[Senate Hearing 110-34]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 110-34
 
                      THE FISCAL YEAR 2008 BUDGET 
                         FOR VETERANS' PROGRAMS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 13, 2007

                               __________

       Printed for the use of the Committee on Veterans' Affairs


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                     COMMITTEE ON VETERANS' AFFAIRS

                   Daniel K. Akaka, Hawaii, Chairman
John D. Rockefeller IV, West         Larry E. Craig, Idaho, Ranking 
    Virginia                             Member
Patty Murray, Washington             Arlen Specter, Pennsylvania
Barack Obama, Illinois               Richard M. Burr, North Carolina
Bernard Sanders, (I) Vermont         Johnny Isakson, Georgia
Sherrod Brown, Ohio                  Lindsey O. Graham, South Carolina
Jim Webb, Virginia                   Kay Bailey Hutchison, Texas
Jon Tester, Montana                  John Ensign, Nevada
                    William E. Brew, Staff Director
                 Lupe Wissel, Republican Staff Director









                            C O N T E N T S

                              ----------                              

                           February 13, 2007
                                SENATORS

                                                                   Page
Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii........     1
Craig, Hon. Larry E., Ranking Member, U.S. Senator from Idaho....     3
    Charts:
      FY 2008 Discretionary Budget Request.......................     7
      Quality, Affordable Health Care............................     8
    Transcript excerpt, Hearing on Veterans Health Care 
      Eligibility Priorities (Part I), held on March 20, 1996, 
      Senate Committee on Veterans' Affairs......................   143
Rockefeller, Hon. John D. IV, U.S. Senator from West Virginia....     9
Murray, Hon. Patty, U.S. Senator from Washington.................    10
Sanders, Hon. Bernard, U.S. Senator from Vermont.................    12
Brown, Hon. Sherrod, U.S. Senator from Ohio......................    14
Tester, Hon. John, U.S. Senator from Montana.....................    16
Webb, Hon. Jim , U.S. Senator from Virginia......................    17

                               WITNESSES

Nicholson, Hon. R. James, Secretary, Department of Veterans 
  Affairs; accompanied by Michael Kussman, M.D., Acting Under 
  Secretary for Health; Hon. Daniel L. Cooper, Under Secretary 
  for Benefits; Hon. William F. Tuerk, Under Secretary for 
  Memorial Affairs; and Robert J. Henke, Assistant Secretary for 
  Management.....................................................    18
    Prepared statement...........................................    22
    Response to written questions submitted by:
      Hon. Daniel K. Akaka.......................................    32
      Hon. John D. Rockefeller IV................................    45
      Hon. Patty Murray..........................................    49
      Hon. Larry E. Craig........................................    52
    Response to written questions submitted by Hon. Jim Webb to 
      Hon. Daniel L. Cooper......................................    62
Blake, Carl, National Legislative Director, Paralyzed Veterans of 
  America........................................................    74
    Prepared statement...........................................    75
Violante, Joseph A., National Legislative Director, Disabled 
  American 
  Veterans.......................................................    78
    Prepared statement...........................................    79
Greineder, David G., Deputy National Legislative Director, AMVETS    85
    Prepared statement...........................................    86
Cullinan, Dennis M., Director, National Legislative Service, 
  Veterans of 
  Foreign Wars of the United States..............................    89
    Prepared statement...........................................    90
Robertson, Steve, Director, National Legislative Commission, 
  American 
  Legion.........................................................    96
    Prepared statement...........................................    98
Rowan, John, National President, Vietnam Veterans of America.....   110
    Prepared statement...........................................   111
    Working paper, prepared by Linda Bilmes, John F. Kennedy 
      School of Government, Harvard University...................   118

                                APPENDIX

The American Federation of Government Employees, AFL-CIO, 
  prepared statement.............................................   145
The Friends of VA Medical Care and Health Research, prepared 
  statement......................................................   148
    Chart, Inflation Adjusted VA Research Appropriations.........   152
    FOVA Membership..............................................   153
The Independent Budget Response to Written Questions Submitted 
  by:
    Hon. Daniel K. Akaka.........................................   154
    Hon. Larry E. Craig..........................................   157
Letters to Hon. Daniel K. Akaka submitted by:
    Hon. Frank Q. Nebeker (Ret.), Chief Judge, U.S. Court of 
      Appeals for Veterans Claims, dated February 12, 2007.......   158
    Hon. Daniel Ivers (Ret.), Chief Judge, U.S. Court of Appeals 
      for Veterans Claims, dated February 13, 2007...............   159
    Rear Admiral Philip J. Coady (Ret.), Chairman, Board of 
      Directors, Lung Cancer Alliance, dated March 22, 2007......   160
        Attachment, Lung Cancer Screening and Early Disease 
          Management Pilot Program...............................   161
The Independent Budget for Fiscal Year 2008......................   163


           THE FISCAL YEAR 2008 BUDGET FOR VETERANS' PROGRAMS

                              ----------                              


                       TUESDAY, FEBRUARY 13, 2007

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room SR-418, Russell Senate Office Building, Hon. Daniel K. 
Akaka, Chairman of the Committee, presiding.
    Present: Senators Akaka, Rockefeller, Murray, Brown, 
Tester, Webb, Sanders, and Craig.

     OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, 
                    U.S. SENATOR FROM HAWAII

    Chairman Akaka. This hearing will come to order. Aloha, and 
welcome to all of you who are here. I look forward to our 
dialogue with Secretary Nicholson and other top VA officials, 
as well as the representatives of all our Veterans Service 
Organizations here with us today.
    I also want to say that I am so delighted to be here with 
my colleague and friend and former Chairman of this Committee. 
We have worked so well together, and I look forward to 
continuing that relationship for the benefit of the veterans of 
our country. I am so happy to be working with him again.
    At the outset, I am pleased that the Administration is 
requesting a straightforward increase for VA, without some of 
the offsets proposed in prior years. While some see this 
proposed budget as good, others see it as inadequate. I believe 
that what we need is a much better understanding of some of the 
specifics before our Committee goes forward to the Budget 
Committee with our views and estimates.
    For example, I believe we need to know what the actual 
increase is for veterans' health care in the proposed budget. 
It appears to me that inflation and automatic cost increases 
account for nearly all of the $1.9 billion increase being 
requested of Congress. This would leave little funding 
available for expansions or improvements to key programs such 
as mental health and care for returning servicemembers. I will 
address this concern in my questions to VA.
    I want you to know that I remain committed to my opposition 
to the policy proposals that would impose higher costs on 
veterans.
    Once again, the Administration is suggesting that we ask 
veterans to pay more out of their own pockets if they are not 
disabled but still want access to VA care. Let me be clear 
about these veterans who would be forced to shoulder these cost 
increases. Many of these veterans cannot, in my view, be 
characterized as ``higher income.'' These are veterans living 
in places like my home State of Hawaii, where the cost of 
living is one of the highest in the country, who make as little 
as $28,000 a year and would be asked to pay new fees for their 
care or their medication.
    I have a number of questions about this year's enrollment 
fee proposal. Basing the fee upon family income is a different 
version than the Administration has proposed in the past. I am 
concerned about the lower end of the tier structure, those 
working families with a combined income of $50,000 a year, and 
how this policy would affect them. A family with two-veteran 
wage earners, each taking an average number of medications and 
each paying the enrollment fee, would have to pay nearly $3,000 
more in out-of-pocket costs if the proposed fees are mandated. 
I do not believe this is the way to reward the working families 
who have served our country.
    On the benefits side of the ledger, VA must be ready to 
adjudicate claims in a timely and accurate manner. Should VA 
receive claims in excess of the 800,000 that are estimated for 
next year, I do not believe the Department will have the 
resources to handle the workload. In addition, VA does not have 
a history of absorbing the impact of new court decisions 
easily, and I am concerned that pending court cases may have an 
adverse effect on VA's timeliness and accuracy.
    We also know that the ongoing situations in Iraq and 
Afghanistan are increasing VA's workload and will continue to 
do so for many years to come. The time for VA to hire and train 
staff to meet present and future demand for timely adjudication 
is now.
    I will continue to monitor VA's inventory and staffing 
requirements. Our Nation's veterans deserve nothing less than 
having their claims rated accurately and in a reasonable amount 
of time.
    I am committed to working with the Secretary and my 
colleagues on both sides of the aisle to ensure that the 
Department gets what it truly needs to deliver the highest-
quality benefits and services to those who have served.
    I am also deeply committed to working to have all of our 
colleagues in Congress recognize the reality that meeting the 
needs of veterans is truly part of the ongoing costs of war.
    Mr. Secretary, I want to share that, prior to this hearing, 
staff asked some questions about the various proposals included 
in this budget. The day after the budget roll-out, basic 
questions were posed, such as: Would there be a cap on total 
drug copayments imposed on veterans? We did not receive this 
information. I cannot emphasize enough that answers must be 
provided in a more timely way.
    Again, I want to say welcome to all of you here today, and, 
Mr. Secretary, I want to wish you well. As I told you, we look 
forward to working together for a great year and in years to 
come for our veterans. We do this on behalf of the Nation's 
veterans in the weeks and months ahead, as the Committee works 
to put together the best possible budget for veterans' programs 
in the coming fiscal year.
    Now, I would like to call on our Ranking Member, Senator 
Craig, for his statement.

       STATEMENT OF HON. LARRY E. CRAIG, RANKING MEMBER, 
                    U.S. SENATOR FROM IDAHO

    Senator Craig. Well, Mr. Chairman, thank you very much, and 
I think your concluding words are the most important--``the 
best possible budget'' we can possibly arrive at for our 
veterans.
    And, again, let me thank you, Mr. Secretary, for appearing 
before the Committee this morning. I know that it has been 
difficult to put a 2008 budget together in the absence of a 
2007 budget. I think we will have that out for you this week. 
But where is the level of spending? And I think that is a 
concern. I would say, though, that working with all of my 
colleagues on this Committee and the Appropriations Committee 
staff, I think--in fact, I believe in an absolute certain way 
that you will be pleased with the 2007 budget, as will millions 
of veterans who rely on VA's services, because I think this 
Congress has been responsive.
    Today, you put before us another strong funding 
recommendation for the upcoming fiscal year. Within the context 
of the total Federal budget request for Fiscal Year 2008, 
veterans are again, in my opinion, clear winners. Let me give a 
visual demonstration of this fact.
    On the chart behind me, you will see that when 
discretionary spending increases associated with defense- and 
homeland security-related spending are factored out, there is 
an $8 billion increase left over for all other Federal agencies 
and programs. Of that $8 billion, under the President's plan, 
about $3 billion will go to VA. In effect, this will leave 
about a 1 percent increase for the rest of Government. As I 
said, the President and the Congress continue to make veterans 
a priority within the overall Federal budget.
    Unfortunately, I have read or heard a number of statements 
from some of my colleagues suggesting that this President has 
demonstrated a lack of commitment to VA funding. This rhetoric 
persists even in the face of a VA budget that has increased 77 
percent--let me repeat that--a VA budget that has increased 77 
percent under President Bush's watch. Where was the strident 
criticism during the late 1990s when, in 2 consecutive years, 
actual cuts in VA medical care were proposed by then-President 
Clinton? Why now are 10 percent average annual increases 
bemoaned as inadequate, but 2 percent increases during the 
Clinton years were hailed as an essential to control Federal 
spending and reduce the deficit? Frankly, I find that double 
standard very troubling.
    In the past, I have spoken at length about impending 
collisions between VA spending and the spending of other 
Federal programs. Well, as the chart demonstrates, the 
collision is upon us, except it does not resemble a collision 
at all. It, rather, resembles the VA in an 18-wheeler headed 
down the Federal road and running over the top of other 
agencies in its process.
    Now, that is an interesting and probably a colorful 
metaphor. It begs the question. Can this pattern be sustained? 
That is the question that I and my colleagues will grapple with 
as we debate with you, Mr. Secretary and the President, the 
President's budget in the months ahead.
    One of my favorite sayings is attributed to Benjamin 
Franklin. He said, ``The definition of insanity was doing the 
same thing over and over but expecting different results.'' 
Well, it appears that the Administration has heeded Ben 
Franklin's wisdom with the Fiscal Year 2008 VA budget in three 
key areas, and I commend the President for listening to his 
critics on these issues, and I would hope we could shift some 
courses. This President has shifted courses.
    First, as many already know, it is the sixth year in a row 
that some form of increased cost sharing on veterans with 
higher incomes and no service-connected disabilities is being 
proposed. The Chairman has just mentioned it. Each year, the 
proposals were essentially dead upon arrival. We all know that. 
There was not a Congressman or a Senator who wanted to support 
them. Members of the veterans organizations alike argued that 
Priority 7 and 8 veterans were not wealthy and that an 
enrollment premium would drive veterans from the system because 
they simply could not afford to pay it.
    In response, this year the President's budget proposes a 
tiered premium that only applies when the income of a non-
service-connected veteran hits $50,000, double the income floor 
of previous proposals, and above the median income level in the 
United States. The Chairman of the MilConVA Subcommittee of 
Appropriations now, she and I had that discussion a year ago 
and recommended to the Administration that if they came back to 
us with the same proposal, it would go nowhere. They have not. 
They have substantially adjusted and changed it.
    Second, many complained that the priority proposals forced 
one veteran to pay for the health care of another, and that 
relying on future premium collections to reduce appropriated 
dollars was a risky way to fund a health care system. This 
year, the President proposes exactly the opposite. He 
recommends that new revenues generated by his proposal be 
deposited directly in the Federal Treasury, no tradeoffs, and 
not used as an offset against appropriated dollars. In other 
words, the President's medical care appropriation request is 
not affected by or dependent upon the Congress' action on his 
fee proposals.
    And, finally, past budgets by both Republican and 
Democratic Presidents have been criticized for their use of 
unspecified management efficiencies that were driven primarily 
by OMB's directives to reduce the need for appropriated 
dollars. This budget ends that practice.
    Let me talk for a moment, Mr. Chairman, about my own view 
of the President's proposals. I know many Senators have come 
out once again against the President's premium proposals in 
this budget. I, on the other hand, am one that finds these 
premiums to be a very reasonable price for access to what is 
widely now hailed as the best health care system in America. I 
would like to take a minute to go back in time to the late 
1990s when the VA first began the transformation from a 
hospital system to a health care system. And as we know, those 
approaches are very different.
    From about 1999 on, the VA started to see hundreds of 
thousands of new enrollees every year. Interestingly enough, an 
overwhelming proportion of those new enrollees were Medicare-
eligible vets from World War II and the Korean War. In fact, 
today over 45 percent of the 5.5 million users of VA's health 
care system are Medicare eligible. Many of them signed up for 
VA care to get access primarily to one thing: the drug benefit.
    Of course, at that time Medicare Part D was not an option 
for them. Now it is. As enrollment accelerated, long wait times 
began to appear. Using authority given by the Congress to focus 
limited resources on the VA's highest priority patients, then-
Secretary Tony Principi closed enrollments to new Priority 8 
veterans. As a result of all of this, I find myself in a bit of 
a quandary. The VA now provides care to 2.5 million veterans 
who have access to Medicare and nearly 550,000 who have TRICARE 
coverage and 215,000 who have both TRICARE and Medicare. That 
may be well and good, but it probably is not efficient, and it 
certainly does not appear fair to those Priority 8s now locked 
out of VA with no insurance coverage at all.
    I often talk of those Priority 8s who, for purposes of this 
discussion, I call the ``Boise Cascaders.'' Now, that may sound 
confusing to all of you. These are veterans in their late 40's 
and 50's who once worked for Boise Cascade Corporation, home-
based in my State of Idaho, a forest products company. 
Unfortunately, the decline in the timber industry in the 
country shoved them off the rolls of a large company's health 
care plan. They are now working in small businesses--
construction, electrical work, local stores, et cetera--and 
they cannot afford health care insurance on their salary, and 
their employers do not provide it.
    The chart behind me shows what the average cost of an 
individual health care insurance premium is in this country 
today, and that is $4,242. This is what a Boise Cascader--and 
there are many of them across the Nation as our economy adjusts 
and changes--is forced into paying.
    The President's proposal may be showing us an opportunity 
to offer VA health care at an affordable price to those who 
cannot offer it to themselves at a time of their need. I cannot 
think of anyone with a family income of at least $50,000--and 
that is what the new proposal is--and without any other health 
care insurance who would not suddenly drop VA health care 
because all of a sudden it cost them $21 per month. Now, that 
is $21 per month to access the number one health care delivery 
system in the country. By anybody's guesstimation, Mr. 
Chairman, that is a flat bargain.
    Perhaps some with other health insurance would choose not 
to pay multiple premiums for multiple plans, and if so, so be 
it. I think it is an opportunity for us to take a segment of 
America's workforce that is underinsured or uninsured today and 
to allow others who have three options--Medicare, TRICARE, and 
VA--to determine which of those options they would choose to 
access.
    So in the end, Mr. Chairman, I believe we have a strong 
budget request for VA with thought-provoking proposals. I note 
with interest that VA's request for medical care when all 
sources of revenue are included even exceeds the recommendation 
made by the Independent Budget. And as you know, Mr. Chairman, 
the last several years we have always heard that as a 
comparative.
    I am sure our VSO panel will have more to say on this 
point, but I have said before that the care of America's 
veterans continues to be a clear funding priority of this 
Congress and this President, and I think this budget reflects 
it. And within the VA's budget, the needs of our veterans 
returning from Iraq and Afghanistan, the disabled, the poor, 
are front and center, where they belong.
    Mr. Chairman, I have spoken long enough. You have been very 
patient. I think these are important issues to make. They will 
go on in the debate over the next several months as we work 
this budget out. I look forward to hearing from the rest of my 
colleagues and the witnesses before the Committee today.
    Thank you.
    Chairman Akaka. Thank you very much, my colleague, for your 
statement.
    [The Fiscal Year 2008 Discretionary Budget Request, and the 
Quality, Affordable Health Care charts follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Let me call for opening statements on Members of this 
Committee. I want to welcome the Members of the Committee here, 
and we will begin with Senator Jay Rockefeller.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman. I have to go 
do an Aviation markup right after my statement, for which I 
genuinely apologize. It is a classic case of cross-scheduling, 
which always hurts somewhere.
    Mr. Secretary, I am very glad that you are here. I wrote a 
letter to Jim Altmeyer the other day and mentioned you. And I 
am also very aware of what Senator Craig has said most clearly, 
and that is that there has been a 77 percent increase since the 
President took office. And I will agree that that sounds 
dramatic. There is a whole variety of ways of taking that and 
breaking it down and seeing it in other ways. But that is not 
for the point here.
    I think our Members would care to understand that life is 
not always what is the percentage of increase but, rather, are 
people getting taken care of the way they should be taken care 
of? And if you are looking at a budget, obviously everything is 
in the realm of possible. But it really should be--in terms of 
veterans, it is different from other budget item. Are they 
getting the health care they actually need and deserve?
    My sense is that this budget does not do that. The 
Independent Budget suggests that VA health care needs an 
additional $2 billion for fully funded care. The VA has seen an 
enormous increase in workloads, and health inflation is real. 
But we have to focus on the challenging needs of our veterans 
returns from Iraq and Afghanistan, and I would dispute some who 
would say that they are getting all that they need.
    I visit with them constantly, as I have discussed with 
Patty Murray on a number of occasions because I think Patty is 
passionate about veterans, and I think she deserves the credit 
for restoring $1.3 billion to our veterans' health care budget 
last Congress. But, you know, we have got Iraq veterans, we 
have got Afghanistan veterans, we have got World War II, Korea, 
and Vietnam veterans. They served, all of them, and they all 
deserve their benefits.
    I worry that the VA continues to propose new fees to either 
drive veterans away from VA health care or make them pay more. 
One of the previous speakers indicated that we added on an 
extra fee in the past. But that was for a new program, for 
something called long-term care, which had never existed in the 
history of this country before and which was done by Senator 
Specter and myself and Lane Evans in the House before some were 
even on this Committee. So there was a reason for that fee 
increase--a new program, entirely new program. Still it is the 
only long-term care program in this country.
    I think this year's proposal is even more discouraging 
about fees because the budget suggests that enrollment fees go 
to the Treasury general revenue. People can try to make that 
look good or somehow as a responsible thing to do. I do not 
understand that type of thinking.
    Whenever I can, which is about every other weekend, I spend 
3 to 4 hours in the afternoon usually with returned Afghan and 
Iraq veterans. They are young. Sometimes they go back to the 
Vietnam War, but not usually. Most of them are wounded. I do 
not see them at Walter Reed. I see them in West Virginia. And 
so I see them when they are in the course of their VA rehab and 
PTSD care along with the rest of it. There is no staff. There 
is no press. There are no pencils, no paper. Nothing goes 
outside the room. And these have been very, very powerful, 
emotional events for me, one after another after another. There 
are a lot of cases that come out of that which make me think of 
our VA budget.
    I think it is really important to be honest about 
information, not just percentage increases but what is actually 
being done, what do people get, what do they not get. I think 
we also need a better process. I am quite pleased that the 
joint continuing resolution has a $3.6 billion increase for VA 
health care for the rest of this fiscal year. But this increase 
is 4 months late. As the Secretary knows only too well, such 
delays are hard for VA centers, especially not staffing 
decisions.
    As I indicated--this is about a quarter of what I wanted to 
say--I have to do an Aviation markup and, unfortunately, I have 
to Chair it. So I have got to leave, Mr. Chairman, and I 
apologize for that. But I just think we have to be very, very 
careful when we are talking about veterans, number one, that we 
do not get political. Whether President Clinton did or did not 
do something is not particularly relevant to me, or whether 
President Bush did or did not do something. But the only test 
that counts here is: Are they getting the services, the medical 
services they need? The deep degree of distress of our veterans 
is almost impossible to describe the hurt, and you do not see 
it, and you do not get until you have been with them for 
several hours. And then somebody starts going really deep in 
describing his or her hurt, and then other members who are 
there, 12 or 13 gathered around in a circle, they say, ``Stop, 
stop, stop. Don't go there. That is too painful for me.''
    Now, are we dealing with that? Are we not? Are we dealing 
with it adequately? Are we not? I think that is the only 
question that counts.
    Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Rockefeller.
    Senator Murray?

                STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Thank you very much, Chairman Akaka, 
Senator Craig. I appreciate your holding this very important 
hearing on the President's budget proposal for Fiscal Year 
2008. I want to thank the Veterans Service Organizations who 
are here as well today, who put an awful lot of work into 
crafting the Independent Budget, and I think it is very 
important we hear what they have to say. So I appreciate them 
being here.
    I want to welcome back Secretary Nicholson again. Mr. 
Secretary, as I said to you privately before we started, thank 
you so much for the new CBOC in Northwest Washington, the new 
Vet Center in Everett. These are issues we have been working on 
for a number of years, and our vets in northwest Washington are 
really pleased that someone is finally moving the ball forward. 
And I do want to thank you for that publicly.
    Mr. Chairman, with our troops fighting overseas and more 
veterans being created each and every day, it is critical that 
we do everything in our power to make sure that the budget we 
provide provides for our veterans. In the past, the VA has been 
dramatically wrong in its budget projections, and I think we 
all agree we can never let that happen again.
    Mr. Secretary, you and I both agree that the VA's health 
care system is among the best in the country, once you get in 
the door, and that is what concerns many of us. It is the 
problem of getting in the door that we have to make sure we are 
addressing.
    I am very concerned that the budget that we are looking at 
closes the VA's door to thousands of our Nation's veterans. It 
does, as has been talked about, include new fees and increased 
copays that will discourage veterans from accessing the VA, and 
it continues to bar Priority 8 veterans from enrolling in the 
VA health care system.
    I am also very concerned that the VA is still 
underestimating the number of veterans from Iraq and 
Afghanistan that will seek care in the VA. In Fiscal Year 2006, 
the VA underestimated the number of patients it would see by 
45,000. For the current fiscal year, 2007, the VA has been 
forced to revise its projection up by 100,000 veterans. Now the 
VA is projecting that it will see 263,000 Iraq and Afghanistan 
vets in 2008, but I am being told by some that the VA should 
actually be preparing to care for more than 300,000 returning 
veterans. Frankly, I think it is very important that we do not 
underestimate this number. We have seen the past failures in 
the VA to accurately project the numbers, and I think it is 
important that this Committee get it right.
    While this budget increases funding for the VA over 
previous years, as we have heard, it does barely keep pace with 
inflation and other built-in costs, and it falls far short, as 
we will hear from the Independent Budget recommendations. This 
budget assumes cutbacks in veterans' health care in 2009 and 
2010, and I think we need to focus on that, Mr. Chairman, 
because we cannot project out the care of some of these 
veterans in the short term. We have to make sure they are 
covered in the long term, and this budget does not do that.
    This budget also assumes a decrease in the number of 
inpatient mental health patients. When all signs everywhere 
point to an increase in need, when the President has now 
proposed a surge of troops to Iraq, when the men and women in 
uniform are being deployed for their second and third tours of 
duty, and when more and more of our troops are coming home with 
PTSD and mental health care needs, I do not understand how the 
VA can assume that they will treat fewer patients for inpatient 
mental health care.
    Mr. Chairman, I think our veterans deserve a better budget 
than has been presented to us. They deserve a budget that is 
based on real numbers and real needs. We all know too well what 
happens when the VA gets shortchanged. It is not bureaucrats in 
D.C. that suffer. It is the men and women who have served us so 
honorably that pay the biggest price, and I hope that, through 
strong oversight of this Committee and your leadership, we will 
make sure we are presenting a budget that does reflect the 
needs that we have in front of us.
    Thank you.
    Chairman Akaka. Thank you very much, Senator Murray.
    May I call on Senator Bernie Sanders.

