[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                   THE DEPARTMENT OF VETERANS AFFAIRS
                   FISCAL YEAR 2008 BUDGET PRIORITIES
=======================================================================




                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 1, 2007

                               __________

                           Serial No. 110-11

                               __________

           Printed for the use of the Committee on the Budget


                       Available on the Internet:
       http://www.gpoaccess.gov/congress/house/budget/index.html




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                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ROSA L. DeLAURO, Connecticut,        PAUL RYAN, Wisconsin,
CHET EDWARDS, Texas                    Ranking Minority Member
JIM COOPER, Tennessee                J. GRESHAM BARRETT, South Carolina
THOMAS H. ALLEN, Maine               JO BONNER, Alabama
ALLYSON Y. SCHWARTZ, Pennsylvania    SCOTT GARRETT, New Jersey
MARCY KAPTUR, Ohio                   THADDEUS G. McCOTTER, Michigan
XAVIER BECERRA, California           MARIO DIAZ-BALART, Florida
LLOYD DOGGETT, Texas                 JEB HENSARLING, Texas
EARL BLUMENAUER, Oregon              DANIEL E. LUNGREN, California
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
BETTY SUTTON, Ohio                   K. MICHAEL CONAWAY, Texas
ROBERT E. ANDREWS, New Jersey        JOHN CAMPBELL, California
ROBERT C. ``BOBBY'' SCOTT, Virginia  PATRICK J. TIBERI, Ohio
BOB ETHERIDGE, North Carolina        JON C. PORTER, Nevada
DARLENE HOOLEY, Oregon               RODNEY ALEXANDER, Louisiana
BRIAN BAIRD, Washington              ADRIAN SMITH, Nebraska
DENNIS MOORE, Kansas
TIMOTHY H. BISHOP, New York
[Vacancy]

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                James T. Bates, Minority Chief of Staff



                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 1, 2007....................     1
Statement of:
    Hon. John M. Spratt, Jr., Chairman, House Committee on the 
      Budget.....................................................     1
        Prepared statement of....................................     4
    Hon. Paul Ryan, a Representative in Congress from the State 
      of Wisconsin...............................................     6
        Prepared statement of....................................     8
        Unanimous consent request................................    33
    Hon. R. James Nicholson, Secretary, U.S. Department of 
      Veterans Affairs...........................................     9
        Prepared statement of....................................    13

 THE DEPARTMENT OF VETERANS AFFAIRS FISCAL YEAR 2008 BUDGET PRIORITIES

                              ----------                              


                        THURSDAY, MARCH 1, 2007

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
210, Cannon House Office Building, Hon. John M. Spratt 
presiding.
    Present: Representatives Spratt, Edwards, Cooper of 
Tennessee, Boyd, McGovern, Scott, Hooley, Baird, Bishop, 
Etheridge, Moore, Kaptur, Ryan, Garrett, Hensarling, and 
Tiberi.
    Chairman Spratt. I call the hearing to order, and Secretary 
Nicholson, welcome. Welcome, and thank you for joining us to 
discuss something of great importance to you and to us and to 
all Americans: the budget for the Department of Veterans 
Affairs. Our purpose today is to learn more about the 
President's budget request for 2008 for the VA so that we can 
determine whether it is adequate to meet our commitments to the 
veterans who have served this country so well and so honorably. 
Your testimony and answers to our questions will help inform us 
as to how we will put together our budget resolution providing 
for veterans benefits.
    Today there are more than 23 million veterans. More and 
more of these veterans are relying on VA healthcare each year. 
If I could have chart number one just to show you graphically 
what I am talking about.


    The number of VA healthcare patients continues to rise. As 
you can see here, it is well above five million in that 
particular case, a substantial number. According to the 
Veterans Department, in 2008 the VA will provide healthcare to 
more than five million veterans, as shown on this chart, and 
500,000 non-veterans.
    This Committee is interest in knowing how the VA developed 
its estimates upon which this budget is based and the related 
budget request. These questions are critical to making 
decisions about the VA's budget. About half of that budget goes 
to pay disability compensation, pensions, and other benefits 
that operate under permanent law, so-called entitlements. We 
may have some questions about those benefits in this hearing, 
but today they are not our primary focus. Today our primary 
focus is on the other half of the VA budget, the half which 
Congress appropriates every year. Almost 90 percent of these 
funds go to Veterans Healthcare Administration.
    The President's budget for 2008 increases this appropriated 
funding for veterans to $39.6 billion, a substantial increase. 
That level is more than the appropriation for 2007 and more 
than the Congressional Budget Office's baseline budget estimate 
for 2008. The next chart, chart number two, will show you 
graphically what I mean.


    So it is a substantial increase and that is good news. But 
after 2008 the administration's budget fund veterans care at 
billions of dollars below what CBO calls its baseline, that is 
the amount of money necessary to keep pace with current 
services so that there are no, at least no deletions or no 
diminishment of coverage. If you put up chart number four you 
will see further what I am saying.


    The President's budget increases fees as well as decreasing 
the Veterans Healthcare allotment. In the out years fees would 
be increased substantially. And one of the assumptions you make 
is these fees will be available to pay for services and the 
fact of the matter is these fees have been proposed repeatedly. 
They have been around the track time after time and they have 
never yet made it to the finish line. And I think it is 
doubtful that they will survive this year, either.
    Approximately 1.4 million men and women have served in the 
various wars. Some of the veterans who have served have 
sustained significant injuries, particularly in the current War 
in Iraq, have sustained traumatic brain injuries and spinal 
cord injuries. And VA healthcare will be critically, absolutely 
critically, important to them for years to come. Others will 
suffer now or in the future from Post Traumatic Stress 
Syndrome. We want to better understand from your testimony and 
the questions we put to you how your budget will meet this 
critical need which is so emblematic of the situation in Iraq 
and Afghanistan today, where multiple injuries like this are 
being incurred.
    The Department of Veterans Affairs has received accolades 
for healthcare and medical research. Just last year, the VA was 
recognized for innovative, computerized patient record system. 
I have a daughter and a son-in-law at Duke and they both work 
from time to time in the VA Hospital. They have told me it is a 
good system. It is a system that is user friendly, but also 
very comprehensive and we commend you for that. At the same 
time, we remain aware that just a few years ago the VA's 
original budget request significantly underestimated the 
increased number of patients the VA would see and the amount of 
funding that would be required to treat them. We can all agree 
that we do not want to see that happen again.
    Ultimately, we are here to do our best to determine the 
budget necessary to fulfill our promises to the veterans of 
this country. These are promises that rank high among those 
that must be kept by the government. We want to see that the 
promises that we have made to them, particularly in the area of 
veterans healthcare, will be honored. Not only carried out and 
fulfilled, but done in the best possible form so that they get 
medical care at the VA medical care system that is equal to any 
care received anywhere in the country.
    Mr. Secretary, for all of these reasons we look forward to 
your testimony. But before going to your testimony, I would 
like to recognize Mr. Ryan, our Ranking Member, for a statement 
of his own.
    [The prepared statement of Chairman Spratt follows:]

            Prepared Statement of Hon. John M. Spratt, Jr.,
                   Chairman, Committee on the Budget

    Secretary Nicholson, welcome and thank you for joining us to 
discuss the budget for the Department of Veterans Affairs (VA). Our 
purpose today is to learn more about the President's budget for 2008 
and later years so that we can determine whether it is adequate to meet 
the Nation's commitments to the veterans who have served this country 
so honorably. Your testimony and answers to our questions will help to 
inform us as we prepare our own budget.
    Today, there are more than 23 million veterans. More and more of 
these veterans are relying on VA health care every year. According to 
the Department of Veterans Affairs, in 2008, VA will provide health 
care to more than 5 million veterans and 500,000 non-veterans. This 
committee is interested in learning more about how VA developed its 
estimates and the related budget request.
    These questions are critical to making decisions about VA's budget. 
About half of VA's budget goes to pay disability compensation, 
pensions, and other benefits that operate under permanent law. We may 
have some questions about these benefits in this hearing, but they are 
not our primary focus today.
    Rather, this hearing will focus on the other half of VA's budget, 
which the Congress appropriates each year. Almost 90 percent of these 
funds go to veterans' health care.
    The President's budget for 2008 increases this appropriated funding 
for veterans to $39.6 billion. That level is more than the 
appropriations for 2007 and the Congressional Budget Office's baseline 
budget estimate for 2008. After 2008, however, the Administration's 
budget cuts funding for veterans and is billions of dollars below the 
CBO baseline over the five year period. In addition, this budget again 
proposes to increase fees on veterans for their health care by millions 
of dollars.
    It is also important for us to learn more about how VA is helping 
the veterans of the wars in Iraq and Afghanistan. The number of these 
veterans continues to rise significantly.


    Approximately 1.4 million men and women have served in these wars. 
According to VA, about 155,000 of them received VA health care 
treatment in 2006. VA projects that this number will grow to 263,000 in 
2008.
    Some of these veterans have experienced severe injuries like 
traumatic brain and spinal cord injuries, and VA health care will be 
important to them for many years to come. Others of them will suffer 
now, or in the future, from Post-Traumatic Stress Disorder. We want to 
better understand how this budget meets their needs.
    The Department of Veterans Affairs has received many accolades for 
its health care and medical research. Just last year, VA was recognized 
for its innovative computerized patient record system. These 
acknowledgments are well-deserved, Mr. Secretary, and I know you would 
agree that they are most important because they represent real 
advancements for this Nation's veterans.
    At the same time, we remain aware that just a few years ago, VA's 
original budget requests significantly underestimated the increased 
number of patients that VA would see and the amount of funding needed 
to treat them. We can all agree that we do not want to repeat that 
situation.
    Ultimately, we are here to do our best to determine the budget 
necessary to fulfill our commitments to the veterans who served this 
country in the past and the future veterans who are serving it so ably 
and honorably today.
    Mr. Secretary, I look forward to your testimony.

    Mr. Ryan. All right, thank you Chairman. Thank the Chairman 
for yielding. And, you know, anybody that watches television or 
reads the news, you might think that we Americans are always 
arguing with one another and that is especially true here in 
Congress. But in fact, there are many things that we Americans 
agree on. And that is we place a high value on those who serve 
our country and we are very proud of them. I, along with Mr. 
Andrews who is on this Committee, went to Iraq last week to 
meet with our soldiers and our troops to see just the valiant 
efforts, just the incredible amount of heroism that is on 
display today for our country. And so, this is an area where 
Republicans and Democrats together agree and believe that we 
owe a great debt of thanks and gratitude to our nation's men 
and women who served in our armed forces.
    That degree of honor has also been reflected in the budget 
and policy actions Congress has taken in recent years, and I 
want to just bring up a couple of examples just to show the 
kind of level of commitment that has been displayed here. If 
you could bring up slide six, please?


    Take a look at the total budget authority for hospitals and 
medical care for veterans before and after 1995. If you take a 
look at the dedication to veterans healthcare, since 1995 the 
budget was $16.6 billion. This last year, in 2006, it was $31.2 
billion, an almost near doubling of the VA medical care budget. 
If you go to slide three, please.


    Take a look at spending per veteran, which really goes to 
the heart of the issue because as Mr. Spratt noted we have 
increased those who have been consuming veterans healthcare. 
Spending per veterans started at $1,366 in 1995 to today, this 
year, $3,167 in 2007, a 132 percent increase over the last ten 
years on spending per veterans healthcare. So clearly, Congress 
has demonstrated its priorities in honoring our veterans and 
meeting the needs of the VA healthcare.
    We are going to disagree on how best to meet those needs. 
But it is wrong to say that this area has been abjectly 
neglected. A few years ago, Congress enacted the most sweeping 
change in concurrent receipt policy in more than one hundred 
years. For the first time, military retirees who were 50 
percent or more disabled plus all purple heart disabled began 
receiving concurrent receipt of their retired pay and 
disability compensation. Over ten years the legislation 
provides $22.1 billion for eligible persons. Over the past 
decades VA medical care has improved to the point where VA care 
is now some of the best medical care in the country.
    This has happened under both Democrat and Republican 
administrations, so the credit for it is bipartisan. My own 
home state of Wisconsin, we have enacted CBOCs, Community Based 
Outpatient Clinics. Three of them in my own congressional 
district, a number of them throughout the State of Wisconsin, 
to reduce the waiting lines at our VA hospitals and to get 
veterans better outpatient care close to their homes and 
relieve pressure on some of our hospitals. So we have made 
substantial progress on getting the waiting lines down, on 
getting the care our veterans need, and improving the quality 
of its care.
    So in the process we should constantly look for better ways 
to achieve this goal and to improve on the success that we have 
already achieved. There are clearly areas where we need to make 
improvements. There are clear areas of deficiencies. We just 
read some stories about Walter Reed Hospital. But it is 
important to note that the dedication is here, that the honor 
and commitment will be made, and that this is something that we 
ought to be able to work on on a bipartisan basis. And I am 
sure that this is the attitude that the Secretary and other 
witnesses will bear and I appreciate, Secretary Nicholson, you 
and the other panel witnesses coming and joining us today. And 
I yield the balance of my time.
    [The prepared statement of Mr. Ryan follows:]

Prepared Statement of Hon. Paul Ryan, a Representative in Congress From 
                         the State of Wisconsin

    To anyone who watches television or reads the news, you might think 
we Americans are always arguing with one another--and that seems even 
more pronounced here in Congress. But in fact there are many things we 
Americans agree on, and one of them is this: we place a high value on 
those who serve our country.
    This was certainly true even before President Lincoln uttered those 
famous words in his second inaugural--``to care for him who shall have 
borne the battle and for his widow, and his orphan''--and it survives 
right up to this day, when those who have fought in the front lines in 
the war against terrorism have the respect of everyone in this country. 
It is why we have long had a separate agency in the Federal Government 
to serve veterans, and why President Reagan made that agency a cabinet-
level department in the early 1980s.
    It is also reflected in the budget and policy actions Congress has 
taken in recent years. Here are just a few examples:
     Under the past several Congresses, spending for veterans 
medical care increased from $18.9 billion in fiscal year 2000 to $31 
billion in 2006.
     Since 2000, spending per veteran has increased 85 percent 
from $1,715 to $3,167.
     A few years ago, Congress enacted the most sweeping change 
in concurrent receipt policy in more than a hundred years. For the 
first time, military retirees who are 50 percent or more disabled, plus 
all purple heart disabled, began receiving concurrent receipt of their 
retired pay and disability compensation. Over ten years, the 
legislation provides $22.1 billion to eligible persons.
     Over the past decade, veterans medical care has improved 
to the point where VA care is now some of the best medical care in the 
country. This has happened under both Democrat and Republican 
administrations, so the credit for it is bipartisan--and it further 
proves that our veterans are important to all of us.
    So despite our various differences, I'm sure all of us on this 
committee--and in this Congress, for that matter--agree that our 
respect for America's veterans--and our enduring thanks--should always 
be one of our highest priorities. It's because of their service that we 
can peacefully hash out our differences in this committee room, or on 
the House floor, or anywhere in the country. They have protected our 
freedoms--often at great sacrifice--and we should always provide the 
honor they deserve.
    In the process, we should constantly look for better ways to 
achieve this goal. So if we differ about how well the Department is 
functioning--or how well it delivers its services, or how wisely it 
makes use of the funds Congress provides--it's because we put a high 
priority on those things. It's precisely because we honor our veterans 
that we should always try to make their Department better.
    I'm sure that's the attitude we will all bring today as we hear 
from Secretary Nicholson.

    Chairman Spratt. Mr. Secretary, you may submit your 
statement for the record and we will have it printed in its 
entirety and you can summarize when and where you see fit. 
Thank you again for coming. The floor is yours.

   STATEMENT OF R. JAMES NICHOLSON, SECRETARY, DEPARTMENT OF 
 VETERANS AFFAIRS; ACCOMPANIED BY ADM DANIEL L. COOPER, UNDER 
 SECRETARY FOR BENEFITS; WILLIAM F. TUERK, UNDER SECRETARY FOR 
    MEMORIAL AFFAIRS; DR. MICHAEL J. KUSSMAN, ACTING UNDER 
SECRETARY FOR HEALTH; GEN ROBERT T. HOWARD, ASSISTANT SECRETARY 
FOR INFORMATION AND TECHNOLOGY; AND ROBERT J. HENKE, ASSISTANT 
       SECRETARY FOR MANAGEMENT, CHIEF FINANCIAL OFFICER

