[Senate Hearing 108-762]
[From the U.S. Government Publishing Office]
S. Hrg. 108-762
THE ADMINISTRATION'S PROPOSED FISCAL YEAR 2005 BUDGET FOR VETERANS'
PROGRAMS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
FEBRUARY 10, 2004
__________
Printed for the use of the Committee on Veterans' Affairs
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
______
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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
Bryant Hall, Minority Staff Director and Chief Counsel
C O N T E N T S
----------
February 10, 2004
SENATORS
Page
Specter, Hon. Arlen, U.S. Senator from Pennsylvania.............. 1
Prepared statement........................................... 1
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
prepared statement............................................. 3
Graham, Hon. Bob, U.S. Senator from Florida...................... 15
Prepared statement........................................... 16
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.................. 21
Murray, Hon Patty, U.S. Senator from the State of Washington..... 22
Nelson, Hon. E. Benjamin, U.S. Senator from Nebraska............. 24
Jeffords, Hon. James M., U.S. Senator from Vermont............... 25
Rockefeller IV, Hon. John D., U.S. Senator from West Virginia.... 27
WITNESSES
Principi, Hon. Anthony, Secretary, U.S. Department of Veterans
Affairs; accompanied by Robert H. Roswell, M.D., Under
Secretary for Health; John W. Nicholson, Under Secretary for
Memorial Affairs; William H. Campbell, Assistant Secretary for
Management; D. Mark Catlett, Principal Deputy Assistant
Secretary for Management; and Robert Epley, Associate Deputy
Under Secretary of Benefits for Policy and Program Management.. 3
Prepared statement........................................... 8
Gaytan, Peter S., Principal Deputy Director, Veterans Affairs and
Rehabilitation, The American Legion............................ 39
Prepared statement........................................... 40
Fuller, Richard B., National Legislative Director, Paralyzed
Veterans of America............................................ 53
Prepared statement........................................... 173
The Independent Budget....................................... 54
Surratt, Rick, Deputy National Legislative Director, Disabled
American Veterans.............................................. 175
Prepared statement........................................... 176
Hayden, Paul A., Deputy Director, National Legislative Service,
Veterans of Foreign Wars of the United States.................. 184
Prepared statement........................................... 185
Jones, Richard, National Legislative Director, AMVETS............ 188
Prepared statement........................................... 190
THE ADMINISTRATION'S PROPOSED FISCAL
YEAR 2005 BUDGET FOR VETERANS'
PROGRAMS
----------
TUESDAY, FEBRUARY 10, 2004
U.S. Senate,
Committee on Veterans' Affairs,
Washington, DC.
The committee met, pursuant to notice, at 3 p.m., in room
418, Russell Senate Office Building, Hon. Arlen Specter
(chairman of the committee) presiding.
Present: Senators Specter, Campbell, Graham, Rockefeller,
Jeffords, Akaka, Murray, and Nelson.
OPENING STATEMENT OF HON. ARLEN SPECTER,
U.S. SENATOR FROM PENNSYLVANIA
Chairman Specter. Good morning, ladies and gentlemen. The
Veterans' Affairs Committee will now proceed. We have a very
distinguished panel of witnesses before us at the moment. My
full statement will be admitted to the record, without
objection.
[The prepared statement of Chairman Specter follows:]
Prepared Statement of Arlen Specter, U.S. Senator from Pennsylvania
Good afternoon, ladies and gentlemen. And good afternoon to you,
Secretary Principi. It is a pleasure to welcome you--and the veterans
service organizations, who are scheduled to testify after you--to this
hearing.
The subject of today's hearing is the Administration's proposed VA
budget for fiscal year 2005. We will hear testimony from Secretary
Principi and the senior VA officials who have accompanied him here
today. And we will hear from the service organizations who will voice
the separate views of each organization, if they so choose, and who--
except for The American Legion--will also speak as advocates for the
``Independent Budget.'' It is my hope that, armed with this testimony,
the Committee will be in a position to render its collective judgment
on a number of weighty policy questions. Among them are these:
What precisely is VA asking for this year in terms of
added appropriations to provide medical care benefits to currently-
enrolled veterans?
Will this amount be sufficient to get VA through the
year--even assuming that VA continues to bar new enrollments of so-
called ``Priority 8'' veterans? Or will VA need more, just to maintain
current levels of services?
What precisely will VA need in terms of added funding if,
for example, the Congress declines to enact certain ``policy
proposals'' requested by VA?
And finally, what would it take for VA to be able to
reopen enrollments to ``Priority 8'' veterans? That is a prospect that
I, for one, have not given up on.
These are critical questions, questions that we raise this year at
a critical time while the Nation is at war.
We mourn the deaths of every service member who has fallen in Iraq
and Afghanistan, and we assure the families of these brave men and
women that their sacrifice--the ultimate sacrifice--will not be
forgotten. But while we mourn those who have fallen, we are also
mindful of the fact that we have been relatively fortunate. One year
ago, we were prepared for the possibility that hundreds--even thousands
or tens-of-thousands--might fall, particularly as our troops approached
Baghdad. That did not happen; we are, of course, fortunate that it did
not.
But now we face a very difficult situation in Iraq. While our
troops were greeted with enthusiasm initially--how can any of us ever
forget the scene in Baghdad when the tyrant's statue was pulled down by
the Iraqis . . . with some small assistance from United States troops--
they now face a very troubling situation. They are viewed by at least
some elements of the Iraqi population as enemy occupiers, and they face
the threat of enemy small arms fire, and terrorist bombings, daily. Our
men and women will overcome these obstacles to peace and stability in
Iraq--but not without a price. The Nation--and VA--must be prepared to
bind up the bodily and emotional wounds that will ensue as our troops
fully stabilize Iraq. After we have done that, the Nation--and VA--must
be prepared to offer the readjustment benefits that these veterans will
have earned. For we cannot have and we will not have--another
generation of veterans, like Vietnam veterans, who were asked to fend
for themselves after their return from the battlefield.
I am concerned that this proposed budget may not suffice to meet
these requirements. Rather, it seems barely adequate--if it is adequate
at all--to meet the existing challenges that face VA. It will be my
mission here to find out whether this budget proposal is, at minimum,
adequate. And if--as I expect--it is not adequate, it will be my
mission to find out what it will take for VA to maintain current
services; what it will take to care for and provide services to the new
young veterans who will return from Iraq this year; what it will take
to work through, and eliminate, clinical appointment waiting times; and
what it will take to reopen the VA healthcare system to so-called
``low-priority'' veterans. That is the budget number I want to identify
and secure for VA.
I know that the Secretary shares these goals. He surely is not a
man who will fail to meet the needs of the brave new veterans who are
earning their benefits in Iraq today. And he is not a man who will fail
to meet the needs of veterans who have earned their benefits in prior
wars. He has proved that to me repeatedly--most recently, on the
Saturday that just passed when he visited with veterans in Oil City, PA
and Warren, PA. I think few Cabinet Members would have made such a trip
on the weekend through blizzard conditions. But I dare say that
Secretary Anthony J. Principi is not like most Cabinet Members. He is,
in this Chairman's opinion, the most extraordinary man ever to serve as
Secretary of Veterans' Affairs. So I will not be critical of him. I
will just seek to learn what VA will need to accomplish the goals that
he and I--and the President--share.
Mr. Secretary, I look forward to your testimony. And I look forward
to continuing to work with you in service to the Nation's veterans.
Chairman Specter. I want to begin by recognizing our
distinguished Secretary of Veterans Affairs, Anthony Principi,
with special appreciation for his coming to Pennsylvania last
Saturday to announce the opening of veterans' clinics in Will
City, Pennsylvania, and Warren, Pennsylvania. It was a rare
occurrence for a cabinet officer to visit a city of that size,
those sizes. We are very grateful to the Secretary. The people
of Pennsylvania, more importantly, were very grateful and I
think it is a solid sign as to the dedication that the
Secretary and the Department have to aiding the veterans of
America.
I have said on many occasions, but never too often, my deep
commitment to the veterans arises from the first veteran I
knew, who was my father, Harry Specter, who was a veteran of
World War I, who was promised a bonus, did not get his bonus,
and perhaps in this year's appropriations bill we can deliver
in a metaphorical sense on my father's bonus.
Senator Campbell, would you care to make an opening
statement?
Senator Campbell. No. I think with your permission I will
just submit for the record, Mr. Chairman. I have to leave in
about half an hour, so I would rather hear Secretary Principi,
and welcome, Mr. Secretary.
Chairman Specter. Thank you very much, Senator Campbell.
[The prepared statement of Senator Campbell follows:]
Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator
from Colorado
Thank you, Mr. Chairman. I would like to welcome you, Mr.
Secretary, and thank you for appearing before the committee today. I am
looking forward to your testimony which will give us a better picture
of how the Administration is going to address the serious issues facing
the VA at this time. And, I also want to welcome the members of the
VSO's who are going to comment on the budget today. I will be listening
carefully to your testimony as you represent the opinions of veterans
throughout the nation.
Though I notice that the fiscal year 2005 budget calls for a small
increase in discretionary health care funding for veterans, I continue
to be concerned that we find a way to take care of what will be an
increasing number of elderly veterans. I think we can all agree that
one of our greatest national responsibilities is the welfare of our
nation's veterans. It is critical that we find a balanced way to make
good on the promises to them.
I am also encouraged that the budget includes monies for
construction under the CARES (Capital Asset Realignment for Enhanced
Services) initiative. I understand that incorporating change into a
huge Federal entity is difficult. But, changing from institutional care
to primary and community-based care has left the VA with vacant and
under-utilized buildings. Deciding how to use these facilities is
difficult and disposing of such assets is a complex process. But,
operating hundreds of unneeded buildings can cost billions of dollars
each year. I look forward to the draft report of the CARES Commission
which I understand is expected sometime this week.
Mr. Secretary, I appreciate your strong commitment to our veterans
who have service-connected injuries and illnesses and have always
admired you for stepping up to the plate to make the hard calls.
However, the proposals to add co-pays and user fees for those not
suffering from a military-related disability, will affect many veterans
in my State of Colorado whose incomes are close to the cutoff for
health care services.
Speaking as a veteran, I believe we need to do all we can to serve
those who have so honorably served us all. And, knowing that our
soldiers are putting their lives on the line for us at this moment
makes it even more important that we make veterans' health care our No.
1 priority.
I will be listening to the veterans who are meeting with me this
month and I am looking forward to the testimony of the many veterans'
organizations that will be testifying at the joint hearings during the
next few weeks.
Mr. Secretary, again, I thank you for being here. I look forward to
hearing details of the budget proposal and how you plan to address
these issues within the proposed budget. I look forward to working with
you and the VSO's to make sure that our veterans receive the care they
have been promised.
I thank the chair.
Chairman Specter. Then, Mr. Secretary, the floor is yours.
STATEMENT OF HON. ANTHONY J. PRINCIPI, SECRETARY, U.S.
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY ROBERT H.
ROSWELL, M.D., UNDER SECRETARY FOR HEALTH; JOHN W. NICHOLSON,
UNDER SECRETARY FOR MEMORIAL AFFAIRS; WILLIAM H. CAMPBELL,
ASSISTANT SECRETARY FOR MANAGEMENT; D. MARK CATLETT, PRINCIPAL
DEPUTY ASSISTANT SECRETARY FOR MANAGEMENT; AND ROBERT EPLEY,
ASSOCIATE DEPUTY UNDER SECRETARY OF BENEFITS FOR POLICY AND
PROGRAM MANAGEMENT
Secretary Principi. Thank you, Mr. Chairman, Senator
Campbell, and members and staff of the committee. It is always
a pleasure to be before you. It was a great, great pleasure and
a privilege to be in Pennsylvania this past weekend and to be
around so many heroes of World War II and Korea and Vietnam who
were in the audience.
Eight-hundred-thousand more veterans will receive VA
medical care this year and next year if this bill is approved
than in 2001, the year I took office as Secretary of Veterans
Affairs, and these veterans are the beneficiaries of a series
of increased budgets requested by the President and made
tangible through active and successful advocacy by the members
of this committee and throughout this body, and I thank you for
your support for the Department and the men and women we have
the privilege to serve.
As the first chart shows--please show that first chart--our
health care budget with the enactment of the 2005 request have
increased more than 40 percent, and on behalf of America's
veterans, I thank the members of the committee again for
following through on your commitment to our nation's citizen
soldiers.
[GRAPHIC] [TIFF OMITTED] T7531.001
I believe that this is the golden age of VA health care,
our quality of care never before so good, veterans' access to
VA care never before this broad, and never before have we
treated so many veterans at so many locations, and please show
the second chart.
Since 2000, 2 years of the previous administration, my
predecessor, through 2005, we will have treated one more
million veterans than we did in the year 2000. And since the
year 2000, and again, our projections through the year 2005
will show that three million more veterans have enrolled in the
VA health care system, unprecedented growth in the number of
veterans who have come to us for care and who have enrolled in
the VA health care system, a significant number who have not
used the system but have enrolled in the event that they may
need to come to us.
[GRAPHIC] [TIFF OMITTED] T7531.002
For 2005, our total health care budget authority would
increase 4.2 percent over 2004, and to be clear, that figure,
that percentage, includes our capital construction as well as
our collections. We have counted collections as part of the VA
budget since 1998, when the Congress made the decision to allow
those resources to remain in the VA health care system rather
than going into the United States Treasury as miscellaneous
receipts. I believe that we will be able to sustain the forward
momentum we have achieved over the last 3 years.
[GRAPHIC] [TIFF OMITTED] T7531.003
If the President's request is endorsed by Congress, we will
have the resources we need to meet our goal of scheduling non-
urgent primary care for 93 percent of veterans within 30 days
and 99 percent within 90 days. Our goal is to totally eliminate
our waiting list within 90 days.
If the 2005 budget is approved, we will be able to provide
timely quality treatment to all the veterans we believe will
come to us seeking health care this year and next, and we will
continue to focus on the medical care needs of the men and
women who were disabled in uniform, our service-connected
disabled veterans. I believe our highest priority needs to be
for them. For the lower-income veterans, the poorest of the
poor who have few other options for health care in this
country, and those who need our specialized services--spinal
cord injury, blind rehabilitation, they too have been
identified by Congress as the highest priority.
Compared to the current fiscal year, this budget request
more than doubles our appropriation request for construction of
CARES identified new and improved facilities. Would you please
show the construction chart, which is that one there.
[GRAPHIC] [TIFF OMITTED] T7531.004
This has been a big concern to all of us, I know to members
of the committee and certainly to me, the aging of our
infrastructure, the modernization that needs to take place.
Using the authority granted by Congress this past year, we will
also apply up to $400 million of the 2004, this year's medical
care appropriation, to CARES projects. These actions will
enable us to commit approximately $1 billion more in 2004 and
2005 toward transforming VA's medical facilities into a 21st
century health care system.
Mr. Chairman, members of the committee, I know that you
have a concern and share with me a goal of ensuring that we
provide high quality medical care for our young men and women
returning home from our overseas conflicts Enduring Freedom and
Iraqi Freedom, and I am absolutely confident that this budget
will enable us to meet our commitment to this new generation of
freedom's defenders.
The numbers are relatively small so far. Of the 83,000
service members, including Guard and Reserve, who have
separated from the military and served in Iraqi Freedom
conflict, roughly 12 percent have come to us for care, about
9,700 of those veterans. Of the 15,000 who have been discharged
and served in Enduring Freedom, Afghanistan, roughly 1,400 have
come to us for care since they have been discharged, and I
expect those numbers will increase, but they are relatively low
compared to Persian Gulf I and, of course, Vietnam and some of
our other conflicts. But we need to be prepared to take care of
this new generation of men and women who have fought.
We still have challenges. Of that, there is little doubt.
We are responding to those challenges with policy initiatives.
First, we emphasize our commitment to the highest priority
veterans by asking Congress to raise the income threshold to
$16,500 from $9,800 for exempting low-income veterans from
pharmacy copayments, lifting the burden of copayments from the
poorest of our veteran population who seek care in the VA. We
also ask that you eliminate all copayments imposed on former
POWs. We also proposed to eliminate hospice care copayments,
hospice care provided in the home, hospice care provided under
contract. We ask for the authority to reimburse our patients
for the copayments that they must pay their insurance companies
when they seek emergency care in private sector hospitals.
At the same time, we ask Congress to approve both a modest
increase in pharmacy copayments and an annual fee totaling less
than $21 per month, a very small portion of the cost of care,
for higher-income non-service-disabled veterans using our
system. I want to be very clear to our veterans that this is
not an enrollment fee. It would be an annual use fee collected
only from veterans receiving care and could be paid on a
monthly or annual basis, depending upon the needs of the
veteran.
For many, many years, Congress has mandated such a fee for
enlisted personnel--tech sergeants, staff sergeants, petty
officers--who spent at least 20 years in the military and
retire and enroll in the Department of Defense health care
system, Tricare. They are required to pay $254 a year to be
enrolled in the DOD health care system after serving 20 years
on active duty, and we are just asking those who have no
service-connected disabilities, do not stay in the military and
retire, and have higher incomes, usually higher than what a
petty officer or staff sergeant retires on, to pay a modest use
fee.
We can meet some of our other challenges on our own. For
example, I approved the recommendation of the Under Secretary
of Health, Dr. Roswell, to address regional funding imbalances
by including all veterans, Category 7 and Category 8 veterans,
using our system and our resource allocation model.
In addition to improving access to health care, the
President directed me to bring our benefits processing under
control, and by last year, thanks to the hard work of the
people in VA, we were able to reduce our inventory of rating-
related claims, the time it takes a veteran to receive a
decision for a disability claim or pension, down to 253,000
from a high of 432,000, and the percentage of veterans waiting
more than 6 months for a decision was down to 18 percent from
48 percent. I don't think this would have happened without the
increase requested by the President and the decisions of this
body in giving us additional people to handle the claims
workload. Our backlog has gone up recently due to a September
2003 court decision, but Congress has corrected that issue and
we are now back on track to achieve our goals.
I think it is very telling that the number of veterans
receiving service-connected disability compensation is
projected to increase to 2.6 million from 2.3 million in 2001,
and we see a sizable increase in the funding, the mandatory
funding for disability compensation. In 2005, the President is
asking for almost $2.8 billion in additional funding for
disability compensation.
VA is not only health care and benefits, we also honor our
veterans in their final rest. Advanced by the President's
budget request, we will continue the greatest expansion of the
national cemetery system since the Civil War. One new cemetery
has just been opened. We will open five more new cemeteries
over the next year, and we have proposed to add six new
cemeteries to the system by the year 2009. This will increase
our gravesites by 85 percent over the current number within our
120 existing national cemeteries, so this is indeed a major,
major expansion of our national cemetery system, and, of
course, it is required because of the large number of veterans,
World War II and Korea, passing from us, some 1,800 a day. So
we are very, very pleased with this expansion.
I am confident that the President's request and the actions
of the Congress will allow us to continue to build on our
record of commitment and success. I thank the committee for all
you have done to help us achieve our goals and I look forward
to your questions. Thank you.
Chairman Specter. Thank you very much, Mr. Secretary.
[The prepared statement of Secretary Principi follows:]
Prepared Statement of Hon. Anthony J. Principi, Secretary, U.S.
Department of Veterans Affairs
Mr. Chairman and members of the Committee, good morning. I am
pleased to be here today to present the President's 2005 budget
proposal for the Department of Veterans Affairs (VA). The focal point
of this budget is our firm commitment to continue to bring balance back
to our health care system by focusing on veterans in the highest
statutory priority groups.
The President's 2005 budget request totals $67.7 billion (an
increase of $5.6 billion in budget authority): $35.6 billion for
entitlement programs and $32.1 billion for discretionary programs. Our
request for discretionary funds represents an increase of $1.2 billion,
or 3.8 percent, over the enacted level for 2004, and supports my three
highest priorities:
provide timely, high-quality health care to our core
constituency--veterans with service-connected disabilities, those with
lower incomes, and veterans with special health care needs;
improve the timeliness and accuracy of claims processing;
and
ensure the burial needs of veterans and their eligible
family members are met, and maintain veterans' cemeteries as national
shrines.
The growth in discretionary resources will support a broad array of
benefits and services that VA provides to our Nation's veterans.
Including medical care collections, funding for the medical care
program rises by $1.17 billion over the 2004 enacted level. As a
principal component of our medical care budget, we are requesting $524
million to begin implementing recommendations stemming from studies
associated with the Capital Asset Realignment for Enhanced Services
(CARES) program.
We are presenting our budget request using a slightly modified new
budget account structure that we proposed for the first time last year.
This new structure more clearly presents the full funding for each of
the benefits and services we provide veterans. This will allow the
Department and our stakeholders to more effectively evaluate the
program results we achieve with the total resources associated with
each program. I am committed to providing Congress with the information
and tools it needs to be comfortable with enacting the change.
MEDICAL CARE
The President's 2005 request includes total budgetary resources of
$29.5 billion (including $2.4 billion in collections) for the medical
care program, an increase of 4.1 percent over the enacted level for
2004, and more than 40 percent above the 2001 level. With these
resources, VA will be able to provide timely, high-quality health care
to nearly 5.2 million unique patients, a total 21 percent higher than
the number of patients we treated in 2001.
I have taken several steps during the last year to refocus VA's
health care system on our highest priority veterans, particularly
service-connected disabled veterans who are the very reason this
Department exists. For example, we recently issued a directive that
ensures veterans seeking care for service connected medical problems
will receive priority access to our health care system. This new
directive provides that all veterans requiring care for a service
connected disability, regardless of the extent of the injury or
illness, must be scheduled for a primary care evaluation within 30 days
of their request for care. If a VA facility is unable to schedule an
appointment within 30 days, it must arrange for care at another VA
facility, at a contract facility, or through a sharing agreement.
By highlighting our emphasis on our core constituency (Priority
Levels 1-6), we will increase our focus on the Congressionally
identified highest priority veterans. The number of patients within our
core service population that we project will come to VA for health care
in 2005 will be nearly 3.7 million, or 12 percent higher than in 2003.
During 2005, 71 percent of those using VA's health care system will be
veterans with service-connected conditions, those with lower incomes,
and veterans with special health care needs. The comparable share in
2003 was 66 percent. In addition, we devote 88 percent of our health
care funding to meet the needs of these veterans.
While part of our strategy for ensuring timely, high-quality care
for our highest priority veterans involves a request for additional
resources, an equally important component of this approach includes a
series of proposed regulatory and legislative changes that would
require lower priority veterans to assume a small share of the cost of
their health care. These legislative proposals are consistent with
recent Medicare reform that addresses the difference in the ability to
pay for health care. We are submitting these proposals for Congress'
reconsideration because we strongly believe they represent the best
opportunity for VA to secure the necessary budgetary resources to serve
our core population. Among the most significant legislative changes
presented in this budget are to:
assess an annual use fee of $250 for Priority 7 and 8
veterans; and
increase co-payments for pharmacy benefits for Priority 7
and 8 veterans from $7 to $15.
We will work with Congress to enact our legislative proposal to
eliminate the pharmacy co-payment for Priority 2-5 veterans, who have
fewer means by which to pay for these costs, by raising the income
threshold from the pension level of $9,894 to the aid and attendance
level of $16,509 (for a single veteran). This would allow about 394,000
veterans within our core constituency to receive outpatient medications
without having to make a co-payment.
The 2005 budget includes several other legislative and regulatory
proposals that are designed to expand health care benefits for the
Nation's veterans. Among the most significant of these is a provision
that would give the Department the authority to pay for insured veteran
patients' out-of-pocket expenses for urgent care services if emergency/
urgent care is obtained outside of the VA health care system. This
proposal would ensure that veterans with life-threatening illnesses can
seek and receive care at the closest possible medical facility. In
addition, we are proposing to eliminate the co-payment requirement for
all hospice care provided in a VA setting and all co-payments assessed
to former prisoners of war. Currently, veterans are charged a co-
payment if hospice care cannot be provided in a VA nursing home bed
either because of clinical complexity or lack of availability of
nursing home beds.
The President's 2005 budget for VA's medical care program also
continues our effort to expand access to long-term care for veterans.
This budget includes a legislative proposal to focus long-term care on
non-institutional settings by expanding the 1998 average daily census
nursing home capacity requirement to include the following categories
of extended care services--nursing homes, community residential care
programs, residential rehabilitation treatment programs, home care
programs, non-institutional extended care services under VA's
jurisdiction, and long-term care beds for which the Department pays a
per diem to states for services in State homes. As part of this effort,
we aim to significantly enhance access to non-institutional care
programs that allow veterans to live and be cared for in the comfort
and familiar setting of their home surrounded by their family.
We are continuing our work with the Department of Health and Human
Services to implement the plan by which Priority 8 veterans aged 65 and
older, who cannot enroll in VA's health care system, can gain access to
the new ``VA Advantage'' program. This would allow these veterans to
use their Medicare benefits to obtain care from VA. In return, we would
receive payments from a private health plan contracting with Medicare
to cover the cost of the health care we provide.
In return for the resources we are requesting for the medical care
program in 2005, we will continue to aggressively pursue my priority of
providing timely and accessible health care that sets a national
standard of excellence for the health care industry. During the last 3
years, we have significantly enhanced veterans' access to health care.
We have opened 194 new community clinics, bringing the total to 676.
Nearly 9 out of every 10 veterans now live within 30 minutes of a VA
medical facility. This expanded level of access has resulted in an
increase in the number of outpatient visits from 44 million in 2001 to
51 million in 2003, as well as a 26 percent rate of growth in the
annual number of prescriptions filled to a total of 108 million last
year. To further highlight the Department's emphasis on the delivery of
timely, accessible health care, our standard of care for primary care
is that 93 percent of appointments will be scheduled within 30 days of
the desired date and 99 percent of all appointments will be scheduled
within 90 days. For appointments with specialists, the comparable
performance goal is 90 percent within 30 days of the desired date.
As I mentioned earlier Mr. Chairman, a key component of our overall
access goals is the assurance that veterans seeking care for service-
connected medical problems will receive priority access to health care.
In addition, we have dramatically reduced the number of veterans on the
waiting list for primary care. We will eliminate the 6-month waiting
list no later than April 2004.
VA's health care system continues to be characterized by a
coordinated continuum of care and achievement of performance outcomes
that improve services to veterans. In fact, VA has exceeded the
performance of private sector and Medicare providers for all 18 key
health care indicators, from diabetes care to cancer screening and
immunizations. The Institute of Medicine has recognized the
Department's integrated health care system, including our framework for
using performance measures to improve quality, as one of the best in
the nation. Additionally, VA's quality score based on a survey
conducted by the Joint Commission on Accreditation of Healthcare
Organizations exceeds the national average quality score (93 versus
91).
We will continue to use clinical practice guidelines to help ensure
high-quality health care, as they are directly linked with improved
health outcomes. We expect to show improvements in both of our
principal measures of health care quality. The clinical practice
guidelines index will rise to 71 percent in 2005, while the prevention
index will increase to 84 percent.
The 2005 budget includes additional management savings of $340
million that will partially offset the need for additional funds to
handle the increasing utilization of health care resources,
particularly among our highest priority veterans who require much more
extensive care, on average, than lower priority veterans. We will
achieve these management savings through improved standardization
policies in the procurement of supplies, pharmaceuticals, and other
capital purchases, as well as in other operational efficiencies such as
consolidations.
Our projection of medical care collections for 2005 is $2.4
billion. This total is 38 percent above our estimated collections for
2004 and is more than three times the collections level from 2001.
Approximately $407 million, or 61 percent, of the increase above 2004
is possible as a result of the proposed medical care policy
initiatives. The Department continues to implement the series of
aggressive steps identified in our revenue cycle improvement plan in
order to maximize the health care resources available for the medical
care program. We are establishing industry-based performance and
operational metrics, developing technological enhancements, and
integrating industry-proven business approaches, including the
establishment of centralized revenue operation centers. For example,
during the last year we have lowered the share of reimbursable claims
receivable greater than 90 days old from 84 percent to 39 percent, and
we have decreased the average time to produce a bill from 117 days to
49 days. Further, the Department is implementing the Patient Financial
Services System in Veterans Integrated Service Network 10 (Ohio). This
will be a single billing system that we will use for both hospital
costs as well as physician costs, and involves comprehensive
implementation of standard business practices and information
technology improvements.
As you know Mr. Chairman, one of the President's management
initiatives calls for VA and the Department of Defense (DoD) to enhance
the coordination of the delivery of benefits and service to veterans.
To address this Presidential initiative, our two Departments
established a high-level Joint Executive Council to develop and
implement significant collaborative efforts. We are focusing on three
major system-wide issues: (1) facilitating electronic sharing of
enrollment and eligibility information for services and benefits; (2)
establishing an electronic patient health record system that will allow
rapid exchange of patient information between the two organizations by
the end of 2005; and (3) increasing the number of shared medical care
facilities and staff. The sharing of DoD enrollment and eligibility
data will reduce the burden on veterans to provide duplicative
information when making the transition to VA for care or benefits.
Shared medical information is extremely important to ensure that
veterans receive safe and proper care. VA and DoD are working together
to share facilities and staff in order to provide needed services to
all patients in the most efficient and effective manner.
CAPITAL ASSET REALIGNMENT FOR ENHANCED SERVICES (CARES)
The 2005 budget includes $524 million of capital funding to move
forward with the Capital Asset Realignment for Enhanced Services
(CARES) initiative, a figure more than double the amount requested for
CARES for 2004. This is a multiyear program to update VA's
infrastructure to meet the needs of veterans in the 21st century and to
keep our Department on the cutting edge of medicine. CARES will assess
veterans' health care needs across the country, identify delivery
options to meet those needs in the future, and guide the realignment
and allocation of capital assets so that we can optimize health care
delivery in terms of both quality and access. The resources we are
requesting for this program will be used to implement the various
recommendations within the National CARES plan by funding advance
planning, design development, and construction costs for capital
initiatives.