              STATEMENT OF HON. BERNARD SANDERS, 
                   U.S. SENATOR FROM VERMONT

    Senator Sanders. Thank you very much, Mr. Chairman. And, 
Mr. Secretary, welcome. Thank you for being here.
    Let me begin by concurring with many of the remarks made by 
others who have already spoken, and let me just start off by 
commenting a little bit on my friend Senator Craig's remarks 
about the very significant increase in the last several years. 
There are two reasons for that. Number one, as we all know, the 
cost of health care is soaring in every area of our lives, so 
if nothing else were happening, the cost of health care is 
going up. And, number two, we are at war, and more and more of 
our soldiers are coming back wounded, and they need care. So I 
think those factors have got to be included when we look at the 
increased in VA spending. But the issue that we should be 
focusing on, as others have said, is-- is the amount of money 
that we are spending adequate to take care of the needs of the 
men and women who are the veterans of this country?
    And I would hope, Mr. Chairman, that there is no 
disagreement on this Committee. I know that we have different 
political philosophies here, but I would hope that there is no 
disagreement that when a man or woman puts his or her life on 
the line to defend this country, whether it is a war that I 
support or I do not support, that we all agree that when that 
person comes home, they are entitled to all of the health care 
they need for the rest of their lives; that, in other words, 
when the Congress votes to send people to war, that we 
understand that the cost of war is not just the tanks and the 
bullets, but that the cost of war is that 90-year-old soldier 
who may have fought 50 years ago and was hurt, and that we are 
not a serious country, a moral country, if we ever turn our 
backs on any of those soldiers. I would hope that there would 
be agreement on that.
    Sadly, for a number of years--and I think it is without 
dispute--the budgets that President Bush has sent us have been 
totally inadequate, and the evidence is pretty clear, because 
in Vermont, and I think all over this country, there are 
waiting lists for people to get into the VA. There are staffing 
shortages. There are, very clearly, backlogs in terms of the 
processing of the claims that veterans bring forward. I do not 
think there is a disagreement to that, Mr. Secretary. Maybe you 
will speak to that in a moment. But when a veteran puts in a 
claim, they should not have to wait 6 months or a year to get 
that claim adjudicated. You know as well as I do that there are 
veterans who absolutely believe that one of the reasons for 
that is maybe they will die, and then the VA will not have to 
pay out the claim. I do not want one veteran in the United 
States of America to hold that view.
    Also, I would concur with the Chairman and others to say 
that when people put their lives on the line, we should not be 
asking them to pay substantially more--almost double--for 
prescription drug fees. We should not be increasing the fees 
for people to get into the VA, which, in my view, has the 
designed purpose of pushing people out of the VA health care 
system altogether. We should be welcoming people into what some 
have referred to as one of the great health care systems in the 
world, not pushing them out.
    We all know--and I want to thank all of the veterans 
organizations for the excellent work that they have done, and I 
think the Independent Budget that they have given us is a very 
important document. It enables us to go forward in assessing 
the needs of veterans from the perspective of the veterans 
themselves. And I appreciate very much what they have done, and 
this year's Independent Budget reveals that the 
Administration's proposed budget is about $4 billion short--$4 
billion short.
    Now, Mr. Chairman, those of us in the Congress know that 
there are many competing funding priorities. Four billion 
dollars is, in fact, a lot of money, but let's see how within 
the Bush budget that $4 billion competes with other needs that 
the President has brought forward. And I want everybody to hear 
this because this is really what this whole debate is about. It 
is about priorities. It is about how strongly we really care 
about people who put their lives on the line compared to 
others.
    In the President's budget, he proposes the elimination of 
the estate tax. This tax cut benefits only--the only 
beneficiaries of that repeal are the wealthiest two-tenths of 1 
percent of the American people; 99.8 percent of Americans do 
not benefit one nickel from the repeal of the estate tax. 
Eliminating the estate tax will save one family--the Walton 
family, who owns Wal-Mart, as we all know--over $32 billion. 
Mr. Chairman, one family, the repeal of the estate tax will 
benefit $32 billion. And I would like anybody in this room to 
tell me that as a Nation we cannot come up with another $4 
billion to protect the men and women who have put their lives 
on the line defending this country when we can come up with $32 
billion for one family. One family. This Nation is the 
wealthiest nation in the history of the world. We have the 
funds to take care of our veterans.
    Mr. Chairman, I have to say that one of the most glaring--
and Senator Craig raised this issue, and maybe we can work 
together on this issue--examples of the abandonment of our 
veterans is the bar on Category 8 veterans. Since 2003, this 
Administration has closed the door to VA enrollment by new 
Category 8 veterans. Estimates are that over a million veterans 
have been denied access to care as a result.
    Now, these are ``wealthy'' veterans. Let us be clear. These 
are not the Walton family ``wealthy'' veterans. These are 
people who, if they are single, earn $28,000 a year. They 
cannot get into the VA anymore. We cannot take care of them, 
but if you are the Walton family, we have got $32 billion to 
take care of you.
    Mr. Chairman, in my view, we should take a very, very hard 
look at this budget. In my view, we have got to keep faith with 
the 22,000 soldiers who have been wounded in Iraq, the tens and 
tens of thousands more who are going to be coming home with 
severe post-traumatic stress disorders and other problems.
    I should tell you, Mr. Chairman, that my office is now 
working on a comprehensive piece of legislation which will 
include many of the concerns that the veterans organizations 
have. We are going to bring that forward, and we look forward 
to support of Members of this Committee. The time is now to get 
our priorities right, and included in that is the need to take 
care of our veterans.
    Thank you very much, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Sanders.
    Senator Sherrod Brown?

               STATEMENT OF HON. SHERROD BROWN, 
                     U.S. SENATOR FROM OHIO

    Senator Brown. Thank you very much, Mr. Chairman.
    Secretary Nicholson, thank you, and thank you for your 
quick responsiveness to many of us on this Committee. I 
appreciate that and your commitment to the Nation's veterans. I 
especially echo Senator Murray and her thanks of helping 
particularly with CBOCs in Parma, Ohio, and other outpatient 
clinics and your work on the consolidation in Cleveland and 
what that means especially for psychiatric care and especially 
for homeless veterans. Thank you for that.
    One hundred and eight years ago, in a tailor shop in the 
then small town of Columbus, Ohio, the 13 veterans who recently 
returned from the Spanish-American War met and talked about 
sharing their memories, talked about their fallen comrades, 
talked about issues facing returning veterans coming home, 
talked about pensions and the fact there were no pensions, no 
real health care for these veterans. In that small tailor shop, 
out of that meeting of those 13 veterans came the VFW.
    The VFW and so many other veterans organizations, from the 
Vietnam Vets to the American Legion to the Disabled American 
Vets and so many organizations, are a big reason that we are 
here today and a big reason that this Nation has done not 
always adequate, but a decent job over the years of taking care 
of our veterans.
    As this body so often does not go much beyond being a 
responsive body, whether it is environmental law, whether it is 
the creation of Medicare and Social Security, whether it is 
civil rights, or whether it is veterans issues, clearly these 
outside organizations, like the VFW and the American Legion and 
others, have played such a role in getting this body to do the 
right thing. And I thank all the veterans organizations that 
have played such a major role in that, especially, as Senator 
Craig said, now that the VA really is the best--probably the 
best health care system in this country.
    But I also concur with Senator Murray in that we simply--
the VA and the President's budget are sorely lacking in what we 
really ought to be doing. We know of the problems. We have 
heard them stated over and over. A couple of things I wanted to 
address, not to go over all the issues that my colleagues--
Senator Sanders and others--talked so well about.
    The VA medical care funding still lags behind clearly what 
is needed to meet the growing number of veterans. The 
Administration proposal is a scant 0.14 percent, one-seventh of 
1 percent, more than last year's when adjusted for inflation 
and increased patient utilization costs. As Senator Sanders 
said, we all share outrage in the VA charging Priority 7 and 8 
veterans additional health fees. It is seeking authority, as 
was discussed, to redirect $310 million in revenues that would 
be generated from these fees to the Department of the Treasury. 
Instead of reinvesting those dollars into a VA to help 
Secretary Nicholson and the Under Secretaries and the Assistant 
Secretaries representing the VA today, instead of helping them 
take care of using those funds for less affluent, if you will, 
by Senator Sanders' definition, to take care of them, it is 
money that goes back into the Treasury that pays, again, for 
the tax cuts that Senator Sanders mentioned.
    Third, veterans should not have the lengthy waits for 
health care and should not be excluded from enrolling for care. 
The VA health care system needs to be fully funded and on time 
to provide for all veterans seeking care.
    Lastly, there was an article in the Miami Herald on Sunday, 
I believe, that had a couple of interesting facts and charts 
that tell me we have a long way to go, especially on outpatient 
mental health care or mental health care generally in the VA. 
There is a chart that shows there are--based from 1995 and a 
decade later--I will give these to the Secretary and will ask 
about them. I, like Senator Rockefeller, have to leave for 
other committees, but will come back.
    Ten years ago, there were 565,000 patients treated in the 
VA mental health system. Today, there are 923,000. That is no 
surprise, especially with this war. But, equally importantly, 
in 1995, outpatient mental health visits per veteran, 15.1, the 
average veteran receiving outpatient mental health treatment 
was--they paid 15.1 visits. Ten years later, in 2006, it was 11 
visits per patient. I do not understand that. I think probably 
the VA is doing some things to discourage people, the fees, the 
copays, that kind of thing, to discourage people from coming.
    Even more significant, perhaps, is that per patient veteran 
costs have come down even before correcting for inflation. In 
1995, the VA was spending $3,500 per patient for mental health 
care. In 2004--they do not have 2005 or 2006 numbers in this 
chart--it was $2,500. So we are spending $1,000 less even 
before correcting for inflation, $1,000 less. And to compound 
that, some veterans get more visits, obviously, than others, 
but that is in part based on which clinics they are assigned to 
or they live near. Average number of visits per veteran with 
PTSD ranged from 22 in the Hudson Valley Medical Center to a 
low of 3.1 in Fargo, North Dakota. That is not a function of--I 
cannot believe that is a function of the illness of the veteran 
on average. It is more a function of something that the VA is 
doing differently or not doing right.
    So all of those concerns, Mr. Chairman, we need to look at. 
I think that mental health coverage and care for the VA is 
improving, but not nearly fast enough. I am not convinced we 
are prepared for the next 50 years of mental health problems so 
many of our veterans face from this awful war. And I think that 
we need assurances and we need real demonstrations from the VA 
that they are both aware of that and are taking steps to deal 
with it.
    I thank the Chairman.
    Chairman Akaka. Thank you very much, Senator Brown.
    We will hear now from Senator Jon Tester.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman. I also want to 
thank the Secretary for being here. I very much look forward to 
what is said in this Committee meeting. I will make my remarks 
very short.
    First of all, I want to tell you that everywhere I go, I am 
told that in the veterans' facilities you have some of the best 
doctors, nurses, and staff that are available. They are doing 
an incredible job.
    On the other hand, I will also tell you that they are being 
burnt out. They are understaffed. And that bothers me, 
especially when you have quality people. So that is an issue.
    We have been talking to the grassroots folks for nearly 2 
years. I mean, literally that has been what I have done since 
May of 2005. And I can tell you that not all the people I have 
talked to have complaints, but there are enough of them that 
have complaints that make me think that there is a problem.
    My barber, for example, who is a Korean War vet, is very 
happy with the service he gets. He has gotten through the door.
    On the other side of the coin, over the last year and a 
half to 2 years, I cannot tell you the number of episodes that 
I have heard--I have not brought it up, although we did have 
some hearings here a couple of weeks ago with veterans about 
issues of access and accessibility and the folks that are 
trying to get through the door that cannot, that are being 
delayed. Several folks told me that they think the delays are 
intentional. They think it is because of lack of resources, 
money, and they think that the VA is trying to outlive them.
    Now, I do not know if that is correct or not, but the truth 
is, if it is correct, we should be ashamed. Because as Senator 
Sanders said, I think that this is a cost of war that we cannot 
overlook, if you take a look at how this country was founded 
and why it was founded and what we stand for. And I think we 
are on the same page on that.
    The health care benefits for veterans, from my perspective, 
is not a reward. It is a matter of fulfilling a promise that we 
have given our veterans. And I will tell you that. If I did not 
think this was an issue, if I did not think there was just a 
whole bunch of folks out there that have served this country so 
very well on the battlefield and in peacetime that deserve the 
benefits, I would not feel so strongly about the fact that this 
budget needs to be scrutinized, and it needs to be scrutinized 
very strongly. And, quite frankly, I do not think it is 
adequate.
    If you take a look at the 0.14 percent increase and then 
assume the number of veterans--and I am sure you have got 
spread sheets that extrapolate this out--from the Iraqi and 
Afghanistan war, I think we may be put into a position where 
folks cannot get through the door and they cannot get the 
access, because I agree with Senator Murray, once they get 
through the door, they are getting good health care. But the 
matter of fact is, I do not think that all the ones that need 
to get through the door are.
    So I look forward to your presentation, folks. I appreciate 
your being here, and I appreciate being a part of this 
Committee.
    Chairman Akaka. Thank you very much, Senator Tester.
    Senator Jim Webb?

                  STATEMENT OF HON. JIM WEBB, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Webb. Thank you, Mr. Chairman, and I also will 
attempt to be brief. We run the risk of having had the hearing 
before we have heard the testimony of the people here.
    I want to take notice and ask the Secretary and the 
veterans group members to take notice of the attendance here 
this morning. I think it is a clear indicator of the emphasis 
that we on this side of the table put on veterans' issues. And 
I, like a number of the new Members on the Committee, actively 
sought to be on this Committee. We care deeply about veterans' 
issues.
    Next month marks the 30th anniversary of when I started 
working formally on veterans' issues as a full committee 
counsel on the House side. And I have tremendous regard for the 
people who have dedicated their careers to working in the 
veterans area. I think they are among the most selfless people 
in Government. You find so many people who are doing this 
absolutely for the right reasons and dedicating their 
professional lives to it. And, also, to many people in the 
veterans groups themselves who have made themselves 
professionals on issues that go directly to veterans' health 
care.
    I entered the room when the Ranking Republican was making a 
comparison, basically defending the current budget process, 
talking about why could people be attacking a 10 percent 
increase when they were defending a 2 percent increase during 
the Clinton years. And I think as my colleague Senator Sanders 
pointed out, there are clear reasons for that. The first, is 
obviously, we have entered a wartime period. There are 
different needs. There is a different pool of veterans coming 
in. And at the same time, there has been a breakdown of medical 
care in this country nationwide. In the last 6 years, medical 
costs in this country have gone up 73 percent, and 36 percent 
of that has been right out of people's pockets. So there has 
been a natural migration into the VA system.
    I was a little puzzled, quite frankly, hearing this comment 
about how 45 percent of the veterans who are coming to the VA 
are Medicare eligible and have come over basically because of 
this prescription drug program and that that might be mitigated 
by Medicare D, and perhaps it will. Medicare D is in its own 
period of transition. But to say that those people coming into 
the system are doing so to the exclusion of people who do not 
have medical insurance basically begs the question. If both of 
these classes of people are eligible, why shouldn't we be 
treating both of them? Somewhere along the line the Government 
is going to pay, whether it is Medicare, TRICARE, or the VA. 
And the VA system, I am proud to say, as someone who has worked 
on and off in it for 30 years, is a wonderfully fine system. 
And those who have eligibility ought to be using it.
    I would like to say to you, Mr. Secretary, you are aware 
that I have strong feelings about the need for those people who 
have been serving since 9/11 to get a GI bill that is worthy of 
their service. That is something I look forward to discussing 
over the coming months. There are a number of other issues that 
I have some concerns about, but I would be very anxious to get 
into the testimony, Mr. Chairman, and to hear the witnesses.
    Thank you very much.
    Chairman Akaka. Thank you very much for your statement, 
Senator Webb.
    All right. We will go into our questions now. Mr. 
Secretary, before we get to our questions, I want to invite you 
to make your statement or other statements that you have before 
the Committee. Again, we welcome you to the Committee.

       STATEMENT OF HON. R. JAMES NICHOLSON, SECRETARY, 
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY MICHAEL KUSSMAN, 
  M.D., ACTING UNDER SECRETARY FOR HEALTH; DANIEL L. COOPER, 
                      UNDER SECRETARY FOR 
        BENEFITS; WILLIAM F. TUERK, UNDER SECRETARY FOR 
       MEMORIAL AFFAIRS; AND ROBERT J. HENKE, ASSISTANT 
                    SECRETARY FOR MANAGEMENT

    Secretary Nicholson. Thank you, Mr. Chairman, Members of 
the Committee. Good morning. I do have a written statement I 
would like to submit for the record.
    Chairman Akaka. It will be included in the record.
    Secretary Nicholson. Thank you, Mr. Chairman. I would also 
like to introduce my colleagues that are with me here at the 
table. I will start at my far left, your right: Under Secretary 
for Memorial Affairs, Bill Tuerk. Next to him is the Under 
Secretary for Benefits, Admiral Dan Cooper. To my immediate 
left is the Acting Under Secretary for Health, Dr. Michael 
Kussman. On the far right is the Assistant Secretary for 
Information Technology and the Chief Information Officer, Bob 
Howard. And on my immediate right is the Assistant Secretary 
for Management, and, in effect, the Chief Financial Officer of 
the VA, Bob Henke.
    Let me preface my remarks by saying that I look forward to 
working with the 110th Congress, and particularly our Veterans' 
Committee, in a bipartisan, bicameral way of support for our 
Nation's veterans. I have heard said and I have said that I 
think taking care of our veterans is, in essence, not a 
partisan endeavor. It is a patriotic endeavor. And I want to 
offer my congratulations to the Committee's newest Members: 
Senators Sanders, Brown, Webb, and Tester.
    I am here today to discuss the President's 2008 budget 
proposal for the Department of Veterans Affairs. The President 
is requesting a landmark budget. He is requesting nearly $87 
billion to fund our Nation's commitment to America's veterans. 
This budget will allow us to expand the three core missions of 
the VA, those being: to provide world-class health care; to 
provide broad, fair, and timely benefits; and, third, to 
provide dignified burials in shrine-like settings for our 
Nation's veterans.
    This budget will also allow us to continue our progress 
toward becoming a national leader in information technology and 
data management. 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.
    At the VA, we already have the right dedicated people. With 
the President's proposed budget, we have the right resources, 
too. The $87 billion requested for the VA represents a 77 
percent increase in veteran spending since this President took 
office on January 20, 2001. Medical care spending is up over 83 
percent.
    Mr. Chairman, I will outline the major portions of our 
proposed budget.
    First, Veterans Health Administration. Our total medical 
care request is $36.6 billion in authority for our health care. 
VA health care is the best anywhere, and that is not just a 
boast of a proud Secretary--I am grateful for the complimentary 
remarks that have been made here by Members of the Committee. I 
would add that medical journals, the national media, and 
institutions as respected as the Harvard Medical School just 
recently agreed that the VA leads the Nation in health care 
delivery, safety, and technology.
    During 2008, we expect to treat about 5.8 million patients. 
This total is more than 134,000 above the 2007 estimate. 
Patients in Priorities 1 through 6--that is, veterans with 
service-connected conditions, lower incomes, special health 
care needs, and who have had service in Iraq and/or 
Afghanistan--will comprise 68 percent of the total patient 
population in 2008. They will account for 85 percent of our 
health care costs. The number of patients in Priorities 1 to 6 
will grow by 3.3 percent from 2007 to 2008.
    In 2008, we expect to treat approximately 263,000 veterans 
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 us for health care during this fiscal 
year, and an increase of 108,000, or 70 percent, more than the 
number that we actually treated in 2006.
    Access to this health 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. Ninety-six percent of primary care appointments 
and 95 percent of specialty care appointments are scheduled 
within 30 days of the desired date by the relevant veteran. We 
will minimize the number of new enrollees waiting for their 
first appointment to be scheduled. In the last 8 months, we 
reduced this number by 94 percent, and we will continue to 
place strong emphasis on this effort.
    Mental health services--The President's request includes 
nearly $3 billion to continue our effort to improve access to 
mental health services across the country. Mr. Chairman, 
Members of the Committee, 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.
    Medical research--The President's 2008 budget includes $411 
million to support the VA's unparalleled medical and prosthetic 
research program. This amount will fund nearly 2,100 high-
priority research projects to expand knowledge in areas most 
critical to veterans' particular health care needs, most 
notably: research in the areas of mental illness, $49 million; 
aging, $42 million; health services delivery improvement, $36 
million; cancer research, $35 million; and heart disease 
research, $31 million. Nearly 60 percent of our research budget 
is devoted to OIF/OEF health care issues.
    Polytrauma care--I have traveled to three of our polytrauma 
centers, Mr. Chairman, and there is no doubt that these centers 
of compassion and competent care are where miracles are 
performed every day. In response to the need for such 
specialized medical services, the VA has expanded its four 
traumatic brain injury centers, which are in Minneapolis, Palo 
Alto, Richmond, and Tampa, to a constellation of polytrauma 
centers encompassing 17 additional polytrauma centers to make 
them more accessible geographically to provide these additional 
specialties to treat patients with multiple complex injuries.
    Seamless transition--One of the most important features of 
the President's 2008 budget request is to ensure that 
servicemembers' transition from active duty military status or 
mobilized Guard and Reserve to civilian life continues to be as 
smooth and seamless as possible. We will not rest until 
seriously injured or ill servicemen or women returning from 
combat in Iraq or Afghanistan receive the treatment that they 
need in a timely way.
    Veterans Benefits Administration--Let me speak of 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 during the last few years. The volume of claims 
applications has grown substantially during the last few years 
and is now the highest that it has been in 15 years. We 
received more than 806,000 individual claims in 2006. That does 
not account for the number of issues per claimant. And we 
expect this high volume of claims to continue as we are 
expecting in the neighborhood of 800,000 claims a year in both 
2007 and 2008. However, through a combination of management and 
productivity improvements and our 2008 request to add 
approximately 450 staff, which is in this budget, we will 
improve our performance while maintaining high quality.
    We expect to improve the timeliness of processing claims to 
145 days in 2008. We will make better use of new technologies 
and have more trained people to process and evaluate claims. 
With this budget, we project that we can reduce our claims 
processing time by 18 percent while maintaining quality.
    The National Cemetery Administration--We expect to perform 
nearly 105,000 interments in 2008. We are 8.4 percent higher 
than the number of interments we performed in 2006. This is 
primarily the result of the aging of the World War II and 
Korean War veterans population and the opening of new 
cemeteries.
    The President's 2008 budget request includes $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.
    Capital programs, which is construction and grants to 
States--The VA's 2008 request before you includes $1.1 billion 
in new budget authority for our capital programs. Our request 
includes $727 million for major construction projects, $233 
million for minor construction, $85 million in grants for State 
extended care facilities, and $32 million in grants to build 
State veterans cemeteries. The 2008 request for construction 
funding for our health care programs is $750 million. These 
resources will be devoted to a continuation of the Capital 
Asset Realignment for Enhanced Services, known as CARES, 
program.
    Over the last 5 years, $3.7 billion in total funding has 
been provided for CARES. Within our request for major 
construction are resources to continue six medical facility 
projects already underway. Those are in Pittsburgh; Denver; Las 
Vegas; Orlando; Lee County, Florida; and Syracuse. Funds are 
already included for six new national cemeteries in 
Bakersfield, California; Birmingham, Alabama; Columbia-
Greenville, South Carolina; Jacksonville, Florida; Southeastern 
Pennsylvania; and Sarasota, Florida.
    Information technology--VA's 2008 budget request for 
information technology is $1.8 billion, which includes the 
first phase of our reorganization of IT functions in the 
Department and which will establish a new IT management system 
in the VA. The major transformation of IT will bring our 
program in line with the best practices in the IT industry. 
Greater centralization will play a significant role in ensuring 
that we fulfill my promise to make the VA the gold standard for 
data security within the Federal Government. Toward that end, 
our 2008 budget IT request includes almost $70 million for 
enhanced cyber security.
    Mr. Chairman, I know the Committee shares with me the 
concern about VA's ability to secure all our veterans' personal 
information. There have been security incidents that are simply 
unacceptable, and I have made it a priority to assure our 
veterans that we are addressing their concerns. It is not that 
these incidents will never occur, but when they do, the VA now 
has a process to properly and promptly respond to them.
    We are encouraging all our employees to report, including 
self-reporting, thefts or other losses of equipment, whether in 
the workplace, at home, or on travel, so we can strengthen our 
information security procedures through lessons learned, review 
personal accountability, and, when appropriate, take 
disciplinary actions, including terminations.
    Electronic health records--The most critical IT project for 
our medical care program is the continued operation and 
improvement of the Department's fabled electronic medical 
records. I have made it a point for the past year to praise our 
electronic health records for their ability to survive 
Hurricanes Rita and Katrina. Electronic health records are a 
Presidential priority, and VA's electronic health records 
system 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. This is the program to modernize our existing 
electronic health records. It will make use of standards that 
will enhance the sharing of data within the VA as well as with 
other Federal agencies and public and private sector 
organizations.
    Mr. Chairman, in closing, I want to take this opportunity 
to inform you of my plan to create a special advisory committee 
on OIF/OEF veterans and their families and to mention a new 
initiative to assist returning veterans to connect with their 
State and territorial veterans departments, including the 
District of Columbia.
    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, informed, hassle-free 
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 military hospitals to VA medical facilities in their 
communities, I announced yesterday, with the 50 State VA 
Directors who were in town for a meeting, an expansion of a 
collaborative outreach program with the States and territories 
and the District of Columbia. It is called the States Benefits 
Seamless Transition Program. We just completed a very 
successful 4-month pilot with the State of Florida, and I have 
expanded the program to all States and territories.
    This initiative is a promising extension of the VA's own 
transition assistance for those leaving the military service, 
and it is an opportunity to partner with the States to make 
long-term support possible for our most deserving veterans 
throughout the country. There are several States, for example, 
that totally waive ad valorem taxes for residential real estate 
for those seriously injured veterans.
    Mr. Chairman, over the next few weeks and months, as I 
travel across the country, I also will be meeting with the 
commanders of the 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 coastguardsmen 
who are returning from duty overseas. This Friday, I will meet 
with Admiral Stavridis, the Commander of the Southern Command, 
to brief him on the VA's programs for OIF/OEF troops. In the 
coming weeks, I will be meeting with the senior enlisted 
advisors and the Reserve chiefs. I also will be extending an 
invitation to each service Secretary and service Chief to meet 
with me so that we can keep our lines of communication open in 
working better for the benefit of all of our transitioning 
servicemen and women.
    Mr. Chairman, this concludes my remarks. Thank you.
    [The prepared statement of Secretary Nicholson follows:]
       Prepared Statement of Hon. R. James Nicholson, Secretary, 
                     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 request is $37.80 
billion, or 77 percent, above the funding level in effect when the 
President took office.
    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 servicemembers' 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.
    Last week, 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 servicemembers more easily make the transition from military 
service to civilian life. This is a comprehensive intergovernmental and 
public-private alliance that will provide separating servicemembers 
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 servicemembers 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 servicemembers 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 servicemembers 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 servicemembers 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 
servicemembers from Iraq and Afghanistan are frequently sent for care. 
These include benefit counselors who help servicemembers obtain VA 
services as well as social workers who facilitate health care 
coordination and discharge planning as servicemembers 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, the National Naval Medical 
Center Bethesda, the 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 servicemembers. 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 servicemembers regarding military-related readjustment 
needs.
                              medical care
    We are requesting $36.6 billion for medical care in 2008, a total 
of 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).
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:

 
------------------------------------------------------------------------
               Family Income                      Annual Enrollment
------------------------------------------------------------------------
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 
copayment 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 copayment 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. 
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. The value of 
this system was clearly demonstrated when every patient medical record 
from the areas devastated by Hurricane Katrina was made available to 
all VA health care providers throughout the Nation within 100 hours of 
the time the storm made landfall. Veterans were able to quickly resume 
their treatments, refill their prescriptions, and get the care they 
needed because of the electronic health records system--a real, 
functioning health information exchange that has been a proven success 
resulting in improved quality of care. It can serve as a model for the 
health care industry as the Nation moves forward with the public/ 
private effort to develop a National Health Information Network.
    The Department also received an award from the American Council for 
Technology for our collaboration with the Department of Defense on the 
Bidirectional Health Information Exchange program. This innovation 
permits the secure, real-time exchange of medical record data between 
the two departments, thereby avoiding duplicate testing and surgical 
procedures. It is an important step forward in making the transition 
from active duty to civilian life as smooth and seamless as possible.
    In its July 17, 2006, edition, Business Week featured an article 
about VA health care titled ``The Best Medical Care in the U.S.'' This 
article outlines many of the Department's accomplishments that have 
helped us achieve our position as the leading provider of health care 
in the country, such as higher quality of care than the private sector, 
our nearly perfect rate of prescription accuracy, and the most advanced 
computerized medical records system in the Nation. Similar high praise 
for VA's health care system was documented in the September 4, 2006, 
edition of Time Magazine in an article titled ``How VA Hospitals Became 
the Best.'' In addition, a study conducted by Harvard Medical School 
concluded that Federal hospitals, including those managed by VA, 
provide the best care available for some of the most common life-
threatening illnesses such as congestive heart failure, heart attack, 
and pneumonia. Their research results were published in the December 
11, 2006, edition of the Annals of Internal Medicine.
    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 to be scheduled. 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 sizable 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.
    The number of active duty servicemembers 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
    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 
servicemembers 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.
    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.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Akaka to 
   Hon. R. James Nicholson, Secretary, Deparment of Veterans Affairs
    Question 1. VA's estimates for the number of OEF/OIF veterans that 
will come into the system next year are relatively incremental, at 
around 54,000. In the past, VA has underestimated the number of new 
veterans seeking VA health care. We also know that some conditions, 
such as PTSD, can take some time to manifest themselves in these young 
servicemembers, and that in these current conflicts, the average 
servicemember will serve more tours than in the past. Can you please 
explain the projects that VA will see such a low number of OEF/OIF 
veterans next year? In our hearing, you mentioned that you use a very 
sophisticated model to reach your projections can you explain this 
model?
    Response: The Department of Veterans Affairs (VA) has made every 
effort to account for the needs of Operation Enduring Freedom/Operation 
Iraqi Freedom (OEF/OIF) veterans within the actuarial model. Starting 
with the identification of OEF/OIF veterans from a roster provided by 
the Department of Defense (DOD) the actuarial model develops 
projections based on the actual enrollment and utilization patterns of 
OEF/OIF veterans since Fiscal Year (FY) 2002. These projections are 
based on the development of separate enrollment, morbidity, and 
reliance assumptions for OEF/OIF veterans based on their actual 
enrollment and utilization patterns. However, unknowns, such as the 
length of the conflict, will impact the services that VA will need to 
provide. Therefore, we have included additional investments for OEF/OIF 
in the Fiscal Year 2008 budget to ensure that VA is able to care for 
all of the health care needs of our returning veterans.