    Secretary Nicholson. Thank you very much, Mr. Chairman, Mr. 
Ranking Member, members of the Committee. Good morning. I 
appreciate the fact that you have invited us here. I look 
forward to this discussion. I do have a written statement I 
would like to submit for the record, Mr. Chairman. And I would 
like to introduce my colleagues that are with me this morning. 
My far left, your right, is Under Secretary Bill Tuerk, the 
Under Secretary for Memorial Affairs. Next is Under Secretary 
for Benefits, Admiral Dan Cooper. My immediate left is the 
Acting Secretary for Health, Dr. Michael Kussman. My far right, 
your left, is Assistant Secretary for Information and 
Technology General Bob Howard. At my right is the Assistant 
Secretary for Management, who is also the Chief Financial 
Officer of the VA, Assistant Secretary Bob Henke.
    Mr. Chairman, I would like to mention a few things from my 
written submittal. First, a mention of the media reports that 
have recently talked about the VA's care. And I would like to 
say first that I welcome the light of media scrutiny because I 
know the VA's 235,000 are dedicated to providing the best 
possible healthcare, benefits, and memorial benefits to 
America's veterans. The quality of VA care is widely 
recognized, as you have generously mentioned. It is widely 
recognized as the best integrated healthcare system in the 
United States, maybe in the world. But the fact is there is 
still, in spite of that, areas where improvement is needed. And 
there is no question that what we have all seen in these recent 
media reports is not what the VA or veterans, especially young 
combat veterans or their families, should expect. It is 
absolutely unacceptable for anyone of these young people and 
their families to have to endure the circumstances that we saw. 
That breaks my heart. And I want them to know that we are here 
to serve them, and we will do better by those cases.
    To that end, additional improvement measures will be 
forthcoming from the VA over the next several days and weeks 
ahead. And we will keep you apprised as we implement those 
enhancements. I am committed to assuring and proving to 
America's veterans that even in a system that now has over one 
million patient visits a week that one failure is unacceptable 
when it comes to honoring our promise to those veterans who 
honored their promise to us.
    So Mr. Chairman, I look forward to working with the 110th 
Congress in a bipartisan, bicameral way in support of our 
veterans. I believe that taking care of veterans is not a 
bipartisan or partisan endeavor. It is a patriotic mandate. I 
am here to discuss the President's 2008 budget proposal for the 
Department of Veterans Affairs. The President is requesting a 
landmark budget of nearly $87 billion to fund our commitment to 
our veterans. This budget will allow us to expand the three 
core missions of the VA, those being to continue to provide 
world class healthcare; provide broad, fair and timely 
benefits; and dignified burials in shrine-like settings. It 
will also allow us to continue our progress toward becoming a 
national leader in information technology and data security.
    I believe that with the right resources in the hands of the 
right people, anything and everything is possible when it comes 
to caring for America's veterans. And at the VA we already have 
the right dedicated people. With this proposed budget we will 
have the right resources as well. The $87 billion requested a 
77 percent increase in veterans spending since the President 
took office on January 20, 2001. The medical care portion of 
the budget is up 83 percent.
    I would like to outline very briefly the major portions of 
the proposed budget. In the Veterans Health Administration, as 
has been stated, our total request is $36.6 billion in 
authority. VA healthcare, overall, is the best anywhere. And 
that is not just me saying that as the proud Secretary, Mr. 
Chairman, medical journals, the national media, institutions as 
respected as the Harvard Medical School recently stated that we 
are leading this nation in healthcare delivery, safety, and 
technology. As I said, though, we can do better and during 2008 
we expect to treat 5.8 million patients and this is more than 
134,000 above the 2007 estimates. Patients in priorities one 
through six, that is veterans with service connected 
conditions, lower incomes, special healthcare needs, and 
service in Iraq and/or Afghanistan will comprise 68 percent of 
the total patient population in 2008. They will account for 85 
percent of the healthcare costs. The number of these patients 
will grow by 3.3 percent over this fiscal year. In 2008 we 
expect to treat 263,000 who served in Iraq and Afghanistan. 
This is an increase of 54,000, or 26 percent above the number 
in these campaigns for this year.
    Access to care, with the resources requested, the 
Department will be able to enhance access. 96 percent of 
primary care appointments and 95 percent of specialty care 
appointments are currently scheduled within thirty days of the 
patient's desired date. We will minimize the number of new 
enrollees waiting for their first appointment to be scheduled. 
I am pleased to say that in the last eight months we reduced 
this number by 94 percent and we will continue to place strong 
emphasis on this effort.
    Mental health services, this budget requests nearly $3 
billion to continue our effort to improve access to mental 
health services across the country. The VA is a respected 
leader in mental health and PTSD research and care. About 80 
percent of the funds for mental health go to treat seriously 
mentally ill veterans, including those suffering from Post 
Traumatic Stress Disorder.
    The medical research budget includes $411 million to 
support our unparalleled medical and prosthetic research 
programs. This amount will fund nearly 2100 high priority 
research projects to expand knowledge in areas most critical to 
veterans particular healthcare needs. Most notably in the area 
of mental health, mental illness, $49 million, aging $42 
million, health services delivery improvement $36 million, 
cancer $35 million, and heart disease $31 million. Nearly 60 
percent of our research budget is devoted to OIF/OEF healthcare 
issues.
    Polytrauma care, I have traveled to three of our four 
polytrauma centers and there is no doubt that these centers of 
compassion and competency are where miracles are performed 
every day. In response to the need for such specialized medical 
services, the VA has expanded from these four traumatic brain 
injury centers, which are in Minneapolis, Palo Alto, Richmond, 
and Tampa, to a broader center of polytrauma care that will now 
be twenty-one such centers and clinical support teams around 
the country providing state of the art treatment that will be 
closer to injured veterans' homes. Because of traumatic brain 
injury, or TBI, can be present without any visible injuries 
from explosions, this spring we will at the VA initiate a TBI 
screening program for all recent combat veterans from Iraq and 
Afghanistan. And this will take place in all of our 155 major 
medical centers.
    One of the most important features of the President's 2008 
budget is to ensure that servicemembers transition from active 
duty status to mobilized Guard and Reserve to civilian life 
continues to be as smooth and as seamless as possible. And we 
will not rest until every seriously injured or ill serviceman 
or woman returning from combat receives the treatment they need 
in a timely way.
    Let me speak a minute about veterans benefits. The VA's 
primary focus within the administration of benefits remains 
unchanged: delivering timely and accurate benefits to veterans 
and their families. Improving the delivery of compensation and 
pension benefits has become increasingly challenging, however, 
over the past few years. The volume of claims applications has 
grown substantially and it is now the highest it has been in 
fifteen years. We received more than 806,000 claims last year. 
We expect this high volume of claims to continue as we are 
projecting the receipt of about 800,000 this year and next year 
each. However, through a combination of management and 
productivity improvements, and our 2008 request which is to add 
approximately 450 additional staff, we will improve our 
performance while maintaining our high quality. With this 
budget we expect to improve the timeliness of processing 
claims. We will make better use of new technologies and have 
more trained people to process and evaluate these claims. As I 
said, we project that we can reduce our claims processing time 
while maintaining our quality and are committed to do so.
    Finally, the National Cemetery Administration, Mr. 
Chairman. We expect to perform nearly 105,000 internments in 
this fiscal year of 2008, which is an 8.4% increase higher than 
the number of internments we performed last year. These are 
primarily the result of the aging World War II and Korean War 
population and the opening of new cemeteries. The President's 
2008 budget requests include $167 million in operations and 
maintenance funding to activate six new national cemeteries and 
to meet the growing workload at existing cemeteries by 
increasing staffing and funding for contract maintenance, 
supplies, and equipment.
    The capital programs in this budget request $1.1 billion in 
new authority for capital programs, which include $727 million 
for major construction, $233 million for minor construction, 
$85 million in grants to states for extended care facilities, 
and $32 million in grants to build state veterans cemeteries. 
The 2008 request for construction funding for our healthcare 
programs is $750 million. These resources will be devoted to 
continuing the Capital Asset Realignment for Enhanced Services, 
better known as CARES. Over the last five years, $3.7 billion 
in total funding has been provided for CARES projects. Within 
our request for 2008 are major construction resources to 
continue six medical facilities now underway. They are in 
Pittsburgh; Denver; Las Vegas, this will complete funding for 
Las Vegas; Orlando; Lee County, Florida; and Syracuse, New 
York. Funds are also included for six new national cemeteries 
in Bakersfield, California; Birmingham; Columbia/Greenville, 
South Carolina; Jacksonville, Florida; Southeastern 
Pennsylvania; and Sarasota County, Florida.
    The budget also requests $1.8 billion for information 
technology, which includes the first phase of our major 
comprehensive reorganization of the IT function in the 
Department, and will help to establish the new management 
system for IT in the VA. This transformation within the VA is 
progressing very well and will bring our program in line with 
the best practices in the IT industry. Greater centralization 
will play a significant role in fulfilling our promise, our 
commitment, to lead the pack in the government for data 
security.
    To that end, the budget also includes almost $70 million 
for enhanced cybersecurity. And I know, Mr. Chairman, that the 
Committee shares with me the concern about the VA's ability to 
secure all veterans' personal information. There have been 
security incidents that are simply unacceptable and have made 
it a priority to assure that our veterans are getting the 
protection of their privacy that they deserve. We are taking 
unprecedented steps to implement the required national security 
measures and to change the culture of the agency as to 
protected data. And it is not that these incidents will never 
occur, but when they do that the VA now has a process to 
properly respond. We are encouraging all of our employees to 
report, including self reporting, the thefts or other losses of 
equipment, whether in the workplace, at home, or on travel, so 
that we can strengthen our information security procedures 
through lessons learned reviews, personal accountability, and, 
when appropriate, disciplinary actions including terminations.
    The most critical IT project for our medical care program 
is the continued operation and improvement of the Department's 
electronic medical records. I have made it a point for the past 
year to praise our electronic records for their ability to 
survive such things as Katrina and Hurricane Rita. Electronic 
records are a presidential priority and the VA's electronic 
record system has been nationally recognized for increasing the 
productivity, quality, and safety of our system. Within this 
initiative we are requesting $131.9 million for ongoing 
development and implementation of our Healthy Vet Vista. This 
is the program to modernize this electronic health record 
system. It will make use of standards that will enhance the 
sharing of data within VA, as well as without, or as with other 
federal agencies and public and private sector organizations as 
well.
    In closing I want to let you know that I will soon be 
naming members to a special advisory committee on OIF/OEF 
veterans and their families. It is worth mentioning a new 
initiative to assist returning veterans to connect with their 
state and territorial veterans departments as well. First the 
OIF/OEF panel, its membership will include veterans, spouses, 
survivors, and parents of combat veterans and it will report 
directly to me. Under its charter, the committee will focus on 
ensuring that all men and women with active military service in 
Iraq and Afghanistan are transitioned to the VA in a seamless, 
hassle-free, informed manner. The committee will pay particular 
attention to severely disabled veterans and their families.
    Second, in order to help severely injured servicemembers 
receive benefits from their states and territories when they 
move from the military hospitals to the VA and eventually to 
their home communities, I have recently announced the expansion 
of a collaborative effort between the states and including the 
District of Columbia, and it is called the States Benefits 
Seamless Transition Program. We just completed a very 
successful four-month pilot of this with the State of Florida 
and have now expanded it nationwide. It is a promising 
extension of the VA's own transition assistance for those 
leaving the military service. It is also an opportunity to 
partner with the states to make long term support possible for 
our most deserving veterans throughout the country.
    Over the last few weeks and months as I have traveled this 
country I have met with commanders of several combatant 
commands to talk to them about how the VA and the DOD can 
better work together to care for our soldiers, sailors, airmen, 
marines, and guardsmen when they return home from duty 
overseas. In the coming weeks, and these meetings have now been 
scheduled, I will be meeting with the senior enlisted advisors 
of the respective services as well as the service chiefs. I 
will be extending an invitation to each service secretary to 
also meet with me so that we can keep our lines of 
communication open, working for the benefit of our servicemen 
and women.
    Mr. Chairman, this concludes my remarks. Thank you.
    [The prepared statement of R. James Nicholson follows:]

             Prepared Statement of Hon. R. James Nicholson,
             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 2008 budget 
proposal for the Department of Veterans Affairs (VA). The request 
totals $86.75 billion--$44.98 billion for entitlement programs and 
$41.77 billion for discretionary programs.
    The total budget request is $37.80 billion, or 77 percent, above 
the funding level in effect when the President took office. The 2008 
request for discretionary funding is $18.74 billion (or 81.4 percent) 
above the discretionary resource level available in 2001. The growth in 
funding for entitlement programs from 2001 to 2008 is similar--$19.06 
billion (or 73.5 percent). Nearly 90 percent of the increase in 
entitlement costs is accounted for by compensation payments to veterans 
with service-connected disabilities as well as their survivors.
    The President's requested funding level will allow VA to continue 
to improve the delivery of benefits and services to veterans and their 
families in three primary areas that are critical to the achievement of 
our mission:
     to provide timely, high-quality health care to a growing 
number of patients who count on VA the most--veterans returning from 
service in Operation Iraqi Freedom and Operation Enduring Freedom, 
veterans with service-connected disabilities, those with lower incomes, 
and veterans with special health care needs;
     to improve the delivery of benefits through the timeliness 
and accuracy of claims processing; and
     to increase veterans' access to a burial option in a 
national or state veterans' cemetery.
ensuring a seamless transition from active military service to civilian 
                                  life
    The President's 2008 budget request provides the resources 
necessary to ensure that service members' transition from active duty 
military status to civilian life continues to be as smooth and seamless 
as possible. We will continue to ensure that every seriously injured or 
ill serviceman or woman returning from combat in Operation Iraqi 
Freedom and Operation Enduring Freedom receives the treatment they need 
in a timely way.
    Recently I announced plans to create a special Advisory Committee 
on Operation Iraqi Freedom/Operation Enduring Freedom Veterans and 
Families. The panel, with membership including veterans, spouses, and 
parents of the latest generation of combat veterans, will report 
directly to me. Under its charter, the committee will focus on the 
concerns of all men and women with active military service in Operation 
Iraqi Freedom or Operation Enduring Freedom, but will pay particular 
attention to severely disabled veterans and their families.
    We will expand our ``Coming Home to Work'' initiative to help 
disabled service members more easily make the transition from military 
service to civilian life. This is a comprehensive intergovernmental and 
public-private alliance that will provide separating service members 
from Operation Iraqi Freedom and Operation Enduring Freedom with 
employment opportunities when they return home from their military 
service. This project focuses on making sure service members have 
access to existing resources through local and regional job markets, 
regardless of where they separate from their military service, where 
they return, or the career or education they pursue.
    VA launched an ambitious outreach initiative to ensure separating 
combat veterans know about the benefits and services available to them. 
During 2006 VA conducted over 8,500 briefings attended by more than 
393,000 separating service members and returning reservists and 
National Guard members. The number of attendees was 20 percent higher 
in 2006 than it was in 2005 attesting to our improved outreach effort.
    Additional pamphlet mailings following separation and briefings 
conducted at town hall meetings are sources of important information 
for returning National Guard members and reservists. VA has made a 
special effort to work with National Guard and reserve units to reach 
transitioning service members at demobilization sites and has trained 
recently discharged veterans to serve as National Guard Bureau liaisons 
in every state to assist their fellow combat veterans.
    Each VA medical center and regional office has a designated point 
of contact to coordinate activities locally and to ensure the health 
care and benefits needs of returning service members and veterans are 
fully met. VA has distributed specific guidance to field staff to make 
sure the roles and functions of the points of contact and case managers 
are fully understood and that proper coordination of benefits and 
services occurs at the local level.
    For combat veterans returning from Iraq and Afghanistan, their 
contact with VA often begins with priority scheduling for health care, 
and for the most seriously wounded, VA counselors visit their bedside 
in military wards before separation to assist them with their 
disability claims and ensure timely compensation payments when they 
leave active duty.
    In an effort to assist wounded military members and their families, 
VA has placed workers at key military hospitals where severely injured 
service members from Iraq and Afghanistan are frequently sent for care. 
These include benefit counselors who help service members obtain VA 
services as well as social workers who facilitate health care 
coordination and discharge planning as service members transition from 
military to VA health care. Under this program, VA staff provide 
assistance at 10 military treatment facilities around the country, 
including Walter Reed Army Medical Center, National Naval Medical 
Center Bethesda, Naval Medical Center San Diego, and Womack Army 
Medical Center at Ft. Bragg.
    To further meet the need for specialized medical care for patients 
with service in Operation Iraqi Freedom and Operation Enduring Freedom, 
VA has expanded its four polytrauma centers in Minneapolis, Palo Alto, 
Richmond, and Tampa to encompass additional specialties to treat 
patients for multiple complex injuries. Our efforts are being expanded 
to 21 polytrauma network sites and clinic support teams around the 
country providing state-of-the-art treatment closer to injured 
veterans' homes. We have made training mandatory for all physicians and 
other key health care personnel on the most current approaches and 
treatment protocols for effective care of patients afflicted with brain 
injuries. Furthermore, we established a polytrauma call center in 
February 2006 to assist the families of our most seriously injured 
combat veterans and service members. This call center operates 24 hours 
a day, 7 days a week to answer clinical, administrative, and benefit 
inquiries from polytrauma patients and family members.
    In addition, VA has significantly expanded its counseling and other 
medical care services for recently discharged veterans suffering from 
mental health disorders, including post-traumatic stress disorder. We 
have launched new programs, including dozens of new mental health teams 
based in VA medical facilities focused on early identification and 
management of stress-related disorders, as well as the recruitment of 
about 100 combat veterans as counselors to provide briefings to 
transitioning service members regarding military-related readjustment 
needs.
                              medical care
    We are requesting $36.6 billion for medical care in 2008, a total 
more than 83 percent higher than the funding available at the beginning 
of the Bush Administration. Our total medical care request is comprised 
of funding for medical services ($27.2 billion), medical administration 
($3.4 billion), medical facilities ($3.6 billion), and resources from 
medical care collections ($2.4 billion).
    From 2001 to 2006, VA spent over $158 billion on the delivery of 
veterans' health care. Two of the most significant components of the 
total expenditures for veterans' health care during this period were 
for payroll costs for physicians, nurses, and other health care 
professionals and support staff ($83 billion) and for pharmaceuticals 
($21.2 billion).
                         legislative proposals
    The President's 2008 budget request identifies three legislative 
proposals which ask veterans with comparatively greater means and no 
compensable service-connected disabilities to assume a small share of 
the cost of their health care.
    The first proposal would assess Priority 7 and 8 veterans with an 
annual enrollment fee based on their family income:



------------------------------------------------------------------------
                                                       Annual enrollment
                    Family income                             fee
------------------------------------------------------------------------
Under $50,000.......................................                None
$50,000-$74,999.....................................                $250
$75,000-$99,999.....................................                $500
$100,000 and above..................................                $750
------------------------------------------------------------------------

