetheless, oppose this legislation because we believe 
it could prevent VA from achieving maximum value from disposal of the 
property should the property no longer be needed by VA. Achieving best 
value in a property transaction involves market timing and competition, 
and this proposal would remove both of these considerations.

S. 2133--Designation of Bronx VAMC

    This bill would designate the Bronx VAMC as the ``James J. Peters 
Department of Veterans Affairs Medical Center.'' We defer to Congress 
in the naming of Federal property.
Veterans Programs Improvement Act of 2004

    Mr. Chairman, we also request the Committee's favorable 
consideration of a draft bill we submitted only very recently. In 
addition to providing for a compensation COLA (identical to that in 
your bill, S. 2483) it would: o extend full-time and family 
Servicemembers' Group Life Insurance coverage to certain additional 
reservists; o authorize VA to provide memorial headstones or markers 
when the remains of veterans' minor children are unavailable for burial 
in State or national veterans cemeteries; o authorize use of chapter 34 
and chapter 35 benefits to defray the costs of certain high-tech 
courses; and o allow eligible veterans who are employable, but are 
determined to be in need of chapter 31 employment services only, to 
receive Vocational Rehabilitation Employment Adjustment Allowances.

Other Bills

    Mr. Chairman, we do not yet have cleared positions or cost 
estimates on S. 2524, a proposal to establish a War-Related Blast 
Injury Center, or S. 2534, a bill to improve veterans education and 
housing benefits. We will supply those for the record.
    This concludes my prepared statement. I would be pleased to answer 
any questions you or any of the Members of the Committee may have.

    Chairman Specter. Thank you very much, Mr. Secretary.
    Turning to S. 1153, the proposed Veterans Prescription Drug 
Assistance Act, this would provide for a discount for veterans. 
And a couple of illustrations show the enormous cost factor. 
The Veterans Administration cost for 30 10-milligram tablets of 
Zocor, a cholesterol-lowering drug, the VA pays $7.80, and the 
retail price is $75.59. Lisinopril, a popular high blood 
pressure medication, costs the VA $2.11, and the retail price 
quoted at CVS is $23.09.
    This legislation would provide that veterans eligible for 
Medicare would be able to have the benefit of VA-negotiated 
lower prices, allowing the VA to add on administrative costs, 
and the veterans would not have to be under care of the 
Veterans Administration in order to qualify for these lower 
costs. Do you not think that is a pretty good bill?
    Mr. Mansfield. Mr. Chairman, I understand and agree with 
the concept of attempting to serve veterans better, but I think 
there are some institutional problems that we have talked about 
before, and that includes the fact that the VA medical 
community believes that we should be not just taking parts of 
the care, but we should be providing the whole care, and there 
are some concerns from the medical community about whether we 
would be adequately treating the patient if all we do is take 
care of their prescription requirements.
    There are certain requirements on a periodic basis to find 
out what the effects of the drugs may be, to have tests and to 
find out, you know, what the effect of the prescription is on 
the person, and I think the medical doctors feel that they 
would rather have the care of the whole person rather than just 
one part.
    Chairman Specter. Well, when the veteran comes with a 
prescription from a doctor, what is the problem? If the veteran 
is not getting any care at all, what is the problem on the 
question if when the veteran comes with a prescription from a 
doctor?
    Mr. Mansfield. Sir, let me ask Dr. Kussman to help me 
answer that.
    Dr. Kussman. Mr. Chairman, I certainly reemphasize what the 
Deputy Secretary said, that we understand that you want to 
expand the ability to provide as much care as we can to 
veterans. We traditionally assume the full care of the 
patients, whether they come with a private prescription or not. 
And just filling the prescription would not allow us to be sure 
whether this was an appropriate thing for us to do as part of 
the health care delivery system.
    Chairman Specter. Well, the problem is that the VA 
currently has a closed enrollment, does it not?
    Mr. Mansfield. Yes, sir, we do not accept new enrollments 
of Category 8s; that is correct.
    Chairman Specter. So the veteran does not have the option 
of enrolling to have the benefit of the treatment and the lower 
cost.
    There has been considerable controversy over the Medicare 
prescription drug bill as to a provision that does not permit 
the Federal Government to negotiate with the pharmaceutical 
companies to get the lowest negotiable price. The Veterans 
Administration does negotiate with the pharmaceutical 
companies, does it not, to get the prices illustrative of the 
ones I just cited?
    Mr. Mansfield. Yes, Mr. Chairman, it does in fact, but I 
would point out that we are limited to 3 or 4 percent of the 
total product delivery system of the pharmaceutical industry, 
and that is an element that is involved in what the pricing is.
    Chairman Specter. Do you not think that it would be a good 
idea to let the Government negotiate for the benefit of 
Medicare-eligible veterans--to get the lowest price for 
seniors?
    Mr. Mansfield. Are you asking the Deputy Secretary of 
Veterans Affairs or Gordon Mansfield?
    [Laughter.]
    Mr. Mansfield. As the Deputy Secretary, I would make the 
point that it--as the Deputy Secretary----
    Chairman Specter. Well, let me--wait a second. You asked me 
a question. I am going to answer your question. I am sorry to 
go over time, but I want an answer. Answer it both ways: first 
from Gordon Mansfield, then from the Deputy Secretary.
    Mr. Mansfield. As the Deputy Secretary of Veterans Affairs, 
I would make the point that it might well have an effect on 
what our pricing is, and it might well cause a rise in the 
price that we have if you expanded the amount of the product 
that was subject to the negotiation. That is what I have seen 
in economic reports.
    Chairman Specter. Senator Graham.
    Senator Graham of Florida. Well, I would like to pursue 
that question in a defensive manner.
    Recently, before the Finance Committee, Secretary of HHS 
Thompson was asked basically the same question that you were 
just asked but with this twist: if it has been determined that 
it would be inappropriate to provide negotiation on 
prescription drugs for Medicare beneficiaries because it would 
constitute Federal Government price fixing, is there going to 
be an effort within the administration and within the VA to 
reverse the policy of the VA negotiating on the same rationale?
    Have you seen any movement within the VA to alter your 
access to the lower drug prices available through aggressive 
negotiation?
    Mr. Mansfield. No, sir, I have not.
    Senator Graham of Florida. Your comment about your concern 
that there would possibly be an increase in the VA prices if 
all of the Medicare beneficiaries were suddenly eligible, you 
know, only about a third of the Medicare beneficiaries are 
currently estimated to be likely candidates for the benefit, 
because the other two-thirds already get some kind of 
assistance with their prescription drugs.
    Actually, the number of people who are likely to be served 
under Medicare are not substantially greater than the number 
who are being served under the VA. Would that make you feel a 
little less apprehensive about an adverse effect on VA pricing?
    Mr. Mansfield. I guess it would depend on what the numbers 
are as part of the answer, sir, yes.
    Senator Graham of Florida. I notice that one of the bills 
that you said you opposed was the mandatory funding provision, 
the eligibility for funding. Is that not--we are celebrating 
the 60th anniversary of the GI Bill. Would you not define that 
today as being an entitlement program?
    Mr. Mansfield. I guess, and I do not want to parse it too 
much, but for example, the GI Bill education program originally 
started out in World War II as benefits paid to the returnees, 
whereas now, to sign up for it, you have to make an election, 
No. 1, and then, you have to pay something into it, No. 2, so I 
think it has evolved over time as the best way----
    Senator Graham of Florida. But 60 years ago when Franklin 
Roosevelt signed the GI Bill, would we not today entitle that 
as being an entitlement?
    Mr. Mansfield. I would guess that we would, sir, yes.
    Senator Graham of Florida. Well, why do you feel that 
today, for something as basic as the health care of veterans, 
that idea which has served veterans so well for the past 60 
years would not be a concept that would be applicable to 
serving the needs of veterans today with their health care?
    Mr. Mansfield. I would have to answer it in two ways. No. 1 
is there is a different set of circumstances today. In those 
days, we had a military that was drafted, to a large degree, to 
fight World War II, 16 million men and women under arms in a 
different situation. Today, we have a volunteer army that is 
much smaller, and that, I think, has an effect on what we are 
talking about as far as----
    Senator Graham of Florida. So you are saying you think that 
those persons who make a voluntary election to join the 
military are less deserving than those who are drafted into the 
military?
    Mr. Mansfield. No, sir, I did not say that at all.
    Senator Graham of Florida. Well, what was the connection 
between the GI Bill of 1944 and the issue of medical benefits 
in 2004?
    Mr. Mansfield. I said there were changed circumstances, and 
that is one of the circumstances that I see as a differential.
    Senator Graham of Florida. Would it not provide the kind of 
stability and predictability that the VA educational benefits 
created in 1944 if today we were to develop an entitlement 
program for health care benefits?
    Mr. Mansfield. Sir, I understand the concept and the 
direction and the intent. One of my concerns would be the 
unintended consequences. If you look at the prepared statement, 
you would see that the argument is that we are not sure of 
exactly what all the intended or the unintended consequences 
may be. Part of it is a cost factor. Part of it is how it 
affects other programs. And that is the reason that we are 
saying we think we would like to take more time and study this 
further.
    Senator Graham of Florida. Do you think--what constitutes 
more time? Thirty days? Sixty days?
    Mr. Mansfield. No, sir, I do not think you are going to get 
anything during this session of Congress as an answer to that.
    Senator Graham of Florida. Is this the first time that the 
VA has been thinking about it?
    Mr. Mansfield. No, it is not the first time, sir, but I 
would say that the bill has evolved over time, and then, it has 
changed significantly from what the first concept was. I have 
had the opportunity to be on what you might say both sides of 
this bill, having been involved with the Veterans Service 
Organization when the concept first arose, and I have seen it 
evolve, change and grow from the original concept. So I think 
we still have to examine what the effects may be and continue 
to study it.
    Senator Graham of Florida. Well, Mr. Chairman, my time is 
up. I would just say that exactly the same arguments were being 
made in a room like this in 1942 and 1943 relative to extending 
these very extensive educational benefits to the GIs of that 
era. It seems to me that we ought to build on that plan, not 
feel as if we have to go back to the drawing boards in order to 
develop a mandatory funding for health care.
    Chairman Specter. Those arguments were probably made in 
this room.
    Senator Graham of Florida. Might well have been in this 
room.
    Chairman Specter. And Strom rejected them.
    [Laughter.]
    Chairman Specter. Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman.
    I would like to pursue something a little different, if you 
do not mind. It is my understanding that VA is currently 
studying a new hospital for Louisville, Kentucky. Would you 
please give me an update on the status of that study and when 
the hospital may be open or any kind of construction may be 
beginning?
    Mr. Mansfield. Sir, my understanding is that the Secretary 
has directed that that study be conducted and completed by the 
end of this calendar year and that the design of the study is 
currently under discussion and I think being finalized and 
should shortly go out to the field.
    Senator Bunning. I want to see that the existing hospital 
remain in service to the veterans. Obviously, we have an 
existing hospital in Jefferson County, in Louisville, Kentucky. 
The Kentucky Department of Veterans Affairs is interested in 
acquiring the old hospital to provide nursing home care, adult 
day care, and homeless services for veterans.
    That is why my bill that I have put in requires the VA to 
negotiate with the Commonwealth before anyone else. I know the 
Veterans Administration does not support this concept, but I 
hope they have read the entire bill where in the bill, we 
specifically State that you must get fair compensation.
    Now, the timing of that compensation, obviously, would be 
determined by the Veterans Administration if, in fact, they get 
permission for equal value being determined for the building. 
That is in my bill. You have argued or the Veterans 
Administration, not you specifically, have argued that you do 
not want to be tied down for a year.
    Well, the timing may exist that you want to hold the 
building for more than a year. You may think you can get more 
out of it. We do not tie your hands as far as that goes. So I 
think you ought to reexamine the Veterans Administration's 
position definitely in regard to the bill that I put in so that 
the VA and the Department of Veterans Affairs in Kentucky at 
least has a chance to utilize that current facility for the 
purposes I discussed.
    Please take a look at the bill in regards to that, because 
Veterans Affairs Department in Kentucky wants a chance to 
revitalize that building, use it for the veterans. There are 
almost 100,000 veterans in that immediate area, Jefferson 
County, Bullitt County, Shelby County and Oldham County. So it 
would behoove you to look at that bill and maybe reexamine the 
Veterans Administration's stance on that bill, because it gives 
you flexibility----

[Sound of breaking glass from the audience]

    Senator Bunning. ----My God. I did not mean to cause that 
stir, Mr. Chairman.
    Chairman Specter. Senator Bunning, with just a break in the 
examination, if you please. OK, is anybody hurt? Anybody need 
any medical attention? Would the people in the area where the 
glass broke move away? Fortunately, there is a doctor on the 
premises if anybody needs any help.
    [Laughter.]
    Mr. Mansfield. Yes, right here.
    Dr. Kussman. She tells me she is fine.
    Chairman Specter. Dr. Kussman, would you step outside with 
the young lady for just a minute and be sure she is OK?
    Senator Bunning, with the break, I have to excuse myself to 
go to----
    Senator Bunning. I am just clearing up, and I have to----
    Chairman Specter. I have got three more seconds. I just 
wanted to say, if you want to chair, Senator Graham is prepared 
to chair in my absence. I will return.
    Senator Bunning. Please let Senator Graham, because I have 
another meeting at 3:30.
    I am finished. Thank you very much, gentlemen.
    Mr. Mansfield. Senator, I will commit to you that we will 
look at it again and get back to you as soon as possible.
    Senator Bunning. Thank you.
    Chairman Specter. Thank you, Senator Bunning.
    As I said, I am going to have to excuse myself for a few 
moments to make a quorum in the Department of Defense 
appropriation bill, and I shall return.
    Thank you very much, Senator Graham.
    Senator Graham of Florida. [Presiding]. Senator 
Rockefeller.
    Senator Rockefeller. Thank you, Mr. Chairman.
    Secretary Mansfield, you made a couple of interesting 
statements, and I have known you in both of your capacities. 
And you really are not allowed to use your private capacity as 
an excuse for your public capacity or vice versa.
    You, when you were in your private capacity, were a very 
strong, unyielding advocate, which I applauded. You just made a 
very interesting statement. You said, well, we cannot do 
whatever it was that was being discussed because we do not know 
what the effects would be on the other parts of the veterans 
health care, we cannot really do, and then, you backed this up, 
Doctor, we cannot really do one particular add-on until we have 
a whole health care, the whole health care of the veteran.
    Now, you are perfectly aware of the budget and the budget 
constraints, and therefore, I assume that you are perfectly 
aware that what you really said was we are against this, 
because we are not ever going to have the wholly necessary care 
of the veteran, and so, you are not willing to make incremental 
steps along the way. Am I wrong about that?
    Mr. Mansfield. I think you are, sir.
    Senator Rockefeller. Would you explain that?
    Mr. Mansfield. And I appreciate the point that you are 
making and take it to heart. I thought I was answering the 
question by saying that I recognize that this effort started 
out with one concept----
    Senator Rockefeller. No, no, I am not talking about that. 
You made a separate--before that came up, you made an answer in 
which you said we cannot support this because we do not have 
the budget for all of the health care needs of the veterans, 
and therefore, we cannot pick and choose one particular health 
care----
    Mr. Mansfield. I am sorry; referencing the pharmacy bill, 
sir? I am sorry.
    Senator Rockefeller. Yes.
    Mr. Mansfield. I am sorry. I think the answer that I gave 
was that I believe that the medical community would rather 
treat the whole person rather than just be involved in 
delivering the one part of the benefit, which is the pharmacy 
benefit.
    Senator Rockefeller. I have no argument with that, Mr. 
Mansfield, but I hope you understand the disingenuous nature of 
your answer, because you know perfectly well that there is not 
going to be a budget, or there has not been a budget under 
either Republican or Democratic administrations that take care 
of all of the health care needs of the veteran. So what you are 
saying is that you want to put us on permanent hold and not 
take individual initiatives? I was on the conference committee 
back in 1993 which settled on this volume discount purchasing 
power of prescription drugs and find myself at a loss at your 
unwillingness to make an incremental adjustment until you have 
what doctors want to do, and that is to treat the entire needs 
of the veteran when you know perfectly well the budget is not 
there to do that.
    Mr. Mansfield. Well, you know, there are other examples of 
this that we have used before, and for example, do we want to--
well, I am sorry; I understand the concern that you are 
raising.
    Senator Rockefeller. I understand the concern I am raising, 
too, but I want to know what your response to it is.
    Mr. Mansfield. Well, I did not intend to be disingenuous. I 
intended to make the argument that the medical community, the 
VA medical community feels that they should not just be 
treating this one part; that they would rather have the----
    Senator Rockefeller. Not just treating this one part called 
prescription drugs, which is the most sought-after part of 
virtually all of health care unless you are dealing with some 
kind of spinal cord injury of some sort which many people do 
it, you know, much, much less all the people who are estimating 
that 70 percent of all of the veterans returning from this war 
that we are involved in will be facing post-traumatic stress 
disorder.
    The Veterans Administration is not in a position to treat 
that either. Are you going to make an effort toward that? I 
mean, I use the word disingenuous, because I meant the word 
disingenuous, because you are saying until we can do the whole 
thing, we are not going to do anything. That is what you were 
saying.
    Mr. Mansfield. I think that is what the answer is, then.
    Senator Rockefeller. I will go to my second question, and I 
will do it quickly: when Secretary Principi was here, I asked 
him the question that I always ask the top brass of the 
Veterans Administration. I have been on this Committee for 20 
years, and he answered the question, but I am going to ask you 
the question. If you are deputy, that means that you are 
fighting for veterans' health care and for the necessary funds 
to be able to do that. It is a limited budget. It is set in 
statutory form. It cannot be exceeded. It cannot borrow. We all 
know that.
    So the only way--and I have done this myself, and I took on 
a vice president and backed off a vice president into allowing 
higher numbers into the budget. What I asked Secretary 
Principi, are you willing to go face-to-face with President 
Bush about the veterans health care budget, and he said he was, 
and I believe him, because I think he would do it. That is the 
way I feel about Tony.
    I know you pretty well, too. I want to know have you made 
any effort to fight for a higher level of veterans care? HUD is 
not your business. Small Business Administration is not your 
business. Your business is veterans. Have you made an effort to 
take on folks at OMB or others at the White House for a higher 
level of funding for veterans' health care?
    Mr. Mansfield. We are approaching that time in the cycle 
when it will happen.
    Senator Rockefeller. No, the time in the cycle when it 
should happen is when the budget is submitted.
    Mr. Mansfield. Well, we are in the process of going through 
that cycle right now.
    Senator Rockefeller. Are you going to do that?
    Mr. Mansfield. Yes, sir, I will.
    Senator Rockefeller. Thank you.
    Senator Graham of Florida. After the budget hearings, which 
I believe were held in February, there were a number of 
questions that were submitted on specific aspects of the 
budget. I understand that as of today, we have not received the 
answers to those questions. Do you have an idea when we might 
do so?
    Mr. Mansfield. Sir, I will check and get back to you as 
soon as possible with some definite times.
    Senator Graham of Florida. I recently chaired a hearing of 
this Committee held at Bay Pines in Florida. One of the major 
issues was the new computer system, the Core FLS System. There 
were substantial problems identified at that time in the basic 
architecture of the system, the training that has been provided 
to the personnel who were going to be responsible for the 
system. There was also a request that there would be an 
assessment of this. I believe it was going to be done by 
Carnegie Mellon.
    Could you tell us what the status of the Core FLS System 
is, what steps are being taken to deal with the problems that 
were identified and what is the recommendation of how to 
proceed, and when will we get this external evaluation?
    Mr. Mansfield. Sir, the Core FLS System is supposed to be 
designed to handle our requirements in accounting, finance, 
logistics and covers all parts of the VA, so the implementation 
was partially with NCA, the Cemetery Administration, partly 
with VBA and partly with VHA.
    The VHA part went into Bay Pines as the chosen site to test 
it. The Bay Pines site was not prepared in the sense that their 
operating inventory system would match up with the program that 
was accepted, and that is where the problem in the program came 
up. In addition to that, I would agree with you that the 
training that was designed was inadequate and was not carried 
out properly.
    Right now, we are in the process of stabilizing and 
ensuring that the hospital operations at Bay Pines can go 
forward in a manner that the patient care is the first 
responsibility and taken care of, and that is happening to 
date. The group you mentioned is in the process of doing a 
review and will report to the Secretary.
    We have also had the Inspector General doing a review, and 
I believe his report is due out within a couple of days or at 
least the draft report, which means we have to look at it and 
then make any comments we may have about what the draft report 
is, and that is the situation we are in, sir.
    Senator Graham of Florida. When do you expect the Carnegie 
Mellon evaluation to be available?
    Mr. Mansfield. Sir, I am not sure if the final report is 
going to be available for less than 60 days, but I know that 
the IG report and also the House Appropriations Committee 
investigators have also been involved in it at the Chairman's 
direction, and I believe that their report will be in before 
that 60-day period. But the final report that the Secretary is 
going to be making his final decisions on would be the Carnegie 
Mellon report.
    Senator Graham of Florida. Well, as you probably know, the 
Chairman of the House Appropriations Committee, with Bay Pines 
inside his Congressional district, has indicated that if he 
does not get satisfaction, he is going to defund this Core FLS 
System. So I would suggest that there ought to be a sense of 
urgency to get the kinds of answers to the questions came up at 
the hearing that we held at Bay Pines, of which Congressman 
Young, based on his representation of the community in which 
Bay Pines is located, knows well.
    Mr. Mansfield. I am aware of his interest and in touch with 
his office.
    Senator Graham of Florida. Senator Rockefeller, any further 
questions?
    Senator Rockefeller. No, sir.
    Senator Graham of Florida. Thank you very much.
    Mr. Mansfield. Thank you, Mr. Chairman.
    Senator Graham of Florida. While they are coming forward, I 
would like to introduce the members of the third panel, 
representing veterans service organizations: Mr. Donald L. 
Mooney, the Assistant Director for Resource Development, 
Veterans Affairs and Rehabilitation Commission, the American 
Legion; Mr. Paul A. Hayden, Deputy Director, National 
Legislative Service, Veterans of Foreign Wars; Mr. Adrian M. 
Atizado, Assistant National Legislative Director, Disabled 
American Veterans; Mr. Carl Blake, Associate Legislative 
Director of the Paralyzed Veterans of America; and Mr. Richard 
Jones, the National Legislative Director of AMVETS.
    Thank you very much for your being here. If I could call on 
you in the order in which you were identified for an opening 
statement.
    Mr. Mooney.

STATEMENT OF DONALD L. MOONEY, ASSISTANT DIRECTOR FOR RESOURCE 
 DEVELOPMENT, VETERANS AFFAIRS AND REHABILITATION COMMISSION, 
                      THE AMERICAN LEGION

    Mr. Mooney. Thank you, Senator Graham. Thank you for this 
opportunity to present the American Legion's views on the many 
bills being considered by the Committee today. In view of the 
time restrictions, I will limit my comments to the three bills 
we feel are most important. Our written testimony covering all 
of the bills has been submitted for the record.
    S. 50, the Veterans Health Care Funding Guarantee Act of 
2003, establishes, beginning in fiscal year 2006, a system of 
capitation-based funding for the Veterans Health Administration 
by combining the total enrolled veteran population with the 
number of non-veterans served by VHA then dividing that number 
into 120 percent of the fiscal year 2000 VHA budget.
    The resulting baseline per capita amount is then adjusted 
for medical inflation annually and is multiplied by the veteran 
and non-veteran population for the prior fiscal year to arrive 
at a total budget for the VHA for the succeeding fiscal year.
    Mr. Chairman, VHA is now struggling to meet demand and to 
maintain its national preeminence in the 21st Century with 
discretionary funding methods that were developed in the 19th 
Century. No other modern health care organization could be 
expected to survive under such a system. The American Legion 
believes that the time has come to fund VHA based on its 
capitated veteran enrollment and eliminate the uncertainty of 
discretionary funding. The American Legion is pleased to 
support S. 50.
    S. 1014 amends 38 USC to require the Secretary of Veterans 
Affairs, in the management of health care services for 
veterans, to place certain low-income veterans in higher health 
care priority categories. This bill expands eligibility for 
inclusion of veterans in priority group to include those 
veterans whose incomes do not exceed 80 percent of the median 
income for the geographical area in which they reside.
    Currently, this is the statutory definition of priority 
group 7. This bill essentially eliminates priority group 8 by 
raising priority group 7s to group 5 and redesignating priority 
group 8 as 7. The American Legion has no objection to this bill 
in concept. It is unclear to the American Legion, however, what 
effect this bill will have on the former priority group 8 
veterans without additional funding to pay for the new influx 
of enrollees it will create.
    It is likely that the Secretary of Veterans Affairs may be 
again forced to suspend enrollment of former priority group 8 
veterans, now priority group 7 under S. 1014.
    The American Legion is concerned that this law could raise 
hopes of priority group 8 veterans now ineligible for 
enrollment, only to have a new barrier erected. This whipsaw 
effect is eroding the confidence of veterans in the VA health 
care system, and it should be avoided.
    S. 2484, the Department of Veterans Affairs Health Care 
Personnel Enhancement Act, establishes a new system of 
compensation designed to recruit and retain highly qualified 
doctors and dentists within the VA health care system. The new 
pay system is benchmarked to represent salaries of non-VA 
positions, dentists and health care clinician executives by 
health care market and includes performance incentives.
    The American Legion has long held the position that VA pay 
for doctors and dentists is woefully inadequate and has led to 
the exodus from VHA of scarce specialists such as 
gastroenterologists, ophthalmologists, anesthesiologists and 
radiologists to more lucrative private practice.
    We believe the time has come for Congress to correct the 
situation and pay salaries that will attract qualified 
physicians and dentists to work in veterans' health care. The 
American Legion supports this bill. Under this bill, however, 
VA-employed physicians and dentists holding dual appointments 
with affiliated medical schools and dental schools may no 
longer receive compensation in any form from the affiliate, 
although waivers may be granted on a case-by-case basis.
    This provision is worrisome to the American Legion. The VA 
medical school affiliation system has played an important role 
in bringing VHA to its position of excellence in health care. 
This provision will force dual appointees to choose loyalties 
and could negatively impact its highly successful symbiotic 
relationship and could conceivably cause research-oriented 
physicians to leave VA for their affiliates that generally pay 
more. The American Legion believes a way should be found to 
avoid this unintended consequence.
    Mr. Chairman, that concludes my testimony. Thank you.
    [The prepared statement of Mr. Mooney follows:]

 Prepared Statement of Donald L. Mooney, Assistant Director, Veterans 
        Affairs and Rehabilitation Division, The American Legion
    Mr. Chairman and Members of the Committee: Thank you for this 
opportunity to present The American Legion's view on the many issues 
being considered by the Committee today. The American Legion commends 
the Committee for holding a hearing to discuss these important and 
timely issues.

S. 50--The Veterans Health Care Funding Guarantee Act of 2003

    This bill establishes in fiscal year 2006, a system of capitation-
based funding for the Veterans Health Administration (VHA). It combines 
the total enrolled veteran population with the number of non-veterans 
who received services from VHA, then divides that number into 120 
percent of the fiscal year 2003 VHA budget. This baseline per-capita 
amount is then adjusted for medical inflation each year and is 
multiplied by the veteran and non-veteran population for the prior 
fiscal year to arrive at a total budget for VHA for each succeeding 
fiscal year. This system would provide all of VHA's funding, except 
funding of the State Veterans Homes Construction Grant Program, which 
would be separately authorized. Annual funding would be without fiscal 
year limitation; any savings VHA realized in a fiscal year would be 
retained rather than returned to the Treasury. This would provide VHA 
with incentives to develop efficiencies and creating a pool of funds 
for enhanced services, needed capital improvements, expanded research 
and development and other purposes.
    S. 50 also repeals Section 8104 of title 38, United States Code 
that currently requires Congressional approval of major medical 
facility construction in excess of $4 million. Instead, VA would be 
required to report any design and development costs over $500,000 for 
major medical facilities construction to the Senate and House Veterans' 
Affairs Committees, then wait thirty days before proceeding with a 
project. The American Legion is supportive of legislation that will 
create a reliable and consistent funding stream for veterans' health 
care programs, but believes that some level of congressional oversight 
of VA construction activities should remain.