    Question 2. VA has indicated that the size of the active duty force 
is the best indicator of new claims activity. DOD data shows that there 
were nearly 198,000 military separations in 2006. This number does not 
include demobilized Guard and Reserve. Trends show that 35 percent of 
these veterans will file a claim over the course of their lifetime. For 
2006 separation only, that number is over 69,000 for just active duty 
forces. What is VA doing to prepare now for this current and future 
increase in claims activity?
    Response: Special workload reduction initiatives are being 
undertaken to meet the demands of pending and future inventory. These 
initiatives include an aggressive recruitment program to add more 
decisionmakers; employment of rehired annuitants; expanded use of 
overtime; expansion of our claims development centers; shifting work 
among regional offices to maximize resources and enhance performance; 
improving the training for new and existing employees; and working with 
DOD to identify opportunities to improve information sharing and 
efficiency of claims processing and transition services. The 8,320 
direct full time employees (FTE) requested in 2008 for the Compensation 
and Pension (C&P) program are essential if VA is to reduce the pending 
workload. With a workforce that is sufficiently large, correctly 
balanced, and well trained, the Veterans Benefit Administration (VBA) 
can successfully meet the needs of our veterans.

    Question 3. How many veterans does VA estimate will leave the VA 
health care system due to the enrollment fees and increase in the drug 
copayment, and how many veterans will be deterred from seeking services 
at VA?
    Response: VA estimates that approximately 420,000 Priority 8 
veterans will choose not to pay the tiered enrollment fee and increased 
pharmacy copayment in Fiscal Year 2009. A majority of these veterans 
are non-users but approximately 111,000 veteran patients are impacted 
by this proposal.

    Question 4. Over the past 5 years, VA has made extraordinary 
progress in developing new solutions to the medical needs of our aging 
veterans population and the growing number of younger veterans with 
multiple traumatic injuries. Yet, the research request for Fiscal Year 
2008 relies on outside funding sources, and would amount to a cut of $2 
million authorized from Fiscal Year 2007. In a similar trend, the 
budget requests 3,000 research employees, down by almost 200 from 2006. 
Please explain the motivation for these cuts, and the impact they will 
have on the impressive research conducted at VA?
    Response: VA is committed to increasing the impact of its research 
program by ensuring that resources are targeted to the most pressing 
needs and spent on the programs that prove to be most effective at 
developing new solutions to the medical needs of new and aging 
veterans.
    VA continues to maintain a workable balance among the competing 
needs for research; to evaluate and fund existing programs at 
appropriate levels and to fund new projects at a comparable rate as has 
happened previously. Strategies include using attrition, transitioning 
to shorter durations of awards, and conducting competitive reviews of 
research centers. VA is using performance-based criteria to decide 
whether to modify, terminate, or expand programs.
    Using these strategies, VA research is increasing its focus on the 
emerging needs of new veterans, especially those returning from OEF/ 
OIF, while maintaining a broad research portfolio that addresses the 
needs of aging veterans, including chronic diseases and mental health. 
It is important to note that, in many cases, the needs of new OEF/OIF 
veterans relate to those of aging veterans who served in previous 
conflicts. For example, research focused on the combat-related mental 
health needs of OEF/OIF veterans is also applicable to the mental 
health needs of aging veterans who served in previous deployments. 
Similarly, research designed to improve traumatic amputation and 
subsequent prosthetics care is also relevant to aging veterans with 
diabetes and vascular disease. Accordingly, increases in funding for 
OEF/OIF related research does not necessarily come at the expense of 
research focused on the aging veteran.

    Question 5. How does VA handle OEF/OIF veterans as they enter the 
VA system through their 2-year automatic window of eligibility 
following separation from service? Are all of them automatically 
``enrolled'' in the VA health care system? And how are they prioritized 
after their enrollment or entry into the system? Do they automatically 
become 7s and 8s?
    Response: Combat veterans, including OEF/OIF veterans, who apply 
for enrollment within 2 years of their release from active duty are 
eligible for placement into Priority Group 6 (unless they are eligible 
for placement in a higher Priority Group based on other eligibility 
factors).
    These combat veterans are eligible for the full medical benefits 
package. They are provided hospital care, medical services, nursing 
home care, and medications for any illness that may be related to their 
combat service during the 2 years after their release from active duty 
is provided without charge. Treatment for conditions other than those 
clinically determined to be related to their service are subject to 
copays.
    At the end of their 2-year combat eligibility period, enrolled 
combat veterans remain enrolled and are placed into Priority Groups 
based upon their income and/or other applicable eligibility factors. 
Combat veterans who apply more than 2 years after separation from 
active duty are evaluated for enrollment based upon the same 
eligibility factors as any other veteran.

    Question 6. The proposed budget would maintain the current ban on 
enrollment of Priority 8 veterans. How much would it cost to bring 
these veterans back into the system? Please take into account the third 
party insurance these veterans will bring with them.
    Response: Reopening Priority 8 enrollment in Fiscal Year 2008 is 
estimated to increase enrollment in Priority 8 by approximately 1.6 
million and require an additional $1.7 billion in the budget. VA has 
significant concerns that this additional demand will strain VA's 
capacity to provide timely, quality care for all enrolled veterans and 
will lead to longer waits for care. VA must also consider the impact of 
this policy in future years. In 2017, this policy would increase 
Priority 8 enrollment by an estimated 2.4 million and would require an 
additional $4.8 billion. Over the next 10 years, resumption of Priority 
8 enrollment would require an additional $33.3 billion.

    Question 7. VA's budget appears not to add $360 million but only 
$54 million to implement mental health initiatives to close gaps in 
services identified in VA's Mental Health Strategic Plan. Can you 
please provide the Committee with a detailed breakdown of how the $306 
million will be spent in Fiscal Year 2007 and how the VA proposed to 
spend the additional $54 million in Fiscal Year 2008?
    Response: The plan for spending the $306 million allocated for the 
mental health initiative is included as a spreadsheet. The additional 
funds for the Mental Health Initiative for Fiscal Year 2008 will be 
fully used to support full year funding for those activities initiated 
in Fiscal Year 2007 and prior years.
    The following table provides additional information.

 
----------------------------------------------------------------------------------------------------------------
FY 2007 and FY 2008 Proposed Mental Health Initiative Spend Plan      FY 2007         FY 2008         Change
----------------------------------------------------------------------------------------------------------------
Continuation of FY 2005 and FY 2006 Recurring Initiated              166,296,744     166,296,744               0
 Activities.....................................................
Primary Care/Mental Health Integration..........................      38,380,506      55,691,153      17,310,647
Suicide prevention coordinators (156 sites).....................       8,624,890      16,249,780       7,624,890
Psychosocial Rehabilitation (PSR)...............................      15,138,061      23,587,385       8,449,324
Mental Health Intensive Case Management (MHICM): Rural, multiple      10,185,091      12,345,644       2,160,553
 teams, etc.....................................................
Homeless Program Initiatives....................................      17,556,002      17,342,238        -213,764
Substance Use Disorders.........................................       4,624,702       9,096,072       4,471,370
Mental Health staff in Community Based Outpatient Clinics             15,290,157      21,883,139       6,592,982
 (CBOCs)........................................................
Operation Enduring Freedom/Operation Iraqi Freedom (OEF/OIF)           3,490,567       5,102,231       1,611,664
 inreach........................................................
Post Traumatic Stress Disorder (PTSD), including Dual Diagnosis        4,979,157       5,115,401         136,244
 and Military Sexual Trauma (MST) Resource program..............
Telemental Health...............................................       7,018,000       3,100,000      -3,918,000
EES training....................................................         600,000         600,000               0
Centers of Excellence...........................................       3,000,000       4,950,000       1,950,000
Gulf Coast market survey........................................         196,659               0        -196,659
Vet Center staff enhancement....................................       3,379,923      10,531,046       7,151,123
TBI Transitional Housing........................................       2,500,000       5,000,000       2,500,000
Other activities including training in evidence based                  4,849,541       3,109,167      -1,740,374
 psychotherapy..................................................
                                                                 -----------------------------------------------
    Total.......................................................     306,110,000     360,000,000      53,890,000
----------------------------------------------------------------------------------------------------------------

    Question 8. I remain concerned that the funding for new mental 
health initiatives may be inadequate. VA has been implementing the 
Mental Health Strategic Plan since Fiscal Year 2005. Please identify 
the initiatives in the plan that have not been fully implemented and 
the amounts of funding needed to fully implement each of the remaining 
initiatives.
    Response: The Veterans Health Administration (VHA) mental health 
strategic plan (MHSP) identifies and addresses gaps in services, 
disseminates evidence-based programs, and works toward transformation 
in the culture of care. While VHA has been working toward 
implementation of the MHSP for approximately 2 years, we anticipate 
that 5 years or more will be required to achieve the enhancements and 
transformations required to fully meet its intended goals.
    In terms of initiatives that have not been fully implemented, VA 
views the MHSP as a living document that must be modified or 
interpreted differently as the needs of eligible veterans change, and 
as new opportunities for providing care become available. For example, 
VA has learned far more about the needs of veterans from the Global War 
on Terrorism (GWOT) since 2003 and 2004 when the strategic plan was 
developed. We have also learned from research about new opportunities 
for treating veterans with mental illnesses.
    Resources to support mental health services have come in the form 
of supplementing Veteran Integrated Service Network (VISN)-based 
activities funded through veteran's equitable resource allocation 
(VERA). Enhancements funded through the mental health initiative are 
moving the system rapidly toward implementation of the MHSP. Extending 
the funding for the initiative with $306 million in Fiscal Year 2007 
and $360 million in Fiscal Year 2008 will contribute to the 
transformation of the mental health care system and full implementation 
of the MHSP.

    Question 9. VA's ability to provide for the security of our 
veterans' personal information is still questionable. I understand this 
budget contains over $70 million for cyber security. Please explain in 
detail how this money will be used. How will this budget prevent future 
losses of computer equipment and secure personal information of the 
type that is believed to be on the hard drive at the Birmingham VA 
Medical Center that was reported lost last month?
    Response: The information technology (IT) cyber security program 
includes 18 initiatives, as follows:

 
------------------------------------------------------------------------
                         Initiative                            FY 2008
------------------------------------------------------------------------
Cyber Security Management..................................       $28.7M
    Certification & Accreditation of IT Systems............          7.5
    Identity Safety and Risk Management....................          6.0
    Policy Development and Maintenance.....................          5.7
    Training, Awareness and Education......................          5.4
    FISMA Reporting........................................          2.3
    Security Inspection....................................          1.8
------------------------------------------------------------------------
Field Security Operations..................................       $41.4M
    Enterprise Encryption and Data Protection..............          7.0
    Maintenance/Support Services...........................          6.5
    Enterprise Framework...................................          5.5
    Antivirus..............................................          5.4
    Vulnerability Assessment and Penetration...............          4.0
    Patch Management.......................................          3.4
    Encryption.............................................          2.7
    Testing................................................          2.2
    Intrusion Prevention...................................          1.9
    E-Authentication.......................................          1.9
    Media Disposal.........................................          0.5
    COOP...................................................          0.4
------------------------------------------------------------------------
        Total..............................................      $7O.1OM
------------------------------------------------------------------------

    To account for equipment and protect information, VA is:

     Requiring all VA laptops have security software updated 
and unauthorized sensitive information removed through the laptop 
``Health Check'' procedure every 90 days.
     Permitting the use of Federal Information Processing 
Standards (FIPS) 140-2 certified encrypted universal serial buses (USB) 
thumb drives for VA employees who have justified the need and received 
approval to store information on a removable storage device as outlined 
in VA Directive 6601, Removable Storage Media.
     Testing a port security technology to enforce adherence to 
the directive that will restrict the transfer of information to 
removable storage media and thwart the introduction of malicious code 
via USB ports.
     Establishing levels of standardization and maintaining an 
inventory for Blackberry devices, SmartPhones and other mobile devices 
(such as personal digital assistants).
     Implementing Blackberry content protection on devices VA 
owns, i.e., if a device is lost, it is password protected and 
encrypted.
     Restricting use of non-government mobile devices within 
VA, only allowing them to be used if VA can monitor their use to verify 
they are following VA IT security policies.
     Deploying an encryption solution for SmartPhones and other 
mobile devices similar to that of the Blackberry protection.
     Securing remote access to e-mail and file shares for 
employees, contractors, and business partners using government 
furnished equipment through the remote enterprise security compliance 
update environment (RESCUE), which ensures equipment is encrypted and 
has an active host-based firewall, updated antivirus files, and the 
most recent security patches mandated for installation.
     Prohibiting employees, contractors and business partners 
from saving information on non-government owned equipment.
     Testing technology to encrypt network traffic from VistA 
mail, computerized patient record system and time and attendance 
applications.
     Automating the distribution of software, patches and 
upgrades to servers and workstations via the enterprise security 
framework to ensure policy compliance for VA information systems, to 
produce compliance reports, and to mitigate risks--in concert with the 
VA patch management, intrusion prevention and antivirus initiatives--
propagated by viruses, worms, and other malicious code.
     Distributing data eraser (a software package for 
overwriting sensitive information contained on hard drives) nationwide 
to properly sanitize and dispose of equipment.
     Conducting vulnerability assessments and penetration 
testing to identify and quantify risks.
     Drafting/implementing policies addressing agency 
responsibilities to protect laptops and other portable data storage and 
communication devices, such as keeping laptops in carry-on luggage, use 
of privacy screens when accessing agency information outside the 
office, etc.

    Question 10. As discussed in the past, I am concerned that VA 
cannot always absorb court decisions, anticipated or not, without 
falling behind. This year, we already know of a court decision that 
could have a significant effect on the workload at VA. What measures 
are you taking now to ensure that should the Haas decision not be 
overturned, that veterans who are already in the queue, or those who 
are now filing their claims, are not burdened by unnecessary delay?
    Response: The Haas decision could potentially affect many veterans 
who have claims based on herbicide exposure in which the only evidence 
of exposure is the receipt of the Vietnam Service Medal or service on a 
vessel off the shore of Vietnam, i.e., there is no evidence they served 
on land or the inland waterways of Vietnam. In order to be prepared for 
adjudication of claims that will be influenced by the decision rendered 
by the U.S. Court of Appeals for the Federal Circuit, VA released 
instructions in December of 2006 to all regional offices on the correct 
process for tracking and controlling claims with Haas issues.
    The initiatives that have recently been put in place to address 
increased inventory will assist VA in tackling the potential increase 
in claims that may stem from Haas. These initiatives include an 
aggressive recruitment program to add more decisionmakers, employment 
of rehired annuitants, increased use of overtime, expansion of claims 
development centers, shifting work among regional offices to maximize 
resources and enhance performance, and improved training for all 
employees.

    Question 11. How is the Department counting injuries that come 
about as a result of participation in the Global War on Terror? Are 
combat and non-combat injuries categorized differently?
    Response: The Office of Public Health and Environmental Hazards 
does perform a quarterly review of healthcare use by those OEF/OIF 
veterans who have separated from service and present to VA for care. 
Since September 2003, DOD Defense Manpower Data Center (DMDC) has 
developed an updated file of ``separated'' Afghan and Iraqi combat 
troops who have become eligible for VA health care. This roster is used 
to check the VA's electronic inpatient and outpatient health records, 
in which the standard International Classification of Disease (ICD)-9 
diagnostic codes are used to classify health problems, to determine 
which OEF/OIF veterans have accessed VA health care. The data available 
for this analysis are mainly administrative information and are not 
based on a review of each patient record or a confirmation of each 
diagnosis. However, every clinical evaluation is captured in VHA's 
computerized patient record. Consequently, the data used in this 
analysis are excellent for health care planning purposes because the 
ICD-9 administrative data reflects the need for health care resources.
    VA/DOD social work liaisons located at 10 military treatment 
facilities (MTFs) assist with the transfer of seriously injured 
servicemembers to the most appropriate VA medical facilities closest to 
their home to meet their medical needs. These VA/DOD social work 
liaisons categorize the nature of the injury (battle, non-battle or 
disease) as part of their documentation and referral to the receiving 
VA medical facility. From August 2003 to February 22, 2007, VA/DOD 
liaisons received the following referrals:

 
------------------------------------------------------------------------
                                                    Patient   Percent of
            Military Class of Injury                 Count       Total
------------------------------------------------------------------------
Battle Injury (BI)..............................       1,215        20.3
Non-Battle Injury (NBI).........................       2,303        38.5
Disease.........................................       1,467        24.6
Unknown.........................................         990        16.6
    Total Uniques...............................       5,975         100
------------------------------------------------------------------------
Data Source: MTF2VA Tracking System.

    Question 12. What is the justification for moving a claim filed as 
a result of the Global War on Terror ahead of an initial claim filed by 
a Vietnam veteran?
    Response: VA's initiative to provide priority processing of all 
OEF/OIF veterans' disability claims will allow all the brave men and 
women returning from the OEF/OIF theaters who were not seriously 
injured in combat, but who nevertheless have a disability incurred or 
aggravated during their military service, to enter the VA system and 
begin receiving disability benefits as soon as possible after 
separation. We believe this is an important step in assisting them with 
their transition to civilian life.
    VBA has undertaken several improvement initiatives to reduce the 
pending workload and shorten the waiting time for all veterans. We are 
hiring more employees and devoting additional resources to claims 
processing. Additional overtime funds have been provided to regional 
offices, and we are recruiting retired claims processors to return to 
work as rehired annuitants. These experienced claims processors will be 
tasked with processing claims that have been pending the longest. 
Through these initiatives, claims processing for all veterans will be 
improved.

    Question 13. How was the strategic target for average days to mark 
a grave at national cemeteries developed? Now that the National 
Cemetery Administration is performing well-above the strategic target, 
will the strategic target be adjusted to make the goal higher?
    Response: The strategic target for the timeliness (within 60 days 
of interment) of marking graves in national cemeteries was originally 
set at 90 percent based on a review of performance data and of the 
business processes involved with furnishing headstones and markers at 
national cemeteries. In Fiscal Year 2002, the National Cemetery 
Administration (NCA) collected baseline data showing that 49 percent of 
graves in national cemeteries were marked within 60 days of interment. 
This level of performance was raised by reengineering business 
processes, such as ordering and setting headstones and markers. In 
Fiscal Year 2004 and 2005, NCA exceeded this initial strategic target, 
marking 94 percent and 95 percent of graves in national cemeteries 
within 60 days of interment, respectively. As a result, NCA has 
increased the strategic target for this measure to 92 percent.
    While NCA's improved performance in this key strategic measure is 
due primarily to reengineered business processes, favorable weather 
conditions over the past few years, especially during the winter months 
in the Northeast and Midwest, have also positively impacted our 
performance. External factors beyond NCA's control, such as extreme 
weather conditions that impact ground conditions, may cause delays in 
the delivery and installation of headstones and markers. Additionally, 
some families may choose to delay the ordering of a headstone or marker 
for the grave of an individual interred in a national cemetery, which 
may impact our ability to mark graves within 60 days of interment. 
While national cemetery staff work with families and funeral homes to 
ensure the ordering of headstones and markers in a timely manner, we 
respect that some families may choose to defer ordering their headstone 
or marker until a later date. With these factors in mind, NCA is 
currently focused on sustaining our high level of performance in this 
area and continuing to achieve and surpass our current strategic 
target.

    Question 14. Please explain the 310 day change in the Appeals 
Resolution Time Strategic Target from last year to this year.
    Response: The Board of Veterans Appeals (Board or BVA) appeals 
resolution time (ART) is the average length of time it takes the 
Department to process an appeal from the date a claimant files a Notice 
of Disagreement (NOD) until a case is resolved, including resolution at 
a regional office or by issuance of a final, non-remand, decision by 
the Board. This Department-wide timeliness measure was adopted in the 
late 1990s as a major organizational crosscutting effort to demonstrate 
the Board's and VBA's commitment to veterans. We recognize that 
appellants are less interested in how long individual stages in the 
appeals process take as they are about the length of the entire 
process. ART provides appellants, elected officials, Departmental 
leadership, VBA and BVA management, and other interested parties a much 
more comprehensive and accurate answer to the question, ``How long does 
the appeal process take?'' For the reasons that will be discussed 
below, the strategic target for the ART for Fiscal Year 2007 was 
revised from the longstanding goal of 365 days to 675 days to more 
realistically and accurately reflect the actual length of the appeals 
process.
    The goal established in 1998 was 365 calendar days. However, that 
goal has never been met (see chart below). Moreover, this goal was 
established before the Veterans Claims Assistance Act (VCAA) was 
enacted in November 2000. Prior to that time, VA evaluated claims to 
determine whether they were ``well grounded.'' If they were not, VA did 
not assist the claimant in the development of his or her claims. The 
VCAA, among other things, heightened VA's duty to assist and duty to 
notify claimants of the type of evidence needed to substantiate their 
claim. This resulted in more steps to the claims process and an 
increase in the length of time required to develop claims. In addition, 
the U.S. Court of Appeals for Veterans Claims and the U.S. Court of 
Appeals for the Federal Circuit have issued a series of precedent 
decisions, which required additional action on VA's part. See Holliday 
v. Principi, 14 Vet. App. 280 (2001); Quartuccio v. Principi, 16 Vet. 
App. 183 (2002); Charles v. Principi, 16 Vet. App. 370 (2002); 
Pelegrini v. Principi, 18 Vet. App. 112 (2002); Mayfield v. Nicholson, 
444 F.3d 1328 (Fed. Cir. 2006); Dingess/Hartman v. Nicholson, 19 Vet. 
App. 473 (2006); Kent v. Nicholson, 20 Vet. App. 1 (2006).

 
------------------------------------------------------------------------
                                                               Strategic
             Fiscal Year              Target ART  Actual ART  Target ART
------------------------------------------------------------------------
1999................................                     745         365
2000................................                     682         365
2001................................                     595         365
2002................................                     731         365
2003................................                     633         365
2004................................                     529         365
2005................................                     622         365
2006................................                     657         365
2007................................         685        670*         675
2008................................         700                     675
------------------------------------------------------------------------
*Thru 1/31/07.

    Question 15. The Administration's request projects an increase in 
funding for VA health care in Fiscal Year 2008, and cuts in funding in 
subsequent years. This projection parallels last year's request which 
suggested cuts in immediate out years as well. In the face of steadily 
increasing patient workload, an aging veteran population, and steady 
inflation in the cost of medical care, what is the rationale for these 
projections?
    Response: The Administration determines the details of its 
appropriations request 1 year at a time. Each year, Office of 
Management and Budget (OMB) works with the agencies to develop the 
detail estimates for individual programs. OMB's computer model 
generates placeholders for, in the case of this year's budget, Fiscal 
Year 2009-2012 by account that hit overall targets for defense, 
homeland security, international, and other non-security spending, so 
that OMB can calculate the deficit path. These projections do not 
represent the President's proposed levels for individual accounts and 
programs. The Fiscal Year 2009 and subsequent year's requests will be 
made in future cycles.

    Question 16. The proposed budget shows a transfer of 5,689 Food 
Service FTE from the medical facilities to medical services account. 
How are these personnel to be distributed amongst the medical services 
activities? What is the justification for this change?
    Response: This is a technical correction. Under the medical care 
three-appropriation structure, which began in 2004, food service 
operations were designated under the medical facilities appropriation. 
The costs incurred for hospital food service workers, provisions, and 
related supplies are for the direct care of patients. Food service 
costs are directly related to inpatient workload and, therefore, should 
be captured under the medical services appropriation which is 
responsible for direct inpatient care. VA requests that beginning in 
2008, food service operations be moved to the medical services 
appropriation.

    Question 17. The proposed budget includes $1.3 billion allocated 
for the IT non-pay account. How is this budget line allocated? What 
portion of this line will be spent on outside contracts? How many 
individual contracts do you expect to make use of, and with how many 
individual contractors? How much of this line represents contractor 
payroll?
    Response: The proposed budget of $1.3 billion is allocated, as 
follows (dollars in thousands):

------------------------------------------------------------------------
                      IT Activities                        2008 estimate
------------------------------------------------------------------------
VA IT Infrastructure....................................        $446,139
Veterans Health Care....................................         461,468
Veterans Benefits Delivery..............................          65,648
Office of Information and Technology....................         191,034
Office of Management....................................          82,572
Human Resources Development.............................          34,140
Other Staff Offices.....................................          22,840
Impact of Continuing Resolution P.L. 109-383............
                                                         ---------------
    Total...............................................      $1,303,841
------------------------------------------------------------------------

    With respect to the remaining contractor-specific questions, the 
volume and detail of data necessary to provide an adequate response 
will require an extensive informationgathering effort. As a result, VA 
needs significant time to collect this data. However, we expect to be 
able to complete the response by June 30, 2007.
    Question 18. FISMA compliance accounts for $249 million of the IT 
budget. Please explain in detail how these funds will be expended to 
improve VA's level of FISMA compliance.
    Response: The information technology component of the budget 
request includes $231.9 million for compliance with the information 
security requirements of Federal Information Security Management Act 
(FISMA) compliance.
    The Department-level budget of $70.1 million for cyber security 
provides an overall framework for development and implementation of the 
VA information security program as required by FISMA. This includes a:
     Cyber security management component that provides the 
Department-wide focal point for leadership in information security 
policies, procedures, and practices; and
     Regional field operations component that provides 
oversight for a segment of facility information security officers who 
are geographically dispersed throughout VA as well as develops and 
maintains certain enterprise-wide security controls and measures.