    The second legislative proposal would increase the pharmacy co-
payment for Priority 7 and 8 veterans from $8 to $15 for a 30-day 
supply of drugs. And the last provision would eliminate the practice of 
offsetting or reducing VA first-party co-payment debts with collection 
recoveries from third-party health plans.
    While our budget requests in recent years have included legislative 
proposals similar to these, the provisions identified in the 
President's 2008 budget are markedly different in that they have no 
impact on the resources we are requesting for VA medical care. Our 
budget request includes the total funding needed for the Department to 
continue to provide veterans with timely, high-quality medical services 
that set the national standard of excellence in the health care 
industry. Unlike previous budgets, these legislative proposals do not 
reduce our discretionary medical care appropriations. Instead, these 
three provisions, if enacted, would generate an estimated $2.3 billion 
in mandatory receipts to the Treasury from 2008 through 2012.
                                workload
    During 2008, we expect to treat about 5,819,000 patients. This 
total is more than 134,000 (or 2.4 percent) above the 2007 estimate, 
and is 1,572,000 (or 37.0 percent) higher than the number of total 
patients we treated in 2001. Patients in Priorities 1-6--veterans with 
service-connected conditions, lower incomes, special health care needs, 
and service in Iraq or Afghanistan--will comprise 68 percent of the 
total patient population in 2008, but they will account for 85 percent 
of our health care costs. The number of patients in Priorities 1-6 will 
grow by 3.3 percent from 2007 to 2008.
    We expect to treat about 263,000 veterans in 2008 who served in 
Operation Iraqi Freedom and Operation Enduring Freedom. This is an 
increase of 54,000 (or 26 percent) above the number of veterans from 
these two campaigns that we anticipate will come to VA for health care 
in 2007, and 108,000 (or 70 percent) more than the number we treated in 
2006.
                            funding drivers
    Our 2008 request for $36.6 billion in support of our medical care 
program was largely determined by three key cost drivers in the 
actuarial model we use to project veteran enrollment in VA's health 
care system as well as the utilization of health care services of those 
enrolled:
     inflation;
     trends in the overall health care industry; and
     trends in VA health care.
    The impact of the composite rate of inflation of 4.45 percent 
within the actuarial model will increase our resource requirements for 
acute inpatient and outpatient care by nearly $2.1 billion. This 
includes the effect of additional funds ($690 million) needed to meet 
higher payroll costs as well as the influence of growing costs ($1.4 
billion) for supplies, as measured in part by the Medical Consumer 
Price Index. However, inflationary trends have slowed during the last 
year.
    There are several trends in the U.S. health care industry that 
continue to increase the cost of providing medical services. These 
trends expand VA's cost of doing business regardless of any changes in 
enrollment, number of patients treated, or program initiatives. The two 
most significant trends are the rising utilization and intensity of 
health care services. In general, patients are using medical care 
services more frequently and the intensity of the services they receive 
continues to grow. For example, sophisticated diagnostic tests, such as 
magnetic resonance imaging (MRI), are now more frequently used either 
in place of, or in addition to, less costly diagnostic tools such as x-
rays. As another illustration, advances in cancer screening 
technologies have led to earlier diagnosis and prolonged treatment 
which may include increased use of costly pharmaceuticals to combat 
this disease. These types of medical services have resulted in improved 
patient outcomes and higher quality health care. However, they have 
also increased the cost of providing care.
    The cost of providing timely, high-quality health care to our 
Nation's veterans is also growing as a result of several factors that 
are unique to VA's health care system. We expect to see changes in the 
demographic characteristics of our patient population. Our patients as 
a group will be older, will seek care for more complex medical 
conditions, and will be more heavily concentrated in the higher cost 
priority groups. Furthermore, veterans are submitting disability 
compensation claims for an increasing number of medical conditions, 
which are also increasing in complexity. This results in the need for 
disability compensation medical examinations, the majority of which are 
conducted by our Veterans Health Administration, that are more complex, 
costly, and time consuming. These projected changes in the case mix of 
our patient population and the growing complexity of our disability 
claims process will result in greater resource needs.
                            quality of care
    The resources we are requesting for VA's medical care program will 
allow us to strengthen our position as the Nation's leader in providing 
high-quality health care. VA has received numerous accolades from 
external organizations documenting the Department's leadership position 
in providing world-class health care to veterans. For example, our 
record of success in health care delivery is substantiated by the 
results of the 2006 American Customer Satisfaction Index (ACSI) survey. 
Conducted by the National Quality Research Center at the University of 
Michigan Business School, the ACSI survey found that customer 
satisfaction with VA's health care system increased last year and was 
higher than the private sector for the seventh consecutive year. The 
data revealed that inpatients at VA medical centers recorded a 
satisfaction level of 84 out of a possible 100 points, or 10 points 
higher than the rating for inpatient care provided by the private-
sector health care industry. VA's rating of 82 for outpatient care was 
8 points better than the private sector.
    Citing VA's leadership role in transforming health care in America, 
Harvard University recognized the Department's computerized patient 
records system by awarding VA the prestigious ``Innovations in American 
Government Award'' in 2006. Our electronic health records have been an 
important element in making VA health care the benchmark for 294 
measures of disease prevention and treatment in the U.S.
    These external acknowledgments of the superior quality of VA health 
care reinforce the Department's own findings. We use two primary 
measures of health care quality--clinical practice guidelines index and 
prevention index. These measures focus on the degree to which VA 
follows nationally recognized guidelines and standards of care that the 
medical literature has proven to be directly linked to improved health 
outcomes for patients. Our performance on the clinical practice 
guidelines index, which focuses on high-prevalence and high-risk 
diseases that have a significant impact on veterans' overall health 
status, is expected to grow to 85 percent in 2008, or a 1 percentage 
point rise over the level we expect to achieve this year. As an 
indicator aimed at primary prevention and early detection 
recommendations dealing with immunizations and screenings, the 
prevention index will be maintained at our existing high level of 
performance of 88 percent.
                             access to care
    With the resources requested for medical care in 2008, the 
Department will be able to continue our exceptional performance dealing 
with access to health care--96 percent of primary care appointments 
will be scheduled within 30 days of patients' desired date, and 95 
percent of specialty care appointments will be scheduled within 30 days 
of patients' desired date. We will minimize the number of new enrollees 
waiting for their first appointment. We reduced this number by 94 
percent from May 2006 to January 2007, to a little more than 1,400, and 
we will continue to place strong emphasis on lowering, and then 
holding, the waiting list to as low a level as possible.
    An important component of our overall strategy to improve access 
and timeliness of service is the implementation on a national scale of 
Advanced Clinic Access, an initiative that promotes the efficient flow 
of patients by predicting and anticipating patient needs at the time of 
their appointment. This involves assuring that specific medical 
equipment is available, arranging for tests that should be completed 
either prior to, or at the time of, the patient's visit, and ensuring 
all necessary health information is available. This program optimizes 
clinical scheduling so that each appointment or inpatient service is 
most productive. In addition, this reduces unnecessary appointments, 
allowing for relatively greater workload and increased patient-directed 
scheduling.
         funding for major health care programs and initiatives
    Our request includes $4.6 billion for extended care services, 90 
percent of which will be devoted to institutional long-term care and 10 
percent to non-institutional care. By continuing to enhance veterans' 
access to non-institutional long-term care, the Department can provide 
extended care services to veterans in a more clinically appropriate 
setting, closer to where they live, and in the comfort and familiar 
settings of their homes surrounded by their families. This includes 
adult day health care, home-based primary care, purchased skilled home 
health care, homemaker/home health aide services, home respite and 
hospice care, and community residential care. During 2008 we will 
increase the number of patients receiving non-institutional long-term 
care, as measured by the average daily census, to over 44,000. This 
represents a 19.1 percent increase above the level we expect to reach 
in 2007 and a 50.3 percent rise over the 2006 average daily census.
    The President's request includes nearly $3 billion to continue our 
effort to improve access to mental health services across the country. 
These funds will help ensure VA provides standardized and equitable 
access throughout the Nation to a full continuum of care for veterans 
with mental health disorders. The resources will support both inpatient 
and outpatient psychiatric treatment programs as well as psychiatric 
residential rehabilitation treatment services. We estimate that about 
80 percent of the funding for mental health will be for the treatment 
of seriously mentally ill veterans, including those suffering from 
post-traumatic stress disorder (PTSD). An example of our firm 
commitment to provide the best treatment available to help veterans 
recover from these mental health conditions is our ongoing outreach to 
veterans of Operation Iraqi Freedom and Operation Enduring Freedom, as 
well as increased readjustment and PTSD services.
    In 2008 we are requesting $752 million to meet the needs of the 
263,000 veterans with service in Operation Iraqi Freedom and Operation 
Enduring Freedom whom we expect will come to VA for medical care. 
Veterans with service in Iraq and Afghanistan continue to account for a 
rising proportion of our total veteran patient population. In 2008 they 
will comprise 5 percent of all veterans receiving VA health care 
compared to the 2006 figure of 3.1 percent. Veterans deployed to combat 
zones are entitled to 2 years of eligibility for VA health care 
services following their separation from active duty even if they are 
not otherwise immediately eligible to enroll for our medical services.
                          medical collections
    The Department expects to receive nearly $2.4 billion from medical 
collections in 2008, which is $154 million, or 7.0 percent, above our 
projected collections for 2007. As a result of increased workload and 
process improvements in 2008, we will collect an additional $82 million 
from third-party insurance payers and an extra $72 million resulting 
from increased pharmacy workload.
    We have several initiatives underway to strengthen our collections 
processes:
     The Department has established a private-sector based 
business model pilot tailored for our revenue operations to increase 
collections and improve our operational performance. The pilot 
Consolidated Patient Account Center (CPAC) is addressing all 
operational areas contributing to the establishment and management of 
patient accounts and related billing and collections processes. The 
CPAC currently serves revenue operations for medical centers and 
clinics in one of our Veterans Integrated Service Networks but this 
program will be expanded to serve other networks.
     VA continues to work with the Centers for Medicare and 
Medicaid Services contractors to provide a Medicare-equivalent 
remittance advice for veterans who are covered by Medicare and are 
using VA health care services. We are working to include additional 
types of claims that will result in more accurate payments and better 
accounting for receivables through use of more reliable data for claims 
adjudication.
     We are conducting a phased implementation of electronic, 
real-time outpatient pharmacy claims processing to facilitate faster 
receipt of pharmacy payments from insurers.
     The Department has initiated a campaign that has resulted 
in an increasing number of payers now accepting electronic coordination 
of benefits claims. This is a major advancement toward a fully 
integrated, interoperable electronic claims process.
                            medical research
    The President's 2008 budget includes $411 million to support VA's 
medical and prosthetic research program. This amount will fund nearly 
2,100 high-priority research projects to expand knowledge in areas 
critical to veterans' health care needs, most notably research in the 
areas of mental illness ($49 million), aging ($42 million), health 
services delivery improvement ($36 million), cancer ($35 million), and 
heart disease ($31 million).
    VA's medical research program has a long track record of success in 
conducting research projects that lead to clinically useful 
interventions that improve the health and quality of life for veterans 
as well as the general population. Recent examples of VA research 
results that are now being applied to clinical care include the 
discovery that vaccination against varicella-zoster (the same virus 
that causes chickenpox) decreases the incidence and/or severity of 
shingles, development of a system that decodes brain waves and 
translates them into computer commands that allow quadriplegics to 
perform simple tasks like turning on lights and opening e-mail using 
only their minds, improvements in the treatment of post-traumatic 
stress disorder that significantly reduce trauma nightmares and other 
sleep disturbances, and discovery of a drug that significantly improves 
mental abilities and behavior of certain schizophrenics.
    In addition to VA appropriations, the Department's researchers 
compete for and receive funds from other federal and non-federal 
sources. Funding from external sources is expected to continue to 
increase in 2008. Through a combination of VA resources and funds from 
outside sources, the total research budget in 2008 will be almost $1.4 
billion.
                       general operating expenses
    The Department's 2008 resource request for General Operating 
Expenses (GOE) is $1.472 billion. This is $617 million, or 72.2 
percent, above the funding level in place when the President took 
office. Within this total GOE funding request, $1.198 billion is for 
the administration of non-medical benefits by the Veterans Benefits 
Administration (VBA) and $274 million will be used to support General 
Administration activities.
     compensation and pensions workload and performance management
    VA's primary focus within the administration of non-medical 
benefits remains unchanged--delivering timely and accurate benefits to 
veterans and their families. Improving the delivery of compensation and 
pension benefits has become increasingly challenging during the last 
few years due to a steady and sizeable increase in workload. The volume 
of claims applications has grown substantially during the last few 
years and is now the highest it has been in the last 15 years. The 
number of claims we received was more than 806,000 in 2006. We expect 
this high volume of claims filed to continue, as we are projecting the 
receipt of about 800,000 claims a year in both 2007 and 2008.
    VA's processing of the increased claims volume has led to a 
significant rise in the number of veterans and their survivors 
receiving compensation or pension payments from VA. In 2008 this total 
will exceed 3.7 million. This is about 513,000, or 16 percent, more 
than the number of compensation and pension recipients in 2001.
    The number of active duty service members as well as reservists and 
National Guard members who have been called to active duty to support 
Operation Enduring Freedom and Operation Iraqi Freedom is one of the 
key drivers of new claims activity. This has contributed to an increase 
in the number of new claims, and we expect this pattern to persist. An 
additional reason that the number of compensation and pension claims is 
climbing is the Department's commitment to increase outreach. We have 
an obligation to extend our reach as far as possible and to spread the 
word to veterans about the benefits and services VA stands ready to 
provide.
    Disability compensation claims from veterans who have previously 
filed a claim comprise about 55 percent of the disability claims 
received by the Department each year. Many veterans now receiving 
compensation suffer from chronic and progressive conditions, such as 
diabetes, mental illness, and cardiovascular disease. As these veterans 
age and their conditions worsen, we experience additional claims for 
increased benefits.
    The growing complexity of the claims being filed also contributes 
to our workload challenges. For example, the number of original 
compensation cases with eight or more disabilities claimed nearly 
doubled during the last 4 years, reaching more than 51,000 claims in 
2006. Almost one in every four original compensation claims received 
last year contained eight or more disability issues. In addition, we 
expect to continue to receive a growing number of complex disability 
claims resulting from PTSD, environmental and infectious risks, 
traumatic brain injuries, complex combat-related injuries, and 
complications resulting from diabetes. Each claim now takes more time 
and more resources to adjudicate. Additionally, as VA receives and 
adjudicates more claims, this results in a larger number of appeals 
from veterans and survivors, which also increases workload in other 
parts of the Department, including the Board of Veterans' Appeals.
    The Veterans Claims Assistance Act of 2000 has significantly 
increased both the length and complexity of claims development. VA's 
notification and development duties have grown, adding more steps to 
the claims process and lengthening the time it takes to develop and 
decide a claim. Also, we are now required to review the claims at more 
points in the adjudication process.
    We will address our ever-growing workload challenges in several 
ways. First, we will continue to improve our productivity as measured 
by the number of claims processed per staff member, from 98 in 2006 to 
101 in 2008. Second, we will continue to move work among regional 
offices in order to maximize our resources and enhance our performance. 
Third, we will further advance staff training and other efforts to 
improve the consistency and quality of claims processing across 
regional offices. And fourth, we will ensure our claims processing 
staff has easy access to the manuals and other reference material they 
need to process claims as efficiently and effectively as possible and 
further simplify and clarify benefit regulations.
    Through a combination of management/productivity improvements and 
an increase in resources in 2008 to support 457 additional staff above 
the 2007 level, we will improve our performance in the area most 
critical to veterans--the timeliness of processing rating-related 
compensation and pension claims. We expect to improve the timeliness of 
processing these claims to 145 days in 2008. This level of performance 
is 15 days better than our projected timeliness for 2007 and a 32-day 
improvement from the average processing time we achieved last year. In 
addition, we anticipate that our pending inventory of disability claims 
will fall to about 330,000 by the end of 2008, a reduction of more than 
40,000 (or 10.9 percent) from the level we project for the end of 2007, 
and nearly 49,000 (or 12.9 percent) lower than the inventory at the 
close of 2006. At the same time we are improving timeliness, we will 
also increase the accuracy of our decisions on claims from 88 percent 
in 2006 to 90 percent in 2008.
   education and vocational rehabilitation and employment performance
    In 2001, about 485,000 trainees took advantage of the readjustment 
and vocational rehabilitation and employment services offered by the 
Department. In 2006, that number swelled to over 614,000. From 2001 
through 2006, nearly $15.6 billion was paid in support of these 
programs. In 2006 alone, $3.2 billion was obligated for readjustment 
programs, an increase of 82 percent from the 2001 level.
    The largest readjustment program is the All Volunteer Force 
Educational Assistance Program, or the Montgomery GI Bill. Effective 
October 1, 2006, the monthly education benefit under this program rose 
to $1,075. This monthly rate is 60 percent higher than it was 5 years 
ago. This investment in education continues to produce clear and 
substantial benefits for veterans. For example, the unemployment rate 
among users of the Montgomery GI Bill is well below that of non-users, 
while earnings among program participants are higher than for non-users 
of the program.
    With the resources we are requesting in 2008, key program 
performance will improve in both the education and vocational 
rehabilitation and employment programs. The timeliness of processing 
original education claims will improve by 15 days during the next 2 
years, falling from 40 days in 2006 to 25 days in 2008. During this 
period, the average time it takes to process supplemental claims will 
improve from 20 days to just 12 days. These performance improvements 
will be achieved despite an increase in workload. The number of 
education claims we expect to receive will reach about 1,432,000 in 
2008, or 4.8 percent higher than last year. In addition, the 
rehabilitation rate for the vocational rehabilitation and employment 
program will climb to 75 percent in 2008, a gain of 2 percentage points 
over the 2006 performance level. The number of program participants 
will rise to about 94,500 in 2008, or 5.3 percent higher than the 
number of participants in 2006.
    Our 2008 request includes $6.3 million for a Contact Management 
Support Center for our education program. These funds will be used 
during peak enrollment periods for contract customer service 
representatives who will handle all education calls placed through our 
toll-free telephone line. We currently receive about 2.5 million phone 
inquiries per year. This initiative will allow us to significantly 
improve performance for both the blocked call rate and the abandoned 
call rate.
    The 2008 resource request for VBA includes about $4.3 million to 
enhance our educational and vocational counseling provided to disabled 
service members through the Disabled Transition Assistance Program. 
Funds for this initiative will ensure that briefings are conducted by 
experts in the field of vocational rehabilitation, including 
contracting for these services in localities where VA professional 
staff are not available. The contractors would be trained by VA staff 
to ensure consistent, quality information is provided. Also in support 
of the vocational rehabilitation and employment program, we are seeking 
$1.5 million as part of an ongoing project to retire over 650,000 
counseling, evaluation, and rehabilitation folders stored in regional 
offices throughout the country. All of these folders pertain to cases 
that have been inactive for at least 3 years and retention of these 
files poses major space problems.
    In addition, our 2008 request includes $2.4 million to continue a 
major effort to centralize finance functions throughout VBA, an 
initiative that will positively impact operations for all of our 
benefits programs. The funds to support this effort will be used to 
begin the consolidation and centralization of voucher audit, agent 
cashier, purchase card, and payroll operations currently performed by 
all regional offices.
                    national cemetery administration
    The President's 2008 budget request includes $166.8 million in 
operations and maintenance funding for the National Cemetery 
Administration (NCA). These resources will allow us to meet the growing 
workload at existing cemeteries by increasing staffing and funding for 
contract maintenance, supplies, and equipment. We expect to perform 
nearly 105,000 interments in 2008, or 8.4 percent higher than the 
number of interments we performed in 2006. The number of developed 
acres (over 7,800) that must be maintained in 2008 will be 7.3 percent 
greater than last year.
    The number of veteran deaths peaked in 2006 at about 687,600, or an 
average of 1,884 deaths per day. Due primarily to the aging of the 
Vietnam Era, Korean Conflict, and World War II populations, the number 
of veteran deaths will remain above 600,000 a year for the next 10 
years. The next decade will also see workload growth at our national 
cemeteries.
    Our budget request includes $3.7 million to prepare for the 
activation of interment operations at six new national cemeteries--
Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, 
South Carolina; Jacksonville, Florida; southeastern Pennsylvania; and 
Sarasota County, Florida. Establishment of these six new national 
cemeteries is directed by the National Cemetery Expansion Act of 2003.
    The 2008 budget has $9.1 million to address gravesite renovations 
as well as headstone and marker realignment. These improvements in the 
appearance of our national cemeteries will help us maintain the 
cemeteries as shrines dedicated to preserving our Nation's history and 
honoring veterans' service and sacrifice.
    With the resources requested to support NCA activities, we will 
expand access to our burial program by increasing the percent of 
veterans served by a burial option within 75 miles of their residence 
to 84.6 percent in 2008, which is 4.4 percentage points above our 
performance level at the close of 2006. In addition, we will continue 
to increase the percent of respondents who rate the quality of service 
provided by national cemeteries as excellent to 98 percent in 2008, or 
4 percentage points higher than the level of performance we reached 
last year.
          capital programs (construction and grants to states)
    VA's 2008 request includes $1.078 billion in appropriated funding 
for our capital programs. Our request includes $727.4 million for major 
construction projects, $233.4 million for minor construction, $85 
million in grants for the construction of state extended care 
facilities, and $32 million in grants for the construction of state 
veterans cemeteries.
    The 2008 request for construction funding for our health care 
programs is $750 million--$570 million for major construction and $180 
million for minor construction. All of these resources will be devoted 
to continuation of the Capital Asset Realignment for Enhanced Services 
(CARES) program, total funding for which comes to $3.7 billion over the 
last 5 years. CARES will renovate and modernize VA's health care 
infrastructure, provide greater access to high-quality care for more 
veterans, closer to where they live, and help resolve patient safety 
issues. Within our request for major construction are resources to 
continue six medical facility projects already underway:
     Denver, Colorado ($61.3 million)--parking structure and 
energy development for this replacement hospital
     Las Vegas, Nevada ($341.4 million)--complete construction 
of the hospital, nursing home, and outpatient facilities
     Lee County, Florida ($9.9 million)--design of an 
outpatient clinic (land acquisition is complete)
     Orlando, Florida ($35.0 million)--land acquisition for 
this replacement hospital
     Pittsburgh, Pennsylvania ($40.0 million)--continue 
consolidation of a 3-division to a 2-division hospital
     Syracuse, New York ($23.8 million)--complete construction 
of a spinal cord injury center.
    Minor construction is an integral component of our overall capital 
program. In support of the medical care and medical research programs, 
minor construction funds permit VA to address space and functional 
changes to efficiently shift treatment of patients from hospital-based 
to outpatient care settings; realign critical services; improve 
management of space, including vacant and underutilized space; improve 
facility conditions; and undertake other actions critical to CARES 
implementation. Our 2008 request for minor construction funds for 
medical care and research will provide the resources necessary for us 
to address critical needs in improving access to health care, enhancing 
patient privacy, strengthening patient safety, enhancing research 
capability, correcting seismic deficiencies, facilitating realignments, 
increasing capacity for dental services, and improving treatment in 
special emphasis programs.
    We are requesting $191.8 million in construction funding to support 
the Department's burial program--$167.4 million for major construction 
and $24.4 million for minor construction. Within the funding we are 
requesting for major construction are resources to establish six new 
cemeteries mandated by the National Cemetery Expansion Act of 2003. As 
previously mentioned, these will be in Bakersfield ($19.5 million), 
Birmingham ($18.5 million), Columbia-Greenville ($19.2 million), 
Jacksonville ($22.4 million), Sarasota ($27.8 million), and 
southeastern Pennsylvania ($29.6 million). The major construction 
request in support of our burial program also includes $29.4 million 
for a gravesite development project at Fort Sam Houston National 
Cemetery.
                         information technology
    VA's 2008 budget request for information technology (IT) is $1.859 
billion. This budget reflects the first phase of our reorganization of 
IT functions in the Department which will establish a new IT management 
structure in VA. The total funding for IT in 2008 includes $555 million 
for more than 5,500 staff who have been moved to support operations and 
maintenance activities. Prior to 2008, the funding and staff supporting 
these IT activities were reflected in other accounts throughout the 
Department.
    Later in 2007 we will implement the second phase of our IT 
reorganization strategy by moving funding and staff devoted to 
development projects and activities. As a result of the second stage of 
the IT reorganization, the Chief Information Officer will be 
responsible for all operations and maintenance as well as development 
activities, including oversight of, and accountability for, all IT 
resources within VA. This reorganization will make the most efficient 
use of our IT resources while improving operational effectiveness, 
providing standardization, and eliminating duplication.
    This major transformation of IT will bring our program under more 
centralized control and will play a significant role in ensuring we 
fulfill my promise to make VA the gold standard for data security 
within the federal government. We have taken very aggressive steps 
during the last several months to ensure the safety of veterans' 
personal information, including training and educating our employees on 
the critical responsibility they have to protect personal and health 
information, launching an initiative to expeditiously upgrade all VA 
computers with enhanced data security and encryption, entering into an 
agreement with an outside firm to provide free data breach analysis 
services, initiating any needed background investigations of employees 
to ensure consistency with their level of authority and 
responsibilities in the Department, and beginning a campaign at all of 
our health care facilities to replace old veteran identification cards 
with new cards that reduce veterans' vulnerability to identify theft. 
These steps are part of our broader commitment to improve our IT and 
cyber security policies and procedures.
    Within our total IT request of $1.859 billion, $1.304 billion (70 
percent) will be for non-payroll costs and $555 million (30 percent) 
will be for payroll costs. Of the non-payroll funding, $461 million 
will support projects for our medical care and medical research 
programs, $66 million will be devoted to projects for our benefits 
programs, and $446 million will be needed for IT infrastructure 
projects. The remaining $331 million of our non-payroll IT resources in 
2008 will fund centrally-managed projects, such as VA's cyber security 
program, as well as management projects that support department-wide 
initiatives and operations like the replacement of our aging financial 
management system and the development and implementation of a new human 
resources management system.
    The most critical IT project for our medical care program is the 
continued operation and improvement of the Department's electronic 
health record system, a Presidential priority which has been recognized 
nationally for increasing productivity, quality, and patient safety. 
Within this overall initiative, we are requesting $131.9 million for 
ongoing development and implementation of HealtheVet-VistA (Veterans 
Health Information Systems and Technology Architecture). This 
initiative will incorporate new technology, new or reengineered 
applications, and data standardization to improve the sharing of, and 
access to, health information, which in turn, will improve the status 
of veterans' health through more informed clinical care. This system 
will make use of standards accepted by the Secretary of Health and 
Human Services that will enhance the sharing of data within VA as well 
as with other federal agencies and public and private sector 
organizations. Health data will be stored in a veteran-centric format 
replacing the current facility-centric system. The standardized health 
information can be easily shared between facilities, making patients' 
electronic health records available to them and to all those authorized 
to provide care to veterans.
    Until HealtheVet-VistA is operational, we need to maintain the 
VistA legacy system. This system will remain operational as new 
applications are developed and implemented. This approach will mitigate 
transition and migration risks associated with the move to the new 
architecture. Our budget provides $129.4 million in 2008 for the VistA 
legacy system. Funding for the legacy system will decline as we advance 
our development and implementation of HealtheVet-VistA.
    In veterans benefits programs, we are requesting $31.7 million in 
2008 to support our IT systems that ensure compensation and pension 
claims are properly processed and tracked, and that payments to 
veterans and eligible family members are made on a timely basis. Our 
2008 request includes $3.5 million to continue the development of The 
Education Expert System. This will replace the existing benefit payment 
system with one that will, when fully deployed, receive application and 
enrollment information and process that information electronically, 
reducing the need for human intervention.
    VA is requesting $446 million in 2008 for IT infrastructure 
projects to support our health care, benefits, and burial programs 
through implementation and ongoing management of a wide array of 
technical and administrative support systems. Our request for resources 
in 2008 will support investment in five infrastructure projects now 
centrally managed by the CIO--computing infrastructure and operations 
($181.8 million); network infrastructure and operations ($31.7 
million); voice infrastructure and operations ($71.9 million); data and 
video infrastructure and operations ($130.8 million); and regional data 
centers ($30.0 million).
    VA's 2008 request provides $70.1 million for cyber security. This 
ongoing initiative involves the development, deployment, and 
maintenance of a set of enterprise-wide controls to better secure our 
IT architecture in support of all of the Department's program 
operations. Our request also includes $35.0 million for the Financial 
and Logistics Integrated Technology Enterprise (FLITE) system. FLITE is 
being developed to address a long-standing material weakness and will 
effectively integrate and standardize financial and logistics data and 
processes across all VA offices as well as provide management with 
access to timely and accurate financial, logistics, budget, asset, and 
related information on VA-wide operations. In addition, we are asking 
for $34.1 million for a new state-of-the-art human resource management 
system that will result in an electronic employee record and the 
capability to produce critical management information in a fraction of 
the time it now takes using our antiquated paper-based system.
                                summary
    Our 2008 budget request of $86.75 billion will provide the 
resources necessary for VA to:
     strengthen our position as the Nation's leader in 
providing high-quality health care to a growing patient population, 
with an emphasis on those who count on us the most--veterans returning 
from service in Operation Iraqi Freedom and Operation Enduring Freedom, 
veterans with service-connected disabilities, those with lower incomes, 
and veterans with special health care needs;
     improve the delivery of benefits through the timeliness 
and accuracy of claims processing; and
     increase veterans' access to a burial option by opening 
new national and state veterans' cemeteries.
    I look forward to working with the members of this committee to 
continue the Department's tradition of providing timely, high-quality 
benefits and services to those who have helped defend and preserve 
freedom around the world.