Mr. Chairman, the independent commission that is reviewing our
draft CARES plan will be delivering their report to me soon. The
commission had originally intended to complete their work by the end of
November, but due to the intense interest in this project and the
overwhelming volume of information they are faced with examining, their
report has been delayed a few months. I look forward to reviewing the
commission's analysis and recommendations. We will thoroughly evaluate
their report and seriously consider their recommendations before making
our final realignment decisions and preparing for the next phase of the
CARES program.
MEDICAL AND PROSTHETIC RESEARCH
The President's 2005 budget includes total resources of $1.7
billion to support VA's medical and prosthetic research program. This
request is comprised of $770 million in appropriated funds, $670
million in funding from other Federal agencies such as DoD and the
National Institutes of Health, as well as $230 million from
universities and other private institutions. Our budget includes an
initiative to assess pharmaceutical companies for the indirect
administrative costs associated with the clinical drug trials we
conduct for these organizations.
This $1.7 billion will support nearly 2,900 high-priority research
projects to expand knowledge in areas critical to veterans' health care
needs--Gulf War illnesses, aging, diabetes, heart disease, mental
illness, Parkinson's disease, spinal cord injury, prostate cancer,
depression, environmental hazards, women's health care concerns, and
rehabilitation programs.
VETERANS' BENEFITS
The Department's 2005 budget request includes $36 billion for the
entitlement costs associated with all benefits administered by the
Veterans Benefits Administration (VBA). Included in this total, is an
additional $2.740 billion for disability compensation payments to
veterans and their survivors for disabilities or diseases incurred or
aggravated while on active duty. Recipients of these compensation
benefits will have increased from 2.3 million in 2001 to over 2.6
million in 2005. The budget includes another $1.19 billion for the
management of these programs: disability compensation; pensions;
education; vocational rehabilitation and employment; housing; and life
insurance. This is an increase of $26 million, or 2.2 percent, over the
enacted level for 2004.
We have made excellent progress in addressing the Presidential
priority of improving the timeliness and accuracy of claims processing.
Not only have we hired and trained more than 1,800 new employees in the
last 3 years to directly address our claims processing backlog, but the
productivity of our staff has increased dramatically as well. Between
2001 and 2003, the average number of claims we completed per month grew
by 70 percent, from 40,000 to 68,000. Last year the inventory of
rating-related compensation and pension claims peaked at 432,000. By
the end of 2003, we had reduced this backlog of pending claims to just
over 250,000, a drop of over 40 percent. We have experienced an
increase in the backlog during the last few months, due in large part
to the impact of the court decision (PVA v Secretary of Veterans
Affairs) that interpreted the Veterans Claims Assistance Act of 2000 as
requiring VA to wait a full year before denying a claim. However, this
rise in the number of pending claims will be temporary, and we expect
the backlog to be back down to about the 250,000 level by the end of
2004. We thank the Committee for the legislation that eliminated the
mandatory 1-year waiting period.
In 2002 it took an average of 223 days to process a claim. Today,
it takes about 150 days. We are on track to reach an average processing
time of 100 days by the end of 2004 and expect to maintain this
timeliness standard in 2005. One of the main reasons we will be able to
meet and then sustain this improved timeliness level is that we have
reduced the proportion of claims pending over 6 months from 48 percent
to just 19 percent during the last 3 years.
To assist in achieving this ambitious goal, VA established benefits
delivery at discharge programs at 136 military installations around the
country. This initiative makes it more convenient for separating
servicemembers to apply for and receive the benefits they have earned,
and helps ensure claims are processed more rapidly. Also, the
Department has assigned VA rating specialists and physicians to
military bases where servicemembers can have their claims processed
before they leave active duty military service.
We expect to see an increase in claims resulting from the return of
our brave servicemen and women who fought to protect the principles of
freedom in Operation Enduring Freedom and Operation Iraqi Freedom. We
propose to use $72 million of the funds available from the war
supplemental during 2004 to address the challenges resulting from an
increasing claims processing workload in order to assist us in reaching
our timeliness goal of 100 days by the end of 2004. We propose to use
the remaining $28 million in 2005 to help sustain this timeliness
standard.
At the same time that we are improving timeliness, we will be
increasing the accuracy of our claims processing. The 2005 performance
goal for the national accuracy rate for compensation claims is 88
percent, well above the 2001 accuracy level of 80 percent.
This budget request includes additional staff and resources for new
and ongoing information technology projects to support improved claims
processing. We are requesting $2 million for the Virtual VA project,
the ultimate goal of which is to replace the current paper-based claims
folder with electronic images and data that can be accessed and
transferred electronically through a web-based solution. The 2005
funding will maintain Virtual VA at the three Pension Maintenance
Centers. We are seeking $3.4 million for the Compensation and Pension
Evaluation Redesign, a project that will result in a more consistent
claims examination process. In addition, we are requesting $2.6 million
in 2005 for the Training and Performance Support Systems, a multi-year
initiative to implement five comprehensive training and performance
support systems for positions critical to the processing of claims.
The Veterans Service Network (VETSNET) development is nearing
completion and is scheduled to begin deployment in April 2004. This
system offers numerous improvements over the legacy Benefits Delivery
Network (BON) that it is replacing (e.g., correction of material
weaknesses and implementation of comprehensive claims processing within
a modern corporate environment). Sufficient platform capacity is
required to successfully deploy VETSNET and to ensure the continued and
uninterrupted payment of approximately $24 billion annually in benefits
to around 3.4 million deserving veterans and their beneficiaries.
Therefore, $5 million in funding is requested to procure the capacity
required. This platform capacity will ensure successful deployment and
operation of VETSNET throughout VBA's Regional Offices and in a modern
corporate environment that integrates all components of claims
processing (e.g., establishing the claim, rating the claim, preparing
the claim award, and paying the claim award). Without sufficient
platform capacity, the Veterans Benefits Administration will be unable
to operate this critical new system.
In support of the education program, the budget proposes $5.2
million for continuing the development of the Education Expert System.
These resources will be used to expand upon an existing prototype
expert system and will enable us to automate a greater portion of the
education claims process and expand enrollment certification. This
initiative will contribute toward achievement of our 2005 performance
goals for the average time it takes to process claims for original and
supplemental education benefits of 25 days and 13 days, respectively.
VA is requesting $9.6 million for the One-VA Telephone Access
project, an initiative that will support all of VBA's benefits
programs. This initiative will result in the development of a Virtual
Information Center that forms a single telecommunications network among
several regional offices. This technology will allow us to answer calls
at any place and at any time without complex call routing devices.
In order to make the delivery of VA benefits and services more
convenient for veterans and more efficient for the Department, we are
requesting $1.5 million for the collocation and relocation of some
regional offices. Some of this will involve housing regional office
operations in existing VA medical facilities. In addition, we are
examining the possibility of collocations using enhanced-use authority,
which entails an agreement with a private developer to construct a
facility on Department-owned grounds and then leasing all or part of it
back to VA. At the end of these long-term lease agreements, the land
and all improvements revert to VA ownership.
In recognition of the fact that the home loan program is primarily
a benefit that assists veterans in making the transition from active
duty life to veteran status, the 2005 budget includes a legislative
proposal to phase in an initiative to limit eligibility for this
program to one-time use. Under our proposal, one-time use of the loan
program would apply to any person who becomes a veteran after the date
this proposed legislation becomes law. Those who are already veterans,
or who will achieve veteran status prior to enactment of the proposed
law, would retain their eligibility to use the home loan benefit as
many times as they need to for a period of 5 years after the law takes
effect. Once that 5-year period has passed, they would no longer be
able to use this benefit more than once. This legislative proposal does
not change eligibility for active duty personnel who would retain the
ability to use this benefit as many times as they need it. VA home
loans are important for first-time buyers because they require no down
payment-making them riskier than other loans. After the first use, home
equity can be used to obtain more favorable terms from conventional
loans, or through the Federal Housing Administration. Therefore,
limiting this benefit to its original intent of one-time use after
leaving the military will lower loan volume and risk, save money over
the long-term, and coordinate Federal programs.
BURIAL
The President's 2005 budget includes $455 million for the burial
program, of which $181 million is for mandatory funding for VA burial
benefits and payments and $274 million is for discretionary funding,
including operating and capital costs for the National Cemetery
Administration and the State Cemetery Grant program. The increase in
discretionary funding is $9 million, or 3.4 percent, over the enacted
level for 2004, and includes operating funds for the five new
cemeteries opening in 2005.
This budget request includes $926 thousand to complete the
activation of new national cemeteries in the areas of Detroit, MI and
Sacramento, CA. These are the last two of the six locations identified
in the May 2000 report to Congress as the areas most in need of a
national cemetery. The other four cemeteries will serve veterans in the
areas of Atlanta, GA, South Florida, Pittsburgh, PA, and Fort Sill, OK.
With the opening of new national cemeteries and State veterans
cemeteries, the percentage of veterans served by a burial option within
75 miles of their residence will rise to 83 percent in 2005. The
comparable share was less than 73 percent in 2001.
The $81 million in construction funding for the burial program in
2005 includes resources for Phase 1 development of the Sacramento
National Cemetery (CA) as well as expansion and improvements at the
Florida National Cemetery (Bushnell, FL) and Rock Island National
Cemetery (IL). The request includes advanced planning funds for site
selection and preliminary activities for six new national cemeteries to
serve veterans in the following areas: Bakersfield, CA; Birmingham, AL;
Columbia/Greenville, SC; Jacksonville, FL; Sarasota County, FL; and
southeastern Pennsylvania. Completion of these new cemeteries will
represent an 85 percent expansion of the number of gravesites available
in the national cemetery system since 2001, almost doubling the number
of gravesites during this time period. In addition, the budget includes
$32 million for the State Cemetery Grant program.
In return for the resources we are requesting for the burial
program, we expect to achieve extremely high levels of performance in
2005 and to continue our noble work to maintain the appearance of
national cemeteries as shrines dedicated to honoring the service and
sacrifice of veterans. Our performance goal for the percent of survey
respondents who rate the quality of service provided by the national
cemeteries as excellent is 96 percent, and our goal for the percent of
survey respondents who rate national cemetery appearance as excellent
is 98 percent. In addition, we will continue to place emphasis on the
timeliness of marking graves. Our performance goal for the percent of
graves in national cemeteries marked within 60 days of interment is 82
percent in 2005, a figure dramatically above the 2002 performance level
of 49 percent.
MANAGEMENT IMPROVEMENTS
Mr. Chairman, we have made excellent progress during the last year
in implementing the President's Management Agenda. Our progress in the
financial, electronic government, budget and performance, and DoD/VA
coordination areas is currently rated ``green.'' Our human capital
score is ``yellow'' due only to some very short-term delays. However,
VA's competitive sourcing rating is ``red'' because existing
legislation precludes us from using necessary resources to conduct cost
comparisons of competing jobs such as laundry, food and sanitation
service. The Administration will work with Congress to develop
legislation to advance this effort that would free up additional
resources to be used to provide direct medical services to veterans. We
will continue to take the steps necessary to achieve the ultimate goals
the President established for each of the focus areas.
We have several management improvement initiatives underway that
will lead to greater efficiency and will be accomplished largely
through centralization of several of our major business processes. We
are currently realigning our finance, acquisition, and capital asset
management functions into business offices across the Department. There
will be one business office in each of the 21 Veterans Integrated
Service Networks and a single office for the National Cemetery
Administration. For the Veterans Benefits Administration, the majority
of the field functions will be centralized into product lines. In
addition, we are establishing an Office of Business Oversight in our
Office of Management that will provide much stronger oversight of these
functions by our Chief Financial Officer, will improve operations
through more specialization, and will achieve efficiencies in staffing.
The realignment of these business functions will reduce and standardize
field business activities into a more manageable size, limit the number
of sites to be reviewed, provide for more consistent interpretation of
policies and procedures, and promote implementation of performance
metrics and data collection related to these business functions. As a
result of the realignment, we will significantly strengthen compliance
and consistency with finance, acquisition, and capital asset policies
and procedures.
We continue to make excellent progress in implementing the
recommendations of our Procurement Reform Task Force, as 43 of the 65
recommendations have been completed. By the end of 2004, we expect to
implement all of the remaining recommendations. These procurement
reforms will optimize the performance of VA's acquisition system and
processes by improving efficiency and accountability. We expect to
realize savings of about $250 million by the end of 2004 as a result of
these improvement initiatives. This figure will rise after we have
completed all 65 recommendations.
During 2005 VA will continue developing our enterprise architecture
that will ensure that all new information technology (IT) projects are
aligned with the President's E-government initiatives as well as the
Department's strategic objectives. The enterprise architecture will
help eliminate redundant systems throughout VA, improve IT
accountability and cost containment, leverage secure and
technologically sound solutions that have been implemented, and ensure
that our IT assets are built upon widely accepted industry standards
and best practices in order to improve delivery of benefits and
services to veterans. One of our primary focus areas in IT will be
cyber security. We will concentrate on securing the enterprise
architecture and providing continuous protection to all VA systems and
networks. This will require purchases of both hardware and software to
address existing vulnerabilities.
We are continuing the development and implementation of our CoreFLS
project to replace VA's existing core financial management and
logistics systems with an integrated, commercial off-the-shelf package.
CoreFLS will help us address and correct management and financial
weaknesses in the areas of effective integration of financial
transactions from Department systems, necessary financial support for
credit reform initiatives, and improved automated analytical and
reconciliation tools. We have conducted initial tests at selected sites
and are still on schedule for full implementation during 2006.
The Department has developed a comprehensive human capital
management plan and has started implementing some of the strategies
outlined in this plan. In addition, we are implementing a redesigned
performance appraisal system to better ensure that all employees'
performance plans are linked with VA's mission, goals, and objectives.
CLOSING
Mr. Chairman, VA has achieved numerous successes during the last 3
years that have significantly improved service to our country's
veterans. We have enhanced veterans' access to our health care services
that set the national standard with regard to quality; improved the
timeliness of health care delivery; expanded programs for veterans with
special health care needs; dramatically lowered the time it takes to
process veterans' claims for benefits; and expanded access to our
national cemetery system. The President's 2005 budget will provide VA
with the resources necessary to continue to improve our delivery of
benefits and services, particularly for veterans with service-connected
conditions, those with lower incomes, and veterans with special health
care needs.
That concludes my formal remarks. My staff and I would be pleased
to answer any questions.
Chairman Specter. I turn now to our distinguished ranking
member, Senator Graham, for an opening statement.
Senator Graham. Thank you very much, Mr. Chairman. I have a
statement that I would like to file for the record.
Chairman Specter. Without objection, it will be made a part
of the record in full.
STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR
FROM FLORIDA
Senator Graham. I would like to summarize some of the
issues that I raise in that opening statement. I am concerned
about the resource commitment that this budget makes, which has
been calculated as a 1.8 percent increase for medical care and
calls for the reduction in other areas, such as 540 staff
responsible for processing veterans' claims. I am also
concerned about the question of the additional pressures that
are being placed upon the VA medical system.
For an example, there will be a significant number of those
American men and women who have been wounded in Afghanistan or
Iraq who will return to the United States, separate from the
military, and then be statutorily entitled to 2 years of
medical care provided by VA. I am concerned as to whether we
are prepared to meet that challenge.
I am also concerned about the reliance on annual user fees
on higher-income veterans,--those with income of as little as
$24,000 a year. Also, the doubling of copayments for
prescription drugs is a matter of concern at a time when we are
trying to expand coverage of prescription drugs in the Medicare
program. I will ask some questions about the consistency here.
In my State, we have had difficulty with delays in veterans
being able to get access to health care providers. There is a
standard being suggested that enrolled veterans would be seen
within 30 days for primary care. Does this budget provide the
resources necessary to achieve that goal?
At the Gainesville VA Hospital, there are several hundred
veterans who have been waiting well beyond 30 days for their
initial visit and there are 600 veterans who have waited more
than a year for services like audiology at the Fort Myers
clinic. How will this budget impact on those delays?
Mr. Principi, not to just focus on some of the areas of
concern, I want to commend you and the VA for the professionals
that you have been able to bring in and retain within the VA
system. I recently spent time at the VA hospital in Miami and
at the outpatient clinic in Ocala, and I was very impressed
with the quality of providers and the level of not just
satisfaction, but enthusiasm, of those veterans who had
received care from those professionals.
Mr. Chairman, I have other points that are made in the
statement that will be in the record, but at this point, I
would defer to other members of the committee and then to
questions.
Chairman Specter. Thank you very much, Senator Graham.
[The prepared statement of Senator Graham follows:]
Prepared Statement of Bob Graham, U.S. Senator from Florida
I join Senator Specter in welcoming our witnesses to today's
hearing and I look forward to working with the Chairman, Members of
this Committee, Secretary Principi, and the veterans service
organizations to meet the needs of the men and women who have served
our nation.
Today, we begin the long process of ensuring that the fiscal year
2005 budget allows VA to provide veterans with the care and benefits
they have earned. To say that the proposed budget is tough is an
understatement. The request includes only a 1.8 percent increase for
medical care, and it calls for cutting 540 staff that process veterans
benefits.
This budget, unfortunately, reflects the priorities of this
Administration and, if enacted, will have devastating effects on the
men and women who have served this country with honor. The
Administration has said the proposed VA budget will ``provide the best
possible health care and benefits to our veterans.''
I would disagree, and I believe we will hear similar sentiments
from our witnesses on the second panel. As we shape VA's budget for the
next year, we must move beyond hopeful rhetoric and political
gamesmanship and take an honest assessment of the needs of veterans. We
must then match this assessment with real dollars.
When you take away the new and higher fees that are to be paid
directly by veterans and the theoretical management efficiencies, the
Administration has asked for an appropriation that fails to cover half
of the expected inflationary increases. I take issue with a budget that
relies on an annual user fee levied upon so-called ``higher income''
veterans--especially when ``higher income'' can mean as little as
$24,000 a year.
It is insulting to laud this budget, but continue to bar veterans
from VA health care. It is unfair to double the prescription drug co-
payments for other veterans. And it is nothing short of hypocrisy to
deliberately reduce demand for health care services and then to count
that as savings.
I am relieved to hear that waiting times for care will disappear in
early fiscal year 2004, but am mystified as to how this will occur.
Does this mean that all enrolled veterans will be seen within 30 days
for primary care? Or does this mean that veterans will not have to wait
to be assigned an appointment, but will quickly get an appointment that
is scheduled up to a year later? Will the hundreds of veterans who must
wait more than a year to see a doctor at the Gainesville VA Hospital or
the 600 veterans waiting more than a year for audiology care at the Ft.
Myers clinic be seen promptly? VA's committed professionals are already
struggling to handle the increased patient load, and for the next
fiscal year they will be doing it without a corresponding increase in
resources.
It is not only the VA health care system that stands to suffer
under this budget. The Administration proposes a cut, for the second
year in a row, in the number of staff who process VA benefits,
including those who decide veterans' disability claims. I commend the
progress that VA professionals have made in reducing the staggering
backlog of claims over the past year, but I fear that these cuts will
erode the gains VBA has made. In addition, this budget request does not
account for recent changes to the system. Specifically, last year's
concurrent receipt legislation will allow military retirees that are
more than 50 percent disabled to receive both their disability pay and
pension payments.
However, this new benefit may bring a rush of claimants into the
system who believe they are eligible, creating an additional backlog.
The Administration's budget does not account for additional claims that
service members returning from Iraq and Afghanistan will file during
the next 2 years.
In addition, the Administration has failed to consider the health
care needs of these returning service members, re-directing $100
million intended for their care. Even without these demands, veterans
are currently forced to wait 189 days for VA to make a determination of
eligibility for benefits. With the proposed funding level, I have
trouble believing VA will be able to meet, much less sustain, the
ambitious target of 100 days for processing new claims.
As we begin discussing next year's budget proposal, there will be
talk of fiscal discipline. It is true that the deficit is a serious
problem we must tackle, but we must make choices. Should we choose to
make a permanent tax cut our nation's priority? Or should we fulfill
our commitment to those who have served our Nation honorably? We cannot
send the signal to our men and women in uniform that we will not care
for them upon their return. I fear the Administration's budget proposal
may send that signal.
Chairman Specter. We will now proceed with our customary
approach of 5-minute rounds of questions on the early bird
principle of order of arrival.
Mr. Secretary, I commend you for the candid testimony which
you gave to the House last week as reported in CQ that you
asked for a $1.4 billion addition, which was denied by the
Office of Management and Budget. I think that kind of candor is
really necessary. I know the custom in many quarters is to not
be candid, but we understand the budget constraints. We know
about the deficit. We understand the problems with the economy
and the very heavy costs of the wars, the ones against
terrorism, Al Qaeda, and the other in Iraq. That kind of candor
is very impressive.
We have noted your request for copayments and we will
consider them carefully, but in a spirit of candor from this
side of the table, they are very, very difficult. When you
start making evaluations of ability to pay, that is very hard.
And in an era where we are calling on our servicemen and women
to do so much and recruiting depends in significant manner on
what is happening to veterans who have been discharged as well,
we take that into account before we make our own budgetary
considerations.
There has been a good deal of talk about Medicare
subvention, where the veterans' budget would be supplemented by
the care you give which could have been, perhaps should have
been, borne by Medicare. You have a new program called VA
Advantage. Would you describe that new approach and what you
anticipate from that by way of increased revenues?
Secretary Principi. Yes, Mr. Chairman. Secretary Thompson
and I over the past year have worked to develop a program, a
concept, wherein veterans who are in Category 8, because of
this dramatic increase in workload and the Congress directs
that I make an annual enrollment decision, have not been able
to enroll in the VA health care system would be able to come to
the VA for care under this VA Advantage program and we would be
reimbursed from Medicare.
Over the past 6 to 8 months, we have been working very
closely with the folks at HHS and CMS to work through the many,
many legalistic and regulatory issues on getting reimbursed
from Medicare, but I am hopeful by the end of this year those
veterans can come to the VA for health care and VA would get
reimbursed by the Medicare Trust Fund. I am not sure we have a
projection on how much we would receive, but the cost of their
care would be covered in full by Medicare. So it is the first
time that we have been able to develop a program with Medicare
and I am hopeful that we can work through the many regulatory
issues that Medicare has so that we can implement this program
as soon as possible.
Chairman Specter. That would certainly be a big boost to
the VA budget if that can be accomplished.
We have also looked to supplementing the VA income by
proceeds of those who are insured. Would you give us a brief
summary as to what you anticipate in that respect?
Secretary Principi. Well, again, starting in 1998, the
Congress authorized the VA to keep the revenues from third-
party payments, payments from insurance companies. Rather than
those dollars going into the Treasury as miscellaneous receipts
and then coming back to the VA indirectly in increased
appropriation, Congress said, you keep them there and you count
them as new resources in addition to your appropriation.
President Clinton started that, rightfully so, and it has been
that way--it has been programmed that way since.
We are making great progress in doing better collecting
from insurance companies. We still have some difficulty with
HMOs, and, of course, Medicare is off the table, the largest
insurance company in the nation, so to speak. But this year, we
project to collect--or for 2005, a little over one billion
dollars in revenues. That is used to enhance our medical care
appropriation and expand the reach of health care, buy more
pharmaceuticals, more outpatient visits, more inpatient visits.
So it is a great program. We just need to do better in our
accounts in collecting those dollars from insurance companies.
We are improving, but we still have a ways to go.
Chairman Specter. Your answer ended just with the
expiration of my time so I will not ask you another question
and I will yield now to Senator Graham.
Senator Graham. Thank you.
Chairman Specter. He is the one exception to the early bird
rule, the Ranking Member.
Senator Graham. Thank you, Mr. Chairman.
I would like to ask in this round about the responsibility
of the VA to provide medical care for combatants who have
separated from the service. During the 2003 consideration of
the VA's budget, I proposed an amendment to add $375 million to
meet the health care needs of returning service members. This
amount was based on a formula taking the percentage of veterans
who sought VA health care and benefits following the first Gulf
War, multiplying that by the VA's average per patient cost
today, and the result of that is $375 million.
In conference with the House, that amount was reduced to
$100 million. It is now my understanding that the
Administration believes that the right number is not $375
million or $100 million, but is zero, and intends to redirect
the full amount from health care to the Veterans Benefit
Administration.
Mr. Secretary, is that policy correct, and if so, what is
the basis of the Administration's determination that there will
be no budgetary cost in terms of providing benefits as
statutorily required to returning servicemen and women?
Secretary Principi. Senator Graham, I applaud you and I
applaud the Congress for adding that $100 million. But the law
in the appropriation, or the language of the appropriation
bills says for an additional amount for costs associated with
processing claims of veterans who may have incurred injuries
with service in the Persian Gulf, war combat arena, $100
million. It did give me the authority to use the dollars for
health care, as well, and the reason that I have elected to use
the $100 million for veterans' benefits and veterans' claims is
because in 2004, the President's request and the Congress's
actions increased our health care budget by 11.5 percent. I
think that is probably a record. We received close to $3
billion in 2004, 4 months, 5 months late, but nonetheless a
very dramatic increase.
Senator, I am absolutely confident that this increase that
you have given us in 2004 is more than adequate to ensure that
we take care of the health care needs of veterans coming back
from Iraq and Afghanistan. Otherwise, that money would be
there, believe me.
At the same time that we received this dramatic increase in
health care spending in 2004, for our Benefits Administration,
the processing of claims, I think there was zero increase. We
really are struggling in the Veterans' Benefits Administration
to ensure that these claims that veterans who are coming back
wounded, filing for disability compensation, are processed in a
timely manner and that was the basis for the decision.
The law said veterans' benefits, and I could move money
over to health care if I need it. I found that I didn't need to
do so, Senator. The $100 million is very important and that is
how we have applied it.
Senator Graham. Are you saying $100 million to process
benefit claims is going to be focused exclusively on combatants
returning from Afghanistan or Iraq?
Secretary Principi. No, sir. I am trying to use that money
to--you know, obviously, by improving our timeliness, by having
the right equipment, the right people on board--we are giving
them a very, very high priority, but it is going to help us
improve our benefit delivery process in general. So no, I would
not make the statement, be misleading and say all $100 million
is going to be for the veterans returning from Iraq and
Afghanistan who are filing disability claims. There are not
that many claims. But in general, this whole system needed the
resources. But----
Senator Graham. That 11 percent increase that you stated
was given to veterans' medical benefits, what was that on a per
capita basis? For each VA patient, how much additional
resources did the 11 percent allow?
Secretary Principi. Rounded, about $500 per patient.
Senator Graham. What is that as a percentage?
Secretary Principi. Eleven percent increase in funding for
our medical care, of which we have--how many users--4.8 million
users of our health care system, so that almost $3 billion
increase that you gave us this year is very, very significant,
Senator.
Senator Graham. I would like to return to this. My round is
now over. That will give you something to look forward to.
[Laughter.]
Chairman Specter. Thank you, Senator Graham.
Senator Campbell.
Senator Campbell. Thank you, Mr. Chairman.
Mr. Secretary, as I understand your testimony, the waiting
time that a veteran has to wait to get in to see a doctor is
going down. I think that is really terrific. The backlog, from
your testimony, is going to continue going down. I am sure that
is good news to all the veterans.
The last 3 years, we have put in more money from Congress
than the President requested in his budget, and even at that,
we hear every year from the veterans' associations it is not
enough, and more than likely after you have testified today,
when the VSO's testify, we are going to hear the same thing,
that we are not putting enough resources into it.
I guess with a $450 billion deficit or maybe more, who
knows what it is going to be by the end of the year, it is
going to be a real tug-of-war around here to get money. I, like
many of the people on this committee, happen to really try to
prioritize veterans' health, being a veteran myself. But I,
like Senator Graham and maybe some of the other members, am a
little concerned about these user fees, too.
I guess I would like you to clarify a little bit, when you
talked about the veterans who are better off, how is that going
to be determined? Is there going to be some kind of a threshold
by which they would have to pay a higher user fee? Who is going
to determine that?
Secretary Principi. Yes. Congress established seven
priority groups when open enrollment went into effect in 1998,
and then about a year or two ago added an eighth priority
group. The Priority Group 7s and 8s are veterans who have no
military disabilities and have--they are not high incomes, but
they have higher incomes. I believe it is around--Category 7 is
about $25,000 for a single veteran, higher if you are married
with dependents.
The copayment--these fees would only be assessed against
the Category 7 and 8 veterans. We are proposing to eliminate
copays, on the other hand, for the poorer veterans. Today, if
you have an income above $9,800, you start paying copays. We
are asking Congress to say, raise that level to $16,500.
So yes, indeed, I believe it is reasonable to ask the
higher-income non-disabled to pay a little bit, a very small
proportion of their care and the poorer veterans to be
alleviated of that burden.
Senator Campbell. I understand that. It may be a little
more complicated on determining some of the things that were
military related. I guess the most common, of course, is
smoking and the long-term effects. I remember when I was in the
service, we got cigarette rations. Even though I didn't smoke,
I still got cigarette rations. We were encouraged to smoke.
What happens to a veteran who is encouraged as a youngster to
smoke and years later he develops cancer? Is there a
possibility that somehow he would be forced to pay higher user
fees because he didn't develop the cancer until after he got
out, even though the roots of it began when he was in the
service?