S. 1014--A Bill to Amend Title 38, United States Code, to Require the 
Secretary of Veterans Affairs in the Management of Healthcare Services 
for Veterans to Place Certain Low-Income Veterans in a Higher 
Healthcare Priority Category

    This bill expands eligibility for inclusion of veterans in Priority 
Group 5 to include those veterans whose incomes do not exceed 80 
percent of the median income for the geographical area in which they 
reside. Currently, this is the statutory definition of Priority Group 
7. This bill essentially eliminates Priority Group 8 by raising 
Priority Group 7 veterans to Priority Group 5 and re-designates 
Priority Group 8 as 7.
    It is unclear to The American Legion what effect this bill will 
have on former Priority 8 veterans without additional funding to pay 
for the influx of enrollees it might create. It is likely that the 
Secretary of Veterans Affairs may again be forced to suspend enrollment 
of former Priority Group 8 veterans; now Priority Group 7 under S. 
1014.
    FY 2002 saw the growth of Priority Group 7 and 8 veterans seeking 
health care at local VA medical facilities. This unprecedented increase 
in enrollees into the VA health care system resulted in over 300,000 
veterans being placed on waiting lists regardless of their assigned 
Priority Group. Fiscal year 2003 saw the suspension of enrollment of 
newly created Priority 8 veterans due to this unforeseen growth. The 
American Legion is concerned that this law could raise the hopes of 
Priority Group veterans now ineligible for enrollment in VA health 
care, only to have a new barrier erected.
    As a Nation at war, The American Legion advocates for adequate VA 
funding in fiscal year 2005 to meet the increased health care needs of 
America's veterans.

S. 1153--The Veterans Prescription Drugs Assistance Act

    S. 1153 amends title 38, United States Code, by adding Section 
1710C. Veterans who have prescriptions from their private physicians 
would be able to obtain such drugs or medicines from the Department of 
Veterans Affairs (VA). Under this new provision, VA would fill the 
prescriptions of those veterans in receipt of special monthly 
compensation. Further, any Medicare-eligible veteran may elect to 
receive their prescription drugs and medicines from VA. However, those 
Medicare-eligible veterans, who make such an election, will not be 
eligible for VA medical care or services during the calendar year 
covered by the election, unless they have a compensable service-
connected disability. They are also required to pay one or more of the 
following: an annual enrollment fee; a co-payments for each 30-day 
supply of medicine; or an amount equal to VA's cost for such medicines 
and drugs.
    Title 38, USC, section 1712(d), currently provides that VA shall 
furnish drugs and medicines prescribed by a duly licensed physician to 
veterans who are in receipt of special monthly compensation or special 
monthly pension by reason of being housebound or in need of aid and 
attendance. Less seriously disabled veterans, receiving VA medical care 
on an outpatient basis, are provided drugs and medicines only when 
prescribed by a VA physician or health care provider. The majority of 
these veterans are in Priority Groups 7 and 8.
    Priority Group 8 veterans, who are currently enrolled and elect the 
option proposed in section 1710C (b)(1), are not guaranteed that after 
1 year, they will be accepted back into the system or have the ability 
to re-enroll. Without that assurance, they will be locked out of the 
system indefinitely.
    There are currently 26 million veterans and 40 percent of them, or 
10 million, are eligible for Medicare. If they all choose to get their 
prescriptions filled by VA, will the VA be able to handle the workload? 
VA enjoys an edge in buying pharmaceuticals and wields significant 
clout in the marketplace. That may end if their demand becomes too 
high. If that happens, the reasonable prices afforded to veterans may 
be lost.
    Due to quality and safety issues, The American Legion does not 
support VA filling outside prescriptions without the veteran being seen 
by a VA physician first. The American Legion believes that while this 
legislation may help to reduce the backlog, the carving out of 
individual benefits of veterans' health care programs should be 
avoided.

S. 1509--The Eric and Brian Simon Act of 2003

    S. 1509 authorizes a gratuity of $100,000 to be paid to any veteran 
who becomes infected with Human Immunodeficiency Virus (HIV) or has 
Acquired Immune Deficiency Syndrome (AIDS) as a result of treatment of 
a service-connected condition. The gratuity is also paid to the spouse, 
former spouse and children who become HIV positive as a result of the 
veteran's infection and the gratuity may be paid to the survivors of a 
deceased veteran.
    The American Legion has no objection to this legislation.

S. 1745--The Prisoner of War/Missing in Action National Memorial Act

    This bill establishes a National Prisoner of War/Missing in Action 
Memorial in Riverside, California. The American Legion has no official 
position on this initiative but is appreciative of the Congress in 
recognizing the dedication and sacrifice of these servicemembers.
    S. 2063--A Bill to Require the Secretary of Veterans Affairs to 
Carry Out a Demonstration Project on Priorities in the Scheduling of 
Appointments of Veterans for Healthcare Through the Department of 
Veterans Affairs, and for Other Purposes
    S. 2063 directs the Veterans Health Administration (VHA) to carry 
out a 2-year demonstration project to assess the feasibility and 
advisability of priority medical appointment scheduling of veterans who 
are 50 percent or greater service-connected disabled or who require 
treatment of a service-connected condition.
    The American Legion has no official opinion on this legislation; 
however, we object to VHA's ongoing characterization of this group of 
veterans as its ``core population.'' In the fiscal year 2004 budget 
request, President Bush and Secretary of Veterans Affairs Principi 
clearly State their objective: ``a continued focus on the health care 
needs of VA's core groups of veterans--those with service-connected 
disabilities, the indigent, and those with special needs.'' However, 
the term ``core groups of veterans'' does not appear in Title 38, 
United States Code. In testimony before the House Veterans' Affairs 
Committee on June 17, 2003, American Legion National Adjutant Robert W. 
Spanogle stated that there are no ``core veterans''--a veteran is a 
veteran. The ``traditional'' veterans treated in VA medical facilities 
were any veteran needing medical care. In the 1980's, ``budgetary 
constraints'' created distinctions through means-testing; before then 
any veteran was welcomed in a VA medical facility.
    It should be noted that VA recently published a final rule at 69 
Fed. Reg. 34074, 34076 [June 18, 2004] in which 38 C.F.R. Sec. 17.49 
was amended to reflect the additional prioritization of veterans above 
and beyond that authorized by 38 U.S.C. Sec. 1705.

S. 2099--A Bill to Amend Title 38, United States Code, to Provide 
Educational Assistance Under the Montgomery GI Bill for Members of the 
Selected Reserve Who Aggregate More Than 2 Years of Active Duty Service 
in any 5 Year Period, and for Other Purposes

    S. 2099 amends title 38, United States Code, to provide entitlement 
to educational assistance under the Montgomery GI Bill for members of 
the Selected Reserve who aggregate more than 2 years of active duty 
service in any 5 year period. This legislation would help to ensure 
that educational benefits afforded members of the Selected Reserve are 
indeed parallel to the level of commitment of these dedicated troops.
    S. 2099 is a positive first step in ensuring that benefits earned 
by members of the Selected Reserve reflect the sacrifices of these 
citizen soldiers. The American Legion fully supports the provisions 
contained in S. 2099 and we commend Senators Miller and DeWine for 
recognizing the need to update the educational benefits in Title 38 to 
adequately recognize the increased reliance on members of the Selected 
Reserve.
S. 2296--A Bill to Require the Secretary of Veterans Affairs to Give 
the Commonwealth of Kentucky the First Option on the Louisville 
Department of Veterans Affairs Medical Center, Kentucky, Upon its 
Conveyance, Lease or Other Disposal by the Department of Veterans 
Affairs

    The decision of the Secretary of Veterans Affairs on the Capital 
Asset Realignment for Enhanced Services (CARES) program for VISN 9 
includes a study of the feasibility, cost-effectiveness and impact of 
building a replacement, state-of-the-art VA Medical Center in 
Louisville, Kentucky. The current facility is over crowded and provides 
a ``poor environment of care.''
    The American Legion has no position on this proposal; however, 
reiterates the position that no facility scheduled for closure or other 
disposal under CARES should be closed until adequate and appropriate 
replacement facilities are available to serve the affected veteran 
population.

S. 2327--A Bill to Amend Title 38, United States Code, to Clarify That 
Per Diem Payments Made by the Department of Veterans Affairs for the 
Care of Veterans in State Homes Shall Not be Used to Offset or Reduce 
Other Payments Made to Assist Veterans

    S. 2327 amends title 38, United States Code, to clarify that per 
diem payments by VA for the care of veterans in State homes shall not 
be used to offset or reduce other payments made to assist veterans.
    The American Legion currently does not have an official position on 
S. 2327. The Veterans Affairs and Rehabilitation Commission within the 
organization is reviewing the intent of the legislation. The American 
Legion has a long history of advocating on behalf of improved funding 
for State Veterans Homes and supports future efforts to ensure long 
term care is available to America's aging veterans population well into 
the new millennium.
    In addition, The American Legion remains concerned of the exclusion 
of long term care services from the CARES analysis that could prove 
detrimental in VA's ability to meet the increasing demand for long term 
care.

S. 2417--A Bill to Amend Title 38, United States Code, to Authorize the 
Secretary of Veterans Affairs to Furnish Care for Newborn Children of 
Women Veterans Receiving Maternity Care, and for Other Purposes

    This bill amends title 38, United States Code, to authorize VHA to 
provide up to 14 days of neonatal care to the newborns of female 
veterans who deliver children in VA facilities or in non-VA facilities 
under contract to VA.
    The United States Armed Forces is currently comprised of 11 percent 
female servicemembers and this figure is expected to climb in the near 
future. This bill is one of many accommodations that VA is undertaking 
to meet the needs of female veterans. The American Legion has no 
objection to this legislation.

S. 2483--The Veterans' Compensation Cost-of-Living Adjustment Act of 
2004

    This bill authorizes the annual cost-of-living increases in the 
rates of Disability Compensation, Clothing Allowance and Dependency and 
Indemnity Compensation by the same amount as the cost-of-living 
increases under Social Security, as well as for the publication of 
these new rates.
    The American Legion supports this annual legislation.

S. 2484--The Department of Veterans Affairs Health Care Personnel 
Enhancement Act of 2004

Section 3--Improvement and Simplification of Pay Provisions for 
Physicians and Dentists

     This provision establishes a new system of compensation designed 
to recruit and retain highly qualified doctors and dentists within the 
VA healthcare system. The new pay system is benchmarked to 
representative salaries of non-VA physicians, dentists and health care 
clinician-executives.
    Three components comprise the new system. Base pay is a uniform pay 
band nationwide with a minimum (Chief Grade maximum, currently 
$100,897) and maximum (Executive Level V, currently $128,200) that is 
adjustable annually by the same percentage as the GS schedule. Market 
pay is a variable pay band that VHA facilities may offer to a 
prospective physician or dentist employee that allows the facility to 
be more competitive in the local marketplace by geographic location, 
specialty, assignment, qualifications and experience.
    Market pay is based on published health care workforce employment 
and compensation data and may be adjusted by VA in response to health 
care labor trends. Performance pay is linked to the attainment of 
organizational and personal performance goals up to $10,000 per annum. 
In the case of Chiefs of Staff and other clinician-executives, 
performance pay up to 10 percent of the total benchmark pay is 
authorized. Base pay for the Undersecretary for Health (USH) is set at 
Executive Level III, currently $145,600. The USH is also eligible for 
market pay.
    The American Legion has long held the position that VA pay for 
doctors and dentist has been woefully inadequate and has led to the 
loss of scarce specialists, such as gastroenterologists, 
ophthalmologists, anesthesiologists and radiologists, to private 
practice. The time has come for Congress to correct this situation and 
pay salaries that will attract qualified physicians and dentists to 
work in veterans' health care. The American Legion supports this bill.
    Under this bill, VA-employed physicians and dentists holding dual 
appointments with affiliated medical and dental schools may no longer 
receive compensation, in any form, from the affiliate, although waivers 
may be granted on a case-by-case basis. This provision is worrisome to 
The American Legion. The VA/Medical School affiliations system has 
played an important role in bringing VHA to its position of excellence 
in health care. This provision will force dual appointees to choose 
loyalties and could negatively impact this highly successful symbiotic 
relationship. The American Legion believes a way should be found to 
avoid these unintended consequences.

Section 4--Alternate Work Schedules

    This establishes a variety of new alternative work schedules to 
attract qualified nurses to work for VA. Flexible work schedules have 
long been used by the private healthcare sector to attract nursing 
personnel. This legislation will not only attract nurses who would have 
opted for other positions because of scheduling issues, but will 
provide Medical Center directors needed flexibility in staffing. The 
American Legion does not oppose this provision.

Section 5--Nurse Executive Pay

    This provision authorizes special pay for nurse-executives (minimum 
$10,000, maximum $25,000) depending upon factors such as grade of the 
position, scope and complexity of the position, personal 
qualifications, characteristics of the health care facility. Given the 
critical shortage of nurses in VA, generally, it is imperative that 
talented nurse-executives be retained. The American Legion supports 
this provision of S. 2484.

S. 2485--The Department of Veterans Affairs Real Property and 
Facilities Management Act of 2004

Section 2--Authority to Use Project Funds to Construct or Relocate 
Surface Parking Incidental to a Construction or Non-Recurring 
Maintenance Project

    This authorizes the use of construction or non-recurring 
maintenance funds to construct or relocate surface parking lots 
incidental to the projects. In its visits to numerous VA healthcare 
facilities, The American Legion notes that the current moratorium on 
new parking space has resulted in congestion and inconvenience to 
veterans, families and employees. In some instances, facilities have 
resorted to contracting valet parking services to address the short-
term problem. The American Legion supports measures that will create 
greater ease of access to VHA facilities.

Section 3--Improvements of Enhanced-Use Lease Authorities

    This provision allows the Undersecretaries for Health, Benefits and 
Memorial Affairs to propose business plans involving enhanced use lease 
(EUL) of VA real property and allow VA to use EULs to obtain other 
facilities, space or services. It requires public hearings be held and 
requires reports on proposed EULs to Congress and reduces the comment 
period from 90 to 45 days. S 2485 further removes the requirement for 
involvement in EULs by the General Services Administration (GSA).

Section 4--Disposal of Real Property of the Department of Veterans 
Affairs

    Section 4 also removes GSA from the EUL process with regard to 
disposal of facilities and land, establishes the Capital Asset Fund 
into which proceeds from EULs are to be deposited and makes an initial 
deposit of $10,000,000 to the fund in fiscal year 2005.
Section 5--Modification of Other Real Property Disposal Authorities

    This redefines the parameters and processes required for VA to 
dispose of certain real property, including justification to Congress 
and the requirement that the net proceeds of disposal be deposited into 
the Capital Asset Fund.

Section 6--Termination of Nursing Home Revolving Fund

    Repeals section 8116, title 38, United States Code and requires 
that any balance in the fund be deposited into the new Capital Asset 
Fund on date on enactment.

Section 7--Lease of Certain National Cemetery Administration (NCA) 
Property

    This authorizes VA to engage in EULs of undeveloped land and 
underutilized buildings and establishes a National Cemetery 
Administration Facilities Operation Fund into which proceeds from EULs 
are to be deposited.
    The American Legion has no position on this bill, but given the 
number of VHA properties slated for EUL under the CARES decision, this 
legislation streamlines the EUL process and establishes funds to ensure 
that proceeds from EULs remain within affected Administrations seems 
appropriate and timely.
    Regarding the NCA EUL provision, The American Legion notes that NCA 
is in the midst of the largest expansion of the National Cemetery 
System since the Civil War and questions what undeveloped land owned by 
NCA is appropriate for EUL.

S. 2486--The Veterans' Benefits Improvement Act of 2004

    S. 2486 amends title 38, United States Code, to improve and enhance 
education, housing, employment, medical and other benefits for veterans 
and to improve and extend certain authorities relating to the 
administration or benefits for veterans.

Title I--Educational Benefits

    Increase in maximum amount of contribution for increased amount of 
basic educational assistance under the Montgomery GI Bill.
    The American Legion does not support increasing the maximum amount 
of servicemember contribution for increased amount of basic educational 
assistance under the Montgomery GI Bill.
    Pilot program on additional 2-year period for use of entitlement by 
participants in Montgomery GI Bill for vocational or job readiness 
training.
    The American Legion supports providing an additional 2-year period 
for usage of GI Bill benefits for vocational or job readiness training.
    Exclusion of veterans' educational benefits in determination of 
eligibility or amount of Federal educational grants or loans.
    The American Legion supports the exemption of educational benefits 
under the GI Bill when determining eligibility for grant or loan 
assistance provided under title IV of the Higher Education Act of 1965.
    Collection of contributions for educational assistance under the 
Montgomery GI Bill from Reservists called to active duty.
    While The American Legion supports increased educational benefits 
for Reservists under the Montgomery GI Bill, that support has never 
included payment of $1200 by any veteran. The American Legion does not 
support requiring payment of $1200 by any active duty, Guard or Reserve 
member in order for receiving benefits under the Montgomery GI Bill.

Title II--Housing Benefits Increase in Maximum Amount of Housing Loan 
Guarantee

    The American Legion fully supports increasing the maximum amount of 
housing loan guarantee currently provided to veterans.

The Montgomery GI Bill for the 21st Century Act

    This draft bill amends title 38, United States Code, to extend and 
enhance benefits under the Montgomery GI Bill to improve housing 
benefits for veterans.

Section 2--Exclusion of Basic Pay Contributions for Participation in 
Basic Educational Assistance in Certain Computations on Student 
Financial Aid

    The American Legion has long supported elimination of the current 
requirement that eligible servicemembers must contribute $1200 during 
their first year of enlistment in order to participate in the GI Bill 
benefit program. Veterans should not have to purchase this well 
deserved benefit.

Section 3--Opportunity for Enrollment in Basic Educational Assistance 
Program of Certain Individuals Who Participated or Were Eligible to 
Participate in Post-Vietnam Era Veterans Educational Assistance Program

    While The American Legion does not have an official position on 
this provision, we do not oppose offering an enrollment opportunity for 
those veterans who are eligible to participate in post-Vietnam Era 
educational assistance programs.

Section 4--Commencement of 10-Year Delimiting Period for Veterans, 
Survivors and Dependents Who Enroll in Training Program

    The American Legion fully supports a delimiting period for the use 
of educational benefits under the Montgomery GI Bill. The unique 
experiences of servicemembers often prevent them from utilizing 
educational benefits directly after discharge from active duty. 
Extending the delimiting period will help to ensure veterans can indeed 
take advantage of the educational benefits they have earned through 
their service.

Section 5--Availability of Education Benefits for Payment for 
National Admissions Exams and National Exams for Credit at Institutions 
of Higher Learning

    The American Legion supports allowing eligible veterans to utilize 
their educational benefits, under the Montgomery GI Bill for payment of 
national admissions tests and national exams for credit at institutions 
of higher learning. In addition, The American Legion supports allowing 
veterans to use their educational benefits for payment of written or 
practical tests that may be required in the acquisition of a license, 
certification or credential that may be needed to obtain employment in 
a certain career field.
    Mr. Chairman, that concludes my testimony. Again, I thank the 
Committee for this opportunity to appear. The American Legion looks 
forward to working with each of you on these important issues.

    Senator Graham of Florida. Thank you very much, Mr. Mooney.
    Mr. Hayden.

         STATEMENT OF PAUL A. HAYDEN, DEPUTY DIRECTOR, 
     NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS

    Mr. Hayden. Thank you very much, Mr. Chairman.
    On behalf of the 2.6 million men and women of the Veterans 
of Foreign Wars of the United States and our ladies' auxiliary, 
I would like to thank you for the opportunity to testify at 
today's important hearing. It is especially fitting, as you 
mention, that today also marks the 60th anniversary of the day 
that President Roosevelt signed the GI Bill into law.
    The legislation under consideration today spans a wide 
range of veterans' health care and benefits issues, and the VFW 
is pleased to offer its support to the majority of bills being 
considered today. Our full comments can be found in our written 
testimony. I would highlight our general support for S. 1153, 
given the current prescription drug situation within the VA.
    The VFW supports the creation of an outpatient prescription 
benefit that would free up VA health care appointments and 
potentially reduce the backlog. In addition, we support 
providing an outpatient medication benefits to Medicare-
eligible category 8 veterans who are currently precluded from 
enrolling in VA health care.
    The VFW, however, does not support the language that 
requires veterans to forego their earned VA health care in 
favor of Medicare. Veterans are unique in that they have an 
entitlement to Medicare by way of financial contribution and 
have also earned the right to VA health care through virtue of 
their service to this Nation. They must not be forced to give 
up their rights to either.
    VFW will continue to fight for adequate appropriations to 
allow all veterans access to VA's medical benefits package.
    Turning to other veterans' benefits, the VFW fully supports 
S. 2486, the Veterans Benefits Improvement Act. We support all 
sections in Title I and II and are particularly pleased with 
Section 103, which would exclude veterans' educational benefits 
in determining the eligibility or amount of Federal education 
grants and loans.
    A veteran's earned benefit, since the MGIB is paid for 
through service and sacrifice. Today's departing servicemembers 
deserve an equal opportunity to be considered for other forms 
of assistance to help them attain their dreams and goals.
    Mr. Chairman, this concludes my testimony. I would be happy 
to answer any questions that you or Members of this Committee 
may have.
    [The prepared statement of Mr. Hayden follows:]

    Prepared Statement of Paul A. Hayden, Deputy Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Committee: On behalf of the 2.6 
million men and women of the Veterans of Foreign Wars of the United 
States (VFW) and our Auxiliaries, I would like to thank you for the 
opportunity to testify at today's important hearing. The legislation 
under consideration today, spans a wide-range of issues pivotal to VFW 
and the entire veterans' community.

S. 50--Veterans Health Care Funding Guarantee Act of 2003

    VFW strongly supports this legislation, which would dramatically 
and beneficially alter the way that veterans' health care is funded. 
For the first time, Congress would guarantee quality, timely, and 
accessible health care for our Nation's veterans.
    Clearly, the current discretionary process fails veterans. Despite 
the record budget increases of the last several fiscal years, for which 
we are thankful, Department of Veterans Affairs (VA) funding continues 
to lag behind what is needed. Previous years of flat-lined budgets and 
increasing demand have created a significant gap between what VA needs 
and what Congress has been able to provide.
    Another problem with the discretionary process is its irregularity. 
It has been several fiscal years since VA has had its budget on time. 
Instead, they have had to deal with flat-lined budgets at the start of 
every fiscal year, which adversely affects long-term and even short-
term planning. The uncertainty of the process hampers VA's ability to 
effectively manage care for the millions of patients it treats. With a 
stalled budget resolution looming large again this year, it is likely 
that VA will not have its fiscal year 2005 budget on time either. They 
will continue to provide care on the already-insufficient amount of 
funding, while increased patient demand and the high costs of medical 
inflation erode this ability until Congress lives up to its full 
responsibility.
    This growing mismatch between the demand for care and available 
funding has forced VA to ration health care through lengthy delays, 
reduced services, higher co-payments, and, in some cases, veterans 
being turned away from hospitals completely. None of these are 
acceptable. Although VA has made substantial progress to reduce the 
appointment backlog from its all-time high of over 300,000 veterans, it 
is still unconscionable that there are any veterans who have to wait 6 
months or more for a simple health care appointment. None of us in this 
room here would accept that, yet we expect those who have faithfully 
served this country to wait.
    Enacting this legislation would go a long way toward providing the 
proper level of funding. For the first time, VA's resources would be 
based on the demand for care and the inflationary costs of providing 
health care. If more veterans choose VA as their health care provider, 
then VA receives more funding, lessening the need for health care 
rationing. Mandatory funding would assure that veterans receive the 
care they justly deserve and would eliminate diminished access as the 
primary method of cost control. I have attached a copy of VFW 
Resolution 610, which supports mandatory funding for veterans' health 
care.
S. 1014--To Amend Title 38, United States Code, to Require the 
Secretary of Veterans Affairs in the Management of Health Care Services 
for Veterans to Place Certain Low-Income Veterans in a Higher Health-
care Priority Category

    VFW supports this bill, which would place veterans who are 
currently in category 7 into enrollment priority category 5. This 
legislation recognizes that those currently in category 7 are some of 
the veterans who most depend on VA. They frequently are the poorest 
veterans and those who can least afford health care outside the VA 
system.
    It gives these veterans better priority access to the system. 
Additionally, it frees them up from having to pay co-payments and other 
fees related to the health care they earned through their service to 
this Nation.
    Our Nation has an obligation to care for those who most need our 
assistance. This legislation recognizes this obligation and provides a 
meaningful solution to the problems these veterans face.

S. 1153--Veterans Prescription Drugs Assistance Act

    This legislation would permit Medicare-eligible veterans to receive 
an out-patient medication benefit from the VA provided that they forgo 
medical care and services from VA during the year they choose such 
benefit.
    By way of background, the Veterans' Health Care Eligibility Reform 
Act of 1996 provides all veterans enrolled in Categories 1-8 full 
access to all of the health services described in VA's Medical Benefits 
Package, which includes prescription drugs.
    The Final Report of the President's Task Force To Improve Health 
Care Delivery For Our Nation's Veterans, released in May, 2003, noted 
that ``According to a November 2002 General Accounting Office (GAO) 
report, of the $3 billion VA spent on outpatient pharmacy drugs in 
fiscal year 2001, 13 percent of the total cost, or $418 million, was 
for former Priority Group 7 veterans. Other surveys have also suggested 
that former Priority Group 7 veterans are significantly affecting VA's 
pharmacy workload, and anecdotal evidence suggests that many of these 
veterans are coming to VA only for prescription drugs. The GAO study 
reported that in fiscal year 1999, 400,000 of the former Priority Group 
7 veterans had 11 million prescriptions filled. In fiscal year 2001, 
the number of veterans in this group seeking prescription drugs 
increased to 800,000 and the number of prescriptions filled grew to 26 
million.''
    These numbers are alarming when one considers that many of these 
veterans come to VA with prescriptions from their private physicians 
already written and in-hand only to find out that they cannot get their 
prescription filled until they see a VA physician. The VA Inspector 
General noted ``frequent comments in patient medical records reflecting 
the frustration of veterans in having to go through VA's extended 
process of scheduling exams and tests and then spending sometimes the 
entire day at the medical center solely, from their perspective, to 
have their prescriptions filled or refilled.''
    In addition, the VA Inspector General also found once veterans 
received appointments with VA physicians, these VA physicians 
``routinely review and approve the orders of the private physicians--
[and] exams frequently duplicate tests and exams that have already been 
performed by the patient's private physician and are conducted to allow 
the VA physician to support filing a prescription that the patient 
brought from his/her private physician.''
    Given the current situation and the opportunity to potentially 
mitigate the impact of long waiting times and produce cost savings by 
streamlining an inefficient and overly bureaucratic process, the VFW 
supports the creation of an out-patient prescription benefit that would 
free up VA health care appointments and potentially reduce the backlog. 
In addition, we support providing an outpatient medication benefit to 
Medicare-eligible Category 8 veterans who are currently precluded from 
enrolling in VA health care.
    VFW, however, does not support the language that requires veterans 
to forgo their earned VA health care in favor of Medicare. Veterans are 
unique in that they have an entitlement to Medicare by way of financial 
contribution and have also earned the right to VA health care through 
virtue of their service to this Nation. They must not be forced to give 
up their rights to either. VFW will continue to fight for adequate 
appropriations to allow all veterans access to VA's Medical Benefits 
Package.