    Chairman Spratt. Mr. Secretary, thank you very much. And 
before proceeding with questions let me state for the record 
and ask unanimous consent that all members who were not able to 
make an opening statement be allowed to submit one for the 
record at this point if they would like.
    Mr. Secretary, thank you for your testimony, thank you for 
your service. We have a concern about veterans healthcare, 
which is our principal concern. And there is a pattern that 
your budgets have tended to follow the last five years that I 
would like to show you by putting up once again chart number 
two.
    As you can see, this year you have made a substantial 
request for an increase in veterans healthcare, $3.1 billion I 
believe. That is $1.9 billion above what CBO calls current 
services, basically the provision next year of the same thing 
we are providing this year. That is a substantial increase, 
too. However, in the out years the amount of money provided 
increasingly falls short of current services. So if you look in 
the fifth year, you will see that there is a shortfall of about 
$2.5 billion in that year alone. And over the five year span of 
those bar graphs there is a shortfall of about $3.4 billion 
below current services.
    Now, if I can show you chart number two.
    As you can see you are treating more and more veterans from 
Afghanistan and Iraq and I do not think that chart is likely to 
cease rising anytime in the near future. But given the fact 
that you have got this caseload, increasing caseload, of 
patients from recent engagements who are going to demand a lot 
of intensive care, do you not think your budget requests for 
veterans healthcare are likely to be trending upward for the 
next several years at least?
    Secretary Nicholson. Mr. Chairman, as you would appreciate, 
our focus at the Department has been on the 2008 budget. We do 
work very closely with the administration and OMB on this 
budget and they do out year projections. We base our requests 
for the, each year that we come up here on very deliberative, 
intensive modeling and projections on, you know, on the data 
that we have. And I have looked at historically how that has 
operated. And it appears that there is a pattern each time a 
budget is submitted here for those out years to be included. 
What I can tell you is that in 2004 they were projecting the 
budget for this year, 2008, it had a number in there of $28 
billion. We are here today requesting $35.3 billion. So what I 
can say is, there will be a lot of intervening information that 
will comprise the request for 2009 before it comes here to the 
Congress, that I think this number is not reflecting at all.
    Chairman Spratt. But do you not think that VA, you will be 
needing the additional amount to at least track current 
services in years to come?
    Secretary Nicholson. Yes, sir. I do. I think that the 
number will continue to go up.
    Chairman Spratt. But your budget does not really reflect 
that because it either flattens out or comes down in terms of 
current services in particular.
    Secretary Nicholson. Well, it does not reflect it because 
it does not have the ingredients that we use to develop these 
budget requests. It is a number, some call it a place holder, 
it is a number that has been put in there.
    Chairman Spratt. Let me ask you about specifically what is 
the most typical and most tragic type of injury being sustained 
in the Persian Gulf today in Iraq and Afghanistan both. That is 
traumatic brain injuries and spinal cord injuries. They account 
for more than 25 percent, according to our information, of 
combat casualties. And typically, they involved more than just 
brain injury. They involve a loss of limb, a loss of vision, a 
loss of hearing, cognitive loss, paralysis, chronic pain, and 
PTSD as well. How much is your budget providing for this 
particular type of injury for 2008? And how much of an increase 
is that over and above 2007?
    Secretary Nicholson. First, maybe let me tell you Mr. 
Chairman, in our polytrauma centers, which is where we have the 
most serious cases. And as I said in my testimony we 
established those so that we would have the aggregation of all 
the medical disciplines in one place and that these people 
could be treated for these at one time and not serially if they 
have a burn problem, an amputation, traumatic brain injury. And 
they are doing wonderful work. We have 342 people that we have 
treated or are treating in those polytrauma centers. Our budget 
number for 2008 is I am being told, it is an increase of 86 
percent, from $405 million for these purposes to $752 million 
in this budget.
    Chairman Spratt. So how many patients is this for? Can you 
tell us on a per patient basis what you are spending for a 
typical brain trauma or spinal cord injury?
    Secretary Nicholson. Well I can tell you, as I said, we 
have 342 that we have treated or are currently being treated in 
the polytrauma centers. But we have other less minor brain 
injury patients in the system. And I think we have treated 
about 1100 of those that we have diagnosed with some form of 
brain injury. I have not done that math but we could do that.
    Chairman Spratt. Over what period of time? Is that over the 
last year, or the current?
    Secretary Nicholson. No, sir. That is since we have opened 
these centers to these combatants.
    Chairman Spratt. Polytrauma centers?
    Secretary Nicholson. Since the inception of the combat.
    Chairman Spratt.  I am sure you are aware that it has been 
said that there are patients who are being sent to the VA 
Hospital at their home communities. They are going back home. 
They go to the Veterans Healthcare facilities nearest home only 
to find that they do not have the kind of treatment expertise 
that the polytrauma centers have. And some of them, before they 
are able to get to a polytrauma system, are sustaining some 
significant injuries that could otherwise maybe have been 
abated if not avoided. Is this a problem? Do you acknowledge 
this problem? And if so, what does the VA plan to do about it?
    Secretary Nicholson. Well, there have been those cases, 
there was one reported in a very recent ABC article on this. 
What we are doing about it, and this has been underway, is that 
we are enhancing the training of our clinical physician and 
nurse staff with respect to traumatic brain injury. And thus in 
all 155 of our major medical facilities, we will have embedded 
people who are competent for the diagnosis and treatment of 
that. And they will not be at the level of these polytrauma 
centers, which are these very concentrated centers of 
excellence for the advanced treatment. But many of these 
patients----
    Chairman Spratt. But is there a process by which these 
conditions can be detected, diagnosed, and immediate transfer 
to one of these polytrauma centers can be affected so that 
people do not lose time and perhaps lose some hope for a better 
recovery?
    Secretary Nicholson. Yes, that is what is being done, is 
that we have enhanced the training and thus the capability, the 
competence, in those medical centers.
    Chairman Spratt. What about the administrative process of a 
patient, or his family, or a local physician who want to get 
this particular veteran to a polytrauma center as fast as 
possible. Is there some kind of fast track or expedited process 
for approval?
    Secretary Nicholson. Well, they are admitted, if they come 
to our attention, and most of them that are seriously injured 
would be handed off to us from the military and come right into 
our polytrauma centers. And in fact many of them by the way are 
in our polytrauma centers while they are still on active duty. 
And the unfortunate case that was talked about the other night 
was one of those. That person was still in the Army. But the 
answer is yes. They are given just very focused, intensive 
attention and expedition.
    Chairman Spratt. Let me ask you this. I think you would 
agree, I at least have the perception as a lot of people do, 
that in certain areas the VA does excellent work, really fine 
work, the best of any treatment anywhere. And that is 
particularly true with prosthetics because of your experience 
over the years. Can you say the same thing about your treatment 
for spinal cord injuries and brain injuries? And in particular 
the reporter we are talking about, Bob Woodruff, has said that 
he got better treatment in the civilian sector than soldiers he 
knew in the public sector were getting from the Veterans 
Administration. Can we say that we are moving spinal cord 
treatment and traumatic brain injury up to the level where it 
is the best in the country? Because after all, this tends to be 
an all too typical injury for our Iraqi veterans. And what are 
we doing to get there? That is the basic question.
    Secretary Nicholson. We can say that. I think we can say 
that proudly. I think the VA is the expert in the world in 
spinal cord injury, Post Traumatic Stress Disorder. It is a 
recognized expert in traumatic brain injury. We have, in 
concert with DOD, been operating a joint traumatic brain injury 
facility since 1994. So we have the expertise. But I will tell 
you, now with respect to traumatic brain injury, that that is 
still a developing science. And there is still a lot that is 
not known, or I guess I should say, we wish we knew more about 
that. For example, I mean the basis of what we used to know 
about this really came primarily from athletic injuries, 
concussions. We still do not know what we want to know about 
young people's proximities to blasts, to explosions, where they 
do not lose consciousness. Or maybe they have a fluttered 
series of blinking, or maybe a second of loss of consciousness. 
What effect does that have or will that have on them? We know 
of these things. And it is over and the squad leader says to 
his guys, ``Is everybody okay?'' and they say, ``Yeah, Sarge, 
okay.'' And they are up and at them. What effect does that 
have? And that is very difficult, also, to detect.
    Having said that, we now also, and I think I said that in 
my testimony, we are going to screen every one of those people 
that come to us for this at the time they come to us which is 
upon their separation from active duty.
    Chairman Spratt. Would you not agree you are stretched 
pretty thin on PTSD psychiatrists who are truly qualified in 
this area, to render the care that lots of veterans are 
needing?
    Secretary Nicholson. No, I think we are, we have got good 
capacity for treating PTSD, Mr. Chairman.
    Chairman Spratt. One final question with respect to spinal 
cord injuries and traumatic brain injuries. As we look through 
the budget we see there is about $333 million for research and 
treatment on spinal cord injuries, barely an increase for 2008 
over 2007. And we cannot break out what is provided for 
traumatic brain injuries. Can you give that to us now or could 
you provide it for the record if you cannot? Is there an 
increase, a significant increase, so that the VA is leading the 
way in developing new treatment modalities for traumatic brain 
and spinal cord injuries?
    Secretary Nicholson. We have that but I do not have it at 
my fingertips. We will submit that to you, Mr. Chairman. Yes, 
sir.
    Chairman Spratt. Is it a significant increase, next year 
over this year?
    Secretary Nicholson. It is an increase. I do not know if 
you would consider it significant. But it is an increase, I 
know that.
    Chairman Spratt. Okay. Thank you very much, Mr. Secretary. 
I ask unanimous consent that the newest member of the 
Committee, the gentle lady from Wisconsin, be allowed to sit in 
and participate in this hearing. Hearing none, welcome to the 
Committee. I now yield to Mr. Ryan.
    Mr. Ryan. First, before I start questioning, I just want to 
welcome my neighbor and my friend from Milwaukee to the 
Committee. Welcome aboard. It is great to have you.
    I want to just pick up where the Chairman left off. You 
know, we went to Camp Arifjan where all our armored vehicles 
that are hit by IEDs come to. And you saw basically a piece of 
land the size of a county fairground full of Strikers, Humvees, 
M1A1 Abrams, Bradleys, ripped apart by IEDs. And now we have 
the newest version, the explosive foreign projectiles, which 
really no armor can stop. And so our enemies are getting better 
at hitting our troops. And so I simply want to add, what the 
Chairman was saying, Secretary, is that, you know, we are going 
to have more of the same thing with our newest veterans coming 
into your system. We are going to have more PTSD. We are going 
to have more brain and spinal cord injuries. And so I simply 
want to, you know, with the strongest possible way encourage 
the VA to recognize that this is coming, and to get ahead of 
the curve and to do everything within your power to be prepared 
for that, especially with Post Traumatic Stress. You know, I 
have heard other stories from, from just vets, from 
constituents on the lack of follow up after leaving. And that 
to me is something that has to be addressed.
    Let me ask you a couple questions about your actuarial 
projections. A couple years ago or a year and a half ago, the 
VA had a funding shortfall that had to be made through a 
midyear supplemental, which is not the easiest thing to do here 
in Congress. And that had to do with some actuarial projection 
problems in areas. Could you just give me a sense of exactly 
what happened? And what is the VA doing to make sure that we do 
not have this kind of a problem again?
    Secretary Nicholson. Yes, I can. You are referring to the 
fiscal year 2005 budget.
    Mr. Ryan. Yes.
    Secretary Nicholson. And in the beginning of the third 
quarter of that, roughly spring of 2005, it became apparent 
that the VA was going to be short of money in the medical care 
side of the endeavor. And one of the things that happened 
there, or the main thing that happened, was that the projection 
for demand for services was off. And it was a peculiar 
circumstance that the same model was used to develop that 
budget that has been used for a long time and is still used, 
which is called the Milliman model which has historically 
uncanny accuracy. In its projection of total patient load it 
comes within five-tenths of one percent, and with unique 
patients it is one-tenth of one percent accurate.
    But what happened is, and how it works is, it models itself 
based on real data. And as you know, the budgeting cycle, we 
are sitting here working on the 2008 budget now in March of 
2007. So back then they were using 2002 data in that model, the 
numbers that were being----
    Mr. Ryan. 2002 data for 2005?
    Secretary Nicholson. Yes, sir.
    Mr. Ryan. Okay.
    Secretary Nicholson. And in 2002 there was not a War. And 
so that model, and thus that budget projection that I got right 
after I came into this job, entering into that, was off. And it 
became very clear that it was off. We did come here and got a 
supplemental.
    Mr. Ryan. Are you confident that the base assumptions in 
your model now are adjusted to reflect today's reality and 
2008's reality? That that is going to be adjusted?
    Secretary Nicholson. I have a good degree of confidence. We 
have applied some judgment to it. It does not, for example, 
does not model long term care. It does not model our expenses 
for CHAMPVA, which are quite ascendant in recent years, if you 
have noticed. And it does not model dental care. So we apply 
those independently, plus, you know, a little bit of judgment 
factor to it based on----
    Mr. Ryan. Yeah, but any model you can add discretionary 
assumptions into it and you have done so to reflect current 
realities. Is that what you are saying?
    Secretary Nicholson. That is correct.
    Mr. Ryan. The data security, you touched on this a little 
bit in your testimony. Can you give us kind of specifically 
what the VA is doing to protect the identities and the 
privacies of our vets? You know, what specific reforms are you 
putting in place to make sure that this episode of, I cannot 
even remember, 16 million veterans does not happen again. What 
exactly are you guys doing to fix that, to prevent that from 
happening?
    Secretary Nicholson. Well, we have the Assistant Secretary 
for IT here with us. But essentially we are going through a 
major transformation of this huge agency that is disbursed 
throughout the world, we really have facilities from Maine to 
Manila, that has had a culture of decentralized sort of semi-
autonomous operation. These hospitals are major things, 
employments centers, vendor centers in their communities, grown 
up that way. We are centralizing all of the IT. It is long 
overdue, but it is a real cultural shock and an imposition. And 
it is necessary that we have the discipline and the uniformity 
of systems and reporting in the entire system so that we do not 
have all these independent operations. That is ongoing and that 
is going quite well.
    Mr. Ryan. When do you expect it to be completed?
    Secretary Nicholson. Well, the entire, I think we project, 
and I will ask Secretary Howard for that, for the end of that 
we have an elaborate chart of steps there. Bob, do you want to 
answer?
    Mr. Howard. Yes, sir. Sir, we have a very comprehensive 
program. We have laid down hundreds of actions that need to be 
taken, beginning with the proper directives. Many of those have 
already been written and published. In fact, the actions are 
broken down into managerial type actions, like the directives. 
Technical actions, enhancing the use of specific technology be 
that encryption, the use of public key infrastructure in 
encrypting emails, and things like that. And then we have 
operational actions, enhancing procedures that need to take 
place. You know, that do not involved technology, in a sense, 
but involve the way you do business. And as I said, this 
overarching plan, the actions number in the hundreds. And that 
is already ongoing. It is considerable work, but a lot of work 
to do.
    Mr. Ryan. When do you feel like you will be confident that 
you have the right technology and actions and processes in 
place to prevent something from happening?
    Mr. Howard. Sir, this fiscal year, in fact, is a very 
critical one. We anticipate by the end of this fiscal year we 
will have a number of those in place, but it will not be 
complete. I would anticipate probably another year before we 
are very comfortable with the protection of our infrastructure. 
By that I mean the complete ability to control our networks and 
eliminate the use of open transmissions and things like that, 
controlling our ports on our computers, shutting those down 
when necessary, monitoring devices that are plugged into 
computers not only throughout VA but we also non-VA activities 
that we have to control, like our affiliates, our contractors. 
And in fact that particular population will be the most 
difficult. It is very extensive. And the other aspect of all 
this, sir, is that as we move forward we must be very careful 
not to shut the operation down. We are flying the plane at the 
same time that we are tightening controls.
    Mr. Ryan. Right, but is it your opinion that you now have 
in place specific controls that would prevent that kind of an 
episode from occurring tomorrow? Meaning, I understand it is 
going to take you a year and a half or a couple years to get 
the whole procedure put into place. The culture changed, the 
interoperability, the data security, all of that. But do you 
have the right controls in place right now so a worker who 
takes a laptop home and that gets stolen and the data can be 
downloaded, do you have the right controls in place today to 
stop that specific kind of a problem from happening tomorrow?
    Mr. Howard. In other words, sir, to prevent the 
downloading----
    Mr. Ryan. Yes.
    Mr. Howard [continuing]. From a remote area?
    Mr. Ryan. Yes.
    Mr. Howard. Not yet, sir. There is a technology that is in 
use right now in region four, that is the northeast, that does 
that. And that is being distributed throughout the country, but 
it is not 100 percent yet.
    Mr. Ryan. When would that technology you are talking about 
in region four be distributed?
    Mr. Howard. Sir, we anticipate by the end of this fiscal 
year.
    Mr. Ryan. Okay, thank you.
    Mr. Howard. And the thing is, sir, to just comment one more 
point about that. The awareness issue, the culture change, is 
critical to what you just said. Because even with the 
introduction of some of these technologies, where there is a 
will, there is a way. In other words, if someone really wants 
to do something incorrect they can do that. The awareness part 
and the culture change and the responsibility of each employee 
throughout the VA is absolutely critical to solving this 
problem.
    Mr. Ryan. But when I hear you say, ``the end of the fiscal 
year,'' what you have in place in region four to protect 
against this specific kind of a problem, that, you are talking 
about the end of September this will all be in place?
    Mr. Howard. For that particular, controlling the 
downloading of critical information and eliminating devices 
from being plugged into the VA network, inappropriate devices.
    Mr. Ryan. Why does it take that long?
    Mr. Howard. Sir, one reason is we are dealing with a very 
highly decentralized organization. And although we just 
recently centralized information and technology, it was as I 
said very decentralized in the past. And as a result, there are 
all kinds of devices that were purchased out there. For 
example, just computers alone, there are all kinds of different 
types of computers. And when introduce a fairly rigid 
technology into that kind of an environment you do have to be 
careful to make sure the computers will accept the technology, 
that the network will accept the technology and not shut down 
and not be overloaded. That is why we have got to be very 
careful as we move forward. Because particularly in the health 
arena we cannot afford to have a hiccup in any of that. We are 
very careful, testing is going on. We are using region four in 
the northeast as our test bed in fact. And there are a number 
of these technologies. You know, we could share with you how we 
are approaching some of that. But there is an extensive amount 
of effort going on to introduce an array of activities. You 
know, it is not just one particular thing. It is not just 
encryption alone. It is control over the network, it is control 
over the ports and the computers, a variety of activities that 
need to be put in place.
    Mr. Ryan. Well, I will just close with this. If you could 
keep us in writing up to date on this. Let us know if you are 
meeting benchmarks, let us know when this first round of 
protections have been implemented. And I would sure like to 
know if you are going to slip past the end of September 
deadline.
    Mr. Howard. Sir, we can share with you those near term 
activities along with long term activities. For example, a lot 
of what we are doing now, as I say this is this fiscal year. 
But we have also got follow on activities that will take place 
well beyond that, that will even improve things even more.
    Mr. Ryan. And keep us posted as you are doing this.
    Mr. Howard. Yes, sir.
    Mr. Ryan. Thank you, I yield.
    Chairman Spratt. Thank you, Mr. Ryan. Mr. Edwards of Texas.
    Mr. Edwards. Thank you, Mr. Chairman. Secretary Nicholson 
from my vantage point as the Chairman of the VA Appropriations 
Subcommittee I want to thank you not only for your 
distinguished combat service to our country in Vietnam but for 
your lifetime of service which you are continuing in this 
position. And I know over the last several years since you 
attained this position you have been an aggressive voice for 
veterans and initiated a lot of new positive programs for 
medical care and other services for our vets, and I salute you 
for that.
    I want to get, for the record, some budget numbers. And I 
want to make it clear that we all understand that these budgets 
are not put together by the VA administration. The OMB bean 
counters are the ones who eventually sign off on these and 
force budgets that none of us would ever approve. But I want to 
get down for the record a few points. As I understand it, you 
are asking for $36.6 billion for VA medical care services for 
fiscal year 2008, is that correct?
    Secretary Nicholson. That is correct, sir.
    Mr. Edwards. For 2009, what does the budget request for VA 
medical care services?
    Secretary Nicholson. It is not a request.
    Mr. Edwards. But what is in the five-year budget? What is 
the estimate for 2009 fiscal year for VA medical care services?
    Secretary Nicholson. The estimate is $34.5 billion.
    Mr. Edwards. $34.5 billion? So that would be a $2.1 billion 
cut starting October 1, 2008 in VA medical care services. Now, 
that does not take into account, well let me get for the 
record. You assume this year a 4.45 percent medical care 
inflation just to maintain present services, given the extra 
costs for healthcare supplies, salaries, is that a correct 
number?
    Secretary Nicholson. Yes, sir. That is the inflation plus 
payroll, 4.45 percent, yes.
    Mr. Edwards. Okay. And you are projecting 2.4 percent 
increase in workload, or in effect net number of new veterans 
coming into VA healthcare system. So you need extra money just 
to maintain present services for each veteran, given you have 
an increase in population. Is that correct?
    Secretary Nicholson. Yes, sir.
    Mr. Edwards. Okay. So for the record, let me just say this 
and I am not going to ask you to respond to it, Mr. Secretary. 
But for the record, if the Congress were to follow the OMB 
recommendation and to fulfill the President's budget request 
for veterans it would require the most massive and 
unprecedented cut in veterans healthcare services in American 
history. It would be over $2.1 billion cut before you 
considered the 4.45 percent increase inflation for maintaining 
present services for healthcare and that would not take into 
account increase in number of veterans going into the system. 
And I want veterans in this country to know that is not going 
to happen. Congress is not going to support it.
    But I want to send a message to the bean counters at OMB, 
when they brag that we can easily balance the budget by 2012, 
protect every tax cut we passed, fund the War in Iraq and 
Afghanistan, they should also have the integrity to say they 
stand behind their recommendation that we would have the most 
massive cut in veterans healthcare services in the history of 
America. They cannot have it both ways. They cannot ask the 
press to say we are going to balance the budget by 2012 in a 
responsible way and then run from their own numbers, which 
would require millions of veterans to have their healthcare 
services cut, perhaps cause hundreds of thousands of other 
veterans not to get their healthcare. And I am not going to ask 
you to comment on that, Mr. Secretary, because I know how the 
system works. And I know the recommendations for 2009 did not 
come from the VA. But I am tired of letting the OMB counters 
get a free ride, bragging about how they are going to balance 
the budget responsibly, but there is nothing responsible about 
having a $2 billion cut in fiscal year 2009 for medical care 
services.
    That also touches on a debate, Mr. Secretary, I will not 
drag you in the middle of but it is a debate we have in this 
Committee often, about when is a cut a cut. And there are some 
who would say if you provide one additional dollar for 2009 
compared to 2008 for VA healthcare you have increased funding 
and therefore you have not cut veterans healthcare. I think 
that is disingenuous because if you added one dollar from 2009 
to the 2008 VA healthcare budget, you would be facing $2 to $3 
billion in cuts in present services for veterans because of 
healthcare inflation, increase in population of veterans. So, 
to those of my colleagues that say, you know, we are being 
disingenuous when we suggest a one dollar increase in the VA 
healthcare budget in 2009 over 2008, I would say that a cut is 
a cut when hundreds of thousands of veterans would not receive 
the healthcare that our nation promised them and the healthcare 
that the nation delivered to them in the year before.
    Mr. Secretary, the one question I want to ask you is this. 
I met with several veterans recently who have formed a new 
Afghan/Iraqi War veterans organization. And they told me that 
in the post-deployment questionnaires and surveys there have 
been thousands of our servicemen and women who have requested 
mental healthcare services. And the vast majority, well over 50 
percent of those, have not received a call yet. I do not think 
this was the fault of the VA because I assume this was still 
within the Department of Defense healthcare system. But I know 
you interact with them. And if that in fact is true, or those 
numbers are even close to being true, I think it is shameful 
that thousands of our Iraqi and Afghan War vets have asked for 
mental healthcare and have not received any response, no 
appointments with doctors, nurses, psychologists, 
psychiatrists. Can I just ask you for the record, have you 
heard about this concern? Or has the Department of Defense 
mentioned this problem to you? Because if it is true then it 
will eventually be a huge problem for the VA. But I would like 
to see if we can address it in the supplemental bill if we can 
get the facts on the table. Can you shed any light on this 
situation?
    Secretary Nicholson. I cannot confirm that proportion, 
those percentages, Congressman Edwards. But I know the GAO 
mentioned it in a report on the Army. And so we know that there 
is a disconnect occurring there. I think I very recently 
testified I had a meeting with the Deputy Secretary of Defense 
to talk about better communications. And that has begun. We are 
getting better information now on both the sessions and the 
people they are getting ready to discharge, which is very 
helpful to us in anticipation. This is another area that needs 
to be improved upon. And that is underway.
    Mr. Edwards. Okay. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.
    Chairman Spratt. Mr. Barrett of South Carolina.
    Secretary Nicholson. Excuse me, Mr. Chairman? Could I just 
make one more comment on something that we are finding out 
about that, that for your information, Mr. Edwards, in 
discussion with those people. And we do not have a solution to 
this yet, either. But we find that a lot of these young people 
who are experiencing these reactions to having been in that 
dangerous condition, combat 360, are reticent to come forward 
and to have it recorded in a medical record of some kind 
because they feel that there is some stigma that attaches to 
this. And we, in our outreach efforts when we do these post-
deployment screens and so forth, are trying to inform them and 
their families and their community of people, including their 
employers, that this is not uncommon. This is a common reaction 
to a very uncommon experience. They are not losing their mind. 
There is no fault. If we are allowed to treat them early enough 
we can make most of them whole. And so we are really 
encouraging them not to be inhibited by this stigma.
    Mr. Edwards. Right. I thank you for that. And I would just 
add a final footnote that because of that outreach if the 
Department of Defense is not doing its job in following up and 
providing appointments with physicians with these veterans who 
have pleaded for it, with these actually active duty and Guard 
and Reserve members, then the word is going to get out. You 
overcome the fear of the stigma, you finally do fill out a 
questionnaire honestly asking for help, and then you do not get 
it. I am afraid it is going to discourage other veterans coming 
back from the wars to ask for that help. But thank you for your 
leadership, and I will look forward to following up with you on 
this, see if we can work with DOD to do something, perhaps even 
in the supplemental.
    Chairman Spratt. Mr. Secretary with your indulgence, we 
would like to pause for just a moment for a brief piece of 
housekeeping business that needs to be done. And I yield to the 
gentleman from Wisconsin, our Ranking Member Mr. Ryan, for a 
unanimous consent request.
    Mr. Ryan. Thank you, Mr. Chairman. Mr. Chairman, I ask 
unanimous consent that the Committee approve Andrew Morton's 
service in the capacity as independent consultant to the House 
Budget Committee Republican Staff. He meets the requirements to 
act as an independent consultant as set forth by the Committee 
and House administration and applicable statutes.
    Chairman Spratt. We have a letter here to the Committee on 
behalf of Mr. Ryan, it is my understanding that you have 
secured the approval of the House Administration Committee for 
this employment, which will be for a course of one year unless 
renewed. Without objection, unless there is objection, the 
unanimous consent request is agreed to, as well as requesting 
the consulting contract will be made a part of the record. This 
will be a consultant to the Republican Staff for the Committee. 
Hearing none, it is all approved by unanimous consent.
    Mr. Ryan. Thank you.
    [The attachment of Mr. Ryan follows:]