Secretary Principi. If he is service-connected disabled for
cancer, he would not pay any copays or user fees. This would
only be those who come to the VA health care system or enroll
in the VA health care system and have no military-related
disabilities.
Senator Campbell. OK. Maybe I phrased my question very
poorly. How do you determine whether it was a military
disability when the cancer didn't appear until after he was out
sometime?
Dr. Roswell. Senator Campbell, if I may, that is why I
think our efforts to work on disability claims are so important
and the $100 million that Senator Graham spoke about. As the
Secretary alluded, over 300 additional veterans are now
receiving service-connected compensation this year, which I
think is a direct reflection on how we are able to reach out to
veterans, to help them file disability claims for illnesses
such as lung cancer, which can be service connected, for
example, for veterans who served in Vietnam, and help them file
those claims so that they receive disability compensation.
They, in turn, not only receive that compensation, but they
then receive priority health care.
Senator Campbell. I think I have no further questions, Mr.
Chairman.
Chairman Specter. Thank you very much, Senator Campbell.
Senator Akaka.
STATEMENT OF HON. DANIEL K. AKAKA, U.S SENATOR
FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman.
I would like to add my welcome to Secretary Principi and
our other witnesses here. I want to express my appreciation to
you for all you have done. I know it is so difficult to carry
on the programs we want with the kind of revenue and
appropriations that you receive.
I have two questions I would like to ask. Secretary
Principi, as the chairman mentioned about Priority 8, I am also
concerned about that. Last year, as you know, I signed a joint
letter objecting to your decision to end the eligibility for
enrollment of Priority 8 veterans in the VA health care
program. I am still concerned about that. After hearing the
fiscal year 2005 budget, I see that Priority 8 veterans are
still barred from enrolling in the VA health care system and I
also see that prescription drug copayments are increasing for
middle-income veterans.
I realize, as you mentioned, that Priority 8 veterans are
considered high-paid veterans. My question to you is, what
would be the impact in your budget if Priority 8 veterans could
enroll--could enroll--into the VA health care system, as well
as the impact on the budget if the increases in copayments were
not implemented?
Secretary Principi. Yes, Senator. If I just very briefly,
historically, as you know, in 1998, we went from approximately
three million eligible for comprehensive VA health care to 25
million, a very, very dramatic jump in eligibility. That,
coupled with the opening--my predecessor and I have continued
to open community-based outpatient clinics. We now have almost
700, a great pharmaceutical benefit, and high quality. We have
seen this enormous, enormous increase in demand for health
care, so much so that consistent with the law, I have to make
an annual enrollment decision based upon resources made
available in the Appropriation Act.
It was only because we had a growing number of veterans on
waiting lists, as Senator Graham talked about in Florida, it
was close to over 300,000 waiting more than 6 months for care,
that I made that decision, because we were enrolling veterans
and had no expectation of providing them with timely care.
To reopen the door to Category 8s--and I continually look
at it to see if we can do it--in 2005 would be $590 million. Of
course, enrolling veterans has an impact not only in the year
that we do so, but as they become older and perhaps sicker,
that the number increases. So it does have a rather
significant, financial impact.
Senator Akaka. I am also concerned about VA's ability to
meet its production goal of processing new claims in 100 days.
It appears to me that VA's 2005 budget does not include an
anticipated increase in claims by service members returning
from service in Iraq or Afghanistan. Additionally, the VA's
budget request assumes a 1.5 percent increase in Federal pay.
However, the Federal pay increase is expected to be 3.5
percent.
Given these factors, Mr. Secretary, I am very concerned
that the VA will need to cut other resources which will result
in additional time processing new claims and will compromise
health care service to veterans. Given this background, I would
like to hear your thoughts regarding these.
Secretary Principi. It is very challenging. I set those
goals of never having more than 250,000 claims in our
inventory, which would allow us to process claims in 100 days.
I felt that veterans having to wait years to get a decision on
a claim is just unconscionable, and that is why I set those
goals and put in place new processes, and with the support of
the President, with the support of the Congress, we added some
1,300 new rating specialists to the VA and we have been able to
dramatically bring down the backlog, and also hundreds of
millions of dollars that you gave us for information technology
enhancements to improve our productivity.
I think the combination of these things, now that these
1,300 people are trained and being very productive, that we
will be able to achieve these goals. But it is going to be
challenging, Senator, you are absolutely right, and that is
why, as Senator Graham said, I have used some of that money for
claims processing.
Chairman Specter. Senator Akaka, we have eight members here
and a second panel of five witnesses.
Senator Akaka. Thank you very much.
Chairman Specter. Thank you, Senator Akaka.
Senator Murray.
STATEMENT OF HON. PATTY MURRAY, U.S SENATOR
FROM WASHINGTON
Senator Murray. Thank you very much, Mr. Chairman, for
holding this very timely hearing, and Mr. Secretary, thank you
for being here and all the work you do on behalf of veterans
and especially for your willingness to request an additional
$1.2 billion for the VA budget. I was disappointed that the
President didn't follow through on that, but I appreciate your
putting it out there.
I have a lot of very serious reservations about the
President's budget. I think with the new generation of veterans
coming home that are going to be reliant upon the VA for health
care and services, we really have an obligation to take care of
them and I think this budget request we have seen really falls
short.
I agree with the comments about the new fees on veterans. I
think it is highly unlikely that Congress is going to approve
that and the health care is going to be far short of what we
need. I am very concerned about the major medical construction
dollars in here, $180 million, and I understand the
administration is going to transfer $400 million from health
care to construction, which will make our construction account
about $600 million. If that is accurate, that is far short of
what the CARES initiative plans were to spend. I think we have
all been assured more than once that the CARES process was--
that we would accept significant changes based on new
construction and service delivery, and if that falls short, it
is going to leave a lot of us really feeling like we were not
told the whole story and our veterans are not going to be
served.
I want to ask you about that, but before I do, I want to
bring up a separate issue and that is on the Department of
Labor rule that is eliminating overtime compensation that will
affect some veterans. I think you are aware that the proposed
rule could very well undermine many of our young people who
enlist in the military because it is going to change the
definition of professional employees. It basically will mean
veterans working in professional fields will now be classified
as professional employees and lose their overtime.
I wanted to know if you had made comments on that, and as
the nation's leading advocate for veterans, if you intend to
express your opposition to the Department of Labor on that
issue.
Secretary Principi. I guess I am not as knowledgeable about
it as I should, Senator. To say that veterans would lose income
by being designated a professional employee, which is based
upon education, experience, and I would hope that being
designated a professional would somehow provide more upward
mobility and more increase in compensation and benefits. But I
guess we could debate that.
I would just, if I can, just take a quick second to say
that, yes, I have always tried to be honest with the Congress,
and having grown up here, about what I requested. Every year,
every Department goes through a very difficult negotiating
process with OMB and we achieve a requested level of spending
that the President makes to Congress.
I just want to be clear that I believe that the budget we
requested, coupled with--I believe we are going to have $800
million or somewhere in that neighborhood that we will be able
to carry over into 2005--will allow us to achieve our goals, to
take care of the very veterans we are all concerned about as
well as, very importantly, the men and women who served in
combat in Iraq and Afghanistan.
But on the Department of Labor issue, I think that is one I
need to study.
Senator Murray. Mr. Secretary, I have actually sent you a
letter dated February 9 on that, and if you could take a look
at that and respond, I would really appreciate it.
Let me also tell you, I am very concerned about the new
generation of veterans that we are creating today. About 40
percent of the U.S. armed forces in Iraq and Afghanistan, as
you know, are activated Guard and Reservists. Those men and
women are going to have a very different priority from the
regular troops. They are older. They are more likely to have
families. They are in a hurry to get back to their jobs and
their community and their own life. I am concerned that we
could lose track of many of those people when we return home,
and I don't think we want them to fall through the cracks.
What is the VA prepared to do in order to capture those
veterans and make sure we don't lose them?
Secretary Principi. You are so right. It is far different
than it was during the Vietnam War, what we are asking our
Reservists and Guardsmen and women to do today.
We are truly outreaching to them. We have engaged in some
over 3,000 of them in TAP programs, Transition Assistance
Programs for members of the armed forces. We have engaged in
another 2,000 briefings. We have outreached to some 46,000
Reservists and Guardsmen and women around the country to just
make sure they understand what their benefits are, that when
they are called up to active duty, they are veterans and they
are eligible and entitled to the veterans' benefits program.
They are entitled to VA health care.
So absolutely, we have an important responsibility to
outreach to them and I can assure you we are going to continue
to do so.
Senator Murray. Good, and I would like to work with you on
that. I think it is really important. Thank you.
Dr. Roswell. Let me just add that we----
Chairman Specter. Senator Murray, your time has expired.
Senator Murray. If Dr. Roswell could just respond to the
last question in 2 seconds.
Dr. Roswell. I was just going to add that we have actually
printed a million brochures specifically for Reserve and Guard
and have distributed those through all of the Reserve and Guard
units. We have opened our readjustment counseling service to
the Reserve and National Guard. The Secretary is planning to
send letters to all 90,000 people who have been separated thus
far, and we have unprecedented cooperation with DOD to make
sure that we know everyone who is being discharged, whether
they are on active duty, in the Reserves, or in the National
Guard.
Chairman Specter. Thank you, Senator Murray.
Senator Nelson.
STATEMENT OF HON. E. BENJAMIN NELSON, U.S. SENATOR FROM
NEBRASKA
Senator Nelson. Thank you, Mr. Chairman, and may I add my
appreciation, Mr. Secretary, for the continuing good work that
you do for our veterans. I suspect after all the praise that
you have received from all of us today, you have to be sitting
there wondering how we can have so many critical things to say
and/or to ask of the care for veterans, but I think it is a
common thought that we have. You are trying to do a better job.
We want to see a better job done, and I hope we can work
together to do that.
When Nebraska was moved into a new VISN just some time ago,
we were all told that the services wouldn't change for veterans
in Nebraska. I remember somebody from your staff saying that
one of the reasons they were having headquarters in Minneapolis
was because there were more qualified people there and I took
issue with that, being from Nebraska. My staff tells me that a
change has occurred, that veterans requiring cardiac surgery
are now being required to go to Minneapolis for the care. If it
is emergency care, surgery, they will be treated in Nebraska.
Once again, I want to point out that we have excellent
cardiac surgeons in Nebraska and this isn't consistent with
what we had hoped would happen, where veterans would be treated
as close to home as possible. It is not a matter of trying to
patronize Nebraska as much as it is to take care of veterans as
close to home as possible. I would hope that you would look
into that to see what you can find out.
We were also told that, well, Nebraska would become the hub
for some other services. But I am not sure that unless there is
a particular reason why the care can't be provided in a
location that we would try to create hubs for care, and yet I
am one who is as hawkish on the budget as can be. I know you
want to save every dollar that you can. But we all have to come
up short of shortchanging the veterans in the process.
Secretary Principi. I made a commitment to you that
Nebraska would not get shortchanged. I will ensure that that
commitment is adhered to. Next week, I happen to be meeting,
along with Dr. Roswell, the network director that has Nebraska.
I will certainly ask these questions, and----
Senator Nelson. We were told part of the reason is because,
and I don't want to overplay my time, the chairman is quite
sharp when you do that, but it is because they can provide the
care in the veterans' hospital there and it has to be
outsourced in Nebraska. But it would seem like we could work
out a contractual relationship that would even out the cost if
it is a cost factor because it needs to be about the care
providing at the closest possible----
Secretary Principi. I am sure there are a number of
factors, and certainly going in for cardiac surgery, open
heart, we certainly want to go and make sure the outcomes are
good. I mean, that is most important. Sometimes it is a little
inconvenient to go to one of those major cardiac care medical
centers, and, of course, cost is an issue, but I will certainly
look into it and I will get back to you personally to make sure
that there are reasons or that there will be a change, so we
can discuss it further.
Senator Nelson. As always, I appreciate the ability and the
opportunity to work with you. Thank you very much. Thank you,
Mr. Chairman.
Chairman Specter. Thank you very much, Senator Nelson.
Senator Jeffords.
STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM VERMONT
Senator Jeffords. Mr. Secretary, I would like to thank you
for coming today and thank you for your leadership over the
past few years on behalf of veterans. Your job is not an easy
one and I appreciate all you have done for increased funding
for the VA over the objections from those who don't want to see
any more money spent on veterans. I believe we have an
obligation to care for those who have carried the flag and I
would like to see that we continue to hold that banner high. We
must not let the banner sag or fall by merely meeting the
minimal obligations.
I have a two part question about benefits. First, how does
the VA plan to notify newly discharged veterans of their
benefits? Second, in anticipation of the increase in claims
submitted by these new veterans, please tell me what VA's
current plan is in processing veterans' initial claims.
Secretary Principi. We are taking as many steps as possible
to outreach to veterans being discharged. Of course, we have
the TAP programs. As I indicated, we have done over 3,000
Transition Assistance Programs for military personnel. Well
over 100,000 have attended those briefings. We engage in other
briefings for military personnel, Guard and Reservists. We have
health fairs. Some 700,000 veterans attended health fairs this
past year. We have brochures that we mail out. I am sending a
letter to all of the recently discharged servicemen and women
coming back from Iran and Afghanistan.
We now have staff on 136 military bases. You know, in the
past, you had to wait until you were discharged and then you
would have to find your way to a regional office, maybe 4 or 5
hours' drive. Today, at 136 military bases, you can walk across
the street from your barracks. You can fill out a claim for
disability compensation or whatever it might be, have an exam
right there across the street from your barracks, and when you
get your discharge papers, you get your disability compensation
or you get your GI bill benefit right away. I mean, I think
this is what we have to do for our customers, the men and women
who served in uniform, bringing the benefit structure to
military bases.
We have full-time staff now for the first time in history
at Walter Reed and Bethesda to make sure the wounded who are
coming back, when they go home on convalescent leave or
discharged, they are already enrolled in a VA hospital near
their home and they have been given the claims information so
that they can get their disability compensation.
I am sure there is more that we can do. I just don't want
to see anybody fall through the cracks, and this is especially
meaningful to me, because I had two sons serve in Iraq at the
same time. So I just feel very strongly, personally and
professionally. We are not perfect. We don't, of course, ever
have all the resources you need. I am not saying we do, but I
think the President, this Congress has treated us very
generously and we need to continually strive to do better.
Senator Jeffords. I appreciate that answer. As you know,
many of us here represent rural States. In the past, the VA has
made an effort to open community-based outreach clinics to get
access to the VA for more vets. But in the last 2 years, the VA
has had a policy of not opening any more clinics. Is there any
chance that this policy will change? I believe these clinics
perform a very useful service for veterans and would like to
know your answer.
Secretary Principi. I applaud my predecessor for
transitioning the VA from a hospital-centric system to a
patient-focused health care system and I have continued that
process. I think I have opened probably or directed that we
open 170, 190 outpatient clinics over the past 3 years and I
will continue to open outpatient clinics.
Of course, we have to balance outpatient clinics and
inpatient hospitals because we have an inpatient mission as
well as an outpatient mission, but we need to continually bring
health care closer to the veteran's home so that they don't
have to drive long distances to get outpatient care in a VA
medical center. They can get it in a community-based outpatient
clinic.
I think it is a great program, Senator. We have tried to
balance it and watch it and maybe there has been a slowing
down, but we will continue to do so.
Senator Jeffords. Thank you. I thoroughly appreciate what
you are doing. Thank you.
Secretary Principi. Thank you, Senator Jeffords.
Chairman Specter. Thank you very much, Senator Jeffords.
Senator Rockefeller.
STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
Senator Rockefeller. Thank you, Mr. Chairman.
I want to say what others have said and I want to say it
with as much or even more feeling, and that is that when you
came in here to be confirmed, I remember I asked you the
question, if you came up against something which really
bothered you, would you go face to face with the President, and
he was on ``Meet the Press,'' so you didn't have time. Before
that, you did, in a sense, go face to face with the President
because you went face to face with the budget officials and
asked for $1.2 billion more for VA health care, which
represents a real act of courage and you did it publicly.
I really commend you for that. It is a gutsy thing to do.
This is an administration which wants people to be in line, and
when somebody isn't in line, they don't like it, but you
decided that you were going to put the veterans ahead of this.
I really congratulate you for that, Secretary Principi, and I
think you understand that I mean it when I say that.
As Ben Nelson said, Senator Nelson, we praise you and then
we ask for things, but that is because you are under a budget.
This is a national budget. It is not a free health care system,
so everything is always in competition with something else. If
you come from States like mine, you have to fight. That is what
we have always done. We have always fought uphill. Arlen
Specter knows something about that in the western part of his
State, and we have to do that.
Now, in the CARES Commission, which hasn't come out, but
they are going to and they are going to suggest cutting some
beds, I am told, from the Beckley VA facility. On the other
hand, you have recognized, and, in fact, due to your
leadership, you have recognized that there are some hospitals
that because of certain situations need to be declared critical
care hospitals, critical access hospitals.
My understanding is that CARES as a commission does not
recognize such designations, wherein we have a quandary because
I need to fight very hard for what is the most isolated part of
my State. I am not sure how we can do this or if we can do it
together or if it can be done, but I am going to try in every
way that I know how. I can't do less than that, because,
frankly, the majority of our veterans come from that part, the
coal fields, the steepest mountains, the poorest counties of
West Virginia, which is 1 of 50 States.
So I ask your attention for that. I don't necessarily need
to have a comment from you. I want to have a sense that you
hear me loud and clear on that, that it is----
Secretary Principi. Senator--oh, I am sorry.
Senator Rockefeller. Go ahead, please.
Secretary Principi. I would just say, I had the pleasure to
tour West Virginia with you. I saw firsthand, as you have
experienced, the needs of veterans in rural America, in West
Virginia. I had the privilege of being in Western Pennsylvania
with Senator Specter, an awful lot of poor people, an awful lot
of elderly people, veterans, who are lacking health care. So I
certainly intend to very carefully review the commission's
report, analyze it, and do what is best for veterans.
I know it is going to entail some changes because health
care is changing and demographics change, and if we don't
change with the changing dynamics in health care, I am afraid
we will fail America's veterans maybe 10, 15, 20 years from
now, because our infrastructure has been built up over 150
years. So we just need to be mindful of that, but at the same
time recognize it is not only in large urban areas, but also in
rural areas that we have a responsibility. I just want you to
know I am listening and hopefully we will make the right
decision.
Senator Rockefeller. Thank you, Mr. Secretary, and I have
two other questions which I will simply submit for the record.
I thank you, sir, and I thank the chairman.
Chairman Specter. Thank you very much, Senator Rockefeller.
Mr. Secretary, I have a thick sheet of 19 questions to ask
you for the record on going into some substantial details. May
I inquire of my colleagues if they would like another round?
Senator Graham. I would like to ask two more questions, Mr.
Chairman.
Chairman Specter. Senator Murray. Senator Nelson.
Senator Nelson. Nothing.
Chairman Specter. Senator Jeffords. Senator Graham, two
questions.
Senator Graham. The first has to do with the assumptions in
the budget. The assumptions, as I read them, are that veterans
will make $1.3 billion in copayments for their medical care,
but only $1 billion will be collected from insurers who are
third party responsible persons. That results in nearly $2
billion in claims being rejected by those insurers. It is my
assumption that if we could do better with insurance company
collections, that would relieve some of the pressures off
taxpayers and veterans. What would be your recommendations as
to what could be done? What role will Congress play in
increasing the percentage of collections made from claims
submitted?
Secretary Principi. As you know, we can't bill Medicare,
and that is a Finance, Ways and Means Committee, and that has
been an issue, a longstanding issue with regard to that. But I
think that Congress can help us with HMOs. I think there is a
very significant amount of resources that we do not collect
from HMOs and it has been a real struggle. So I think
legislation that would somehow require HMOs to reimburse us at
a certain level, reasonable level for billed charges would
certainly generate significant revenues to the VA and that
would expand the reach of health care, because you said we can
keep those dollars. So I would look to that area and we will
work with you, Senator Graham.
Senator Graham. If you could give us what you believe would
be the most effective legislative solution in combination with
your administrative action, I would be very appreciative.
Secretary Principi. Yes, sir.
Senator Graham. The second question goes back to a hearing
that was held last week with Secretary Thompson of HHS. We were
talking about the fact that there seems to be a difference in
the way in which the VA is currently negotiating pharmaceutical
prices, whereas Medicare in the recent legislation is
prohibited from doing so. When asked about this difference,
Secretary Thompson said that Medicare was reluctant to
negotiate because it might constitute an undue intrusion into
the marketplace, i.e., could be described as price setting.
As I understand it, and I know this was true at the VA
hospital in Miami where I spent a day in November, it is
getting better than a 50 percent reduction off what would be
the drug store prices of some $39 million of prescription drugs
that they dispense a year. Has it been your finding that the
VA's effective use of negotiations has constituted an undue
intrusion in the marketplace?
Secretary Principi. No, not at all. I think we have done
extraordinarily well. We have had $1.1 billion in cost
avoidance for pharmaceuticals over the past 3 years. We rely
very heavily, we use a lot of generic drugs. Sixty-five percent
of the drugs we provide are generic. Unfortunately, the brand
name drugs, the 35 percent brand name drugs account for 92
percent of our costs.
So I think a combination of factors of how we procure
pharmaceuticals, how we manage them, our formulary, I think
that it has worked very, very well for our nation's veterans
and for the American taxpayer.
Senator Graham. I would urge you to consider having that
conversation with Secretary Thompson because there is
tremendous savings for the taxpayers and Medicare beneficiaries
if his agency would use the same techniques that the VA has
done, and I would hope that he would be authorized and
encouraged to do so.
Let me ask just one short follow-up question. Are there any
other areas in which the VA could use authority to negotiate to
reduce costs?
Secretary Principi. Nothing comes to mind at the moment,
Senator Graham, but I would appreciate the opportunity to
advise you in writing.
Chairman Specter. Thank you very much, Senator Graham.
Senator Murray.
Senator Murray. Thank you, Mr. Chairman. I appreciate the
accommodation.
Mr. Secretary, I am really concerned that this budget
request is low for major medical construction and it goes back
to the CARES process, where we were told that we will get $5
billion in new facilities for our veterans. Veterans were asked
to accept some pretty significant changes to their health care
system today in exchange for a future promise of funds for new
clinics and hospitals and facilities in the future, and I don't
think this budget request even comes close to meeting the CARES
promises for new facilities.
One of the areas that is slated for a new clinic is in
Central Washington in my home State, and I am concerned that
the $5 billion promise in new facilities is an empty promise
and at the very least this budget sets us behind in meeting the
CARES promise.
Can you comment on this, and specifically whether the
administration, do you believe, will request adequate funding
for the CARES initiative?
Secretary Principi. Yes, Senator. The construction portion
of CARES has always been viewed as a 5- to 7-year effort, that
would not all be funded in the first year. I really do believe
that we have put forth a good down payment. It would be
misleading to say we have all we need, but we have doubled the
CARES money from $280 million to $540 million for 2005. We have
increased major construction, I think, from about $180 to,
what, to $382 or $362. So I think we are moving in the right
direction and it will take additional funding in the out years
to do what I hope to approve in the next couple weeks.
Senator Murray. You can understand why people are really
concerned. They are giving up a lot today on the hope that
something big is going to happen tomorrow, and we have seen
with budget deficits and cutback programs that that doesn't
necessarily occur.
Secretary Principi. Well, I think CARES is a very, very
high priority and I certainly think so in the outpatient clinic
arena, so----
Dr. Roswell. If I could, Senator Murray, we have actually
anticipated the CARES report, though we were unable to
anticipate the specific recommendations. But to make sure that
we are prepared, we have identified 41 projects for which we
have begun the advanced planning. This would put them in a
State of readiness so that when the Secretary makes a decision,
those 41 projects, which we believe are the highest priority,
would be ready to go into the design phase. That design phase
requires 10 percent of the total project cost up front, or the
typical cost is 10 percent.
So even though it is a small amount of money, you are
absolutely right that the promise has to go to $4.6 or $5
billion. We believe that the amount of money that will be
available to the Secretary in fiscal year 2004 and 2005 will be
sufficient to get this thing jump-started with the expectation
that the monies must follow after that.
Senator Murray. Let me just ask a quick question and make a
comment. Mr. Secretary, on December 6, President Bush signed
the Veterans' Health Care Capital Assets and Business
Improvement Act. There was a section in that, 231, requiring
the VA to develop a plan for meeting the future hospital care
needs of veterans who live in North Central Washington State. I
know that that report is not due back until April 15, but I
would like to know whether you have people who are conducting
that study and whether or not my staff can be a resource to you
as you do that.
Secretary Principi. I assume they are, Senator. I don't
know for certain, but I will certainly get back to you and make
sure that is done.
Senator Murray. Would you let me know on that?
Secretary Principi. Yes.
Senator Murray. And finally, Dr. Roswell, my colleague,
Senator Cantwell, and I sent you a letter on December 19
regarding our continued belief that the CARES initiative has
not properly considered the current and future needs for
veterans' health care service in VISN 20. We noted a number of
things, including the relatively young veterans population as
well as the low-market penetration in our home State. We just
sent 3,500 troops off yesterday to Iraq from my State. We know
we are going to have some of those new veterans back in our
State and we want to make sure that this is part of that. I
know you have the letter. I have a copy of it today, but I was
hoping that we could get an answer back on that as quickly as
possible.
Dr. Roswell. We will do everything we can, Senator, to get
you a prompt response.
Senator Murray. Thank you. Thank you, Mr. Chairman.
Chairman Specter. Thank you very much, Senator Murray.
Thank you, Secretary Principi, and thank you, gentlemen,
for accompanying the Secretary. You have heard praise on your
efforts. We recognize the work that you are doing. You have
also heard a great many concerns about the ability of the
Veterans Administration to deliver the necessary care within
the confines of the budget.
We would encourage you, Mr. Secretary and the others, to
explore the Medicare subvention, or as you term it VA
Advantage, and the insurance premiums and Category A. We hope
there will be some way to not bar them from coverage.
We now turn to our next panel, the veterans' service
organizations, and ask Mr. Peter Gaytan, Mr. Paul Hayden, Mr.
Rick Surratt, Mr. Richard Fuller, and Mr. Richard Jones to come
forward.
Thank you very much for coming, gentlemen. We have been
asked to change the order to some extent because this
distinguished group of witnesses has already had the wisdom to
divide up the topic so as to make their words most effective.
We regret the limitations on time, but that is one of the
problems here in the Capitol, as you know.
Our first witness is Mr. Peter Gaytan, Principal Deputy
Director of Veterans Affairs and Rehabilitation in June 2002
for the American Legion. He has a long, distinguished resume
which we will have included in the record, but in the interests
of time, may the record show a dismissive gesture from Mr.
Gaytan to get on with the business at hand. So the floor is
yours, Mr. Gaytan.
Mr. Gaytan. Thank you, Mr. Chairman, and thank you for the
opportunity to express the views of the 2.8 million members of
the American Legion.
Chairman Specter. I am going to have to interrupt you at
the very outset because I have to excuse myself for a few
minutes. I wonder in advance of your opening statements,
Senator Graham, if we might yield to you for a round of
questions if you would like. I will only be a few minutes, but
I am going to have to have a brief adjournment of the meeting.
Senator Graham. Or would you like to start the statements?
You want to be here for the statements?
Chairman Specter. I want to be here for the statements, but
if you would like to question.
Senator Graham. OK. Thank you.
Chairman Specter. Senator Graham will proceed. He knows
what to ask even though he hasn't heard your opening
statements.
[Laughter.]
Senator Graham [presiding]. Thank you, gentlemen. We look
forward to your statements, and as soon as the Chairman is able
to return, we will turn to you. This is a little bit out of
order, but let me ask a question that has been already
discussed, and that is the potential for Priority 7 and
Priority 8 veterans to not come to VA due to the $250 user fee
and the increase in drug copayment from $7 to $15.
What group of veterans do you think will be most affected
by this, and what are the likely effects?
Mr. Gaytan. Well, sir, let me just State that the American
Legion has opposed the restriction of enrollment for Priority
Group 8 veterans since it was announced last January, a year
ago January. We also adamantly oppose the provisions in the
2005 budget request that would implement a $250 enrollment fee
for Priority Group 7s and 8s. We also oppose the increase in
copayments for pharmaceuticals and the increase in copayments
for outpatient care.
Mr. Fuller. Senator Graham, I am Richard Fuller with
Paralyzed Veterans of America. We, too, have opposed the
increases in the fees, and what we basically have been seeing
over the past several years is that the administration
constantly proposes increasing the costs of health care on the
backs of veterans, and more and more they are relying on these
fees as part of their appropriations process to reduce
appropriations and have one veteran paying for the health care
of another veteran out of his own pocket.
We also find it interesting that they keep lumping Category
7s and Category 8s together by implicating that the Category 7s
are somehow high-income veterans, whereas, this committee and
the Congress a couple of years ago created that particular
category to be able to capture people who fell just above the
nationwide low income level but who lived in geographic areas
of higher cost.
Category 7 veterans are basically low-income Category 5
veterans in some people's minds and in our minds, as well. To
think that they can afford to pay these costs and user fees and
copayments in the same fashion as, say, some high-income
veteran in Category 8 can, we find rather implausible.
Senator Graham. What is the range of income for a person
who is designated as a Category 7?
Mr. Fuller. The range is based on a HUD low-income index,
which is really rather complicated, but HUD has been using it
for gauging low-income housing payments. It varies from,
actually from what I understand, even from county to county in
the United States. But it is a formula and it is very easy to
plug into that formula and find out what the income levels are.