S. 1509--The Eric and Brian Simon Act of 2003

    VFW is appreciative of the intent of this legislation, which would 
award a $100,000 gratuity to veterans who contracted HIV or AIDS as a 
result of blood transfusions, organ transplants, or other service-
connected conditions. We cannot, however, support this legislation.
    Although their condition is a tragedy and they have to suffer due 
to no fault of their own, their condition is not significantly 
different than many other diseases, illnesses or injuries that other 
veterans survive. Awarding them additional compensation would not be 
fair to other service-connected veterans, who also suffer due to no 
fault of their own. All disabled veterans have given a piece of their 
lives to this country. The sacred compact of disability compensation is 
intended to lessen the impact of that burden and to help make them 
whole. Those afflicted with HIV or AIDS are already entitled to the 
same treatments and compensations that any other service-connected 
veterans are. Providing a special gratuity to one category of veterans, 
but not another, is not equitable.

S. 1745--The Prisoner of War/Missing in Action National Memorial Act

    VFW supports this legislation, which would designate a POW/MIA 
National Memorial at Riverside National Cemetery in Riverside, 
California. As a long-time advocate and leader in helping to locate the 
remains of members of our Armed Forces who are missing in action, we 
believe that a memorial to honor all former POWs and all those who 
remain unaccounted for is long overdue.
    VFW's Department of California and many of the local VFW Posts in 
Southern California have been instrumental in helping to raise funds to 
build the memorial. It is only fitting and proper that a national 
memorial is dedicated to the bravery of those members who have 
sacrificed and served our Nation honorably--some never to return home.

S. 2063--To Require the Secretary of Veterans Affairs to Carry Out a 
Demonstration Project on Priorities in the Scheduling of Appointments 
of Veterans for Health Care Through the Department of Veterans Affairs, 
and for Other Purposes

    VFW supports this legislation, which would create a demonstration 
project in three Veterans Integrated Service Networks to improve the 
scheduling of appointments for veterans in VA facilities.
    The aim of the bills it to meet VA's 30-30-20 goals, which we 
strongly support. First, veterans must receive primary care and 
specialty care appointments within 30 days of scheduling and they must 
be seen by their health care provider within 20 minutes of the 
scheduled appointment. It remains just a goal as VA has had difficulty 
implementing it system-wide.
    Although VA no longer has over 300,000 veterans waiting over 6 
months for health care appointments, there are still nearly 10,000 
veterans on that waiting list--a number that is still unacceptably 
high.
    The demonstration project this bill would create would give VA the 
opportunity to try new business practices and to attempt unique 
solutions to one of VA's largest problems. We hope that VA could take 
any successes of the demonstration project and apply them to the whole 
system, improving the ability of veterans to access their earned health 
care.

S. 2099--To Amend Title 38, United States Code, to Provide Entitlement 
to Educational Assistance Under the Montgomery GI Bill for Members of 
the Selected Reserve Who Aggregate More than 2 Years of Active Duty 
Service in any 5-Year Period, and for Other Purposes

    VFW supports this legislation, which would greatly improve the 
Montgomery GI Bill (MGIB) benefits provided to reservists. There is a 
significant difference between what the MGIB pays for reservists versus 
what it pays to those on Active Duty ($282 and $985 per month 
respectively). Reservists, however, can qualify for increased benefits 
if they complete 2 consecutive years on Active Duty.
    With the recent deployment of so many Reservists around the world 
in the war on terrorism, significant numbers of them are accumulating 
time on Active Duty, but are falling just short of the 2 consecutive 
years required for improved benefits. This legislation would extend 
these benefits to any Reservists who accumulate 2 non-consecutive years 
of service in any 5-year period. So, for example, one who goes overseas 
for two 18-month deployments separated by a year of inactive service 
would qualify for a higher MGIB rate.
    While on active duty, they would accrue 1 month of Active Duty MGIB 
benefits for each month of active duty service. Additionally, they 
would accumulate 1 month of Active Duty benefit for every 4 months of 
inactive service during that 5-year period. The MGIB would be payable 
at the rate for less-than 3 years of Active Duty service.
    We believe that this is a significant step toward recognizing the 
valuable contributions our Reservists make as part of the Total Force 
Concept.

S. 2133--To Name the Department of Veterans Affairs Medical Center in 
the Bronx, New York, as the James J. Peters Department of Veterans 
Affairs Medical Center

    VFW supports this bill, which would name the Bronx VA Medical 
Center after James J. Peters, former Executive Director of Eastern 
Paralyzed Veterans of America and a long-time advocate for those with 
spinal cord injuries.

S. 2296--To Require the Secretary of Veterans Affairs to Give the 
Commonwealth of Kentucky the First Option on the Louisville Department 
of Veterans Affairs Medical Center, Kentucky, Upon its Conveyance, 
Lease, or Other Disposal by the Department of Veterans Affairs

    VFW would not oppose this bill, which would give the State of 
Kentucky the first chance to purchase or lease the Louisville Medical 
Center if VA decides to dispose or lease it out.

S. 2327--To Amend Title 38, United States Code, to Clarify that Per 
Diem Payments by the Department of Veterans Affairs for the Care of 
Veterans in State Homes Shall Not be Used to Offset or Reduce Other 
Payments made to Assist Veterans

    VFW is pleased to support this bill, which would ensure that VA per 
diem payments that are made to State Veterans' Homes for the care of 
patients cannot count against any other form of payments made to those 
veterans.
    Enacting this legislation would ensure that these veterans, who are 
relying on States for their long-term care, receive the full amounts of 
payments given to them, and by extension, States would be required to 
provide the full amounts to the homes. This would mean more money for 
the homes and better care for the veterans.
    VA has a statutory obligation to provide long-term care for certain 
veterans residing in State homes. To do their job effectively, State 
homes need every resource they are due. This bill sees that these State 
homes receive the funding to which they are entitled.

S. 2417--To Amend Title 38, United States Code, to Authorize the 
Secretary of Veterans Affairs to Furnish Care for Newborn Children of 
Women Veterans Receiving Maternity Care

    VFW supports this bill, which would allow VA to provide health care 
coverage to the children of women veterans for up to 14 days after the 
child's delivery. Currently, no direct health care coverage is provided 
to the children and families must find outside health insurance to help 
pay for the child's treatment. The 14-day window this bill provides 
allows the parents of the child to secure health care coverage, whether 
through a private company or through Medicaid, and would ease VA's 
ability to find a local hospital to accommodate the family.
    This would give the families an important peace of mind allowing 
them to focus on the joys of becoming parents. It makes a small change 
in the law to do what is right for veterans.

S. 2483--The Veterans Compensation Cost-of-Living Adjustment Act

    We are pleased to support this legislation, which would increase 
the rates of compensation for veterans with service-connected 
disabilities, and the rates of dependency and indemnity compensation 
paid to the survivors of certain disabled veterans. This bill provides 
that the rate of increase paid by the VA shall be equal to percentage 
rates payable under Title II of the Social Security Act.
    This legislation greatly benefits those who are least able to 
adjust their incomes to keep pace with inflation and is vital to many 
of whom have limited or fixed incomes.

S. 2484--The Department of Veterans Affairs Health Care Personnel 
Enhancement Act

    This legislation reforms pay and work schedules for VA physicians, 
dentists, nurses, and other health-care personnel. For doctors and 
dentists, it reforms the pay system staring with a new base and adds 
market-based and incentive pays to that. Additionally, it reforms some 
pays for nurses and creates several programs to increase their job-
schedule flexibility.
    While we will not comment on the specifics of the bill, we do 
support it in that we believe that these proposals would improve 
recruitment and retention for VA's health care workers. We must strive 
to ensure that VA maintains the high level of quality service and care 
veterans have grown to expect.

S. 2485--The Department of Veterans Affairs Real Property and 
Facilities Management Improvement Act

    VFW offers our support for this legislation, which would make 
changes to the way VA manages and disposes of its properties.
    In particular, we support the part of section 3 that allows the 
Under Secretaries of Benefits and Memorial Affairs to enter into 
enhance lease agreements.
    Additionally, we support the creation of the Capital Asset Fund, a 
revolving fund that would collect the proceeds from the transfer, 
exchange, or conveyance of property. The funds can then be used to 
supplement VA construction funding, including the costs associated with 
the disposal and clean-up of sites.
    The proposals of this bill would allow VA to reinvest funding back 
into its aging physical structures. CARES-related delays have severely 
hampered construction projects over the last few years and VA needs a 
significant funding boost. The revolving fund, as well as the 
management improvements contained in this bill would be a step in the 
right direction. They would not solve the funding dilemma, but they 
would bring us closer to a solution with the flexibilities this bill 
would provide to VA.

S. 2486--The Veterans Benefits Improvements Act

    VFW supports this bill that will provide many additional benefits 
to veterans. We have reserved our comments to a few sections.

Title I--Education Benefits

    We support all sections in Title I and are particularly pleased 
with Sec. 103, which would exclude veterans' education benefits in 
determining eligibility or amount of Federal educational grants and 
loans. A veteran's earned benefit, such as the MGIB, is paid for 
through service and sacrifice. Today's departing servicemembers deserve 
an equal opportunity to be considered for other forms of assistance to 
help them attain their dreams and goals.

Title II--Housing Benefits

    We support Title II in its entirety and would like to comment on 
Section 201 and Section 204.
    Section 201 would increase the maximum amount of the VA home loan 
guaranty from $60,000 to $83,425. As co-author of the Independent 
Budget, we have strongly advocated increasing this benefit as average 
housing costs have risen to amounts that make the maximum VA guaranty 
insufficient to allow veterans to use the VA home loan when purchasing 
a home. Today's veterans purchasing homes with a VA guaranteed mortgage 
are limited to a home costing a maximum of $240,000. The median price 
of a home in a metropolitan area today is close to $400,000, which 
would render the VA home loan useless in many housing markets today. 
This legislation will effectively expand this most important benefit.
    Section 204 would repeal the loan fees collected from those 
servicemembers eligible to receive compensation as a result of a pre-
discharge disability examination. VFW has long supported repealing all 
VA Home Loan fees, especially for those recently discharged young 
veterans entering the job market and purchasing a home for the first 
time. These individuals are most affected by the inequitable fees and 
can ill-afford such a large out of pocket expense to pay the funding 
fee.

S. 2522--To Amend Title 38, United States Code, to Increase the Maximum 
Amount of Home Loan Guaranty Available Under the Home Loan Guaranty 
Program

    VFW is pleased to support this legislation that increases the 
maximum amount of VA's home loan guaranty. This bill goes a step beyond 
just increasing the amount of home loan guaranty by allowing for the 
maximum amount of the guarantee to be equal to 25 percent of the 
Federal Home Loan Mortgage Corporation's (Freddie Mac) conforming 
mortgage loan rate. As Freddie Mac rates rise, so will VA guaranty 
rates. We believe that this is a giant step forward in ensuring that 
this most important veterans' benefit keeps pace with the constantly 
rising costs of today's housing market.
S. 2524--To Improve the Provision of Health Care, Rehabilitation, and 
Related Services to Veterans Suffering From Trauma Relating to a Blast 
Injury

    I am happy to offer VFW's support for this important legislation, 
which would improve treatment and care for veterans suffering from 
blast injuries by establishing new centers for research, education, and 
clinical activities on blast injuries.
    The news is filled each night with images of the damage bombs and 
other explosive devices cause to our men and women in uniform. Sadly, 
many have paid the ultimate price. But a great many more have survived. 
Improvements in technology are helping those, who just a few years ago 
would have perished, to survive the blasts, but often at a cost of a 
limb or their hearing.
    These veterans have special needs and no one can question the 
merits of their disability--they incurred it while on the front lines 
of the war on terrorism. It is up to us to live up to our obligation 
and to tend to their special needs and the unique challenges their 
disabilities present. VA really is at its best when it is tending to 
these special needs and creating new centers, specifically for the 
traumas of blast injuries is a worthy goal.

S. 2534--To Extend and Enhance Benefits Under the Montgomery GI Bill, 
and to Improve Housing Benefits for Veterans

    VFW is pleased to support this bill, which improves MGIB and 
housing benefits for veterans.
    Section 3 extends an additional opportunity of enrollment in the 
current MGIB for those Vietnam-era veterans who declined to enroll in 
the current program. It allows them one more chance to enroll and 
obtain the improved monetary benefits the MGIB provides.
    We also support sections 4 and 5, which alter the period of use for 
certain training programs and allows the benefits to be used to pay for 
admissions-related tests.
    While we appreciate the intent of section 2, which reduces the 
veterans' financial aid burden by $1,200, it does not fulfill our goal. 
We would prefer to see the complete elimination of the $1,200 buy-in. 
No other form of Federal student aid requires the recipient to pay for 
eligibility. The MGIB should be the same, particularly because those 
who are buying into the program are those who can least afford to give 
up a substantial portion of their income. I have attached VFW 
Resolution 632, which supports a repeal of the $1,200 contribution.
    Mr. Chairman, this concludes my testimony. I would be happy to 
answer any questions that you or the Members of this Committee may 
have.

    Senator Graham of Florida. Thank you, Mr. Hayden.
    Mr. Atizado, did I totally mess up your name?
    [Laughter.]
    Mr. Atizado. I have heard much worse, but thank you; I 
appreciate it.
    Senator Graham of Florida. Would you pronounce your name?
    Mr. Atizado. Atizado.

STATEMENT OF ADRIAN M. ATIZADO, ASSISTANT NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Atizado. Thank you. As always, DAV is grateful for the 
opportunity to provide our views on legislation on today's 
agenda.
    As we all know, access to comprehensive health care and 
specialized services that VA provides is essential for the 
health and wellbeing of many sick and disabled veterans. 
However, VA reports that it has now reached capacity at many of 
its health care facilities, and the cumulative effects of 
insufficient and delayed health care funding have now resulted 
in a rationing of medical care.
    S. 2063 and S. 1014 both seek to address the issue of 
rationed care, and having a resolution from our membership to 
call on timely access to quality health care services, DAV 
supports S. 2063. We do believe that VA must identify and 
immediately correct the underlying problems that contribute to 
excessive long clinic waiting times, and while S. 1014 would 
shift veterans from one priority group to another DAV is 
concerned that this measure would force VA to shift scarce 
resources for the care of one veteran to another, and in doing 
so, the priority treatment of one veteran would simply displace 
another.
    It is no surprise that chronic under funding has forced VA 
to drive veterans away from the system. In fact, while 
budgeting for VA health care considers a co-payments provision 
as a cost saving measure to VA, this is due to increased 
revenues and fewer users. Shifting the cost of care onto the 
backs of sick and disabled veterans is fundamentally contrary 
to the spirit and principles which underlie the provision of 
benefits to veterans by a grateful Nation, and DAV has and will 
continue to oppose any co-payments provision of any bill which 
would affect sick and disabled veterans nationwide.
    With consistent experience that funding veterans' medical 
care under the discretionary process has put veterans' medical 
care at risk, DAV believes in remedies to guarantee adequate 
and stable funding such as those offered under in S. 50. We do 
note that the former Under Secretary for Health testified that 
VHA must apply a 13 or 14 percent per year increase in money 
available to take care of just the core population of veterans.
    Therefore, the current version of S. 50, DAV recommends the 
funding amount of fiscal year 2005 be equal to 130 percent of 
the amount allocated for fiscal year 2003 and that the formula 
utilize the Consumer Price Index for hospital and related 
services.
    In closing, Mr. Chairman, there are many beneficial 
provisions included in the bills being considered today that 
DAV supports, which I have not mentioned for the sake of 
brevity. These provisions demonstrate the sincere efforts of 
Members and the staff of this Committee as well as other 
Senators who have introduced and co-sponsored some of these 
bills to improve veterans' programs.
    We appreciate the strong support for our Nation's disabled 
veterans.
    [The prepared statement of Mr. Atizado follows:]

Prepared Statement of Adrian M. Atizado, Assistant National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee: The agenda today 
includes a number of bills of importance to the more than 1 million 
members of the Disabled American Veterans (DAV). As always, we 
appreciate this Committee's efforts to improve benefits and services 
for disabled veterans, and we are grateful for the opportunity to 
provide our views on legislation affecting our members. With a few 
exceptions, the provisions of these bills are beneficial and justified.

S. 50--The Veterans Health Care Funding Guarantee Act of 2003

    This bill would require the Treasury to make available to the 
Department of Veterans Affairs (VA) Veterans Health Administration 
(VHA) for fiscal year 2005, 120 percent of the amount obligated during 
fiscal year 2002. Adjustments to the amount provided after fiscal year 
(FY) 2005 would be based on the number of enrolled veterans and other 
persons eligible but not enrolled who are provided care, multiplied by 
the per capita baseline amount for fiscal year 2003. In addition, the 
amount provided after fiscal year 2005 would be increased by the 
percentage increase in the Consumer Price Index.
    Furthermore, this measure would repeal the provisions which 
prohibit the appropriation, obligation, or use of funds for any major 
medical facility project or lease unless specifically authorized by 
law. VA would no longer be required to submit to specified 
congressional Committees a prospectus of a proposed medical facility 
involving an expenditure of more than $4 million or facility lease with 
an average annual rental of more than $600,000. Also, VA would not be 
required to give advanced notice to Congress of funds for a major 
medical facility project that would cause the total amount obligated to 
exceed the amount specified in the law for that project by more than 10 
percent, and for any proposal of funds to be used for a purpose other 
than that for which such funds were appropriated.
    The DAV commends this Committee for its strong advocacy for 
veterans in providing this forum for discourse on this extremely 
important matter. Around the world, servicemembers continue to defend 
the freedom we enjoy, some paying the ultimate sacrifice, others 
struggling with the scars of war. Now more than ever, with new sick and 
disabled veterans seeking care, it is vital that the crisis in the VA 
health care system be addressed. As this Committee is aware, we must 
fight an uphill battle year after year to get more realistic 
appropriations for VA, and that annual battle is getting ever more 
difficult in this era of limited discretionary dollars. To get funding 
to continue operation of their medical programs, veterans should not 
have to compete with all the many other interests who seek part of the 
limited allocation of discretionary money. Veterans and VA should not 
have to face the yearly uncertainty of whether there will be sufficient 
and timely funding provided to continue essential medical care services 
for disabled veterans. Veterans should not have to wait months to be 
treated for their illnesses. VA should not have to continue operating 
the largest medical care system in this country on the shoestring of 
annual appropriations and without any means to plan strategically for 
long-term efficiencies. Unfortunately, despite the President's Task 
Force to Improve Health Care Delivery to Our Nation's Veterans (PTF) 
findings of a significant mismatch between demand for VA services and 
available funding, it is the political will of Congress and the 
competing interests that determine how much funding veterans' medical 
care receives each year under the discretionary appropriations process.
    With consistent experience that funding veterans' medical care 
under that process puts veterans' medical care at risk, the remedy is 
to guarantee adequate and stable funding through a permanent 
authorization that uses a reliable formula to project resource needs, 
such as that offered by S. 50. The Former Under Secretary for Health, 
Dr. Roswell, testified before the House Committee on Veterans' Affairs 
that VHA must apply a 13- or 14-percent per year increase in the money 
available to take care of just the core population of veterans. 
Therefore, DAV recommends the funding amount for fiscal year 2005 be 
equal to 130 percent of the amount obligated for fiscal year 2003, in 
the current bill. In addition, since VHA is a provider of health care 
services, we recommend that the formula utilize the Consumer Price 
Index for all Urban Consumers, United States City Average, Hospital and 
Related Services, Seasonally Adjusted. We believe such changes would 
allow VA to plan for and meet the growing needs of our Nation's sick 
and disabled veterans.

S. 1014

    This bill would require VA to give priority, in the veterans' 
patient enrollment system for providing medical care services, to a 
veteran who is eligible for treatment as member of a low-income family 
under the United States Housing Act of 1937 for the area in which the 
veteran resides.
    We commend the advocacy of this legislation for veterans who are 
forced to wait for unreasonably long periods to receive medical care 
and travel long distances to existing facilities operating under 
tremendous financial difficulty. However, DAV has concerns there may be 
some unintended consequences when shifting veterans in Priority Group 7 
into Priority Group 5.
    VA could be forced to shift scarce resources for the care of one 
veteran to another veteran in a different Priority Group. In doing so, 
the priority treatment of one veteran would simply displace another. 
DAV believes the crisis in the VA health care system is due to 
increased demand for medical services and rising costs for care 
combined with continued funding shortfalls. We believe adequate funding 
for VA health care would relieve the health care crisis and allow 
veterans to receive the high quality care they need in a timely manner.

S. 1153

    In addition to allowing Medicare-eligible veterans to elect to 
receive from VA outpatient prescription medication prescribed by a 
physician, the Veterans Prescription Drugs Assistance Act, S. 1153, 
would direct VA to collect co-payments and/or an enrollment fee to 
furnish prescription medications for veterans in receipt of 
compensation and increased pension. Furthermore, the bill would require 
VA to inform each veteran considering an election to receive VA 
medication under these provisions of the terms of the election.
    As this Committee may be aware, veterans service organizations 
acquiesced to the use of co-payments which were only imposed upon 
veterans under urgent circumstances and as a temporary necessity to 
contribute to reduction of the Federal budget deficit. Accordingly, the 
Omnibus Budget Reconciliation Act of 1990 established VA's authority to 
charge co-payments to veterans for prescription medication and medical 
services with a sunset date of September 30, 1991. However, since 1997, 
Congress and the Administration have used the amount estimated that VA 
might collect from veterans to offset appropriations for VA. Most 
recently, on September 20, 2003, Public Law 108-7 eliminated the sunset 
provision making co-payments permanent without debate through hearings 
and other authorizing Committee processes.
    DAV Resolution No. 175 calls for the repeal of all co-payments for 
veterans' medical services and prescriptions. Accordingly, we oppose 
the co-payments provisions of this bill, which would require a veteran 
to pay an annual enrollment fee and the full cost of prescription 
medication VA would otherwise pay. Such provisions move VA farther down 
the road of shifting the costs of care onto the backs of sick and 
disabled veterans. Moreover, this provision is fundamentally contrary 
to the spirit and principles underlying the provision of benefits to 
veterans by a grateful Nation. We believe that providing our Nation's 
veterans with high quality health care is a continuing cost of national 
defense and should be our first priority, without cost to veterans.

S. 1509

    The Eric and Brian Simon Act of 2003, S. 1509, would direct VA to 
pay $100,000 to each veteran who contracted HIV from treatment for a 
service-connected disability, and $100,000 to the current and former 
spouse and each natural child who has contracted HIV from such veteran.
    Testimony delivered by Eric Simon and his father before this 
Committee on March 9, 2004 clearly depicts the nature of the tragic and 
life-altering effects of HIV on veterans and their dependents, 
especially those innocently infected. DAV does not have a resolution on 
this issue; however, we commend this Committee for introducing this 
bill to assist veterans and their dependents suffering from HIV by 
alleviating the economic effects of this terrible disease.

S. 1745

    The Prisoner of War/Missing in Action National Memorial Act, S. 
1745, would designate the memorial in honor of POW/MIA veterans at 
Riverside National Cemetery in Riverside, California, as a national 
memorial. The DAV has no resolution concerning this issue; however, we 
would not oppose the enactment of this bill because it commemorates the 
extreme sacrifices POW/MIA veterans have made on behalf of our Nation.

S. 2063

    To address the issue of timely access to high quality medical care, 
this measure would require VA to carry out a 2-year demonstration 
project to assess the feasibility and advisability of providing for 
priorities and scheduling appointments according to the VHA goal of 30-
30-20, and VHA directives 2002-059 and 2003-062. VA would select three 
VISNs, representing an urban, rural, and highly rural area. The 
priority of the project is to schedule each appointment at a VA 
facility. VA would also be required to submit an annual report to the 
House and Senate Committees on Veterans' Affairs on waiting times for 
health care appointments.
    We believe VA must identify and immediately correct the underlying 
problems that contribute to excessively long clinic waiting times for 
primary and specialty care for veterans nationwide. VA surveys show 
that the organization has fallen far short of the expected progression 
toward its ``30-30-20'' timeliness goals and has failed to provide 
equal access to primary and specialty care for its enrolled veteran 
population. DAV has a resolution calling for timely access to quality 
health care and medical services; therefore, we support this bill and 
urge favorable consideration by the Committee.

S. 2099

    This measure would make a member of the Selected Reserve who serves 
on active duty for an aggregate of not less than 2 years during any 5-
year period on or after September 11, 2001, eligible for basic 
educational assistance under the Montgomery GI Bill. In addition, VA 
would be required to inform members of the Selected Reserve, who are or 
may become entitled to basic educational assistance benefits, of their 
eligibility. The DAV has no mandate from its members; however, this 
bill appears beneficial and we would not oppose favorable consideration 
by this Committee.

S. 2133

    This bill would rename the Department of Veterans Affairs medical 
center in the Bronx, New York, as the James J. Peters Department of 
Veterans Affairs Medical Center. The DAV has no resolution on this 
issue, but we do not oppose its enactment.

S. 2296

    This bill would require VA to give the Commonwealth of Kentucky the 
first option on the Louisville Department of Veterans Affairs Medical 
Center upon its conveyance, lease or other disposal by the Department 
of Veterans Affairs. DAV does not have a resolution on this issue; 
however, we are concerned this measure may have a negative impact on 
the implementation of the Capital Assets Realignment for Enhanced 
Services (CARES) process. This measure circumvents CARES as a national 
initiative and does not ensure fair market value or guard against 
diminished returns to enhance services to sick and disabled veterans.

S. 2327

    The VA State Veterans Home Program has proven to be a cost-
effective provider of quality care services to the Nation's veterans 
who require domiciliary, nursing home, and hospital care. However, the 
current interpretation by the Centers for Medicare and Medicaid 
Services (CMS) treats VA per diem payments as third-party payments, and 
thus requires that the entire amount be offset against Medicaid 
payments. S. 2327 would clarify the treatment of the VA per diem 
payments made to State Veterans Homes and restore the benefit that 
residents of State Veterans Homes receive. The DAV does not have a 
resolution on this issue; however, we are pleased this Committee 
recognizes the need to ensure the viability of the VA State Veterans 
Home Program, and we would not oppose favorable consideration.

S. 2417

    This legislation would allow VA to provide care, for up to 14 days 
after birth, to a newborn child of a woman veteran who is receiving 
maternity care furnished by the VA. DAV does not have a resolution on 
this matter, but would not oppose this measure.

S. 2483

    As the short title of S. 2483 indicates, the Veterans' Compensation 
Cost-of-Living Adjustment Act of 2004 would increase the rates of 
disability compensation, dependency and indemnity compensation, and the 
clothing allowance by the percentage of annual increase in the cost of 
living, with rounding down of the adjusted rates to the next lower 
whole-dollar amount. These increases would be effective December 1, 
2004.
    Congress must adjust these benefit rates regularly to avoid the 
decrease in their value that would otherwise occur by reason of rising 
costs of goods and services. The DAV supports this bill. However, we 
continue to oppose rounding down of compensation increases.

S. 2484

    The Department of Veterans Affairs Health Care Personnel 
Enhancement Act of 2003, S. 2484, would revise VA physician and dentist 
pay provisions. VA would also be authorized to provide alternative work 
schedules and, upon completion of a specified alternative work 
schedule, would allow overtime pay for additional hours of work above 
and beyond the alternative work schedule.
    DAV has a resolution on competitive salary and pay levels for VA 
physicians, pharmacists, dentists, and nurses; however, we have some 
concern that the current version of the bill would not provide VA the 
level of competitiveness needed for effective recruitment and 
retention. We believe this is a good first step for further discussion 
on VA's ability to recruit and retain an adequate number of qualified 
health care providers.