    The IT system-level budget, which is $161.8 million spread across 
the IT portfolio for implementation, comprises security initiatives 
accomplished at the system or facility level to support FISMA 
compliance (to include implementation of security controls required by 
the National Institute of Standards and Technology). For Fiscal Year 
2008, anticipated expenditures are related to re-certification and 
accreditation of approximately 560 VA systems; deployment of the VA 
personal identify verification system to provide standardized 
government identification and access to IT systems for over 350,000 VA 
employees and contractors; integration of security into VistA 
application development; secure deployment of the VA regional data 
centers; remediation of facility security weaknesses; temporary 
employee background investigations; field level contingency plan 
testing; and system security upgrades.
    Question 19. Please provide in detail VA's outreach efforts to the 
Guard and Reserve, including specific actions and numbers of 
servicemembers contacted, as well as the number of servicemembers 
seeking benefits and services.
    Response: VHA has made extensive efforts to ensure that information 
is available to returning troops about VA services and their 
eligibility. Ultimately it is each veteran's decision regarding where 
they will seek health care, but VA wants that decision to be based on 
ample information about VA and its programs for veterans. VBA, with the 
activation and deployment of large numbers of Reserve/Guard members, 
has greatly expanded its outreach to this group of veterans as well. 
The following is a summary of efforts to reach out and educate veterans 
and their families: Transition Assistance Advisors (TAA): The Office of 
Seamless Transition has partnered with the National Guard Bureau to 
establish 54 TAA, formerly State benefits advisors. A TAA is in every 
State and territory. The TAAs are National Guard Bureau staff that work 
closely with VA medical centers and Vet Centers in outreach, education, 
and referral efforts.
    Post Deployment Health Reassessment (PDHRA) Program: VA Medical 
Centers (VAMC) and Vet Centers are heavily involved in DOD PDHRA 
program for National Guard and Reserve members. PDHRA is an outreach, 
education, identification, and referral program. Vet Center staff has 
participated in over 300 PDHRA screening events with National Guard and 
Reserve units. These screenings have resulted in over 17,125 
servicemembers, as of February 2007, being referred to VA for follow-up 
care. In addition to providing this follow-up care, VA staff actively 
enrolls National Guard and Reserve members in health care.
    Army Wounded Warrior (AW2): Recently VA has agreed to host 22 AW2 
staff in VAMCs to work with seriously injured soldiers/veterans and 
their families. AW2 soldiers have 30 percent or higher disability 
ratings from the Army. Over 20 percent of the soldiers/veterans in this 
program have a post traumatic stress disorder (PTSD) disability. An AW2 
staff will be located in each VISN (with two assigned in VISN 7). 
Sixteen of the AW2 staff are currently in place with the remaining six 
scheduled to be assigned during 3rd quarter Fiscal Year 2007. The VA/ 
AW2 partnership is a major step in the outreach initiative that will 
help VAMC and Vet Center staff reach out to seriously injured soldiers/ 
veterans and their families.
    Memorandums of Understanding (MOU): The Office of Seamless 
Transition is actively working with the Army Reserve and the Marine 
Corps to develop MOUs to help promote outreach, education, and 
transition assistance.
    Vet Center Enhancements: In response to the growing numbers of 
veterans returning from combat in OEF/OIF, the Vet Centers have hired 
additional staff and opened new centers. In February 2004, 50 GWOT 
veterans were hired to augment the Vet Center existing staff. VA 
authorized a new 4-person Vet Center in Nashville, Tennessee in 
November 2004. An additional 50 GWOT veterans were hired in April 2005 
to further enhance services to veterans returning from combat in 
Afghanistan and Iraq. VA established two new Vet Centers (Atlanta, 
Georgia and Phoenix, Arizona) in April 2006. Since the beginnings of 
hostilities in Afghanistan and Iraq, the Vet Centers have seen over 
165,000 OEF/OIF veterans, of which over 119,000 were outreach contacts 
seen primarily at military demobilization and National Guard and 
Reserve sites, usually in group settings.
    Vet Center Expansion: In February 2007 a major expansion of the Vet 
Center program was announced, with 23 new Vet Centers to be located in 
Montgomery, AL; Fayetteville, AR; Modesto, CA; Grand Junction, CO; 
Orlando, Fort Myers, and Gainesville, FL; Macon, GA; Manhattan, KS; 
Baton Rouge, LA; Cape Cod, MA; Saginaw and Iron Mountain, MI; Berlin, 
NH; Las Cruces, NM; Binghamton, Middletown, Nassau County and 
Watertown, NY; Toledo, OH; Du Bois, PA; Killeen, TX; and Everett, WA.
    Returning Veterans Outreach, Education and Clinical (RVOEC) Teams: 
RVOEC teams (funded and monitored through the Office of Mental Health 
Services) collaborate with readjustment counseling services and with 
State veterans affairs offices to provide information about VA 
services. A primary goal of the RVOEC program is to promote awareness 
of health issues and health care opportunities and the full spectrum of 
VA benefits. Some VAMCs began these outreach activities before RVOEC 
teams were funded as local initiatives, and they continue these 
services, now using the RVOEC teams as their agents.
    The National Center for PTSD: The Center has a number of 
informational pamphlets for returning veterans and their families on 
their Web site (http://www.ncptsd.va.gov/). The Web site contains the 
latest fact sheets and literature on the war in Iraq. Important links 
from the site include: The Iraq War Clinician Guide, 2nd Edition, and 
two new guides on Returning from the War Zone: A Guide for Military 
Personnel and A Guide for Families as well as the VA Operation Enduring 
Freedom and Iraqi Freedom Seamless Transition Web site.
    Briefings: VA provides briefings on benefits and health care 
services specific to Reserve/Guard members at demobilization sites and 
during the military pre-separation process as well as at town hall 
meetings, family readiness groups, family day activities, reunion and 
welcome home events, and during unit drills near the home of returning 
Guard/Reservists. Return and deactivation of Reserve/Guard units 
presents significant challenges to VA because rotation is irregular and 
the servicemembers spend short periods at military installations prior 
to release to their Guard or Reserve components. For this reason, VA 
continues to refine and adapt traditional outreach efforts to meet the 
needs of those who are currently separating from service by focusing at 
the local armories or Reserve centers in the months following 
deactivation. Benefits briefings such as the transition assistance 
program (TAP) workshops and retirement and separation briefings are 
available to active duty personnel and also available to Reserve/Guard 
members.
    Following is a summary of briefings held specifically for Reserve/ 
Guard members:

                         Reserve/Guard Briefings
------------------------------------------------------------------------
                  Fiscal Year                    Briefings    Attendees
------------------------------------------------------------------------
2003..........................................          821       46,675
2004..........................................        1,399       88,366
2005..........................................        1,984      118,658
2006..........................................        1,298       93,361
2007*.........................................          447       23,389
------------------------------------------------------------------------
*Through 01/31/07

    A Summary of VA Benefits for Guard and Reserve Personnel--IB-164: 
VA, in cooperation with the Department of Defense (DOD), produced a new 
brochure outlining benefits and services available to Guard and Reserve 
personnel. Supplies have been mailed to regional offices to support 
outreach events and personal interviews. The brochure has also been 
provided to Reserve/Guard units to have available for members.
    Secretary's Letter: Since May 2005, as part of the Secretary's 
Letter Writing Outreach Campaign, over 658,000 letters were mailed to 
veterans informing them of VA's wide range of health care benefits and 
assistance to aid in their transition from active duty to civilian 
life. Based on lists routinely provided by DOD, the Secretary of 
Veterans Affairs sends a letter to each returning OEF/OIF veteran, 
including Reserve/Guard members, who has separated from the active 
duty. Two pamphlets are enclosed with the letter: VA Pamphlet 21-00-1, 
A Summary of VA Benefits, and VA IBlO-164, A Summary of VA Benefits for 
National Guard and Reserve Personnel.
    Veterans Assistance at Discharge System (VADS): The VADS process 
generates the mailing of a ``Welcome Home Package'' that includes a 
letter from the Secretary, VA Pamphlet 21-00-1, A Summary of VA 
Benefits, and VA Form 21-0501, Veterans Benefits Timetable, to all 
veterans recently separated or retired from active duty (including 
Reserve/Guard members). VADS also sends a 6-month follow up letter with 
the same enclosures to these veterans. Through this process, 
information letters and materials are also sent about Education and 
Life Insurance benefits.
    About 181,000 of more than 689,000 GWOT veterans have filed a claim 
for disability benefits either prior to or following their GWOT 
deployment (approximately 26 percent). This includes survivors' claims 
for dependency and indemnity compensation (DIC) and death pension. VA 
has processed nearly 2,000 DIC claims for survivors of GWOT 
servicemembers who died in service.
    Summary counts of C&P benefit activity among veterans deployed 
overseas in support of GWOT have been generated. Through this VA/DOD 
data match, we are at this point only able to identify deployed GWOT 
veterans who have also filed a VA disability claim either prior to or 
following their GWOT deployment. Many GWOT veterans had earlier periods 
of service, and filed for and received VA disability benefits before 
being reactivated. VBA's computer systems do not contain any data that 
would allow us to attribute veterans' disabilities to a specific period 
of service or deployment.

    Question 20. Committee staff have learned that separating 
servicemembers in the Benefits Delivery at Discharge Program are not 
receiving specialty examinations, except for hearing and psychiatric 
cases, and that VBA Regional Office personnel believe that they are 
precluded by policy to authorize these examinations. Please explain the 
bases for this policy, with specific regard to whether it is based upon 
budget implications, and describe your efforts to remedy the problem.
    Response: There is no centralized policy that prohibits rating 
specialists from ordering specialty or specialist examinations when 
needed for servicemembers going through the Benefits Delivery at 
Discharge (BDD) process.
    We believe that some confusion may exist over the use of the term 
``specialty.'' There are differences between general medical 
examinations, ``specialty examinations,'' and ``specialist 
examinations.'' A specialist examination is an examination conducted by 
a clinician who specializes in the particular field. Currently, all 
initial psychiatric examinations, and all audiology, dental, and eye 
examinations are required to be conducted by a specialist.
    A specialty examination is an examination that may be conducted by 
a licensed clinician using specific detailed examination worksheets to 
elicit the information needed with respect to a specific disability. 
For example, it is not necessary in most cases to have a board-
certified orthopedic surgeon or sports medicine physician conduct an 
examination of a knee to determine limitation of motion, stability, and 
other factors required by the rating schedule. Rather these are routine 
examinations that occur in clinical practice throughout public and 
private healthcare settings by general practitioners, physicians' 
assistants, and nurse practitioners.
    A general medical examination is one that is ordered in initial 
claims. It is frequently accompanied by specific specialty worksheets 
depending on the nature of the conditions claimed.

    Question 21. We have seen a dramatic increase in the number of 
young veterans requiring long-term care due to combat injuries, such as 
traumatic brain and spinal cord injuries. How does the budget address 
these additional long-term care demands.
    Response: VA has not seen a dramatic increase in the number of OEF/ 
OIF veterans returning with injuries requiring long term care relative 
to the total veteran population receiving long term care services. 
However, we have seen that the OEF/OIF veteran requires increasingly 
complex long term care. To meet their complex care needs, VA has and 
will continue to provide a spectrum of long term care services for 
young veterans with combat injuries with the goal of maintaining them 
at their highest functional level and as close to home as possible. The 
spectrum of services ranges from home and community based care 
including home telehealth, respite services, and adult day health care, 
to three venues of nursing home care.
    VA has rapidly expanded the capacity of its non-institutional home 
and community-based services since 1998 while sustaining capacity in 
nursing home programs. The Fiscal Year 2008 President's Budget 
Submission proposes funding for a 26 percent expansion in home and 
community based care services from Fiscal Year 2007 to Fiscal Year 
2008. The increase will allow VA to purchase day health and independent 
living skills services which are designed to meet the needs of younger 
veterans and serve as an alternative to institutional care. In 
addition, sufficient capacity exists in the VA, community nursing home, 
and State veterans home programs to meet the needs of this population 
when short-term or long-term (greater than 90 days) nursing home care 
is indicated.

    Question 22. How are education and training programs for all VA 
employees, specifically those regarding information protection, funded 
and administered?
    Response: Development of training and awareness programs focused on 
information protection are centrally funded through the Enterprise 
Cyber Security Program. It provides general security awareness training 
for employees and specialized, role-based training for executives, 
project/program managers, and field chief information officers (CIO). 
Specialized training for Department information security officers 
(ISOs) and other IT professionals is centrally developed in a number of 
modalities, to include:

     Web-based, online modules;
     Training videos;
     Satellite broadcasts;
     Annual information security conference;
     Commercially available training, such as, security 
certification classes; and
     Specialized training focused on new security tools and 
technologies under development or being deployed in the enterprise.

    We are currently assessing the option of using an Information 
System Security Line of Business Shared Service Center as a general 
security awareness training provider. This initiative is an E-
Government Line of Business, managed by the Department of Homeland 
Security, intending to make Government-wide IT security processes more 
efficient.
    VA policy requires all staff, including volunteers and contractors, 
to participate in an annual awareness session. It is the responsibility 
of employees and their supervisors to ensure compliance. Training 
metrics are collected annually and reported to Office of Management and 
Budget as part of the annual FISMA report. Privacy training, which also 
addresses information protection, is handled in a similar manner, 
administered through an enterprise privacy program also under the 
direction of the VA CIO. Privacy training is required for all employees 
annually and is offered in a number of modalities, including 
specialized role-based training courses in addition to general 
awareness. Privacy officers are provided with specialized training 
during the annual information security conference.

    Question 23. I have been impressed by the establishment of risk 
management and incident response teams, as part of the new information 
protection measures VA has implemented. Under which budget line are 
these teams funded? Are the team members VA employees or contracted 
employees?
    Response: As part of the Office of Information and Technology 
(OI&T) realignment, and as recommended by IBM, several existing IT 
compliance programs have been consolidated into the Office of IT 
Oversight and Compliance. This organization is designed to strengthen 
and enhance VA's records management, privacy and IT security programs 
and practices through a comprehensive program of assessments. 
Assessment teams, comprised of VA employees, will conduct analyses 
nationwide to measure how well VA facilities comply with legislative, 
Federal Government oversight, and VA policies, procedures and 
practices. The major objectives of these assessments are to determine 
the adequacy of internal controls; validate compliance with laws, 
policies and directives; ensure proper safeguards are maintained; and 
recommend corrective actions where necessary. This office is currently 
funded from multiple line items within the OI&T budget, including the 
cyber security and privacy programs.

    Question 24. Please provide a breakdown of the Fiscal Year 2008 
request for all programs and services for homeless veterans, including 
comparisons to the levels as passed in H.J. Res. 20 for Fiscal Year 
2007.
    Response: The estimate for 2007 and 2008 President's budget request 
shows an increase in funding for Fiscal Year 2007 and Fiscal Year 2008:

                       Homeless Veterans Programs
------------------------------------------------------------------------
                                    2006          2007          2008
------------------------------------------------------------------------
Obligations ($000):
    Homeless Veterans             $1,448,769    $1,514,096    $1,634,086
     Treatment Costs..........
Programs to Assist Homeless
 Veterans:
    Health Care for Homeless          56,998        59,278        61,649
     Vets (HCHV)..............
    Homeless Grants & Per Diem        63,621        92,180       107,180
     Program..................
    Homeless Grants & Per Diem                      12,300        12,300
     Liaisons.................
    Domiciliary Care for              63,592        72,702        75,610
     Homeless Veterans........
    Compensated Work Therapy/         19,529        20,310        21,123
     Transitional Residence
     (CWT/TR) Program.........
    Department of Housing &            5,297         5,498         5,718
     Urban Development/VA
     Supported Housing Program
     (HUD-VASH) & Joint HUD/ 
     Health & Human Services/ 
     VA Supported Housing.....
    Other.....................         1,248         3,353         3,428
                               -----------------------------------------
        Total.................      $210,285      $265,621      $287,008
------------------------------------------------------------------------

    The ``other'' category includes a distribution of funds for ``Stand 
Downs''; the monitoring and evaluation performed by the North East 
Program Evaluation Center (NEPEC); the administration of the 
multifamily transitional housing loan guarantee program, and excess 
equipment and clothing distributed at ``Stand Downs'' and other 
homeless functions.
    VA will continue with activation of 11 new homeless domiciliary 
residential rehabilitation and treatment programs (DRRTPs). The 11 new 
DRRTPs will add over 400 new rehabilitative care beds for homeless 
veterans.
    VA will also continue the development of transitional housing and 
supportive service centers to fill treatment and housing gaps for 
homeless veterans in an overall Federal housing continuum. Public Law 
107-95 provides VA the authority under the homeless providers grant and 
per diem (GPD) program to assist with operational costs as well as 
partial capital costs to create and sustain transitional housing and 
service programs for homeless veterans. Additionally, VA will continue 
to work with grant and per diem recipients to assure high-quality 
services and improved outcomes for homeless veterans served in these 
supported housing programs and supportive service centers.
    In Fiscal Year 2007 and Fiscal Year 2008, VA intends to continue to 
work toward building on initiatives that were started in 2005 and 
continued in 2006. This includes continued collaboration with other 
Federal agencies to address the needs of homeless veterans, 
particularly those who are chronically homeless.

    Question 25. With regard to the Grant and Per Diem Program and 
Special Needs Grants, the proposed budget requests $107 million in 
obligations and 2 FTE. Last year, Public Law 109-461 authorized $130 
million for the Grant and Per Diem Program, noting that 400,000 
veterans will experience homelessness at some point during the course 
of the year, that only 25 percent of that number receive assistance 
through VA, and that only 150,000 homeless veterans are served by 
community-based organizations each year. Please explain why more 
funding was not requested for these programs?
    Response: VA has supported a significant increase in services for 
homeless veterans. VA's Fiscal Year 2008 budget requests an increase of 
nearly 77 million dollars between Fiscal Year 2006 and Fiscal Year 2008 
funding levels. VA's plans have been both aggressive and thoughtful. VA 
has in recent years expanded programs so that there are community 
operated programs approved in every state and Puerto Rico, and several 
programs on tribal land. On Thursday February 22, 2007, VA published a 
series of notices of funding availability (NOFA) in the Federal 
Register that will request proposals from community providers to create 
1,000 new transitional housing beds under the VA's Homeless Providers 
GPD program which represents a 10 percent increase of current capacity 
in the number of beds; a funding opportunity to double our services for 
special needs programs for homeless women veterans with children, frail 
elderly, terminally ill and chronically mentally ill; and to offer 
technical assistance to assist community groups be more effective in 
securing additional resources.
    Question 26. Last year, Congress authorized (in P.L. 109-461) 
appropriation of $7 million for Fiscal Year 2007 through Fiscal Year 
2011 for Special Needs Grants (women, frail elderly, terminally ill or 
chronically mentally ill). What amount has been targeted for Special 
Needs Grants in the Fiscal Year 2008 budget?
    Response: VA has announced a total of $6 million for current 
special needs and an additional $6 million for new special needs 
programs. The approximate amount of $12 million will be available 
January 2008 thru September 2009 (21-month funding cycle). VA has 
announced funding to renew and create new special needs grants.

    Question 27. Last year, GAO reported that they estimated a 9,600 
bed shortfall would occur in the number of beds available to veterans 
seeking to escape homelessness. How does the proposed budget address 
this projected need?
    Response: VA's current NOFA published February 22, 2007, will add 
an additional 1,000 beds. Last year VA awarded funding for an 
additional 800 beds. In less than 6 months VA has added and offered 
funding to create 1,800 new beds--nearly 20 percent of beds identified 
in the 9,600 bed deficit identified in the last community assessment of 
need. VA hopes to offer additional funding under VA's Homeless 
Providers GPD program.

    Question 28. Does the VA budget reflect any plans to expand the 
supply of decent and affordable housing for elderly and low-income 
veterans?
    Response: VA does not have any authority to independently expand 
affordable housing for elderly and low-income veterans. VA works 
closely with the Department of Housing and Urban Development (HUD) and 
other Federal, State, and local entities to promote enhanced housing 
opportunities for elderly and low income veterans. Under the Enhanced 
Use Lease Program VA has entered into leases with other entities to 
create affordable transitional and permanent housing opportunities for 
the homeless and elderly. In VA's Enhanced Use Lease Report dated 
January 2007, VA has awarded 48 enhanced use leases. A total of 15 
projects (37 percent) provide direct service to veterans; 9 projects 
provide homeless and transitional housing services, 4 projects are 
targeted for senior services, and 2 projects targeted for hospice care 
and triage emergency services. The total estimated value of the 
enhanced use lease agreements for both the homeless and senior services 
is in excess of 20 million with the conservative estimate of 682 
affordable housing beds. The number is expected to increase.

    Question 29. What has been budgeted for the thousands of vacant 
lots that could be used to stimulate the development of affordable 
housing for veterans?
    Response: VA does not specifically budget for the development of 
veterans housing on VA property. However, VA does continually identify 
its unneeded assets (land and buildings) and uses its Enhanced-Use 
Lease (EUL) authority to out-lease targeted properties and/or buildings 
to non-VA entities, who then provide a wide-range of housing 
opportunities for veterans. Through this approach, VA has been able 
provide homeless, transitional, and affordable housing for veterans. To 
date, VA has executed 13 EUL projects and has 9 other EUL projects 
under development, which have or will include homeless, transitional or 
affordable housing. All aforementioned VA projects offer housing 
opportunities to veterans at discounted rates. VA does not currently 
have the authority to build and operate affordable housing facilities 
on VA property outside of the EUL program.
    In addition to the EUL program, properties acquired by VA as the 
result of foreclosure of guaranteed loans made to veterans, are offered 
for sale to the general public in an effort to recover as much of the 
Government's monetary outlay as possible. If there are competing 
purchase offers from a veteran and non-veteran for the same dollar 
amount, VA gives preference to the veteran's offer. Also, the Loan 
Guaranty Program has the authority to sell its foreclosed properties 
for up to a 50 percent discount to HUD approved homeless providers who 
agree to use these properties primarily to house homeless veterans.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
  to Hon. R. James Nicholson, Secretary, Deparment of Veterans Affairs
                         va health care issues
    Question 1. In West Virginia private roundtables with returning 
veterans, I hear serious problems about the transition from military to 
civilian life. Would VA consider an ombudsman or a specific office so 
veterans had a place to seek expeditious action on claims that have 
fallen through the bureaucratic cracks?
    Response: The Department of Veterans Affairs (VA) has taken 
significant measures to expedite the claims process for all Operations 
Enduring Freedom and Operation Iraqi Freedom (OEF/OIF) veterans. Each 
regional office has designated specific veterans service center 
employees to process OEF/OIF claims and an OEF/OIF coordinator to 
ensure that OEF/OIF claims are expeditiously processed. Any OEF/OIF 
veterans experiencing problems should contact their local regional 
office on our nationwide tollfree number 1-800-827-1000. All public 
contact employees have been fully trained in this special OEF/OIF 
processing initiative and will assure their claims receive priority 
handling.
    Since the onset of the combat operations in Afghanistan and Iraq, 
VA has provided expedited and case-managed services for all seriously 
injured OEF/OIF veterans and their families. Last month, the Secretary 
of Veterans Affairs announced a new initiative to provide priority 
processing of all OEF/OIF veterans' disability claims. This initiative 
covers all active duty, National Guard, and Reserve veterans who were 
deployed in the OEF/OIF theatres or in support of these combat 
operations, as identified by the Department of Defense (DOD).
    Each regional office has designated an individual who reports 
directly to the director of the regional office to work with National 
Guard and Reserve units to obtain service medical records and serve as 
the primary point of contact with VA medical centers and contractors to 
expedite the scheduling and reports of medical examinations. The 
Veterans Benefit Administration (VBA) is also working with the Veterans 
Health Administration (VHA) and VA's contract medical examination 
provider to develop procedures for expediting VA medical examinations 
for all OEF/OIF veterans who served in or in support of OEF/OIF 
theatres.
    To assist the regional offices in processing OEF/OIF claims, VA has 
also designated two development centers and three resource centers as a 
special ``Tiger Team.'' The two development centers, located in Roanoke 
and Phoenix, will obtain the evidence needed to properly develop the 
OEF/OIF claims. The three resource centers, located in Muskogee, San 
Diego, and Huntington, will rate OEF/OIF claims for regional offices 
with the heaviest workloads.

    Question 2. What action will the VA take during this budget cycle 
to ensure that the full amount of funding appropriated for mental 
health services is used and appropriately targeted?
    Response: Appropriated funding for mental health services to VHA 
consists of two components. The first component is mental health 
funding in the amount of $2.50 billion that will be distributed to the 
Veterans Integrated Service Networks (VISN) in fiscal year (FY) 2007 
through the Veterans Equitable Resource Allocation (VERA). The second 
component is mental health enhancement funding, in the amount of $306 
million, to support the implementation of the Comprehensive Mental 
Health Strategic Plan.
    To ensure that the funds are used efficiently in fiscal year 2007 
and fiscal year 2008, VHA has adopted a 2-year planning period and 
staggered the implementation of programs during the course of the year 
to simultaneously prepare for the fiscal year 2007 and fiscal year 2008 
initiatives.
    Many of last year's delays were due to difficulties associated with 
hiring mental health professionals. In addition, the delay was related 
to both program and staff development activities that were necessary to 
ensure that funds, when spent, would be used effectively and 
efficiently to improve care. This year, to encourage prioritizing 
hiring for new positions, VHA has created a performance measure for 
VISN leadership to fill these positions. VHA is closely monitoring 
recruitment and the resulting changes in clinical productivity. If 
there are delays in hiring, VHA will use these funds to augment non-
recurring projects to enhance care and advance implementation of the 
Mental Health Strategic Plan.

    Question 3. What plan does VA have to support the Vet Centers and 
the staff who are dealing with an increasing number of veterans and 
families?
    Response: VA has addressed the need for Vet Center support in 
anticipation of OEF/OIF requirements.
    In response to the growing numbers of veterans returning from 
combat in OEF/OIF, the Vet Center program has hired additional staff 
and opened new Vet Centers. In February 2004, 50 Global War on Terror 
(GWOT) veterans were hired to augment existing Vet Center staff. VA 
authorized a new 4-person Vet Center in Nashville, TN in November 2004. 
An additional 50 GWOT veterans were hired in April 2005 to further 
enhance services to veterans returning from combat in Afghanistan and 
Iraq. VA established two new Vet Centers (Atlanta, GA and Phoenix, AZ) 
in April 2006.
    In February 2007, a major expansion of the Vet Center program was 
announced. There will be 23 new Vet Centers located in Montgomery, AL; 
Fayetteville, AR; Modesto, CA; Grand Junction, CO; Orlando, Fort Myers, 
and Gainesville, FL; Macon, GA; Manhattan, KS; Baton Rouge, LA; Cape 
Cod, MA; Saginaw and Iron Mountain, MI; Berlin, NH; Las Cruces, NM; 
Binghamton, Middletown, Nassau County and Watertown, NY; Toledo, OH; Du 
Bois, PA; Killeen, TX; and Everett, WA.
    Since the inception of the Vet Center bereavement program in fiscal 
year 2004, the families of over 900 military casualties have received 
bereavement services. Of these 900 cases, almost 75 percent of the 
casualties were from OEF/OIF. Through this program, Vet Centers have 
provided approximately 6,500 visits to families at an estimated cost 
$600,000. The capacity for an increase in current workload was factored 
into the current budget.

    Question 4. Does the VA has any plans underway to provide 
additional training and support for staff and veterans on the issue of 
suicide prevention as suggested by S. 479, the Joshua Omvig Veterans 
Suicide Prevention Act?
    Response: VHA has formulated a comprehensive strategy for suicide 
prevention focusing on the needs of both new veterans from OEF/OIF and 
those from prior conflicts.
    The specific programs for suicide prevention are based on public 
health and clinical models, and activities both within the community 
and in VA facilities.

    Structural elements of the program include:
     Designation of March 1, 2007, as the first annual VA 
National Suicide Prevention Awareness Day with educational activities 
for all staff, clinical and non-clinical at all VAMCs.
     Designation of two Centers of Excellence focused on 
suicide prevention that will provide technical assistance to the system 
as a whole.
     Designation of the Serious Mental Illness Treatment 
Research and Evaluation Center (SMITREC) to maintain data on suicide 
rates and risk factors, nationally, regionally, and locally, to guide 
prevention strategies.
     Funding for Suicide Prevention Coordinators within each VA 
medical center as of April 1, 2007.
     Creation of a suicide prevention hotline for veterans by 
the end of this calendar year.

    Public health oriented components of the program, to be accelerated 
during the coming year, include:
     Ongoing messages and education for the community about the 
availability of services and the effectiveness of treatment.
     Continued outreach to returning veterans to support 
awareness of VA resources and identification of mental health concerns.
     Increasing training for those who are in contact with 
veterans about the recognition of signs and risk factors for suicide, 
and process for helping veterans engage in treatment.
     Strengthening collaborations with other local, regional, 
and national suicide prevention activities.