Senator Graham. In my opening statement, I made the
statement that Category 7 went as low as $24,000 a year. Is
that----
Mr. Fuller. Twenty-four thousand is the national threshold
if you are just looking at what the base means test is. Now, if
you lived in Miami or you lived in San Francisco or Brooklyn,
New York, I haven't seen the actual scales and studied them
that closely myself, but you could get up to maybe $27,000,
$28,000, something of that nature, but you are not going to be
considered rich by any stretch of the imagination. You are
basically going to be considered, if you are faced with a
catastrophic illness, as medically indigent.
Senator Graham. If I could move on to another question, and
thank you for your comments on that first question, this is the
issue of claims processing. This has been a very big issue in
my State, where there has been a history of long delays.
It is my understanding that this budget calls for cutting
the claims processing staff nationwide by some 500-plus
persons. I would be interested in what your assessment of the
likely impact of that reduction would be and what do you
consider to be the minimum appropriate level of claims
processors in order to meet the demands and reduce the backlog
on claims that have already been filed?
Mr. Surratt. Senator, as you know, the VA has been
struggling with claims backlogs for years. With some focus on
fixing their deficiencies and some additional resources from
the Congress, they made some gains. But I think VA's own budget
projections speak for themselves here.
We just finished fiscal year 2003, so that makes a good
comparison with what they are asking for for 2005. Compensation
claims, the VA projects they will have 178,966 more in 2005
than they had in the fiscal year we just completed, yet they
are reducing staffing. Now, 2004 has a reduced staffing and
2005 goes even below that.
Education, in the education department, they are going to
have 10 percent more claims in 2005 than we had last year, some
51,000. Yet again, they propose cutting the budget. It is the
same way with voc rehab. They anticipate more claims and they
just had a task force that is about to report, and if those
task force recommendations are implemented, VA will get more
into the employment business. It is vocational rehabilitation
and employment, but they have very few people devoted to actual
employment now for veterans.
So finding increased efficiencies to stay even is one
thing. That is a challenge. But finding increased efficiencies
to do more with less, that is--I guess that is the kind of
magic we see in Washington sometimes in budgets, but it doesn't
seem realistic. We have made specific FTE recommendations and I
have covered those in my written statement. But essentially,
for most of the services, we have recommended that they keep
their--that they have the fiscal year 2003 level. I think we
ask for 200 more FTE in vocational rehabilitation and
employment.
Mr. Gaytan. Sir, if I may for the American Legion, we are
very concerned about the wait times for benefit claims. We
understand the mandated quotas implemented by the Secretary
last year and it has improved some of the wait times and
reduced the backlog of benefit claims. But we are cautious in
this hurried rush to adjudicate claims in that we don't want to
reduce the quality of the claims as they are processed the
first time. We don't want them to have to come back as remands,
and some of those will be going back as remands as these claims
adjudicators are trying to meet these production quotas. We
must be conscious that faster is not always better. We need the
quality in the claims in the first process before they are sent
back as a remand. We do not agree with reducing the number of
FTEs to adjudicate these claims.
Senator Graham. It has, again, been my experience in
Florida that there is a relationship between the number of
claims and the staff deciding the claims and then the
percentage of those claims that denied and then appealed. I
think it is the old adage that an ounce of prevention is worth
a pound of care. If you do a good job at the front end, then
you are less likely to have to replicate it.
Let me raise a question that I asked the Secretary about,
and that has to do with the fact that apparently there are
approximately $3 billion in annually claims sent to private
insurance carriers. I have been told that since the VA can't
bill Medicare, none of that is Medicare related, and we are
recovering now about $1 billion. I asked if there were any
steps that the secretary thought VA could take to increase that
level of recovery so as to loosen or reduce the demand on
veterans for paying things like the $250 enrollment fee in
order to make up the difference in claims that are not
collected. Do any of you have any thoughts about that or
suggestions?
Mr. Fuller. Senator, historically, VA has done a very poor
job in trying to collect these third-party reimbursements, as
they are known. They are getting better. There are
institutional challenges, however, which makes it difficult, if
not impossible, for them to collect from, as the Secretary
said, from HMOs and people who they need to negotiate and
establish rates and exchange with. I believe that we have been
discussing it for several years, that this problem existed and
ought to be addressed undoubtedly through legislation and we
were glad to hear that the Secretary thought so too so perhaps
that can help.
On the Medicare side, VA, of course, has been subsidizing
Medicare for years and to great, great savings to the Medicare
Trust Fund. There are difficulties involved in opening that
door back up, not only institutional but also from the
standpoint that every time we think of some way to fund VA
health care from non-appropriated funds, what happens is that
OMB offsets the appropriation by those collections the next
year, so it is just a pass-through of money from one side to
the other and is a constant battle.
As we state in The Independent Budget--this is The
Independent Budget for 2005, which was provided to all of you
which we will be addressing here today. The Independent Budget
has never counted the collections as being part of the funding
mechanism for VA health care. Some people have said this is
rather unrealistic, but we want to keep a pure marker as to
what the appropriated dollar need is for the Congress to be
aware of and not have the budget obscured by the fact that the
collections are becoming an increasingly larger amount of the
total that the Administration is asking for.
Senator Graham. Any other comments on my question?
Mr. Jones. May I retract the question, Senator? My concern
is with the decision to ban Priority 8's access to VA
hospitals. It was suggested when it was done, the year it was
done, that the cost savings would be about $340 million by
denying access. In the same year, we rescinded from the VA
budget $225 million and we rolled over $650 million. Yet the
decision was made that we didn't have enough money.
If we did not roll over $650 million and kept that in the
medical care system, that money would have provided access to
over 300,000 veterans. That is more than was estimated by the
VA that came to VA looking for access but were barred. They
estimated it at 167,000. I am concerned about that.
VA says that the average cost of the priority veterans is
about $2,500 a year, and yet we have rolled over $600 million,
we have rescinded $225 million, and we saved $339 million by
barring their access. That is one of the things that concerns
me, the decisionmaking.
I think the law says that an assessment is supposed to be
made with regard to the resources available. It seems that the
decision is being made prior to resources being provided or
even to resources being suggested. I am concerned about this. I
am concerned about the law. I am concerned that money that is
available isn't being used.
The Congress is generous. Your generosity was spoken about
earlier today, 11 percent-plus increase, far, way and above,
what the President has suggested. But the money isn't being
used. It is being rolled over. The estimate for fiscal year
2005 is at $800 million that we rolled over into fiscal year
2005's budget from fiscal year 2004.
That is just what I wanted to say.
Senator Graham. Let me move to a related subject, and that
is access to prescription drugs. In the questions to Secretary
Principi, I indicated the very significant savings that
veterans secure by getting access to prescription drugs through
the VA as opposed to through normal channels.
One of the barriers for veterans getting access to
prescription drugs is that VA requires an independent
evaluation of the patient before the VA will make prescription
drugs available to them, even though a non-VA provider has
authorized a prescription. Of course, this restriction on
Category 8 veterans getting access to health care means that
they are also losing their access to the less-expensive
prescription drugs.
Is that an accurate assessment of the situation, and what
do you think are the policy rationales of requiring veterans to
have a second physical before they can get prescription drugs?
Mr. Fuller. Historically, Senator, we have taken the
position with an argument along these lines, that the VA health
care system is a health care provider. It historically has been
a provider of health care from the standpoint they want to have
control over the patients, the patients' care, and what the
patient is prescribed from the standpoint of both quality and
medical interactions.
The concept of veterans taking prescriptions from private
physicians to the VA changes the role of the VA in a way that
it becomes not a provider but it becomes a drug store. It loses
control over that particular patient as being able to find out
if there are complications in mixes of other prescriptions and
other types of care that the individual might be getting.
Indeed, it does cost money to be able to put these people
into the system and examine them, but at the same time, I
believe the Secretary a couple of years ago testified over on
the House side that the cost of everybody going to the VA to
get their prescriptions filled at such a modest rate would be
in the neighborhood of $4 or $5 billion a year. You would be
shifting a major part of VA costs from being a health care
provider to being a prescription provider.
Of course, if OMB wants to provide that $4 or $5 billion,
we would love to have the VA turned into a pharmacy, but I
can't quite see that money coming across when they aren't
funding the health care system side adequately right now.
Senator Graham. Any other comments on that issue?
Mr. Jones. We know the Secretary did lift the ban earlier
last year in order to address the waiting list problem. I
haven't seen any costs of that or any studies or reports as to
what happened. As you recall, the Secretary trying to address
the waiting list offered the opportunity for those who had been
on the waiting list for greater than 6 months an opportunity to
bring their prescriptions to VA and have them filled if the
prescription had been written by a private doctor.
That, I believe, has been suspended at the time, but there
was a brief time, a brief moment last year the Secretary used
exactly what you are suggesting might be used and perhaps some
data could be gained from requesting the Secretary to submit a
study or some results from that activity.
Senator Graham. To me, one of the ironies is that the
typical veteran over the age of 65 prior to going to the VA
probably was getting most of his or her health care financed
through Medicare at a Medicare-approved physician. The Federal
Government is paying for that cost through Medicare. Now the
veteran comes to the VA and is required to spend more Federal
money to get an examination before they can get prescription
drugs in VA. There needs to be some better coordination, both
for the benefit of the veteran, who shouldn't have to wait 6
months to get access to prescription drugs, and for the
taxpayers, who shouldn't have to pay twice to do the same
essential examination of the patient. If anybody has any
suggestions about how to do that better, I am sure we would all
be interested.
Another issue is funding for medical research. VA
historically has not only provided a great service to American
veterans, but to health care literally on a global scale by the
quality of its medical and prosthetics research. That budget is
now being suggested to be reduced by $50 million, which equates
to 149 research projects and 500 VA employees. VA has indicated
that the area of those lost projects will include aging,
cancer, and heart disease research.
How do the organizations that represent veterans, what
value do you put on VA's research budget?
Mr. Gaytan. Sir, on behalf of the American Legion, we are
very concerned about the proposed cuts in the budget for
research funding. Not only as you mentioned have the historical
research advantages created through the VA benefited the
veterans who seek their health care at the VA, it has also
benefited all Americans nationwide.
In addition to those benefits that are accrued the research
that is carried forth in the VA, there is also the key factor
of the affiliations, the medical schools that are affiliated
with the VA who carry out some of these research projects
through the VA facilities. Last year, the American Legion
initiated a ``System Worth Saving,'' where our National
Commander visited over 60 VA medical centers, and one of the
areas he tried to focus on was the affiliations and the
partnerships between the medical schools and the VA facilities
and exactly how much the VA facilities benefited through these
affiliations, through volunteers, through students, and mainly
through the research, and the American Legion fears this
decrease in funding for research and the detrimental effects it
will have on not only the veterans who seek care at the
facilities, but patients nationwide.
Mr. Fuller. Senator, on behalf of Paralyzed Veterans of
America, we were actually astonished at this budget request.
This is totally unprecedented. Granted, as we have seen the
administration and Congress almost double funding for NIH
research, the VA research program sort of limps along with
little increases every year of $5 or $10 million or something
of that nature. But to swoop in in one stroke and to call for a
reduction of $50 million, which we anticipate in both the grant
money and the indirect support funding, would reduce VA
research back to 1999 levels.
When you are talking about losing 500 researchers, you are
not talking about guys and gals who are just sitting in a
laboratory. These are clinician researchers. These are doctors
and nurses who work certainly in the laboratory doing research,
but they are also there at the VA treating a veteran patient
and this would be a stunning loss to a program which has
received Nobel prizes and then TOP awards both nationally and
internationally and we certainly hope that Congress can do
something to set this straight.
Mr. Jones. We agree, Senator. The research is clinical
research. It is applied to veterans almost immediately on
discovery. It is not theoretical or basic research, and that is
one of the marks that makes the difference between VA research
and National Institutes of Health research. It is applied at
the base where delivery of health care is done. So it is an
important element and could have adverse effects on the health
of veterans.
Senator Graham. If I could move to another issue, The
Independent Budget raises some questions about VA's proposal
for achieving management efficiencies. In this budget, those
efficiencies are projected to result in a cost reduction of
approximately $1 billion.
Based on previous VA management efficiency programs, what
do you think might result from the one that is suggested in
this budget in terms of service to beneficiaries, cuts to
employees, and reductions in particularly specialty programs?
Mr. Fuller. When you look at a figure that large, Senator,
of $1 billion, and you figure that the VA appropriation, the
largest amount of it is in domestic discretionary funding, and
the cost of VA health care is basically based upon the cost of
FTE, of people, certainly there is equipment and construction
and all those other things, but where you achieve the savings
are through people. And, if you have to cut people, then you
are cutting services to veterans and you are cutting both the
quantity of the services you can provide but also the quality
of those services.
This, as you well know, is a standard trick of all
administrations in every annual budget to try to force
imaginary and unrealistic management efficiencies as just being
part of their bottom line and they are never achieved.
Senator Graham. This is especially true in my State, but it
is also a national phenomenon that the veteran population is
aging. My own brother, who was a radar operator on a B-29 in
the Second World War, just had his 80th birthday. How well
prepared do you think VA is for this increasingly older
population in areas such as providing community care so that
veterans don't have to be unnecessarily institutionalized, and
where they do require institutionalization, having facilities
that will be appropriate to their needs and provide a quality
of service?
Mr. Gaytan. I can say the American Legion is very concerned
with the budget proposal that would reduce long-term care beds.
We support first meeting the mandates of the Millennium Health
Care Act, which they aren't doing, but then aside from not
reaching those goals, to propose a budget that would reduce
long-term care beds which are going to be needed by that very
population of veterans that you mentioned, those aging veterans
who are turning to long-term care, and when the VA can't supply
it, then they are offering a budget that reduces the existing
long-term care beds. The American Legion is very concerned that
VA will be unable to meet the mandate of these aging veterans
as they turn to long-term health care to the VA.
Mr. Fuller. From PVA's standpoint, of course, long-term
care issues are our great interest and a necessity of all our
membership. Of course, the last thing in the world we want for
anyone, any person with a disability, is to be
institutionalized if there is an alternative to that
institutionalization.
That being said, of course, we have no real direct long-
term care policy in the United States, either in the public or
private sector, and it is one of the embarrassments for our
country, when we compare our system with other countries of the
world.
The VA could serve as the most shining example of how to
put together an enlightened long-term care policy if they would
provide the resources to do it. The Congress and this Committee
required the VA a couple years ago by statute to maintain a
floor for the number of nursing home beds. They have ignored
that statutory requirement and this particular budget calls for
a reduction of 5,000 nursing home beds. They claim, on the
other hand, that they are going to be increasing their home and
community-based programs, which is admirable, but, of course,
they never really meet the targets that they say that they are
going to meet. You wind up with a gap in the middle of services
between inpatient and home and community-based programs. There
really ought to be a way for the Congress to--and you have done
yeoman work in this committee in trying to force the VA into
doing the right thing as far as long-term care is concerned,
but we have got a long way to go, still.
Chairman Specter [presiding]. Senator Graham, thank you
very much for holding the fort and thank you for your patience
and the fact that you have been patient. It is hard to get our
time to any extent, as you have found out, but now we will
begin the testimony.
Mr. Gaytan, I had introduced you, so if you will proceed.
STATEMENT OF PETER S. GAYTAN, PRINCIPAL DEPUTY
DIRECTOR, VETERANS AFFAIRS AND REHABILITATION,
THE AMERICAN LEGION
Mr. Gaytan. Thank you, Mr. Chairman. The American Legion,
as you know, continues a proud tradition of advocating for
funding to ensure America's veterans receive the health care
and benefits they have earned through their honorable service
to this country. As American service members continue to fight
for our freedom in a number of countries worldwide, it is the
responsibility of this Congress to provide a budget that will
allow VA to fulfill its mission.
In the fiscal year 2005 budget request, there is a
continued emphasis on the treatment of the core mission veteran
population. The term ``core mission veteran population'' does
not appear in Title 38. In 1998, eligibility reform ensured all
eligible veterans could seek health care through VA, not simply
those designated as the core mission veteran population. Since
then, we have seen VA shut its doors to Priority Group 8
veterans.
Tailoring the patient population to meet the budget was not
the intent of Congress when VA eligibility was reformed. The
American Legion urges this committee to fund VA at a level that
will ensure all veterans have access to the VA health care
system. The VA budget must reflect the true demand for care.
Today, veterans continue to suffer as a result of a system
that has been routinely underfunded, is now ill-equipped to
handle the large influx of veterans waiting to use their
services. Veterans continue to experience long waiting times
for medical appointments as well as long waiting times for
claims adjudication.
The American Legion applauds Secretary Principi for his
efforts to reduce the extreme backlog of patients waiting to
receive care at VA facilities and we urge VA to continue to
implement practices that will eliminate the backlog systemwide.
Last year, as I mentioned earlier, the American Legion
initiated the ``System Worth Saving'' initiative. National
Commander Ron Conley visited 60 Veterans' Affairs medical
centers, and so far this year, a team of Legionnaires has
visited more than 30 facilities. We are learning that one of
the main issues of concern is the increased medical care
collection fund targets. Medical center directors are concerned
over the significant increases in their medical care collection
fund goals and what impact the restriction on enrolling any
Priority Group 8 veterans will have on their ability to meet
these goals.
The American Legion shares their concern and we are also
concerned about the impact of certain proposals included in the
fiscal year 2005 budget request. The American Legion opposes
the continuation of the suspension of enrollment of new
Priority Group 8 veterans. Denying veterans access to VA health
care, particularly while the Nation is at war, is the wrong
message to send, not only to the members of the all-volunteer
force, but also to the young men and women who may be
considering a life of service in the U.S. Armed Forces.
The American Legion also opposes the implementation of a
$250 annual enrollment fee for non-service connected Priority
Group 7 and 8 veterans. The American Legion would urge Congress
to once again reject this proposal, just as it did last year.
While the American Legion applauds the initiative to exempt any
hospice care from copayments and to exempt former POWs from
copayments for extended care services, we do not support
increasing the pharmacy copay from $7 to $15.
Additionally, the American Legion opposes the proposed
regulatory change that would increase outpatient primary care
copayments from $15 to $20. The American Legion would rather VA
seek reimbursement from CMS for all enrolled Medicare-eligible
veterans being treated for non-service connected medical
conditions before they try to balance the budget on the backs
of Priority Group 7 and 8 veterans.
The American Legion is very concerned with the proposed
reduction in long-term care beds, as I mentioned earlier. VA
must meet the mandates of the Millennium Health Care bill, and
eliminating long-term care beds is not the answer.
The American Legion recommends $30 billion for VA medical
care without the inclusion of MCCF collections. The American
Legion continues to advocate for all MCCF collections to be
added to the budget numbers and not be treated as an offset to
the budget.
Regarding Veterans' Benefits Administration, the American
Legion is committed to ensuring VA will adjudicate veterans'
claims fairly and impartially within a reasonable amount of
time, and I think I expressed that during our Q and A earlier.
The American Legion is pleased, however, with the fiscal
year 2005 budget request proposal to address the influx of
claims resulting from returning service members from Operation
Enduring Freedom and Operation Iraqi Freedom. These deserving
veterans should not be told to wait in line when turning to
VBA.
Chairman Specter. Mr. Gaytan, would you mind summarizing?
Mr. Gaytan. Yes.
Chairman Specter. You are 50 percent over time now.
Mr. Gaytan. Yes, sir. I apologize. I just want to mention
or reaffirm the American Legion's support for mandatory
funding. We fully support designating VA medical care as a
mandatory funding item within the Federal budget.
I apologize for extending my time and I appreciate your
patience.
Chairman Specter. Thank you. Thank you very much, Mr.
Gaytan.
[The prepared statement of Mr. Gaytan follows:]
Prepared Statement of Peter S. Gaytan, Principal Deputy Director,
Veterans Affairs and Rehabilitation, the American Legion
Mr. Chairman and Members of the Committee:
Thank you for this opportunity to present the views of the 2.8
million members of The American Legion regarding the Department of
Veterans Affairs' (VA) fiscal year (FY) 2005 budget request. The
American Legion continues to advocate adequate funding levels to ensure
America's veterans receive the health care and benefits they have
earned through their honorable service to this country. As America's
soldiers, sailors, airmen, and Marines continue to fight in more than
130 countries worldwide, this Nation must fulfill its obligation ``. .
. to care for him who has borne the battle, and for his widow and his
orphan.''
In the fiscal year 2005 VA budget request, there is a continued
emphasis on focusing resources for medical treatment of the core-
mission veteran population. The term core-mission veteran population
does not appear in Title 38, United States Code. In 1996, Congress
passed VA eligibility reform legislation. It was not until 1998 that VA
finally established the rules to enforce the statute. Eligibility
reform ensured all eligible veterans could seek health care through VA,
not simply those designated as the core-mission veteran population.
Tailoring the veteran population to meet the budget was not the intent
of Congress when it reformed access eligibility. The American Legion
believes VA must be funded at a level that will ensure all eligible
veterans have access to the VA health care system. The VA budget must
reflect the true demand for care.
Once again, the Administration attempts to place the burden of
financing VA health care on the backs of veterans. The fiscal year 2005
budget request contains provisions that would increase prescription co-
payments and create an annual enrollment fee. These legislative
initiatives target those Priority Group 7 and 8 veterans who are
currently enrolled in the system. At the same time, VA continues to
deny enrollment of any future Priority Group 8 veterans who could help
shoulder this burden. These are the very veterans required to pay VA's
co-payments and make third-party reimbursements for their health care.
Rationing health care to America's veterans is not the solution to VA's
accessibility crisis. The American Legion supports repealing the
suspension of enrollment of Priority Group 8 veterans.
We applaud the Administration efforts to alleviate co-payments for
veterans receiving hospice care and former prisoners of war. The
American Legion supports provisions within the budget request that
would increase the income threshold from the Pensions level of $9,894
to the aid and attendance level of $16,509 for certain Priority Group
2-5 veterans. This would help reduce the pharmacy co-payment for those
veterans struggling to meet the sky-rocketing cost of health care.
In addition, The American Legion supports provisions to allow VA to
pay for emergency room care at non-VA facilities for enrolled veterans.
This will prevent any delays in treating life threatening injuries or
illnesses for enrolled veterans not in close proximity to a VA
facility. During visits to VA facilities under The American Legion's
``System Worth Saving'' initiative, Past National Commander, Ronald
Conley discovered many VA facilities operated under a ``divert'' policy
that imperiled veterans by denying them immediate access to health
care.
The American Legion is equally concerned with VA's continued
efforts to create the new ``VA Advantage'' Medicare plan that would
offer limited health care services to Priority Group 8 veterans 65 or
older with Medicare Part B. Keep in mind that only nonservice-connected
veterans who fall above the geographical means test and are Medicare-
eligible will be considered under this proposal. Priority Group 8
veterans who are not Medicare-eligible will simply continue to be
denied access to VA medical care.
Indian Health Services and TRICARE for Life are classic examples of
effective Medicare and Medicaid Federal partners. Since over half of
VA's enrolled patient population are Medicare-eligible veterans, The
American Legion strongly believes Congress should consider passing
legislation to ensure VA is reimbursed for treatment of Medicare-
eligible veterans for allowable, nonservice-connected medical
conditions.
The fiscal year 2005 budget request must provide an adequate level
of funding to eliminate the backlog of veterans waiting to receive
care, to meet the needs of returning servicemembers who must now
receive health care from VA, and to once again allow Priority Group 8
veterans to receive timely access to quality VA medical care through
the very system created to meet their unique health care needs.
THE AMERICAN LEGION'S BUDGET REQUEST FOR SELECTED DISCRETIONARY
PROGRAMS FOR VA IN FISCAL YEAR 2005
The American Legion strongly recommends Congress provide VA with
the following specified funding in fiscal year 2005:
------------------------------------------------------------------------
Counts Budget Request
------------------------------------------------------------------------
Medical Care.............................. $30 billion*
Medical & Prosthetics Research............ $445 million
Construction:
Major................................... $325 million
Minor................................... $255 million
State Grants for Extended Care Facilities. $120 million
State Grants for Veterans' Cemeteries..... $40 million
National Cemetery Administration.......... $160 million
General Administration.................... $1.8 billion
------------------------------------------------------------------------
* Third-party reimbursements should supplement rather than offset
discretionary funding.
VETERANS HEALTH ADMINISTRATION
Medical Care
Over the past 20 years, VA has dramatically transformed its medical
care delivery system from a struggling collection of hospitals and
homes to an integrated health care system of excellence that leads
private and other government health care providers in almost every
measure. The quality of care that is provided through the VA health
care system is exemplary. However, the quality of care is irrelevant
when access to that care is impeded.
Today, there are over 25 million veterans. As more veterans choose
to use VA as their primary health care provider (over 8 million
veterans enrolled or waiting to enroll), the strain on the system
continues to grow. The American Legion fully supported the enactment of
Public Law 104-262, the Veteran's Health Care Eligibility Reform Act
that opened enrollment in the VA health care system. Many veterans who,
until this time, were restricted from VA health care in the 1980's were
once again able to gain access. Veterans recognize that the Veterans
Health Administration provides affordable, quality care that they
cannot receive anywhere else.
The astronomical growth of Priority Groups 7 and 8 veterans seeking
health care at their local VA medical facility resulted in over 300,000
veterans being placed on waiting lists regardless of their assigned
Priority Group. As mentioned earlier, fiscal year 2003 saw the
suspension of enrollment of new Priority Group 8 veterans due to this
growth in enrollees. The American Legion does not agree with the
decision to deny health care to veterans simply to ease the backlog.
Denying earned benefits to eligible veterans does not solve the
problems resulting from an inadequate budget.
The simple fact is VHA does not have the funding needed to treat
all veterans seeking care from VA. VHA operates under a constant cloud
of fiscal uncertainty. The fiscal year 2004 VA appropriations battle
delayed much-needed funds until more than 5 months into the fiscal
year. Future spending projections, staffing levels, equipment
purchases, and structural improvements are all stalled if the funding
is not a certainty. Delayed funding means delayed services for
deserving veterans who rely on VA for their care.
In an effort to provide a stable and adequate funding process, The
American Legion supports mandatory funding for veterans' medical care,
as well as Medicare reimbursement for VA.
MANDATORY FUNDING FOR VETERANS MEDICAL CARE
The American Legion believes that health care rationing for
veterans must end. It is time to guarantee health care funding for all
veterans. The American Legion has called for the current discretionary
funding process, in which VA must compete with other agencies for
scarce budget dollars, to be replaced by a mandatory funding formula
for VA medical care. VA must be adequately funded to meet its own
growth and end intolerable waiting periods.
For over a decade, The American Legion has advocated allowing
veterans to spend their health care dollars on the health care system
of their choice. The American Legion believes the VHA can efficiently
expand to meet the health care needs of the men and women who have
honorably served this Nation in its armed forces--in war and in peace.
When Congress opened access to the VA health care system, many
veterans believed VA was their best health care option and newly
eligible veterans began seeking care at VA. Since the Centers for
Medicare and Medicaid Services (CMS), the nation's largest public
health insurance program, does not offer its beneficiaries the full
continuum of care or a substantive prescription benefit program, many
Medicare-eligible veterans chose to enroll in VHA specifically to
receive quality health care and access to an affordable prescription
program. Although the Department of Defense's TRICARE and TRICARE for
Life require military retirees to make co-payments or pay premiums,
they do not provide for specialized care (like long-term care) many
military retirees may need; therefore, many military retirees chose to
also enroll for VA care to meet their unfulfilled medical needs.
Veterans continue to suffer as a result of a system that has been
routinely under funded and is now ill-equipped to handle the large
influx of veterans waiting to use their services. Veterans continue to
endure extensive waiting times for medical appointments, as well as
unacceptably long waiting times for claims adjudication.
Funding for VA health care currently falls under discretionary
spending within the Federal budget. The VA health care budget competes
with other agencies and programs for limited Federal dollars each year.
The funding requirements of health care for service-disabled veterans
are not guaranteed under discretionary spending. VA's ability to treat
veterans with service-connected injuries is dependent upon
discretionary funding approval from Congress each year.
However, under mandatory spending, VA health care would be funded
by law for all enrollees who meet the eligibility requirements,
guaranteeing annual appropriations for the earned health care benefits
of veterans.
The American Legion believes it is disingenuous for the government
to promise health care to veterans and then make it unattainable
because of inadequate funding. Rationed health care is no way to honor
America's obligation to the brave men and women who unselfishly put our
nation's priorities in front of their own needs. Mandatory funding for
VA health care will help ensure timely access to quality health care
for America's veterans.
Mandatory funding of VA medical care would not prohibit the use of
other revenue streams to meet fiscal obligations, such as co-payments
and third-party reimbursements from all health care insurers, both
public and private.
THIRD PARTY REIMBURSEMENT AND MEDICAL CARE COLLECTION FUNDS
Public Law 105-33, the Balanced Budget Act of 1997, established the
VA Medical Care Collections Fund (MCCF) and requires that amounts
collected or recovered after June 30, 1997, be deposited into this
fund. The MCCF is a depository for collections from third party
insurance, outpatient prescription copayments and other medical charges
and user fees. The funds collected may only be used for providing VA
medical care and services and for VA expenses for identification,
billing, auditing and collection of amounts owed the Government.
Technically, the MCCF is not considered a Treasury offset because
the funds collected do not actually go back to the Treasury account,
but remain within VHA and are used as operating funds. Instead, in
developing a budget proposal, the total appropriation request is
reduced by the estimate for MCCF for the fiscal year in question. We
fail to see the difference in the net effect to the VISN's and VAMC's.
Offsetting estimated MCCF funds largely defeats the purpose of
realigning VHA's financial model to more closely approximate the
private sector. The American Legion adamantly opposes offsetting annual
VA discretionary funding by the MCCF recovery.