S. 2485

    Currently, the time-consuming and cumbersome process to implement 
VA's authority for enhanced used lease of a property dissuades any 
interested parties to enter into any such agreement with VA. The 
Department of Veterans Affairs Real Property and Facilities Management 
Improvement Act of 2004, S. 2485, would improve VA's authority of 
enhanced used lease and disposal of real property. This bill would also 
eliminate VA's nursing home revolving fund and establish the capital 
assets fund. Any unobligated balances from the nursing home revolving 
fund, as well as proceeds from the disposal of real property by 
transfer, exchange, or conveyance would be deposited into the capital 
assets fund.
    While this bill seeks to streamline the process of enhanced use 
lease, it does not specify the uses for this fund. Without 
specification, such funds may be utilized to offset VA appropriations, 
much like how the estimated amount that VA might collect from veterans 
and their third-party insurers has been used to offset appropriations.
    Furthermore, the pursuit of additional revenue sources through a 
streamlined enhanced use lease process may minimize other real property 
issues. Faced with scarce funding and competing patient care demands, 
VA management has delayed the protection and preservation of VA's 
historic structures for decades and has ignored its legal and moral 
responsibility to develop a comprehensive national program for its 
historic properties. Like all other real property administered by the 
Secretary, VA and Congress must ensure receipt of fair market value and 
not dispose such properties for the sake of getting rid of them.

S. 2486

    Section 101 of Title I of the Veterans' Benefits Improvements Act 
of 2004, would allow eligible servicemembers to provide additional 
contributions to increase the aggregate education assistance allowance 
of the Montgomery GI Bill (MGIB). Section 102 of this bill would 
authorize VA to carry out a 4-year pilot project in which veterans 
would be entitled to an additional 2-year period after the expiration 
of the 10-year eligibility period to use MGIB education benefits. 
Section 103 would prohibit veterans' education benefits from being 
considered when determining a veteran's entitlement to Federal 
financial aid. Section 104 would allow members of the Selected Reserve 
to contribute the full amount for eligibility of MGIB benefits at any 
time after having served 2 consecutive years of active military 
service.
    In its current form, the MGIB is inadequate because it has not kept 
pace with the significant increases in the costs of higher education. 
Although the DAV has no mandate from its membership on this issue, we 
believe these provisions have beneficial purposes and we do not oppose 
its enactment.
    Section 201 of Title II of this bill would increase the maximum 
amount available to a veteran through the VA home loan guarantee from 
$60,000 to $83,425. The Congressional Research Service Reports show 
that since the program's inception, the VA has guaranteed approximately 
$708 billion in loans for the purchase or refinance of more than 16.6 
million homes. To remain successful, the amount of guarantee must keep 
pace with the rising cost of homes. The Independent Budget (IB) for 
fiscal year 2005, which is a document co-authored by the DAV, the 
Veterans of Foreign Wars, Paralyzed Veterans of America, and AMVETS 
(American Veterans), recommended raising the home loan guaranty maximum 
amount. We are pleased that the Committee recognizes the need for a 
significant increase. In accordance with the recommendation of the IB, 
the DAV supports this provision.
    Sections 202 and 203 would make permanent the authority for VA to 
guarantee adjustable rate mortgages (ARMs) and hybrid ARMs. Section 204 
would allow VA to waive funding fees to active-duty servicemembers who 
are eligible to receive compensation resulting from a pre-discharge 
rating examination. DAV has no mandate on these issues and has no 
objection to these provisions.
    Section 301 would extend administrative and judicial redress to all 
veterans who are eligible for Federal job preferences but who were 
denied the opportunity to compete for Federal employment. The DAV has 
no mandate on these issues, but we do not oppose this section of the 
bill.
    DAV fully supports Section 311 of this legislation, which would 
prohibit the collection of co-payments from veterans receiving hospice 
care furnished by VA. DAV's resolution calls for the repeal of all co-
payments for veterans' medical services and prescriptions. We commend 
this Committee for recognizing the undue burden placed on veterans in 
need of end-of-life care that provides dying patients and their loved 
ones with comfort, compassion, and dignity.
    Section 321 would extend to 2009 the authority for a biennial 
report by the VA Advisory Committee on Former Prisoners of War for 
setting forth recommendations for improvements in VA benefits afforded 
to former prisoners of war. In addition, the reporting requirement for 
the VA Special Medical Advisory Group would be extended to December 31, 
2009. Although the DAV has no mandate from its membership on these 
issues, we believe these provisions have beneficial purposes and should 
be reported by the Committee.
    The DAV believes women have always provided meaningful 
contributions to our armed services over the course of our Nation's 
history, most recently exemplified in Afghanistan and further by the 
33,000 women who served honorably in Southwest Asia performing combat 
and combat support functions. Currently, many women seeking VA health 
care find services difficult to obtain or personnel unprepared to 
understand or deal with their specific needs. Section 321 would make 
permanent VA's authority to provide counseling and treatment services 
to those who suffered sexual trauma during military service. DAV has a 
resolution from its membership to seek enactment of legislation 
mandating the provision of VA health care services to eligible women 
veterans to the same degree and extent that services are provided to 
eligible male veterans, including counseling and/or psychological 
services incident to sexual trauma; therefore, we fully support this 
provision.
    Section 331 would modify the definition of minority group for the 
purposes of membership in the VA Advisory Committee on Minority 
Veterans. The DAV has no mandate on this issue, but we do not oppose 
favorable consideration by this Committee.

S. 2524

    This measure would establish at least one War-Related Blast Injury 
Center within VA, to improve the provision of health care, 
rehabilitation, and related services to veterans suffering from trauma 
relating to a blast injury. In addition, it would provide comprehensive 
and specialized rehabilitation programs, as well as targeted education 
and outreach programs and research initiatives. Although the DAV has no 
mandate from its membership on this issue, we believe this bill has 
beneficial purposes and should be reported by the Committee.

S. 2534

    Section 2 of the Montgomery GI Bill for the 21st Century Act would 
exclude the basic pay contribution by a servicemember for MGIB 
education benefits by subtracting $1200 from the expected family 
contribution when determining a veteran's entitlement to student 
financial aid. Section 3 would provide for an opportunity for 
servicemembers who participated in or were eligible for the Veterans 
Educational Assistance Program (VEAP) to enroll in the MGIB education 
program. Section 4 would commence on the first day of the program of 
study the 10-year delimiting period for use of MGIB education benefits.
    Section 5 would make national admissions exams such as the 
Scholastic Aptitude Test (SAT), Graduate Record Examination (GRE), 
Graduate Management Admission Test (GMAT) and Law School Admission Test 
(LSAT), and national exams for credit at institutions of higher 
education, such as the Advanced Placement exam covered by MGIB. 
Although the DAV has no mandate from its membership on these issues, we 
believe these provisions have beneficial purposes and we do not oppose 
its enactment.
    Section 6 would index the maximum VA guarantee loan amount at 100 
percent of the Freddie Mac conforming loan limit. The IB, in addition 
to recommended raising the home loan guaranty maximum amount, also 
recommended that Congress provide for an automatic annual indexing of 
the Fannie Mae-Freddie Mac loan ceiling thereafter. We are pleased that 
the Committee recognizes the need for a significant increase as 
considered in S. 2486, along with this annual indexing to ensure the 
program to remain successful. In accordance with the recommendation of 
the IB, the DAV supports this provision for favorable consideration by 
this Committee.

Closing

    The many beneficial provisions included in these bills demonstrate 
the sincere efforts of Members and staff of this Committee, as well as 
other Senators who introduced and co-sponsored some of these bills, to 
improve veterans' programs. We appreciate this strong support for our 
Nation's disabled veterans.

    Senator Graham of Florida. Thank you.
    Mr. Blake.

   STATEMENT OF CARL BLAKE, ASSOCIATE LEGISLATIVE DIRECTOR, 
                 PARALYZED VETERANS OF AMERICA

    Mr. Blake. Senator Graham, PVA would like to thank the 
Committee for the opportunity to testify today on the proposed 
legislation. Since I am sure you are well aware of PVA's 
position on mandatory funding, and having submitted my full 
written statement for the record, I will limit my remarks to S. 
2485 and S. 2133.
    S. 2485 would improve the authority of the VA to manage and 
dispose of real property and facilities. As the VA begins the 
manipulation, sale or leasing of its infrastructure, great care 
must be taken to ensure that the value on equity in VA's 
physical property is not squandered. That equity does not 
belong to the VA or the Federal Government; it belongs to the 
veterans of the Nation for their future good.
    We believe the legislation before the Committee does 
provide the VA with improved flexibility in leasing unused or 
underused properties. One major element in the legislation that 
I would like to address is the establishment of a capital 
assets fund to serve as the repository for the proceeds from 
the sale or lease of VA properties and then acting as the 
conduit of the reinvestment of those proceeds for the 
improvement of other VA facilities.
    PVA strongly supports this provision which would allow the 
VA to keep the equity and the income from property it conveys, 
and, in the spirit of the CARES process, use those proceeds for 
the improvement of health care and benefit delivery for 
veterans.
    We have two areas of caution, however. First, VA, with 
proper Congressional oversight, must ensure that it receives 
fair market value and appropriate leases for these properties. 
Second, Congress, in authorizing the Capital Assets Fund, must 
be very specific in defining what these funds can be used for. 
PVA has great concern, just as in the case of third party 
collections or any other alternative funding mechanism that VA 
uses that the capital assets fund might be looked at by OMB or 
the Congressional Budget and Appropriations Committees as an 
alternative to and not a supplement for regular VA health care.
    We also do not want to see VA major and minor construction 
funding or nonrecurring maintenance budget line items offset by 
Capital Asset Fund disbursements either. PVA would also like to 
recommend that the Committee consider making historic 
preservation of VA structures a recipient of capital asset 
funding.
    PVA is also pleased to support S. 2133, which would rename 
the VA Medical Center in the Bronx, New York as the James J. 
Peters Department of Veterans Affairs Medical Center. For over 
30 years, Mr. Peters was a leader, a counselor and a visionary 
for PVA. Through his position as executive director of the 
Eastern Paralyzed Veterans Association, his focus was on the 
veterans of New York City Metropolitan Area and surrounding 
States. Yet his reach and achievements stretch nationwide.
    The legacy of James J. Peters is one that can be measured 
in improved lives for tens of thousands of veterans with spinal 
cord injury and dysfunction and millions of other Americans 
with disabilities. There can be no more fitting tribute to Mr. 
Peters than to name the medical center after him, a medical 
center to which he tirelessly devoted himself.
    Senator Graham, again, I would like to thank you for the 
opportunity to testify today, and I would be happy to answer 
any questions you might have.
    [The prepared statement of Mr. Blake follows:]

   Prepared Statement of Carl Blake, Associate Legislative Director, 
                     Paralyzed Veterans of Amercia
    Chairman Specter, Ranking Member Graham, Members of the Committee, 
Paralyzed Veterans of America (PVA) would like to thank you for the 
opportunity to testify today on the proposed legislation.

S. 50--The Veterans Health Care Funding Guarantee Act

    PVA fully supports S. 50 which would remove veterans health care 
funding from the uncertainty of the ``discretionary'' budget process 
and make it ``mandatory.'' Year after year, the Department of Veterans 
Affairs (VA) faces increasingly inadequate health-care budgets. This 
year was no exception as the President released his Budget Request for 
fiscal year 2005, a request that recommended a mere 1.2 percent 
increase over last year. PVA is committed to ensuring that VA health 
care is fully funded.
    Over time, the true resource requirements for veterans' health care 
have not increased sufficiently to provide timely, quality care. In the 
past 5 fiscal years, VA appropriations have not been enacted prior to 
the start of the fiscal year on October 1st, and in the last 2 years, 
the VA health care system has had to operate under the already 
inadequate funding levels established for the prior year, fully one-
third of the way through the new fiscal year. Because of inadequate 
resources, and the tardiness with which they have been provided, the VA 
health care system continues to struggle to meet the needs of sick and 
disabled veterans.
    Mandatory funding would ensure funding for the VA based on the 
number of veterans seeking care from the system without subjecting it 
to current, often arbitrarily determined, discretionary budgets. It 
would not create an individual entitlement to health care, nor would it 
change the VA's mission. Mandatory funding is a comprehensive policy 
solution to the funding crisis faced by veterans and would keep our 
commitments to current, and future veterans.

S. 1014

    S. 1014 would require the VA to place veterans in Priority Category 
7 into new Priority 5(B). This would give Priority 7 veterans 
precedence over Priority 6 veterans. Priority 8 veterans would then 
become Priority 7 veterans due to renumbering of the categories. PVA 
has concerns with the provisions of S. 1014 that would shift these 
veterans. This represents a major change in the priority management 
structure for health care in the VA. Although the eligibility of these 
veterans is protected under the means test, they are still required to 
pay co-payments for services. We are sympathetic to the situation that 
they face.
    However, PVA believes that there may be certain unforeseen 
consequences. First and foremost, the eligibility of veterans in other 
categories might be threatened, particularly veterans currently 
enrolled in Category 8. Furthermore, we are concerned that the VA may 
not be able to pay for this change while operating under the severely 
constrained budget that it does.
    Of greater concern to PVA is the injustice to catastrophically 
disabled veterans, particularly PVA members, which this change would 
maintain. For eligibility purposes, catastrophically disabled veterans 
who are non-service connected are enrolled in Category 4, but they 
still must pay co-payments like other non-service connected veterans. 
PVA has testified in the past that these co-payments can become an 
enormous financial burden on veterans with severe disabilities due to 
the number and expense of prescription drugs and medical supplies that 
they must pay for out of their own pockets. Moving the Category 7 
veterans to Category 5 to relieve the burden of co-payments does not 
address the unfairness of catastrophically disabled veterans continuing 
to make co-payments.

S. 1153--The Veterans Prescription Drug Assistance Act

    PVA has expressed concerns in the past about the expansion of 
prescription drug benefits. We believe that any new prescription drug 
legislative proposals could change the basic primary mission of the VA 
which is to provide health care to sick and disabled veterans. The VA 
does not need to take on the role of the veterans' drug store. PVA 
fears that if we embark upon this path of only providing certain health 
benefits to certain categories of veterans, we could very well see the 
erosion of the VA's mission. The VA would essentially revert back to 
the way it provided care and services prior to eligibility reform, when 
health care was not governed by medical needs but rather by arbitrary 
budget-driven classifications stratifying veterans' health care 
eligibility into ``have'' and ``have not'' categories.
    With the VA having taken steps to drastically reduce access by 
denying enrollment to Category 8 veterans last year and a budget 
situation that can only be described as critical, now is not the time 
to take chances with the lives and health of veterans by dramatically, 
and fundamentally, changing the nature of the VA health care system. 
The VA would then take on the new role of managing a prescription drug 
plan for a whole new category of eligible veterans.
    PVA opposes the provision of this legislation that would shift the 
cost burden of administering this program onto the backs of veterans. 
This is yet one more attempt to shift the responsibility for providing 
quality care and services away from the Federal Government. This 
measure would be unnecessary if Congress provided adequate funding to 
meet the needs of these veterans.

S. 1509--The Eric and Brian Simon Act

    This legislation would authorize the VA to provide a $100,000 
gratuity to a veteran and his or her spouse or dependents who contract 
HIV or AIDS from blood transfusions related to a service-connected 
disability. PVA observed the moving statements provided by Douglas and 
Eric Simon during this Committee's hearing earlier this year. PVA has 
no objection to providing this benefit to families affected by this 
horrible disease.

S. 1745--The Prisoner of War/Missing in Action National Memorial Act

    S. 1745, the ``Prisoner of War/Missing in Action National Memorial 
Act,'' calls for the designation of a POW/MIA memorial located at the 
Riverside National Cemetery in Riverside, California. PVA has no 
objections to the proposed memorial. A memorial recognizing the extreme 
sacrifices and struggles of those held prisoner and those who have 
never returned home is a fitting tribute. As we have recommended in the 
past with respect to the authorization of national memorials, we urge 
the designers of this memorial to make every effort to ensure full 
accessibility for disabled veterans and citizens in the memorial 
design.

S. 2063

    S. 2063 would require the VA to carry out a demonstration project 
on priorities in the scheduling of appointments for health care within 
the VA. PVA supports the standards that the VA established with VHA 
Directives 2002-059 (Priority for Outpatient Medical Services and 
Inpatient Hospital Care) and 2003-062 (Priority Scheduling for 
Outpatient Medical Services and Inpatient Hospital Care for Service 
Connected Veterans) and the 30-30-20 goal for waiting times for 
veterans. Timely access to care is indeed a critical concern of PVA. 
The number of veterans seeking health care from the VA in recent years 
has risen dramatically. Since 1995, the number of veterans enrolled in 
the VA has risen from approximately 2.9 million to more than 5 million. 
Despite the Secretary's decision to close enrollment of Category 8 
veterans earlier this year, the numbers of enrolled veterans only 
continues to increase as we add new veterans from the war in Iraq and 
Afghanistan.
    PVA opposes the provision of this legislation that allows the 
Secretary to contract out care to a non-Department medical facility. 
Veterans with specialized health care needs cannot receive the same 
level of care that VA specialized services provide. Likewise, 
contracting out to private providers will leave the VA with the 
difficult task of ensuring that veterans seeking treatment at non-VA 
facilities are receiving quality health care. PVA believes that 
contracting services to private facilities will set a dangerous 
precedent, encouraging those who would like to see the VA privatized. 
Privatization is ultimately a means for the Federal Government to shift 
its responsibility of caring for the men and women who served.
    PVA does support an annual report on waiting times and appointments 
for care and services within the VA. The information provided by this 
report could prove useful in determining where the VA is struggling to 
meet the demand of veterans seeking care and assist in developing 
solutions to overcome long waiting times.

S. 2099

    PVA supports S. 2099, a bill which would allow members of the 
Selected Reserve who spend more than 2 years on active duty in any 5 
year period to be entitled to Montgomery GI Bill (MGIB) benefits. This 
would apply to reservists called to duty after September 11, 2001. 
Since September 11, the National Guard and Reserves have spent lengthy 
periods of time on active duty. The sacrifices these individuals have 
made in defense of this country are no less important than those being 
made by our men and women on permanent active duty. It is only fair 
that Selected Reservists be allowed to use MGIB benefits that many of 
their counterparts who are on permanent active duty are eligible for.
S. 2296

    S. 2296 would give the State of Kentucky the first option for 
conveyance, lease, or disposal of the VA medical center in Louisville, 
Kentucky. PVA has no position on this legislation. We would only urge 
the VA to ensure that it gets fair market value for the property and 
that disposal of the property is in the best interest of veterans and 
the VA.

S. 2327

    PVA supports S. 2327 that would clarify that per diem payments by 
the VA for the care of veterans in State veterans' homes not be used to 
offset payments made from third parties to assist veterans. PVA 
understands that State homes are being pressured by Medicaid because 
they are receiving reimbursements from both the VA and Medicaid to care 
for veterans. This legislation would prevent Medicaid from denying 
payment to the State homes just because they are receiving funds from 
VA.

S. 2417

    S. 2417 would authorize the VA to provide care to newborn children 
of women veterans who are receiving maternity care. The woman veteran 
may be receiving care at a VA medical center or at a non-VA facility 
that the woman's care was contracted to. PVA supports this legislation.

S. 2483--The Veterans' Compensation Cost-of-Living Adjustment Act

    PVA supports S. 2483, a bill to increase the rates of compensation 
for veterans with service-connected disabilities and the rates of 
dependency and indemnity compensation for certain disabled veterans. We 
oppose again this year, as we have in the past, the provision rounding 
down to the nearest whole dollar compensation increases.

S. 2484--The Department of Veterans Affairs Personnel Enhancement Act

    PVA believes that the subject of recruitment and retention of 
health care professionals deserves a hearing solely dedicated to that 
end. The VA health care system does not operate in a vacuum, and must 
be ever-cognizant of national health care trends and practices. 
Although the VA is part of our national health care effort, it must 
also compete with private and other public sector systems to ensure 
that veterans receive their health care from the most highly qualified 
and highly motivated health care professionals.
    We look forward to seeing the revision that will be made to this 
version of the legislation, and look forward to exploring, along with 
this Committee, how best to recruit and retain health care 
professionals.

S. 2485

    S. 2485 would improve the authority of the VA to manage and dispose 
of real property and facilities. As the VA begins the manipulation, 
sale or leasing of its infrastructure, facilitated in the legislation 
before the Committee today, great care must be taken to ensure that the 
value and equity in VA's physical property is not squandered. That 
equity does not belong to the VA or the Federal Government; it belongs 
to the veterans of the Nation for their future good. With any 
rearrangement of VA facilities great care should be taken to make 
certain the present as well as the future needs of veterans are fully 
accounted for.
    With that caveat, we believe the legislation before the Committee 
does provide the VA with improved flexibility in leasing unused or 
underused properties. VA enhanced use lease authority is unique among 
other Federal departments and agencies. Unfortunately, however, the 
process has been called cumbersome and time consuming, discouraging VA 
administrators from wanting to expend the effort to use this route in 
dealing with property. Such a lengthy process also greatly discourages 
potential private sector entities from considering VA properties as a 
potential investment asset. This legislation authorizes the VA to 
further streamline the enhanced use leasing process to the benefit of 
both the VA and those in the private sector wishing to invest in VA 
properties.
    The second major element in the legislation is the establishment of 
a Capital Assets Fund to serve as the repository for the proceeds from 
the sale or lease of VA properties and then acting as the conduit for 
the reinvestment of those proceeds for the improvement of other VA 
facilities. PVA strongly supports this provision which would allow VA 
to keep the equity and the income from property it conveys, and, in the 
spirit of the CARES process, use those proceeds for the improvement of 
health care and benefit delivery for veterans. We have two areas of 
caution, however. First, VA, with proper Congressional oversight, must 
ensure that it receives fair market value and appropriate leases for 
these properties. Second, Congress, in authorizing the Capital Assets 
Fund must be very specific in defining what these funds can be used 
for. PVA has great concern, just as in the case of third party 
collections or any other alternative funding mechanism VA uses that the 
Capital Assets Fund might be looked upon by the Office of Management 
and Budget, Congressional Budget and Appropriations Committees as an 
alternative to, and not a supplement for regular funding for VA health 
care. We do not want to see VA major and minor construction funding or 
non recurring maintenance budget line items offset by Capital Asset 
Fund disbursements.
    PVA would also like to recommend that the Committee consider making 
historic preservation of VA structures a recipient of Capital Asset 
Funding. The Independent Budget for fiscal year 2005 makes a very 
direct recommendation on the protection and preservation of VA's 
extensive inventory of historic structures. The CARES Commission report 
also recommended that the VA move to address this issue. VA owns almost 
2,000 historic structures. Many are suffering from neglect and 
deteriorate further every year. VA has a moral responsibility to 
maintain these examples of the national legacy we share in caring for 
the American veteran. The Department is also bound by other Federal 
statutes requiring it to care for them as well. Other Federal 
departments and agencies have come to grips with this problem, finding 
alternative uses or divesting themselves of historic properties through 
leasing or sale. VA, if given the incentives, can do the same. The 
Capital Asset Fund is a logical source for renovation funding or 
stabilization for enhanced use leasing to help VA turn many of these 
structures from liabilities to assets.

S. 2486

    S. 2486 would make improvements to many benefits programs 
administered by the VA, to include education, housing, employment, and 
medical. Title I of the proposed legislation addresses changes to VA 
education benefits. Section 101 would increase the maximum amount of 
MGIB benefits from $600 to $2000. PVA supports this provision as it 
will afford servicemembers better access to education opportunities. It 
also reflects the ever-increasing cost of advanced schooling. PVA also 
supports Section 102 which would authorize a pilot program to allow a 
veteran to use MGIB benefits for vocational or job readiness training 
for up to an additional 2 years beyond the delimiting date of the 
benefit. Vocational training gives veterans more options as they enter 
the civilian workforce.
    Section 103 would exclude veterans' education benefits from the 
determination of eligibility for grants or aid provided by the 
Department of Education. Although some grants, such as Pell grants, 
already exclude VA education benefits, not all grants and education aid 
provide the same exclusion. PVA supports this section. PVA also 
supports section 104 of the legislation.
    Title II of S. 2486 addresses improvements in the home loan program 
administered by VA. Section 201 would increase the maximum amount of 
the home loan guarantee from $240,000 to $333,700. This provision is in 
accordance with a proposal made by The Independent Budget to increase 
the maximum VA home loan guaranty amount. This would allow our 
servicemen and women who are returning from the conflicts in Iraq and 
Afghanistan and getting out of the military to have a fair opportunity 
to own a home. Too often, these men and women do not have a chance to 
obtain a home because of high real estate costs associated with the 
still booming housing market. PVA supports Section 202 and 203 which 
would make permanent the authority of the VA to guarantee adjustable 
rate mortgages (ARMS), and authorize the guarantee of hybrid adjustable 
rate mortgages. PVA also has no objections to Section 204.
    PVA supports Section 301 of S. 2486 that would allow a veteran to 
file a complaint with the Secretary of Labor if his or her veterans' 
preference rights have been violated. PVA has worked with many of the 
veterans service organizations to ensure that veterans preference 
rights in Federal hiring are protected. We remain concerned that the 
Federal Government is not doing enough to recruit new veterans to the 
workforce. We are concerned that veterans often are hired for jobs that 
are not commensurate with the skills they have. PVA supports Section 
311 which would prohibit the VA from collecting a co-payment from a 
veteran who is receiving hospice care. PVA has no objections to Section 
321 or 331.

S. 2524

    PVA supports S. 2524 which would improve health care, 
rehabilitation, and related services for veterans suffering from trauma 
relating to a blast injury. The VA will accomplish this by designating 
not less than one and not more than three centers for research, 
education, and clinical activities on blast injuries. Many of the young 
men and women who have been injured in Iraq suffer the effects of 
blasts associated with improvised explosive devices being used by the 
enemy. These devices are causing severe trauma, both physically and 
mentally. The VA needs a facility that can properly care for these men 
and women as well as study methods to improve their care over time.

S. 2534--The Montgomery GI Bill for the 21st Century

    PVA supports Section 2 of this legislation which would exclude 
basic pay contributions made to educational assistance programs for 
certain computations on student financial aid. Section 3 would open 
enrollment into the MGIB education program for 1 year for 
servicemembers who participated in or were eligible to participate in 
the post-Vietnam era educational assistance program, known as VEAP. PVA 
supports this provision. PVA also supports Section 4 which would allow 
the 10 year delimiting period for the use of education benefits to 
begin on the date that a veteran or his or her dependent begins the 
program of study. Currently, the 10 year period begins upon discharge 
from the service. Section 5 of the legislation could be very beneficial 
to young veterans who were unable to take these national admissions 
test upon graduation from high school or who could not afford to take 
the tests prior to military service. PVA fully supports this provision 
of S. 2534.
    PVA supports Section 6 of S. 2524 which would increase the maximum 
home loan guaranty amount and index that amount annually based on the 
Freddie Mac conforming loan limit. As we stated with regard to Section 
201 of S. 2486, we support any measure that will provide our servicemen 
and women a more fair opportunity to own a home. PVA, in accordance 
with the recommendations of The Independent Budget for fiscal year 
2005, also agrees with the provision of this legislation that would 
allow the home loan guaranty amount to have an automatic annual 
adjustment. Much like many other benefit programs administered by the 
VA, the home loan guaranty has not been adequately adjusted to reflect 
the economic growth of this country.

S. 2133

    S. 2133 would rename VA medical center in the Bronx, New York, as 
the James J. Peters Department of Veterans Affairs Medical Center. For 
over 30 years, Mr. Peters was a leader, a counselor, and a visionary 
for PVA. Through his position as Executive Director of the Eastern 
Paralyzed Veterans Association his focus was on the veterans of the New 
York City metropolitan area and surrounding States, yet his reach and 
achievements stretched nationwide. The legacy of James J. Peters is one 
that can be measured in improved lives for tens of thousands of 
veterans with spinal cord injury and dysfunction and millions of other 
Americans with disabilities. There can be no more fitting tribute to 
Mr. Peters than to name the medical center after him, a center to which 
he tirelessly devoted himself. PVA strongly supports S. 2133.