Unanimous Consent Request by Mr. Ryan for the House Budget Committee to 
                   Approve an Independent Consultant

    Mr. Chairman, I ask unanimous consent that the Committee approve 
Andrew Morton's service in the capacity as independent consultant to 
the House Budget Committee, Republican staff.

    Chairman Spratt. Thank you very much. And now, Mr. Barrett 
is not here. Mr. Garrett?
    Mr. Garrett. Thank you, Mr. Chairman. Thank you, Mr. 
Secretary. I appreciate the questions of the Ranking Member 
earlier. I will not be redundant on those, they already covered 
some of the points. I would like to thank the Secretary, 
though, for your service to the vets of this nation. I would 
like to also thank you personally for during your tenure 
traveling up to my neck of the woods, the great state of New 
Jersey, the fifth congressional district, and spending some 
time up there. You may recall you had the opportunity to travel 
up and visit the Paramus Veterans Home. And the men who were 
there were sort of shocked to see you there, but very pleased 
to see you, had the opportunity to engage in conversation with 
you. So I appreciate that.
    While there and through our discussion there, we were able 
to point out some of the advances that are being made as far as 
some safety improvements that are being made to that particular 
facility to enhance the conditions from a safety point of view 
for the men who are in that facility, and who will spend their 
lives there now. One aspect that we were able to touch on a 
little bit that was not able to, we are still working on, it is 
something not from a safety point of view although you might 
put it in that category in some definition is for the fact that 
these people spend their entire day, twenty-four hour, twenty- 
four seven there, and need recreation as well. And so we are 
looking to have expansion of what we call a day room for 
exercise, and done in a way that we are actually not just 
looking to the VA but outside organizations are stepping up to 
the plate to help as well, to help underwrite and fund these 
programs which I think is a good joint effort. We just look to 
you to see that the hope that the VA continues but a priority 
in the construction and grants funding for programs that are 
not specifically safety in nature, but are also life critical. 
And that is in the area of the environment and the recreation 
for the gentlemen there. And if you just want to, I will just 
let you comment on that if you see the importance of those 
aspects in addition to simply the safety aspects of these 
facilities? 
    Secretary Nicholson. Well, we do consider that important. 
We of course have to prioritize for, you know, life safety and 
medical support needs. But we agree. In the long term care 
environment we try to be as holistic as we can. We coordinate a 
lot of volunteers into those centers and, you know, the things 
that go with that: trips, outside stimulation, so forth. And 
the recreation part of it is very important.
    I might add parenthetically, I was visiting a long term 
care facility here in the North Washington VA Center and a 
little lady in a wheelchair with one leg said, ``Hey Secretary, 
how old do you think I am?'' And I guessed. I said, ``Oh, I 
think you are about seventy-five, ma'am.'' She says, ``I am 
ninety-five and I want to go to Atlantic City.'' And it turned 
out she was, she is now 100. She was ninety-five and we, I 
organized a little thing and we got a van with some of the 
other colleagues, and she went up and had her, what she said 
was her final wish. She is still kicking and she still wants to 
go back again. But she went to Atlantic City.
    Mr. Garrett. Well, we appreciate New Jersey for Atlantic 
City. The second question is, with regard to cemeteries. On 
federal cemeteries, correct me if I am wrong, if a 
servicemember or a spouse was to be buried in a federal 
cemetery then there is no cost to that soldier or his spouse. 
If he wants to be, if he or his spouse want to be buried in a 
state cemetery there is a minimal cost, or some cost to the 
individual, to the soldier, but there is no subsidy, if you 
will, the spouse has to pay their total fee to go into a state 
cemetery is my understanding. My question to you, if I 
understand that correctly, would it not be a true cost savings 
in long term, because a state cemetery pays for all the 
additional costs of maintaining that cemetery down the road, if 
the VA could just supplement just to the extent of a few 
hundred dollars or whatever that they pay for the soldier for 
the spouse to go into that? Because at that point the spouse 
would never be, there would never be a cost to the VA in the 
future for that spouse had that spouse decided to go into a 
federal cemetery.
    Secretary Nicholson. Well, I appreciate the question, 
Congressman. As you know, the plots are there and they are 
there without cost. Those details I am going to defer to Under 
Secretary Tuerk to respond to.
    Mr. Tuerk. Yes, thank you Mr. Garrett. I am glad to respond 
to you to the extent that I can this morning.
    Mr. Garrett. Okay.
    Mr. Tuerk. And we can supply additional information. You 
are correct, in a national cemetery there is no charge to 
anyone who is eligible for burial there. In the state 
cemeteries, however, we leave it to the states to determine 
whether they are going to charge a fee for a spouse. I am not 
personally aware that New Jersey charges a fee. Apparently that 
is the case. As I said, we leave that to the states.
    Mr. Garrett. Well, I would just encourage you to take a 
look at this, whether there would be a cost savings overall. 
Because now if a New Jersey resident who obviously is defending 
not just New Jersey but is defending the entire nation when 
they are a soldier is buried in a state cemetery, the spouse 
has to pay upwards to $500 I believe or more for internment. 
And then the state is picking up the cost, as I said before, 
for the perpetual care of that site. Whereas if they had chosen 
to go to a federal facility, the federal government would be 
responsible for both ends of it, for the internment plus for 
the perpetual care as well. We see this as a way to encourage 
people to remain where they want to be, which is back at home 
in their own state facilities, and decrease the overall cost. 
And also decrease the need, as there is an apparent need now, 
for additional federal cemeteries for our soldiers and their 
spouses as well. So I encourage you to take a look at that and 
I would be glad to discuss it with you.
    Mr. Tuerk. I would be happy to. I will talk with your 
staff, Mr. Garrett, and we will get back to you with 
information on that question.
    Mr. Garrett. Thank you so very much.
    Mr. Tuerk. Happy to do that.
    Chairman Spratt. Mr. Cooper?
    Mr. Cooper of Tennessee. Thank you, Mr. Chairman, thank 
you, Mr. Secretary. I would like to yield my five minutes to 
the person I think is the only member of this Committee who has 
actually worked in a VA hospital, Mr. Baird of Washington 
State.
    Mr. Baird. I thank Mr. Cooper. I would rarely ask for this, 
but I have to go to another mark up. And having worked in the 
VA and specializing in traumatic brain injury, I really wanted 
to take the chance to ask you a few questions if I might.
    And I want to respond to my good friend, the Ranking Member 
from Wisconsin, who asked about the 2005 shortfall. A brief 
story about that is in order. I, along with my colleague Ms. 
Hooley from Oregon, in late 2004 began to ask our local 
psychologists and other health professionals at our regional 
VA, ``Do you have the resources you need currently to treat the 
current veterans? And with reasonable anticipation of certain 
incidence rates among the incoming returnees, have you plussed 
up your budget and staffing levels to meet that?'' The answer 
was deeply troubling. The first answer was, ``Congressman, if I 
tell you the truth I will lose my job.'' That is a true story. 
Federal employees telling an elected representative of the 
people that if they told the truth they would lost their job. 
Secondly, the answer was absolutely not. ``We do not have 
enough to meet our current needs and we do not have any 
projected increase proximal to what we are going to need.''
    In response to that Ms. Hooley and I tried to offer an 
amendment to the then emergency supplemental to add $1.5 
billion, which we estimated and veterans groups estimated would 
close the anticipated gap. We were not allowed to offer that 
amendment when the supplemental came up, and the office 
administration position is, ``You do not need to because we are 
going to meet the needs.'' Six months later, sure enough, there 
was the shortfall revealed, as the Secretary said.
    So my first question, Mr. Secretary, and I know this may 
not have been on your watch initially because you came on right 
after that. Would you without any hesitation say that a staff 
member of a VA who responds honestly to a request for 
information from a member of Congress that does not violate 
confidentiality restrictions will not be subject to dismissal 
if they answer the question honestly?
    Secretary Nicholson. I will unequivocally answer that and 
say absolutely not. One, because that is the way it ought to 
be. But two, it would not even be possible to dismiss them. I 
mean, I have people that we were talking about these data 
breaches, some of which are pretty flagrant, and I find my 
hands very tied in taking discipline action against them for 
that, let alone someone that decides to speak his or her 
opinion.
    That happens, by the way, all the time. I was just on this 
television special and had several members of the VA 
interviewed that had a view of some things different from I and 
they were not a bit inhibited about saying it.
    Mr. Baird. Well, I will tell you, Mr. Secretary, I spoke to 
a half dozen Phds, MDs, nurses, and others, all of whom gave me 
the same answer. So when your model falls short, because the 
reason the model falls short in estimation is the people who 
are on the line providing the service are not included in that 
and they are intimidated. I will just put that out there.
    Second question, that same issue arises, though, as we look 
at the current budget. As we look at the projected incidence of 
certain issues, like traumatic brain injury, Post Traumatic 
Stress Disorder, etc., you said earlier we have good capacity 
to meet Post Traumatic Stress Disorder. I do not hear that from 
the people in the field. When you say good capacity, have you 
done incidence calculations to determine what is the percentage 
of normal incidence of returnees and what capacity do we have 
to meet that? Because I am not seeing that. I certainly am not 
seeing it on the ground.
    Secretary Nicholson. I am going to ask Dr. Kussman to give 
you more of a refined answer. But I will give you some numbers 
of, you know, the returnees from the War, we see in the 
vicinity of 210,000 of those that have come back and have been 
separated. And of that number I think it is 73,000 that we have 
screened have mental health issues. And continuing the 
diagnosis that we do with those people we have concluded that 
39,000 should be in treatment for Post Traumatic Stress 
Disorder and are.
    Mr. Baird. Well, let me, because I am going to run out of 
time here, ask three things. Can you give me some more details 
about what it means to be in treatment for Post Traumatic 
Stress in terms of frequency of visits, waiting time to access 
that? That would be question one. Question two would be when 
you make your long term cost projections, and I think Mr. 
Edwards was very articulate about this, having worked in TBI, 
that was my specialty, was traumatic brain injury. Some of 
these folks are going to need long term care and vocational 
rehab. They are going to need emotional support for their 
families. The data suggest people tend to have fairly positive 
recoveries immediate post-injury, then four or five years out 
is when things begin to fall apart for their families and 
themselves as the recovery rate is plateaued. So I am 
interested in long term costs for TBI. And then the final 
question I would like, could you provide members of the 
Committee some estimate of the additional cost to the VA system 
resulting from the Iraq conflict? Just the Iraq conflict? You 
know, I am not asking for that now. But I think when we hear 
the cost of this War I am very interested in what the 
additional cost of this system would be if we fully met the 
needs of the veterans for the projected future. In other words, 
the lifetime of the veterans, what is the full cost of this War 
going to be for that?
    And I thank the gentleman for yielding the time, and 
obviously I care passionately about this having worked with our 
soldiers in the VA.
    Secretary Nicholson. We will attempt that. But I would like 
to be able to get with you to get some more particularity about 
what that would mean.
    Mr. Baird. Sure. I would be happy to do that.
    Secretary Nicholson. Thank you.
    Chairman Spratt. Mr. Hensarling?
    Mr. Hensarling. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. It is good to see you again. We have known each 
other for a number of years, and let me add my voice to those 
who want to congratulate you for your continued service to our 
nation.
    I really want to start out with a statement, and hearken 
back to something our Ranking Member, Mr. Ryan of Wisconsin, 
said. And that is unfortunately that now we do not agree across 
the aisle in this Committee. But I think if there is one thing 
that we would agree on is that it would be more difficult to 
find a greater moral obligation of this country in this 
Congress than to ensure that our veterans have the best 
healthcare in the world, period, paragraph. And we clearly want 
accountability. We do not want waste. And we know it is not how 
much money you spend that counts, it is how you spend the 
money.
    We will debate in this Committee and in this Congress where 
that money ought to come from. Some will want to pass debt on 
to future generations. Some will want to increase taxes. Others 
will try to find it in lower priority spending. That is 
personally my own preference, but I do not think anyone in this 
Committee would offer a greater priority. And so clearly when 
you see stories like you saw on the cover of Newsweek they are 
disturbing. Simply because I see something in print does not 
mean I accept it as gospel, but it does want me to ask some 
serious questions.
    So I think you said that in your opinion today, that the VA 
is the world's leader in spinal cord injuries and Post 
Traumatic Stress Disorder injury, but yet the traumatic brain 
injury is an evolving area. What is it going to take to make 
sure that the VA does become the world's leader in this area?
    Secretary Nicholson. Well, that is also a goal for the 
obvious reasons of the patient base that we have and we will 
have to serve that affliction. So we are going to continue the 
research that we have ongoing with it, both in concert with 
DOD, as I said we have that research center. And we are going 
to continue and be able to do all the research on the clinical 
work that we are doing because we have patients that we are 
treating for this. And we have an outstanding group of doctors 
involved in it. There is a Dr. Scott in our Tampa Polytrauma 
Center who is one of the leaders both as a clinician and as a 
researcher and visionary in this area. There is a commitment to 
this and we have, we are excellently positioned to do it.
    Mr. Hensarling. Mr. Secretary, over the recent recess I had 
the occasion to meet with veterans in Kaufman, Cherokee, and 
Wood County Texas, mainly Korean, Vietnam era veterans. It is a 
most unscientific survey. But I wanted to let you know that 
with one or two exceptions they are very, very pleased with the 
healthcare that they are receiving at various Va facilities in 
east and north Texas. The same has not always been true from 
the feedback I have received from those coming back from Iraq 
and Afghanistan. I saw a statistic recently, and like a lot of 
statistics that cross my desk, sometimes they are apocryphal in 
nature so I do not know where I received this one. But I read 
that in Vietnam the ratio of those who were wounded to those 
who died was three to one, and now it is sixteen to one. Which 
I suppose means we have a far greater number of wounded 
veterans that we are dealing with, and better to deal with a 
wounded veteran than a deceased veteran. Is that part of that 
challenge to some extent? Are we victims of our success?
    Secretary Nicholson. I think it is. It is clear that many 
of the people that are coming back now alive from this conflict 
would in all previous conflicts be coming back in a body bag. 
And, you know, that is the good news. And then the challenge is 
to take care of them and try to reconstitute them and their 
life to the extent that we can. And I am also very proud of the 
VA and I am proud of the DOD facilities and what they are doing 
in taking care of these people and restoring, putting a lot of 
ability back into, you know, what appears to be initially 
mostly disability.
    Mr. Hensarling. I see I am out of time. Thank you.
    Chairman Spratt. We have a vote in ten minutes and fifteen 
seconds. What we are going to try to do is to carry on to the 
hearing down to about the five minutes point. We will then run 
over, vote with your indulgence Mr. Secretary. I am sorry, but 
this is the nature of this institution, and we will be back as 
quickly as possible. We may have two votes, otherwise we would 
go in shifts, but I think we may have two votes. In the 
meantime let me recognize Mr. Boyd of Florida.
    Mr. Boyd. Thank you, Mr. Chairman. And Mr. Secretary, let 
me join the others who greatly admire and respect your service 
to this country. Many of us know of the long history of your 
service to your country, and we are grateful, and you have 
heard me say that before.
    I have got a couple of things I wanted to ask. First, I 
think I will start with Dr. Kussman. Dr. Perlin, your 
predecessor, came to North Florida. This really has to do with 
the CBOCs and how we are coming with the long backlog list that 
we have. He came last year down and visited North Florida to 
visit some clinics that you have there, and also look at the 
sites that we had picked out for another clinic. And at that 
point in time we had been donated a building that only had to 
have a little bit of rehab done on it, that would have cost the 
Veterans Administration about $50,000. That now is no longer 
available, and we are not sure what it will cost. But can you 
give us an update on the CBOC list and how we are progressing 
with that?
    Secretary Nicholson. Well, I will take the 30,000 footer on 
that, Congressman, and ask Dr. Kussman if he has something in 
particular with your case. But at the end of fiscal year 2006 
we had 717 CBOCs that were open, and that included eight that 
were open or expanded in 2006. In this current fiscal year we 
have twenty-four that have been approved for going into 
operation. And in this budget that we are here presenting to 
you today for 2008 we have twenty-nine in that plan.
    Mr. Boyd. But that would be twenty-nine new ones?
    Secretary Nicholson. Yes, sir.
    Mr. Boyd. I am not talking about improved. I am talking 
about new facilities.
    Secretary Nicholson. Those would be new, yes sir.
    Mr. Boyd. And none in 2007, is that correct?
    Secretary Nicholson. No, in 2007 we have twenty-four.
    Mr. Boyd. That were improved, you said?
    Secretary Nicholson. That is approved.
    Mr. Boyd. Oh, approved.
    Secretary Nicholson. Approved.