Implementation by VHA of the Revenue Cycle Enhancement Plan has a
dramatic effect on the amount of revenue collected. Resuming in early
fiscal year 2002 it has resulted in significantly higher receipts than
projected. VHA doubled the amount expected in fiscal year 2004 from
$1.3 billion to 2.1 billion. However, any system can stand improving
and agency models are available that clearly illustrate the
efficiencies that can be gained through practical application.
Considering that VA is prohibited from collecting third-party
reimbursements from the nation's largest health care insurer--CMS--and
the vast majority of VA enrolled patient population are Medicare-
eligible, VA's MCCF program has the potential of becoming even more
effective in the recovery of third-party reimbursements.
MEDICARE REIMBURSEMENT TO MCCF
As do all working citizens, veterans pay into the Medicare system
without choice. A portion of each earned dollar is allocated to the
Medicare Trust Fund. Although veterans must pay into the Medicare
system, they cannot use their Medicare benefits at any VA health care
facility. VA cannot bill Medicare for the treatment of Medicare-
eligible veterans. The American Legion does not agree with this policy
and supports Medicare reimbursement for VHA for the treatment of
allowable, nonservice-connected medical conditions of enrolled
Medicare-eligible veterans. As a Medicare provider, VHA should be
authorized to bill and collect allowable third-party reimbursements
from the Medicare Trust Fund for the treatment of nonservice-connected
medical conditions of enrolled Medicare-eligible veterans.
Since VA is working with CMS contractors for the purpose of
providing VA with a Medicare-equivalent remittance advice (MRA) for
veterans who are using VA services and are covered by Medicare, the
American Legion recommends including all Medicare-eligible veterans
assigned to Priority Groups 7 and 8. Under the Veterans Equitable
Resource Allocation (VERA) formula, enrolled Priority Group 7 and 8
veterans are not included in the current VERA formula that ultimately
results in an inequitable distribution in resources.
The fiscal year 2005 budget optimistically projects a $2.4 billion
revenue stream attributed to third-party collections, but still
supports the suspension of Priority Group 8 veterans from enrolling in
VA.
As The American Legion continues to visit VA facilities nationwide
as part of the ``System Worth Saving'' initiative, we are hearing
first-hand from facility leadership of the problems that exist with
increased third-party collection rates. During a recent visit to a
VAMC, the facility staff stated that their fiscal year 2004 MCCF
collection goal was ``not realistic''. They added that the goal is
probably ``not attainable as long as Category 7 & 8 veterans who bring
in the MCCF dollars are excluded from using the system''.
The American Legion recommends $30 billion for Medical Care in
fiscal year 2005 in addition to MCCF collections, as well as
eliminating the MCCF offset and authorizing VA to collect third-party
reimbursements from Medicare for the treatment of allowable,
nonservice-connected medical conditions.
MEDICAL AND PROSTHETICS RESEARCH
VA Medical and Prosthetic Research has a history of productivity in
advancing medical knowledge and improving health care, not only for
veterans, but all Americans. VA research has led to the creation of the
cardiac pacemaker, nicotine patch, and the Computerized Axial
Tomography (CAT) scan, as well as other medical breakthroughs. Over
3800 VA physicians and scientists conduct more than 9,000 research
projects each year involving more than 150,000 research subjects.
The VA Medical and Prosthetic Research budget has not kept pace
with inflation during the past 15 years. It is essential that Congress
and the Administration support strong medical and prosthetic research
programs within VA so that veterans and all citizens continue to
benefit from the exceptional research capability of the Department.
The American Legion supports adequate funding for VA biomedical
research activities. Congress and the Administration should encourage
acceleration in the development and initiation of needed research on
conditions that significantly affect veterans--such as prostate cancer,
addictive disorders, trauma and wound healing, post-traumatic stress
disorder, rehabilitation, and others--jointly with the Department of
Defense (DoD), the National Institutes of Health (NIH), other Federal
agencies, and academic institutions.
The American Legion recommends $445 million for Medical &
Prosthetics Research in fiscal year 2005.
MEDICAL CONSTRUCTION AND INFRASTRUCTURE SUPPORT
Major Construction
Over the past several years, The American Legion has testified on
the inadequacy of funding for VA's major and minor construction
programs. Buildings continue to be neglected and the persistent
deterioration results in unsafe environments similar to unsanitary
conditions discovered at the VAMC in Kansas City, Missouri. Of course,
those that pay the price of this neglect are the veterans who are
receiving care at these facilities.
A 1998 study recommended that VA fund two to 4 percent of Plant
Replacement Value (PRV) per year to reinvest in new facilities to
replace aging facilities. The conclusion of this analysis was that VA's
reinvestment rate of .84 percent was significantly lower than the
benchmark of 2 percent. This equates to hundreds of millions of dollars
that conceivably could be used for major construction projects. Private
consultants have been warning for years that dozens of VA patient
buildings were at the highest level of risk for earthquake damage or
collapse yet funding continues to be woefully short of what is actually
needed to correct this problem.
The American Legion supports legislation that would provide $1.8
billion over the next three fiscal years to improve, replace, update,
renovate or establish facilities within the existing VA infrastructure.
These funds would be exempt from 38 USC Sec. 8103 (a)(2) which requires
enabling legislation for construction procurements in excess of $4
million or leases in excess of $600,000 per year. This money would be
available at the discretion of VA for:
Seismic protection;
Life safety upgrades;
Utility improvements; and
Accommodations for disabled persons.
Facilities eligible for improvements include:
Blind rehabilitation centers;
Inpatient and residential programs for seriously mentally
ill veterans and veterans with substance abuse disorders;
Physical medicine and rehabilitation activities;
Long term care including adult day care, nursing
facilities and geriatric research and education facilities;
Amputation care facilities including prosthetics and
orthotics and sensory aids;
Spinal cord and traumatic brain injury centers;
Women's veterans' health programs; and
Hospice and palliative care facilities.
The American Legion is concerned that veterans are needlessly being
placed in harm way within existing VA facilities. There are over 60
patient care and other related use buildings in danger of collapse or
heavy damage in the event of an earthquake. The sorely needed seismic
corrections, along with the necessary ambulatory care and patient
safety projects, will require a significant increase in funding to
address VHA's current major construction requirements. This legislation
will go a long way toward correcting these deficiencies.
The American Legion further supports legislation that would
authorize the following major medical construction projects at the
amounts specified:
Construction of two bed towers to consolidate inpatient
sites in inner-city Chicago at the West Side Division in an amount not
to exceed $98.5 million.
Construction in Clarke County, Nevada of a multi-specialty
outpatient clinic to replace the leased Las Vegas ambulatory care
center and a satellite office for the Veterans Benefits Administration
in an amount not to exceed $97.3 million.
Seismic corrections to strengthen Medical Center Building
1 at VA health Care System at San Diego, California not to exceed $48.6
million.
Renovation of all inpatient care wards at the VA West
Haven, Connecticut healthcare facility at a cost not to exceed $50
million.
The American Legion recommends $325 Million for Major Construction
in fiscal year 2005.
MINOR CONSTRUCTION
Similar to VA's major construction program, VA's minor construction
program has likewise suffered significant neglect over the past several
years. The requirement to maintain the infrastructure of VA's buildings
is no small task. When combined with the added cost of the CARES
program recommendations and the request for minor infrastructure
upgrades in several research facilities, it is easy to see that a major
increase is crucial.
The American Legion recommends $255 Million for Minor Construction
in fiscal year 2005.
STATE EXTENDED CARE FACILITY GRANTS PROGRAM
State Veterans Homes were founded for indigent and disabled Civil
War veterans beginning in the late 1800's and have continued to serve
subsequent generations of veterans for over one hundred years. Under
the provisions of 38 USC, VA is authorized to make payments to states
to assist in the construction and maintenance of State Veterans Homes.
Today, there are 109 State Veterans Homes facilities in 47 states with
over 23,000 beds providing nursing home, hospital, and domiciliary
care. The State Veterans Home Program has proven to be a cost-effective
provider of quality care to many of the nation's veterans and this
program is an important adjunct to VA's own nursing, hospital, and
domiciliary programs. The Grants for Construction of State Veterans
Home Program provides funding for 65 percent of the total cost of
building new veterans homes. VA has not been able to keep pace with the
number of grant applications; and currently there is over $120 million
in unfunded new construction projects pending.
Recognizing the growing long-term health care needs of older
veterans, it is essential that the State Veterans Home Program be
maintained as a viable and important alternative health care provider
to the VA system. The American Legion supports increasing the amount of
authorized per diem payments (40 percent) for nursing home and
domiciliary care provided to veterans in State Veterans Homes. The
American Legion also supports the provision of prescription drugs and
over-the-counter medications to State Homes Aid & Attendance patients,
along with the payment of authorized per diem to State Veterans Homes.
Additionally, VA should allow for full reimbursement of nursing home
care to 70 percent service-connected veterans or higher, if the veteran
resides in a State Veterans Home. The National Association of State
Veterans Homes and VA should develop mutual planning efforts, enhanced
medical sharing agreements, and enhanced-use construction contracts
with qualified providers.
The American Legion recommends $120 Million for the State Extended
Care Facility Grants Program in fiscal year 2005.
NURSING HOME CARE
Except for the occasional congressional initiative to build nursing
homes in individual states or congressional districts and some CARES
planning initiatives, VA has no plans to expand its own nursing home
capacity.
VA has failed to fulfill the promise of its landmark mid-1980's
study, Caring for the Older Veteran. That study recommended large
increases in both inpatient and alternative programs, such as respite,
hospice, adult-day and home-based care, so that VA could approach the
needs of World War II veterans with meaningful, health and end-of-life
care programs, on both institutional and non-institutional bases. This
has not been achieved.
Millennium Act required VA to maintain its in-house NHU bed
capacity at the 1998 level of 13,391. This capacity has significantly
eroded rather than been maintained. In 1999, there were 12,653 VA NHU
beds, 11,812 in 2000, 11,672 in 2001 and 11,969 in 2002. VA estimates
it will have only 9,900 beds in 2003 and 8,500 in 2004. VA has claimed
that it cannot maintain both the mandated bed capacity and implement
all the non-institutional programs required by the Millennium Act.
VA should be required to maintain its nursing home capacity as
intended by Congress. VA must create incentives and receive appropriate
funding to maintain its NHCU beds rather than abandon them to
alternative sources. These beds are a vital component of the VA Long
Term Care (LTC) continuum of care, and they are essential in addressing
the needs of the aging veteran population.
According to VA's fiscal year 2002 Annual Accountability Report
Statistical Appendix, in September 2002, there were 93,071 World War II
and Korean War era veterans receiving compensation for service-
connected disabilities rated seventy percent or higher. The American
Legion opposes provisions in the fiscal year 2005 budget request that
would reduce funding for VA nursing homes by $270.5 million and reduce
staffing by 2,500 full time employees. VA should comply with the intent
of Congress to maintain an adequate LTC nursing home capacity for those
disabled veterans who are in the most resource intensive groups;
clinically complex, special care, extensive care and special
rehabilitation case mix groups. The Nation has a special obligation to
these veterans. They are entitled to the best care that the VA has to
offer.
CAPITAL ASSET REALIGNMENT FOR ENHANCED SERVICES (CARES)
The CARES process was designed to take a comprehensive look at
veterans' health care needs and services. However, because of problems
with the model in projecting long-term care, domiciliary, and
outpatient mental health care needs into the future, specifically to
2012 and 2022, these critical health care services were omitted from
the CARES planning. An extensive look, such as that proposed by the
CARES initiative, cannot possibly be accomplished when an assessment of
need for those services is missing from the process.
The Draft National Plan contains several proposals to realign
campuses and consolidate services. These realignments were introduced
in the eleventh hour, with no stakeholder input sought by VA. There are
13 such realignments proposed in the plan. The American Legion does not
support the closing of a VA facility just for the sake of saving money
while veterans are denied care.
The Draft National CARES Plan expects substantial renovations and
expansions as consolidations happen. A great deal of money will have to
be allocated up front to ensure the new construction and renovations
are completed. The American Legion understands that CARES is an ongoing
process and when dealing with vacant space and renovations, incremental
changes may have to take place. The price tag for all of the
construction and renovations proposed is in the billions of dollars.
With the proposed consolidations and transferring of services, it is
imperative that veterans not experience delays in the delivery of their
care. No facilities should be closed, disposed of, or downsized until
the proposed movement of services is complete and veterans are being
treated in the new locations.
Funding should be provided to ensure that any realignment resulting
from the CARES initiative does not lead to the suspension of services
for veterans seeking care.
VETERANS BENEFITS ADMINISTRATION
Over the years, Congress has established a system of laws that
provide veterans and their survivors a spectrum of the services and
benefits earned by virtue of the veteran's service in the Armed Forces
of the United States. Since 1938, VA has had the responsibility of
implementing these laws in a pro-claimant, informal, ex parte, and
nonadversarial manner. The American Legion continues to closely monitor
the programs and policies of the Veterans Benefits Administration (VBA)
and assess whether or not these are truly meeting the needs of veterans
and their families. The American Legion has a number of concerns about
the current State of claims adjudication and the level and quality of
service being provided by VBA and the Board of Veterans Appeals.
The American Legion emphasizes that it is committed to ensuring
that VA carries out its historic and statutory responsibility to
provide medical care and benefits to those who have served and
sacrificed in the defense of this nation. Veterans have the right to
expect that VA will adjudicate their claims fairly and impartially
within a reasonable period of time. We believe there are still too many
instances where veterans and other claimants are being arbitrarily
denied the benefits to which they are entitled.
Over the course of fiscal year 2002 and fiscal year 2003, VBA has
been able to make notable progress toward realizing Secretary
Principi's often stated goal of the reducing the number of pending
cases down to 250,000 and cutting the average processing time down to
100 days by the end of this month. This has been a major challenge for
VBA. In March 2002, at its peak, the regional offices had a backlog of
over 423,000 cases that required rating action. Of these, 40 percent
were over 6 months old. There were another 147,000 cases in which some
other type of action was pending. In addition, there were approximately
107,000 pending appeals, which included over 22,000 cases that had been
remanded by the Board of Veterans Appeals. In human terms, thousands of
these sick and disabled veterans or their survivors were waiting a year
or more for a regional office to make a decision on their claim. If the
claim was denied and they pursued an appeal, their wait could extend
another two to 3 years or more. Such delays caused increased stress as
well as serious financial hardship. The American Legion has commended
the Secretary for his commitment to improving the regional office
claims adjudication process. Recognizing the fact that many of these
backlogged claims were from elderly veterans, one of the Secretary's
first service improvement initiatives was the establishment of the
Tiger Team at the Cleveland VA Regional Office. This unit has been
primarily responsible for expedited action on the claims of older
veterans, particularly those aged 70 and older, whose cases have been
pending for a year or more.
The Tiger Team initiative has been a success and they too should be
commended for their efforts and dedication. However, it is regrettable
that a sick and disabled veteran has to wait months, if not a year or
more for action on their claim for benefits. Because of processing
delays and necessity of an appeal to the Board of Veterans Appeals (the
Board or BVA) or the Federal courts, many veterans have died before
receiving a final decision on their case. In the view of The American
Legion, the regional offices should be more concerned with people than
process.
It is clear that there has been a dramatic reduction in the claims
backlog in the past year and a half. This decline means that regional
offices are taking less time to adjudicate claims than in the past.
Last year at this time, there were some 358,000 claims awaiting final
action. Of these, almost 36 percent were over 6 months old. At the end
of August, VBA reported there were about 265,000 pending claims and, of
these, about 20 percent are over 6 months old. The average processing
time has been reduced from 224 days in June 2002 to about 160 days
currently. However, given the complexities of the claims adjudication
process and requirements of the law, numbers do not tell the whole
story and ``faster'' is not always ``better.''
In its annual budget request over the past several years, VBA has
reported a steady decrease in claims adjudication error rate. At the
end of 1997, the error rate had been 36 percent. In 1998, it was 30
percent. It increased slightly in 1999 to 32 percent. In 2000, there
was a dramatic increase to 41 percent. The reported error rate declined
to 22 percent in 2001. It was 20 percent in 2002 and, in 2003, it had
declined to only 12 percent. The error rate goal for fiscal year 2004
is 10 percent. Over this same period, The American Legion's regional
office quality review visits do not confirm a substantial and dramatic
improvement in the overall error rate.
There is little doubt that the vast majority of regional office
adjudicators are dedicated, hardworking men and women. They continue to
operate under tremendous stress to meet the Department's and veterans'
expectations. However, The American Legion believes the effectiveness
of VBA's quality improvement efforts has been severely compromised by
the drive to achieve the Secretary's mandated production quotas.
Veterans and other claimants are being short-changed by VBA policies
and procedures that tend to promote less than adequate claims
development, premature denials, and under-evaluations.
The lack of proper and appropriate action on thousands of claims
continues to result in a high level of claimant dissatisfaction and a
steady influx of new appeals to the regional offices. There are now
over 134,000 pending appeals with some 111,500 requiring adjudicative
action. Even though there is a concerted effort to resolve appeals at
the regional office through the Decision Review Officer program, most
of these cases will eventually go to the Board of Veterans Appeals for
a final decision on the merits of the claim.
The straight line staffing level requested for fiscal year 2004 is
based on the assumption that, with the accomplishment of the
Secretary's backlog reduction goals, VBA would be able to refocus its
efforts to more effectively address the quality-related problems and
other long-standing issues. Given past performance, The American Legion
continues to believe that this is an unrealistic policy and will not
afford VBA the flexibility to cope with current workload demands, let
alone some unanticipated contingency, such as supporting the Department
of Defense new Combat-related Special Compensation Program and the
additional resources that will be required to comply with the Huston
decision. The American Legion recognizes that VBA has made a concerted
effort to hire additional staff in the last several years. This policy
of continuing growth is both prudent and necessary, given the
increasingly complex nature of the claims and appeals process, the
heavy volume of new claims, and the ongoing need to buildup the core
adjudication staff in anticipation of the retirement of the more
experienced regional office decisionmakers.
The American Legion is concerned with support in the budget request
for legislation that would reverse the Allen vs. Principi court
decision. Clearly, the intent of this proposal is to overturn the 2001
decision of the United States Court of Appeals for the Federal Circuit
(the Federal Circuit or the Court) in Allen v. Principi 237 F.3d 1368
(Fed. Cir., 2001). The Court held that Congress, in enacting P.L. 96-
466, the ``Omnibus Budget Reconciliation Act of 1990'' (OBRA 90), did
not intend to preclude compensation for an alcohol or drug-related
disability resulting from or secondary to a non-willful misconduct
service-connected disability. Prior to OBRA 90, VA considered
alcoholism and drug abuse disabilities unrelated to a service connected
psychiatric disorder as willful misconduct. The term ``willful
misconduct'' was defined in VA regulations as a deliberate and
intentional act involving conscious wrongdoing or known prohibited
action, with knowledge of or wanton and reckless disregard of the
probable consequences.
However, the definition noted that the mere technical violation of
police regulations and ordinances would not, per se, constitute willful
misconduct unless it is the proximate cause of injury, disease, or
death. VA's policy was that the misconduct bar to benefits did not
apply to those veterans whose alcohol or drug addiction was secondary
to a service connection mental or physical disability. OBRA 90
specifically provided in 38 U.S.C. Sec. Sec. 1110 and 1131, that an
injury or disease resulting from the abuse of alcohol or drugs is not
considered to have been incurred in the line of duty and VA may not pay
compensation for disabilities that are the result of ``the veteran's
own willful misconduct or alcohol or drug abuse.'' Under OBRA 90, VA as
a matter of policy and practice, would not grant secondary service
connection for substance abuse, but would, where appropriate,
incorporate the symptoms of alcohol and drug abuse into the overall
evaluation of the primary service connected disability. As an example,
a veteran may have been rated for ``PTSD with alcoholism.'' In 1998,
the United States Court of Appeals for Veterans Claims (CVAC), in
Barela v. West (11 Vet. App. 280) (1998), held that, while OBRA 90
provided for service connection of alcohol and drug-related
disabilities as being secondary to a service connected disability, VA
could not pay compensation for such disabilities.
BOARD OF VETERANS APPEALS
The reduction in the number and the average processing time of
pending claims represents only one aspect of VA's overall case backlog,
since not all claims can or should be approved. When a veteran or other
claimant receives an unfavorable decision either denying the claim in
whole or in part, they have the right to appeal. The number of appeals
filed each year is a direct reflection of the level of claimant
satisfaction with the quality of the regional office adjudication. The
action taken by the Board of Veterans Appeals (BVA) is a further
reflection and commentary on the quality of regional office
decisionmaking. Of those appeals decided in the first 10 months of
fiscal year 2003, the Board affirmed the decisions of the regional
office only 38 percent of the time and rejected their decision in about
59 percent of the cases. Such poor performance by the regional office
adjudicators is of grave concern to The American Legion, since it
represents a tremendous waste of time and taxpayers' money, and a
hardship for thousands of veterans and their families. Clearly, VBA's
efforts to date have not effectively addressed the persistent systemic
problems that adversely affect regional office claims processing and
adjudication.
COURT OF APPEALS FOR VETERANS CLAIMS AND THE COURT OF APPEALS FOR THE
FEDERAL CIRCUIT
The regulations and procedures of both the VBA and the BVA will be
fundamentally changed by several recent court decisions. The courts
have held that VA, as a matter of policy, had promulgated regulations
that were misleading, basically unfair, and a violation of claimants'
right to full due process.
In 2002, there was a combined effort by the Board of Veterans
Appeals and VBA to try and improve the timeliness and quality of action
on remanded appeals. By alleviating some of the regional offices'
appellate workload, this would enable the regional offices to devote
more resources to resolving previous remands and further reduce the
backlog of pending claims. This initiative was prompted by the fact
that remands often sat in a regional office for months or even years
with little or no action taken. In many instances, the development that
was done would be inadequate or incomplete and the Board had to remand
the case two or three times, which meant greater delay and hardship for
the appellant. Rather than sending a case back to the regional office,
a unit was established within the Board to undertake the development
specified in the remand decision. If the decision included a benefit
grant, the unit could initiate the award, so there would be no delay in
payment. The American Legion supported the intent of this service
improvement effort.
In a decision early last summer, the United States Court of Appeals
for the Federal Circuit held that the BVA's Development Unit was
unlawful. As a result, there are about 8,000 remands plus new remands
that are in the process of being transferred from the BVA Development
Unit to VBA's Appeals Management Center (AMC), which is located at the
Washington VA Regional Office, for further development and
readjudication. While generally supportive of the effort to try and
improve the handling of remands, there are problems in handling cases
where the Board has awarded benefits. The lack of action by the AMC to
expedite payment action has prompted several veterans to contact The
American Legion for assistance. We are hopeful that appropriate steps
have now been taken by VBA to ensure this type of problem does not
recur. The AMC is projected to be fully staffed and operational by
December 2003. In the interim, remands are being referred to the
Huntington, West Virginia Regional Office and the Tiger Team in
Cleveland for action. However, the prior BVA Development Unit
initiative and the current AMC leave unaddressed the larger and more
difficult issues relating to poor regional office decisionmaking,
incomplete development, inadequate VCAA notices, and premature denials.
Furthermore, there does not appear to be any incentive for the regional
offices to improve their case development, nor is there any
disincentive to keep them from certifying cases, because the AMC have
to do what they should have done. VBA must ensure that the AMC does not
become a dumping ground for the regional offices.
In a system with tens of thousands of claims to be processed, there
is a constant tension between management's need to have cases decided
as quickly as possible and the statutory need to protect the claimant's
right by ensuring that any decision made is proper and consistent with
the law and regulations. For the past two and a half years, VBA
management has been emphasizing speed and production volume. Under such
pressure, there has been a tendency among some VBA managers and
adjudicators to ignore the law and VA's own regulations and put
bureaucratic convenience ahead of quality decisionmaking and the
welfare and well being of the individual veteran and his or her family.
In the opinion of The American Legion, one of the key impediments
to progress on improving the quality of regional office decisionmaking
and, thereby, claimant satisfaction, has been VBA's lack of compliance
with both the letter and spirit of the ``Veterans' Claims Assistance
Act of 2000'' (PL 106-475) (VCAA). The American Legion was actively
involved in the development of this landmark legislation. It was
designed to overcome the deficiencies and lack of clarity in the way
VBA communicated with claimants and the way in which it developed
claims. It made clear the exact nature and extent of VA's obligations
and responsibilities to notify and to assist claimants. The idea was
that, if claims were better developed, they could be promptly and more
accurately adjudicated, thereby improving service to claimants. In the
long run, these improvements should also reduce the overall appeals
workload for the regional offices and the Board of Veterans Appeals. It
was to be a ``win/win'' situation for all parties. However, as we have
seen thus far, VBA has generally given lip service to the requirements
of VCAA.
While claimants are provided what is termed a ``VCAA'' letter,
little time or effort goes into trying to help the individual veteran
understand his or her claim and what evidence is going to be needed and
who is responsible for developing it. Such letters usually lack
essential information regarding the individual's claim and the evidence
needed to grant the benefit sought in the particular case. These are
unnecessarily long, confusing, nonspecific letters, which are filled
with bureaucratic jargon. In some of the cases reviewed during The
American Legion's regional office quality review visits, the
information in many VCAA letters was found to be incorrect or not even
appropriate to the claim. Rather than facilitating the adjudication
process, as they were intended, these notice letters set the stage for
an appeal to the BVA and the Federal courts.
The American Legion's concerns regarding the deficiencies in the
VCAA letters have been brought to Secretary Principi's attention as
well as discussed in testimony before the Veterans' Affairs Committees
on a number of occasions. Despite these efforts, VBA policy on the use
of this type of letter remained unchanged. However, as a result of the
July 2003 decision by the United States Court of Appeals for Veterans
Claims (CVAC), in Huston v. Principi, VBA will now be forced to comply
with the duty to notify and duty to assist provisions of title 38,
United States Code, sections 5103(a) and 5103A. VA will now be
obligated to clearly tell the claimant what evidence to submit in order
to obtain the benefits claimed. The American Legion is disappointed
that it took a court order to make VBA do what it should have been
doing since the enactment of the VCAA. We will be watching very closely
how VBA and Board of Veterans Appeals implement the Huston decision.
Continued strong oversight by the Veterans' Affairs Committees will
also be important in ensuring the VBA is, in fact, meeting its historic
and statutory responsibilities to the veterans of this nation.
GI BILL EDUCATIONAL BENEFITS
The American Legion commends the 108th Congress for its actions to
improve the current Montgomery GI Bill (MGIB). A stronger MGIB is
necessary to provide the Nation with the caliber of individuals needed
in today's Armed Forces. The American Legion appreciates the efforts
that this Congress has made to address the overall recruitment needs of
the Armed Forces and to focus on the current and future educational
requirements of the All-Volunteer Force.
Over 96 percent of recruits currently sign up for the MGIB and pay
$1,200 out of their first year's pay to guarantee eligibility. However,
only one-half of these military personnel use any of the current
Montgomery GI Bill benefits. This is directly related to the fact that
current GI Bill benefits have not kept pace with the increasing cost of
education. Costs for attending the average 4-year public institution,
as a commuter student during the 1999-2000 academic year was nearly
$9,000. PL 106-419 recently raised the basic monthly rate of
reimbursement under MGIB to $650 per month for a successful 4-year
enlistment and $528 for an individual whose initial active duty
obligation was less than 3 years. The current educational assistance
allowance for persons training full-time under the MGIB--Selected
Reserve is $263 per month.
The Servicemen's Readjustment Act of 1944, the original GI Bill,
provided millions of members of the Armed Forces an opportunity to seek
higher education. Many of these individuals may not have been afforded
this opportunity without the generous provisions of that act.
Consequently, these servicemen and servicewomen made a substantial
contribution not only to their own careers, but also to the economic
well being of the country. Of the 15.6 million veterans eligible, 7.8
million took advantage of the educational and training provisions of
the original GI Bill. Between 1944 and 1956, when the original GI Bill
ended, the total educational cost of the World War II bill was $14.5
billion. The Department of Labor estimates that the government actually
made a profit because veterans who had graduated from college generally
earned higher salaries and therefore paid more taxes. Today, a similar
concept applies. The educational benefits provided to members of the
Armed Forces must be sufficiently generous to have an impact. The
individuals who use MGIB educational benefits are not only improving
their career potential, but also, making a greater contribution to
their community, state, and nation.
The American Legion recommends the following improvements to the
current MGIB:
The dollar amount of the entitlement should be indexed to
the average cost of a college education including tuition, fees,
textbooks, and other supplies for a commuter student at an accredited
university, college, or trade school for which they qualify.
The educational cost index should be reviewed and adjusted
annually.
A monthly tax-free subsistence allowance indexed for
inflation must be part of the educational assistance package.
Enrollment in the MGIB shall be automatic upon enlistment,
however; benefits will not be awarded unless eligibility criteria have
been met.
The current military payroll deduction ($1,200)
requirement for enrollment in MGIB must be terminated.
If a veteran enrolled in the MGIB acquired educational
loans prior to enlisting in the Armed Forces, MGIB benefits may be used
to repay those loans.
If a veteran enrolled in MGIB becomes eligible for
training and rehabilitation under Chapter 31, of Title 38, United
States Code, the veteran shall not receive less educational benefits
than otherwise eligible to receive under MGIB.
A veteran may request an accelerated payment of all
monthly educational benefits upon meeting the criteria for eligibility
for MGIB financial payments, with the payment provided directly to the
educational institution.