    Senator Graham of Florida. Thank you very much, sir.
    Mr. Jones.

  STATEMENT OF RICHARD JONES, NATIONAL LEGISLATIVE DIRECTOR, 
                             AMVETS

    Mr. Jones. Mr. Chairman, it is a pleasure to present 
testimony on the legislative subjects of this hearing. Like 
those who have testified before, AMVETS supports S. 50, the 
Veterans Health Care Funding Guarantee Act. Mr. Chairman, one 
of the greatest Presidents in the Twentieth Century once said 
that it is commonsense to take a method and try it, and if it 
fails, frankly admit it and try another, but above all, try 
something.
    President Franklin Delano Roosevelt's advice is a wise 
pathway and a ray of hope to veterans seeking access to VA 
health care. Too many sick and disabled veterans either cannot 
enroll in the current system or are waiting too long for care. 
The system is broken, and we need to try something new. We 
support the goal of S. 50.
    Mr. Chairman, AMVETS supports the goal of S. 1153, the 
Veterans Prescription Drug Assistance Act. This legislation 
seeks to remedy a situation faced by older, banned priority 8 
veterans. It would allow Medicare eligible veterans access to 
the VA system via an outpatient medication benefit. A veteran 
who has been diagnosed and prescribed medication by a non-VA 
health provider could have his prescription filled by VA.
    It would help those individuals, and additionally, it may 
induce some of those priority 8 veterans enrolled before the 
Secretary's cutoff date to return to their non-VA doctors, 
which would provide additional access and reduce VA patient 
backlogs.
    S. 1509, which is the Gratuity for Veterans and Family 
Members with Service-Connected AIDS is a bill that we also 
support. The bill would right a wrong that has been committed 
and provide a level of assistance to people who have suffered 
because of no mistake and no fault of their own. This is a bill 
that has been known as the Brian and Eric Simons Act of 2003. 
It is named after the sons of Doug Simons, who received tainted 
blood during an operation at Fort Benning, Georgia, while 
serving in the Army National Guard.
    These tragic victims of a Minnesota family have suffered a 
grief of an infection with this terrible AIDS disease and have 
watched their mother and their sister die. And they continue to 
give their father the care he requires to get through daily 
life. It seems clear to the members of AMVETS that Government 
agencies should be held accountable for the infection of these 
people and other veterans and their families in unfortunate, 
similar circumstances. They have a tragedy visited upon them 
through no fault of their own, and simply because of a blood 
supply that had not been kept safe, they suffer this painful 
experience. AMVETS supports this bill to bring compassionate 
assistance to hurting victims who have contracted this disease.
    Mr. Chairman, the others are a matter of record in the 
written testimony. I thank you for the opportunity to testify.
    [The prepared statement of Mr. Jones follows:]

  Prepared Statement of Richard Jones, National Legislative Director, 
                                 AMVETS
    Chairman Specter, Ranking Member Graham, and Members of the 
Committee:
    Thank you for the opportunity to present testimony to the Veterans' 
Affairs Committee on legislation subject to this legislative hearing. 
AMVETS is pleased to present our views regarding S. 50, the Veterans 
Health Care Guarantee Act; S. 1014, Healthcare Priority; S. 1153, 
Prescription drug bill; S. 1509 Gratuity for veterans and family 
members with service-connected AIDS; S. 1745 POW/MIA Memorial at 
Riverside National Cemetery; S. 2063, Priorities in scheduling 
appointments; S. 2099 Educational assistance boost for certain 
Reservists; S. 2296, State of Kentucky option to purchase VA property; 
S. 2327 Coordination of VA per diem and Medicare payments for care in 
State homes; S. 2417 VA provision of neo-natal care; S. 2483 Cost-of-
living adjustment; S. 2484, VA physician pay; S. 2485 provisions 
related to VA property management; S. 2486 Miscellaneous education, 
home loan, and other benefits; S. 2524, on blast injury research and 
clinical care centers; S. 2534, relating to various education and home 
loan benefits program improvements.
    Mr. Chairman, AMVETS has been a leader since 1944 in helping to 
preserve the freedoms secured by America's Armed Forces. Today, our 
organization continues its proud tradition, providing not only support 
for veterans and the active military in procuring their earned 
entitlements but also an array of community services that enhance the 
quality of life for this Nation's citizens.
    Throughout our 60-year history, our focus and indeed our passion 
have been to represent the interests of veterans as their advocates. In 
this regard, this Committee and our organization share a common 
purpose--we support veterans in their efforts to receive the benefits 
that a grateful Nation intended them to have in recognition of their 
dedicated service to our country.
    As a Nation, we owe veterans an enormous debt of gratitude--for 
their service, their patriotism, and their sacrifices. The benefits to 
which they are legally entitled are not the product of some social 
welfare program, as some might argument. Rather they are yet another 
cost of freedom that unfortunately is too often forgotten.
    As a national veterans service organization, chartered by Congress, 
AMVETS is committed to assisting veterans in their times of need. For 
example, during the past 18 years, we, together with DAV, PVA, and VFW, 
have co-authored a document titled The Independent Budget in which we 
identify the funding requirements necessary to support the Department 
of Veterans Affairs.
    We believe that America's promises made to veterans for their 
military service need to be recognized and honored as our forebears 
intended. We believe that veteran's benefits should be provided in a 
timely and compassionate manner. We believe that to do less dishonors 
those whose service in defense of this Nation provides a central 
underpinning for the prosperity and freedoms we all enjoy.
    We appreciate the opportunity you provide to testify on pending 
legislation to enhance, update, and strengthen veterans legislation.

S. 50--The Veterans Health Care Funding Guarantee Act

    S. 50, introduced by Senator Johnson, would provide a comprehensive 
solution for VA's health care funding crisis. AMVETS fully supports 
moving VA health care from a discretionary account to a mandatory 
account funding method. Providing quality, timely healthcare services 
for sick and disabled veterans should be a top priority. Guaranteed 
funding would eliminate the year-to-year uncertainty about funding 
levels that have prevented VA from planning for and meeting the growing 
needs of veterans seeking care.
    Mr. Chairman, one of our greatest Presidents once said, ``It is 
common sense to take a method and try it. If it fails, admit it frankly 
and try another, but above all try something.'' President Franklin 
Delano Roosevelt's advice presents a wise pathway and a ray of hope to 
veterans seeking access to VA's healthcare system. AMVETS urges 
Congress to recognize that the current system of funding veterans 
health care is broken. It simply doesn't work. Too many sick and 
disabled veterans either cannot enroll in the system or wait too long 
for care.
    AMVETS strongly supports the goal of S. 50 and firmly believes that 
once health care funding matches the actual average cost of care for 
veterans enrolled in the system, with annual indexing of inflation, VA 
can truly fulfill its mission.
    S. 1014, a bill to amend Title 38, United States Code, to require 
the Secretary of Veterans Affairs in the management of health care 
services for veterans to place certain low-income veterans in a higher 
health-care priority category.
    Introduced by Senator Corzine, S. 1014 would adjust the Veterans 
Equitable Resource Allocation to replace the national income thresholds 
for consideration in Priority 5 with regional thresholds that take 
account of differences in the cost of living across the country. The 
aim of this legislation is to improve the allocation of resources under 
VERA to ensure it better reflects the true costs of VA health care in 
various VISNs in the United States. AMVETS supports the goal of this 
bill.

S. 1153--The Veterans Prescription Drugs Assistance Act

    As the Committee is all too aware, Secretary Principi took action 
on January 17, 2003, that banned healthcare access to an estimated 
164,000 veterans who could have enrolled in 2004 and a similar number 
who could have enrolled this year, citing a lack of resources. Congress 
had allowed these so-called high-income veterans or ``Priority 8s'' 
into the VA system since 1996, but the funding to provide for them has 
never been adequately appropriated. Currently, veterans are eligible to 
receive prescription medications from the VA only if a VA physician 
prescribes the medication. While insisting that a VA doctor see the 
patient may not seem like too great an imposition, many of veterans 
waiting for a doctor's appointment are waiting solely to have a 
prescription written and filled.
    It is commonly noted that the majority of the Priority 8s entering 
the system have done so to access the VA prescription drug program. For 
these veterans, once they are under the care of a VA physician, they 
can see dramatically reduced prescription drug costs versus the private 
sector.
    VA dispenses over 100 million prescriptions yearly to its nearly 5 
million patients, and with this volume, VA can negotiate very favorable 
drug prices. Figures from the National Association of Chain Drug Stores 
claim that for 2001, VA cost per prescription was almost half the cost 
found in the private sector. With the ever increasing cost of 
prescriptions, it is little wonder Priority 8 veterans have availed 
themselves of this benefit after Congress allowed them access to the VA 
system.
    Mr. Chairman, AMVETS supports the goal of this legislation. S. 1153 
seeks to remedy the situation faced by older ``banned'' Priority 8s. It 
would allow Medicare-eligible veterans access to the VA system via an 
outpatient medication benefit. A veteran who has been diagnosed and 
prescribed medication by a non-VA healthcare provider could have his 
prescription filled by VA. The current VA prescription cost for 
enrolled patients is $7.00 per prescription for a 30-day supply. At 
this cost, many eligible veterans could see a substantial reduction in 
their medication expenses. Additionally, this benefit could induce some 
Priority 8 veterans, enrolled before the Secretary's cutoff date, to 
return to their non-VA healthcare providers and thereby reduce VA 
patient backlogs.
    Further, though we understand the rational, AMVETS remains 
disappointed in the ban of Priority 8 veterans taken by the Secretary 
January 17, 2003. We understand the funding realities faced by the 
Secretary, and we know this Committee and its members have fought for 
adequate funding for VA. However, we must never forget who Priority 8 
veterans are. They are those brave Americans who answer our Nation's 
call and with God's grace return from service whole and able to 
continue their lives without disabling injury or illness. They are the 
soldiers, sailors, airmen or marines who stand a post or walk a patrol 
somewhere in Iraq or elsewhere across the globe. As we speak, these 
warriors may be replacing a buddy who yesterday gave the ultimate 
sacrifice, but today these patriots are ready take their place, 
voluntarily, in defense of freedom and our way of life. The members of 
AMVETS believe these men and women, whose future income may exceed the 
$24,000-a-year ``high-income'' threshold, which serves to deny them 
future healthcare eligibility, should be able to seek care at VA if 
they have the need following their military service. And it is the 
least our Nation can do for those on whom America depends to defend her 
liberty.

S. 1509--Gratuity for Veterans and Family Members with Service-
Connected AIDS

    Senator Coleman's bill, S. 1509 would right a wrong that has been 
committed and provide a level of assistance to people who have suffered 
because of no mistake of their own. Something has to be done to assure 
compassionate payments to veterans or families of veterans who have 
contracted AIDS through poorly screened blood supplies used by military 
and VA healthcare facilities for transfusions.
    This is the bill that has been known as the Brian and Eric Simon 
Act of 2003. It is named after the sons of Doug Simon who received 
tainted blood during an operation at Fort Benning, Georgia, while 
serving in the Army National Guard. These tragic victims of a Minnesota 
family that suffered the grief of an infection with this terrible 
disease have watched their mother and sister die and continue to give 
their father the care he requires to get through daily life.
    It seems clear to the members of AMVETS that government agencies 
should be held accountable for the infection of these people and other 
veterans and their families in unfortunate similar circumstances. They 
have had a tragedy visited upon them through no fault of their own. 
Simply because a blood supply had not been kept safe, this family 
became a victim of a painful tragedy by the failure to properly screen 
donors and blood supplies. AMVETS supports this bill to bring 
compassionate assistance to hurting victims who have contracted this 
disease through no fault of their own.

S. 1745--A Bill to Designate a Prisoner of War/Missing in Action 
National Memorial at Riverside National Cemetery in Riverside, 
California

    S. 1745, introduced by Senator Boxer, seeks to designate the 
memorial under construction at Riverside National Cemetery, Riverside, 
California, as the Prisoner of War/Missing in Action National Memorial. 
AMVETS supports this legislation as a fitting tribute and honor to 
America's former prisoners of war. It is our hope that such a 
designation would continue the work to ensure that future generations 
understand the courage of these men and women who sacrificed so much of 
their freedom in defense of the liberties we hold dear. AMVETS supports 
the bill.

S. 2063--A Bill to Establish a Demonstration Project on Priorities in 
Scheduling of Appointments

    S. 2063, introduced by Senator Conrad, would help reduce the time 
veterans must wait for a VA doctor's appointment, particularly for 
veterans in need of specialty care.
    While progress is being made to gain more timely care for veterans 
currently enrolled in the VA healthcare system, reports make clear that 
veterans waiting months for eye care, orthopedics, back surgery and 
related specialty care continue their uncertainty of receiving medical 
attention.
    Moreover, the Secretary's decision to halt enrollment of certain 
veterans is another clear indicator that VA cannot meet its own 
standard for scheduling and appointment within 30 days.
    S. 2063 would establish a 2-year pilot program in three Veterans 
Integrated Service Networks--a highly rural VISN, a rural VISN, and an 
urban VISN--to improve access for veterans seeking care. It would help 
determine how much such standards would cost in terms of resources and 
impact on other VA medical services.
    In effect, the bill provides a valuable tool to use for reducing 
waiting times and responding to the healthcare needs of veterans. 
Moreover, it would provide vital information on the actual resource 
needs necessary to ensure veterans earned benefits are provided in a 
timely manner.
    AMVETS supports this legislation to address the concerns of our 
members about veterans waiting for timely care from VA.

S. 2099--Increase in Educational Assistance Under the Montgomery GI 
Bill for Members of the Selected Reserve Who Aggregate More Than 2 
Years Active Duty Service

    S. 2099, introduced by Senator Miller, would authorize a person who 
serves more than 2 years active duty during any 5-year period to be 
eligible for the educational benefits made available under Title 38, 
Chapter 30, of the Montgomery GI Bill.
    As currently designed the Montgomery GI Bill aims to benefit active 
duty service. There is, however, current provision to grant educational 
benefits to Selected Reserves who agree to serve on active duty for 2 
years followed by 4 years in Selected Reserve status.
    S. 2099 would change eligibility criteria to recognize the changing 
mission of Reservists from a strategic reserve built on a cold war 
construct to an operational reserve capable of joint and expeditionary 
missions.
    AMVETS recognizes the crucial role Reserves now play in military 
operations. In the four decades of the cold war, Reserves faced only 
two Presidential activations--once during the 1948 Berlin airlift and 
once again for a limited call-up during the Vietnam War.
    The upward spiral of mobilization and deployment since 1990 stands 
in stark contrast to the previous period. Reserves have participated in 
the Persian Gulf War, Bosnia, Kosovo, Afghanistan, Iraq and elsewhere 
around the globe. While some units have been called up more often than 
others, overall operations have dramatically transformed the Reserves 
as an essential part of combat operations.
    AMVETS supports the bill and welcomes the help of the Senate 
Veterans Affairs Committee in efforts to move its consideration 
forward. The bill appropriately recognizes the mission shift in 
Reserve. Frankly, Mr. Chairman, AMVETS view is that the Nation should 
not skimp on benefits dearly earned by its citizen-soldiers as they go 
in harm's way to defend our freedom.

S. 2296--A Bill to Authorize Conveyance, Lease or Disposal of the 
Louisville VA Medical Center to the State of Kentucky

    S. 2296, introduced by Senator Bunning, would allow the State of 
Kentucky first option regarding the purchase of the Louisville VA 
Medical Center. AMVETS main interest in the Kentucky CARES situation is 
speedy completion of a replacement hospital near the University of 
Louisville, which requires congressional approval of funding. We have 
no opposition to the timely disposition of the former hospital site.

S. 2327--A Bill to Clarify That VA Per Diem Payments for the Care of 
Veterans in State Homes Shall Not be Used to Offset or Reduce Other 
Payments Made to Assist Veterans

    S. 2327, introduced by Senator Campbell, would ensure that VA 
payments to States would not be considered a liability of a third party 
and not otherwise be used to offset or reduce any other payment made to 
assist veterans. VA's per diem program, part of the Medical Care 
account, assists States in providing domiciliary and nursing home care 
for veterans through partial payment of per diem costs. VA reports that 
in fiscal year 2001 over 16,000 veterans on any given day were provided 
nursing home care in State veterans homes. The per diem program is an 
important program as it represents an effective way to deliver 
geriatric care, especially in rural areas. AMVETS supports Senator 
Campbell's bill as it safeguards against the potential of abuse and 
protects the interests of veterans who in many instances are vulnerable 
and dependent in many aspects of their daily lives. With OMB hungry for 
resources, this legislation is particularly timely, and we encourage 
its speedy passage.
S. 2483--The Veterans Compensation Cost-of-Living Adjustment Act of 
2004

    S. 2483, introduced by Chairman Specter, would provide a cost-of-
living adjustment for veterans' benefits programs and help protect the 
veterans' benefit against the erosion effects of inflation. The 
principle programs affected by the adjustment would be compensation 
paid to disabled veterans, dependency and indemnity compensation 
payments made to surviving spouses, minor children and to other 
dependents of servicemembers who died in service or who died as a 
result of service-connected injuries or disabilities. AMVETS supports 
the adjustment. We would, however, encourage Congress to make the 
adjustment to totally disabled veterans more generous than the 
consumer-price-index as measured by the Department of Labor. We believe 
it is time the Nation recognizes that compensation to totally disabled 
veterans is too low. We need to be more generous to those who have 
given so much in their military service. And we believe there are a 
number of ways to make the adjustment within the current budget.
    S. 1133, introduced by Chairman Specter, would provide a cost-of-
living adjustment for veterans' benefits programs and help protect the 
veterans' benefit against the erosion effects of inflation. The 
principle programs affected by the adjustment would be compensation 
paid to disabled veterans, dependency and indemnity compensation 
payments made to surviving spouses, minor children and to other 
dependents of servicemembers who died in service or who died as a 
result of service-connected injuries or disabilities. AMVETS supports 
the adjustment and would encourage Congress to take one more step 
making the payment adjustment to totally disabled veterans more 
generous than the consumer-price-index as measured by the Department of 
Labor. It is time we recognize that the compensation to totally 
disabled is too low and there are a number of ways to make the 
adjustment within the current budget.

S. 2484--The Department of Veterans Affairs Health Care Personnel 
Enhancement Act of 2003

    S. 2484, introduced by Chairman Specter by request, would adjust 
pay provisions for doctors and dentists and better accommodate work 
schedules and pay for nurses within the VA healthcare system. AMVETS 
recognizes that the VHA is an efficient and cost-effective healthcare 
system. VHA makes no profit, pays no insurance premiums, and 
compensates its physicians, nurses and clinical staff less than 
private-sector healthcare systems. We also recognize that VHA must 
compete in the marketplace to attract high-caliber healthcare 
professionals to practice medicine and treat veterans seeking care at 
VA facilities. To attract the skilled workforce necessary to meet the 
needs of the system, the overall VA compensation package must be able 
to respond to the market. It must be flexible and ready to compete. 
Unfortunately the current compensation provisions have not been changed 
since 1991. At the same time, the system must be accountable in 
achieving quality and productivity. To recruit and retain quality 
staff, AMVETS supports the goal of this legislation.

S. 2486--A Bill to Improve and Enhance Education, Housing, Employment, 
Medical, and Other Benefits for Veterans to Improve and Extend Certain 
Authorities Relating to the Administration of Benefits for Veterans

    S. 2486, introduced by Chairman Specter and Sen. Murkowski, would 
improve and update a number of VA education and housing programs. 
Section 101 would enhance the current ``buy up'' program that boosts 
the monthly Montgomery GI Bill benefit when the servicemember 
voluntarily contributes up to $600 in addition to the $1,200 made to 
secure MGIB benefits. This provision would allow the servicemember to 
contribute up to $2,000 to secure up to $500 per month over the period 
of educational entitlement. While AMVETS believes the original GI Bill 
should serve as a template for the veterans educational benefit, we 
believe this proposal would be helpful.
    Section 102 of this bill would extend the eligibility period for 
use of the MGIB benefits, which now is 10-years following discharge. 
With the rapid change in the skill needs of America's workforce, AMVETS 
supports this provision. We believe, as the Chairman's statement says, 
``Providing veterans with some flexibility in the use of a benefit they 
have earned is a sensible approach to helping veterans obtain the 
skills they may need to stay competitive in a 21st century workforce.''
    Section 103 would change eligibility rules for a veteran's 
entitlement to Federal financial aid administered by the Department of 
Education. It would exclude from consideration MGIB benefits for forms 
of assistance such as unsubsidized Stafford loans and campus-based aid. 
AMVETS supports this provision.
    Section 104 would improve the flexibility of MGIB benefits provided 
Reservists. Currently Reservists are eligible for MGIB benefits if they 
contribute $100 a month during their first 12 months of service and 
serve on active duty for 2 consecutive years. Of course, this is a 
difficult situation for a Reservist who has no idea at the start of 
Reserve duty whether a 2-year consecutive service will be required. 
This provision would allow the Reservist to pay $1,200 at some later 
point in service when eligibility is established. AMVETS supports this 
provision.
    Section 201 would increase the maximum amount of housing loan 
guarantee to $83,425 from $60,000. This change in guarantee will 
increase no-down payment VA guaranteed home loan limits from $240,000 
to $333,700. Under the current formula, VA guarantees 25 percent of the 
available loan up to the guarantee limit.
    Housing prices in certain parts of the country prevent many 
veterans from buying a home without a down payment. The proposed 
increase in the guarantee would enable many veterans to purchase a home 
of their choice without a down payment, which would otherwise be 
unavailable to them. It is our understanding that related Federal 
mortgage associations, including Fannie Mae, have established similar 
increases in their guarantee and that this legislation provides parity 
with the conventional loan market. AMVETS fully supports this 
improvement.
    Section 202 and 203 of this bill would expand the range of 
available adjustable rate mortgage options for home loans. The current 
pilot program for ARMs is successful, but limited. Since this current 
pilot expires on September 30, 2005, it is appropriate to review the 
program and enhance it. AMVETS supports the expansion of options for GI 
home loans.
    Section 204 would allow VA to waive the home-loan funding fee for 
active duty servicemembers who are eligible to receive compensation as 
a result of a pre-discharge examination, but who are not yet been 
discharged. With VA making pre-discharge determinations in this regard, 
it is appropriate that the waiver be available in advance of discharge 
when discharge is imminent.
    AMVETS supports the provisions of the Veterans' Benefits 
Improvement Act of 2004.

S. 2522--A Bill to Increase the Maximum Amount of VA Home Loan 
Guarantee Benefits

    It is AMVETS understanding that S. 2522, introduced by Sen. 
Corzine, would adjust annually the amount of maximum home loan 
guarantee available to eligible veterans by indexing the increase of 
the VA guarantee to the Freddie Mac conforming loan limit. Housing 
prices in certain parts of the country prevent many veterans using a VA 
home loan guarantee from buying a home without a down payment. The 
proposed increase in the guarantee would enable many veterans to 
purchase a home of their choice without a down payment, which would 
otherwise be unavailable to them. Because the bill takes into account 
fluctuations in the housing market and would more readily adjust the 
housing benefit to the yearly real estate market, AMVETS supports this 
legislation.

S. 2524--To Address Blast Injury Research and Clinical Care Centers 
(BIRCCs)

    S. 2524, introduced by Ranking Member Graham, would establish a VA 
war-related Blast Injury Center to study, research and treat veterans 
suffering from trauma related to blast injury. Blasts from roadside 
bombs and artillery result in injuries to lungs, inner ear, limbs and 
head are common combat injuries. Veterans returning from war often must 
deal with these types of blast related wounds. AMVETS supports efforts 
to intensify expert treatment that attends to soldiers facing a 
lifetime of dealing with battlefield wounds.

S. 2534--The G.I. Bill for the 21st Century

    S. 2534, sponsored by Ranking Member Graham, would improve home-
buying and education options for America's veterans. AMVETS supports 
this legislation. It would ensure the VA home loan guaranty benefit is 
kept up to pace by increasing the maximum home-loan limit to help 
veterans secure an adequate loan to meet today's housing market. In 
addition, the bill has several education enhancements that would change 
the MGIB benefits. We urge the Committee to give this matter every 
serious consideration. AMVETS supports the goal of this bill.
    This concludes AMVETS testimony. Again, thank you for the 
opportunity to testify on these important bills, and thank you as well 
for your continued support of America's veterans.