    Mr. Boyd. Oh, I am sorry. All right, thank you sir. Mr. 
Secretary, let me also say that the Chairman asked early on 
that the demands for health services would increase in out 
years, and your quote was, ``We are focused on the 2008 
budget.'' And then you went on to explain that the budget 
numbers that we have before us for the out years are not really 
reflective of what you think the demands will be. Is that a 
paraphrase of what you said?
    Secretary Nicholson. That is correct, yes sir.
    Mr. Boyd. So I would assume that given that, that when the 
administration officials, OMB officials come before us and tell 
us they are going to balance the budget by 2012 with the 
proposed budget that we see in front of us, that they are 
really misleading us. Would that be accurate?
    Secretary Nicholson. No, I would not characterize that way. 
What I would say is that those out year numbers do not have the 
benefit of our projected needs at the VA.
    Mr. Boyd. Okay. Mr. Secretary, you have a great deal of 
influence with the folks that run the administration. We all 
know that. You have heard me say to you before that we have 
some very difficult fiscal issues that this Committee is trying 
to deal with in a very responsible way. And the thing that we 
really need to do to be able to solve these long term problems 
is to talk straight with the American people and the folks who 
represent the American people. And I guess that is the biggest 
problem I have with this budget. I personally think that under 
your administration that the Veterans Administration services 
have improved. I see it and hear it in the district and the 
folks that I represent. But I think long term, if we are going 
to be honest with each other about how we deal with the numbers 
that have been reflected, been talked about by everybody here, 
including Mr. Hensarling who said that the number of sixteen to 
one wounded to killed when it was three to one when you and I 
were in Vietnam. The numbers have changed that much, we have 
got probably over 50,000 veterans, then, out there I assume 
being in treatment in the VA system. So, you know, we cannot 
solve these problems unless we can talk straight with each 
other. And I know you do not want to comment on, or I do not 
need you to comment on it, but I just wanted to make that 
point.
    Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Secretary, for about ten or fifteen 
minutes now the Committee will stand in recess subject to the 
call of the Chair. Thank you for your indulgence.
    [Recess]
    Chairman Spratt. The Committee will be called to order and 
we will reconvene the hearing we just adjourned. And next in 
line on the Republican side is Mr. Porter of Nevada, who is not 
here yet. Mr. Alexander of Louisiana? Mr. Smith of Nebraska? 
Mr. Tiberi, I beg your pardon. Mr. Tiberi of Ohio.
    Mr. Tiberi. Thank you, Mr. Chairman. Mr. Secretary, thank 
you for being here. Thank you for your service as well. It is 
very much appreciated, as others have said. And I was here late 
because I had another committee meeting and I apologize if my 
questions are going to be duplicative. But on a personal note, 
I want to thank you for coming out to central Ohio last year 
and visiting with local veterans and coming to a new CBOC that 
opened up last year in Newark, Ohio just east of Columbus. And 
also visiting the construction site of what is going to be 
fabulous facility for veterans in Columbus, the new ambulatory 
care facility. And want to compliment you on your leadership on 
both accounts. And also your continued leadership on working 
with local hospitals to provide for veterans an opportunity to 
have long term care there that the hospital will not provide 
with local hospital so they do not have to go to Cleveland or 
Cincinnati or Dayton. So thank you very much on behalf of the 
veterans of central Ohio for your leadership.
    Another issue that we talked about, I know was on your 
radar screen, that I want to also encourage you to continue to 
pursue is that as you are aware the claims office in Cleveland 
has been one that has been very behind in its claims for 
veterans. And we continue to work with your local office there 
in central Ohio and in Cleveland, the delegation does, to try 
to make sure that we can have a more timely process for 
veterans. And especially as Senator Voinovich has pointed out 
in the coming years when you have a number of people retiring 
in that Cleveland office who have been of great value to the VA 
will make a bad situation worse. So I appreciate you being 
concerned about that.
    Since I came to Congress in 2001 we have spent over 50 
percent more in VA spending. I know spending alone is not going 
to solve all the problems at the VA, Mr. Secretary. Can you 
touch on other things that you all are trying to do? I know 
when you came out to Columbus you pointed to a national 
magazine article very proudly about the VA's medical care being 
recognized for its top rate care. But what other things are you 
doing, your leadership at the VA since you have been there, to 
try to accomplish more for veterans?
    Secretary Nicholson. Well, how much time do you have?
    Mr. Tiberi. A couple minutes.
    Secretary Nicholson. Because everything that, I mean, we 
are doing is we are trying to do for veterans and do it better, 
and I do not say that lightly at all. Let me just mention, in 
terms of some things that are not real expensive that do not 
get a lot of attention. But one of them is an initiative that I 
have kicked off which is called MRSA initiative. MRSA stands 
for methicillin-resistant staph aureus, which is infections in 
hospitals. And we ran a pilot in our hospital in Pittsburgh and 
discovered that we could make considerable improvement using 
just common sense sanitation techniques. They seem so self 
evident, but they do not do it. It is kind of like, you know, 
these cultural things. We cut staph infections in that hospital 
by 70 percent in one year. So that is conclusive to me so I 
have instituted that throughout the entire system. The cost of 
that is about $20.5 million. Most of that is to buy a culture 
reader, it takes two days now to read a culture. What you do 
is, you swab people when they come in in their nasal passages 
to see whether they are positive or negative. If they are 
positive then we treat them in a special way, which cuts down 
exposure. That is now system wide.
    Another is trying to retard the epidemic of diabetes that 
we have in our veterans population. One out of five of our 
veterans have diabetes. And most of it is Type 2, adult onset 
diabetes, meaning most of it was preventable, is preventable. 
And 70 percent of our veterans are obese. So I have instituted 
a big movement. They just yesterday filed some pieces for this 
that we are putting out. All they have to do is a modicum of 
exercise and change in their diet, and it can make tremendous 
effects on their health. Thirty minutes of aerobic exercise 
three times a week, which is just walking. That is costing us 
virtually nothing and can have great effects.
    We have enhanced our performance standards in measurement 
of our hospitals' performance, and we have added some new 
criteria to that. This is a wonderful management tool, because 
it not only gives you an assessment of how that hospital or 
that medical facility is doing, but it is also a big barometer 
that we use in exercising something I think the government was 
very inspired to do, which is to give CEOs of organizations, 
like I am, the right to give bonuses to these people. And that 
is a very clear criteria that we have to measure, whether they 
are worthy of a bonus or not. How are they performing out 
there? Those are examples.
    Mr. Tiberi. Thank you. Thank you, Mr. Chairman.
    Chairman Spratt. Thank you. Mr. McGovern?
    Mr. McGovern. Thank you, Mr. Chairman, and thank you Mr. 
Secretary. I appreciate your testimony. I appreciate your 
service. I also am grateful to your under and assistant 
secretaries who are here and all your staff. I appreciate their 
work. I appreciate the work of the many hardworking doctors and 
nurses and healthcare providers. And the vet centers in our 
communities, who are dedicated to helping our veterans. But I 
am, you know, I want to add my voice to some others here today 
who have expressed concern as to whether or not we are 
adequately meeting the needs of our veterans. I appreciate your 
testimony and the citations of the statistics of who we are 
treating, and of who you are reaching out to and who you are 
getting to. But what I am not clear on is: who we are not 
getting to? And who are falling through the cracks?
    A couple years ago I was at a town hall meeting in 
Massachusetts and had a father stand up and tell me a story 
about his son, who volunteered and went to Iraq because he was 
moved by the speech that President Bush gave at the outset of 
this War. And he came back and according to his father, he was 
given inadequate care by our country. That notwithstanding 
records that show where he told VA officials that he intended 
to end his life, he was released. And then a short while later, 
he committed suicide. And I did not know what to tell the 
father. But the point is that there are people that are falling 
through the cracks. That because of lack of expertise, or 
because we are not getting to them properly, or because we are 
not diagnosing what is wrong, we even have people losing their 
lives when they come back to the United States.
    You mention and the Chairman mentioned and others did the 
Bob Woodruff ABC news report that was on the other night. And 
there were a lot of telling moments in that documentary, and I 
cannot go into all of them. But one in particular stood out for 
me, and that is when it came to traumatic brain injuries, you 
know, where it was reported that tens of thousands of our 
veterans are suffering and remain undiagnosed and undetected, 
which also means they are not being treated. And the estimate, 
and it is just an estimate, put forward by the doctors in that 
interview, is that about 10 percent of our troops returning 
from Iraq and Afghanistan suffer from undetected brain 
injuries. That is maybe roughly 150,000? Or whether it is that 
or 50,000, that is still a huge amount. And, you know, this is 
the result, as you mention, of constant exposure to multiple 
shocks of explosions of combat even though there were not 
outward signs of physical trauma. And when these men and women 
complain to their doctors of headaches or forgetfulness or 
feeling fuzzy headed, they are ignored. And they often are not 
diagnosed because as the system is currently put together, 
there is a lack of expertise in many areas. And so some people 
go for two or three years until correctly diagnosed and 
treated, and that is only if they do not get too discouraged to 
give up.
    So when we talk about adequate budgets, I wonder whether or 
not what is put forward here is adequate enough? And I would 
appreciate your response to that. And just one other thing, as 
I am sitting here listening to the back and forth here, you 
know, this [pointing to budget books] is what the 
administration sent up to us. And the President told us that, 
you know, this is our blueprint and this is going to balance 
the budget and these are the numbers that we need to follow. 
And as I am listening to the testimony here you are conceding 
that with the exception of the upcoming fiscal year you know 
that the numbers that are contained in this budget are not 
real. They do not accurately reflect what we are going to need. 
Yet, you know, when we get to this whole issue of we have 
balanced the budget, it is these cuts in the out years that are 
used to get to that figure of balance. Now the problem for us 
is that in this Committee we do not have the luxury of, you 
know, of kind of fuzzy math. What we have to do is come up with 
a budget that actually is real. That will withstand scrutiny. 
That really does accurately reflect what we are going to need 
to spend on veterans, you know, not only in 2008 but 2009, 
2010, and so on. And so I guess I just want to echo a little 
bit of frustration here that, you know, while I appreciate your 
candor and your forthrightness and the work that you have done 
to improve the quality of care for our veterans, it leaves this 
Committee in a little bit of a dilemma as we try to figure out 
how to come up with our budget.
    And so I guess my two issues are, you know, the adequacy of 
what is on the table right now given the fact, and you heard it 
here through anecdotal evidence, of people on the ground, 
veterans who are falling through the cracks. The ABC new 
special the other night about all those who are undiagnosed and 
undetected with severe brain injuries. And also your comment on 
how we are supposed to do our job when we do not know what the 
real numbers are beyond this year.
    Secretary Nicholson. Well, first Congressman McGovern, let 
me clarify in response to your question about quoting me as 
saying that these numbers are not real. What I said, and would 
repeat, is that that budget, which has a lot of things in it 
besides the VA, does not reflect the input of the VA for our 
needs for 2009 or subsequent years.
    Mr. McGovern. But that is a nice way of saying that these 
numbers are not going to reflect what in fact the 
administration is going to request next year, and the year 
after. Well, there will be a new administration by then. But 
the bottom line is that, I mean I guess we look at these 
numbers. And when you can say we are going to balance the 
budget, I mean, I am assuming that these are accurate 
predictions of what in fact the Veterans Administration, or any 
other agency, is going to need. And so it is a little 
frustrating when on one hand we are told ``we are going to 
balance the budget and here is how we are going to do it.'' And 
I think we all know that the VA is going to need more than is 
what is in these pages here.
    Secretary Nicholson. I cannot speak for any of the other 
agencies. But I can for the VA. And we are in a dynamic 
situation with a War going on and common sense would tell you 
that given the base of patients and the demand on this 
organization that it will need more money. I will say that.
    Mr. McGovern. Well, you and I are on the same wave length 
on that. I guess the other question was about the report on ABC 
news. I mean, those who are undetected. Those who are 
undiagnosed, which again, if we are looking at that report, and 
again it was just an estimate, that is a significant amount of 
people that are right now undiagnosed or undetected. Who 
hopefully we will get better at being able to get to, and I 
know you are committed to that. But that is a significant 
number of people that have served our country, and are coming 
back, and not getting the treatment that they need.
    Secretary Nicholson. It is. And I will tell you, I have 
said before, I welcome the input, the oversight of you and the 
Congress and of other people doing that, the veterans 
organizations, the IG, the media. Because this is a vast 
organization with a huge mission. And it is helpful to me to 
get different inputs, including the criticism although very 
painful when I become aware of these unacceptable and happily 
exceptions to the rule of this great organization.
    As a result already of what has developed, we are now going 
to screen every patient, every veteran who comes to us, for 
brain injury. We have 44,000 nurses and doctors and clinicians 
out there that are now undergoing training to be able to be 
capable of doing this. We have developed a drop down menu of a 
checklist on their computer, because we are electronic as you 
know, that not only reminds them to do this but details for 
them the interrogation to make to try to detect this. What the 
percentage of people who have this is latent or hidden or none, 
I do not know that. I do not know anybody that knows that.
    Mr. McGovern. Could you use more money?
    Secretary Nicholson. Well, you know, I get asked that all 
the time. And when you are running a big organization like this 
I could always use more money, yes. For a lot of different 
things, not least of capital construction.
    Mr. McGovern. Thank you.
    Chairman Spratt. Mr. Scott?
    Mr. Scott. Thank you. Thank you, Mr. Secretary. Let me 
first ask, did I understand your previous testimony to say that 
people coming from Iraq have routine psychological screening? 
You did not say that?
    Secretary Nicholson. I am going to ask Dr. Kussman to 
respond to that.
    Dr. Kussman. Thank you, sir. When any veteran of OIF/OEF 
comes to us regardless of what the symptom is, we have a drop 
down menu related specifically to PTSD but other potential 
mental health things. And the primary care person, whoever it 
is, is required to ask those questions of someone so we can----
    Mr. Scott. There is some screening of everybody that comes 
in from Iraq?
    Dr. Kussman. Yes, sir, when they come to us.
    Mr. Scott. To the VA?
    Dr. Kussman. Yes, sir.
    Mr. Scott. Can I get chart number two please?
    Mr. Secretary, just for the record, does this chart, I 
think you have indicated that you agree with those numbers? 
Those are accurate numbers? Do you have any problem with the 
numbers on chart number two?
    Secretary Nicholson. I can agree that they are in the 
budget, displayed in the budget projections, yes.
    Mr. Scott. Okay. And does the CBO baseline, would you 
consider that conservative because it probably underestimates 
the number of traumatic brain injuries and psychological 
problems that returning veterans from Iraq will have?
    Secretary Nicholson. That is not our estimate, Congressman.
    Mr. Scott. Those are not your estimates?
    Secretary Nicholson. No.
    Mr. Scott. Are your estimates higher or lower than what is 
on chart number two?
    Secretary Nicholson. We do not have those estimates for 
those out years yet.
    Mr. Scott. Okay. On the appeals for disability, what is the 
backlog on appeals and how long do veterans have to wait for 
decisions?
    Secretary Nicholson. Currently the waiting time is about 
177 days. Which includes all claims. We had 806,000 new claims 
last year.
    Mr. Scott. I am not blaming you because I know how bad it 
was before you got there, so you chipped away at it. What is it 
down to now?
    Secretary Nicholson. Well, it is down to 177. In this 
budget, if approved at the level that we are asking, we think 
we can take it down to 145 days.
    Mr. Scott. Which would be about five months?
    Secretary Nicholson. Yes, a little less.
    Mr. Scott. Can you tell me what priority seven and eight 
personnel, who are they and what effect the budget has? Is 
there a lower priority than eight? Is there a priority?
    Secretary Nicholson. Eight.
    Mr. Scott. Seven and eight? Who are they and what effect 
does the budget have on them?
    Secretary Nicholson. First, who are they? They are people 
who have served, are veterans who have no service connected 
disability and they are making, they are working. They are 
making money. And it is at different levels----
    Mr. Scott. Seven and eight?
    Secretary Nicholson. Yes, sir.
    Mr. Scott. And what, they are usually eligible for 
services. What does the budget do to them?
    Secretary Nicholson. Well, currently we are not enrolling 
eights as of 2003. And I cannot tell you that, they are in, the 
ones that are in, and we are treating a considerable number of 
sevens and eights because they were at open enrollment prior to 
January, 2003.
    Mr. Scott. And after 2003?
    Secretary Nicholson. And your question is how much do they 
cost us?
    Mr. Scott. No. What happens if somebody is a category 