Separating service members and veterans seeking a license,
credential, or to start their own business must be able to use MGIB
educational benefits to pay for the cost of taking any written or
practical test or other measuring device.
Eligible veterans shall have 10 years after discharge to
utilize MGIB educational benefits.
Eligible members of the Select Reserves, who qualify for
MGIB educational benefits shall receive not more than half of the
tuition assistance and subsistence allowance payable under the MGIB and
have up to 5 years from their date of separation to use MGIB
educational benefits.
HOME LOAN GUARANTY PROGRAM
The American Legion believes that the current limit of VA Home Loan
Guarantee of $252,500 should be raised to $300,000 and that higher
limits be established for areas of the country where justified by
prevailing real estate market conditions. In San Francisco, California
in 2002 the median price of a home was $482,300, an actual decrease of
.3 percent from 2001. In Boston, Massachusetts the median price of a
home was $358,000; in the New York City Metro area, 285,600; and here
in Washington D.C. the median home cost $229,100 in 2002, up 19.8
percent from $183,700 in 2001. Clearly, in these cities, the difference
between many veterans being able to secure financing for a decent home
for his or her family and being shut out of the market is due to the
inadequate levels of the VA Home Loan Guarantee Program.
The American Legion also supports the recognition of VA Home Loan
Guaranty benefits in cases where both members of a married couple are
eligible for the benefit. If both members are eligible to receive the
benefit, both members should be allowed to use the benefit.
The American Legion is also concerned with a provision in the
budget request supporting legislation that would limit the VA Home Loan
program to one-time use for military members who separate after the
legislation is passed and for all current veterans 5 years after
enactment. Veterans have earned the right to this benefit and it should
not be limited to one-time usage.
The VA Home Loan program is one of the core elements of the
original Servicemen Readjustment Act of 1944, the GI Bill of Rights.
This legislation is often referred to as ``one of the most important
pieces of social legislation ever enacted.'' Successful participation
in the VA Home Loan program should be rewarded, not restricted or
terminated. Due to the transient nature of our society, many Americans
may experience several relocations based on business opportunities or
upgrades in their financial situations. Living the American dream of
homeownership should be encouraged and promoted as continuous economic
stimulus opportunity.
NATIONAL CEMETERY ADMINISTRATION (NCA) THE NATIONAL CEMETERY SYSTEM
VA's National Cemetery Administration (NCA) is comprised of 120
cemeteries in 39 states and Puerto Rico as well as 33 soldiers' lots
and monuments. NCA was established by Congress and approved by
President Abraham Lincoln in 1862 to provide for the proper burial and
registration of graves of Civil War dead. Since 1973, annual interments
in NCA have increased from 36,400 to over 84,800. Annual burials are
expected to increase to more than 115,000 in the year 2010 as the
veteran population ages. Currently 59 national cemeteries are closed
for casket burials. Most of these can accept cremation burials,
however, and all of them can inter the spouse or eligible children of a
family member already buried. Another 22 national cemeteries are
expected to close by the year 2005, but efforts are underway to
forestall some of these closures by acquiring adjacent properties.
Maintaining cemeteries as National Shrines is one of NCA's top
priorities. This commitment involves raising, realigning and cleaning
headstones and markers to renovate gravesites. The work that has been
done so far has been outstanding, however, adequate funding is key to
maintaining this very important commitment. At the rate that Congress
is funding this work, it will take twenty-eight years to complete. The
American Legion supports the Under Secretary for Memorial Affairs in
his goal of completing the NCA's National Shrine Commitment in 5 years.
This Commitment includes the establishment of standards of appearance
for national cemeteries that are equal to the standards of the finest
cemeteries in the world. Operations, maintenance and renovation funding
must increased to reflect the true requirements of the National
Cemetery Administration to fulfill this Commitment.
Congress must provide sufficient major construction appropriations
to permit NCA to accomplish its stated goal of ensuring that burial in
a national or State cemetery is a realistic option by locating
cemeteries within 75 miles of 90 percent of eligible veterans.
P.L. 107-117 required NCA to build six new National Cemeteries.
Fort Sill opened in 2001 under the fast-track program, while the
remaining five (Atlanta, Detroit, South Florida, Pittsburgh and
Sacramento) are in various stages of completion. Additional acreage is
currently under development in 10 national cemeteries, columbaria are
being installed in 4 and additional land for gravesite development has
been acquired at national cemeteries in 5 states. 9 national cemeteries
are expected to close to new interments between 2005 and 2010. The rate
of interments in national cemeteries has increased from 36,400 in 1978
to 84,800 in 2001. This rate is expected to rise to 115, 000 in 2015.
The average time to complete construction of a national cemetery is
7 years. The report of a study conducted pursuant the Millennium Bill
concluded that an additional 31 national cemeteries will be required to
meet the burial option demand through 2020. Legislation is currently
pending in this session that will authorize the establishment of 10 new
national cemeteries in areas of the country facing a shortage of burial
space. Together with the 6 national cemeteries under development, this
will go a long way toward fulfilling this need. NCA will be able to
keep pace with current demand for burial space if this legislation is
enacted and fully funded this year.
The American Legion urges Congress to provide sufficient major
construction appropriations to permit NCA to accomplish its mandate of
ensuring that burial in a national cemetery is a realistic option for
90 percent of our nation's veterans.
The American Legion recommends $156 Million for the National
Cemetery Administration in fiscal year 2005.
STATE CEMETERY GRANTS PROGRAM
The National Cemetery Administration (NCA) administers a program of
grants to states to assist them in establishing or improving state-
operated veterans cemeteries through VA's State Cemetery Grants Program
(SCGP). Established in 1978, the matched-funds program helps to provide
additional burial space for veterans in locations where there are no
nearby national cemeteries. Through fiscal year 2002, more than $169
million in grants has been awarded to states and the Territories of
Guam and the Northern Marianas, including 5 new State cemeteries and
the improvement and/or expansion of 9 existing ones.
Under the Veterans Programs Enhancement Act of 1998, PL 105-261, VA
may now provide up to 100 percent of the development cost for an
approved project. For establishment of new cemeteries, VA can provide
for operating equipment. States are solely responsible for the
acquisition of the necessary land.
The American Legion recommends $40 Million for the State Cemetery
Grants Program in fiscal year 2005.
Mr. Chairman, this concludes my testimony. I again thank the
Committee for this opportunity to express the views of The American
Legion on VA's fiscal year 2005 Budget Request and look forward to
working with you and the members of the Committee to ensure VA is
funded at a level that will allow all veterans to receive the care they
have earned through their service.
Chairman Specter. Our next witness is Mr. Richard Fuller,
National Legislative Director of the Paralyzed Veterans of
America. Thank you for joining us, Mr. Fuller, and your full
biographical resume will be placed in the record.
STATEMENT OF RICHARD B. FULLER, NATIONAL LEGISLATIVE DIRECTOR,
PARALYZED VETERANS OF AMERICA
Mr. Fuller. Thank you, Mr. Chairman. The balance of the
panel here represent the four organizations who co-authored The
Independent Budget every year. This year's 2005 Independent
Budget is available for every member of the committee and will
be sent to every member of the Senate.
[The Independent Budget follows:]
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Mr. Fuller. What we do in the interest of time and also so
we don't repeat ourselves is that each organization takes a
certain segment of The Independent Budget to testify on, and
for the past 18 years, Paralyzed Veterans of America has worked
on the health care portion. I will address my comments to that
today.
The Administration's budget request for health care is a
shocking one, providing once again a woefully inadequate
funding level for sick and disabled veterans. Calling for only
a $310 million increase in appropriated dollars is a mere 1.2
percent increase over fiscal year 2004. This is the smallest
health care appropriation request of any Administration in
nearly a decade.
Indeed, the VA Under Secretary for Health testified just
last year that the VA requires a 13 to 14 percent increase just
to keep its head above water each year. Once again, we are
faced by a request that relies too heavily on budgetary
gimmicks and accounting sleight-of-hand rather than on real
dollars that veterans need.
The Administration is again resurrecting its user fee and
increased copayment schemes, proposals that were soundly
rejected before and we hope they will be rejected again. Once
again, we see unrealistic management efficiencies utilized to
mask how truly inadequate this budget is.
For fiscal year 2005, The Independent Budget recommends a
medical amount of $29.8 billion. This amount represents an
increase of $3.2 billion over the amount provided in 2004. For
medical and prosthetic research, The Independent Budget is
recommending $460 million. This represents a $54 million
increase over the 2004 amount. Sadly, the Administration has
proposed cutting research grants alone by approximately $21
million, which is absolutely unprecedented in recent history.
Accepting this level of funding would set the research grant
program back to fiscal year 1999 levels. This also needs to be
corrected.
In closing, the VA health care system faces two chronic
problems. The first is underfunding, which I have already
outlined, and the second is a lack of consistent funding. The
budget and appropriations process over the last number of years
demonstrates conclusively how the VA labors under the
uncertainty of not only knowing how much money it is going to
get, but more equally important, when it is going to get that
money. No Secretary of Veterans' Affairs, no VA hospital
director, no doctor running an outpatient clinic knows how to
plan and even provide care on a daily basis without the
knowledge that the dollars needed to operate those programs are
going to be there when they need them.
The only solution we can see is for this committee and the
Congress as a whole to approve legislation removing VA health
care from the discretionary side of the budget process and
making annual VA budgets mandatory. The health care system can
only operate when it knows how much it is going to get and when
it is going to get it.
This concludes my testimony. I will be happy to answer any
questions you may have.
Chairman Specter. Thank you. Thank you very much, Mr.
Fuller. Your full statements will all be made a part of the
record and we will have a chance to review them in some detail
and staff will analyze them. We appreciate this very impressive
booklet. I thought you would probably read it in 3 minutes, but
you couldn't do it.
[Laughter.]
[The prepared statement of Mr. Fuller follows:]
Prepared Statement of Richard B. Fuller, National Legislative Director,
Paralyzed Veterans of America
Mr. Chairman and members of the Committee, as one of the four
veterans services organizations publishing The Independent Budget,
Paralyzed Veterans of America (PVA) is pleased to present the views of
The Independent Budget regarding the funding requirements for the
Department of Veterans Affairs (VA) health care system for fiscal year
2005.
This is the eighteenth year, PVA, along with AMVETS, Disabled
American Veterans and Veterans of Foreign Wars have presented The
Independent Budget, a policy and budget document that represents the
true funding needs of the Department of Veterans Affairs. The
Independent Budget uses commonly accepted estimates of inflation,
health care costs and health care demand to reach its recommended
levels. This year, the document is endorsed by 32 veterans service
organizations, and medical and health care advocacy groups.
Mr. Chairman, we are becoming increasingly troubled by the delays
in enacting VA appropriations. In fiscal year 2000, VA appropriations
were not enacted until October 20th, in fiscal year 2001 October 27th,
in fiscal year 2002 November 26th, in fiscal year 2003 February 20th,
and this year, January 23rd. For the past 2 years alone, the VA health
care system has had to struggle along at previous year's inadequate
funding levels for nearly one-third of each year. This is unacceptable.
These delays directly affect the health care received by veterans. This
deplorable State further points to the importance of a mandatory
funding mechanism for VA health care. But until that happens, we ask
that this Congress move expeditiously to put the necessary funding
levels in place by the start of fiscal year 2005. We also are
disappointed in the practice of using rescissions as a budgetary
mechanism in the omnibus spending bills that have become far too
common. These cuts also have real consequences for veterans and their
families.
This year, as we did last year, The Independent Budget is presented
in the traditional account format. The VA is once again presenting its
budget in the format it unveiled last year, a format that did not find
wide acceptance. The House Appropriations Committee has adopted its own
format, a format adopted in the recently enacted Omnibus spending bill.
Until this format dispute is settled, and until we have adequate data
in which to analyze the VA health care system under whichever format is
adopted, we will continue to utilize the traditional account structure.
It can become confusing amid the din of competing dollar amounts based
upon these different formats, but we ask you to compare oranges to
oranges and to bear in mind that attractive numbers may not exactly
match reality.
The Administration's budget request for health care is a shocking
one, providing once again a woefully inadequate funding level for sick
and disabled veterans. Calling for only a $310 million increase in
appropriated dollars, a mere 1.2 percent increase over fiscal year
2004, this is the smallest health care appropriation request of any
Administration in nearly a decade. Indeed, the VA Under Secretary for
Health testified just last year that the VA requires a 13 to 14 percent
increase just to keep its head above water.
In addition, we once again are faced by a request that relies far
too heavily on budgetary gimmicks and accounting sleight of hand rather
than on real dollars that veterans need. The Administration is again
resurrecting its enrollment fee and increased co-payment schemes,
proposals soundly rejected by both the Senate and the House of
Representatives. And once again we see unrealistic ``management
efficiencies'' utilized to mask how truly inadequate this budget is.
The VA must be accorded real dollars in order to care for real
veterans. Shifting costs onto the back of other veterans is not the way
to meet this Federal responsibility. Punitive co-payments and charges
are designed not so much to swell projected budget increases as they
are to deter veterans from seeking their care at VA medical facilities.
Imagine the effect of these additional costs on those who have no other
choice but to get care at VA. We may indeed have the greatest health
care system in the world, but if you cannot get in the door we might as
well have the worst.
Mr. Chairman, The Independent Budget makes a strong statement in
opposition to co-payments. The Congress gave the Secretary of Veterans
Affairs the authority to set and raise fees. What was once thought of
as only an administrative function has now become, in times of tight
budgets, an easy way to try and find the dollars to fund health care
for veterans. When appropriations are in short supply and demand for
health care is high, co-payments have become the new way to fund the VA
out of the pockets of the veteran patient.
For fiscal year 2005, The Independent Budget recommends a Medical
Care amount of $29.791 billion. This figure does not include funds
attributed to MCCF, which we believe should be used to augment a
sufficient appropriated level of funding. This amount represents an
increase of $3.2 billion over the amount provided in fiscal year 2004.
The Independent Budget recommendation is a conservative one. The VA
health care system, in order to fully meet all of its demands and to
ameliorate the effects of chronic under-funding, could use many more
dollars. The Independent Budget recommendation provides for the impact
of inflation on the provision of health care, and mandated salary
increases of health care personnel. It provides resources to begin
funding the VA's critical fourth mission to back up the Department of
Defense health care system. Make no mistake about it, the VA will be
spending money to comply with its new responsibilities in this area,
and if specific funding is not included, then these resources will have
to come directly from dollars used to care for sick veterans. It
provides increased prosthetics funding and long-term care funding, and
provides enough resources, we believe, to enroll Priority 8 veterans.
With the VA's decision to cease enrolling Priority 8 veterans,
undertaken only because of the lack of resources, we are losing an
entire class of veterans, veterans who are an integral part of the VA
health care system.
Of course, these recommendations are only estimates, and our
crystal ball is often cloudy. Health care inflation may be higher, or
lower than we have estimated. Demand may increase, or decrease. The
implications, as they pertain to VA health care funding estimates, of
the 2-year grant of health care eligibility to recently discharged or
released active duty personnel as provided in P.L. 105-363, are
difficult to account for. But what we must account for, and provide
for, are the necessary resources for the VA to meet its
responsibilities, and this Nation's responsibilities, to sick and
disabled veterans. These resources must be provided in hard dollars,
and not dollars magically realized out of the thin air of ``management
efficiencies'' and other budgetary gimmicks.
For Medical and Prosthetic research, The Independent Budget is
recommending $460 million. This represents a $54 million increase over
the fiscal year 2004 amount. Sadly, the Administration has proposed
cutting research by approximately $21 million. Accepting this level of
$385 million would set the research grant program back 6 years to
fiscal year 1999 funding levels. This program is a vital part of
veterans' health care, and an essential mission for our national health
care system. We must provide additional dollars for VA research as we
provide additional funding for our other national research endeavors.
Over the course of 5 years, the budget for the National Institutes of
Health was doubled. We should seek a similar commitment for VA
research.
In closing, the VA health care system faces two chronic problems.
The first is underfunding which I have already outlined. The second is
a lack of consistent funding.
The budget and appropriations process over the last number of years
demonstrates conclusively how the VA labors under the uncertainty of
not only how much money it is going to get, but, equally important,
when it is going to get it. No Secretary of Veterans Affairs, no VA
hospital director, and no doctor running an outpatient clinic knows how
to plan and even provide care on a daily basis without the knowledge
that the dollars needed to operate those programs are going to be
available when they need them.
Health care delayed is health care denied. If the health care
system cannot get the funds it needs when it needs those funds the
resulting situation only fuels efforts to deny more veterans health
care and charge veterans even more for the health care they receive.
The only solution we can see is for this Committee and the Congress
as a whole to approve legislation removing VA health care from the
discretionary side of the budget process and making annual VA budgets
mandatory. The health care system can only operate properly when it
knows how much it is going to get and when it is going to get it.
We look forward to working with this Committee in order to begin
the process of moving a bill through the Senate, and the House, as soon
as possible.
This concludes my testimony. I will be happy to answer any
questions you may have.
Chairman Specter. Our next witness is Mr. Rick Surratt, the
Deputy National Legislative Director for the Disabled American
Veterans. Thank you for joining us, Mr. Surratt, and your full
resume will be placed in the record.
STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE
DIRECTOR, DISABLED AMERICAN VETERANS
Mr. Surratt. Thank you, Mr. Chairman. On behalf of the DAV
and The Independent Budget, I am pleased to present our views
on the President's fiscal year 2005 budget and to highlight our
recommendations for resources and program improvements.
Other than a cost-of-living adjustment for compensation and
reinstatement of the 1-year period for filing death pension
claims, the President's budget contains no positive
recommendations for improvements to the benefit programs. It
does, however, include two objectionable recommendations to
eliminate entitlement to benefits.
It again requests the Congress eliminate entitlement to
compensation for any portion of a service-connected disability
attributable to the effects of alcohol or drug abuse. Under
current law, alcohol abuse, for example, is not itself a
compensable disability. However, when it is a secondary product
and part and parcel of the manifestations of a service-
connected psychiatric disorder, for example, its effects are
properly for consideration in assessing the overall level of
disability for compensation purposes.
There is a great difference between a veteran who uses
alcohol for its pleasurable intoxicating effects and one who
suffers from such unbearable and unremitting psychological
distress or physical pain that he or she resorts to alcohol to
escape the agony. Current law recognizes this distinction.
Congress should again reject VA's recommendation.
The President's budget also proposes legislation to
eliminate a veteran's entitlement to a home loan guarantee
after its initial use, despite the benefits of the repeat use
to the veteran and to the American economy and despite the
apparent lack of any good reason for this adverse action
against veterans. The IB urges you to reject this
recommendation.
The IB recommends a number of beneficial adjustments in
veterans' benefits programs. We hope you will favorably
consider those recommendations this year as you have many of
our recommendations in past years.
Veterans deserve good benefit programs and also have every
right to expect to receive their benefits when they need them.
The proper and timely delivery of benefits requires, among
other things, resources that match the workload. Here again, we
must disagree with the President's budget request.
The President's budget proposes to reduce staffing in the
Veterans' Benefits Administration by 540 full-time employees.
Because of the war and other factors, VBA's workload can only
be expected to increase. VBA has been laboring for several
years to improve proficiency and efficiency, but it has not
historically achieved gains at a rate that would allow it to
make up for such a large loss of personnel in a single year.
The improvident reductions in staffing suggested by the
President's budget may very well make VA lose those gains and
return to the entirely unacceptable situation that existed
before. We urge you to reject the President's recommendation to
reduce VBA's staffing. In the IB, we recommend staffing levels
more consistent with VBA's workload.
Mr. Chairman, that concludes my statement and I will be
happy to answer any questions you may have.
Chairman Specter. Thank you very much, Mr. Surratt.
[The prepared statement of Mr. Surratt follows:]
Prepared Statement of Rick Surratt, Deputy National Legislative
Director, Disabled American Veterans
Mr. Chairman and Members of the Committee:
Thank you for inviting the Disabled American Veterans (DAV) and our
partners in The Independent Budget (IB)--AMVETS, the Paralyzed Veterans
of America (PVA), and the Veterans of Foreign Wars of the United States
(VFW)--to present our views on the budget for the upcoming fiscal year.
As with the President's budget submission, the IB is a broad plan
for veterans' programs and includes recommendations for legislation to
improve the benefits and services our Government provides to meet
veterans' special needs. Consistent with DAV's primary responsibility
in preparing the IB, and to avoid unnecessarily duplicating the
testimony of my colleagues from the IB, my testimony will focus
predominantly on the benefit programs, the administrative operations
and resource requirements for delivering those benefits, and the
judicial appeals process for veterans' claims.
The importance of an adequate budget for veterans' programs cannot
be overstated. All else that the veterans' community seeks and this
Committee undertakes during the year ahead is influenced to a large
degree on available resources. Fortunately, the President's budget only
provides a discussion document to begin deliberations. It does not
dictate what Congress does for veterans. Likewise, support from the
Budget Committee and appropriators is important but not entirely
indispensable to what you, the authorizing committee, determine is
appropriate for our Nation's veterans. Unfortunately, the
Administration's budget request for fiscal year (FY) 2005 does fall
short in many respects, and we are disappointed with its meager
recommendations for benefit improvements.
The President's budget contains few recommendations for legislation
to improve the benefit programs. For compensation, it includes the
usual recommendation for a cost-of-living adjustment (COLA) based on
the increase in the cost of living during the current year, projected
to be 1.3 percent for fiscal year 2004. This increase for disability
compensation would include dependency and indemnity compensation and
the clothing allowance provided to veterans whose service-connected
disabilities tend to increase wear and tear of their clothing.
To prevent the purchasing power of compensation from falling behind
the cost of living as it increases, the IB also recommends a
compensation COLA. However, to maintain the value of compensation in
relation to the cost of living, the IB urges Congress to repeal
provisions that require rounding down the COLA to the nearest whole
dollar. Though this rounding down may erode the value of compensation
very slightly for 1 year, rounding down year after year, with its
compounding effect, eventually amounts to a significant degradation of
the modest compensation veterans rely on to purchase the necessities of
life.
The Administration's budget seeks legislation to bar compensation
altogether for the effects of the added disability that results when
veterans resort to alcohol to escape the extreme distress and
disturbing symptoms of some service-connected mental disorders and
other disabilities. This request reveals a callous disregard and
insensitivity to the true nature of these secondary disabilities and
how severely disabled veterans are victimized by them. It ignores the
cause-and-effect relationship between the primary service-connected
disability and the secondary effects. By using alcohol to ameliorate
the psychological pain of these disabilities, veterans are attempting
to quell their symptoms rather than choosing to be more disabled. In
many of these instances, the underlying illness is so debilitating by
itself that any additional disability attributable to alcohol accounts
for no greater rate of compensation or is so inextricably intertwined
with other psychiatric symptoms as to be essentially indistinguishable
from them. Current law resolves these unfortunate circumstances
equitably. Congress rejected VA's request for this legislation last
year, and the IB urges Congress to respond with an emphatic ``no''
again this year.
Similarly, the IB is resolute in its opposition to any repeat of
last year's misplaced scheme to fundamentally alter the bases for
establishing service connection for service-related disabilities.
Military service is not merely a job where an individual spends his or
her regular working hours. Military service requires the service-
member to be at the disposal of the military authorities 24 hours a day
7 days a week and encompasses, indeed dictates, directly or indirectly
all of a service-
member's life activities. Military service is inherently hazardous, and
it involves physical and mental stresses beyond those experienced by
civilian society. Current law therefore equitably treats disabilities
that occur during service as service connected, without requiring a
showing of cause and effect between particular activities or factors of
service and the disability.
Because of the full-time, extraordinarily rigorous, and dangerous
nature of service in the Armed Forces, and rather than becoming mired
in the problematic nuances of causation in such a unique environment,
causation is presumed. No other fair, foolproof, and practical method
exists for determining service connection. The scheme devised last year
for inclusion in the defense authorization bill would have been
anything but fair, foolproof, and practical, although it would have
been expedient for its self-serving purpose of permitting the
Government to dishonorably disavow its obligation to care for our
Nation's sons and daughters who are disabled in service to their
country. By excluding from eligibility for service connection
essentially all accidental injuries and diseases incurred during
military service except those caused directly by work-related
activities of servicemembers' military occupations, few would meet the
extremely restrictive terms of service connection, and many would have
insurmountable difficulties in producing evidence to isolate the cause
to the direct performance of military duties.
The Department of Veterans Affairs (VA) projected that
approximately two-thirds of the disabled veterans now entitled to
disability compensation would not have qualified for service connection
under these criteria. Obviously, the proposed scheme was calculated to
achieve just that result. The action was brazen and reprehensible.
Because its proponents were so shameless and unrestrained, we may very
well see the same or similar action repeated. It will be no less
repugnant, and no less objectionable to the veterans' community. We
appreciate the decisive stand against this plan taken by the Chairman
and other members of this Committee last year, and we urge you to again
flatly reject any similar efforts this year.
The IB makes three additional recommendations to improve the
disability compensation program. We recommend legislation:
to exclude compensation as countable income for Federal
programs;
to repeal the prohibition of service connection for
disabilities related to tobacco use; and
to repeal delayed effective dates for payment of increased
compensation based on temporary total disability.
The President's budget submission suggests legislation to make
awards of death pension effective the first day of the month in which
death occurred if the claim is filed within 1 year of the date of
death. Prior amendments reduced this period from 1 year to 45 days. We
have no recommendation for this legislation in the IB, but we note that
it would be beneficial to needy widows of wartime veterans, and it
would bring this effective date provision back into line with effective
date provisions applicable to other disability benefit payments,
simplifying the law for VA adjudicators.
Service-connected disabilities result in functional impairments
that not only adversely impact upon veterans' ability to perform job
functions but also adversely impact upon their ability to perform the
everyday activities of living. For veterans suffering from service-
connected blindness and physical disabilities that require special
fixtures and modifications to allow them mobility and independence
within the home, VA provides grants for the purchase or construction of
specially adapted housing. For veterans with service-connected
disabilities that interfere with their ability to operate motor
vehicles, VA provides grants for the purchase and special modification
of automobiles. Like other benefits that are subject to the effects of
rising costs, the grants for specially adapted housing and automobiles
must be increased regularly to match increases in costs of homes and
vehicles. The value of these benefits has fallen substantially behind
rising costs because there have been long periods between adjustments.
Congress increased these grants last year, but the increase did not
equal their cumulative loss in value and therefore did not fully
restore them to the value they had when first established. To remedy
this deficiency and to improve these programs, the IB recommends that
Congress enact legislation:
to increase the amount of the grants for specially adapted
housing and to provide for automatic annual adjustments for increased
costs;
to provide a grant for adaptations to a home that replaces
the first specially adapted home; and
to increase the amount of the automobile grant and to
provide for automatic annual adjustments for increased costs.
For the education programs, the President's budget includes
suggestions for legislation to make three minor ``technical'' changes,
although one of the amendments would make a substantive change to
prohibit education benefits for servicemembers who are incarcerated for
crimes and whose character of service upon discharge following their
release from prison will be disqualifying. The IB has no position on
these suggested legislative changes. However, for the education
programs, we make two recommendations for legislation:
to expand Montgomery GI Bill eligibility to persons who,
but for service on or before June 30, 1985, would be eligible for
education benefits under this program; and
to authorize refund of contributions to veterans who
become ineligible for the Montgomery GI Bill by reason of discharges
characterized as ``general'' or ``under honorable conditions''.
Although we have come to expect the Administration to propose
actions to reduce or eliminate benefits and services for veterans, we
were surprised by this year's suggestion in the President's budget for
VA that Congress enact legislation to restrict veterans' use of home
loan guaranties to one time. When they return to civilian life from
military service, veterans often have very limited means to achieve the
American dream of owning a home. They purchase ``starter'' homes. As
their economic situation improves and families grow, they, like many
other Americans, want to expand and improve their housing. In today's
mobile society, veterans may be required to move to new locations to
follow their jobs or the job market. If a veteran is in good standing
with VA, his or her purchase of another home can be made easier by a VA
guaranteed loan. Because of the limits on VA loans, veterans who use VA
loan guaranty are those who must purchase moderately priced homes, and
the repeat use of this benefit provides no unwarranted windfall for
veterans. At the same time, it is no great burden on the Government.
The ability of veterans to use their loan guaranty more than once can
be very beneficial to them and to the American economy, without any
undue cost to the Government. Therefore, this proposal to limit
veterans to one loan seems to have as its object the reduction of
veterans' benefits merely for the sake of reducing them, without any
reciprocal benefit to the Government. In any event, this suggested
legislation is unwarranted, and the IB urges you to soundly reject it.
The IB makes positive recommendations to improve the home loan
guaranty program for veterans and other eligible beneficiaries. We
recommend that Congress enact legislation:
to increase the maximum VA home loan guaranty and provide
for automatic annual indexing to 90 percent of the Federal Housing
Administration-Federal Home Loan Mortgage Corporation loan ceiling; and
to repeal funding fees imposed upon certain home loan
guaranties.
For the insurance programs, the President's budget proposes
legislation for technical amendments ``to clarify certain points such
as defining an insurable dependent, terms of coverage and premiums.''
According to the budget, these changes require no additional funds.
Without more specifics, we have no position on the proposed legislation
at this time.
The insurance programs for veterans are in need of added
protections and revisions to replace long outdated rates and increase
the maximum coverage available. Often, a veteran's life insurance
policy is all that a veteran has to pay for his or her last expenses
and burial. Yet, for nursing home care under Medicaid, the Government
forces veterans to surrender their Government life insurance polices
and apply the cash value toward nursing home care as a condition for
Medicaid coverage.