    Senator Graham of Florida. Thank you very much, sir.
    I would like to ask a question relative to the mandatory 
funding proposal. As I understand the formula that is currently 
being considered, it is mandatory funding to the Veterans 
Administration for the purposes of financing medical care. Most 
mandatory funding programs, including the one whose 60th 
anniversary we are recognizing today as well as programs like 
Social Security, which is an entitlement program, Medicare, an 
entitlement program, the funding goes directly to the eligible 
beneficiary, and then, the eligible beneficiary accesses or 
uses the funds as he or she determines.
    Why would that not be the preferred method of mandatory 
funding, entitlement funding, for veterans' health care?
    Mr. Mooney. Senator, we would consider the entitled entity 
in this case to be all veterans enrolled, with a pooled 
entitlement. For better or worse, capitation is the standard 
way of funding health care in this country now. You take all of 
your enrollees; you add them up; you assign an amount of money 
to them, and you multiply that money by the number of 
enrollees, and that is your budget. It is up to the health care 
organization how best to utilize the money. The VERA formula 
would work--I believe would work well under a capitated system. 
But the entitled entity would be the VA.
    Senator Graham of Florida. I guess that is the way the 
legislation is currently written. I am trying to understand the 
philosophy behind the legislation. Let us take Medicare, which 
is a similar program. The beneficiary is not the 39 million 
Americans who are currently eligible for Medicare but rather 
each one of the individual 39 million.
    I just would like some discussion as to the relative 
impacts on veterans of using a Medicare type system as opposed 
to a system which would provide a guaranteed block of money to 
the Veterans Administration, and then, it would be responsible 
for allocation.
    Mr. Blake. Well, Senator Graham, one concern we have is you 
are kind of setting up a situation where the VA becomes more of 
an insurer of care, not necessarily a provider of care, and you 
eventually erode what the VA was established for in the first 
place.
    The concern we have is giving each individual veteran this 
money to receive, to get their care through this sort of 
insurance process is that they begin to go out in the private 
sector. And we begin to have concerns that a veteran cannot 
receive the care that he would get from the VA from the private 
sector. This is especially true of members of PVA or of other 
veterans who have severe disabilities or blinded veterans; 
those with post-traumatic stress disorder, all of the 
specialized services.
    These are services that these veterans will not be able to 
get at a private facility. It is just a fact. And they do not 
necessarily know that, and they would think that maybe their 
best alternative is to go to a local private facility, and that 
is not necessarily in their best interest.
    So our concern would be that over time, you would erode 
what the original intent of the VA was, and that was to provide 
care to sick and disabled veterans, and as it is set up now, to 
all veterans who are eligible. And this, by changing that 
system into an insurer, ultimately, you could see the downfall 
of the VA health care system as it is established currently.
    Senator Graham of Florida. If you provided that this 
entitlement could only be accessed at a VA hospital, that is, 
you could not use it in the general health care community, 
would that make you feel more comfortable about having an 
individual entitlement?
    Mr. Atizado. Well, Senator, the idea of having a pool of 
resources within VA for any disabled veteran to utilize at any 
time is probably a better stewardship of the taxpayers' money. 
It allows VA a wide range of flexibility as far as where to 
address demand where it arises. I believe that without that 
flexibility, having a veteran come in at any facility may 
produce--how should I say--undue strain on a particular area of 
VA's health care system.
    Now, the idea of creating an individual entitlement has 
never been part of any iterations of any mandatory funding 
bills, specifically because the Secretary already has the 
ability to ensure that whichever veterans are enrolled into the 
health care system would receive care. Everybody is aware of 
the January 17, 2003, decision of not allowing priority group 8 
veterans into the health care system, which only decries the 
fact that VA is under funded.
    Now, if you were to actually fund VA for every single 
veteran, we are talking about 25 million veterans, and I do not 
believe that that would be the most effective way to provide 
our Nation's veterans with the care that they would receive and 
still answer to the grateful Nation that provides this service.
    Senator Graham of Florida. Any other comments on the issue 
of individual as opposed to group entitlement?
    Before leaving that question, I am going to make a 
parochial statement, and I confess that in my State of Florida, 
we are one of the relatively few States where the veteran 
population is growing. And in addition to the permanent 
population growing, during times of the year such as the 
winter, we get large numbers of veterans who have their 
residence elsewhere but who come to a place like Bay Pines for 
veterans' medical services during the time that they are in 
Florida.
    Would it not assure that the money that is allocated goes 
to the facility where service is being rendered if you had the 
money essentially follow the veteran?
    Mr. Jones. Well, I agree with that premise, that the money 
should flow to where the veteran is seeking care, not where the 
veteran wants care but where the veteran needs care. With the 
circumstances you present, that is an example of a system that 
requires funding to maintain facilities to provide quality, 
timely care to the veterans in the residence catchment area.
    If I have understood you correctly, more money should go to 
those systems that serve more veterans.
    Senator Graham of Florida. And is the best way to ensure 
that that happens not to have the money carried by the veteran, 
so if the veteran goes to hospital A, it gets the money, not 
hospital B, where he is not seeking services?
    Mr. Jones. I think that the system can account for the 
influx and flow of veterans and can account for that in the 
distribution of the total available funding. I think that works 
fairly well.
    Senator Graham of Florida. Do you think that, in fact, has 
been the history of the VA? Have, for instance, there been----
    Mr. Jones. No, it has not been, and it was in the early 
nineties where changes had to be made, and finally, we began to 
recognize the demographics of change, where veterans were 
moving to the Southwest, to the South, and out of the 
Northeast, which, of course, presents problems as outlined 
earlier today by Senator Corzine and Senator Clinton with 
regard to Northeastern facilities.
    Feels a little bit like a drama here today, Senator. You 
have chandeliers breaking, thunder outside.
    Senator Graham of Florida. I mean, there is an amusement 
area in Disney World that reminds me of things that have 
glasses that are tottering and thunder on the outside, but I do 
not think we are at Disney World.
    Mr. Jones. No, sir.
    Senator Graham of Florida. That issue of individual versus 
group entitlement is an issue that I would like to pursue 
later, maybe when we have a hearing which I hope will be soon 
devoted exclusively to the issue of mandatory funding.
    Let me ask about one other piece of legislation that we are 
considering here today, and that is the issue of the ability of 
a veteran who is receiving his primary care outside the VA 
system such as a person on Medicare with a local physician, but 
as of now, the Medicare program does not cover prescription 
drugs, and that is the one element of a comprehensive health 
care system that is not currently available to him at 
affordable prices.
    What do you think about the proposition that a veteran who 
is receiving primary care from a physician who by all standards 
is a professional and properly licensed to provide that care 
and then have the VA fill the prescription drug scripts that 
are written for that individual?
    Mr. Hayden. The VFW believes that veterans should be 
allowed to fill their private prescriptions at the VA.
    Senator Graham of Florida. You say they should or they 
should not?
    Mr. Hayden. They should be allowed to fill their 
prescriptions there. And we base a lot of this--I am sure you 
have seen the GAO report that was produced, the duplication of 
services that goes on; they wait in line; they contribute to 
the backlog of appointment backlogs waiting to see the VA 
physical to basically get the same prescription prescribed to 
them.
    So we think it would be a win-win situation for the veteran 
and the VA.
    Senator Graham of Florida. Any other comments on that?
    Mr. Jones. Yes, sir, for a period of time, AMVETS felt that 
it was important that VA not become a drug store. We felt that 
providing access to non-VA-doctor prescribed medications would 
diminish the amount of available funding for critical medical 
care needs. However, it is our understanding that in fiscal 
year 2004, over $600 million was carried over of unspent 
medical care funding from fiscal year 1903. And it is projected 
into fiscal 1905 from fiscal 1904 that some $800 million will 
be carried over of unspent funding.
    Funding is available presently to ensure that all veterans 
who are currently banned--and that is 164,000 veterans a year 
who are not allowed even access to VA would be able to have 
their prescriptions filled, and we would be able to also begin 
to back out those who remain within the VA system backlogging 
those searching for their first doctor's appointment.
    The money is there; we think that this is an appropriate 
way to spend it. Congress has been generous, and VA ought to 
move forward in this area, and if they are not moving forward, 
sir, certainly, legislation should be out there.
    Senator Graham of Florida. Our Chairman has returned, and I 
will return the gavel to him.
    Chairman Specter. [Presiding]. Thank you very much. Thanks 
very much, Senator Graham, for filling in. Just for a word of 
explanation, after this hearing was set, the Chairman of the 
Appropriations Committee listed a hearing for the Department of 
Defense Appropriations bill, and we had the Subcommittee markup 
in the morning, full Committee this afternoon, and hopefully, 
it goes to the floor tomorrow.
    So the appropriations process understandably takes 
precedence over everything else, but we are able to work it out 
with Senator Graham filling in, so the panel has been able to 
proceed.
    The subject which I would like to discuss with all five of 
you gentlemen involves the prescription drug legislation. It 
seems to me that the VA is able to negotiate tremendous 
discounts. Many of the veterans sign up for care with the VA to 
have the benefit of the prescription drug program. Many 
veterans sign up solely for that reason. The veteran ought to 
have the option of signing up or not, but if the veteran really 
does not want the medical treatment, why should he have to have 
it as a precondition to getting a drug benefit?
    In such cases, the VA is incurring costs giving treatment 
to a veteran who does not want it, who probably is having 
treatment on the outside. And if someone has a prescription for 
Zocor, he is going to a doctor, not that Zocor, for example, 
has any great complications in terms of taking it.
    Mr. Mooney, how do you size it all up? What would your 
conclusion be?
    Mr. Mooney. Well, Mr. Chairman, I would compare the VA 
health care system to Tricare. Tricare is--VA is a closed 
system. Their pharmacy system does not take input from outside 
medical providers. Tricare is a managed care operation that has 
thousands of retail pharmacy providers as well as their mail 
order pharmacies.
    Every time a prescription comes in to Tricare, it goes to a 
computerized review system, and a data base or a profile, 
medications profile is built for each patient who is receiving 
medication. This is from, you know, prescriptions that are 
written by Tricare providers. That way, if there is a 
medication conflict or some other problem, it can be picked up 
on.
    VA does not have that capacity. VA also does not have the 
capacity to--right now, their CMOPs or VA's consolidated mail 
order pharmacies are running pretty much at capacity, and I 
believe Secretary Principi testified to that effect in the 
House last year. They would not be able to pick up the kind of 
demand that this bill would anticipate without, you know, some 
considerable infrastructure improvements.
    The American Legion, we side with the VA on this particular 
issue. We do not believe that the VA was designed to be a mail 
order pharmacy.
    Chairman Specter. Mr. Hayden, what do you think?
    Mr. Hayden. We believe that veterans should have access to 
it, Mr. Chairman. It is there for them; it is part of the 
medical benefits package that they get when they enroll in the 
system. Currently, category 8s are excluded, but you could even 
open it up to allow those category 8s to at least access maybe 
that part of the package if they are not willing to access the 
other part of the medical benefits package.
    Chairman Specter. Mr. Atizado.
    Mr. Atizado. Mr. Chairman, the members of DAV have a strong 
opinion with regards to a provision of the bill, which is a co-
payments provision. I have mentioned that in my oral testimony 
earlier. But aside from that, our concern of having a 
prescription-only benefit in this type is that veterans would 
have to choose either or, such that if a veteran were to elect 
this benefit that they would have to--they would, in a sense, 
not be able to use VA medical care.
    And we believe that may actually be a detriment to the 
veteran. Granted that it is a benefit; prescription medication 
is part of the therapy of a disability. We believe that 
disabled veterans are an inherently different population. They 
are older, sicker; they have more chronic conditions. 
Therefore, we believe that they should have the ability to 
utilize the VA health care system not just one part of the 
benefit.
    Chairman Specter. Thank you very much.
    Senator Graham of Florida. So do you believe that if they 
are not using the whole system, they should be eligible to use 
the pharmaceutical or precluded from using the pharmaceutical?
    Mr. Atizado. I believe they should be able to use the 
entire health care benefit package, not just one.
    Senator Graham of Florida. My question was a little bit 
different.
    Mr. Atizado. I am sorry.
    Senator Graham of Florida. Suppose a veteran says I want to 
use the doctor that I have used for the last 30 years now that 
I am on Medicare, and that doctor, you know, writes a 
prescription. Are you saying that you think that that veteran 
ought to be able to take that prescription to the VA and get it 
filled, or because he is getting the rest of his health care 
through his private physician should be excluded?
    Mr. Atizado. Well, we believe it should be up to the 
veteran, obviously. You should have a freedom of choice, but we 
oppose a preclusion of him being able to use the VA health care 
system.
    Senator Graham of Florida. Oh, yes, OK.
    Chairman Specter. Mr. Blake.
    Mr. Blake. Mr. Chairman, PVA's position has always remained 
essentially the same on this. Our biggest concern is that 
basically, you could see a change in the VA's mission to that 
of sort of a veterans' drug store. Did not realize it was not 
on.
    Our concern is that you would possibly go back to the way 
health care benefits and different parts of the health care 
benefits package were managed prior to eligibility reform, 
where you have certain groups of veterans getting certain types 
of benefits, and it is broken up, and you create categories 
where you have essentially, like, haves and have nots as far as 
who gets what type of benefit covered under the VA.
    I also want to reiterate a point that Mr. Atizado made 
about the co-payments. We have had concerns about shifting the 
burden of costs for even just the prescription drug benefit 
onto veterans, which is, essentially, in our mind, is what S. 
1153 does, as have other prescription drug benefits that we 
have seen that have been proposed.
    So I would say that I would just have to mirror Mr. 
Atizado's comments. We have opposed S. 1153 and most of the 
prescription drug bills that have been proposed because of the 
possibility of a change in the VA's mission.
    Chairman Specter. Mr. Jones.
    Mr. Jones. AMVETS in the past has held a position similar 
to PVA in that we felt that the issuance of non-VA prescribed 
drugs would diminish available medical dollars for critical 
treatments of veterans. However, it is our understanding that 
that argument no longer really holds water.
    If you take a look at the budget for fiscal 1904, you will 
see $600 million of carryover funds from 1903 in the medical 
care account. Looking at the estimated carryover into 1905, 
$800 million. At an average price of $13 per prescription, you 
could easily give all of those veterans who are seeking care 
but banned, 164,000 a year, access to VA without damaging VA's 
timely or quality care resources. So we believe that yes, 
veterans should have access to VA pharmacy whether their 
pharmaceuticals are prescribed by a VA doctor or not.
    Chairman Specter. Well, thank you very much, gentlemen. 
This has been a very useful hearing. We have quite a 
legislative package to move, and this hearing gives us an 
evidentiary record basis for proceeding.
    We thank you for the outstanding job you are doing in 
representing America's veterans, and at a time when we are at 
war in Iraq and Afghanistan and have troops all around the 
world, it is more important than ever that we focus on the ways 
to treat America's veterans properly.
    So thank you very much.
    [Whereupon, at 4:20 p.m., the hearing adjourned.]
                            A P P E N D I X

          Prepared Statement of Hon. Ben Nighthorse Campbell, 
                       U.S. Senator from Colorado
    Mr. Chairman, thank you for holding this hearing on proposed 
legislation relating to VA health care benefits and other general 
benefits. I want to welcome those who have come to testify and look 
forward to hearing their thoughts on the various bills.
    I am especially pleased that we will be considering my Veterans 
Nursing Home Stipend bill, S. 2327, which will clarify the treatment of 
the per diem payments made by the Department of Veterans Affairs (VA) 
to support State Veterans Homes across the country.
    For several decades, Federal law has required that the VA pay a per 
diem amount to States to support quality care provided to eligible 
veterans at qualified State Veterans Homes. This VA per diem, currently 
about $56 per day for nursing home care and $27 per day for domiciliary 
care, is intended to assist States in providing the best possible care 
to those who served in our armed forces.
    In my State of Colorado and a number of other States, the 
availability of the VA per diem is threatened by interpretations of 
Medicaid rules by the Centers for Medicare and Medicaid Services (CMS). 
CMS would treat the VA per diem payments as third-party payments, 
requiring that the entire amount be offset against Medicaid payments. 
This interpretation would deny residents of State Veterans Homes who 
receive Medicaid in these States any benefit whatsoever of the VA per 
diem payments.
    Mr. Chairman, I believe this runs contrary to the intent of 
Congress in establishing the VA per diem payment system. My legislation 
would simply clarify that the VA per diem payments cannot not be 
considered to be a third-party liability under Medicaid.
    Again, thanks. I look forward to the testimony this afternoon.
                               __________
               Prepared Statement of Hon. Patty Murray, 
                      U.S. Senator from Washington
    Chairman Specter, I want to thank you and Senator Graham for 
calling this hearing to discuss the important pieces of legislation 
before us.
    I also want to join you in welcoming all of the panelists here 
today, especially the Veterans Service Organizations who provide a 
strong voice for their membership--those brave men and women who have 
served and sacrificed so honorably for our country.
    As you may know, my father was a disabled World War II veteran. I 
grew up understanding the sacrifices our veterans make, and I've always 
been deeply aware of our obligations to veterans once they return home.
    In college, I volunteered at the Seattle Veterans Hospital, and I'm 
proud to be the first woman to ever serve on this Committee.
    I sought this position so I could advocate for Washington's nearly 
700,000 veterans.
    Today, I continue to be focused on ensuring our veterans have all 
of the benefits and services they have earned.
    Mr. Chairman, like you, I believe it is vital that Congress take 
steps to ensure all members of our armed forces and their families are 
taken care of, especially during extended active-duty deployments, and 
upon their return home.
    Unfortunately, that has not always been the case. Veterans who 
volunteered--or were drafted to serve our country--were promised 
healthcare and other benefits.
    But, when the returned home, many found those promises were not 
kept. In recent years, the Administration has barred certain veterans 
from enrolling in the VA.
    And, the President's budget request for this year would have 
required some veterans to pay additional fees for the services they are 
currently able to receive.
    While this Committee and the Congress have made strides in 
providing the services due to our Nation's veterans, there is still 
much more to be done.
    Mr. Chairman, I am a co-sponsor of several pieces of legislation 
before us today, including:
     Senator Johnson's bill, S. 50, that would make Veterans' 
Healthcare funding mandatory--ending the annual budget games and 
keeping our promise to the veterans who have served so honorably for 
our country.
    And Senator Campbell's bill, S. 2327, which would ensure VA per 
diem payments to State Veterans' Homes--including those in Washington 
State--could be used in conjunction with Medicaid payments to enhance 
patient care to veterans in State homes.
    I am also a co-sponsor of each of the three bills that would allow 
veterans to receive a larger VA home loan.
    As we all know, the VA loan limit has not been increased since 2001 
and the current VA loan amount of $240,000 has eroded to just 74 
percent of the FHA loan limit.
    We must act to ensure that veterans have access to this important 
program, and keep it in pace with the rising costs of decent housing in 
this country.
    As with home costs, education costs are rising at an unprecedented 
pace.
    Updating the Montgomery GI Bill is one of the best ways we can act 
to ensure our recent veterans and current servicemembers have the 
education options they deserve.
    Currently, there are two Montgomery GI Bill programs.
    One for active-duty (MGIB-AD), and one for Guard and Reservists 
(MGIB-SR).
    Originally, the GI Bill benefits for Guard and Reserves were set at 
47 percent of the active-duty benefit. But, these benefits currently 
lag at 29 percent of the active-duty benefit.
    I have heard from members of the National Guard and Reserves who 
worried that they had to leave their university to go to Iraq for a 
year.
    Several soldiers who are in the high tech field said to me ``18 
months away from my job means that I won't be ready to go back to my 
position.''
    That's why--back in February--I included a provision in my Guard 
and Reserve Enhanced Benefits Act (S. 2068) to extend and update the GI 
Bill benefits.
    This is a critical program for the men and women called away from 
school and their jobs to serve our country on active duty.
    I am a proud co-sponsor of each of these GI Bill enhancements 
before the Committee today because we should:
     Encourage participation in the program,
     Provide a competitive edge for Guard and Reserves when 
they return to the private sector, and
     Create incentives for the citizen-soldiers we rely so 
heavily on today.
    Mr. Chairman, as you know, several of us have to leave shortly for 
an Appropriations Committee meeting on the Defense bill.
    But, again, I want to commend you and Senator Graham for bringing 
these important pieces of legislation before the Committee today.
    Your leadership will allow us to make more progress in providing 
our veterans the benefits they have been promised, and the benefits 
they've earned with their sacrifice for our country.
    Thank you, Mr. Chairman.


                               __________


           Prepared Statement of The American Federation of 
                     Government Employees, AFL-CIO