eight, they used to be able to enroll, can they enroll now? Do 
they have to pay extra? What does the budget do to their 
ability to get healthcare at the VA?
    Secretary Nicholson. Well, if they are enrolled they are in 
the system and they are in this budget.
    Mr. Scott. But if they are not enrolled they cannot get in?
    Secretary Nicholson. That is correct.
    Mr. Scott. Let me quickly, I just have a few seconds left. 
Identity theft, have you ascertained whether or not anyone has 
been adversely affected by the apparent breaches in 
information?
    Secretary Nicholson. Yes. Yes, we have contracted for a 
service to monitor that. And they are doing that. And to date, 
knock on wood, we have not any report of an exploitation of one 
of these breaches.
    Mr. Scott. Okay. And let me just make a statement. One of 
the problems with identify theft is nothing ever happens. If 
somebody steals your identity and runs something on the credit 
card, the bank eats the loss and forgets about it. Nobody ever 
pursues the person that did it. I would assume that you would 
insist on prosecution to the full extent of the law if anybody 
was found to have misused a veteran's identification?
    Secretary Nicholson. Absolutely right.
    Mr. Scott. And do you have an identity theft for medical, 
not consumer type things? People coming in, using a veteran's 
id to get medical treatment?
    Secretary Nicholson. We have not, no. We have a few cases 
of fraud. Not fraudulent identification, but fraudulent claims. 
And the IG, I get a report on that every month and there are 
periodically cases that they have discovered where they have 
been fraudulent. And most of them have been prosecuted, and the 
government has gotten restitution.
    Chairman Spratt. Thank you, Mr. Scott. Ms. Hooley?
    Ms. Hooley. Thank you, Mr. Chair. Mr. Secretary, thank you 
for your time, thank you for your service. And I think things 
have gotten better. I have a lot of questions to ask and I will 
try to do them as quickly as possible.
    That first chart we saw today, where it showed from 1984 
the amount of money we are spending on each veteran versus what 
we are spending today on each veteran. You know, it went up 
three times the amount. The problem is with those numbers, at 
the same time what has healthcare costs gone up? And how much 
more costs have been added because of the aging population, 
severity of the cases and more expensive? So how that figure in 
with the numbers that we saw right at the beginning?
    Secretary Nicholson. Well, since 2001, for healthcare alone 
the increase has been 83 percent.
    Ms. Hooley. Healthcare costs have gone up 83 percent?
    Secretary Nicholson. Our requested amount for healthcare 
delivery is up 83 percent, yes ma'am.
    Ms. Hooley. And how much of that is healthcare inflation 
and how much of that are new enrollees?
    Secretary Nicholson. Since 2001?
    Ms. Hooley. Yes.
    Secretary Nicholson. I have to get you that since 2001.
    Ms. Hooley. Okay.
    Secretary Nicholson. I think I can answer that for 2008, 
which is 4.5 percent of that is inflation and payroll. And 3.9 
percent is for cost increases in products, pharmaceuticals.
    Ms. Hooley. Right.
    Secretary Nicholson. Services that we have to purchase.
    Ms. Hooley. And new enrollees?
    Secretary Nicholson. Well, the new enrollees are the 
product of driving the total amount of money that we are 
requesting, that we will need to serve the population. The 
amount of new enrollees is 134,000.
    Ms. Hooley. Okay. And your World War II vets and your 
Korean vets, I am assuming are costing, because of the aging 
population and the complexity of their cases, is also driving 
the cost up.
    Secretary Nicholson. You are correct.
    Ms. Hooley. So, sometimes when we deal with numbers I think 
it is important that we have all of those things in front of us 
as opposed to, ``here is a set of numbers that went up this 
much versus what we did, you know, five years ago or ten years 
ago.'' Let me talk about appeals and how long it takes in the 
Portland VA region. We have got over 7,000 pending rating 
decisions. We have got almost 3400 pending appeals. We have 108 
full time employees. So that means each person, no matter what 
their job is, has 96 people pending cases, the second highest 
rate to employees in the country. Washington Regional Office 
has thirty-five per person pending cases, so ours is more than 
double. And in the past, and I want to know if you have changed 
this policy, we did not allocate staffing based on pending work 
or of the ratio of pending work to staff. Instead we allocated 
staff based on performance standards and timeliness. Well, when 
you already have the second highest caseload in the United 
States, it is very hard to deal with the timeliness because you 
just keep getting further and further behind. And you know, I 
have got people that have, I mean cannot wait that long for 
their cases to be decided. I mean, they are waiting way too 
long and, you know, they need that money to pay for their 
everyday expenses. So are you changing that policy?
    Secretary Nicholson. Congresswoman, I am going to ask Under 
Secretary Cooper if he would respond to those questions.
    Admiral Cooper. We are looking at Portland very carefully 
and are making some changes in Portland. However, part of our 
looking at allocation of people is how a given Regional Office 
is doing and we have a brokering strategy where in fact offices 
which cannot handle the workload they have we in fact get them 
ready to rate and send them to other offices that have been 
able to do fairly well and take care of that. So the fact that 
the numbers themselves are high, or the number of people that 
you have is not as high as it might be, we attempt to do that 
through this brokering strategy.
    In looking at Oregon, Oregon has improved over the last 
couple of years. We are, as I say, making moves. But their 
quality has come up in the last couple years. Their days are 
still too long, but we are watching that very carefully. But 
our strategy has essentially remained the same for about the 
last four or five years. And we are trying to operate the 
system in a totality, where everybody is able to improve some.
    Ms. Hooley. Well, I still think you have a problem with 
timeliness and being judged adding new staff when you have a 
higher caseload than anybody else in the United States. So I 
think, I mean, I would like you to look at what I see as a very 
regressive policy.
    Let me quickly add, because I do not have too much time, 
the current Medcom policy is that all soldiers that, mobilized 
or demobilized, had a base would go to that base for follow on 
care. So I think, again, our state which has had a lot of 
National Guard serve in both Afghanistan and Iraq, they, if 
they are mobilized out of Georgia, out of Texas, that is where 
they go for care. And what has happened is, and we do not have 
any treatment facility in Oregon. So what happens as they 
return, some of these soldiers and warriors have sort of 
minimized that anything is wrong. Then they have gone to the 
VA. But what they are finding at the VA, it is harder to get VA 
support if they do not already have the documentation in their 
military medical records. This policy seems unfair to guardsmen 
and reservists, but it is also unfair to the VA in states where 
there is a high percentage of National Guardsmen returning from 
deployment. Those VA's are more heavily burdened than states 
with an MTF that guardsmen can be treated at without delays in 
seeing their families. I mean, these guys want to get home to 
see their families. Can you tell me how much of an effect the 
DOD policy has had on already overburdened VA facilities? What 
are your suggestions for handling the problem for troops that 
would allow them to return home quickly but still get treated 
for the injuries at the expensive DOD rather than the VA?
    Secretary Nicholson. Well Congresswoman, several things. 
One, if any of those people are showing up at a VA hospital and 
they are not being properly treated, that should not be the 
case. And that is something over which I have authority and 
responsibility, that they are eligible for care at a VA 
hospital for twenty-four months from the time they are deployed 
back.
    Ms. Hooley. I know they are. But how much is this adding to 
your costs? I mean, we have this, is it the responsibility of 
DOD to pay for them? Or is the responsibility of VA? And how 
much is that adding to our costs by this happening?
    Secretary Nicholson. That is our responsibility. That is a 
right in the law that they have been given. And we project 
that, and that is in this budget. That I think about 250,000 we 
project seeing in 2008, and that will be our cost. And we have 
been seeing them----
    Ms. Hooley. I mean I think the VA Portland does a great 
job.
    Secretary Nicholson. Thank you.
    Ms. Hooley. I have no complaints other than the long 
waiting periods, but they are seeing returning soldiers from 
Afghanistan and Iraq very quickly. But you see, I mean part of 
it is a DOD policy that is putting an extra burden on the VA.
    Secretary Nicholson. Well, if you are talking about people 
that are still on active duty, are you?
    Ms. Hooley. No, I am talking when they are Guard or 
Reserve.
    Secretary Nicholson. Yeah.
    Ms. Hooley. They come back. They do not want to go back to 
the base where they were deployed because they want to come 
home and see their family. So when they go to the VA they do 
not always have the documentation they need from DOD.
    Secretary Nicholson. Well, I know that is the case because 
they have paper records, they get lost, or they are in another 
location. That to me, though, is not an excuse for treating 
them and treating them adequately. We can take steps to seek 
their records. I am going to look on that one. But we are 
working with DOD much more than we were on issues like this for 
this transition. And making some progress. If they are more 
remotely located, you know, they can get TRICARE if they are 
still in an active Guard or Reserve status in a community. Or, 
and we welcome them, we have a very robust outreach to these 
people to come into our facilities both for healthcare and for 
benefits. And we are keeping up with it pretty well.
    Ms. Hooley. Well, I hope you would also work with DOD to 
see if there is another way that you can do this. So in fact 
they can get the paperwork taken care of at DOD and still get 
the healthcare at the VA without sort of trying to skip that 
step because they do not want to go back to the base where they 
were deployed from because they are not going to see their 
families.
    Secretary Nicholson. I will look into that. I have not 
heard.
    Ms. Hooley. Okay. Thank you very much.
    Chairman Spratt. Mr. Etheridge?
    Mr. Etheridge. Thank you, Mr. Chairman. Mr. Secretary, 
thank you. And I join my colleagues in thanking you for your 
service, which is long and distinguished.
    As you probably know, I have the distinction of 
representing Fort Bragg and Pope Air Force Base, too. It is 
kind of hard to say one without the other because of the 
peculiar nature of it. And when the call goes, they respond. 
And as a result of that, there is a large population of 
veterans in my district. And really in adjacent districts. And 
one of the criticisms and concerns I hear from constituents who 
applied for VA benefits is in regard to mandatory examinations 
at VA facilities by VA people.
    Now, let me tell you what I am talking about. Because today 
one of the real big issues we are bumping into is a lot of 
Korean War veterans and World War II veterans, many of whom 
have a well documented medical history. And their health gets 
to the point where they cannot go a great distance to be 
examined. My question to you is that many of them as they get 
older and get weak and they are unable to go. Why is there no 
avenue, and if there is one please tell me what it is, how we 
can expedite it, for referrals from personal physicians? And 
especially about those situations that wind up in emergency 
situations, and dire situations, because as you know if a 
person is deceased before their eligibility position may be 
determined, their family are denied benefits. And in many cases 
it is a widow without means of support in some cases.
    Secretary Nicholson. I am going to first ask Dr. Kussman if 
he would respond to your question as I understand it about 
those people to whom it would be a hardship to come to a VA 
facility for a physical.
    Mr. Etheridge. And in many cases it is a very limited 
number. We are not talking about a lot of folks, but for those 
it is very important.
    Dr. Kussman. Yes, sir. Both the VBA and VHA work very 
closely together as part of the benefit package. One not only 
has to document what the injury was but we do a physical 
examination to determine whether compensation and pension 
should be granted. Let me ask Admiral Cooper.
    Admiral Cooper. Thank you. When we look at a person we are 
determining what the disability is. And it is important, 
particularly these older veterans, that we look at them because 
as they get older and age whatever disability they have has 
gotten worse. So it is important to them that we do that. 
Secondly, if we ever find out, one of the high priorities we 
have are those people who are extremely ill, those people who 
are close to being terminal. And if we find out about it, I 
guarantee we will do it just as fast as possible. And finally--
--
    Mr. Etheridge. What is the expedited procedure, then? We 
need to know that.
    Admiral Cooper. I would say to you for them to get hold of 
the Regional Office, which in your case is Winston-Salem.
    Mr. Etheridge. I am telling you, it is not working the way 
it is supposed to be then if it is supposed to be expedited. We 
need to do some training.
    Admiral Cooper. And we are doing training. But then I would 
say to you, if someone on your staff gets hold of me I will 
guarantee you that we will do it.
    Mr. Etheridge. I will need your phone number before I 
leave.
    Admiral Cooper. Yes, sir. Secondly, I would say to you that 
a law was passed three years ago or four years ago to address 
the very thing you talked about. Namely that the dependents, 
presumably we were not addressing some of these cases that were 
terminal, and the dependents were not getting anything. And the 
law was passed that if the claim is in a certain stage of being 
adjudicated that in fact we continue adjudication and the money 
will go to the estate.
    Mr. Etheridge. But part of the problem is if you cannot get 
the person there to get the determination you still do not get 
the benefit.
    Admiral Cooper. It is if we are in a certain state of 
adjudication, you are right. And I would merely say that if 
there are such things as that let me know and I will personally 
assure you that we will take care of that. But it is a problem 
and----
    Mr. Etheridge. Let me follow this up. I am going to take 
every bit of my time to do that.
    Admiral Cooper. Yes, sir.
    Mr. Etheridge. Let me have chart number four up there if I 
could please.
    Mr. Secretary, I just had one question on this because it 
deals with the out years. And I noticed in the handout we have 
it shows a substantial new enrollment fee. What is that 
enrollment fee? It starts in 2009.
    Secretary Nicholson. That is an enrollment fee for, it 
would be category seven and eight veterans. Those are veterans 
with no service disabilities and who are working, making money 
but are in the system and being treated.
    Mr. Etheridge. Are those ones who are presently in the 
system? Or new enrollees?
    Secretary Nicholson. No, they are in, in the system.
    Mr. Etheridge. So we are not letting new ones in, but we 
are charging those that are already in the system.
    Secretary Nicholson. That is correct.
    Mr. Etheridge. So that is not a new enrollment fee. It is a 
fee to remain in the system.
    Secretary Nicholson. Well, it is new in that they are not 
paying it now. And if it were instituted they would. The sevens 
and eights who are in the system being treated.
    Mr. Etheridge. But we are not charging that fee to any 
other veteran?
    Secretary Nicholson. No. We are not charging that fee 
period, now.
    Mr. Etheridge. All right. What is that fee?
    Secretary Nicholson. It is $250 starting for a veteran that 
is making $50,000 a year. Under that there would be no 
enrollment fee.
    Mr. Etheridge. Okay.
    Secretary Nicholson And then it is progressive. For 
veterans making $100,000 it would be $750 a year.
    Mr. Etheridge. For those making how much again, please?
    Secretary Nicholson. $100,000.
    Mr. Etheridge. Would be how much?
    Secretary Nicholson. $750.
    Mr. Etheridge. Per year?
    Secretary Nicholson. Yes, sir.
    Mr. Etheridge. And that is a flat fee just to be in the 
system?
    Secretary Nicholson. That is correct.
    Mr. Etheridge. It is over and above any copay or anything 
else?
    Secretary Nicholson. That is correct. Copays for 
pharmaceuticals would also apply, yes sir.
    Mr. Etheridge. I yield back.
    Secretary Nicholson. Thank you, Mr. Etheridge. Mr. 
Chairman, could I ask----
    Chairman Spratt. Sure.
    Secretary Nicholson. I want to clarify one thing and ask 
Admiral Cooper, would you comment on the fact, we have 
established these Tiger Teams to take care of these claims 
applicants that were 70 years old and older. Would you just 
comment on that?
    Admiral Cooper. Yes. We have established a Tiger Team in 
Cleveland, as a matter of fact. And that Tiger Team, we have 
been able to bring on retired annuitants and help them to help 
us to adjudicate claims for people who are over 70 and whose 
claim has been extant for over a year.
    Mr. Etheridge. Mr. Chairman, may I have your indulgence to 
follow it up? Would you be kind enough to share that with every 
member of Congress?
    Admiral Cooper. Yes, sir.
    Mr. Etheridge. I think that would be helpful because I 
guarantee you every member is having some of those challenges 
in their offices. And if they could share it and get it to 
their district office I think it would help a lot of veterans 
across this country.
    Admiral Cooper. Yes, sir.
    Mr. Etheridge. Thank you, Mr. Chairman.
    Chairman Spratt. Thank you, Mr. Etheridge. Ms. Kaptur?
    Ms. Kaptur. Thank you, Mr. Chairman, Mr. Secretary, and all 
of your associates there at the VA. Thank you for trying to do 
a fine job, sometimes without enough resources and that is why 
we are here to help.
    I have several questions. One is a request. And that is, if 
you could identify someone within your organization that could 
work with our office to create an assisted medical housing 
model in northern Ohio associated with our Sandusky Veterans 
Home, which is a state home that receives about 40 percent of 
its funding that is federal. Particularly to help with 
supportive housing, because there are a number of units there 
that are not occupied, for veterans who present with 
neuropsychiatric issues and possibly brain injured veterans 
that will be coming home to us. It is very hard to work with 
the VA and connecting the floor that deals with housing and the 
floor that deals with medicine, and certainly when we have a 
state home involved. And I would like to really push that 
prototype model with you, if we could. If you could just send 
somebody I would sure appreciate it.
    Secretary Nicholson. I will do that. And ask Dr. Kussman, 
because that is in his domain, to follow up with that.
    Ms. Kaptur. Thank you very much. Number two, we put a 
little slide up, I do not know if they can get it up there on 
the screen or not.