    Clinical components of the program include:
     Education and training for all VA staff about signs and 
risk factors of suicide, and of opportunities to help veterans in need 
engage in treatment.
     Programs organized and directed by the suicide prevention 
coordinators to identify veterans at high risk for suicide and to 
ensure that the intensity of their clinical monitoring and care are 
enhanced.
     Training for all mental health providers on evidence-based 
interventions shown to prevent suicide.
                           security questions
    Question 5. How is the Department of Veterans Affairs (VA) 
addressing the protection of Personally Identifiable Information (PII) 
as described in the Executive Office of the President, OMB Memorandum 
M-06-16?
    Response: VA is taking the following actions to address the 
protection of PII:

    1. Encrypt all data on mobile computers/devices which carry agency 
data unless the data is determined to be non-sensitive, in writing, by 
your Deputy Secretary or an individual he/she may designate in writing;
    By September 15, 2006, the VA encrypted approximately 15,000 
laptops. To date, the VA has 18,000+ laptops that are encrypted. 
Simultaneously, the Department developed and implemented procedures to 
ensure that all laptops have applied updated security policies and 
removed all sensitive information that was not authorized to be stored 
on the devices. This procedure will continue to occur throughout the 
Department routinely and is one measure we have undertaken to protect 
information.
    The VA Secretary recently approved VA Directive 6600, 
Responsibility of Employees and Others Supporting VA in Protecting 
Personally Identifiable Information (PII) , and VA Directive 6601, 
Removable Storage Media. VA Directive 6601 mandates that VA will only 
allow Federal Information Processing Standards (FIPS) 140-2 certified 
encrypted universal serial buses (USB) thumb drives to be used within 
the Department. In addition, a port security technology is currently 
undergoing test and evaluation to enforce adherence to the directive. 
This technology will only allow VA authorized removable storage media 
to be used; it will restrict the transfer of information to removable 
storage media, and will thwart the introduction of malicious code via 
USB ports.
    The VA is also establishing levels of standardization for 
Blackberry devices, SmartPhones and other mobile devices. Older 
versions of mobile devices that do not support encryption or content 
protection will be retired and replaced with versions of the devices 
that can support the VA's IT security policies. The Department has 
Implemented Blackberry content protection on a majority of devices VA 
owns. IT Memorandum 07-01, Standardization of Blackberry Devices 
SmartPhones and other Mobile Devices, also restricts the usage of non-
government mobile devices within VA and only allows them to be used if 
the VA can monitor their use to verify that they are following VA IT 
Security policies. The VA is also in the process of deploying Trust 
Digital which will encrypt SmartPhones.
    2. Allow remote access only with two-factor authentication where 
one of the factors is provided by a device separate from the computer 
gaining access;
    The Virtual Private Network (VPN) currently uses the active 
directory (AD) infrastructure for VPN authentication. Once connected to 
the VA network, access to sensitive data usually requires additional 
authentication to the internal resource that hosts the information. The 
Network Security Operations Center (NSOC) is in the process of writing 
a white paper regarding an interim implementation of two-factor 
authentication, pending the rollout of VA's personal identity 
verification (PIV) project.
    3. Use a ``time-out'' function for remote access and mobile devices 
requiring user reauthentication after 30 minutes inactivity;
    The ``time-out'' function has been in place since the VPN was 
implemented in January 2002. Users are disconnected if their VPN 
session is inactive for 30 minutes. If they choose, they may initiate a 
new VPN connection which requires them to reauthenticate. In order for 
an inactivity timer to be enforced, there must be no traffic generated 
over the connection. There are many applications that send out 
``heartbeats'' and ``keep-alives'' or that routinely generate traffic 
(i.e. Outlook) that prevent a VPN session from being inactive. When 
these types of applications are running with VPN, the inactivity timer 
cannot be enforced.
    4. Log all computer-readable data extracts from databases holding 
sensitive information and verify each extract including sensitive data 
has been erased within 90 days or its use is still required.
    The VA has developed an enterprise level requirements document that 
was submitted to the vendor community in March 2007 for a request for 
information (RFI). Among the many types of requirements, this document 
is intended to address business requirements for protecting 
information, such as the mandate from the Office of Management and 
Budget (OMB) 06-16 ``to log all computer-readable data extracts 
databases holding sensitive information and to verify each extract 
including sensitive data has been erased within 90 days.'' In response 
to the RFI, the vendor community will provide technology solutions for 
VA to research, test, and deploy. Technology to address OMB 06-16 will 
result from the RFI. The Department will take immediate action 
subsequently to begin test and evaluation of the technology.

    Question 6. What specific policy, plans, and funding has the VA put 
in place to ensure all of the following OMB M-06-16 requirements are 
met and that protection of all personally identifiable information is 
secure and cannot be compromised?
    Response: Several Departmental policies have been issued from the 
Secretary and Deputy Secretary:
SECVA Directives
    VA IT Directive 06-2, Safeguarding Confidential and Privacy Act-
Protected Data at Alternative Work Locations, dated June 6, 2006.
    Memorandum for the Assistant Secretary for Information and 
Technology, Delegation of Authority for Responsibility for Departmental 
Information Security, dated June 28, 2006.
    Open Letter to VA Contractors and Subcontractors, dated August 10, 
2006.
DEPSEC Directives
    VA IT Directive 06-1, Data Security-Assessment and Strengthening of 
Controls, dated May 24, 2006.
    Memorandum to Under Secretaries, Assistant Secretaries, and Other 
Key Officials--Access Control and Employee Sensitivity Levels, dated 
July 14, 2006.
    Memorandum to Under Secretaries, Assistant Secretaries, and Other 
Key Officials--Handling and Storing of VA Data by Contractors and 
Subcontractors, dated August 10, 2006.
    VA IT Directive 06-3, Data Security-Assessment and Strengthening of 
Controls, Review of VA Activities that Involve Non-VA employees, dated 
August 11, 2006.
    VA IT Directive 06-4, Embossing Machines and Miscellaneous Data 
Storage Devices, dated September 7, 2006.
    VA IT Directive 06-5, Use of Personal Computing Equipment, dated 
October 5, 2006.
    VA IT Directive 06-6, Safeguarding Removable Media, dated September 
29, 2006.
    VA IT Directive 6600, Responsibility of Employees and Others 
Supporting VA in Protecting Personally Identifiable Information (PI), 
dated February 27, 2007.
    VA IT Directive 6601, Removable Storage Media, dated February 27, 
2007.

    The VA NSOC has architected a new remote access environment that 
distinguishes VA government furnished equipment (GFE) from non-VA owned 
other equipment (OE). GFE equipment is subjected to a variety of 
compliance and host integrity checks. One of those checks includes 
ensuring the remote device is encrypted prior to allowing full access 
to the VA network. Non-encrypted devices will be restricted to a 
virtual desktop which does not allow data to be saved on the 
unencrypted device. The NSOC is preparing to begin a 60-day pilot of 
this solution March 12, 2007. This new architecture will include a 30-
minute inactivity timeout which requires the user to reauthenticate if 
they wish to reconnect to the VA network. The solution is also capable 
of supporting two-factor authentication.
    While the Department is in the process of testing, evaluating, 
procuring and deploying at an enterprise level, the technologies that 
exist within VA that contribute to Information Protection, a long term 
strategy has been developed and is being executed in parallel.
    The long term strategy began with the development of an enterprise 
information protection requirements document. The existing 
infrastructure serves as a baseline for VA's information protection 
program and the intent of the requirements document is to fill in the 
gaps where information is stored and transmitted, that have yet to be 
addressed because VA does not have the technology. The intent of the 
RFI is to have the vendor community feed information back to VA with 
recommendations on how VA can fill in the information protection gaps 
with technical solutions to mitigate the likelihood of unauthorized 
disclosure.
    VA has already procured the software to encrypt laptops, Blackberry 
devices and SmartPhones and will procure FIPS 140-2 certified thumb 
drives, as needed. The secure remote access solution, the port security 
solution and the secure network transmission technology will be funded 
and procured with fiscal year 2007 money if pilot testing proves 
successful. Funding has been made available to support all of VA's 
information protection initiatives.

    Question 6(a). What is the status of ensuring that all data on 
portable devices is encrypted before leaving the physical premises of 
the VA?
    Response: When the Department encrypted the laptops in September 
2006, a laptop health check procedure was implemented throughout the 
enterprise. The Department developed and implemented procedures to 
ensure that all laptops have been encrypted, all security policies are 
updated and all unauthorized sensitive information has been removed 
from the devices. This procedure occurs routinely throughout the 
Department and at a minimum; laptops must be brought into the facility 
every 90 days to undergo the health check. In addition, VA IT Directive 
6601 mandates that all information stored on a removable storage media 
must be stored on a device that employs the National Institute of 
Standards and Technology (NIST) (FIPS) 140-2 certified encryption 
algorithms.

    Question 6(b). What is the status of ensuring that all remotely 
accessed data is only available to users who have verified at least 2 
factors of authentication, and that access is revoked after 30 minutes 
of inactivity?
    Response: VA has an enterprise-wide VPN solution. The VPN currently 
uses the VA AD infrastructure for VPN authentication which is one-
factor authentication. There is, however, a separate ``authorization'' 
component to the authentication process. A database that contains 
authorized VPN users is maintained by information security officers 
(ISOs). If a user is not in the database, they will not be authorized 
access to the VA network, even if they possess a valid AD account. 
Also, once connected to the VA network, access to sensitive data 
usually requires additional authentication to the internal resource 
that hosts the information. The NSOC is in the process of writing a 
white paper regarding an interim implementation of two-factor 
authentication, pending the rollout of the PIV project. All One-VA VPN 
users are subject to a 30-minute inactivity timeout.

    Question 6(c). Are you successfully enforcing the removal of all 
remotely stored data over 90 days old?
    Response: For data that is stored on laptops, the information 
should be removed during the routine 90 day health check. VA is in the 
process of deploying Microsoft Rights Management Services (RMS) 
throughout the enterprise. This technology will automate the process of 
ensuring information is removed after 90 days of being stored. The 
implementation of Microsoft RMS will allow VA to protect information 
that has been used and stored remotely. RMS has the ability to set the 
duration for how long documents, files and e-mails can exist and then 
the document will automatically be destroyed after the duration is 
expired. RMS will be fully implemented throughout the enterprise by 
July 2007.

    Question 6(d). Once all this security is in place, will employees 
be able to get their work done remotely--that is, can they access e-
mail, get to files and applications on PCs and servers, and communicate 
with coworkers, regardless of location?
    Response: Each of the technologies that VA is implementing 
contributes to Information Protection and they integrate so that 
business operations can continue. E-mail access remotely for employees, 
contractors and business partners using GFE will be accomplished 
through the use of the GFE VPN solution. The GFE VPN solution will 
allow employees to access e-mail and share drives to conduct business. 
E-mail for employees, contractors and business partners with OE can be 
accomplished through the use of Outlook Web Access (OWA) and a virtual 
desktop. The virtual desktop will allow OE employees to access the 
intranet and work with files and documents; however, nothing can be 
saved on the device. The VA also has a technology undergoing test and 
evaluation to encrypt network traffic. This technology will ensure that 
the traffic from VistA mail, computerized patient record system (CPRS) 
and time and attendance applications are encrypted. The technology can 
provide a secure encrypted connection, with secure sockets layer (SSL) 
3.0/TLS 1.0, from an external system to the internal server. This 
technology, coupled with the use of OWA and secure VPN will enable 
employees to conduct business on external devices in a 
secure manner.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Patty Murray 
  to Hon. R. James Nicholson, Secretary, Deparment of Veterans Affairs
         spokane er: shorter hours at va urgent care in spokane
    Question 1. Mr. Secretary, this is a second problem with the VA's 
emergency room policy. It is very hard for veterans to figure out if 
the VA is going to pay for an ER visit or if they're going to get stuck 
with the bill. Your new director for emergency medicine, Dr. Gary 
Tyndall, told the Syracuse Post Standard--``I've told patients `You 
could have died from this.' And the veterans will say, `I'd rather die 
than leave my family with a bill that would take 5 years to pay.' ''
    Mr. Secretary, if veterans are not going to the ER because they're 
worried about sticking their families with massive bills, then it's 
clear your policy is broken. I think part of the problem is that the 
rules are very confusing. The VA is the ``payer of last resort.'' And 
whether or not it pays depends on everything from the miles to the 
hospital, the veteran's age, whether its service connected, and the 
time of day.
    Response: VA is aware that the statutes and regulations for 
emergency care can be confusing to veterans and providers. We are 
taking the following steps to address these concerns:

     Providing an emergency care brochure to all local VA 
facilities, that is also available on VA's Web site.
     Developing handbooks explaining Fee program regulations 
and policies, which will be made available to the general public on the 
VA Web site.
     Providing training to all VA Fee program staff so they can 
better explain the requirements for payment of emergency care. VA's 
long term goal is to clarify and simplify all regulations for the Fee 
program.

       confusing er payment makes veterans hesitant to seek care
    Question 2. Mr. Secretary, there is a major concern in the eastern 
part of my state about emergency care for veterans. In Spokane, at 
least one veteran has died when he sought care at a VA hospital that no 
longer offered urgent care after 4:30 p.m. According to the Spokesman 
Review, two other families have come forward saying the same thing 
happened to their loved ones. Mr. Secretary, that is absolutely 
unacceptable. When a veteran is having chest pains, he should not have 
to wonder whether the doors to the VA are going to be closed to him or 
have to worry about getting stuck with the bill if he goes to a local 
hospital. Why did you reduce the hours of urgent care at Spokane VA?
    Response: For many years, the Spokane VAMC provided around-the-
clock emergency room care for veterans; however, after a long-term 
review of clinic records, it was determined that very few patients 
actually used the emergency room after regular business hours. The 
review also showed that treatments provided to those patients who did 
come in for after-hours services were mostly for minor, non-urgent 
conditions that could have safely been taken care of the next business 
day.
    These findings raised concerns regarding physicians keeping their 
skills current with such a low volume of patients presenting for care 
with the vast majority having minor ailments. In addition, the facility 
determined that resources dedicated to after hours activities should be 
realigned to daytime services in order to provide better and faster 
care to our patients. This change also allowed the facility to expand 
their ability to see as many veterans as needed on a daily basis.

    Question 2(a). What are you doing to fix this broken and confusing 
emergency room policy?
    Response: VHA recognized the importance of establishing clear 
emergency room policy and established The Emergency Medicine Field 
Advisory Committee, (EMFAC) to actively assess and improve the 
provision of emergency care in our facilities. As a result of the 
EMFAC's efforts, VHA Directive 2006-051, ``Standards for Nomenclature 
and Operations in VHA Facility Emergency Departments,'' dated September 
15, 2006, was published. This directive establishes policy ensuring 
that emergency departments at VHA facilities remaining open 24 hours a 
day delivering high-quality emergency care. It also outlines the 
minimum standards that are acceptable for emergency departments that 
provide emergency care to our veteran population and the appropriate 
designations for units providing unscheduled care to veterans, i.e., 
emergency department and the urgent care clinic. National 
implementation of this policy is underway.

    Question 2(b). What are you doing to communicate with local 
veterans in Spokane so they know the VA does not provide urgent care 
after 4:30 p.m.?
    Response: Prior to the reduction in urgent care hours (June 2006), 
an aggressive communication plan was launched in an effort to educate 
veterans, not only about the change in hours, but about where to seek 
care in the case of an emergency. The plan included a direct mailing to 
23,000 patients, advising them of the change in hours and encouraging 
them to go directly to community emergency rooms if emergency care is 
needed. Less than a dozen veterans responded to the letter, with most 
seeking confirmation that their service connected needs would be paid 
by the VA.
    Veterans were also informed that, as a result of the change in 
hours, Spokane's telephone care program was expanded, and treatment for 
urgent or emergent conditions related to their service-connected 
condition, or veterans with no other payment source who meet certain 
criteria, may be eligible for payment assistance through a VA program. 
In addition, a brochure detailing urgent care hours, services and 
instructions regarding what to do in the event of an emergency, was 
widely distributed to veterans during the time of the change.
    In October 2006, a second letter was sent to the same 23,000 
patients, reiterating the information contained in the first letter. 
The second mailing also included a fact sheet addressing eligibility 
questions. In addition, public service announcements were distributed 
to media outlets in Spokane and the surrounding area, detailing the 
change in hours, clarifying the types of services provided at the 
urgent care unit, describing the most common symptoms of a life 
threatening emergency, and urging veterans to go to a community 
emergency room, regardless of the time of day, should they experience a 
health emergency. The telephone line at the Spokane facility also 
directs patients that, in case of emergency, they are to ``hang up and 
dial 911 immediately.''
                              walla walla
    Mr. Secretary, turning to Walla Walla, Washington--As you know, in 
2003 the VA CARES Commission tried to close the facility that 69,000 
veterans rely on. I worked with the community and the VA, and I 
appreciate you committing to building a new facility in Walla Walla. 
The community and I have some questions about the care that will be 
provided in that new facility--particularly mental health, long-term 
care, and inpatient medical care.
Mental Healthcare
    Question 3. As you know, mental health care is not available in the 
surrounding community. Can you explain how veterans in Walla Walla will 
get mental healthcare under your proposal? Also, how will they get drug 
rehabilitation?
    Response: The VAMCs in Walla Walla and Spokane will cooperatively 
manage inpatient mental health care for the Washington, Oregon and 
Idaho counties in their 38 service areas. This will include residential 
rehabilitation care for substance abuse and PTSD provided mostly at the 
Jonathan M. Wainwright Memorial VAMC in Walla Walla and through 
community contracts in Spokane. Inpatient psychiatry will be provided 
at the Spokane VAMC in Spokane, Washington and through community 
facilities in Lewiston, ID, and Yakima and Tri-Cities, Washington. 
Expanded outpatient mental health services will continue to be provided 
at the VAMCs, the existing and planned community based outpatient 
clinics, and in other locations as determined.

    Question 4. Will you continue to provide long-term care at the 
Walla Walla facility as long as it's needed, and will you commit to 
working with the state to build a state nursing home?
    Response: Long term care will be provided at the Walla Walla 
facility or the surrounding community as long as it's needed. In 
regards to working with the state to build a state nursing home, VISN 
20's network director has recently requested that Walla Walla's new 
director work with the director of the Washington State Department of 
Veterans Affairs to begin the process of establishing a nursing home. 
Applications for VA grants to assist in the construction of state 
nursing homes for Fiscal Year 2008 must be submitted by August 15, 
2007.

    Question 4(a). How should vets who need LTC today get it?
    Response: There has been no change in the provision of long term 
care at the Walla Walla facility at this time.
                             inpatient care
    Question 5. Can you assure me that veterans in Walla Walla will not 
lose access to inpatient care as this transformation moves forward?
    Response: Veterans with service-connected conditions will continue 
to receive acute inpatient care in community facilities close to their 
homes. Walla Walla facility staff will ensure that the quality and 
accessibility of care are maintained.

    Question 6. Mr. Secretary, Washington state is working on getting 
its second VA cemetery in the Spokane area. Veterans have long sought a 
cemetery in Eastern Washington, so survivors could avoid the 5-hour 
drive to the Tahoma National Cemetery near Kent, south of Seattle. Can 
you or Under Secretary Tuerk update me on the status of this cemetery?
    Response: The staff of the VA State Cemetery Grants Program are 
coordinating with the State of Washington Department of Veterans 
Affairs to establish a State veterans cemetery in the Spokane area that 
will serve approximately 70,000 veterans living in Eastern Washington 
and Idaho. Prior to VA approving a pre-application for the grant, 
Washington must approve legislation that will authorize the State to 
apply for Federal assistance. A study conducted by the State identified 
two properties suitable for 39 development as a new cemetery located 
approximately 15 to 20 minutes from downtown Spokane. Due to the large 
number of veterans in the area, VA State Cemetery Grants Program staff 
is working closely with the State of Washington Department of Veterans 
Affairs on the preparation of the award request, which would grant 
funds to cover 100 percent of the cost of developing and equipping a 
State veterans cemetery.
          va budget cuts and freezes spending in future years
    Question 7. Mr. Secretary, your budget assumes cutbacks in 
veterans' healthcare in 2009 and 2010 and a freeze after that. Those 
cuts could hit just when large a number of troops are returning home 
and need care. Are these phony numbers--created to make it seem like 
the President's Budget is balanced?
    Response: Out-year estimates in the 2008 budget are based on an OMB 
formula that is tied to government-wide deficit reduction targets for 
2009 through 2012. Consistent with past practice, VA's medical care 
budget for 2009 and beyond will be evaluated on an annual basis. I 
fully anticipate that the President's budget in future years will 
include sufficient medical care resources to ensure the continued 
delivery of timely, high-quality health care for our Nation's veterans.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Larry E. Craig 
  to Hon. R. James Nicholson, Secretary, Deparment of Veterans Affairs
                    compensation and pension program
    Question 1. It is clear the Administration has made improving 
claims processing a high priority, by requesting over 450 new 
Compensation and Pension (C&P) employees. However, VA's productivity 
target for FY08--101 claims per direct FTE--is lower than VA has 
achieved in prior years and lower than VA expects to achieve this year. 
It is also substantially lower than the FY07 goal of 108--a goal that 
VA described last year as ``realistic'' given the increasing experience 
levels of employees hired during FY05 and FY06.
    Question 1(a). What factors account for this reduction in target 
performance? With the increasing experience level of previously hired 
employees, how can VA justify lowering its productivity goals?
    Response: Output per FTE is the number of completed rating-related 
claims per C&P direct labor FTE. Table 1 following illustrates the 
2004-2006 actual output and the 2007-2008 estimated output. VA's 2008 
budget submission adjusted the 2007 output target to 102.8, and the 
2008 output target to 101.

                    Direct Compensation and Pension Rating Productivity Actual and Estimates
----------------------------------------------------------------------------------------------------------------
                                                                       C&P Direct     Completed      Output per
                                                                          FTE           Claims          FTE
----------------------------------------------------------------------------------------------------------------
2004...............................................................        7,498        703,254             94
2005...............................................................        7,547        788,298            101
2006...............................................................        7,858        774,378             98.5
2007 (projected)...................................................        7,863        808,316            102.8
2008 (projected)...................................................        8,320        840,320            101
----------------------------------------------------------------------------------------------------------------

    The primary factors for lowering the rating-related claims output 
for 2007 and 2008 are: the large number of new employees added in 2006 
and projected to be added in 2007 and 2008; continuing loss of our most 
experienced decisionmakers to retirement; increased number and 
complexity of claimed disabilities; and changes in law and process.
    In recent years, there has been a trend for veterans to claim 
multiple disabilities. For 2006, 24 percent of the original 
compensation claims contained eight or more service-connected 
conditions. The number of claimed conditions increases the number of 
variables that must be considered and addressed, therefore making the 
claims more complex. VCAA continues to influence the claims process. 
VCAA has increased both the length and complexity of claims development 
by increasing VA's notification and development duties to assist.
    Additionally, VBA continues to expand outreach programs for 
separating servicemembers and is devoting resources to priority claims 
processing for all returning OEF/OIF veterans. VBA's outreach 
initiatives result in more claims.
    Beginning in the second quarter of 2006, VSA began an aggressive 
recruitment program that has increased our on-board strength by over 
580 employees (in addition to replacing all employees who retired or 
otherwise left VBA). These new employees require extensive and ongoing 
training to become effective. VBA provides on-the-job and comprehensive 
centralized national training for all new claims processors. However, 
the overall training process takes 2 to 3 years for an entry-level 
employee to become fully productive. Approximately 40 percent of our 
decisionmakers have less than 3 years of experience in their current 
positions. As these employees develop their skills and gain experience, 
their output per FTE will increase.

    Question 1(b). Given the length of time it takes for new employees 
to become fully productive, when would VA expect to see productivity 
improvements based on the additional 450 FTE?
    Response: The productivity assumptions for the additional 450 FTE 
hires are based upon outcomes from recent employment activities and the 
current training process. On average, due to the complexities of claims 
processing, an entry-level claims processor does not become fully 
productive until they have at least 2 years in the position. Based on 
that assumption, VBA anticipates some productivity improvements from 
the additional 450 Fiscal Year 2008 hires as early as 6 months from the 
employment commencement--with full production reached after 2 years in 
the position.

    Question 2. In 2001, the VA Claims Processing Task Force--Chaired 
by Admiral Daniel Cooper--recommended that VA allocate FTE ``to those 
Regional Offices that have consistently demonstrated high levels of 
quality and productivity in relation to workload and staffing levels.'' 
If VA's budget proposal is approved, how would VBA allocate the 
additional C&P FTE among the regional Offices? Will FTE be allocated 
only to high-performing offices?
    Response: VBA's staffing policy considers both the number of claims 
received at a RO and specific performance factors in determining its 
FTE share for the Fiscal Year. FTE is allocated to all offices based on 
the number of claims received in order to ensure that staffing levels 
are maintained at a sufficient level to allow completion of the C&P 
work received each year. However additional FTE is distributed to ROs 
who demonstrate high levels of quality and productivity. These 
performance factors are reviewed each Fiscal Year and reflect VBA's 
strategy to reduce the inventory of pending claims and improve decision 
timeliness, decision accuracy, and appeals processing. Therefore, 
stations that consistently perform better in these critical areas will 
receive additional FTE.

    Question 3. In a December 2005 report, the Government 
Accountability Office noted that there are wide variations in 
performance among the 57 VA regional offices. According to that report, 
``VBA and others who have studied claims processing have identified 
various options for changing the basic field structure in order to 
improve claims processing efficiency, reduce overhead costs, and 
improve decision accuracy and consistency, including consolidating 
claims processing into fewer than 57 regional offices.'' Would removing 
the claims processing function from challenged regional offices and 
shifting that work to high-performing stations improve VBA's overall 
efficiency? If so, does VA plan to implement any consolidations of this 
type during FY08?
    Response: VBA continues to explore opportunities to improve claims 
processing efficiency and improve decision accuracy and consistency. 
The BDD program provides servicemembers with briefings on VA benefits, 
assistance with completing forms, and a disability examination before 
leaving service. The goal of this program is to deliver benefits within 
60 days following discharge. VBA has consolidated the rating aspects of 
our BDD initiative, which will bring greater consistency of decisions 
on claims filed by newly separated veterans. Additionally, VBA 
consolidated claims based on radiation exposure to the Jackson RO. 
Claims based on radiation exposure require lengthy and complex evidence 
development prior to adjudication; consolidation of these claims to 
Jackson will allow quicker development due to specialization of the 
staff and a single line of communication to sources of information, 
including DOD.
    We also established two Development Centers in Phoenix and Roanoke 
to assist ROs in obtaining the required evidence and preparing cases 
for decision. Pension processing realignment began in 2002 with the 
consolidation of pension maintenance work to Philadelphia, St. Paul, 
and Milwaukee. Continued consolidation of original pension work to 
these centers is currently under consideration. In October 2006, VBA's 
C&P Field Realignment Task Force presented its recommendations to the 
Under Secretary for Benefits. The Task Force presented three near-term 
recommendations currently under consideration: (1) consolidation of 
survivor benefit claims processing, (2) restructuring of the oversight 
and management of fiduciary activities, and (3) centralization of 
telephone activities to call centers.
    The Realignment Task Force also presented recommendations to 
develop a comprehensive strategic plan for the longer-term 
consolidation of additional compensation work. As we explore and 
develop additional consolidation opportunities in our compensation 
program, we will continue in 2008 to use our resource allocation model 
and brokering strategy to redirect workload and resources from our 
challenged regional offices to our most productive stations.

    Question 4. Given that the level of incoming claims has been 
increasing over the past several years and the ongoing conflicts in 
Iraq and Afghanistan, what is VA's basis for concluding that incoming 
claims in FY08 will remain at the same level as VA expects to receive 
in FY07 (800,000 claims)?
    Response: In preparing our estimate for Fiscal Year 2008 we 
considered a number of factors. Those include the trend in disability 
claims over the last 10 years, the size of the active duty force, and 
any known or anticipated factors that would affect claims activity. At 
the time the budget was prepared, increased troop strengths in 
Afghanistan and Iraq were not certain. If the surge in forces in the 
combat theaters is drawing from existing active duty and already 
planned activation of Guard and Reserve forces, we believe we have 
already accounted for them. We did not predict any major changes in 
benefit entitlement criteria or new programs that would increase 
claims.

    Question 5. During FY07 and FY08, how many Rating Veteran Service 
Representatives and Veteran Service Representatives will be eligible 
for retirement and how many do you anticipate will retire during those 
years?
    Response: Through 2008, approximately 900 Veterans Service 
Representatives and Rating Veterans Service Representatives will be 
eligible to retire. We anticipate about 200 retirements each year.
                           education program
    Question 1. I appreciate VA's efforts to find innovative ways to 
improve productivity, such as the Contract Management Support Center 
initiative. By having year-round contract customer service 
representatives handling education calls, how many additional FTE would 
this allow the Education Service to allocate to processing and deciding 
education claims? What impact would this have on the expected level of 
productivity?
    Response: It is estimated that the contract management support 
center would allow the reallocation of 45 FTE to processing education 
claims. This represents 5.8 percent of the 772 direct FTE allocated to 
field stations in Fiscal Year 2008, and would be expected to result in 
a similar percentage increase in output.

    Question 2. It is my understanding that many calls are simple 
inquiries about the status of a claim and that VA has been working 
toward providing that information online. What is the status of that 
effort? Once that information is available online, do you anticipate a 
decline in incoming telephone calls?
    Response: We are currently working on providing status of claim 
information on our GI Bill Web site by allowing individuals to log into 
the Web automated verification of enrollment (WAVE) application and 
view status of claim information from their electronic claims folder. 
Our plan is to have this additional self-service feature available by 
July 1, 2007. Right now, if they are currently receiving benefits, they 
can view their current award information in WAVE and submit a change of 
address, if required.
    We are also looking to add additional features so that individuals 
can view other benefit information that pertains to their individual 
benefit record, such as the amount of their remaining entitlement, 
delimiting date and payment information.
    We would anticipate a decline in the number of telephone inquiries 
that we receive as we add more self-service options on our GI Bill Web 
site.