    The American Federation of Government Employees, AFL-CIO, which 
represents more than 600,000 Federal employees who serve the American 
people across the Nation and around the world, including roughly 
150,000 employees in the Department of Veterans Affairs (VA), is 
honored to submit comments on legislation currently pending before the 
Senate Veterans Affairs Committee.
     s. 2484--department of veterans affairs health care personnel 
                        enhancement act of 2003
    Chairman Arlen Specter introduced S. 2484 on June 1, 2004, at the 
request of Secretary Prinicipi. Our union greatly appreciates that when 
Chairman Specter introduced S. 2484 as a courtesy to Administration he 
acknowledged that AFGE had significant concerns with VA's proposed 
legislation and that we have offered constructive ideas to improve the 
VA's proposal. AFGE looks forward to working with Chairman Specter and 
Ranking Member Graham and members of the Committee to improve this 
legislation.
                  physician and dentist pay provisions
    The legislation VA requested to be introduced would give the VA 
unreviewable discretion to set VA physicians' and dentists' pay. AFGE 
opposes the physician and dentist pay provisions in S. 2484, as 
drafted. We do not believe this pay system, as introduced, will help 
the VA retain and recruit needed medical providers to care for 
veterans.
    VA claims that its proposal will simplify its current physician and 
dentist pay system. The legislation would establish three tiers of pay 
bands. The first tier, would be a nationwide base pay band ranging from 
$110,000 to $125,000. VA would have broad discretion to situate an 
individual's base pay anywhere along the base pay band. The proposed 
legislation does not state how the VA would make meaningful 
distinctions among employees to situate their base pay along the pay 
band.
    In addition to the base pay, the VA would then have the discretion 
to add a second market pay tier. The legislation gives the VA total 
discretion to set the range for market pay, to define the market area 
and to then situate an individual along the variable market pay band 
base upon specialty, assignment, personal qualifications, and 
individual experience. Thus the VA would have the flexibility and 
discretion to set a variety of market pay bands within a geographic 
area to account for the other variables or to set one geographic pay 
band and situate the market component of a physician's pay along the 
band based upon non-market factors. The legislation does not require 
physicians to receive a minimum market pay adjustment for their 
locality.
    In addition to variables for being situated along the base pay and 
market pay bands, the VA would also have a performance pay tier. VA 
proposes that this third tier would be linked to performance and be 
paid for discrete achievements in quality, productivity and support of 
``corporate goals.'' The variables for setting those goals and ensuring 
consistent measurement are not specified in the legislation.
    The tier variable pay bands would be combined to set individual pay 
for each VA physician and dentist. The legislation gives VA broad 
flexibility to set the pay bands and to set individual salaries using 
the combined three tiers of pay bands. It is our understanding that if 
this bill remains unchanged VA intends to use the flexibility to set 
individual physician and dentist pay by the Medical Director based upon 
a recommendation from management designated professional standards 
board.
    S. 2484, as drafted, authorizes the VA to reduce the market and 
performance salaries of VA physicians or dentists, and S. 2484 
explicitly makes such an extreme action unreviewable by existing 
governmental processes designed to ensure due process and fairness in 
governmental personnel actions. The legislation, as drafted, does not 
require any independent neutral process by which a physician or dentist 
may seek to challenge a negative, unfair or arbitrary salary decision.
    The legislation does guarantee VA physicians and dentists a 
nationwide across-the-board pay increase based upon the General 
Schedule (GS) nationwide pay increase. As currently drafted, S. 2484, 
would not guarantee VA physicians and dentists the GS locality pay 
increase.
    As drafted, S. 2484, does not require the VA to recognize the value 
of full-time physicians and dentists through a guaranteed and 
consistent pay adjustment for fulltime physicians. The current pay 
system rewards full-time physicians for their full-time commitment to 
caring for veterans. Under S. 2484, a part-time VA primary care 
physician could make the same amount as a full-time VA primary care 
physician in the same medical facility.
    S. 2484, as introduced, does not require the VA to encourage a 
stable patient-physician relationship and long-term commitment to 
caring for veterans through length of service pay, as in the current 
pay system for VA physicians and dentists.
    S. 2494 also does not provide incentive pay for ongoing 
professional expertise and advanced credentials through guaranteed 
compensation for board certification, which recent research has shown 
is linked to improved patient outcomes. The current pay system has an 
automatic adjustment for board certification. Under S. 2484, the VA 
would no longer be required to increase a physician's pay because he or 
she achieved board certification in the practice of medicine.
        afge's recommendations to improve physician and dentist 
                       recruitment and retention
    1. Improve quality of care by promoting physician and nurse 
involvement in the organizational and clinical decisionmaking processes 
of the VA by enhancing collaboration and communication between VA 
administrators and front-line care providers.
    Addressing VA's ability to retain and recruit needed primary care 
and medical specialty providers is essential if the VA is to meet the 
current and future demand for veterans' medical care. Our members are 
frustrated and deeply concerned that veterans must wait months for 
appointments to see VA medical providers.
    Pay and benefits are key to retaining and recruiting direct care 
providers, but AFGE strongly believes that current working conditions 
must improve in order for the VA to be able to hire and retain 
physicians and dentists. Like other civil servants, physicians and 
dentists choose to work at the VA because it offers an opportunity to 
help people hone and develop their professional practice, and perform 
meaningful and challenging work. In short, it is the nature of the 
work, not just the size of the paycheck, which matters.
    Decisions on restructuring, staffing, administrative duties, and 
rationing of care affect how physicians are able to practice medicine. 
Ensuring that front-line physicians have a voice in decisions, which 
involve medical practice and quality of care issues, is absolutely 
essential if the VA is to be the employer of choice for doctors and 
dentists and provide world-class health care.
    For example:
     Front-line medical providers need to be part of VA's 
dialog on developing a staffing model for primary care, long-term care, 
and specialty care to ensure that the methodology accounts for time 
spent not only on direct patient care but administrative tasks, 
research, coordination of care and ongoing professional development and 
education.
     VA's ongoing efforts to refine a computerized medical 
record system would benefit from extensive feedback from the very 
doctors who must expend time entering data that would otherwise be 
spent with the patient.
     VA's efforts to implement the CORE-FLS system would also 
benefit from additional input and feedback from front-line staff.
    Current law creates unnecessary constraints on the ability of 
front-line physicians and dentists to work with VA management to 
address the ongoing challenges the VA faces in the delivery of direct 
patient care.
    AFGE strongly urges the Committee to revise S. 2484 to enhance the 
participation of front-line physicians and dentists in administrative 
decisions that affect their practice. Ensuring that frontline staff has 
a voice in decisions that involve medical practice and quality of care 
is absolutely essential if the VA is to provide world-class health 
care.
    Establishing a process whereby front-line doctors and their union 
representatives can provide meaningful input to help shape workplace 
decisions that impact on patient care will boost VA's ability to hire 
and keep medical providers.
    AFGE believes the collaborative process drafted by the Senate 
Veterans Affairs Committee and enacted in P.L. 108-107 offers a 
moderate approach to providing collaborative input from VA health care 
professionals in VA's policies on their advancement and promotions. 
Chairman Specter and Ranking Member Graham, AFGE urges you to revise S. 
2484 to provide front-line doctors, nurses and their union 
representatives with collaborative opportunities to shape workplace 
decisions that affect how these professionals deliver care.
    2. Balance VA flexibility and discretion in setting individual 
physician and dentist pay with statutorily established accountability 
and safeguards.
    The current VA physician pay system is transparent, fair, credible, 
and equitable because many of the pay components are guaranteed. It 
also makes the system easier to administer and less subjective or 
vulnerable to bias or discrimination than a system which places all 
components of pay for each individual physician at the discretion of VA 
facility management or on the recommendations of a professional 
standards board.
    Discretion in setting individual pay may give VA flexibility but it 
also makes the pay system vulnerable to arbitrary, inconsistent and 
biased salary decisions. With this vulnerability comes inconsistency, 
favoritism and discrimination, all which erode the core merit principle 
of equal pay for work of equal value. The inconsistent and biased 
exercise of discretion hurts morale.
    According to the General Accounting Office (GAO), any Federal pay 
system, which attempts to implement ``results-oriented pay reform'', 
must have ``effective, credible, and validated management systems that 
are capable of supporting pay and other personnel decisions.'' \1\ 
Although there is no evidence that GAO's own performance pay system has 
either improved production, quality or upheld the merit system 
principle of equal pay for substantially equal work, the GAO has put 
forth the following standards to consider both before implementing a 
pay system to set individual pay linked to performance and individual 
competencies and as safeguards for post-implementation.
---------------------------------------------------------------------------
    \1\ GAO April 1, 2004 Testimony ``Results-Oriented Cultures: Modern 
Performance Management Systems Are needed to Effectively Support Pay 
for Performance,'' before the Subcommittee on Civil Service and Agency 
Organization, Committee on Government Reform, House of Representatives.
---------------------------------------------------------------------------
     Assure that the agency's management systems can result in 
meaningful distinctions in individual employee performance.
     Involve affected employees, their representatives and 
other stakeholders in the design of the system, including having 
employees directly involved in validating key parts of the pay system 
and standards for making pay distinctions.
     Assure that key pre-decisional internal safeguards exist 
to help achieve the consistency, equity, non-discrimination and non-
politicization of the process (e.g., reviews of pay determinations to 
ensure that they are merit-based, internal grievance process to address 
employee complaints).
    Assure transparency and appropriate accountability mechanisms in 
connection with the process (e.g. publish results of pay decisions 
while protecting individual confidentiality and report periodically on 
internal assessments and employee survey results).\2\
---------------------------------------------------------------------------
    \2\ Id. and May 19, 2003, letter to The Honorable Jo Ann Davis, 
Chairwoman, Subcommittee on Civil Service and Agency Organization, 
Committee on Government Reform, House of Representatives, from J. 
Christopher Milm, GAO Director, Strategic Issues.
---------------------------------------------------------------------------
    When agencies lack credible and validated performance appraisal 
methods and lack appropriate safeguards to support individualized pay 
systems, the GAO found that employees and managers lose confidence in 
the fairness of the decisions that are made.\3\
---------------------------------------------------------------------------
    \3\ May 19, 2003 GAO letter, pages 4-5.
---------------------------------------------------------------------------
    GAO's determination about the factors that lead to failures in 
systems that set individualized pay based upon subjective assessment 
echoes the conclusions of researchers in the field of ``pay for 
performance.''
    Professor Jeffrey Pfeffer, of Stanford University's School of 
Business, has written extensively about the misguided use of 
individualized pay for performance systems in the public and private 
sectors. Pfeffer's research shows that performance systems never 
achieve their desired results, yet ``eat up enormous managerial 
resources and make everyone unhappy.''
    Professor Pfeffer explains that pay for performance myths are based 
on conceptions that human nature is uni-dimensional and unchanging. In 
economics, humans are assumed to be rational maximizers of their self-
interest, and that means they are driven primarily, if not exclusively, 
by a desire to maximize their incomes. The inference from this theory, 
according to Pfeffer, is that ``people take jobs and decide how much 
effort to expend in those jobs based on their expected financial 
return. If pay is not contingent on performance, the theory goes, 
individuals will not devote sufficient attention and energy to their 
jobs.''
    But do pay for performance systems work? Pfeffer answers with the 
following:
    Despite the evident popularity of this practice, the problems with 
individual merit pay are numerous and well documented. It has been 
shown to undermine teamwork, encourage employees to focus on the short 
term, and lead people to link compensation to political skills and 
ingratiating personalities rather than to performance. Indeed, those 
are among the reasons why W. Edwards Deming and other quality experts 
have argued strongly against using such schemes.
    Consider the results of several studies. One carefully designed 
study of a performance-contingent pay plan at 20 Social Security 
Administration (SSA) offices found that merit pay had no effect on 
office performance. Even though the merit pay plan was contingent on a 
number of objective indicators, such as the time taken to settle claims 
and the accuracy of claims processing, employees exhibited no 
difference in performance after the merit pay plan was introduced as 
part of a reform of civil service pay practices. Contrast that study 
with another that examined the elimination of a piece work system and 
its replacement by a more group-oriented compensation system at a 
manufacturer of exhaust system components. There, grievances decreased, 
product quality increased almost tenfold, and perceptions of teamwork 
and concern for performance all improved. \4\
---------------------------------------------------------------------------
    \4\ ``Six Dangerous Myths about Pay'' by Jeffrey Pfeffer, Harvard 
Business Review, May-June 1998, v.76, no. 3, pg. 109(11).
---------------------------------------------------------------------------
    Compensation consultants like the respected William M. Mercer Group 
report that just over half of employees working in firms with 
individual pay for performance schemes consider them ``neither fair nor 
sensible'' and believe they add little value to the company.
    GAO's research on the Federal Aviation Administration's 
individualized pay band system found similar results. Nearly two-thirds 
of the FAA managers and employers interviewed by the GAO disagreed or 
strongly disagreed that the new pay system is fair to all employees. 
GAO found evidence to support concerns about FAA pay disparities in the 
Department of Transportation's Inspector General report.\5\
---------------------------------------------------------------------------
    \5\ Human Capital Management: FAA's Reform Effort Requires a More 
Strategic Approach, GAO-03-156 (February 3, 2003).
---------------------------------------------------------------------------
    As the Committee considers S. 2484, AFGE urges that you revise the 
legislation to establish the following statutory safeguards and 
mechanisms for accountability.
     Establish a national base pay schedule that would 
recognize and reward fulltime dedication to caring for veterans and 
encourage stable patient-physician relationships and long-term 
commitment to caring for veterans through a guaranteed time-in-grade 
pay increase based upon satisfactory performance.
     Adjust the full salary of VA physicians and dentists 
annually with the GS across-the-board and locality pay increases.
     Prohibit negative pay adjustments.
     Involve affected VA physicians, their representatives and 
other stakeholders in the design, training and evaluation of the pay 
system, including validating and testing the reliability of any 
criteria used to make pay distinctions, and the selection of board 
members.
     Enhance the objectivity of the pay setting process by 
ensuring consistent pay adjustments for board certification and full-
time status.
     Assure pre-decisional accountability by establishing 
employee access to an independent, neutral grievance process by which 
employees may challenge pay decisions which they regard as 
inconsistent, arbitrary or non-merit based.
     Assure transparency by requiring the VA to publish an 
annual result of pay decisions (while protecting individual 
confidentiality) desegregated by gender, race, ethnicity, age, area of 
medical specialty, and facility.
     Assure accountability through published periodic 
evaluations and assessments (from the Inspector General or GAO) 
involving employees and their representatives.
    AFGE looks forward to working with the Committee to ensure that the 
revision of VA's physician pay system reflects the minimal statutory 
safeguards and accountability measures recommended by the GAO.
    3. Correct the obsolete 24/7 leave policy. S. 2484, as introduced, 
does nothing to address an ongoing frustration for physicians and 
dentists over how the VA charges them for annual, sick and military 
leave. The current VA rules governing leave for physicians, dentists, 
podiatrists, optometrists and chiropractors requires that these 
employees be charged for annual, sick and military leave on weekends, 
even when their normal work schedule is Monday through Friday. This 
policy is based upon the VA's position that VA physicians, dentists, 
podiatrists, optometrists and chiropractors are on-call 24/7, 
regardless of their actual work schedule. Eliminating the weekend 
charges for annual, sick and military leave, while maintaining 30 days 
of annual leave for full time physicians, dentists, podiatrists, 
optometrists and chiropractors, would be a significant step to 
improving the working conditions of these medical providers at the VA. 
VA's own Quadrennial Report Reviewing Committee concluded ``there is no 
longer any value in charging full-time physicians and dentists for 
absences on non-duty days.''
    AFGE has tried to work with the VA to address this issue of concern 
for many full-time VA physicians and dentists, unfortunately with 
limited success. As a result, we must urge Congress to eliminate the 
weekend charges of annual, sick and military leave for VA's physician 
medical care providers. As you revise S. 2484, we urge you to correct 
the problems in the VA's 24/7 leave policy.
         registered nurse alternative work schedule provisions
    S. 2484, as drafted, would authorize the VA the discretion to offer 
Registered Nurses (RNs) the following flexible tours:
    (1) three 12-hour tours (36 hours) in a workweek paid as 40 hours;
    (2) seven 10-hour days/7 days off in a pay period, with pay for 80 
hours;
    (3) 9 months of work with 3 months off, with pay apportioned over a 
12-month period.
    AFGE is generally supportive of the principle of offering RNs 
alternative work schedules in order to recruit and retain nurses. 
However, we have the following concerns with the S. 2484, as drafted, 
which we believe adversely impact RNs and veterans.
    1. VA's legislative proposal takes no steps to ensure continued 
patient safety.
    The Institute of Medicine (IOM) report titled ``Keeping Patients 
Safe: Transforming the Work Environment of Nurses'' recommends that, to 
reduce error-producing fatigue, health care organizations should 
establish policies designed to prevent nurses who provide direct 
patient care from working longer than 12 hours in a 24-hour period and 
in excess of 60 hours per 7-day period. \6\
---------------------------------------------------------------------------
    \6\ The relevant pages of the IOM report are attached, including 
Appendix C which was prepared by Ann E. Rogers, Ph.D, RN, FAAN, of the 
University of Pennsylvania, concerning the research to support the 
recommendation on preventing direct care nurses from working more than 
12 hours in a 24-hour period and more than 60 hours in a 7-day period.
---------------------------------------------------------------------------
    VA is proposing a schedule that would have direct care RNs work 
seven 10-hours days consecutively or 70 hours in a 7-day period, and 
then have 7 days off. This provision in S. 2484, which the VA proposed 
to Congress before the IOM report was issued, would have the VA violate 
the IOM recommendation that direct care nurses should not volunteer or 
be required to work more than 60 hours in 7-day period.
    Even though the proposal would allows facility managers to offer a 
70-hour work schedule but does not require it, we believe that the VA 
should be the leader in creating systemic improvements in patient 
safety. Given the strength of the IOM recommendations that hospitals 
should take steps to prevent direct care nurses from working more than 
60 hours in a week it would imprudent for Congress to pass legislation 
to give VA facility management the discretion to ignore basic patient 
safety standards for nurse scheduling.
    Given the IOM recommendation for patient safety and RN work hours, 
based upon a substantive body of research on the effects of fatigue on 
worker performance, AFGE must oppose the alternative work schedule of 
70 hours in 7-days.
    Although the proposed alternative schedule of three 12-hour shifts 
does not technically conflict with the IOM recommendation that 
hospitals prevent direct care nurses from working 12 hours in a 24-hour 
period, we are concerned with the proposal given VA's current policy 
and practices. It lacks consistent practices and has an often non-
existent policy to prevent RNs from working more than 12-hour shifts. 
Our union is concerned that direct care RNs working three 12-hour 
shifts, either under this alternative schedule or otherwise, will be 
vulnerable to working additional fatigue-producing hours and their 
patients' safety will be placed at risk.
    As the Committee considers allowing the VA to offer work schedules 
that will require RNs to work to up to the maximum number of safe hours 
in a 24-hour period AFGE urges the Committee to ensure that the VA 
follow the IOM recommendations to prevent direct care nurses from 
working beyond 12 hours in a 24-hour period.
    For the safety of veterans and to ensure the retention and 
recruitment of quality nursing staff, AFGE urges this Committee to 
require the VA to develop a policy designed to prevent direct care 
nurses from working longer than 12 hours in a 24-hour period whether 
voluntarily or by mandate. Such a prevention policy would need not 
prohibit RNs from being called upon to work in excess of 12 hours in a 
24-hour period or in excess of 60 hours in a week during emergencies. 
Rather the policy would ensure that such occurrences are rare and due 
to true emergencies not inadequate scheduling or staffing. In order to 
secure a policy that is flexible for the unique situation of each 
hospital unit but remain a meaningful objective, it is imperative that 
the policy is jointly designed and jointly monitored for compliance by 
VA's nurse administrators and the union representatives of VA direct 
care nurses.
    2. S. 2484, as drafted, denies RNs who agree to work the 
alternative schedules with existing premium pay.
    VA's legislative proposal specifically exempts RNs working on the 
proposed alternative schedules from receiving night shift differential 
pay, Saturday premium pay, holiday pay, and on-call pay under 38 USC 
7453. Nurses working an alternative work schedule should not be denied 
any current premium pay under 38 USC 7455, which are now available to 
part-time and full-time RNs. AFGE urges the Committee to ensure that 
all RNs, continue to receive all premium pay provisions under 38 USC 
7453.
    3. S. 2484, as drafted, may place RNs who agree to work some 
alternative schedules, but not other alternative schedules, in an 
indefinite probationary status.
    RNs who work an alternative work schedule or years of part-time 
should not be considered on probation for an indefinite and unending 
period of time. RNs who work full-time and have satisfactorily 
completed their 2-year probation period are returned to an indefinite 
and unending probationary period if they convert their schedule to 
parttime. RNs who are not considered probationary would become 
probationary indefinitely if they agreed to work the 9-month 
alternative schedule under S. 2484. AFGE urges the Committee to clarify 
the law to ensure that all RNs at the VA should have a 2-year probation 
requirement. Upon satisfactory completion of the hour equivalent of 2 
years of full-time work--under any work schedule--RNs should no longer 
be considered on probation.
    4. VA's legislation would limit overtime for RNs on alternative 
work schedules.
    S. 2484, as drafted, would limit the overtime of RNs who work the 
alternative schedule. For example, a RN who works three 12-hour shifts 
would only get paid overtime after he or she worked an additional 4 or 
more hours. The RN would not get overtime pay for working 3 additional 
hours beyond a 12-hour shift.
    Nurses working an alternative work schedule should receive overtime 
for any hours they work over their set work schedule. It is 
particularly important that VA pay RNs overtime as a disincentive for 
VA requiring RNs already working 12-hour shifts to work additional 
error-prone fatigue-producing hours. AFGE urges Congress to ensure that 
all RNs continue to receive overtime for any hours worked over their 
shift.
    5. VA's legislative proposal, as introduced in S. 2484, shuts 
front-line direct care nurses and their union representatives out of 
the process for developing and implementing fair regulations on 
alternative schedules.
    Should the Senate Committee include portions of the alternative 
schedule provision in the final version of S. 2484, RNs and their 
employee representatives need a collaborative role as the VA develops 
and implements its policy on these alternative schedules. Last year, 
this Committee took the lead in developing a moderate and model 
approach to allowing front-line professionals at the VA weigh in on key 
workplace decisions concerning the advancement and promotion of a 
significant group of VA professional health care workers. As a result 
of this Committee's leadership, P.L. 108-107, established a labor-
management collaborative process. AFGE urges this Committee to provide 
for collaborative input by union representatives into the development 
and implementation of the policy for how each facility will determine 
whether or not to offer RNs these alternative schedules and how RNs 
will be selected to agree to work such alternative schedules.
    6. VA's legislative proposal, as introduced in S. 2484, is unclear 
as to the full impact of working the proposed alternative schedules on 
annual leave, health care premiums, life insurance, etc.
    The legislative provision on the alternative 9-month schedule is 
unclear and ambiguous with respect to leave and benefits for RNs 
agreeing to work this alternative schedule.
    The legislation is silent as to whether RNs working this schedule 
will earn leave at the full-time rate while working full-time or earn 
it at the .75 rate for all 26 weeks. It is also not clear how nurses 
working a 9-month year will be charged for health care premiums during 
the 3 non-work months. Currently, part-time Federal employees are 
eligible to receive the same health care coverage as full-time 
employees, but part-time workers must pay a greater percentage of the 
premium because the Federal Government's share is prorated based on the 
number of hours the employee is scheduled to work each week. Would 
nurses on the 9-month scheduled be required to pay the full premium 
during the 3 months of non-work hours?
    We also are concerned that the lack of clarity in the legislation 
for the 9-month schedule may adversely impact employees with regard to 
the Federal Employees' Group Life Insurance program because the 
entitlement to the benefit has fiscal, calendar, and leave-years 
requirements.
    Similarly, the legislation does not explicitly state that RNs 
scheduled for three 12-hour shifts, or 36-hours a week, will not be 
required to pay a greater portion of their health care premium, even 
though normally a Federal employee scheduled for a 36-hour week would 
be required to pay an additional percentage of the health care premium.
    We recognize that the Committee intends for these alternative 
schedules to be desirable for RNs. AFGE urges the Committee to revise 
S. 2484 to resolve these ambiguities to ensure that RNs who agree to 
work these schedules do not receive diminished benefits or entitlements 
and do not have to pay additional premiums to receive the same level of 
health care coverage.
    AFGE also encourages the Committee to ensure that VA to provide RNs 
documentation about the impact of working an alternative schedule on a 
RN's FEGLI entitlements, health benefit premiums, probationary status, 
and leave. This official documentation should be in plain English. It 
should be given to RNs prior to their agreement to accept an 
alternative work schedule.
      section 7 of s. 2484, va's proposed administrative provision
    In VA's requested legislation, VA creates a new section 7427 in 
Title 38 that states that ``The functions assigned to the Secretary and 
other officers of the Department of Veterans Affairs under this chapter 
are vested in their discretion.'' The need for this vague legislative 
provision is unclear. VA's transmittal letter provides not a single 
sentence on this provision.
    The VA's analysis of the draft bill provides this brief description 
of the purpose of Section 7: ``Section 7 adds an administrative 
provision concerning functions under chapter 74. It provides that 
functions of the Secretary and other Department officers under chapter 
74 are vested in their discretion. The purpose of this provision is to 
make clear that the exercise of those functions 5 U.S.C. 701(a)(2) 
exempts the exercise of those functions from judicial review under the 
Administrative Procedures Act.''
    AFGE must vigorously oppose this provision. It would allow the VA 
to issue directives and regulations without any opportunity for 
aggrieved parties to seek minimal judicial review to determine if such 
regulations are arbitrary or capricious or not within the scope of VA's 
authority.
                                summary
    AFGE greatly appreciates the opportunity to submit our views and 
recommendations to the Committee. We look forward to working with 
Chairman Specter and Ranking Member Graham to improve S. 2484.
                               __________
         Prepared Statement of the Mortgage Bankers Association
    The Mortgage Bankers Association (MBA) \1\ appreciates the 
opportunity to express our views to the Senate Committee on Veterans' 
Affairs on the provisions of two bills pending before the Committee: S. 
2486, the ``Veterans' Benefits Act of 2004,'' introduced by Chairman 
Aden Specter, and S. 2522, (same title), introduced by Senators Jon 
Corzine and Lisa Murkowski.
---------------------------------------------------------------------------
    \1\ The Mortgage Bankers Association (MBA) is the national 
association representing the real estate finance industry, an industry 
that employs more than 400,000 people in virtually every community in 
the country. Headquartered in Washington, D.C., the association works 
to ensure the continued strength of the nation's residential and 
commercial real estate markets; to expand homeownership prospects 
through increased affordability, and to extend access to affordable 
housing to all Americans. MBA promotes fair and ethical lending 
practices and fosters excellence and technical know-how among real 
estate finance professionals through a wide range of educational 
programs and technical publications. Its membership of approximately 
2,700 companies includes all elements of real estate finance: mortgage 
companies, mortgage brokers, commercial banks, thrifts, life insurance 
companies and others in the mortgage lending field. For additional 
information, visit MBA's Website: www.mortgagebankers.org.
---------------------------------------------------------------------------
    MBA is a strong advocate of the home financing program offered by 
VA's Loan Guaranty Service. Since 1949, this program has provided an 
important homeownership benefit to those men and women who have served 
their country through their service in the armed forces. The vast 
majority of VA guaranteed loans made each year are made by MBA members. 
Our members are proud of their involvement in this program.
    Both bills contain provisions strongly supported by MBA. Both bills 
would increase the maximum VA Home Loan Guaranty amount to 25 percent 
of Freddie Mac's conforming loan limit, resulting in a current maximum 
VA loan amount of $333,700. In addition, S. 2522 would provide that the 
maximum VA loan amount would be indexed annually to the Freddie Mac 
conforming loan limit. S. 2468 would reinstate the VA 1-year adjustable 
rate mortgage (ARM), provide for permanent authority for the VA Hybrid 
ARMS, and would provide technical improvements in the 5/1, 7/1 and 10/1 
Hybrid Mortgage products.
    MBA supports the concept of indexing the maximum VA guarantee 
amount to the Freddie Mac limit because it will avoid the necessity of 
Congressional action to keep the VA benefit relevant as home prices 
change.
    VA's guarantee amount has been raised only once since 1994, for an 
increase of approximately 18 percent, despite the fact that national 
home prices have appreciated over 70 percent since that time.
    The indexing feature is already a part of another important Federal 
housing program, the Federal Housing Administration's (FHA) single 
family loan programs. FHA received such indexing authority in 1996, and 
its maximum mortgage limits have nearly doubled since that time, 
Freddie Mac loan limits have increased over 64 percent since 1994. 
Clearly, it is time for veterans to be treated equally with other 
homebuyers with regard to financing.
    MBA is concerned that the lack of indexing will preclude more and 
more veterans from using their benefit to obtain homeownership in many 
expensive markets as home price appreciation outstrips the VA maximum 
no-downpayment loan amount. For this reason, MBA strongly supports the 
indexing feature of the two bills.
    MBA understands that this is expected to generate additional 
revenue for the U.S. Government by an estimated $71.3 million over the 
next 10 years. The additional revenue provided by this change gives 
further evidence that the two bills are a prudent financial move for 
VA's Loan Guaranty Service. Therefore, this is not only good for 
veterans, but it is good for the American taxpayer.
    With respect to the VA Loan Home Guaranty Program in general, MBA 
would suggest the following additional improvements:
         amend the cap structure on 5/1, 7/1, 10/1 hybrid arms
    As of October 1, 2003, VA began guarantying hybrid Adjustable Rate 
Mortgages (hybrid ARMs. In the 7 months following, VA has guaranteed 
35,183 3/1 hybrid ARMs, representing 16 percent of its entire 
production and 27 percent of its refinances for that period. VA has 
indicated that no 5/1, 7/1, or 10/1 ARMs have been originated during 
that period. Clearly there is a problem with the cap structure for 
these hybrid ARMS,
    While authorized to guarantee 5/1, 7/1, and 10/1 hybrid ARMs, 
lenders are not finding these products viable because of the interest 
rate caps restricting these products to a 1 percent initial and annual 
adjustment cap and a 5 percent lifetime adjustment cap. MBA believes 
amending the caps for the 5/1, 7/I, and 10/1 hybrid ARMs to a 2 percent 
initial and annual adjustment limit and a 6 percent lifetime adjustment 
limit will offer sufficient flexibility for these products to be 
offered in the marketplace. The above cap structure is the same that 
MBA has urged for FHA hybrid ARMS: For veterans to gain the best 
pricing, MBA believes it is particularly important that the cap limits 
on the FHA and VA hybrid ARMs are the same so that the loans can be 
pooled together by Ginnie Mae. If VA adopts limits that are different 
than FHA, it is likely that the VA loans will lose the economies of 
scale of being pooled with the higher volume FHA hybrid ARMs.
                    reinstate the 1-year arm product
    MBA also supports the reinstatement of the VA 1-year ARM product. 
Previously, VA was authorized to guarantee 1-year ARMs during 1994 and 
1995, as a pilot program. MBA believes that it is important to offer 
veterans as many mortgage options as other borrowers. Over the past 10 
years, underwriting polices and procedures have advanced such that 1-
year ARMs can be successfully originated. FHA and the private sector 
have proven this.
       remove legislative mandate for appraiser assignment by va
    Finally, MBA would suggest taking this opportunity to give the Loan 
Guaranty Service the authority to dissolve its panel of fee appraisers 
and implement a system whereby lenders can choose licensed appraisers. 
FHA undertook this reform more than 10 years ago and MBA believes it 
has led to increased efficiencies for the FHA program and lower costs 
for FHA borrowers. It is time for VA to have the same authority.
    The current VA appraiser fee panel can be problematic for lenders 
and borrowers. Borrowers who submit a purchase offer on a home using VA 
guaranteed financing are often disadvantaged in the marketplace because 
of the perception that VA-guaranteed financing takes longer to 
complete. While this perception is largely inaccurate, MBA does believe 
that a policy of lender-chosen appraisers will improve the VA Loan 
Guarantee program and ensure the veteran borrower is competitive with 
other bidders.
    Giving such authority to VA's Loan Guaranty Service will allow the 
Service to review the lender-choice policy option and offer it to 
lenders as a way to increase the efficiency of originating VA 
guaranteed loans and lower the costs to veterans. Unfortunately, under 
current law, VA's Loan Guaranty Service is restricted from implementing 
such a change.
    MBA respectfully urges the passage of S. 2486, as modified with the 
above suggested changes, for by doing so, you are bettering the 
homeownership prospects for those men and women of the armed services 
who have served our great country.
    Thank you for giving MBA an opportunity to express our views on S. 
2486 and S. 2522. We would be pleased to furnish any additional needed 
information.
           Prepared Statement of the National Association of 
                  VA Physicians and Dentists (NAVAPD)
    Thank you Mr. Chairman for allowing the National Association of VA 
Physicians and Dentists, (NAVAPD), the opportunity to submit written 
testimony to the Senate Committee on Veterans Affairs on behalf of the 
physicians and dentists who practice in the Veterans Health System. 
NAVAPD is the only national organization whose sole mission is 
enhancing the professional working conditions, and incentives, that 
increase VA physicians and dentists ability to provide accessible, 
high-quality health care for our Veterans.
    We are here today with three messages: (1.) To thank this 
administration and this Congress for recognizing the need for an 
adjustment in the direction of competitive pay for the front line 
physicians and dentists who serves our nation's veterans. (2.) To 
support the paradigm shift in compensation that is rooted in S. 2484. A 
shift which, we believe, lays the groundwork for Title 38 VA physicians 
and dentists to keep pace with similar practitioners in the private 
sector, And, (3.) To support changes to the proposal that we believe 
will produce a statute that is simple, equitable, understandable, self-
updating and more easily administered than the version that Chairman 
Specter introduced ``by request.'' The proposal we support, and which 
has been discussed at length with staff and other affected parties has 
flexibility, is market responsive and maintains harmony with the 
American economy.
    Some thirteen years ago, NAVAPD and others came before Congress 
asking that the compensation of VA doctors be adjusted upward because 
we were falling woefully behind our colleagues in the private sector. 
You heard us and enacted legislation that brought us more in line with 
the private sector. Since that bill was signed into law a dozen years 
ago, save for cost of living increases, VA physicians have not received 
one dime in increased compensation. While the time for action is long 
overdue, we believe that Secretary Principi and the Bush Administration 
are acting out of a genuine desire to provide the quality of health 
care our country's veteran population deserves.
    The Department of Veterans Affairs is facing a critical situation 
in its compensation system for physicians and dentists. The VA can no 
longer recruit and retain highly qualified and experienced physicians 
and dentists, and not just in the categories where scarce medical and 
surgical sub-specialties are required. Many VA professionals remain 
employed in the VHA out of respect for, and loyalty to, the men and 
women ``who shall have borne the battle.'' However, these professionals 
also desire opportunities to do research that cannot be done elsewhere 
and to educate future healthcare providers. In so doing, they build 
careers and provide unique care-giving knowledge for the special needs 
of our veterans. These professionals want to be treated fairly and be 
compensated commensurate with their knowledge and skill levels.
    Because the Department of Veterans Affairs is not meeting these 
professional career goals, recruitment and retention of physicians and 
dentists is a critical, and worsening, problem for the Department. In 
addition, generational attitude shifts by many young medical 
professionals have redirected their focus away from institutionalized 
medical care, medical education, and research. This translates into a 
rapidly shrinking pool from which to select replacement physicians and 
dentists with the requisite knowledge base and specialized skills.
    Historically, it has been necessary for VA physicians and dentists 
to come to Congress with a request for increases in compensation 
through the addition of ``specialty pay'' categories or higher ``pay 
bands'' for existing specialty pay brackets. This has meant VA 
physicians and dentists pay has approached private sector standards for 
a snapshot in time. We have then had to ``wait our turn'' for the next 
legislative opportunity. . .all the while slipping further and further 
behind our private sector colleagues. Now we have a proposal on the 
table that suggests review and parity on a regular basis, without the 
need to change the law of the land each time. We believe this is a 
prudent change in thinking that will have a positive impact on 
recruitment and retention of quality physicians and dentists. However, 
as is usually the case. . .the devil is in the details.
    The Department of Veterans Affairs proposal is vague and complex 
and, NAVAPD believes, impossible to fairly administer. NAVAPD also 
believes that the Department's proposed legislation is limited in 
scope, is intended to benefit only a small minority of front line 
medical staff, provides few details regarding implementation, and has 
the potential to be manipulated in ways that were not originally 
intended. Further, the legislation proposed by the Department is not in 
concert with either the most recent Presidentially mandated Quadrennial 
Report or even the Department of Veterans Affairs' Task Force 
Interpretation of that Report.
    The stated purpose of this legislation is to provide salaries that 
will be competitive with the private sector, which will in turn keep 
the professionals we have and attract high-quality recruits to the VHA. 
However, as proposed, this legislation would have a positive 
compensation impact on only thirty percent (30 percent) of the fourteen 
thousand-plus physicians and dentists currently in the VHA. And that 
assumes total pay would include base pay, market pay AND performance 
pay. It is difficult to see this as a ``morale booster'' for existing 
staff or a recruiting tool for new-hires.
    It is even more difficult to see how this will help VA meet overall 
operational and clinical objectives. The front line medical staff is 
more than just ``foot soldiers'' in achieving these objectives. They 
are the face of the VA, they are the decisionmakers, the team leaders, 
the clinical thinkers, the quality managers, the innovators. They are 
very much the pilots of this highly technical, highly complex machine 
that is the modern health care system, managing life and death 
decisions, entrusted with the care and comfort of vulnerable and 
suffering human beings. They are under constant public scrutiny, 
relying upon their many years of education, training and experience, 
their intuition and art, and their humanity to guide their clinical 
actions in helping veterans and their families face the most complex, 
intimate and difficult choices of their lives. In this regard, quality 
does matter, and not just for the 20 or 30 percent of the most 
difficult to recruit and the highly paid sub-specialists, but perhaps 
of equal or greater importance, also for the journeyman VA physicians 
and dentists, the folks who are the heart and soul of this system and 
the ones who make it run day in and day out.
    In addition to the goals which have already been described, and 
which are primarily addressed by the proposed legislation--the ability 
to recruit and retain extremely high-paid rare sub-specialist--we ask 
that you keep another objective in mind as well the importance of 
returning the VHA to those who have the interest of the organization 
most at heart, the career VA physicians and dentists.
    Wasting precious taxpayer dollars through the use of expensive 
contracts with affiliated university or private groups to hire needed 
and rare sub-specialists must be significantly reduced, if not 
eliminated. We agree with the department that it is vexing and galling, 
perhaps even ludicrous, to pay more to hire these specialists on 
contract while losing the benefit of a loyal full time VA employee in 
the process. To ``pretend'' to not pay them higher than the prohibited 
salary levels by hiring them ``On Contract'' is a lose-lose proposition 
for the VA, the veterans and the taxpayers. One of the stated purposes 
of this legislation is to address this issue, however, it is only a 
part of story from our perspective.
    The value and contributions of sub-specialty providers are 
generally well understood; but less well understood are the 
contributions of the full time, clinically based medical providers. 
These are the professionals for whom the quality of the organization 
matters, who are loyal not only to their patients and their colleagues, 
but also to their organization and the mission of the VA. We represent 
and are concerned about the ``bread and butter'' of the medical staff, 
the doctors who come to work each day with the intent to make their 
facility a better place and who are committed to working in a health 
care environment which is world class and second to none in their 
community in the standards and quality of care. The cost of neglecting 
this talent is never addressed in the proposed bill and in our 
estimation the cost is incalculable. If this item remains unaddressed 
when the bill is passed this asset will almost certainly gradually be 
lost to expensive contract services.
    S. 2484 as it is currently written describes ``Performance Pay'' as 
``a variable pay band linked to a physician's or dentist's achievement 
of specific corporate goals and individual performance objectives.'' It 
goes on to say, ``The amount payable to a physician or dentist for this 
component may vary based upon individual achievement, and may not 
exceed $10,000.'' The proposal later states that ``no physician or 
dentist will be paid less the day after the implementation than he or 
she was being paid the day before implementation.'' How is it possible 
to determine performance pay prior to implementation? Is this 
provision, in fact, a ``lack of performance'' pay that potentially will 
be held over the heads of physicians and dentists like the sword of 
Damocles? At a minimum, this provision, as written, is vague and open 
to abuse. We recommend that a clear and distinct benchmark be used for 
evaluating the decisions of Medical Center and VISN Directors to ensure 
that performance pay is equitably administered across the country and 
not just a means for individual Directors to balance their budgets.
    Additionally, this assurance of no negative pay adjustments appears 
to be negated by subsection 7431 (B) (d) which states, ``Any decrease 
in pay that results from an adjustment to the market or performance 
component of a physician's or dentist's total compensation does not 
constitute an adverse action,'' and by the proposed language for 
subsection 7431, which states, ``the functions of the Secretary and 
other officers of the Department of Veterans Affairs under this chapter 
are vested in their discretion.'' This provision appears to remove the 
due process rights of physicians and dentists and is reported to be in 
response to the unfair termination case of Dr. Elizabeth Von Zemensky 
in which the courts upheld her reinstatement.
    Physicians and dentists are further placed at risk of negative pay 
adjustments when budget pressures may force cost cutting measures. This 
is the result of the statutory provision that prohibits negative pay 
adjustments for the largest professional group in the VHA, nurses. We 
implore you not to allow an accounting bulls-eye to be placed on our 
backs, and adopt the same no negative pay adjustment standard for 
physicians and dentists in this legislation as currently exists for 
nurses. Similarly, we urge you to favorably consider the deletion of 
the aforementioned change to subsection 7431.
    As we mentioned earlier, the current proposal will positively 
impact only thirty percent (30 percent) of the physicians and dentists 
in the VHA. NAVAPD is supporting a proposal that will positively effect 
a more significant pool of VA physicians and dentists. To this end, we 
support a two-tiered basic pay plan, consisting of a National Market 
Rate and Scale and a National Longevity Scale combined with a separate 
annual bonus program to reward extraordinary service.
    The Market Rates and Scales will be developed, reviewed and 
implemented by the Secretary under specific guidelines every 2 years. 
These guidelines would include the use of at least two nationally 
recognized data sources that identify private sector physician and 
dentist pay by regions, as well as defined professional criteria. 
Individual pay would be determined locally by the director, in 
consultation with a local PSB, which would consist of three to five 
members, a majority of which must be practicing clinicians. In the `off 
year' between Secretarial reviews, all physicians and dentists will 
receive the governmentwide cost-of-living increase, including locality 
adjustments, presuming satisfactory job performance. We would recommend 
that Base Pay be standardized at the GS 15, step 10 level for all 
physicians and dentists.
    The Longevity Rates would consist of fifteen (15) ladder steps. For 
each 2 years a physician or dentist remains employed within VHA that 
employee would move one step (approximately 3-percent) on the ladder, 
presuming ``satisfactory'' performance at the current level. This will 
provide a thirty-year career pay path to assist in retaining high-
quality practitioners in all practice areas.
    We also recommend that a Performance Pay bonus system be 
implemented for higher than standard work achievement and that the 
range be from $1,000 to $20,000 in 1 year. This bonus pay would be 
reviewed and awarded annually at the local level and would not be 
included in any high three or retirement calculations.
    If this legislation is going to be the vehicle that moves the 
recruitment and retention of high-quality physicians and dentists into 
the 21st Century then we must address the leave policies that are 
unintentionally punitive in their effect. While private sector 
practices are offering newly minted physicians and dentists between 6 
and 8 weeks of annual leave, as well as paid time for continuing 
medical education, we have remained trapped in a system that 
discourages normal vacations by charging us leave for Saturday and 
Sunday if we take leave on the preceding Friday and the following 
Monday. . .regardless of whether or not we see patients or perform 
other duties on that Saturday and/or Sunday. We believe that the 
department has the authority to make the necessary adjustments to 
correct this situation. We have been trying to work with them for over 
2 years on this issue. However, we have been unsuccessful, even though 
other groups have changed leave and other benefits without this type of 
difficulty. We now turn to you for help. Our final request of this 
Congress would be to statutorily remove the so-called 24/7 regulations 
that currently penalize Title 38 physicians and dentists in the use of 
their leave. This charge against annual and sick leave is even being 
calculated for VA physicians and dentists who are away from their VA 
facility on active duty in Iraq and other foreign countries. This is a 
significant drain on morale and it can be changed at little or no cost 
to the taxpayers and without ``windfall'' days or payments to 
physicians and dentists when they retire. Please include in this 
legislative package the directive necessary to allow us to take our 
thirty days of annual leave without the penalty of being charged for 
our non-duty days.
    Mr. Chairman, we have taken the liberty of including suggested 
substitute language in our written testimony on these and other 
relevant subjects for your consideration. We believe this alternative 
compensation proposal will provide the roadmap necessary for VA 
professionals to know where our careers stand and what the future will 
hold for us. We hope you will factor our comments and concerns into 
your deliberations.
    Again, thank you for the opportunity to share NAVAPD's thoughts on 
this critically important legislation. We would be happy to answer any 
questions you may have.
  elements of the navapd proposed substitute compensation legislation
    The alternative compensation plan described below will address the 
tremendous pay disparities between VA physicians and dentists and those 
in private practice and academia. Although this plan would not match 
current private practice incomes, it would stem the rapid drain of 
these professionals from the system. The proposed compensation plan 
will provide assurance to Veterans that this Nation will maintain a 
Veterans' Health System that is second to none.