    But I represent the northwestern part of Ohio. And we have 
one of two veterans clinics in America that are not in the 
state of the mother hospital. So Toledo, Ohio sticks up in the 
northwestern corner of what is called VISN 10, there. And what 
I am going to ask you to do is to work with me to figure out 
how we can change this so that we can be in the state in which 
our veterans live. The reason this relationship with the Ann 
Arbor Hospital has existed for years, it is an anachronism left 
over since post-World War II when our region had no medical 
hospital. We now have a medical hospital. Actually, it is a 
graduate medical facility. Our veterans would prefer to go 
there and to develop an association with our veterans clinic, 
which is in the city of Toledo, rather than having to travel 
all over the place. As I go east in my district, that is okay. 
We take care of them at Brecksville and over in Cleveland. But 
in the Toledo area we have got this strange bird. And our goal 
is to treat our veterans close to home and to find a way to do 
that. So I would very much appreciate if you could send 
somebody over, work with us, tell me if I have got to have 
legislation up here to stick us in an appropriate VISN.
    We had another slide that shows the various communities, 
now there is VISN 10.


    They have got Chillicothe, Cincinnati, Cleveland, Columbus, 
Dayton, which is Ohio. And then if you go up to VISN 11 you 
have got Ann Arbor, Battle Creek, Danville, Detroit, Fort 
Wayne, you have got mainly Michigan cities up there. So I just 
wanted to draw this to your attention and hopefully we can work 
on that.
    And finally, I wanted to move to the neuropsychiatric area, 
which I know a number of other members have discussed. I have 
not looked at your budget to know if there is funding in there 
for the Homeless, Chronically, Mentally Ill Program anymore. 
Those tend to be underfunded around the country. But I am 
interested in your HCMI, whether it has been transmorphed or if 
it exists. I am going to ask you some questions for the record 
about the number of doctors you have on staff who are skilled 
in neuropsychiatry as well as psychiatry for diagnosis and 
treatment. How you organize this set of skills, do you have a 
chief doc that is in charge of a division that deals with 
neuropsychiatric issues? What about your peer review groups for 
research that is done? Do you incorporate neuropsychiatrists on 
those and what percent of those reviewing are 
neuropsychiatrists and psychiatrists and psychologists? We know 
one thing. We know that in our country, 95 percent of those who 
are diagnosed with a neuropsychiatric condition, many time 
complicated by substance abuse, are improperly diagnosed, even 
by a psychiatrist. With a psychologist we know 98 percent are 
misdiagnosed. So one of the reasons half the homeless in 
America are veterans is because those diagnoses are wrong and 
we have not figured out a way to really help to a greater 
degree. So I am very interested in how you structure those 
programs within the VA.
    And I want to tell you a story. The commander of the Ohio 
Military Order of the Purple Heart came into see us here in 
Washington about a week ago. And he is a partially disabled vet 
who has worked his whole life. He is a 59 year old Vietnam vet. 
He said, ``Congresswoman,'' he said, ``here is what happened to 
me.'' He said, ``I recently had a stroke.'' And he said, ``It 
took the VA six months to pull all my paper together and give 
me an appointment. Now they tell me it is going to take me 
another six months to get another appointment. Can you help?'' 
He was so calm. One of his buddies committed suicide. He has 
attempted it twice himself. And yet, it is going to take six 
months to get an appointment at a VA facility? Something is 
really wrong. And so I know the general answer of the VA is, 
``Well, we will take care of that patient.'' But that patient, 
even though it will make me happy to get him proper 
appointments and everything, represents just the tip of a big 
iceberg of problems down there at the local level, where we had 
these extended appointment periods and so forth. So I would 
like you to comment, if you could, as we get more cases now 
coming back from Iraq who have neuropsychiatric damage, PTSD, 
we are not even taking care of our Vietnam vets. How are you 
structured within the VA to give this importance? Because over 
half your population presents with neuropsychiatric and 
substance abuse, do they not? In terms of on any given date in 
the beds?
    Secretary Nicholson. Well, I will ask Dr. Kussman to 
address that specific technical demographic question, if he 
can. Otherwise we will have to get back to you with that.
    Dr. Kussman. I cannot give you a specific number, but, I 
mean, you are saying 50 percent of the patients that we see 
every day have neuropsychiatric----
    Ms. Kaptur. That are in the beds. That have either 
complications of substance abuse or neuropsychiatric as 
comorbid.
    Dr. Kussman. Which beds are you talking about, 
Congresswoman?
    Ms. Kaptur. VA hospitals.
    Dr. Kussman. All of our patients?
    Ms. Kaptur. Mm-hmm, that is my understanding. On any given 
day.
    Dr. Kussman. I would have to, that seems like an awfully 
large number.
    Ms. Kaptur. Well, let us pull those numbers, doctor. Yes, 
the first time I heard it I was shocked, too. But let us take a 
look at those numbers and see what they show.
    Dr. Kussman. Okay.
    Ms. Kaptur. And then if someone could get us the 
organization chart. I do not want a thousand pages, I just want 
one page, that shows me how you organize your approach to 
neuropsychiatric and substance abuse issues within the VA. How 
are you structured to deal with this at the central office and 
then as you get down into the regions and at the local level?
    Dr. Kussman. Yes, ma'am.
    Chairman Spratt. Mr. Edwards would like to clarify 
something for the record. Mr. Edwards?
    Mr. Edwards. Mr. Secretary, this will be very brief because 
you have been patient and thank you for you and all of the VA 
leadership for being here today.
    Obviously as we work together to try get an adequate budget 
for VA healthcare for fiscal year 2008, one of the key 
assumptions is what will be the projected growth of the number 
of veterans in the system and the net increase in that number. 
I know no one can predict that exactly during a time of war, 
but I do want to ask you. I think I heard you say earlier that 
for fiscal year 2007 we are on a path to a net increase of 3 
percent. Is that an accurate recollection? Or could you give me 
what we project the net increase in number of veterans in VA 
healthcare system for fiscal year 2007 to be?
    Secretary Nicholson. I am going to ask somebody to help me. 
I know what it is for what we are asking for 2008.
    Mr. Edwards. It is a 2.4 percent, I think you are 
projecting for 2008, is that correct?
    Secretary Nicholson. Yeah, it is 134,000 for 2008.
    Mr. Edwards. Right. So 2.4 percent for 2008.
    Secretary Nicholson. The total for 2007 is 5,685,000. But 
that is not giving you the question you asked. You want the net 
increase of 2007 over 2006?
    Mr. Edwards. Yes.
    Secretary Nicholson. If we could.
    Mr. Edwards. And if you need to give follow up----
    Secretary Nicholson. If you give us a minute I think we 
have it.
    Mr. Edwards. Okay.
    Secretary Nicholson. It is 219,000.
    Mr. Edwards. Can you give that to me in percentage numbers 
in any of your----
    Secretary Nicholson. Well, it is going to be about, it is 4 
percent.
    Mr. Edwards. About a 4 percent. All right. As I recall 
looking at the independent budget, as you know, from several 
veterans service organizations projections for 2008, I think 
they had gone back and they had a chart that showed over the 
last five years in the year of the smallest net increase number 
of veterans going into VA healthcare it was a 4.6 percent 
increase over the previous year. And the year during that five 
year period where you had the largest increase it was 5.5 
percent. So a low of 4.6 percent, the high of 5.5 percent. I do 
not know if they use the same assumptions as you do. But they 
generally have been pretty accurate, and I have been impressed 
with the independent budget numbers.
    And my question is, let us just assume those numbers were 
correct. So that the history for the last half a decade has 
been an approximately 5 percent increase in new veterans coming 
into the system. If we are on a projection of 4 percent 
increase for the present fiscal year, what in the model allows 
us to suggest that it will only be a 2.4 percent increase in 
net new veterans in the VA healthcare system for 2008? That is 
approximately 50 percent below what the historical annual 
increase has been over the last five years. And without getting 
into all the complications of the sophisticated computer 
models, sometimes recent history is a better prediction than 
somebody's mathematical model, as good as that might be. And 
there may be very understandable factors that would have us go 
from 4 percent increase this year down to 2.4 percent increase 
next year. But I do not want to just assume that is correct 
because otherwise that gets us on a glad path toward 
underfunding your needs for fiscal year 2008.
    Secretary Nicholson. Well, again, that model has a very 
good history of accuracy save for that exception for 2005. And 
that is what it projected. And, again, the other 15 percent of 
it was the inputs that we put in for long term care and dental 
and for CHAMPVA. And with 134,000 projection of new additions 
to it coming back and off of active duty from the War, we do 
have a diminishing population of veterans overall in the 
country.
    Mr. Edwards. Right.
    Secretary Nicholson. Because of their aging, on a net basis 
we are losing veterans every year by several hundred thousand. 
That is a factor in that model.
    Mr. Edwards. Right. And I assume the aging of the World War 
II, Korean, Vietnam veterans probably has counteracted that at 
least at this point. We are not on a down slope, yet, not 
seeing a reduced number.
    Secretary Nicholson. Oh, we are on a down slope of those 
numbers. Yes, sir.
    Mr. Edwards. A down slope in the number of veterans, but 
still there is a net increase in the number of veterans going 
into the VA healthcare system.
    Secretary Nicholson. That is correct.
    Mr. Edwards. Okay, but a down slope in the number of 
veterans.
    Secretary Nicholson. Yes.
    Mr. Edwards. One last question on this. Because this may 
sound technical, but this is going to be key to Chairman Spratt 
putting together a budget that reflects the real needs of the 
VA healthcare system. You say we are on a glad path for 4 
percent net increase for this present fiscal year, in 2007. Do 
you know a year ago or when the administration put together its 
budget request, what did the computer model project the net 
increase to be for fiscal year 2007? So we can figure out how 
accurate it was for the present fiscal year.
    Secretary Nicholson. I do not know that I have that with 
me, Congressman. We can get you that. I will say it is pretty 
close to what we requested and what we got.
    Mr. Edwards. I would not have expected you to have that in 
the tip of your fingers today. But if you could provide for the 
Committee the 2006, and 2005 was a rough year in projections. 
But perhaps include 2004, 2005, 2006, 2007. Let us look at the 
track record of what the assumption was when the administration 
presented its budget versus what the actual reality was at the 
end of the year. I think that would be helpful for us to judge 
that.
    Thank you. And thank you all for your tremendous service on 
behalf of our nation's veterans.
    Chairman Spratt. Mr. Secretary, we have had one more member 
come, Mr. Bishop of New York. If you could respond to his 
questions we would appreciate it. Mr. Bishop?
    Mr. Bishop. Thank you, Mr. Chairman, and Mr. Secretary 
thank you very much. I am sorry I have been running in and out. 
I have been in a mark up of another committee that I am on.
    I have just two questions, one of which you have dealt with 
in one form or another but I want to go back to it and that is 
the issue of the appropriate level of care and whether or not 
we are appropriately geared up to deal with veterans with Post 
Traumatic Stress Disorder. You indicated in response to a 
question from Chairman Spratt that we had a ``good'' capacity 
for treating PTSD. I know Mr. Baird pursued this, but I am 
drawn to this tragic story of the young veteran in Minnesota 
who went to the Regional Veterans Affairs Center in St. Cloud 
and he was told that he was twenty-sixth on a waiting list for 
one of the twelve beds in the PTSD section of that hospital. 
And according to state VA officials that number of twelve has 
been a static number in terms of beds available for PTSD 
treatment for the last decade. And I am just wondering how that 
happens. First off, is that accurate? And second, if it is 
accurate is that an absence of funding? Is it an absence of 
foresight? I mean, what is the truth there?
    Secretary Nicholson. I have to be careful responding to 
that specific case because we have not been given a waiver by 
the family. It is a tragic case, very sad. I have testified, 
though, what I can say and have is that young veteran was seen 
forty-six times by our healthcare providers in Minnesota. And 
that in Minnesota and throughout the system we have psychiatric 
inpatient capability and capacity that exists everywhere. And 
overall, at the time we looked at this systemwide we had 30 
percent capacity unused. Meaning, that 70 percent of our beds 
were taken and 30 percent were not. And we of course for him 
had that capacity. So that was not the question if it were 
considered to be an emergent situation. And I have the chief 
health inspector and the inspector general, and they are both 
investigating that situation at this time.
    The facility in St. Cloud is, one of the programs they have 
is an inpatient post-detoxification rehab facility for 
substance abuse. And it is a serial set of classes with 
inpatient participants. And that was full. And that is the 
reason that he was put in that queue.
    Mr. Bishop. If I may, I guess the thrust of my question is, 
it would seem that now we are, you know, several hundred 
thousand troops have returned home, have been discharged, and 
the estimate is that at least close to one out of five of them 
will have some form of Post Traumatic Stress Disorder. So the 
thrust of my question is, are we about the process of 
increasing our capacity to deal with those veterans? And if 
that is the case, is it accurate that the number of beds 
available in this particular hospital for PTSD has remained 
static over a decade?
    Secretary Nicholson. I am going to ask Dr. Kussman to 
respond. I will tell you that we have, in the system we have 
over 200 special PTSD programs throughout the system. We are 
recognized for our expertise in it. We have numbers on those 
that we are treating that have come back from OIF/OEF. And I 
will let him give you more detail.
    Dr. Kussman. Yes, sir. Thank you. Obviously PTSD is very 
important to us. It is a spectrum of adjustment reactions, and 
clearly someone who comes with any kind of acute urgent or 
emergent they will get in right away. Otherwise they are put 
into programs, they are through the primary care or directly 
into mental health services. The treatment spectrum is all the 
way from a very acute inpatient, if it is needed, to outpatient 
services as well. So we put a lot of money and part of our 
mental health strategic plan was to address this particular 
issue. We targeted large amounts of money. We have increased 
the number of psychiatrists and psychologists. There are 
obviously challenges occasionally in hiring people in certain 
geographic areas, but it is very important to us and we are 
looking at that very closely.
    Mr. Bishop. Thank you very much. Mr. Chairman, I did have 
one additional question. I wonder if you would indulge me to 
ask one additional question?
    Chairman Spratt. Go ahead.
    Mr. Bishop. I will be very quick. State approving agencies, 
my understanding is that the current year budget is $19 
million. The President's request for next year is $13 million 
for state approving agencies. And I am just curious what level 
of service will be, if it is a 30 percent cut or thereabouts, 
how will we provide the service and maintain the quality 
control in terms of post-secondary training that veterans 
enroll for if we are cutting the evaluation agency by 30 to 33 
percent?
    Secretary Nicholson. Let me ask Under Secretary Cooper if 
he would respond to that.
    Admiral Cooper. Yes, sir. That is my program in the 
education. My understanding is that five years ago it was 
stated that they would increase it to $19 million, and now in 
this particular time come back to $13 million. We have been 
discussing this with various people. The SAAs were in here the 
other day trying to figure it out. As it stands right now, my 
group will absorb what has to be done and ensure that it is 
done properly.
    Mr. Bishop. So the level of service would remain constant?
    Admiral Cooper. It should remain the same, yes.
    Mr. Bishop. Thank you very much, and thank you Mr. 
Secretary.
    Chairman Spratt. Mr. Secretary, Ms. Moore would like to put 
a few questions to you if we could and we will wrap it up after 
that.
    Ms. Moore of Wisconsin. Thank you so much, Mr. Chairman, 
and thank you Mr. Secretary for your long suffering through all 
of these questions. I am so delighted to be here. I am a new 
member of this Committee, almost member of this Committee. But 
I am absolutely delighted. Just by way of background, I was in 
the state legislature for sixteen years before I came to 
Congress. And my very, very, very first bill I ever passed as a 
legislator was on behalf of veterans. And so it is a passion of 
mine.
    And during my very first term in Congress I worked very 
hard to secure $32.5 million for urgently needed upgrades at 
the Zablocki VA Medical Center Spinal Cord Injury Unit. And we 
have discussed all morning how we are having more paraplegia 
and quadriplegia return from Afghanistan and from Iraq. And 
Zablocki has one of only twenty-three spinal cord injury units 
in the country.
    I can see that my time is waning, but I just want to point 
out that it is such a pathetic institution. We have a spinal 
cord injury unit on the tenth floor. Basically the plan for 
evacuating the spinal cord injury veterans is to put them 
between two mattresses and drag them down ten flights of 
stairs. Just to give you the most dramatic part of the 
inadequacy of those facilities.
    We had this as one of the ``earmarks'' in the continuing 
resolution. Now, the VA administration placed this as their 
highest priority for new construction prior to the continuing 
resolution being passed. So I just want to know, Mr. Secretary, 
it is your discretion, I just want to know, the suspense is 
killing me, is you is or is you ain't going to build this new 
spinal cord injury unit at Zablocki?
    Secretary Nicholson. We is.
    Ms. Moore of Wisconsin. Yes. Yes! I will yield back.
    Chairman Spratt. Thank you, ma'am. Mr. Secretary, you have 
been forthright and forebearing, you and your colleagues both. 
And we appreciate very much the testimony you have provided, 
the information, your answers to our questions. I want to 
assure you that our objective is common with yours, and that is 
to deliver the best possible service that we can to our 
veterans and to keep the promises we have made to them. To that 
end we will work together, I can assure you. Thank you again so 
much for your participation today.
    Secretary Nicholson. Thank you, Mr. Chairman, members of 
the Committee.
    Chairman Spratt. Before adjourning, I ask unanimous consent 
that all members who did not have the opportunity to ask 
questions be given seven days to submit questions for the 
record. So we are not through. We are indeed, though, the 
meeting is adjourned. Thank you again.
    [Whereupon, at 1:12 p.m., the Committee was adjourned.]

                                  
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