    Question 3. With the additional FTE requested for the Education 
Service, plus any FTE that would be freed-up by using a contract call 
center, will staffing be sufficient to handle the expected level of 
incoming claims in FY08 and to reduce any existing backlog?
    Response: With the 14 additional FTE requested for the Education 
Service, plus the 45 FTE that would be freed-up by using a contract 
call center, staffing will be sufficient to handle the expected level 
of incoming claims in Fiscal Year 2008, to reduce pending inventory, 
and to improve processing timeliness.
            vocational rehabilitation and employment program
    Question 1. The Administration's FY08 budget proposal includes $4.3 
million to enhance the Disabled Transition Assistance Program (DTAP).

    Question 1(a). How many DTAP briefings has VA proved each year 
since 2001 and how many attendees were at those briefings?
    Response: VA did not separately track DTAP briefings prior to 
Fiscal Year 2006. A breakout of DTAP briefings and participants during 
Fiscal Year 2006 and Fiscal Year 2007 through January as follows:
    FY 2006: 1,462 DTAP briefings attended by 28,941 participants.
    FY 2007 through January 2007: 493 DTAP briefings attended by 9,407 
participants.

    Question 1(b). With the expanded resources requested for FY08, how 
many DTAP briefings does VA expect to provide and how many attendees 
could be accommodated? At how many locations will these DTAP briefings 
be conducted?
    Response: DOD projects that approximately 200,000 servicemembers 
annually will separate from active duty or be demobilized. Of those 
separating, approximately 35,000 will receive medical separations.
    Currently, DTAP briefings are not mandated or required by all 
military services during the pre-separation counseling process or 
during medical separation. A review of Department of Army data showed 
that about 45 percent of separating servicemembers requested a DTAP 
briefing during pre-separation counseling. Extrapolating from that 
data, VA anticipates that about 80,000 servicemembers could potentially 
request a DTAP briefing. If DOD mandates that DTAP briefings be 
provided for all separating servicemembers who request a briefing, then 
VA's goal is to provide services to all 80,000.
    VA proposes to use the expanded DTAP resources requested for Fiscal 
Year 2008 to meet this goal. The more severely injured hospitalized 
servicemembers will require one-on-one DTAP. Other servicemembers can 
receive DTAP briefings in small groups that encourage discussion and 
participation. We estimate that the ideal group size would be 8-12 
participants. DOD has more than 300 separation sites, both within and 
outside the continental United States. The following groups will be 
used to prioritize expenditure of funds and location of DTAP briefings:
    Priority Group 1: Hospitalized War-Wounded and Severely Disabled--
These are the most seriously injured servicemembers in jurisdictions 
with major military treatment facilities. One-on-one DTAP will be 
provided at these locations to the servicemembers and their family 
members. Individual and very small group DTAP briefings will also be 
provided to servicemembers referred to the Military service's physical 
evaluation board (PEB).
    Priority Group 2: War-Wounded Requiring Rehabilitation--Injured/ill 
servicemembers who are in medical hold or medical holdover status will 
be provided individual and group DTAP briefings. Servicemembers in this 
group will generally be in their home communities and assigned to 
National Guard/Reserve units, community based health care organizations 
(CBHCOs), MTFs, or other military separation centers.
    Priority Group 3: Hidden War-Wounded: Readjustment and Coming 
Home--Injured veterans who have already separated from active duty or 
demobilized are also eligible to attend DTAP briefings. These 
individuals usually self-identify after sustaining ``hidden wounds'' 
during combat operations that were not identified until the PDHRA. DTAP 
briefings will be provided at National Guard/ Reserve units, MTFs, 
military installations, and VA facilities.
    Priority Group 4: Other Injured/Ill Servicemembers--Other 
servicemembers and military retirees self-identified during DOD's pre-
separation counseling process as requesting or requiring a DTAP 
briefing. DTAP briefings will be provided at military duty stations 
across the country.

    Question 2. The Administration's FY08 budget proposal request 35 
additional FTE for the Vocational Rehabilitation and Employment Program 
to serve as contracting specialist, to work on the Coming Home to Work 
initiative, and to work on the Process Consolidation initiative.
    Question 2(a). For the Coming Home to Work initiative, what 
specific functions will these employees perform? How do these functions 
differ from those performed under the direction of the Veterans' 
Employment and Training Service, or other Federal employment programs?
    Response: Vocational Rehabilitation and Employment (VR&E) provides 
a variety of services to veterans to facilitate their timely return to 
civilian employment (educational/vocational testing, counseling, 
volunteer and non-paid work experience, job accommodations, adaptive 
technology, job seeking assistance, job retention skills, education, 
on-the-job training, and all necessary rehabilitative support 
services). The goal is for the veteran to obtain and retain suitable 
employment consistent with their interests, aptitudes, and abilities. 
The coming home to work (CHTW) initiative currently brings these 
services to servicemembers on medical hold status at eight major MTFs. 
However, the need to provide early VR&E services to VR&E eligible 
servicemembers is growing. Through DOD's community based health care 
initiative, more and more wounded servicemembers are recovering at 
their home of record, and therefore do not receive all of the outreach 
efforts available at the MTFs. VA plans to implement CHTW at all 57 ROs 
by September 30, 2008, in order to meet the needs of all VR&E eligible 
servicemembers that will be medically separated from the military. 
Providing VR&E services to servicemembers on medical hold status can 
greatly reduce the length of unemployment many disabled veterans face 
after separation.
    Eight FTE are requested for the CHTW program in the Fiscal Year 
2008 budget submission. Those FTE will liaison with military case 
managers and VR&E staff, assist servicemembers with the VR&E 
application process as needed, and case manage OEF/OIF servicemember 
application processing. Each of the eight FTE will cover a geographical 
region, providing services to servicemembers at MTFs, CBHCOs, and VA 
facilities within their assigned region. Unlike employees of the 
veterans employment training service (VETS) and other Federal 
initiatives, these FTE will focus specifically on VR&E services.

    Question 2(b). For the Process Consolidation initiative, what are 
the major milestones of that project and what are the target completion 
dates for those milestones?
    Response: Milestones for the VR&E process consolidation initiative 
are still under development. The goal is to consolidate various VR&E 
functions as determined and prioritized by a thorough analysis and a 
feasibility assessment. Possible functions subject to consolidation and 
centralization include: general eligibility determination processing; 
subsistence allowance award processing; contract administration; 
purchase card processing; training; and management oversight. The 
Fiscal Year 2008 budget submission includes four FTE in support of this 
effort.
                         loan guaranty program
    Question 1. If I understand your request, you expect more VA-
guaranteed loans to be made during the 2007 and 2008 period, and more 
defaults and foreclosures resulting from rising interest rates and 
maturing loans. Despite the workload increase, you request a reduction 
in the loan guaranty budget. How will VA maintain quality service to 
veterans in the face of a declining budget and increasing workload? If 
relying on industry partners is an aspect of the ``do more with less'' 
strategy, which I applaud, what oversight mechanisms are in place to 
ensure that taxpayers and veterans are being well served?
    Response: VA will be prepared to ensure that taxpayers and veterans 
are well served should the Loan Guaranty program have to deal with a 
rise in defaults and foreclosures. A newly redesigned loan servicing 
business process and its supporting IT application will, among other 
things, allow VA to maintain high quality service to veterans, and 
improve VA oversight capability of private sector loan servicers. Under 
this new environment, many loan servicing functions are delegated to 
private sector loan servicers, and VA will use IT to directly oversee 
the work being performed by these servicers on VA's behalf.
    The redesigned business environment will be managed through the VA 
loan electronic reporting interface (VALERI) application, which is 
scheduled for implementation at the end of 2007. Through use of VALERI, 
VA will gain significant efficiencies in servicing loans. VALERI will 
provide VA the capacity to directly monitor and ensure appropriate 
performance of servicers as they service VA loans, and will expedite 
VA's ability to intervene on veterans' behalf when necessary.

    Question 2. Please provide me with updated statistics on the usage 
of ARMs and hybrid-ARMs.
    Response: Between 1993 and 1996, VA had the authority to guarantee 
adjustable rate mortgages (ARMs). During this period, 139,271 such 
loans were made. Since reauthorization of ARMs in 2004, VA has made 
1,695 such loans. Since receiving authority to guarantee hybrid 
adjustable rate mortgages in 2003, VA has guaranteed 81,319 such loans.
                       office of general counsel
    Question 1. During the past few years, the number of incoming 
appeals at the Court of Appeals for Veterans Claims (CAVC) has 
increased dramatically. In fact, during the first quarter of FY07 the 
CAVC received over 1,500 new cases--the highest level of incoming cases 
in CAVC's history. Of the 15 additional FTE requested for the Office of 
General Counsel, how many will be allocated to assist in handling cases 
pending before the CAVC?
    Response: Dependent upon the Office of General Counsel's (OGC) 
approved budget and balancing critical hiring needs among all of our 
offices, OGC expects to apply 11 of the 15 new FTE to our Veterans 
Court Litigation Group, referred to internally as Professional Staff 
Group VII (PSG VII).
    OGC has closely tracked the significant rise in new cases before 
the CAVC. PSG VII represents the Secretary before the CAVC. PSG VII 
experienced a 37 percent increase in workload from 2005 to 2006. We 
project an additional 57 percent increase from 2006 to 2008. Until 
Fiscal Year 2006, PSG VII had six teams comprised of attorneys, 
paralegals, and support staff. In Fiscal Year 2006, OGC created a 
seventh team within PSG VII to address the rising caseload before the 
CAVC. The new team includes one GS-15 supervisory attorney, seven 
attorneys (GS-12/13/14), two legal assistants (GS-5/6/7) and one copy 
clerk (GS-2/3). Since the Fiscal Year 2006 budget cycle predated the 
significant rise in caseload before the CAVC, the new team had not been 
identified as a specific initiative in OGC's Fiscal Year 2006 budget. 
OGC increased PSG VIl's FTE by 13 from November 2005 to January 2007. 
OGC's request for 15 additional FTE is, in part, designed to increase 
our budget base to pay for the new PSG VII team established in Fiscal 
Year 2006 and restore much-needed payroll funds to fill critical 
vacancies in our other offices.

                               health/it
    Question 1. What percentage of returned OEF/OIF servicemembers have 
undergone either VA-administered or DOD administered mental health 
screenings? Of that percentage, how many have been diagnosed with post-
traumatic stress disorder or other mental health issues?
    Response: While VA understands that DOD policy is to screen all 
OEF/OIF servicemembers upon return from deployment and again 90-180 
days post deployment, only DOD has data on the numbers/percentage 
actually screened.
    It is VA policy to screen all OEF/OIF veterans who come to VA for 
care. As of November 2006, 205,097 (32 percent) of the 631,174 
separated OEF/OIF veterans eligible for VA services had sought services 
at VAMCs and clinics. Of 205,097, 73,175 (35.7 percent) received a 
provisional diagnosis of a mental disorder, and among the 73,175 group, 
33,754 (46.1 percent) were given a provisional diagnosis of PTSD.
    It should be noted that a provisional diagnosis of PTSD only 
indicates that the veteran has responded positively to three of the 
four items on the screener for PTSD or that there were other indicators 
suggesting a possible diagnosis. It does not mean that the veteran has 
been definitively diagnosed with PTSD. Additional evaluation, which may 
include testing, is generally required to make a diagnosis of PTSD.

    Question 2. Your budget request suggest VA Pharmacy Services will 
increase 30 percent from Fiscal Year 2006 to Fiscal Year 2008. 
Traditionally, VA has been able to keep its pharmacy cost increases 
fairly low. Is VA's ability to hold down its pharmacy costs waning or 
is there another explanation for the substantial growth in this budget 
line over a 2-year period?
    Response: This increase in expenditures is a result of several 
factors. VA projects a 9.6 percent increase in use of 30-day 
prescriptions from Fiscal Year 2006 to Fiscal Year 2008 due to a slight 
increase in enrollment, the aging of the enrollee population, and the 
increasing importance of prescription drugs in the medical management 
of diseases. It also reflects the continued increase in the cost of 
prescription drugs due to inflation and the development of more 
expensive drugs. While VA's national formulary, pharmacy management 
practices, and contracting efforts are effective in promoting 
appropriate use of prescription drugs and containing costs, VA is still 
impacted by changing medical practice and inflationary increases in 
prescription drug costs.
    VA believes this increase in use of drugs and the use of more 
expensive drugs will continue. Many chronic care conditions require 
multiple drug regiments for a patient to achieve a therapeutic goal.

    Question 3. Under current Appropriation law, VA's Medical Care 
budget is broken down into three components: Medical Services, Medical 
Administration, and Medical Facilities. Health-related Information 
Technology expenditures are yet another account. Does this structure in 
any way assist VA in better understanding its budget expenditures? Or, 
is the three account structure mostly a burden with little benefit? 
Please explain your answer with some detail.
    Response: The three main accounts are: Medical Services, Medical 
Administration, and Medical Facilities. The multiple accounts do not 
more accurately reflect VA's medical care expenditures because the 
accuracy is achieved by charging expenditures to cost centers which are 
associated with the multiple appropriation accounts. The cost centers 
are the same ones that existed under the single appropriation 
structure. The four accounts significantly increase the complexity of 
financial management at each individual medical facility without 
improving the accuracy of accounting. The multiple accounts create the 
false perception that only the Medical Services account is directly 
related to patient care which is not correct. For example, the salary 
for physicians and nurses who treat patients are paid from the Medical 
Services account, the salary for security guards who protect patients 
and staff are paid from the Medical Administration account, and the 
cost of utilities to heat and cool the patients are paid from the 
Medical Facilities account--all are essential to the delivery of high 
quality health care services to our veterans. The Medical Services 
account is not the only account directly related to patient care. The 
benefits of the multiple account structure do not outweigh the benefits 
of the previous single account structure.

    Question 4. Your budget suggests that the total number of veterans 
in need of mental health care services who will be treated in an 
inpatient setting will drop by approximately 1,300 veterans and the 
average daily census for this program will drop by 103 veterans. How 
much of this drop, if any, is related to reductions in service, bed 
numbers, and employee levels? How much of this drop, if any, is related 
to changing treatment patterns (i.e., less long-term stays on 
psychiatric wards) and new atypical antipsychotics drugs keeping 
veterans out of inpatient settings? Please provide a detailed 
explanation including--if known--the average age of inpatient 
psychiatric patients as well as the average length of stay controlled 
for age.
    Response: Similar to all other clinical settings, psychiatric care 
in VHA has evolved over the past decades from a predominantly inpatient 
based system to one that is predominantly clinic based. Since Fiscal 
Year 2002, the number of average operating beds for all VHA psychiatric 
services has dropped steadily from 7,565 to 7,250, while the occupancy 
rate has similarly declined from 72 percent to 60 percent through 
November, Fiscal Year 2007. These beds include general psychiatry, 
substance abuse, and psychosocial residential rehabilitation treatment 
program (PRRTP) beds, but not domiciliary or nursing home beds.
    Although there is some drop in beds over this time, there is also a 
drop in occupancy rates. Thus, it would appear that the demand for 
available beds is diminishing. The occupancy rates demonstrate that 
inpatient care beds are not filled, and that there is capacity in the 
system as a whole to admit patients in need of hospitalization.
    From another perspective, the number of veterans discharged from 
VHA psychiatric beds has varied over recent years. It was 56,513 in 
Fiscal Year 2003; 57,485 in Fiscal Year 2004; 56,756 in Fiscal Year 
2005; and 55,937 in Fiscal Year 2006. While there have been overall 
decreases in the number of hospitalizations since Fiscal Year 2004, the 
trend since 2003 can best be interpreted by suggesting that the use of 
inpatient services fluctuates from year to year. As noted already, 
however, the current occupancy rates demonstrate that the system can 
accommodate the needs in higher utilization years.
    Thus, looking at the past 4 years, it is not clear if the if use of 
psychiatric inpatient services has leveled off, or whether there is 
still evidence of a persisting but slowed rate of decline. The presence 
of substantial numbers of beds that are not occupied on any day argues 
strongly against the availability of services, the number of beds, or 
the number of employees as being the reason for any decreases in 
admissions and discharges. Instead, any decreases in use of inpatient 
psychiatric services could be attributed to increases in services such 
as mental health intensive case management, psychosocial 
rehabilitation, homeless programs, and substance abuse treatment 
services.

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    While the average age of all veterans hospitalized in VHA 
psychiatric settings remains in the mid 50s, there is a shift since 
Fiscal Year 2003 from 43 percent in the 45-54 age range to 38 percent, 
while the 55-64 age group increased from 20 percent to 29 percent. The 
number of veterans over age 65 discharged from psychiatric bed sections 
actually decreased from 10.1 percent to 9.4 percent during that period. 
The under 35-year-old age groups increased marginally from 6.7 percent 
to 8.8 percent.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The average lengths of stay by age for all psychiatric beds reveals 
that veterans stay for shorter periods of time than older veterans.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Question 5. I noticed that the budget for the CHAMPVA program is 
growing at incredible rates. By my count, it has gone up several 
hundred percent since 2001. What is the primary driver of these large 
increases?
    Response: The civilian health and medical program VA (CHAMPVA) 
provides payment for medical services for the dependents of veterans 
rated permanently and totally disabled, or dependents of veterans who 
succumb to VA rated service connected conditions. CHAMPVA is comprised 
primarily of dependents of World War II, Korean, and Vietnam era 
veterans.
    The two major drivers causing upward cost pressures include unique 
users and medical cost per unique user.
    Unique Users--Since 2001 the number of CHAMPVA enrollees increased 
by 158 percent; concurrently, the number of enrollees using benefits 
increased by 203 percent. The majority of this enrollment growth 
occurred with the enactment of Public Law 107-14, which extended 
CHAMPVA benefits effective October 1, 2001, to beneficiaries aged 65 
years and greater.
    Medical Cost per Unique User--This cost driver includes usage 
rates, acuity levels, and medical consumer price index (CPI).

     Usage rates, or the number of enrollees with at least one 
paid claim per year, increased 203 percent since 2001. The percentage 
of beneficiaries using program benefits in 2001 was approximately 58 
percent; this participation rate increased to 68 percent in 2006.
     The acuity level, based upon the number of annual claims 
paid per user, increased from 21.5 claims paid per year in 2001 to 30.2 
claims paid per year in 2006, an increase of 40 percent. The annual 
cost per user was $2,350 in 2001 and $3,285 in 2006, an overall 
increase of 39.8 percent.
     The annual increase in the cost of medical services, or 
the medical CPI, increased 26 percent from 2002 to 2006, an annual rate 
of change of about 5.0 percent.

    Question 6. I am glad to see that the Department is committed to 
completion of construction projects that are already underway, all of 
which were authorized by Congress last year as part of a $3 billion 
medical construction bill. These are not small price tags, and the 
Committee is committed to ensuring that VA's capital assets align with 
care needs for optimal access for veterans and efficiency for 
taxpayers.
    Question 6(a). What is VA doing to control its construction cost? 
Are there further sharing and lease opportunities that VA could use to 
leverage its resources?
    Response: The Department, along with other government agencies and 
private sector businesses and individuals, is experiencing a 
significant growth in the cost of construction as a result of the 
booming construction economy worldwide. The significant demand for 
contractors, labor and building materials has produced significant 
increases in pricing. This has been further exacerbated by higher 
petroleum prices on both petroleum based building products and fuel as 
well as construction related impacts of the hurricanes of 2004 and 2005 
including Katrina.
    In order to position the Department to best deal with this 
situation, VA has taken several steps. These include developing a more 
detailed market analysis of individual geographic location to ensure 
that the best available information is used when establishing the 
escalation rates that will be used in the cost estimate. These in 
consideration to market timing to the extent practical in order to bid 
the project at a time when there is the best opportunity to have the 
greatest competition by the contracting community. VA has also began to 
employ more extensive preplanning before a project is placed in the 
budget to be sure that all issues relating to scope, building systems 
and constructability have been identified and their costs recognized.

    Question 6(b). Are there further sharing and lease opportunities 
that VA could use to leverage its resources?
    Response: On December 4, 2006, the Secretary approved a decision 
document launching a Site Review Initiative. The intent of this 
initiative is to market and decrease the amount of underused VA 
property while reinvesting the proceeds into programs and activities at 
the Secretary's discretion. The Assistant Secretary for Management will 
provide the Secretary with a site assessment by April 2007.

    Question 7. Please detail the status of VA's IT organizational 
restructuring. Are funds for the restructuring fully budgeted for in 
the Fiscal Year 2008 request?
    Response: On October 19, 2005, the Secretary approved the concept 
of a Federated IT System for the VA and charged the Assistant Secretary 
for Information and Technology with the development of a Federated 
Model and a follow-on implementation plan. The Federated Model is a 
framework that defines the VA Federated IT System by separating IT into 
two domains--an Operations and Maintenance Domain that is the 
responsibility of the Assistant Secretary for Information and 
Technology (VA's Chief Information Officer) and an Application 
Development Domain, that is the responsibility of the administrations 
and staff offices. The Federated Model was approved by the Secretary on 
March 22, 2006.
    VA contracted with IBM to recommend the best business practices and 
develop processes to manage VA IT capabilities and resources. On 
October 1, 2006 over 4,200 employees who worked in IT operations and 
maintenance across VA, nationwide, were centralized under the Office of 
the Assistant Secretary for Information and Technology.
    On October 31, 2006, the Secretary approved the transition of VA IT 
management system from the Federated IT System model to a single IT 
leadership authority under the Assistant Secretary for Information and 
Technology. With this approval, all VA IT employees who worked in the 
IT Applications Development Domain, approximately 1,200 employees 
nationwide, were detailed to the Office of the Assistant Secretary for 
Information and Technology in December 2006.
    On February 27, 2007, the Secretary approved a modification to VA 
IT management system to implement a process-based organization 
structure for the Office of Information and Technology. This 
restructuring is an important step for driving IT standardization, 
compatibility, interoperability, and fiscal management disciplines 
across VA in support of veterans' programs and services.
    The resulting construct of this more than 2 year effort is a 
centralization of VA IT personnel and financial resources and physical 
assets including all IT equipment, all VA data processing centers 
nationwide. Any requirements necessary for this restructuring are 
included in the Fiscal Year 2008 budget request.
                               cemeteries
    Question 1. What is the status of VA's efforts to fund the needed 
cemetery repairs identified in 2002 in the Study on Improvements to 
Veterans Cemeteries: Volume 2, The National Shrine Commitment. Please 
incorporate in your answer the expected outlay of Nation Shrine 
Commitment dollars as part of VA's FY07 appropriations, and expected 
outlay under VA's FY08 request.
    Response: We are making steady progress completing the repairs 
needed to ensure that each national cemetery is maintained as a 
national shrine.
    The Millennium Act Report to Congress (Volume 2, National Shrine 
Commitment), issued in August 2002, provides a comprehensive assessment 
of the condition of VA's national cemeteries. This information is used 
in NCAs planning process to assist in prioritizing national shrine 
projects over a multi-year period.
    The report identified the need for 928 repair projects at an 
estimated cost of $280 million to ensure a dignified and respectful 
setting appropriate for each national cemetery. NCA is using the 
information and data provided in the report to plan and accomplish the 
repairs needed at each cemetery. Through Fiscal Year 2006, NCA 
completed work on 269 projects, and initiated work on additional 
projects, with an estimated cost of $99 million.
    Repairs to address repair/maintenance needs are addressed in a 
variety of ways. Gravesite renovation projects to raise, realign and 
clean headstones and markers and to repair sunken graves are addressed 
through NCA's operations and maintenance (O/M) account. Infrastructure 
improvements to buildings, roads, irrigation systems, and historic 
structures are addressed with capital expenditures through the major 
and minor construction programs. In addition, cemetery staff is used to 
complete some repairs.
    In Fiscal Year 2007, NCA plans to spend $16.6 million specifically 
for national shrine projects--$9.1 million from O/M and $7.5 million 
from minor construction. The 2008 budget includes $11.1 million for 
national shrine projects--$9.1 million in the O/M account and $2 
million in the minor construction request.
    In addition to specific national shrine projects, a commitment to 
enhancing the appearance of the national cemeteries underlies all NCA 
activities. Over 30 percent of NCA's operating budget is used for 
routine tasks such as mowing, trimming, and other maintenance work. 
These functions are equally critical to providing enduring memorials to 
those we serve.
    Our progress in improving the appearance of our national cemeteries 
is evidenced in our performance results. In Fiscal Year 2006, 97 
percent of respondents rated the appearance of our national cemeteries 
as excellent. Our target for Fiscal Year 2007 and 2008 is 99 percent.
    NCA has also established an organizational assessment and 
improvement (OAI) program to ensure regular and consistent assessment 
of performance against established standards. Each national cemetery 
will be evaluated through site visits conducted on a cyclical basis. A 
total of 47 national cemeteries have been reviewed under OAI since the 
program's inception in 2004. In addition, NCA has developed additional 
performance metrics that will be used to improve the appearance of its 
national cemeteries. Baseline data was collected in 2004 for three new 
performance measures designed to assess the condition of individual 
gravesites, including the cleanliness and proper alignment of 
headstones and markers. With this baseline data, NCA has identified the 
gap between current performance and the strategic goal for each 
measure.
    Funds available in Fiscal Year 2007 and included in the 2008 budget 
request will allow us to continue work toward improving the appearance 
of our national cemeteries. This is a multi-year effort, and VA is 
committed to ensuring that a dignified and respectful setting for each 
national cemetery is achieved. Future budget requests tied specifically 
to the shrine commitment will be prioritized within the context of 
Departmental priorities. For example, critical gravesite expansion 
projects require our immediate focus in order to keep existing 
cemeteries open and to ensure continued service to our nation's 
veterans and their families.
Response to Written Questions Submitted by Hon. Jim Webb to Hon. Daniel 
L. Cooper, Under Secretary for Benefits, Department of Veterans Affairs
    Question 1. Provide the current inventory of pending rating-related 
claims:
    Response: VBA defines the claims processing workload as the number 
of liability claims requiring a rating decision. The chart below shows 
rating-related workload by type of claim.* As of April 7, 2007, 406,660 
claims were pending.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    *Rating-related workload by type of claim:
    Original Disability Compensation--128,030
    Reopened Disability Compensation--233,249
    Original DIC and Disability Pension--20,163
    Reopened Disability Pension--15,243
    Future Exams/Hospitalization Reviews--9,975

    Question 2. Utilization of Benefits. I would be curious if you 
could get us something just in terms of utilization of the VA system, 
writ large. What are we going to estimate in terms of how many people 
are going to take advantage of one or another benefit in the VA system, 
whether it is home loans or compensation, pension, education benefits?
    Response. VA does not have access to date that would allow us to 
compile this information for the entire veteran population. We are 
working with DOD to obtain inforamtion that will allow us to compile 
data on benefits usage for veterans of the Global War on Terrorism 
(GWOT). The Information we currently have available is provided in the 
table below. We are continuing to work to expand and refinethis data. 
Because many GWOT veterans had earlier periods of service, the benefits 
activity identified in the table could have occurred either prior to or 
subsequent to their GWOT deployment (or both).

                  Total Living GWOT Population--686,306
            (Based on DOD separations through November 2006)
------------------------------------------------------------------------
                                               GWOT Veterans (percent)
------------------------------------------------------------------------
Veterans with disability claims decisions-- 21.7
 148,891 (data through 12/06.
Veterans who accessed the VR&E program--    1.7
 12,168 (data through 12/06).
Veterans awarded TSGLI benefits--1,569      0.2
 (data through 01/24/07).
Veterans who have obtained a VA home loan-- 22.5
 154,377 (data through 01/31/07).
------------------------------------------------------------------------
Note: Percentages reflect unique veterans within that business line
  only.


    We can provide the estimated number of servicemembers, veterans,a 
nd survivors that will receive or use VA benefits in FY 2007 and FY 
2008.