Because of service-connected disabilities, disabled veterans have
difficulty getting or are charged higher premiums for life insurance on
the commercial market. VA therefore offers disabled veterans life
insurance at standard rates under the Service Disabled Veterans'
Insurance (SDVI) program. When this program began in 1951, its rates,
based on mortality tables then in use, were competitive with commercial
insurance. Commercial rates have since been lowered to reflect improved
life expectancy shown by current mortality tables. VA continues to base
its rates on mortality tables from 1941, however. Consequently, SDVI
premiums are no longer competitive with commercial insurance, and SDVI
therefore no longer provides the intended benefit for eligible
veterans.
When life insurance for veterans had its beginnings in the War Risk
Insurance program first made available to members of the Armed Forces
in October 1917, coverage was limited to $10,000. A $10,000 life
insurance policy provided sufficiently for the loss of income from the
death of an insured in 1917. Today, some 87 years later, maximum
coverage under the base SDVI policy is still $10,000. Given that the
annual cost of living is many times what it was in 1917, the same
maximum coverage, well over three quarters of a century later, clearly
does not provide meaningful income replacement for the survivors of
service-disabled veterans.
Similarly, the maximum coverage under the Veterans' Mortgage Life
Insurance (VMLI) program has fallen behind current needs. The maximum
VMLI coverage was last increased in 1992. Since then, housing costs
have risen substantially. Because of the great geographic differentials
in the costs associated with accessible housing, many veterans have
mortgages that exceed the maximum face value of VMLI. Thus, the current
maximum coverage amount does not cover many catastrophically disabled
veterans' outstanding mortgages. Moreover, severely disabled veterans
may not have the option of purchasing extra life insurance coverage
from commercial insurers at affordable premiums.
These deficiencies substantially reduce the effectiveness of the
insurance programs. To correct these shortcomings, the IB recommends
legislation:
to exempt the dividends and proceeds from, and cash value
of, VA life insurance policies from consideration in determining
entitlement under other Federal programs;
to authorize VA to use modern mortality tables instead of
1941 mortality tables to determine life expectancy for purposes of
computing premiums for SDVI;
to increase the maximum protection available under the
base policy of SDVI from $10,000 to $50,000; and
to increase the maximum coverage under VMLI from $90,000
to $150,000.
Veterans' benefits are for veterans, not others who have no right
to them. Congress has been careful to ensure veterans receiving
benefits are not easy prey for persons seeking to divert these benefits
away from veterans and into their own pockets. Congress has placed
restrictions on attorney fees, and Congress has included broad and
sweeping protections in the law to prohibit the assignment of veterans'
benefits and to protect them against the claims of third parties.
Existing law provides:
``Payments of benefits due or to become due under any law
administered by the Secretary shall not be assignable except to
the extent specifically authorized by law, and such payments
made to, or on account of, a beneficiary shall be exempt from
taxation, shall be exempt from the claim of creditors, and
shall not be liable to attachment, levy, or seizure by or under
any legal or equitable process whatever, either before or after
receipt by the beneficiary.''
Despite the prohibition against assignment, some commercial
entities were enticing vulnerable veterans into arrangements whereby
the veterans traded their future compensation payments for lump sums
amounting to a fraction of the value of the compensation. Last year,
Congress added language to the prohibition against assignment to leave
no room for convenient interpretation of the law as permitting that
practice. Despite the clear and emphatic language in the law shielding
veterans' benefits from the claims of third parties, the courts have
conveniently interpreted the law to permit what it unquestionably
prohibits. As a result, veterans' benefits have become an easy target
for former spouses seeking alimony. The courts show little reverence
for the principle that veterans' benefits were created for veterans and
little regard for congressional intent that a disabled veteran, and not
someone else, should be compensated for the effects disability. Courts
seem to have no hesitation in ordering disabled veterans to pay part of
their disability compensation to able-bodied former spouses. This
situation is appalling. The IB therefore recommends legislation to
reinforce existing law so there can be no doubt that it means what it
says.
While not under the jurisdiction of this Committee, we also call
for legislation to remove, for all service-connected disabled military
longevity retirees, the offset between their military retired pay and
disability compensation. As you know, the legislation enacted near the
end of the last session of Congress provides for removal of this
inequitable offset for some disabled veterans. In so doing, it left the
injustice in place for many other veterans. We also recommend
legislation to extend the 3-year limitation on recovery of taxes
withheld from disability severance pay and military retired pay later
determined to be exempt from taxable income.
Although they need fine tuning from time to time, the benefit
programs have been carefully crafted by Congress to alleviate the
disadvantages veterans suffer as a result of disabilities and as a
result of educational and vocational opportunities forgone by young men
and women who chose to serve their country before personal advancement.
These programs are effective only to the extent the benefits and
services are delivered to entitled veterans when they need them.
Efficiently and proficiently administering this broad range of programs
for millions of veterans naturally and unquestionably presents
formidable management challenges. Small mistakes can have major
consequences for large numbers of veterans. Management and process
deficiencies, and insufficient resources, have consequences that are
directly revealed through poor service to veterans.
Although such poor service frustrates veterans who must deal with a
massive and complex bureaucracy, it causes more than mere
inconveniences. Incorrect decisions deprive entitled veterans of the
benefits they need, and long delays due to incorrect decisions and
insufficient resources deprive entitled veterans of the benefits they
need when they most need them. Of course, the correct and timely
payment of disability compensation is imperative for veterans who must
rely on compensation for food and shelter.
In fulfilling its mission of effective management of the benefit
programs and effective delivery of benefits and services, the Veterans
Benefits Administration (VBA) has a checkered history, especially in
accurate and timely delivery of the core veterans' benefit, disability
compensation. Some of the failures were self-inflicted and the product
of a wrong-headed institutional mindset, others were due to more
innocent mistakes, and many were caused or compounded by insufficient
resources or other factors beyond VA's control.
With a focus and decisive action directed to real reforms and
improvement, current management has made some headway in overcoming
systemic deficiencies in the delivery of benefits. Congress has helped
by providing the additional resources necessary to bring the workforce
and technology to the capacity required. To continue on the course of
restoring VBA to acceptable levels of performance and service to
veterans--indeed, to avoid losing the gains made thus far--VBA must
continue to devote its full energies to the process, and Congress must
continue to provide the resources required to get the job done. The IB
makes specific recommendations in both of these areas.
To enable it to more effectively enforce agency policy and
performance standards, we have recommended that VBA make changes to
remedy some weak links in its management structure. We have called for
improvements in VA rulemaking to make VA's regulations more fairly
serve veterans and to avoid litigation over challenged regulations. For
VBA's Compensation and Pension Service (C&P), we have urged VA to
devote more effort to attacking the root causes of errors in claims
adjudication.
To ensure that VBA has the personnel and tools necessary to carry
out its mission, we have made several recommendations regarding
staffing and appropriations to support ongoing initiatives to develop
and install modern information technology systems. Unfortunately, the
President's budget request appears to seriously undermine VBA's
systematic efforts to correct its deficiencies, employ better
information technology, and improve its production and service to
veterans.
The President's budget submission for VA clearly does not remain
fixed on the objective of strengthening VBA to make it better able to
fulfill its responsibilities to veterans. Due to the war in Iraq and
the many hostilities in which our Armed Forces are engaged today, we
can only expect an influx of new veterans needing VA benefits and
services. Logically, more resources will be needed in some areas just
to stay even with the workload. However, the President's budget
proposes major reductions in resources for the delivery of benefits and
services to veterans. For VBA, the President's budget requests 829
fewer full-time employees (FTE) for fiscal year 2005 than authorized at
the end of the fiscal year we have just finished, fiscal year 2003. The
request is 540 FTE below the fiscal year 2004 level. We note,
incidentally, that the difference between the fiscal year 2003 and
fiscal year 2005 FTE for VBA is apparently greater than the 829
employees indicated by the budget submission because, at the beginning
of fiscal year 2004, the responsibilities and the 31 FTE of the
Evidence Development Unit of the Board of Veterans' Appeals (BVA) were
reassigned from BVA to VBA, without any corresponding request to
increase VBA's authorized FTE by an equal amount.
Under the President's budget request, every benefit line except
Insurance Service would lose employees. Even with all-out efforts,
VBA's progress in reducing the backlog of work and the waiting times
for benefits has been gradual and fairly slow-paced, representative of
deliberate efforts within the limits of its abilities under the
resource levels available in the past few years. We seriously doubt
that VBA can suddenly accelerate and achieve enough productivity
improvements to offset such a substantial loss of resources, especially
against the weight of added work. The President's budget would also
substantially scale back investments in ongoing programs to modernize
VBA's essential information technology. These two proposed reductions
strike the core of the veterans' benefits delivery system.
The President's budget proposes 7,270 FTE, or 487 fewer direct
program FTE for C&P Service in fiscal year 2005 than in fiscal year
2003. In addition, the President's budget requests 185 fewer FTE for
management direction and support and information technology in C&P
Service for fiscal year 2005 than it had in fiscal year 2003. We also
understand that the additional FTE for the Evidence Development Unit
assumed by VBA from BVA are charged to C&P Service. With those FTE
absorbed by C&P and without any equal increase in the FTE requested for
C&P, that number of employees must be calculated as an additional net
reduction of FTE for C&P Service when comparing the fiscal year 2003
staffing with the request for fiscal year 2005.
We recommend in the IB that C&P Service be authorized 7,757 FTE for
fiscal year 2005. VA had projected that its workload would allow it to
draw down its FTE in fiscal year 2005 by approximately 268 below its
staffing level of 7,757 FTE at the end of fiscal year 2003. However,
those projections did not take into account additional work VA now
expects incident to legislation that expanded eligibility for Combat
Related Special Compensation and authorized concurrent receipt of
military retired pay and disability compensation for certain veterans.
VA projects that this legislation will generate 391,000 new claims and
52,869 appellate cases over the next 5 years. In addition, VA projects
it will have to rework approximately 48,000 claims to meet the
requirements of a court decision invalidating VA procedures that placed
unlawful requirements upon veterans. Though most of that work should be
done during fiscal year 2004, this additional volume will likely delay
work on some of C&P's inventory and carry some extra caseload over into
fiscal year 2005. This additional workload requires that VA, at least,
have approximately the same direct program staffing levels for fiscal
year 2005 that it had at the end of fiscal year 2003.
Just as VA must have sufficient staffing to match its compensation
and pension claims workload, it must continue to have efficient
procedures and technology for processing claims and related
information. To aid in accuracy and uniformity in claims adjudication,
and to achieve the greater efficiencies of modern information
technology, VA began its Compensation and Pension Evaluation Redesign
(CAPER) initiative during 2001. To determine and implement its optimum
performance in record development, disability examinations, and claims
decisions, VA is undertaking a review of its claims process with the
goal of developing and deploying an integrated electronic format to aid
in uniform and correct application of procedures and substantive rules
and to allow for the electronic transmission of data from its source
into the claims data base. VA now hopes to have this system fully in
place by September 2006. To achieve that goal, VA needs approximately
$3.5 million in fiscal year 2005 to continue development of this
system. The IB recommends that Congress provide this essential funding
to VA. The President's budget requests only $2.7 million for this
project.
Another aspect of systems modernization is the use of electronic
files to replace manual paper transfer and storage of claims records.
With the necessary imaging and other equipment, VA can acquire, store,
and process claims data much more timely and efficiently, reducing task
times and staffing needs. VA's project, known as ``Virtual VA,'' has
been deployed at VA's Pension Maintenance Centers and is undergoing
evaluation and assessment based on experience at these three sites.
With eventual full implementation, all VBA regional offices will have
document imaging capabilities, and VA medical centers will have
electronic access to veterans' claims folders for review in connection
with disability examinations ordered by claims adjudicators.
Accordingly, the IB recommends that Congress provide VA the $8 million
it needs in fiscal year 2005 to continue document preparation and
scanning at the Pension Maintenance Centers and to continue development
of the system for application nationwide. The President's budget
requests only $1.6 million for Virtual VA.
As with C&P Service, VBA's Vocational Rehabilitation and Employment
Service (VR&E) faces major challenges in meeting its responsibilities
to disabled veterans under circumstances of heavy workloads and limited
resources. The impact of the worldwide war on terrorism, hazardous duty
in other locations around the world, and major combat operations in
Iraq and Afghanistan, will undoubtedly be felt by VR&E when these
veterans begin pouring into the system with the need for rehabilitation
training and employment suitable to their service-connected
disabilities. To sustain current levels of performance with its
projected workload, VR&E needs to retain the staffing strength it had
at the end of fiscal year 2003. In addition, the VA Secretary's VR&E
Task Team has made a number of recommendations to improve vocational
rehabilitation and employment services for veterans. It is projected
that approximately 200 additional FTE will be needed to implement these
substantial reforms in the programs, organization, and work processes
of the VR&E program. At the end of fiscal year 2003, VR&E direct
program staffing was 931 FTE. The IB therefore recommends that Congress
authorize 1,131 direct program FTE for VR&E in fiscal year 2005. The
President's budget requests only 876 FTE for fiscal year 2005, and
seeks 21 fewer FTE for management direction and support and information
technology than VR&E had in fiscal year 2003.
Similarly, VBA's Education Service expects some increase in its
workload, due to legislation last year that expanded coverage of the
program to include additional types of training. VA is striving to
provide more timely and efficient service to claimants seeking
education benefits. Education Service reports gains in these areas
during fiscal year 2003. To continue on the course of improvement and
to meet the added workload projected, Education Service must at least
maintain its fiscal year 2004 staffing level. In fiscal year 2004,
Education Service had 766 direct program FTE authorized, and the IB
recommends that Congress authorize 766 FTE for Education Service in
fiscal year 2005.
For veterans who do not receive a correct disposition of their
benefit claims from VA's administrative claims adjudication processes,
judicial review is available. Because the United States Court of
Appeals for Veterans Claims is not a part of the VA or the executive
branch, its funding is not included under the budget for veterans'
benefits and services. The Court is nonetheless an integral part of the
system of benefits for veterans, and this Committee does, of course,
have oversight responsibilities and jurisdiction over any authorizing
legislation pertaining to the Court and its functioning. Additionally,
the United States Court of Appeals for the Federal Circuit has
jurisdiction to hear appeals from decisions of the Court of Appeals for
Veterans Claims and has jurisdiction to hear direct challenges to VA
regulations. This Committee has jurisdiction over laws that govern
review of these appeals and challenges to regulations in the Federal
Circuit. For this area of great importance to veterans, the IB includes
several recommendations.
In previous years, we have recommended in the IB that Congress
amend the standard under which the Court of Appeals for Veterans Claims
reviews the propriety of factual findings by VA's administrative
appellate board, BVA. Under the ``clearly erroneous'' standard, the
Court was essentially upholding any finding of fact against a VA
claimant that had some ``plausible basis'' in the record although the
law mandates that VA decide a factual question in a claimant's favor
unless the evidence against the claim outweighs the evidence supporting
it. This mandate in law is known as the ``benefit-of-the-doubt'' rule.
This rule is based on the time-honored principle that we owe veterans
greater considerations than ordinary citizens litigating in court or
seeking government assistance from other agencies and that a veteran
claiming benefits is therefore entitled to the benefit of the doubt
when the evidence neither proves nor disproves his or her claim. With
the Court upholding adverse factual findings for which there is merely
some plausible basis, BVA was completely free to ignore the law and
deny a claim for VA benefits even though the supporting evidence was
much stronger than, or at least as strong as, the evidence against it.
The Court was turning a blind eye to erroneous and unjust denials of
meritorious claims, making the benefit-of-the-doubt rule unenforceable
and meaningful only to the extent VA chose to observe it. Appeals to
the Court often follow from arbitrary decisions in which VA chose to
ignore the rule, but these appeals were essentially futile, with
meritorious claims and justice denied. To correct this grave injustice,
the IB recommended that Congress amend the law to require the Court to
reverse any BVA factual finding against a claimant that was clearly
inconsistent with the benefit-of-the-doubt rule. To accomplish this, we
recommended that the clearly erroneous standard be replaced with an
instruction that the Court must reverse any finding of fact adverse to
a claimant that was not reasonably supported by a preponderance of the
evidence, which is weight of the evidence required for such adverse
finding under the benefit-of-the-doubt rule.
Seeking to continue its immunization from meaningful judicial
review of its factual findings, VA opposed this change, and the
veterans' committees compromised with less definite changes than the IB
had recommended and thought necessary. As a result, the Court has
construed the new legislation as making no change whatsoever. Indeed,
VA itself argued to the Court that Congress made no substantive change
in the law by these amendments. Deserving veterans are still left with
no remedy for outright violations of the law. That is unacceptable. We
therefore renewed in this year's IB our previous recommendation that
Congress replace the clearly erroneous standard with the requirement
that the Court reverse factual findings not reasonably supported by a
preponderance of the evidence. Certainly, you should not again be
persuaded to accept any compromise proposed by VA that will enable VA
to once more argue to the Court that you did nothing. We want to
reiterate here that this issue is one that remains very important to
veterans and their rights.
When Congress ended the longstanding absence of judicial review for
veterans' claims, it was very concerned that the formalities typical of
judicial proceedings not change the informalities of VA's
administrative claims processes. The legislative history for judicial
review legislation emphasizes repeatedly congressional intent to
preserve this informality and the pro-veteran procedures at the
administrative level. Congress maintained in the law provisions that
put the obligation on VA to develop the claims record and afford
consideration to all possible theories of entitlement under all
relevant laws, regulations, and other legal authorities. The veteran is
not required to know or argue the legal technicalities of benefits
laws. Thus, failure of BVA to consider all points of law bearing on a
claim is legal error, an error of omission. Yet, the Court has refused
to consider these points in appeals on the grounds that the veteran
failed to argue them before BVA. In effect, the Court is relieving VA
of its obligations under the law and shifting them to veterans. The
Court is imposing upon veterans the very thing Congress did not intend,
the obligation to formally plead all the finer points of law that are
often very complex and poorly understood by average laypersons. To
prevent the Court from further imposing the formalities of adversarial
judicial proceedings upon the non-adversarial veterans' claims process,
the IB recommends legislation to prohibit judicial imposition of formal
pleading or so-called ``exhaustion'' requirements upon the VA claims
system.
Though veterans have deep frustration with some of the Court's
actions, judicial review and many of the Court's precedents have added
legitimacy to the process and forced VA to follow the law more
carefully. Judicial review exposed deeply ingrained unlawful practices
and deficiencies in VA's claims adjudication, and more than any other
factor, forced VA to acknowledge these systemic defects and make
fundamental reforms. As a result of the availability of judicial review
and enforcement of the law by the Court, veterans stand a much better
chance of getting a fair decision today than they did before judicial
review was authorized by your landmark legislation in 1988. We still
need to make adjustments to bring the process closer to that envisioned
by Congress in its 1988 legislation, however.
The Chief Judge has begun exploratory steps toward securing a site
and authority for construction of a courthouse and justice center.
After an appropriate site is located, Congress must enact authorizing
legislation and provide necessary funding if the project is to be
undertaken. The IB fully supports the project to construct a courthouse
for the veterans' court. We seek the support and essential assistance
of the members of this Committee in securing a site, enacting the
necessary legislation, and working with your colleagues in Congress to
obtain the funding required to build this courthouse and justice center
for veterans.
When Congress authorized judicial review of VA's claims decisions,
it also authorized judicial review of VA's regulations. However,
Congress exempted one area of VA's rulemaking from review by the
courts. Congress expressly deprived the courts of jurisdiction to
review VA's Schedule for Rating Disabilities. We agree with the
reasoning that the courts should not be empowered to intervene in VA's
application of its special expertise and the exercise of its discretion
in formulating criteria for evaluating the effects of disabilities.
However, we believe the United States Court of Appeals for the Federal
Circuit should be authorized to review and invalidate rating schedule
provisions that are, on their face, contrary to the laws enacted by
Congress or are arbitrary and capricious. Such narrow review would not
interfere with VA's lawful and legitimate exercise of its broad
discretion, and would empower the Federal Circuit to intervene in only
the most egregious abuses of discretion and invalidate only the
unequivocally unlawful rating schedule provisions. Today, VA is totally
immune to any remedy for flatly unlawful or arbitrary and capricious
actions in adopting or revising its rating schedule. The IB therefore
recommends expanding Federal Circuit jurisdiction to permit that court
to review challenges to VA's rating schedule on these narrow grounds.
Finally, I want to join with our IB witness who is covering
veterans' medical care in this hearing in stressing the importance of
putting a mechanism in place to end what has unquestionably proven to
be an inadequate process for funding veterans' medical care. Year after
year, the President's budget request falls well below the minimum
needed to maintain medical services for sick and disabled veterans
seeking those services from the medical care system established to
serve them. Year after year, we must fight an uphill battle to get more
realistic appropriations, and that annual battle is getting ever more
difficult despite the strong advocacy of the members of this Committee,
who know what resources VA really needs. 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
discretionary dollars. Veterans and VA should not have to face the
yearly uncertainty of whether there will be sufficient 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.
We have thoroughly tested the discretionary appropriations process
whereby political will, rather than actual resource needs, determines
how much funding veterans' medical care receives each year. With
consistent experience that funding veterans' medical care under that
process has repeatedly failed, and will only continue to be
unsatisfactory, the remedy is to guarantee adequate and stable funding
through a permanent authorization that uses a reliable formula to
project resource needs. Among all the meritorious issues to be
addressed by this Committee this year, this issue is the most urgent
and therefore the most important to veterans. We need strong bipartisan
support from the members of this Committee to get legislation for
mandatory funding, and we renew our earnest request for your support
this year.
In closing, I want to acknowledge and express the DAV's sincere
appreciation for the advocacy and support veterans have received from
this Committee. The Committee has acted favorably on many of the
recommendations of the IB in past years, and many of the recommended
changes are now in law, making the programs more effective for our
veterans. Working together, the IB and this Committee have made
numerous improvements in the benefits and the delivery system. We hope
you will again find our recommendations meritorious and will shepherd
legislation through this year to adopt more of them.
Chairman Specter. Our next witness is Mr. Paul Hayden,
National Legislative Service, Veterans of Foreign Wars of the
United States. Thank you for coming in today, Mr. Hayden, and
we will put your whole resume in the record.
STATEMENT OF PAUL A. HAYDEN, DEPUTY DIRECTOR, NATIONAL
LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED
STATES
Mr. Hayden. Thank you, Mr. Chairman, Ranking Member Graham.
As a member of The Independent Budget for VA, the VFW is
responsible for the construction portion of the VA budget, so I
will limit my testimony to that area.
The President's fiscal year 2005 budget indicates that
along with gross funding deficiencies in practically every VA
account, VA construction is to be dramatically and most
detrimentally shortchanged, as well. In fact, since 1993, VA
construction funding has been in steady decline. The fiscal
year 1993 combined major and minor construction total was $600
million, and the fiscal year 2005 proposal is only $170
million.
VA's history of low construction budgets the last 12 years
is an explicit indication of poor stewardship of the system's
facility capital assets. It also flies in the face of statutory
mandates to provide for the short- and long-term care needs of
our most seriously service-connected veterans.
Once again, the administration is proposing counting State
nursing home beds as part of its long-term care capacity. We
view this as an attempt to circumvent both the letter and
intent of the law with a number of our most deserving and
vulnerable veterans suffering as a consequence.
Further, there continues to be a major resistance to fund
an adequate construction budget before the CARES process has
been completed. We have been supportive of the CARES process
from the beginning as long as the primary emphasis is on the
ES, enhanced services. However, we believe that it is poor
policy to defer all VA construction needs until the CARES
process is complete.
We agree with the findings of the President's Task Force to
Improve Health Care Delivery for Our Nation's Veterans. The VA
must accomplish three key objectives. No. 1, invest adequately
in the necessary infrastructure to ensure safe, functional
environments for health care delivery. No. 2, right-size the
respective infrastructures to meet projected demands for
inpatient, ambulatory, mental health, and long-term care
requirements. And finally, create abilities to respond to a
rapidly changing environment using strategic and master
planning to expedite new construction and renovation efforts.
In order to accomplish these objectives, we recommend that
Congress appropriate $571 million to the major construction
account for fiscal year 2005, not the totally inadequate $97
million asked for by the administration. This amount is needed
for seismic correction, clinical environmental improvements,
National Cemetery Administration construction, and land
acquisition.
We also call on Congress to appropriate $545 million to the
minor construction account for fiscal year 2005 while rejecting
the administration proposal of $69 million. These funds
contribute to construction projects costing less than $7
million while providing for inpatient and outpatient care and
support, infrastructure, physical plant, and historic
preservation projects.
Mr. Chairman and members of this committee, this concludes
my statement and I will be happy to answer any questions.
Chairman Specter. Thank you. Thank you very much, Mr.
Hayden.
[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 2.7 million men and women of the Veterans
of Foreign Wars of the United States (VFW) and our Ladies
Auxiliary, I would like to take this opportunity to thank you
for being included in today's important hearing regarding the
Department of Veterans Affairs (VA) budget. As a member of The
Independent Budget for VA, the VFW is responsible for the
Construction portion of the VA budget, so I will limit my
testimony to that area.
The VA construction budget includes major construction,
minor construction, grants for construction of State extended
care facilities, grants for State veterans' cemeteries and the
parking garage revolving fund.
The President's fiscal year 2005 budget indicates that,
along with gross funding deficiencies in practically every VA
account, VA construction is to be dramatically and most
detrimentally short-changed as well. In fact, since 1993, VA
construction funding has been in steady decline. The fiscal
year 1993 combined total was $600 million and the fiscal year
2005 proposal is only $200 million once the Capitol Asset
Realignment for Enhanced Services (CARES) is backed out. VA's
history of low construction budgets the last 12 years is an
explicit indication of poor stewardship of the system's
facility capital assets. It also flies in the face of moral as
well as statutory mandates to provide for the short- and long-
term care needs of our most seriously service connected
veterans. Once again, the administration is proposing counting
State nursing home beds as part of its own long-term capacity.
We view this as an attempt to circumvent both the letter and
intent of the law with a number of our most deserves and
vulnerable veterans suffering as a consequence.
Further, there continues to be major resistance to fund an
adequate construction budget before the CARES process has been
completed. We have been supportive of the CARES process from
the beginning, as long as the primary emphasis is on the
``ES''-enhanced services; however, we believe that it is poor
policy to defer all VA construction needs until CARES is
complete.
Currently, most VA medical centers, with an average age of
54 years, are in critical need of repair. Sadly, the prospect
of system-wide capital asset realignment through the CARES
process has been used as an excuse to hold all construction
projects hostage. These projects are essential to patient
safety; moreover, they will eventually pay for themselves
through future savings as a result of modernization. The
ongoing reconfiguration of the system through CARES must not
distract VA from its obligation to protect its current assets
by postponing needed funding for the construction, maintenance
and renovations of VA facilities.
While we still believe the CARES process should proceed, we
perceive a need for further data to support various
recommendations that would close or change missions of certain
VA long-term care and small-size facilities. These data should
include such items as a cost analysis associated with these
changes to include the costs of transferring patients and
staff; the cost associated with contracting for care in the
community; the cost related to shutting down and disposing of
property to include asbestos removal; the cost to build or
lease new facilities like community-based clinics and patient
bed towers to include associated site elements to make the
building functional, such as equipment, relocation, and
activation costs; and updating facility infrastructures to
handle additional patient workloads while maintaining privacy
and safety requirements.
We acknowledge that the VA Office of Facilities Management
has assembled construction cost data for various functional
building types; however, the inclusion of the aforementioned
cost could provide the rationale for reconsidering some
decisions.
In addition, the assumption that Congress will adequately
fund all CARES proposed changes must be questioned. The VFW and
other Independent Budget Veterans Service Organizations (IBVSO)
are concerned that when CARES implementation costs are factored
into the appropriations process, Congress will not fully fund
the VA system, further exacerbating the current obstacles
impeding veterans' access to quality health care in a timely
manner. It is our opinion that VA should not proceed with CARES
changes until sufficient funding is appropriated for the
construction of new facilities and renovation of existing
hospitals is approved.
We recommend that Congress appropriate $571 million to the
Major Construction Account for fiscal year 2005, not the
totally inadequate $97 million asked for by the administration.
This amount is needed for seismic correction, clinical
environment improvements, National Cemetery Administration
construction, land acquisition, and claims. Allocated as
follows: Seismic Improvements--$285,000; Clinical
Improvements--25,000; Patient Environment--10,000; Research
Infrastructure Upgrade and Replacement--50,000; Advance
Planning Fund--60,000; Asbestos Abatement--60,000; National
Cemetery Administration--81,000; IB Recommended fiscal year
2005 Appropriation--$571,000.
We also call for the Congress to appropriate $545 million
to the Minor Construction Account for fiscal year 2005 while
rejecting the administration proposal of $69 million. These
funds contribute to construction projects costing less than $7
million. This appropriation also provides for a regional office
account, National Cemetery Administration account, improvements
and renovation in VA's research facilities, a staff office
account, and an emergency fund account. Increases provide for
inpatient and outpatient care and support, infrastructure,
physical plant, and historic preservation projects. Allocated
as follows: Inpatient Care Support--$130,000; Outpatient Care
and Support--100,000; Infrastructure and Physical Plant--
150,000; Historic Preservation Grant Program--25,000; Other--
25,000; VBA Regional Office Program--35,000; National Cemetery
Program--35,000; and VA Research Facility Improvement and
Renovation--45,000; IB Recommendation fiscal year 2005
Appropriation--$545,000.