    1. No physician or dentist will receive less than his or her 
current salary on the day following enactment of this statute.

    2. There will be no written employment contracts or specified 
retirement dates.

    3. Market pay Rates and Scales guidelines will be updated every 
even numbered year on November 1 and the new guidelines will become 
effective on the first day of the first full pay period in the 
subsequent January.

    4. Longevity Pay shall consist of a fifteen (15) step ladder with 
each step representing 2 years of satisfactory VA employment, beginning 
at the current Grade 15 Step 10 level.

    5. Total compensation will be the sum of Longevity and Market Pay.

    6. Individual salaries will be determined by the local director in 
consultation with a local PSB.

    7. The legislative language must specifically State that salaries 
of VA physicians and dentists will not be reduced, and that there would 
be no negative pay adjustments.

    8. Performance/Bonus Pay will be calculated and addressed 
separately. One year range to be between $1,000 and $20,000 and shall 
not be included in any high three or retirement calculations.

    9. Federal Locality Pay will be included for all Department of 
Veterans' Affairs physicians and dentists according to current Federal 
statutes for each geographic location in the computation of cost of 
living increases.

    10. Judicial review will be maintained for all administrative 
levels as now dictated by Title 38 and Title 5 statutes.

    11. There will be no vesting periods for any category of pay.

    12. VA physicians and dentists will earn thirty days of annual 
leave per year. Non-duty days (weekends and holidays) will not count 
against that leave.

    13. VA physicians and dentists will earn fifteen days of sick leave 
per year. Non-duty days (weekends and holidays) will not count against 
that leave.

    14. Separate leave pools will be established to facilitate 
transition of non-duty days, with current leave balances being used 
prior to days accrued under new system.

    15. All language referencing benchmarking salaries must be included 
in the actual legislative language, including all references to 
specific sources of income data.

    16. This statute will become effective immediately upon enactment.

    The following is a brief statement that we received from one of our 
rank and file members that speaks to many of the points we are 
addressing here that I would like to share with you:

          I'm a full-time VA employee, board certified in three 
        specialties, with eleven years of post-graduate training before 
        beginning my practice at the VA, where I've remained for the 
        last 8 years. I am an Intensivist, a specialist in critical 
        care medicine and take care of patients who are severely ill in 
        the intensive care unit. During that time I'm on call 24 hours 
        a day, 7 days a week. It is demanding and stressful work. When 
        I'm attending in the ICU, 4 months out of the year, I work on 
        average 70 hours a week, including weekends, for which I 
        receive no additional compensation. When I'm not in the ICU, I 
        work about 50 hours a week. I'm also a co-director of the ICU 
        and I spend long hours working on quality and safety 
        improvement efforts, which have helped to make our ICU among 
        the best in our community. My VA salary, which is my only 
        source of income, is $134,000 dollars a year, admittedly a good 
        income. By contrast, however, according to the Medical Group 
        Management Association (MGMA) data base, the median national 
        income for a Critical Care Intensivist in 2001 was $203,000, 
        the mean salary income nationally was $218,747, and for the 
        third quartile was $277,564. In all likelihood a competitive 
        salary in my particular market area is more than double my 
        current income.

    The VA has an asset in both its academic and clinical front line 
staff, which it seems, it does not fully recognize and which this bill 
absolutely does not recognize. The cost in loyalty, in efficiency, in 
quality improvement to the VA, in letting this asset remain under-
recognized, and not aggressively competing to retain this asset is 
immeasurable and vastly exceeds that for recruitment and retention of 
high end, rare sub-specialists. I agree with the effort to compete for 
these high end sub-specialists but believe that it misses the real 
mark, if that is the main intent of the bill, in terms of providing 
real and lasting value not only to the veterans but to the health and 
future of the VA itself.


                               __________
     Prepared Statement of VetsFirst, a Division of United Spinal 
                              Association

                              introduction

    VetsFirst, a division of United Spinal Association (formerly the 
Eastern Paralyzed Veterans Association), is a nationally certified 
veterans service organization dedicated to enhancing the lives of 
veterans with spinal cord injuries or disease and ensuring their access 
to the supports and services they need and deserve. We applaud the 
Senate Committee on Veterans' Affairs for holding this hearing and 
providing us with the opportunity to comment on this pending 
legislation.
    VetsFirst recognizes the importance of and is providing comments on 
all the bills being discussed. However, we would like to highlight four 
bills, in particular: S. 50, S. 1014, S. 1153 and S. 2133.

S. 50--Veterans Health Care Funding Guarantee Act

    Although we support the concept of making veterans health care 
funding mandatory rather discretionary, VetsFirst has concerns 
regarding S. 50.
    Although the intent of the Veterans Health Care Funding Guarantee 
Act is laudable, we believe that S. 50 will fall short of reaching its 
stated goal of fully funding health care for all veterans. First, the 
proposed method of calculating the mandatory rate of funding is based 
on an arbitrary amount that is already too low, namely the amount 
appropriated for veterans' health care for fiscal year 2003. Second, we 
believe that the amount of money needed to fully guarantee funding for 
all potential veterans seeking health care is extremely cost 
prohibitive and unrealistic in today's fiscal climate. Unfortunately, 
the prospect of passing a law to mandatorily fund veterans' health care 
at the necessary levels, we fear, is slim. We would rather that VA 
budgeting continue as is than have Congress adopt a poorly constructed 
mandatory funding scheme that will not enable VA to offer quality 
health care to all who seek it.
    Again, VetsFirst fully supports efforts to make veterans health 
care funding a mandatory funding stream. We do not believe, however, 
that the Veterans Health Care Funding Guarantee Act is a viable and 
responsible vehicle for doing so.

S. 1014--A Bill to Amend Title 38, United States Code, to Require the 
Secretary of Veterans Affairs in the Management of Health Care Services 
for Veterans to Place Certain Low-Income Veterans in a Higher Health-
Care Priority Group

    VetsFirst strongly supports S. 1014, which would help protect low-
income veterans across America.
    This bill would move certain low-income veterans currently in 
priority group 7 to priority group 5 by establishing a true regionally-
adjusted income threshold based on the Department of Housing and Urban 
Development's definition of ``low-income.'' This regional adjustment 
recognizes that the cost of living, including the cost of medical care, 
can be significantly higher in large urban centers than in smaller, 
more rural communities.
    VetsFirst strongly believes that there is little difference between 
a veteran making $23,000 in low cost of living areas and a veteran 
making $32,000 in a high cost area. For all intents and purposes both 
veterans are indigent and should be considered similarly by the VA. 
Unfortunately, VA's existing means test threshold delineates between 
these two veterans, placing the equally indigent high cost of living 
veteran in a priority group that is more susceptible to potential 
system disenrollment.
    When it was created, priority 7 and 8 veterans were expected to be 
able to afford secondary private insurance from which treating 
facilities could collect payment for care provided. Unfortunately, 
because of the high cost of living in some areas of the United States, 
priority 7 veterans who, by definition, fall above the VA's low-income 
threshold cannot afford to help defray their cost of care.
    Re-categorization of priority 7 veterans into priority group 5 is 
urgent, particularly in light of VA's ongoing budget constraints and 
discussions regarding mandatory funding for veterans' health care. As 
VA faces ever-tightening budget constraints, the Secretary has been 
forced to make difficult decisions regarding priority group 8's ability 
to access the VA system. The Secretary has already chosen to freeze 
enrollment for that category of veterans. Given that VA health care 
will continue to be under-funded, it is our concern that the Secretary 
will be forced to disenroll current priority group 8 veterans. The next 
logical step would be to freeze or even disenroll priority group 7 
veterans. This, of course, would mean that veterans who cannot 
otherwise afford health care would be entirely cut out of the system, 
leaving them uninsured. Although the Secretary may have the discretion 
to bar enrollment of priority group 5 veterans, it would be politically 
impossible to do so because they are considered a ``traditional'' 
coverage group. Moving veterans who fall below the HUD threshold into 
priority group 5 would protect them from possible enrollment 
restrictions and virtually guarantee them continued access to health 
care.
    Furthermore, and as indicated earlier, VetsFirst believes that the 
amount of money that would be necessary to fully fund veterans' health 
care for every potential patient is unrealistically, and cost 
prohibitively, high. Thus, we believe that Congress cannot create a 
mandatory funding system that will provide for all priority groups of 
veterans. Instead, a more viable option would be to only mandate 
funding for the disabled and indigent--priority groups 1-5 with 
veterans in other groups expected to have third-party insurance to 
defray the cost of their care. As current priority group 7 veterans are 
legitimately unable to defray the cost of their care we believe that 
these veterans must be accounted for in any mandatory funding system 
and should be moved into priority group 5 to ensure that they are 
included in potential mandatory funding discussions.
    Moving priority group 7 veterans, who fall below the HUD threshold, 
into priority group 5 would protect them from possible enrollment 
restrictions and help guarantee access to health care. Additionally, it 
would ensure that they are included in most viable mandatory funding 
discussions. For these reasons we strongly support this legislation.

S. 1153--Veterans Prescription Drugs Assistance Act

    VetsFirst strongly supports S. 1153, the Veterans Prescription Drug 
Act of 2003. S. 1153 would allow all Medicare-eligible veterans to 
``opt-in'' to a new program in which VA would fill their privately 
written prescriptions without requiring the patient to see a VA doctor, 
whether the veteran has enrolled in the system or not. The veteran 
would pay the VA's cost of the drug, which is significantly less than 
the cost of the drug in the private market. By opting into this program 
the veteran would also be required to forego his/her access to the rest 
of VA's care for the year and they would have to make the decision on 
their participation in this program on an annual basis. Medicare 
eligible veterans with service-connected disabilities who participate 
in the program would not be precluded from VA services.
    This program was tailored to increase the number of options 
available to veterans as opposed to limiting veterans' choices. 
Participation in this program is discretionary and there is nothing 
forcing each individual veteran to give up his or her access to all of 
VA's services. By allowing only Medicare eligible veterans to opt into 
the program, Congress is ensuring that only those veterans with non-VA 
medical care coverage already in place (i.e., Medicare) can freeze 
themselves out of the system. Additionally, service-connected veterans 
will continue to have open access to the VA system and will now gain 
the opportunity to use private Medicare providers when convenient.
    Finally, S. 1153 could have an additional effect on the system that 
would result in new priority group 8 veterans regaining the ability to 
enroll in the health care system. On January 17, 2003, in response to 
the inundation of veterans into the VA health care system, VA Secretary 
Anthony Principi announced that the system would immediately stop 
enrolling these priority group 8 veterans, closing them out from health 
care. This program will provide, at a minimum, cheaper prescription 
drugs to those veterans currently barred from the system and shorter 
wait times for all veterans seeking VA health care. It is our hope that 
as currently enrolled priority group 8 veterans opt into this program 
and opt out of VA health care, veterans who need the resources of the 
whole system, but are currently frozen out, can fill the vacated spots 
in the VA health care system.
S. 2133--A Bill to Name the Department of Veterans Affairs Medical 
Center in the Bronx, New York, as the James J. Peters Department of 
Veterans Affairs Medical Center

    United Spinal Association strongly supports S. 2133, a bill to name 
the Department of Veterans Affairs medical center in the Bronx, New 
York, as the James J. Peters Department of Veterans Affairs Medical 
Center. Jim Peters served as our Executive Director for over 30 years 
and earned this honor thorough his unwavering support and dedication 
for his fellow paralyzed veteran. All who knew Jim Peters would agree 
that there was no greater advocate for veterans with Spinal Cord Injury 
(SCI). Jim devoted his life to the improvement of health care for 
spinal cord injured veterans and to ensuring quality health care for 
all who served. He was instrumental in establishing a stand-alone 
national Spinal Cord Injury program within the VA and, working with 
Life Magazine, was the driving force in the news stories that exposed 
the deplorable conditions facing spinal cord injured veterans at the 
old Bronx veterans hospital. This exposd triggered the decision to 
rebuild the Bronx Veterans Affairs Medical Center, which is now the SCI 
Center for Excellence in the northeast region. He consistently 
encouraged our members, and veterans alike, to utilize the services 
offered by the VA health care system, as according to him, ``it far 
surpassed the care available anywhere else''. Jim passed away at the 
Manhattan VAMC.
    Jim Peters not only worked tirelessly to improve the spinal cord 
injury ward at the Bronx VAMC but also promoted partnerships with 
medical researchers to develop cutting-edge treatments for spinal cord 
injury patients. The Bronx VAMC is now the premier veterans center for 
spinal cord injury patients, in large part due to Jim's efforts. We see 
no better way of honoring his commitment than having the Bronx VAMC 
renamed, ``The James J. Peters Department of Veterans Affairs Medical 
Center''. It is an action that truly befits his legacy of support for 
his fellow injured veterans.
    We have received letters of support from: Vietnam Veterans of 
America, The American Legion, Paralyzed Veterans of America, AMVETS, 
Disabled American Veterans, Blinded Veterans Association, Veterans of 
the Vietnam War, Jewish War Veterans, Catholic War Veterans, Veterans 
of Foreign Wars, Military Order of the Purple Heart, United Veterans 
Beacon House, National Amputation Foundation, New York State Council of 
Veterans Organizations, Mount Sinai, and No Greater Love.
    We will now briefly comment on the remaining bills on the 
committee's agenda.

S. 1509--Eric and Brian Simon Act of 2003

    VetsFirst supports the Eric and Brian Simon Act of 2003 (S. 1509), 
which would provide compensation to veterans, their spouses and 
children who contract HIV or AIDS as a result of a blood transfusion 
relating to a service-connected disability.
    According to this legislation, any veteran treated with HIV 
contaminated blood as a result of a service-connected disability would 
receive $100,000 in compensation. If a spouse or child of the veteran 
becomes infected with HIV through transmission from the veteran, they 
too would receive compensation. Additionally, if an individual entitled 
to a gratuity under this legislation is deceased at the time of 
payment, payment shall be made to a surviving spouse or children. This 
legislation is similar to provisions created under the Veterans Benefit 
Act of 1997, which states that children of Vietnam veterans suffering 
from spina bifida are granted benefits ranging from monetary allowance, 
vocational training and rehabilitation, and healthcare benefits limited 
to the treatment of spina bifida (38 U.S.C. Sec. 1805), so similar 
precedent already exists.
    United Spinal recognizes the enormous cost associated with HIV/AIDS 
healthcare treatment and medications and would also recommend that a 
spouse or child infected with HIV as a result of the veteran's service-
connected transfusion be given access to VA's healthcare system for the 
treatment of HIV/AIDS or at the very least VA's pharmaceutical 
benefits.

S. 1745--Prisoner of War/Missing in Action National Memorial Act

    VetsFirst supports S. 1745. It is both appropriate and necessary to 
honor members of the Armed Forces who have been held as prisoners of 
war or listed as missing in action.
S. 2063--A Bill to Require the Secretary of Veterans Affairs to Carry 
Out a Demonstration Project on Priorities in the Scheduling of 
Appointments of Veterans for Health Care Through the Department of 
Veterans Affairs, and for Other Purposes

    VetsFirst supports S. 2063, which would assess the feasibility of 
providing priority scheduling of appointments for service-connected 
veterans through a demonstration project. VetsFirst supports this 
legislation that will bolster the Secretary's authority to implement 
this appointment prioritization as he has already done (38 CFR Part 
17). We support projects that look for effective ways to deliver timely 
access care to VA health care.

S. 2099--A Bill to Amend Title 38, United States Code, to Provide 
Entitlement to Educational Assistance Under the Montgomery GI Bill for 
Members of the Selected Reserve Who Aggregate More Than 2 Years of 
Active Duty Service in Any Five Year Period, and for Other Purposes

    VetsFirst strongly supports this legislation that will extend 
educational assistance provided by the Montgomery GI bill to members of 
the Selected Reserve who accumulate more than 2-years of active duty 
service in a 5-year period. In light of recent military actions that 
have resulted in longer periods of service and greater conflicts, this 
benefit is well deserved.

S. 2296--A Bill to Require the Secretary of Veterans Affairs to Give 
the Commonwealth of Kentucky the First Option on the Louisville 
Department of Veterans Affairs Medical Center, Kentucky, Upon its 
Conveyance, Lease or Other Disposal by the Department of Veterans 
Affairs

    VetsFirst supports S. 2296. We believe that the Commonwealth of 
Kentucky should use this space primarily for the provision of services 
to veterans.

S. 2327--A Bill to Amend Title 38, United States Code, to Clarify that 
Per Diem Payments by the Department of Veterans Affairs for the Care of 
Veterans in State Homes Shall Not be Used to Offset or Reduce Other 
Payments Made to Assist Veterans

    VetsFirst supports this legislation that would prevent the 
offsetting of payments made to veterans in State homes based on VA's 
per diem payments to State homes.

S. 2417--A Bill to Amend Title 38, United States Code, to Authorize the 
Secretary of Veterans Affairs to Furnish Care for Newborn Children of 
Women Veterans Receiving Maternity Care, and for Other Purposes

    United Spinal Association supports S. 2417 which would amend Title 
38, United States Code, to Authorize the Secretary of Veterans Affairs 
(VA) to furnish care for newborn children of women veterans receiving 
maternity care, and for other purposes. This legislation would apply to 
any woman veteran who is receiving maternity care furnished by the VA 
up to 14 days after the birth of the child whether or not the veteran 
delivered the child in a VA facility or in a non-VA facility pursuant 
to VA's contract for the delivery services. Though most pregnancy care 
is focused on the pre-birth period, post delivery is also a critical 
time for the health of the mother and her baby. United Spinal 
recognizes the importance of postpartum care and therefore strongly 
supports this bill.

S. 2483--Veterans' Compensation Cost-of-Living Adjustment Act of 2004

    VetsFirst supports this legislation to increase the rates of 
compensation for veterans with service-connected disabilities and the 
rates of Dependency and Indemnity Compensation for the survivors of 
certain disabled veterans.

S. 2484--Department of Veterans Affairs Health Care Personnel 
Enhancement Act of 2003

    VetsFirst supports the concept of S. 2484. Like all parts of the 
health care sector, VA is facing shortages of health care personnel. 
This has been one of the root causes of delays in and waiting lists for 
appointments with VA doctors. VA must do all it can to attract high 
quality doctors, nurses and other health care providers, including 
increasing pay rates and possibly adjusting work hours.

S. 2485--Department of Veterans Affairs Real Property and Facilities 
Managements Improvement Act of 2004

    VetsFirst supports S. 2485. In particular, the procedures for 
entering into enhanced-use leases of VA property is notoriously 
complicated, drawn-out, and overly burdensome for all parties involved. 
This system is long overdue for change. Additionally, by allowing the 
VA to retain the proceeds of disposition of VA properties, S. 2485 
would improve the financial situation of the Department. In light of 
the recently announced Capital Asset Realignment for Enhanced Services 
plan, this provision makes sense.

S. 2486--Veterans' Benefits Improvements Act of 2004

    VetsFirst supports this legislation that will improve or expand 
education, housing, and employment benefits to veterans. We also 
support the waiving of co-payments for veterans receiving hospice care.

S. 2524--A Bill to Amend Title 38, United States Code, to Improve the 
Provision of Health Care, Rehabilitation, and Related Services to 
Veterans Suffering from Trauma Relating to a Blast Injury, and for 
Other Purposes

    VetsFirst supports S. 2524, which would improve the provision of 
health care, rehabilitation, and related services to veterans suffering 
from trauma relating to a blast injury. The majority of blast injury 
victims (70 percent) sustain soft tissue injury, and traumatic 
amputations occur in approximately 11 percent of cases.\1\ We support 
the creation of centers for research, education, and clinical 
activities on blast injuries, as they will allow for the proper 
treatment of veterans suffering from multiple traumas associated with a 
blast injury. Blast injuries are devastating and any improvement of 
services for victims of explosions is strongly supported by VetsFirst.
---------------------------------------------------------------------------
    \1\ Elsayed NM. Toxicology of blast overpressure. Toxicology 
1997;121:1-15.

---------------------------------------------------------------------------
S. 2534--Montgomery GI Bill for the 21st Century Act

    VetsFirst supports S. 2534 that will improve educational benefits 
under the Montgomery GI Bill.
                               conclusion
    VetsFirst applauds the committee for holding this hearing on 
pending legislation and its leadership on these and all issues 
important to the men and women who have served our country. We 
appreciate the opportunity to comment on this critical legislation.



[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


  

                                  