------------------------------------------------------------------------
          Beneficiaries              2007 Estimate       2008 Estimate
------------------------------------------------------------------------
Veterans Receiving Disability     2.7 million.......  2.9 million
 Compensation.
Survivors Receiving DIC.........  330,000...........  340,000
Veterans and Survivors Receiving  523,000...........  512,000
 Receiving Pension.
Veterans who will access the      92,000............  94,000
 VR&E program.
Veterans who will obtain a VA     180,000...........  180,000
 Home Loan.
Serviemembers, Veterans, and      7 million.........  6.9 million
 Survivors Covered by VA Life
 Insurance.
------------------------------------------------------------------------

    Chairman Akaka. Thank you very much, Mr. Secretary.
    At this time the Chairman calls for a very brief recess 
that will be at least 5 minutes, maybe a little bit more.
    Thank you.
    [Recess.]
    Chairman Akaka. The Committee will come to order.
    Mr. Secretary, before I start my questions, I want to 
commend you on your final remarks about extending yourself to 
the families of veterans and also your outreach program for the 
severely injured and for your meeting with the combatant 
commanders. I think this will be of great benefit to our 
veterans.
    Mr. Secretary, I note that it is certainly true that VA has 
received significant budget increases during this 
Administration's tenure, as you testified and as others have 
mentioned. It is also true that these increases are a result of 
both Administration proposals and actions by the Congress, and 
my simple question to you is: Do you agree with that statement?
    Secretary Nicholson. I think that both the President and 
the Congress have been very supportive of the VA, yes, sir.
    Chairman Akaka. Well, thank you. I want you to know that 
this Committee works well together, in a bipartisan manner, to 
help our veterans.
    Mr. Secretary, I would like to expand on what I touched on 
in my opening statement, regarding the actual level of funding 
requested for health care. As I said, when you take into 
account the $2 billion in what the budget calls ``health care 
industry trends''--increases due to inflation and other 
factors--there does not seem to be any funding left for the top 
priorities. I am talking about mental health improvements and 
ensuring that the needs of returning war veterans are met.
    My question to you is: How can VA both cover inflation and 
other costs and still make the improvements that we all know 
are needed?
    Secretary Nicholson. Thank you, Mr. Chairman.
    Mr. Chairman, we are requesting a 10.3 percent increase for 
health care in the budget, 2007 to 2008, and believe that with 
the pay increase that would be anticipated in that and 
inflation, there would still be above that a 3.6 percent 
increase in the Health Administration. That is after adjusting 
for inflation, after adjusting for the pay increase.
    Chairman Akaka. Dr. Kussman, I note that inpatient care in 
various settings is facing a big cut in this budget. You expect 
to have fewer patients in rehab and psychiatric units as well 
as in residential facilities. I do not believe that these cuts 
are being driven by good medical practice. I understand clearly 
that outpatient care is the best approach in some cases, but we 
must, however, own up to the fact that this war is resulting in 
some young veterans who will need substantial inpatient 
treatment. Just last week, a family wrote to me about their son 
who died in a VA facility from a drug overdose after spending 
only 2 weeks in an inpatient unit.
    Can you please explain why VA should be losing beds now?
    Secretary Nicholson. Well, you touched on it, Mr. Chairman. 
The paradigm for VA health care in general is for more 
outpatient care. That is, as some of the statistics were cited, 
a great frequency of visits to a facility. But we also are 
using far more of the technology of our times--telemedicine, 
telehealth, we are doing teletherapy. So there is an increasing 
usage of those technology.
    But I could tell you, Mr. Chairman, that we have the 
capacity and that no veteran who is in need of acute mental 
health care is turned away. They are admitted.
    Chairman Akaka. Mr. Secretary, I would like to ask for 
specifics on the enrollment fee proposal this year. In my 
statement, I mentioned the new out-of-pocket costs for working 
families. In creating this year's version of the enrollment 
fee, what attention was given to families with dependents, 
families with two veteran wage earners, and other similar 
situations?
    Secretary Nicholson. There was a lot of discussion given to 
these policy proposals which have been proposed in some form 
for six years. I have testified now for the third time on this 
concept, and I will tell you that I support it. I support it on 
a practical basis, and I support it on an equitable basis.
    What we are talking about here are veterans who have no 
service-connected disability, no diminution as a result of 
their service, which is the whole theory behind the VA. If 
someone has suffered physically or mentally as a result of 
their service, they are to be compensated by a grateful 
country. These people have not had that experience, and they 
have income.
    We have looked at and reflected on the experiences of the 
previous years, where you all here in the Congress have not 
been very supportive of this. And so we discussed a progressive 
system where people making less than $50,000 would not be asked 
to pay this modest enrollment fee. Again, keep in mind, if you 
would, sir, and Members of the Committee, no one with any 
service-connected disability pays this under this proposal.
    Second, there is an equity argument because if you are a 
person who served in the military for 30 years or 35 years and 
take off the uniform and go into the TRICARE health care 
system, you pay an enrollment fee, and you pay a copay. We can 
debate that. I think it is fair to say they are modest. But 
they are more than what is being asked here.
    In an environment of somewhat finite resources, if you want 
to assume that the resources are finite, then we have to make 
priorities, which we do, and try to direct resources toward 
those who need us the most. That is the policy behind this.
    Chairman Akaka. Let me ask in particular, if there were two 
veterans who were married to each other with a combined income 
of $50,000 a year would each be assessed the fee?
    Secretary Nicholson. Yes, they would, Mr. Chairman. If they 
were both patients in our system, yes.
    Chairman Akaka. Thank you.
    Now, I will call on our Ranking Member for his questions.
    Senator Craig. Thank you very much, Mr. Chairman.
    Mr. Secretary, I apologize for having to step out to 
another hearing to give testimony, and I do appreciate your 
presence and that of your staff and associates here today.
    Your budget talks about focusing aggressively on reducing 
waiting times for current patients, specifically targeting 
those patients who are waiting the longest for care. Certainly, 
it makes sense to all of us that that happens, and we have 
worked on that progressively over time.
    Can you talk a little about who is now waiting the longest 
for care? Is it a function of individual facilities that 
struggle to deliver timely care? Or is it certain specific 
services, such as neurology or orthopedics? In other words, 
what are the drivers in the time here? What are the drivers in 
the waiting time involved?
    Secretary Nicholson. Thank you, Senator. Let me again 
repeat the good news part of this, which I think is 
significant, in that 95 percent of all people who want an 
appointment of any kind get it within 30 days, and 96 percent 
get an appointment within 60 days.
    There are some of these specialties that do have to wait 
longer, among which are dermatology and ophthalmology. The 
primary reasons for that are our resources in those specialties 
and our ability to be able to hire and retain doctors in the 
numbers that we need.
    We have been assisted by you in recent legislation where we 
can incentivize them into the VA, and we are doing that. That 
is helping. But that is the main part of that.
    Senator Craig. And all of these categories are non-
emergency type settings. Is that correct?
    Secretary Nicholson. Yes, sir. There is no veteran who is 
in need of, as they say, emergent or emergency care that does 
not get it immediately. If we cannot provide it, he or she is 
taken to a local facility.
    Senator Craig. It was interesting that you would mention 
dermatology. My wife will probably crucify me for bringing her 
into this. She in a routine way scheduled a meeting with her 
dermatologist about a month ago, and it occurred last week. In 
the civilian landscape, non-emergency type routine access to 
health care oftentimes takes that long, depending on where you 
are in the delivery system and all of that kind of thing. I 
find it fascinating that you would mention that.
    Ten years ago, Mr. Secretary, every Member of this 
Committee signed a budget letter stating that VA entitlement 
spending did not show spiraling growth patterns. We concluded 
that VA entitlement programs were--and this is the quote from 
the letter--``not among the chief factors in looming Federal 
deficits.'' VA entitlement spending has since jumped by nearly 
100 percent. As our bipartisan letter then put it, ``I am 
worried that we have entered into a pattern of unsustained 
growth.''
    What are the causes of the growth in VA entitlement 
spending? And is this growth expected to continue at its 
present rate?
    Secretary Nicholson. The causes, Senator Craig, are 
multiple. One of those is very active, aggressive outreach by 
the VA, and it takes several forms. We have now over 140 VA 
benefit counselors embedded in military units throughout the 
world who are there to counsel and educate and make aware those 
people who have a separation from the service coming up. And we 
have people at all the major points of embarkation, people 
redeploying back from the combat zone.
    We have traveling groups of outreach counselors who go out 
and set up displays at Veterans Service Organization events. 
Two weeks ago, I was in San Antonio for the dedication of the 
Center for the Intrepid, and we had a major outreach, a static 
display with staff for the many veterans there to become more 
aware of what they are entitled to. And they are entitled to 
substantial benefits, depending, of course, on their situation.
    Then there is the corresponding fact that more and more of 
them are coming in, as I said, in absolute numbers. In 2006, we 
had 806,000 individuals come in and make a claim.
    The other thing that is happening is the demographics of 
veterans--some of us are older. Fifty percent of our veterans 
are over 60, 45 percent of our veterans are over 65, and they 
begin to have more ailments from their experiences or arthritis 
and different things. So that is an individual claim, each of 
those, individual clinic visits, individual adjudications. And 
the underlying philosophy that is imparted to the VA in this 
system is to grant a claim if you can and deny only if you 
must.
    And so the system, I think, is quite beneficial and people 
are coming in in ever increasing numbers.
    Senator Craig. Thank you.
    Thank you, Mr. Chairman. My time is up.
    Chairman Akaka. Thank you very much, Senator Craig.
    Senator Murray?
    Senator Murray. Thank you, Mr. Chairman.
    I wanted to follow up on the Chairman's line of questioning 
on the need for inpatient mental health care, because I, too, 
was really disconcerted to see the budget request projecting 
fewer veterans needing inpatient mental health care. I 
understand the philosophy of trying to do more and more 
outpatient, reach more people that way, but it just seems to 
me, when one in three Iraq war veterans are estimated now to be 
seeking mental health care, many of our servicemembers are now 
on their second or third, some even fourth deployments. We are 
hearing about the intensity on the ground and what our men and 
women are facing and the consequences when they return home, 
and the President now sending up to 48,000 more troops. It just 
seems to me that we are going to need more inpatient 
psychiatric services, not less. And I want to hear your 
rationale on that.
    But, you know, you made a comment that struck me because 
you said no veteran has been denied inpatient health care, 
mental health care, yet we heard about a highly publicized case 
of an Iraq war veteran with two Purple Hearts named Jonathan 
Schulze, who tragically took his own life, and the press 
reports were that he had asked for help from the VA twice and 
was told he was 26th on the waiting list. We have heard about 
cases in Minnesota as well as--or he was from Minnesota, but 
also a case in Illinois and in Iowa.
    It just seems to me when you have that many red flags 
going, you cannot just arbitrarily say no one is being denied 
care. And, you know, I think we have to say there are red flags 
out there. We need to find out what is going on.
    So I would ask you two questions: We are hearing about 
these cases that say veterans are being denied care when they 
ask for it. And, second, how can you predict a lower demand for 
inpatient psychiatric services in your budget when we know 
there are going to be increasing consequences as the years 
progress?
    Secretary Nicholson. Thank you, Senator Murray. Those are 
several important questions, and I like having the opportunity 
to respond.
    First, our budget for psychiatric inpatient care is 
actually up. I am looking at it. We are asking for $1.6 
billion----
    Senator Murray. Right. Your budget request has increased, 
but you are projecting that fewer veterans will need inpatient 
health care.
    Secretary Nicholson. Well, let me give you the capacity 
figures. You know, what we have anticipated our needs to be is 
what we should request from you the money to fill.
    In our capacity for mental health, we are currently being 
utilized at 70 percent, and for polytraumatic care in our 
polytrauma centers, it is 80 percent. So we have, in the case 
of mental health in general, a 30 percent capacity available; 
in the case of polytraumatic capacity, we have 20 percent 
available.
    Let me also address--you raised the point----
    Senator Murray. Are you talking nationwide 20 percent 
available? Because if those facilities are not where our 
veterans are, it does not make any difference. They are not 
going to travel 5,000 miles to get inpatient care.
    Secretary Nicholson. We have 154 inpatient facilities 
around the country and almost 1,000 other points of access for 
veterans to come in to be screened, to be referred.
    I want to address the other point that you raised to the 
extent that I can, and I am limited by the privacy regulations 
because the family has not given us a waiver to discuss this. 
But the case that you mentioned from Minnesota, which comes up 
often, that veteran was seen by our facilities in Minnesota 46 
times. That is about all I can say.
    Senator Murray. OK. I understand extenuating circumstances 
in all cases, but it is not an isolated case. We are hearing 
about cases elsewhere.
    But my question to you is: Do you really think that we are 
going to see fewer veterans needing access to inpatient mental 
health care?
    Secretary Nicholson. Well, we are projecting that we are 
going to see somewhat fewer of those cases in this time frame.
    Senator Murray. Well, my time is up, and I want to ask 
another quick question. But, Mr. Chairman, I think we have to 
be careful not just to project numbers on the hopes of keeping 
the budget down, but really looking at what we are going to 
need to pay for because of inpatient care. And as you have 
stated and as I referred to, we do have, you know, many 
veterans who are in their second, third, possibly fourth tour. 
We have 48,000 additional troops being sent, and we are seeing 
a third of our veterans seeking mental health care. So I hope 
we look very carefully at those numbers as we put our budget 
together.
    But let me ask one other question really quickly in my 
time. I wanted to ask you about shorter hours at our urgent 
care in Spokane--I am going to submit that for the record--
because we have a serious concern about that facility closing 
at 4:30 in the afternoon. We have one if not more cases of 
veterans who have died because they have shown up shortly after 
the facility closed, and there is a huge problem with how 
veterans perceive their care if they do not go to the VA 
facility not being paid for. That is an issue I want to address 
with you on another occasion.
    But I also wanted to ask you about these increased user 
fees and copays because, as you know, I oppose that. I believe 
that anybody that we ask to serve us should not be given an 
additional cost to get their health care. That is not what they 
were told. But I am disturbed that in the proposal this year 
that you asked to put that money from fees, should it ever be 
collected, back into the general budget rather than into the VA 
health care. And it seems to me what that simply is saying to 
our veterans is we are asking you to balance the Federal budget 
now. And I find that even worse than the suggestion that they 
should pay copays, and I wanted to ask you why you have changed 
that policy and why you are suggesting that in this budget.
    Secretary Nicholson. Well, the reason for that, Senator 
Murray, is that if you will recall other discussions that we 
have had about this, the revenue that was assumed in the budget 
was used to apply for the needs on the application side of the 
budget. So having an experience where it has not been approved 
and then having a gap, instead of doing that, we did not assume 
it. This budget, if you approve it without those measures, will 
still have the money that we need.
    Senator Murray. So basically we can balance the budget if 
we charge our veterans fees. I just find that incom----
    Secretary Nicholson. No, no. I am not being artful in 
trying to explain it. If you deny it, there will be no gap in 
this budget where you have to find it somewhere else.
    Senator Murray. For the VA.
    Secretary Nicholson. Right.
    Senator Murray. I know my time is up, Mr. Chairman. Thank 
you.
    Chairman Akaka. Thank you very much, Senator Murray. Let me 
tell you that we have a second round of questions for this 
panel, and then we will have our next panel.
    At this time, Senator Jim Webb.
    Senator Webb. Thank you, Mr. Chairman. May I ask a 
procedural request? Our colleague, Senator Tester, had to leave 
in order to preside, and he asked that I ask a question on his 
behalf. I would request that the clock be reset once I have 
asked the question on his behalf.
    [Laughter.]
    Chairman Akaka. Senator Webb, granted.
    Senator Webb. Thank you, Mr. Chairman.
    Mr. Secretary, the question that Senator Tester wanted to 
get an answer to regards the growth in the claims and the 
indication that it has now gone from 500,000 to over 800,000. 
And he had had a number of constituent contacts that indicated 
that a lot of the claims that are going forward had been kicked 
back for more information and this sort of thing. And so his 
question was, ``What percentage of this claim backlog involves 
recycled or incomplete claims? And if you do not have that 
today, could we please have that?''
    Secretary Nicholson. Thank you, Senator Webb. I do not 
think we have that, and we will get that. I can ask Admiral 
Cooper, the Under Secretary for Benefits, if he would like to 
expand.
    Admiral Cooper. Yes, sir. We have a very specific process 
established by law as to how to process a claim, and no claims 
are sent back to the individual. We do go to them and tell them 
specifically what we require in order to properly adjudicate 
their claims. We also state precisely what VA will do to 
properly obtain the information. Once we get all the 
information in and make the decision, then they will 
occasionally appeal that decision. The appeal process is a 
separate process. Appeals are not counted as part of the 
approximately 400,000 claims that we have pending today.
    Senator Webb. So when you say 400,000, you are talking all 
of those are initial claims?
    Admiral Cooper. All of those are initial, but the term 
``initial'' requires explanation. They are either original, 
that is, the person has come in for the first time, or they are 
reopened, which means that the person having had a claim 
adjudicated previously, now comes in because his or her 
condition has deteriorated or the veteran claims service 
connection for another condition that has not been claimed 
before.
    Senator Webb. Or new information----
    Admiral Cooper. Or they have new information----
    Senator Webb. Could you get us some sort of a breakdown so 
we could understand that?
    Admiral Cooper. Of course.
    Senator Webb. Thank you.
    Mr. Chairman, if we could now reset the clock, I will do my 
best to ask a few on my own time.
    I was struck by a number here, a percentage here--I am just 
trying to get my data points as I join the Committee--that says 
out of the 198,000 military separations in 2006, trends show 
that 35 percent will file a claim over the course of their 
lifetime. I am assuming that means some sort of a compensation 
claim. What I am curious about is what percentage are we 
estimating a vet is going to use a benefit, because I recall 
even from the Vietnam GI bill alone it was about a two-thirds 
participation rate.
    Secretary Nicholson. I will review the top line, Senator, 
and then if Admiral Cooper wants to come in. If you think of 
the veteran population as a whole in the country today, it is 
about a little over 24 million: 7.8 million of them are 
enrolled in our health care system; 5.6 million present 
themselves every year for medical treatment. But that is on the 
average of 10.1 times, which means that we see over 1 million 
people a week in the health care system. On the claims side, 
about 35 percent of those that we----
    Senator Webb. So we are defining a claim as a claim for 
compensation?
    Secretary Nicholson. Yes, sir.
    Senator Webb. Purely. OK. I just wanted to make that clear. 
I would be curious if you could get us something just in terms 
of the utilization of the VA system, writ large. What are we 
going to estimate in terms of how many people are going to take 
advantage of one or another benefit in the VA system, whether 
it is home loans or compensation, pension, educational 
benefits? I would venture that number is well in excess of----
    Admiral Cooper. I do not have that information now, but let 
me get back to you in writing.
    Senator Webb. OK. Great. Thank you.
    As I mentioned in my opening statement, I am very desirous 
of ensuring that these people who have been serving since 9/11 
get an educational benefit that is worthy of the service that 
they have given. I think we are all aware that the Montgomery 
GI Bill, which is a good GI bill, a good peacetime GI bill, has 
its limitations. I am wondering if you would agree that the 
post-9/11 veterans should receive a better educational reward 
than that which they are now getting.
    Secretary Nicholson. Well, you recognize, Senator, that I 
am here as a representative of the Administration, and what you 
are talking about is a major policy implication with 
significant cost ramifications which have not been scored.
    We will, if you ask, analyze that and give you the benefit 
of our judgment in concert with the Administration, whom we 
represent and, as you know, I think, is very supportive of 
veterans and appreciates the importance of education and what 
the GI bill has meant to veterans and to our country, which I 
certainly support as well.
    Senator Webb. On a personal level, I assume that I am 
hearing that on a personal level you probably would agree with 
that, or are you comfortable in saying----
    Secretary Nicholson. I have to qualify my answer, but I 
will tell you, coming from a family that had to get through 
college--all seven of our kids in my family went to college by 
hook and by crook, and I was lucky I got to go to the Military 
Academy. And knowing what education means in this country, I 
have some concern about our Reserve and National Guard and 
whether they are being equitably benefited because of their 
service, their active-duty service now in this war, I think 
that is a legitimate thing to be looking at.
    Senator Webb. Did the Administration support the 
legislation that allowed attorney representation in VA claims? 
I was not here when----
    Secretary Nicholson. It did not.
    Senator Webb. It did not?
    Secretary Nicholson. No, sir.
    Senator Webb. Do you have any indication of how this new 
concept has affected the increase or decrease in caseload?
    Secretary Nicholson. Well, no. The answer is no, but we are 
working on that. It is now the law, and we are charged with 
implementing it and coming up with the standards for the 
attorneys, the system, to look out for the interests of the 
veterans in this case to see that they are well and fairly 
represented and that the compensation is a fair system. It is 
not yet in effect, but we are looking at it.
    I think part of your question, if I hear it right, is what 
effect is this going to have on waiting times on this system.
    Senator Webb. Yes.
    Secretary Nicholson. And I will tell you that I think it is 
going to have an effect of stretching them out. I mean, I 
cannot help reflecting I grew up in this little town of 99 
people that had one country lawyer that used to play pinochle 
every afternoon at the one tavern, and then a young lawyer 
moved in, and then they were both busy.
    [Laughter.]
    Secretary Nicholson. So this is going to have an effect on 
waiting times, I think there is no question.
    Senator Webb. I would agree with your concern in that area, 
quite frankly. I have watched the quality of the national 
service officers over the years, people who have become 
specialists in Title 38. And it is worrisome if we were to go 
to a system where a veteran would feel compelled to have to 
obtain an attorney rather than the free services that have been 
available, unless that attorney were willing to do it on a pro 
bono basis, as I have on many occasions, by the way. That is 
something that I look forward to look at, and I hope there is 
some kind of a tracking system established where we might get 
into the timing and those sorts of things and be able to 
evaluate.
    Thank you, Mr. Chairman. My time is up.
    Chairman Akaka. Thank you very much, Senator Webb. We will 
begin a second round here.
    Admiral Cooper, in your personal or professional view, and 
without regard to the present situation, how long should a 
veteran or dependent have to wait to have their claim decided?
    Admiral Cooper. The goal that we have--and I honestly 
believe we can get there--is 145 days, predicated on all the 
laws that are now in place. As you know, the Veterans Claims 
Assistance Act of 2000 did extend processing time by 
establishing many specific things that VA is required to do, 
all for the benefit of the veteran, all for the right reason. 
But that did extend the process.
    As I look at it and try to analyze how we can best reduce 
the time to the shortest time possible, I find that 145 days--
perhaps 140 days eventually--that is probably, realistically, 
the best we can achieve on average. We will be able to do some 
claims, very fast assuming we get all the information 
immediately. But, on average, I think 145 days is about the 
best we can do.
    Secretary Nicholson. Mr. Chairman, could I just add an 
important footnote to that.
    Chairman Akaka. Mr. Secretary.
    Secretary Nicholson. For clarity, a claim, when it is 
finally decided, is paid from the time it was initiated. So 
during that pendency period, if it is given, it is given 
retroactive back to the time it was filed.
    Chairman Akaka. Thank you for that explanation.
    Dr. Kussman, in your personal or professional opinion, 
should someone seeking a primary care appointment have to wait 
30 days to get an appointment? Or in your answer, please give 
me examples of other health care systems that use such an 
extended period for a primary care appointment.
    Dr. Kussman. Thank you, Mr. Chairman. As was already 
mentioned, anybody who has an urgent or emergent issue can be 
seen right away by walking into one of our clinics or one of 
our emergency rooms. So if anybody really needs to be seen 
right away--the issue of the 30 days is for stable, chronic, 
longitudinal care for the patient that we have been seeing 
regularly in our clinics.
    Chairman Akaka. Thank you.
    Mr. Secretary, I notice that VA's estimated number of OEF 
and OIF veterans that will come into the system next year is 
relatively incremental at around 54,000. We know that in the 
past, VA has underestimated the number of new veterans seeking 
VA health care. We also know that some conditions such as PTSD 
can take some time to manifest themselves in these young 
servicemembers, and that in these current conflicts, the 
average servicemember will serve more tours than in the past.
    Can you please explain the projection that VA will see such 
a low number of OEF and OIF veterans next year?
    Secretary Nicholson. Well, Mr. Chairman, we use a very 
sophisticated model. The model, as you will recall--I know you 
do--for the 2005 budget year did not hit it because it was 
based on 2003 actual data, and it did not incorporate the 
effects of the war into it.
    Since that time, that model in the overall patient demand 
that we have is almost uncanny in its accuracy--less than half 
of 1 percent off. So we use that. We use it for 85 percent of 
our predictive capacity. It does not predict certain things 
like long-term care, dental, and CHAMPA. So we have to apply 
some judgment into that. But we are quite confident in that 
estimate that we have for 2008, which is 263,000. And the 
funding for it, as you will note, we have asked for nearly 
double that of 2006.
    Chairman Akaka. Thank you very much, Mr. Secretary. My time 
has expired.
    Senator Craig?
    Senator Craig. Mr. Chairman, I will be brief. We have 
another panel, and I would like to hear from them before I have 
to rush out around the noon hour.
    There are questions I will submit for the record for the 
Secretary and his colleagues to answer.
    I would only make this observation, Mr. Secretary. Last 
year, the VA stated that the training of veterans service 
officers, that once trained by the VA, could help expedite 
claims. And while you are an attorney and I am not, I cannot 
imagine that well-trained attorneys in the law could not help 
expedite claims also. Or is there something about the degree 
itself that deters them from expediting----
    [Laughter.]
    Senator Craig [continuing].--while VSOs trained by VA can, 
in fact, expedite claims processes? Now, you must defend your 
fellow attorneys. I understand that.
    Secretary Nicholson. I am a recovering attorney, Senator.
    [Laughter.]
    Senator Craig. I see.
    Secretary Nicholson. But I would tend to repeat my story of 
Struble, Iowa, and rest my case. The veterans service officers 
that work on these cases, they are really doing it--they have 
no financial interest in it. They do not have a clock that is 
running. It is not dependent on their livelihood. I think they 
have a more detached view, but in most cases a very competent 
and committed view. And attorneys--I mean, attorneys are 
trained to be thorough. If they are not thorough, because they 
are held to a higher standard, could be held to be negligent, 
so they do not tend to leave many stones unturned, or they are 
not too much on an expedition. And I think common sense for me 
suggests that it will just take longer.
    Senator Craig. Well, I thank you for that. I visited with 
the judges down at the court. Thoroughness is part of a problem 
in why claims are rejected at that level, and thoroughness is 
something that is important to carry the process through. That 
is why I felt that the policy of the Civil War era should be 
put to bed once and for all on behalf of our veterans.
    Having said that, Mr. Chairman, I thank you all of you for 
being here today and look forward to working with you in the 
coming year.
    Chairman Akaka. Thank you very much, Senator Craig, for 
your remarks.
    Mr. Secretary, before we switch panels, I want to let you 
know that we will be sending post-hearing questions over to you 
beginning this afternoon, and others may follow in the next few 
days. And questions from Members will be submitted for the 
record for your response.
    Mr. Secretary, I have two requests. First, please send 
replies to individual questions as soon as they are ready--you 
do not have to wait until the packages are completed. Second, I 
would greatly appreciate your prompt attention to the questions 
as well. Having VA's answers will be extremely helpful as we 
move forward with our work on the VA budget, and that is the 
reason for my request.
    Last year, we did not receive our responses until summer, 
and that is simply too late. We want to work together with you 
on the budget.
    Mr. Secretary, I want to thank you and your staff for your 
responses. We have heard good things in your statements and 
look forward to working with you to even make it better as we 
move along here in the budget process.
    So thank you again, and we wish you well.
    Secretary Nicholson. Thank you, Mr. Chairman.
    Chairman Akaka. At this time I would like to call up the 
second panel.
    We have in our next panel Carl Blake, National Legislative 
Director, Paralyzed Veterans of America; Joseph Violante, 
National Legislative Director, Disabled American Veterans; 
David Greineder, Deputy National Legislative Director, AMVETS; 
and Dennis M. Cullinan, Director, National Legislative Service, 
Veterans of Foreign Wars. We also have Steve Robertson, 
Director, National Legislative Commission, American Legion; and 
John Rowan, National President, Vietnam Veterans of America.
    We welcome all of you to this Committee hearing, and we 
would like you to begin your testimony in the order that I 
called your names. First will be Carl Blake.