Annually, the VHA submits a list of Top 20 Priority Major
Medical Construction Projects to Congress, which identifies the
major medical construction projects that have the highest
priority within VA. This list includes buildings that have been
deemed as ``significant'' seismic risk and buildings that are
at ``exceptionally high risk'' of catastrophic collapse or
major damage. Currently, 890 of VA's 5,300 buildings have been
classified as significant seismic risk, and 73 VHA buildings
are at exceptionally high risk.
The IBVSO's believe, as we have indicated in the past, that
there is ill-advised resistance to funding any major
construction projects before the CARES process has been
completed, and this includes correcting seismic deficiencies in
VHA facilities. Regardless of the recommendations of the CARES
program on facility realignments, it is our contention that VA
must maintain and improve its existing facilities to support
the delivery of health-care services in a risk-free environment
for veterans and VA employees alike.
Most seismic correction projects should include patient-
care enhancements as part of their total scope. Also,
consideration must be given to enhanced service recommendations
provided for in CARES. Due to the lengthy and widespread
disruption to ongoing hospital operations that are associated
with most seismic projects, it would be prudent to make
qualitative medical care upgrades at the same time.
We contend that Congress should appropriate $285 million to
correct seismic deficiencies. Further, VA should schedule
facility improvement projects and CARES recommendations
concurrently with seismic corrections.
In The Independent Budget for Fiscal Year 2004, we cited
the recommendations of the interim report of The President's
Task Force to Improve Health-Care Delivery for Our Nation's
Veterans (PTF). That report was made final in May 2003. To
underscore the importance of this issue, we will cite the
recommendation of the PTF again this year.
VA's health-care facility major and minor construction over
the 1996 to 2001 period averaged only $246 million annually, a
recapitalization rate of 0.64 percent of the $38.3 billion
total plant replacement value. At this rate, VA will
recapitalize its infrastructure every 155 years. When
maintenance and restoration are considered with major
construction, VA invests less than 2 percent of plant
replacement value for its entire facility infrastructure. A
minimum of 5 percent to 8 percent investment of plant
replacement value is necessary to maintain a healthy
infrastructure. If not improved, veterans could be receiving
care in potentially unsafe, dysfunctional settings.
Improvements in the delivery of health care to veterans require
that VA and DOD adequately create, sustain, and renew physical
infrastructure to ensure safe and functional facilities.
It was also recommended by the PTF that ``an important
priority is to increase infrastructure funding for
construction, maintenance, repair, and renewal from current
levels. The importance of this initiative is that the physical
infrastructure must be maintained at acceptable levels to avoid
deterioration and failure.''
The PTF also indicated that ``Within VA, areas needing
improvement include developing systematic and programmatic
linkage between major construction and other lifecycle
components of maintenance and restoration. VA does not have a
strategic facility focus, but instead submits an annual top 20
facility construction list to Congress. Within the current
statutory and business rules, VA can bring new facilities
online within 4 years. However, VA facilities are constrained
by reprogramming authority, inadequate investment, and lack of
a strategic capital-planning program.''
The PTF believes that VA must accomplish three key
objectives:
(1) invest adequately in the necessary infrastructure to
ensure safe, functional environments for healthcare delivery;
(2) right-size their respective infrastructures to meet
projected demands for inpatient, ambulatory, mental health, and
long-term care requirements; and
(3) create abilities to respond to a rapidly changing
environment using strategic and master planning to expedite new
construction and renovation efforts.
Additionally, it was recommended by the PTF that ``an
important priority is to increase infrastructure funding for
construction, maintenance, repair, and renewal from current
levels.''
In a study completed in 1998, Price Waterhouse was asked to
determine the spending level required to ensure that the
Veterans Health Administration's (VHA) investment in facility
assets would be adequately protected against adverse
deterioration and to keep the average condition of facilities
at an appropriate level. Price Waterhouse concluded that the
VHA was significantly underfunding its construction spending,
and based on their observations across the industry,
appropriate annual spending should be between 2 percent and 4
percent of the plant replacement value (PRV) on reinvestment to
replace aging facilities. Price Waterhouse considered
reinvestment to be improvements funded from the major and minor
construction appropriations. PRV for the VHA is approximately
$35 billion. The 2 percent-4 percent range would therefore
equate to annual funding of $700 million to $1.4 billion.
The VFW supports the Price Waterhouse recommendation that
VA spend at least 2 percent of the value of its buildings or
$700 million annually on upkeep. Together with the IBVSO's, we
believe that $400 million should be appropriated in fiscal year
2005 with continued increases in the following years until an
appropriate level of funding, that will forestall the continued
deterioration of VA properties, is achieved.
Congress should appropriate no less than $400 million for
nonrecurring maintenance in fiscal year 2005 to provide for
adequate building maintenance. VA should direct no less than
$400 million for nonrecurring maintenance in fiscal year 2005.
VA should also make annual increments in nonrecurring
maintenance in the future until 2 percent of the value of its
buildings is budgeted and utilized for nonrecurring
maintenance.
Good stewardship demands that VA facility assets be
protected against deterioration and that an appropriate level
of building services be maintained. Given VA's construction
needs, such as seismic correction, compliance with the
Americans with Disabilities Act (ADA) and Joint Commission of
Accreditation of Healthcare Organization (JCAHO) standards,
replacing aging physical plant equipment, and CARES, VA's
construction budget continues to be inadequate.
In addition, it has been suggested that the VA medical
system has vast quantities of empty space that can be cost
effectively reused for medical services. It has also been
suggested that unused space at one medical center may help
address a deficiency that exists at another. Although the space
inventories may be accurate, the basic assumption regarding
viability of space reuse is not.
Medical facility planning is a complex task because of the
intricate relationships that must be provided between
functional elements and the demanding technical requirements of
the sophisticated equipment that must be accommodated. For
these reasons, space in medical facilities is rarely
interchangeable--except at a prohibitive cost. Unoccupied rooms
located on a hospital's eighth floor, for example, cannot
offset a space deficiency in a second floor surgery because
there is no functional adjacency. Medical space has very
critical inter- and intra-departmental adjacencies that must be
maintained for efficient and hygienic patient care. In order to
maintain these adjacencies, departmental expansions or
relocations usually trigger extensive ``domino'' impacts on the
surrounding space. These secondary impacts greatly increase
construction costs and patient care disruption.
Some permanent features of medical space, such as floor-to-
floor heights, column-bay spacing, natural light, and
structural floor loading, cannot be altered. Different medical
functions have different technical requirements based on these
permanent characteristics.
Laboratory or clinical space, for example, is not
interchangeable with patient ward space because of the need for
different column spacing and perimeter configuration. Patient
rooms need natural light and column locations that are
compatible with patient room layouts. Laboratories should have
long structural bays and function best without windows. If the
``shell'' space is not appropriate for its purpose, renovation
plans will be larger and more inefficient and therefore cost
more.
Using renovated space rather than new construction yields
only marginal cost savings. Build out of a ``gut'' renovation
to accommodate medical functions usually costs approximately 85
percent of the cost of similar new construction. If the
renovation plan is less efficient, or the ``domino'' impact
costs are greater, the small potential savings are easily lost.
Renovation projects often cost more and produce a less
satisfactory result. Renovations are sometimes appropriate to
achieve desirable functional adjacencies, but they are rarely
economical.
Early VA medical centers used flexible campus-type site
plans with separate buildings serving different functions.
Since World War II, however, most main hospitals have been
consolidated into large, tall ``modern'' structures. Over time,
these central medical towers have become surrounded by
radiating wings and connecting corridors leading to secondary
structures. Many current VA medical centers are built around
prototypical ``Bradley buildings.'' These structures were
rapidly constructed in the 1940's and 1950's for returning
World War II veterans.
Fifty years ago, these brick facilities were easily site-
adapted and inexpensive to build, but today they provide a very
poor chassis for a modern hospital. Because most Bradley
buildings were designed before the advent of air conditioning,
for example, the floor-to floor heights are very low. This
makes it almost impossible to retrofit modern mechanical
systems. The older hospital's wings are long and narrow (in
order to provide operable windows) and therefore provide
inefficient room layouts by contemporary standards. The Bradley
hospital's central service core with a few small elevator
shafts is inadequate for the vertical distribution of modern
medical services.
In addition, much of the currently vacant space is not
situated in prime locations. If the space were, it would have
been previously renovated or demolished to clear the way for
new additions. Unused space is typically located in outlying
buildings or on upper floor levels. Its permanent
characteristics often make it unsuitable for modern medical
functions.
VA should perform a comprehensive analysis of its excess
space and deal with it appropriately. Some of this space is
located in historic structures that must be preserved and
protected. Some space may be appropriate for enhanced use. Some
may be appropriate for demolition. While it is tempting to
focus on unused space, it should not be a major determinant in
CARES realignments. Each medical center should develop a plan
to find appropriate uses for its vacant properties.
Mr. Chairman and members of this Committee, this concludes
my statement and I will be happy to respond to any questions
you may have.
Chairman Specter. Our final witness in this round is Mr.
Rick Jones, National Legislative Director of AMVETS. Thank you
for being with us, Mr. Jones, and the floor is yours.
STATEMENT OF RICHARD JONES, NATIONAL LEGISLATIVE DIRECTOR,
AMVETS
Mr. Jones. Thank you, Mr. Chairman, Ranking Member Graham.
It is an honor to be here with you today and I would like to
note appreciation for your strong leadership and continuing
support.
Last year, Mr. Chairman, you played a critical role in
terminating a dark-of-night proposal to make future disabled
veterans pay the compensation of past veterans for their
service-connected injury and we applaud you for your stand up,
stand out defense of veterans. Thank you very much.
Mr. Chairman, without your strong commitment, Congress may
fall short of providing the appropriations necessary to ensure
that burial space for millions of veterans and their eligible
dependents will be provided. The Independent Budget Veterans
Service Organizations do work together and we work to ensure
that the National Cemetery Administration remains a world
class, quality service that honors veterans and recognizes
their contribution to the security and development of our
nation.
The members of The Independent Budget recommend Congress
provide $175 million in fiscal year 2005 for the operational
requirements of the National Cemetery Administration, the
National Shrine Initiative, and the backlog of repairs. We
recommend your support for a budget that would be consistent
with NCA's growing demands and in concert with the respect that
is due every man and woman who ever wore the uniform of the
Armed Service of the United States. This is an increase of
nearly $30 million over current year funding.
Funding for the State Cemetery Grants program, the members
of The Independent Budget recommend $37 million in the new
fiscal year. The intent of the State Cemetery Grants program is
to develop a true complement to, not a replacement of, the
National Cemetery System and it is a vital program. It has
greatly assisted States to increase burial service to veterans,
especially those living in more rural areas, less densely-
populated areas that are not currently served by the National
Cemetery System. For example, in the current year, the IBO's
anticipate fast track opening in Idaho, Kansas, Massachusetts,
and the Tidewater area of Virginia, where over 200,000 veterans
reside.
The IB VSO's also recommend a series of upgrades on a
number of burial benefits that have eroded over time since
their initiation in 1973. The legislative proposals are part of
the fiscal year 2005 Independent Budget and we ask for
consideration of these proposals.
Mr. Chairman, I would just note one thing. On the cover of
The Independent Budget, you will note that in the bottom left
hand corner there is an individual in a wheelchair who has lost
a leg who is sitting with his family. The picture above is also
a picture of the same individual standing with his comrades
prior to injury. I think this is important for us to note, that
individuals who we expect to return, in full health as Priority
8 veterans may return otherwise. But in each case, it's a
Priority 8 veteran who needs to step forward when a fellow
soldier is injured, hurt, or, unfortunately, killed. We don't
win our battles and we don't have victory without that
commitment.
Thank you, sir, and God bless America.
Chairman Specter. Thank you. Thank you very much, Mr.
Jones.
[The prepared statement of Mr. Jones follows:]
Prepared Statement of Richard Jones, National Legislative Director,
AMVETS
Mr. Chairman, Ranking Member Graham, and members of the Committee:
AMVETS is honored to join fellow veterans service organizations at
this hearing on the VA's budget request for fiscal year 2005. We are
pleased to provide you our best estimates on the resources necessary to
carry out a responsible budget for the fiscal year 2005 programs of the
Department of Veterans Affairs. AMVETS testifies before you today as a
co-author of The Independent Budget. This is the 18th year AMVETS has
worked with the Disabled American Veterans, the Paralyzed Veterans of
America, and the Veterans of Foreign Wars to produce a working document
that sets out our spending recommendations on veterans' programs for
the new fiscal year. Indeed, we are proud that over 30 veteran,
military, and medical service organizations endorse these
recommendations. In whole, these recommendations provide decisionmakers
with a rational, rigorous, and sound review of the budget required to
support authorized programs for our nation's veterans.
In developing this document, we believe in certain guiding
principles. Veterans must not be forced to wait for the benefits
promised them. Veterans must be assured of access to high quality
health care. Veterans must be guaranteed access to a full continuum of
healthcare services, including long-term care. And, veterans must be
assured burial in a State or national cemetery in every state.
It is our firm belief that the mission of the VA must continue to
include support of our military in times of emergency and war. Just as
this support of our military is essential to national security, the
focus of the VA medical system must remain centered on specialized
care. VA's mission to conduct medical and prosthetics research in areas
of veterans' special needs is critical to the integrity of the veterans
healthcare system and to the advancement of American medicine.
In addition, the budget must recognize that VA trains most of the
nation's healthcare workforce. The VA healthcare system is responsible
for great advances in medical science, and these advances benefits all
Americans. The Veterans Health Administration is the most cost-
effective application of Federal healthcare dollars, providing benefits
and services at 25 percent lower cost than other comparable medical
services. In times of national emergency, VA medical services can
function as an effective backup to the DoD and FEMA.
Noting the mission of the VA, it is important to understand the
areas where VA funding must be increased. The VA budget must address
the pending wage increases for VA employees. It must address the
continuing backlog in veterans waiting for health care and it must
address, as well, VA's benefits casework backlog. There are severely
disabled veterans and those needing home-based healthcare in those
backlogs, and I think we can all agree that this situation should be
addressed and corrected.
As we look to fiscal year 2005, we watch a live lesson about the
challenges inherent to inadequate funding. Due to a lack of resources,
VA took action on January 17, 2003, to ban healthcare access to 164,000
veterans who could have enrolled last year. This ban remains in force,
despite substantial increases in healthcare funding over the past 2
years. It is remarkable that after blocking entry to these so-called
``high income'' veterans, VA issued a healthcare directive (VHA
Directive 2003-003, January 17, 2003) telling workers to send banned
veterans to Community Social Work for assistance.
It is hoped that recently passed provisions contained in the fiscal
year 2004 appropriations bill, which aim to overcome VHA Directive
2003-003, will remedy this breach of faith. When an individual commits
to the defense of the rest of us, undertakes training that is
inherently more dangerous than the typical civilian occupation, and
stands ready to go into harm's way so that others need not, this
country's gratitude should not be demonstrated with a simple referral,
however courteous and sincere, to the welfare line.
Looking to the new year, The Independent Budget recommends Congress
provide $29.8 billion to fund VA medical care for fiscal year 2005, an
increase of nearly $3.1 above fiscal year 2004. We ask Congress to
recognize that the VA healthcare system is an excellent investment for
America. It can only bring quality health care, however, if it receives
adequate funding.
We also ask Congress to understand that there are other potential
challenges regarding veterans health care especially in regard to a new
generation of veterans returning from Iraq, Afghanistan and the war on
terrorism. By last year's count, more than 80,000 veterans who returned
from the war have sought VA health care. And, it is likely the demand
will remain strong for the foreseeable future. To facilitate their
care, it is important that Congress work with the administration to
accelerate the development of a seamless, transferable lifetime medical
record between the DoD and VA.
It is also important to clearly State that AMVETS along with its IB
partners strongly support shifting VA healthcare funding from
discretionary funding to mandatory. Mandatory funding would give some
certainty to healthcare services. VA facilities would not have to deal
with the uncertainty of discretionary funding, which has proven
inconsistent and inadequate. Mandatory funding would provide a
comprehensive solution to the current funding problem. Once healthcare
funding matched the actual average cost of care for veterans enrolled
in the system, the VA can fulfill its mission.
THE NATIONAL CEMETERY ADMINISTRATION
Before I address budget recommendations for the National Cemetery
Administration, I would like members of the Committee to know that
AMVETS fully appreciates the strong leadership and continuing support
demonstrated by members of the Senate Veterans' Affairs Committee.
AMVETS is truly grateful to those who serve on this important
committee. Through your work, you have distinguished yourselves as
willing to lead the country in addressing issues important to veterans
and their families.
Since its establishment, the National Cemetery Administration (NCA)
has provided the highest standards of service to veterans and eligible
family members in the system's 120 national cemeteries.
Currently, the National Cemetery Administration maintains more than
2.6 million gravesites on approximately 14,000 acres of cemetery land,
while providing nearly 90,000 interments annually.
VA is scheduled to open new cemeteries in Atlanta, GA; Oklahoma
City, OK; Pittsburgh, PA; Detroit, MI; Miami, FL; and Sacramento, CA.
Also under legislation passed last year (P.L. 108-109), VA is directed
to design and construct cemeteries at six new national locations in
Philadelphia, Pennsylvania; Birmingham, Alabama; Jacksonville, Florida;
Bakersfield, California; Greenville, South Carolina; and Sarasota
County, Florida.
The strong effort to build new cemeteries recognizes the dramatic
increases in the interment rate of veterans. NCA requires increases in
funding if it is to carry out its statutory mandates. Without the firm
commitment of Congress and its authorizing and appropriations
committees, VA would likely fall short of burial space for millions of
veterans and their eligible dependents.
The members of The Independent Budget urge Congress and the
administration to significantly boost NCA resources for fiscal year
2005. It should be recognized that not only is the interment rate
increasing and the construction of new facilities accelerating, but
also there are repair and upgrades needed. The Study on Improvements to
Veterans Cemeteries, a comprehensive report submitted in 2002 by VA to
Congress on conditions at each cemetery, identified nearly $300 million
in over 900 projects for gravesite renovation, repair, upgrade, and
maintenance.
As any public facilities manager knows, failure to correct
identified deficiencies in a timely fashion results in continued, often
more rapid, deterioration of facilities and increasing costs related to
necessary repair. The IBVSO's agree with this assessment and believe
that Congress needs to carefully consider this report to address the
condition of NCA cemeteries and ensure they remain respectful settings
for deceased veterans and visitors. We recommend that Congress and VA
work together to establish a timeline for funding these projects based
on the severity of the problems.
Volume 3 of the Study describes veterans cemeteries as national
shrines saying that one of the most important elements of veterans
cemeteries is honoring the memory of America's brave men and women who
served in the Armed Forces. ``The commitment of the nation,'' the
report says, ``as expressed by law, is to create and maintain national
shrines, transcending the provisions of benefits to the individual even
long after the visits of families and loved ones.''
Indeed, Congress formally recognized veterans cemeteries as
national shrines in 1973 stating, ``All national and other veterans
cemeteries'' shall be considered national shrines as a tribute to our
gallant dead.'' (P.L. 93-43) Moreover, many of the individual
cemeteries within the system are steeped in history and the monuments,
markers, grounds and related memorial tributes represent the very
foundation of these United States. With this understanding, the
grounds, including monuments and individual sites of interment,
represent a national treasure that deserves to be protected and
nurtured.
Unfortunately, despite NCA continued high standards of service and
despite a true need to protect and nurture this national treasure, the
system has and continues to be seriously challenged. The current and
future needs of NCA require continued adequate funding to ensure that
NCA remains a world-class, quality operation to honor veterans and
recognize their contribution and service to the Nation.
The members of The Independent Budget recommend that Congress
provide $175 million in fiscal year 2005 for the operational
requirements of NCA, the national Shrine initiative, and the backlog of
repairs. We recommend your support for a budget consistent with NCA's
growing demands and in concert with the respect due every man and woman
who wears the uniform of the United States Armed Forces. This is an
increase of nearly $30 million over current year funding.
Clearly, the aging veteran population has created great demands on
NCA operations. Nearly 655,000 veterans deaths are estimated in 2005
with the death rate peaking at 690,000 in 2009; of these, it is
expected that 109,000 will seek burial in a national cemetery. As
veteran deaths accelerate, it is obvious the demand for veterans'
burial benefits will increase.
THE STATE CEMETERY GRANTS PROGRAM
For funding the State Cemetery Grants Program, the members of The
Independent Budget recommend $37 million for the new fiscal year. The
intent of the State Cemetery Grants Program is to develop a true
complement to, not a replacement for, our Federal system of national
cemeteries.
With enactment of the Veterans Programs Enhancement Act of 1998,
the NCA has been able to strengthen its partnership with States and
increase burial service to veterans; especially those living in less
densely populated areas not currently served by a national cemetery.
During fiscal year 2004, the IBVSO's anticipate fast-track openings
at new cemeteries under construction--Boise, Idaho (the last State in
the United States without a veterans cemetery); Wakeeny, Kansas (300
miles east of Denver and west of Kansas City, serving rural areas in
western Kansas); Winchendon, Massachusetts (serving the densely
populated northern part of the State); and Suffolk, Virginia (serving
200,000 veterans in the Tidewater area).
To augment support for veterans who desire burial in State
facilities, members of The Independent Budget support increasing the
plot allowance to $725 from the current level of $300. The plot
allowance now covers less than 6 percent of funeral costs. Increasing
the burial benefit to $725 would make the amount nearly proportional to
the benefit paid in 1973. In addition, we firmly believe the plot
allowance should be extended to all veterans who are eligible for
burial in a national cemetery not solely those who served in wartime.
The Independent Budget veterans service organizations (IBVSO's)
also request Congress review a series of burial benefits that have
seriously eroded in value over the years. While these benefits were
never intended to cover the full costs of burial, they now pay for only
a fraction of what they covered in 1973, when they were initiated.
The IBVSO's recommend an increase in the service-connected benefits
from $2,000 to $4,000. Prior to action in the last Congress, increasing
the amount to $2,000, the benefit had been untouched since 1988. The
request would restore the allowance to its original proportion of
burial expense.
The IBVSO's recommend increasing the nonservice-connected benefit
from $300 to $1,225, bringing it back up to its original 22 percent
coverage of funeral costs. This benefit was last adjusted in 1978, and
today covers just 6 percent of burial expenses.
The IBVSO's also recommend that Congress enact legislation to index
these burial benefits for inflation to avoid their future erosion.
Mr. Chairman, this concludes my statement. I thank you again for
the privilege to present our views, and I would be pleased to answer
any questions you might have.
Chairman Specter. I would like to ask just a few questions
at the moment. I would like each of you to comment on the
proposals for mandatory funding. That has been a subject under
discussion for a considerable period of time which would avoid
the discretionary consideration each year, but the other side
of it is it might not produce the kind of analysis and
thoughtful examination depending upon the circumstances.
I would just like you to go down the row and tell me if you
would like to see mandatory funding.
Mr. Gaytan. Thank you for the question, first off. The
American Legion fully supports mandatory funding and it is
going to be key for the equation that reaches the amount needed
for VA health care to be adequate. The equation that is used
must ensure that the cost for each veteran is an adequate cost
when determining exactly what the overall funding for VA would
be under a mandatory funding mechanism.
Chairman Specter. Mr. Fuller, before you respond, Senator
Graham would like to make a brief comment.
Senator Graham. I apologize that I am going to have to
leave for another 5 o'clock appointment, but I want to thank
each of you for your contribution not only today, but with the
excellent independent analysis that you have given to the VA's
budget. That is very helpful to all the Members of the Congress
and I thank you for that and appreciate your very helpful
responses to the questions that I ask. Thank you very much.
Chairman Specter. Thank you, Senator. Thank you very much,
Senator Graham.
Mr. Fuller, what do you think about mandatory funding?
Mr. Fuller. Paralyzed Veterans of America fully supports
the concept of mandatory funding. We have become increasingly
frustrated year after year after year when it is a constant
battle, the budget fight that goes on. You hardly get one
appropriation taken care of and you are already battling for
the next year's budget request. We think that it is not only
the question of how much you get, as I said in my statement,
but when you get it. In the past 2 years alone, VA has----
Chairman Specter. Mr. Surratt, your view?
Mr. Surratt. The DAV is one of the nine organizations, I
believe, that is in the coalition supporting mandatory funding.
We have a problem. We know what that problem is. We have a
solution. There have been questions raised about whether a
mandatory formula and the law would be flexible enough, but we
project funding for discretionary appropriations and I believe
that Congress can come up with a formula that makes necessary
adjustments by making funding mandatory in law.
Chairman Specter. Mr. Hayden.
Mr. Hayden. VFW fully supports mandatory funding, sir.
Chairman Specter. Mr. Jones, do you dissent?
Mr. Jones. No, sir. No, sir.
Chairman Specter. On the issue of copays or entrance fees,
is there any level that there would be any support for the VA
proposals and their ways sprinkled all through the VA budget to
try to raise some revenues, any means testing at all which
would be acceptable to the veterans' organizations?
Mr. Jones.
Mr. Jones. We have a means test, sir. The interesting thing
is that these user fees seem more intended to drive veterans
away. VA projections last year on user fees suggested up to 1.2
million veterans who were currently enrolled would not re-
enroll if they had to pay a user fee. The current projections
with this smaller user fee is that over 300,000 veterans would
not return and 200,000 would have trouble returning. That is
about a half-a-million.
Chairman Specter. So you are opposed to all the user fees?
Mr. Jones. I think the user fees are intended to go about
it in the wrong way, sir. Yes, we are opposed.
Chairman Specter. Mr. Hayden.
Mr. Hayden. The VFW is opposed to user fees, as well, sir.
Chairman Specter. Mr. Surratt.
Mr. Surratt. The DAV is opposed to user fees.
Chairman Specter. Mr. Fuller.
Mr. Fuller. The PVA is opposed to user fees.
Mr. Gaytan. The American Legion is, as well.
Chairman Specter. Mr. Gaytan, it is up to you.
Mr. Gaytan. Yes, sir. We oppose it, as well.
Chairman Specter. The final question, and the hour is
growing late and you have been very patient, the VA customer
performance satisfaction rating remains low at 55 percent,
despite stated increases in performance. First of all, do you
think that there have been increases or improvement in
performance? Does anybody think that is so in the VA?
Mr. Gaytan. Sir, if you are mentioning performance as
quality of care, yes, the American Legion recognizes the
improvement in quality of care over the past 20 years. But as I
stated earlier----
Chairman Specter. How would you account, Mr. Gaytan, for
the fact that the customer satisfaction remains low at 55
percent?
Mr. Gaytan. I think it would be due to wait times. Wait
times for care----
Chairman Specter. Wait times?
Mr. Gaytan. Yes, sir. Not only the extended wait times for
months to get into the facility, but those wait times within
the waiting rooms themselves. As I stated earlier, the American
Legion has put together the System Worth Saving Task Force and
we are out there visiting these facilities. Just this past
week, we visited six different facilities in three different
States and we are accruing that information. We are going to
present that again to you this year, sir.
Chairman Specter. Does anybody else care to comment on that
question?
Mr. Jones.
Mr. Jones. Well, it is an anomaly. It is hard to figure
out, because what we hear is that once you are in, veterans are
very pleased with the care. Fifty-five percent expression of
performance and quality, that is interesting. I had not seen
that. I thought that the performance and quality was way up and
those who were in the system were well pleased with the care
they received.
Chairman Specter. Mr. Fuller, what do you think?
Mr. Fuller. I think that we have a double-edged sword here.
What we have always heard is that once you got into the VA, you
said this was the greatest thing since sliced bread and I
really love the VA. I am really surprised to see those figures.
I would have assumed that they would have been higher, as well.
I would be very interested in seeing a copy of that and also
seeing if the committee staff could follow up on that for us in
being able to find out from the VA what is going on here,
because that is really rather astonishing.
Chairman Specter. Mr. Surratt.
Mr. Surratt. I really don't have anything to add to that,
Mr. Chairman. Our impression has been that veterans appreciate
the care they get and think it is very good.
Chairman Specter. Mr. Hayden.
Mr. Hayden. I agree with my colleagues at the table.
Chairman Specter. The hearing ran a lot longer than we
would ordinarily expect. You had eight Senators here today.
That constituted a quorum. We haven't had a--I can't recall
when we had a quorum with this hearing before, but I think that
attests to the tremendous interest that the United States, this
committee, and the whole Senate and the whole Congress have
about veterans' issues.
We are looking at a very, very difficult budget. There is
no doubt about the need for more homeland security and there
has been a 9.7 percent increase there, more for national
defense, 7 percent without even accounting for Iraq and
Afghanistan, which is later, and the discretionaries are
overall less than a half-a-percent. So the Veterans
Administration did better than most.
But we will take a very, very close look at it, and I was
pleased, as I said, to see Secretary Principi very candidly
tell the House that they thought they ought to have more money,
$1.2 billion, and we admire the work that your service
organizations are giving. We are going to submit detailed
questions and we will take into account your full statements
and staff will be in touch with you further. Thank you for
providing some bedtime reading.
[Laughter.]
Chairman Specter. One very short story. When I was one of
the younger stories--and I say younger because I am still a
young lawyer--for the Warren Commission staff, we had to
produce 400 pages every Friday for Earl Warren because he was
an insomniac and he couldn't fall asleep unless he had more to
read than he could possibly read. So our assignment--this is a
serious point, not the only serious point today but a serious
point--we had to provide 400 pages for Warren every Friday. So
thank you for providing some pages for me.
[Laughter.]
Mr. Surratt. Mr. Chairman, we are disappointed to learn
that the independent budget is a cure for insomnia.
[Laughter.]
Chairman Specter. Thank you all. The hearing is adjourned.
[Whereupon, at 5:08 p.m., the committee was adjourned.]