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

    Mr. Blake. Thank you, Mr. Chairman.
    Mr. Chairman, Senator Craig, on behalf of the four co-
authors of the Independent Budget, I would like to thank you 
for the opportunity to present our views today regarding the 
veterans' health care budget for Fiscal Year 2008. Before I 
begin, I would just like to mention that in the spirit of 
openness and cooperation, the IBVSOs invited all of the 
Committee staff members as well as all of the legislative 
assistants for the Members of the Committee to attend a 
briefing the week before the President's budget was released to 
discuss the recommendations of the Independent Budget in 
advance and to go into some detail about how we develop our 
budget recommendations, realizing that we have nothing really 
to hide and ultimately our only interest is to ensure that 
veterans have the best quality health care and benefits 
available to them.
    It is unfortunate, even as we testify today, that the 
appropriations bill has still not been completed for the 
Department of Veterans Affairs, as well as other Federal 
agencies. Despite the positive outlook in H.J. Res. 20, the VA 
has been placed in a critical situation where it is forced to 
cannibalize other accounts in order to continue to provide 
health care services to veterans. This is jeopardizing not only 
the health care system, but the actual health care of veterans.
    For Fiscal Year 2008, the Administration has requested 
$34.2 billion for veterans health care, a $1.9 billion increase 
over the levels established in H.J. Res. 20. Although we 
recognize this is another step forward, it still falls short of 
the recommendations of the IB. For Fiscal Year 2008, the IB 
recommends approximately $36.3 billion, an increase of $4 
billion over the Fiscal Year 2007 appropriation level, yet to 
be enacted, and approximately $2.1 billion over the 
Administration's request.
    For Fiscal Year 2008, the IB recommends approximately $29 
billion for medical services. Our medical services 
recommendation includes $26.3 billion for current services, 
$1.4 billion for the increase in patient workload, $105 million 
for additional FTEs, and approximately $1.1 billion for policy 
initiatives. For medical administration, the IB recommends 
approximately $3.4 billion, and, finally, for medical 
facilities the IB recommends approximately $4 billion.
    This recommendation also includes an additional $250 
million above the Fiscal Year 2008 baseline in order to begin 
addressing the non-recurring maintenance needs of the VA. 
Although the IB health care recommendation does not include 
additional money to provide for the health care needs of 
Category 8 veterans being denied enrollment into the system, we 
believe that adequate resources should be provided to overturn 
this policy. The VA estimates that more than 1.5 million 
Category 8 veterans will have been denied enrollment in the VA 
health care system by Fiscal Year 2008. Assuming a utilization 
rate of 20 percent in order to reopen the system, the IB 
estimates that VA will require approximately $366 million in 
discretionary funding.
    Although not proposed to have a direct impact on veterans' 
health care, we are deeply disappointed that the Administration 
has chosen to once again recommend an increase in prescription 
drug copayments and an indexed enrollment fee. Although the VA 
does not overtly explain the impact of these proposals, similar 
proposals in the past have estimated that nearly 200,000 
veterans will leave the system, and more than 1 million 
veterans will choose not to enroll.
    It is astounding that the Administration would continue to 
recommend policies that would push veterans away from the best 
health care system in America. Congress has soundly rejected 
these proposals in the past, and we call on you to do so once 
again.
    For medical and prosthetic research, the Independent Budget 
is recommending $480 million. This represents a $66 million 
increase over the Fiscal Year 2007 level established in H.J. 
Res. 20 and is $69 million over the Administration's request 
for Fiscal Year 2008. We are very concerned that the medical 
and prosthetic research account continues to face a virtual 
flat line in its funding level. Research is a vital part of 
veterans' health care and an essential mission for our national 
health care system.
    In closing, to address the problem of adequate resources 
provided in a timely manner, the Independent Budget has once 
again proposed funding for veterans' health care be removed 
from the discretionary budget process and be made mandatory. 
The budget and appropriations process over the last number of 
years, and particularly this year, demonstrates conclusively 
how the VA labors under the uncertainty of not only knowing how 
much money it is going to get, but when it is going to get it.
    In the end, it is easy to forget that the people who are 
ultimately affected by the wrangling over the budget during 
this process are the men and women who have served and 
sacrificed so much in defense of this country.
    Mr. Chairman, Senator Craig, I would like to thank you 
again for the opportunity to testify, and I would be happy to 
answer any questions that you might have.
    [The prepared statement of Mr. Blake follows:]
   Prepared Statement of Carl Blake, National Legislative Director, 
                     Paralyzed Veterans of America
    Mr. Chairman and Members of the Committee, as one of the four co-
authors of The Independent Budget, Paralyzed Veterans of America (PVA) 
is pleased to present the views of The Independent Budget regarding the 
funding requirements for the Department of Veterans Affairs (VA) health 
care system for Fiscal Year 2008.
    PVA, along with AMVETS, Disabled American Veterans, and the 
Veterans of Foreign Wars, is proud to come before you this year marking 
the beginning of the third decade of The Independent Budget, a 
comprehensive budget and policy document that represents the true 
funding needs of the Department of Veterans Affairs. The Independent 
Budget uses commonly accepted estimates of inflation, health care costs 
and health care demand to reach its recommended levels. This year, the 
document is endorsed by 53 Veterans Service Organizations, and medical 
and health care advocacy groups.
    Last year proved to be a unique year for reasons very different 
from 2005. The VA faced a tremendous budgetary shortfall during Fiscal 
Year 2005 that was subsequently addressed through supplemental 
appropriations and additional funds added to the Fiscal Year 2006 
appropriations. For Fiscal Year 2007, the Administration submitted a 
budget request that nearly matched the recommendations of The 
Independent Budget. These actions simply validated the recommendations 
of The Independent Budget once again.
    Unfortunately, even as we testify today, Congress has yet to 
complete the appropriations bill more than one-third of the way through 
the current fiscal year. Despite the positive outlook for funding as 
outlined in H.J. Res. 20, the Fiscal Year 2007 Continuing Resolution, 
the VA has been placed in a critical situation where it is forced to 
ration care and place freezes on hiring of much needed medical staff. 
Waiting times have also continued to increase. Furthermore, the VA has 
had to cannibalize other accounts in order to continue to provide 
medical services, jeopardizing not only the VA health care system but 
the actual health care of veterans. It is unconscionable that Congress 
has allowed partisan politics and political wrangling to trump the 
needs of the men and women who have served and continue to serve in 
harm's way.
    For Fiscal Year 2008, the Administration has requested $34.2 
billion for veterans' health care, a $1.9 billion increase over the 
levels established in H.J. Res. 20, the continuing resolution for 
Fiscal Year 2007. Although we recognize this as another step forward, 
it still falls well short of the recommendations of The Independent 
Budget. For Fiscal Year 2008, The Independent Budget recommends 
approximately $36.3 billion, an increase of $4.0 billion over the 
Fiscal Year 2007 appropriation level yet to be enacted and 
approximately $2.1 billion over the Administration's request.
    The medical care appropriation includes three separate accounts--
Medical Services, Medical Administration, and Medical Facilities--that 
comprise the total VA health-care funding level. For Fiscal Year 2008, 
The Independent Budget recommends approximately $29.0 billion for 
Medical Services. Our Medical Services recommendation includes the 
following recommendations:

 
                         (Dollars in Thousands)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Current Services Estimate...............................     $26,302,464
Increase in Patient Workload............................       1,446,636
Increase in Full-time Employees.........................         105,120
Policy Initiatives......................................       1,125,000
                                                         ---------------
    Total fiscal year 2008 Medical Services.............     $28,979,220
------------------------------------------------------------------------

    In order to develop our current services estimate, we used 
the Obligations by Object in the President's Budget to set the 
framework for our recommendation. We believe this method allows 
us to apply more accurate inflation rates to specific accounts 
within the overall account. Our inflation rates are based on 5-
year averages of different inflation categories from the 
Consumer Price Index-All Urban Consumers (CPI-U) published by 
the Bureau of Labor Statistics every month.
    Our increase in patient workload is based on a 5.5 percent 
increase in workload. This projected increase reflects the 
historical trend in the workload increase over the last 5 
years. The policy initiatives include $500 million for 
improvement of mental health services, $325 million for funding 
the fourth mission (an amount that nearly matches current VA 
expenditures for emergency preparedness and homeland security 
as outlined in the 2007 Mid-Session Review), and $300 million 
to support centralized prosthetics funding.
    For Medical Administration, The Independent Budget 
recommends approximately $3.4 billion. Finally, for Medical 
Facilities, The Independent Budget recommends approximately 
$4.0 billion. This recommendation includes an additional $250 
million above the Fiscal Year 2008 baseline in order to begin 
to address the non-recurring maintenance needs of the VA.
    Although The Independent Budget health-care recommendation 
does not include additional money to provide for the health-
care needs of Category 8 veterans now being denied enrollment 
into the system, we believe that adequate resources should be 
provided to overturn this policy decision. VA estimates that 
more than 1.5 million Category 8 veterans will have been denied 
enrollment in the VA health-care system by Fiscal Year 2008. 
Assuming a utilization rate of 20 percent, in order to reopen 
the system to these deserving veterans, The Independent Budget 
estimates that VA will require approximately $366 million. The 
Independent Budget Veterans Service Organizations (IBVSO) 
believe the system should be reopened to these veterans and 
that this money should be appropriated in addition to our 
Medical Care recommendation.
    Although not proposed to have a direct impact on veterans' 
health care, we are deeply disappointed that the Administration 
chose to once again recommend an increase in prescription drug 
copayments from $8 to $15 and an indexed enrollment fee based 
on veterans' incomes. These proposals will simply add 
additional financial strain to many veterans, including PVA 
members and other veterans with catastrophic disabilities. 
Although the VA does not overtly explain the impact of these 
proposals, similar proposals in the past have estimated that 
nearly 200,000 veterans will leave the system and more than 
1,000,000 veterans will choose not to enroll. It is astounding 
that this Administration would continue to recommend policies 
that would push veterans away from the best health care system 
in the world. Congress has soundly rejected these proposals in 
the past and we call on you to do so once again.
    For Medical and Prosthetic Research, The Independent Budget 
is recommending $480 million. This represents a $66 million 
increase over the Fiscal Year 2007 appropriated level 
established in the continuing resolution and $69 million over 
the Administration's request for Fiscal Year 2008. We are very 
concerned that the Medical and Prosthetic Research account 
continues to face a virtual flatline in its funding level. 
Research is a vital part of veterans' health care, and an 
essential mission for our national health care system. VA 
research has been grossly underfunded in comparison to the 
growth rate of other Federal research initiatives. We call on 
Congress to finally correct this oversight.
    The Independent Budget recommendation also recognizes a 
significant difference in our recommended amount of $1.34 
billion for Information Technology versus the Administration's 
recommended level of $1.90 billion. However, when compared to 
the account structure that The Independent Budget utilizes, the 
Administration's recommendation amounts to approximately $1.30 
billion. The Administration's request also includes 
approximately $555 million in transfers from all three accounts 
in Medical Care as well as the Veterans Benefits Administration 
and the National Cemetery Administration. Unfortunately, these 
transfers are only partially defined in the Administration's 
budget justification documents. Given the fact that the 
veterans' service organizations have been largely excluded from 
the discussion of how the Information Technology reorganization 
would take place and the fact that little or no explanation was 
provided in last year's budget submission, our Information 
Technology recommendation reflects what information was 
available to us and the funding levels that Congress deemed 
appropriate from last year. We certainly could not have 
foreseen the VA's plan to shift additional personnel and 
related operations expenses.
    Finally, we remain concerned that the Major and Minor 
Construction accounts continue to be underfunded. Although the 
Administration's request includes a fair increase in Major 
Construction from the expected appropriations level of $399 
million to $727 million, it still does not go far enough to 
address the significant infrastructure needs of the VA. 
Furthermore, the actual portion of the Major Construction 
account that will be devoted to Veterans Health Administration 
infrastructure is only approximately $560 million. We also 
believe that the Minor Construction request of approximately 
$233 million does little to help the VA offset the rising tide 
of necessary infrastructure upgrades. Without the necessary 
funding to address minor construction needs, these projects 
will become major construction problems in short order. For 
Fiscal Year 2008, The Independent Budget recommends 
approximately $1.6 billion for Major Construction and $541 
million for Minor Construction.
    In closing, to address the problem of adequate resources 
provided in a timely manner, The Independent Budget has 
proposed that funding for veterans' health care be removed from 
the discretionary budget process and made mandatory. The budget 
and appropriations process over the last number of years 
demonstrates conclusively how the VA labors under the 
uncertainty of not only how much money it is going to get, but, 
equally important, when it is going to get it. No Secretary of 
Veterans Affairs, no VA hospital director, and no doctor 
running an outpatient clinic knows how to plan and even provide 
care on a daily basis without the knowledge that the dollars 
needed to operate those programs are going to be available when 
they need them.
    Making veterans health care funding mandatory would not 
create a new entitlement, rather, it would change the manner of 
health care funding, removing the VA from the vagaries of the 
appropriations process. Until this proposal becomes law, 
however, Congress and the Administration must ensure that VA is 
fully funded through the current process. We look forward to 
working with this Committee in order to begin the process of 
moving a bill through the House, and the Senate, as soon as 
possible.
    In the end, it is easy to forget, that the people who are 
ultimately affected by wrangling over the budget are the men 
and women who have served and sacrificed so much for this 
Nation. We hope that you will consider these men and women when 
you develop your budget views and estimates, and we ask that 
you join us in adopting the recommendations of The Independent 
Budget.
    This concludes my testimony. I will be happy to answer any 
questions you may have.

    Chairman Akaka. Thank you very much, Mr. Blake.
    I want our witnesses to know that your full statements will 
be included in the record.
    Mr. Violante?

STATEMENT OF JOSEPH A. VIOLANTE, NATIONAL LEGISLATIVE DIRECTOR, 
                   DISABLED AMERICAN VETERANS

    Mr. Violante. Thank you, Mr. Chairman, Members of the 
Committee. I am pleased to appear before you on behalf of 
Disabled American Veterans to summarize our recommendations for 
Fiscal Year 2008. As mentioned in my written statement, my 
testimony focuses primarily on the Department of Veterans 
Affairs benefit programs.
    To improve administration of VA's benefit programs, the IB 
recommends Congress provide the Veterans Benefits 
Administration with total funding of $1.9 billion in Fiscal 
Year 2008. Included in our funding recommendations are new 
resources needed for additional VBA staffing, training 
programs, and information technologies to correspond with a 
more effective and efficient benefit delivery system. Mr. 
Chairman, a core mission of the VA is to provide timely 
financial disability compensation, dependency and indemnity 
compensation, and disability pension benefits to veterans and 
their family members and survivors. VA disability benefits are 
critical to veterans and their families. We believe meeting the 
needs of disabled veterans should always be a top priority of 
the Federal Government.
    Mr. Chairman, the backlog is unquestionably growing. Rather 
than making headway and overcoming the chronic claims backlog 
and subsequent protracted delays in disposition of claims, VA 
actually has lost ground on the problem.
    We believe that adequate staffing levels are essential to 
any meaningful strategy to get claims processing and backlogs 
under control. The IB recommends 10,675 employees for 
Compensation and Pension.
    Mr. Chairman, in addition to boosting its staffing, we 
believe VBA must continue to upgrade its information technology 
infrastructure and revise its training tools to stay abreast of 
modern business practices to maintain efficiency and to meet 
increasing workload demands. The IB, therefore, recommends that 
Congress provide $115.4 million for VBA initiatives in Fiscal 
Year 2008.
    To meet its ongoing workload demands and to implement the 
important initiatives that the VA Vocational Rehabilitation and 
Employment Task Force recommended, VR&E needs increased 
staffing. The task force recommended creation and training of 
200 new staff position for this purpose. With its increased 
reliance on contract services, VR&E also needs approximately 50 
additional FTEE for management and oversight of contract 
counselors and employment service providers.
    VA has been striving to provide more timely and efficient 
service to its claimants for education benefits. VBA must 
increase staffing in its Educational Service to 1,033 
employees.
    The benefit programs are effective for their intended 
purposes only to the extent that VBA can deliver benefits to 
entitled veterans and dependents in a timely fashion. Congress 
must make adjustments to benefit programs from time to time to 
address increases in the cost of living and other needed 
improvements. We invite your attention to our written statement 
and the Independent Budget itself for details on those issues.
    Mr. Chairman, my final concern today is a serious one to 
the DAV, and also some of our sister organizations. The DAV 
believes that each veteran who is awarded compensation is 
entitled to the full payment and that no disabled veteran 
should be forced to obtain a private attorney to secure an 
accurate and humane disability rating from VA. Last year, 
Congress passed Public Law 109-461, which opened the claims 
process to attorneys.
    We at DAV do not believe private attorneys will ease 
resolution of veterans' claims--and I think the Secretary 
agreed with that--reduce the claims backlog, nor get these 
claims resolved on an expeditious basis--the historical intent 
of Congress. We have been advised by professionals in VBA that 
adding attorneys to the claims process will only complicate, 
lengthen, and make resolution of veterans' disability claims 
more difficult. How such a contentious new direction will 
actually help sick disabled veterans is beyond our ability to 
comprehend.
    Mr. Chairman, thank you for inviting DAV and the other 
member organizations of the Independent Budget to testify 
before the Senate today. I would be happy to answer any 
questions your Members may have.
    [The prepared statement of Mr. Violante follows:]
    Prepared Statement of Joseph A. Violante, National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee:
    I am pleased to have this opportunity to appear before you on 
behalf of the Disabled American Veterans (DAV), one of four national 
veterans organizations that create the annual Independent Budget (IB) 
for veterans programs, to summarize our recommendations for Fiscal Year 
(FY) 2008.
    As you know Mr. Chairman, the IB is a budget and policy document 
that sets forth the collective views of DAV, AMVETS, Paralyzed Veterans 
of America (PVA), and Veterans of Foreign Wars of the United States 
(VFW). Each organization accepts principal responsibility for 
production of a major component of our Independent Budget, but it is a 
budget and policy document on which we all agree. Reflecting that 
division of responsibility, my testimony focuses primarily on the 
variety of Department of Veterans Affairs' (VA) benefits programs 
available to veterans.
    In preparing this 21st Independent Budget, the four partners draw 
upon our extensive experience with veterans' programs, our firsthand 
knowledge of the needs of America's veterans, and the information 
gained from continuous monitoring of workloads and demands upon, as 
well as the performance of, the veterans benefits and services system. 
As a consequence, this Committee has acted favorably on many of our 
recommendations to improve services to veterans and their families. We 
ask that you give our recommendations full and serious consideration 
again this year.
      the veterans benefits administration is still understaffed 
                            and overwhelmed
    To improve administration of VA's benefits programs, the IB 
recommends Congress provide the Veterans Benefits Administration (VBA) 
$752 million in additional funding in Fiscal Year 2008 compared to the 
existing Fiscal Year 2007 funding level (assumed at the time of 
submission of this statement to be that level approved for VBA by the 
other Body in H. J. Res. 20, the Continuing Resolution for Fiscal Year 
2007, now pending consideration by the Senate). These additional funds, 
which would raise total funding for VBA to $1.9 billion in Fiscal Year 
2008, will provide the means to support a workable long-term strategy 
for improvement in claims processing and more adequate staffing for the 
discretionary programs under the jurisdiction of VBA. Included in our 
funding recommendation are new resources needed for additional VBA 
staff, training programs and information technologies to correspond 
with a more effective and efficient benefits delivery system. In total, 
if Congress accepts our recommendations for necessary funding increases 
to the General Operating Funds account, these new funds would bring new 
capabilities to VBA to better serve disabled veterans.
    Mr. Chairman, a core mission of VA is to provide financial 
disability compensation, dependency and indemnity compensation, and 
disability pension benefits to veterans and their dependent family 
members and survivors. These payments are intended by law to relieve 
economic effects of disability (and death) upon veterans, and to 
compensate their families for loss. For those payments to effectively 
fulfill their intended purposes, VA should deliver them promptly and 
based on sound adjudications. The ability of disabled veterans to feed, 
clothe, and provide shelter for themselves and their families often 
depends on VA benefits. Also, the need for financial support among 
disabled veterans can be urgent. While awaiting action by VA on their 
pending claims, they and their families must suffer hardships; 
protracted delays can lead to privation and even bankruptcy and 
homelessness. Some veterans have died while their claims for VA 
disability compensation or pension were unresolved for years at VA. In 
sum, VA disability benefits are critical to veterans and their 
families, Mr. Chairman. We believe meeting the needs of disabled 
veterans should always be a top priority of the Federal Government.
                    diversion from the real problem
    Recently VA has adopted a tactic of diverting public attention away 
from the growing claims backlog it holds by demonstrating great speed 
and efficiency in adjudicating the claims of soldiers and Marines who 
were severely wounded in the current conflicts in Iraq and Afghanistan. 
While VA is crowing that it is breaking all records in awarding these 
new veterans their rightful benefits, hundreds of thousands of claims 
from older veterans of prior conflicts and military service during 
earlier periods lie dormant, awaiting a vague future resolution. While 
we applaud VA's efforts to help new veterans, VA continues to fail 
older veterans every day that the backlog grows.
    Mr. Chairman, the backlog is unquestionably growing. Rather than 
making headway and overcoming the chronic claims backlog and consequent 
protracted delays in disposition of its claims, VA actually has lost 
ground on that problem. In fact, looking retrospectively over the past 
6 years, the backlog of claims has moved from the December 2000 total 
of 363,412, to the January 13, 2007 level of 606,239, a more than 80 
percent increase during a period when three VA Secretaries of both 
political parties have stated publicly on multiple occasions that 
reducing this backlog was their highest management priority. We also 
note that during this same period as these promises were being made in 
public, VBA staffing has essentially remained flat at about 9,000 full-
time employee equivalents (FTEE). As late as 1 week ago, 
representatives of our organizations heard senior VA officials brief us 
on the President's Fiscal Year 2008 budget, with what we could only 
call ``hopeful thinking'' that the backlog will be brought under 
control, but without disclosing any particular plan to fulfill that 
hope. It will not occur with the level of resources requested by the 
Administration.
    We believe that adequate staffing is essential to any meaningful 
strategy to get claims processing and backlogs under control. The IB 
recommends 10,675 FTEE for Compensation and Pension Service (C&P). 
During Fiscal Year 2004 and Fiscal Year 2005, the total number of 
compensation, pension, and burial claims received in C&P Service 
increased by 9 percent, from 735,275 at the beginning of Fiscal Year 
2003 to 801,960 at the end of Fiscal Year 2005. This represents an 
average annual growth rate in claims of 4.5 percent. During this same 
period, the number of pending claims requiring rating decisions 
increased by more than 33 percent. As the VA Under Secretary for 
Benefits has stated, ``[c]laims that require a disability rating 
determination are the primary workload component because they are the 
most difficult, time consuming, and resource intensive.'' With an aging 
veteran population and escalating U.S. military operations in Iraq and 
Afghanistan, we have no reason to believe that growth rate will 
decline. With a 9 percent increase over the Fiscal Year 2005 number of 
claims in 2006, VA should be expecting 874,136 claims in C&P Service in 
Fiscal Year 2007. Moreover, legislation requiring VA to invite veterans 
in six States to request review of past claims decisions and to require 
VA to conduct outreach to invite new claims from other veterans in 
these States will add substantially to the growing workload. Much of 
this new workload carried over into Fiscal Year 2007. Also, the 
Secretary's recent announcement of a special VA outreach effort to 
ensure non-service connected disability pensioners become aware of 
their potential eligibility for Aid and Attendance and Housebound 
benefits is sure to add even more claims to the existing backlog. While 
we appreciate such outreach efforts, as well as efforts to correct past 
injustices that may have occurred in particular States, VBA has a co-
equal responsibility to ensure it maintains a system capable of 
managing workload growth. We have not seen that system at work.
    In its budget submission for Fiscal Year 2007, VBA projected 
production based on an output of 109 claims per direct program FTEE. We 
have long argued that VA's production requirements do not allow for 
thorough development and careful consideration of disability claims, 
resulting in compromised decisions, higher error and appeal rates, and 
even more overload on the system. In addition to recommending staffing 
levels more commensurate with the workload, we have maintained that VA 
should invest more in training adjudicators and that it should hold 
them accountable for higher standards of accuracy. In response to 
survey questions from VA's Office of Inspector General, nearly half of 
the VBA adjudicators responding admitted that many claims are decided 
without adequate record development. They saw an incongruity between 
their objectives of making legally correct and factually substantiated 
decisions, with management objectives of maximizing output to meet 
production standards and reduce backlogs. Nearly half reported that it 
is generally, or very difficult, to meet production standards without 
compromising quality. Fifty-seven percent reported difficulty meeting 
production standards as they attempt to assure they have sufficient 
evidence for rating each case and thoroughly reviewing the evidence. 
Most attributed VA's inability to make timely and high quality 
decisions to insufficient staff. Also they indicated that adjudicator 
training had not been a high priority in VBA.
    To allow for more time to be invested in training, we believe it 
prudent to recommend staffing levels based on an output of 100 cases 
per year for each direct program FTEE. With an estimated 930,000 
incoming claims in Fiscal Year 2007, that effort would require 9,300 
direct program FTEE in Fiscal Year 2008. With support FTEE added, this 
would require C&P to be authorized 10,675 total FTEE for Fiscal Year 
2008.
    Instead of requesting the additional funds and personnel needed to 
accomplish better results over the past 5 years, the Administration 
sought, and Congress provided, fewer VBA resources. Recent budgets have 
requested actual reductions in full-time employees--the workforce that 
processes claims. Any reductions in VBA staffing would be clearly at 
odds with the realities of VBA's growing workload and its own well-
established adjudication procedures. Adjudication of veterans' claims 
is a labor-intensive and ``hands on'' system of personal 
decisionmaking, with lifelong consequences for disabled veterans. These 
management and political decisions to cut funding and reduce staffs 
have contributed to a diminished VA's quality of claims processing and 
to VA's loss of ground against its backlog. During Congressional 
hearings, VA is routinely forced to defend VBA budgets that it knows to 
be inadequate to the task at hand. The priorities and goals of the 
immediate stagnation are at odds with the need for a long-term strategy 
to fulfill VBA's mission and confirm the Nation's moral obligation to 
disabled veterans.
    Historically, many underlying causes have acted in concert to bring 
on this seemingly intractable problem. These include poor management, 
misdirected goals, lack of focus or the wrong focus on cosmetic fixes, 
poor planning and execution, and outright denial of the existence of 
the problem--rather than the development and execution of real 
strategic measures. These dynamics have been thoroughly detailed in 
several studies and reviews of the continuing problem, but they persist 
without remedy. While the problem has been exacerbated by lack of 
action, the IBVSOs believe most of the causes can be directly or 
indirectly traced to availability of resources. The problem was 
primarily triggered and is now perpetuated by chronic and insufficient 
resources.
                 unmet needs in information technology
    Mr. Chairman, in addition to boosting its staffing, we believe VBA 
must continue to upgrade its information technology infrastructure and 
revise its training tools to stay abreast of modern business practices, 
to maintain efficiency, and to meet increasing workload demands. In 
recent years, however, Congress has actually reduced funding for such 
VBA initiatives. With restored investments in its initiatives, VBA 
could complement staffing increases for higher workloads with a support 
infrastructure designed to increase operational effectiveness. VBA 
could resume an adequate pace in its development and deployment of 
information technology solutions, as well as upgrade and enhance 
training systems, to improve operations and service delivery. Some of 
these initiatives for priority funding are:
Replacement of the antiquated and inadequate Benefits Delivery Network 
        (BDN) with VETSNET for C&P, The Education Expert System (TEES) 
        for Education Service, and Corporate WINRS (CWINRS) for VR&E
    VETSNET serves to integrate several subsystems into one nationwide 
information system for claims development and adjudication and payment 
administration. TEES serves to provide for electronic transmission of 
applications and enrollment documentation along with automated expert 
processing. CWINRS is a case management and information system allowing 
for more efficient award processing and sharing of information 
nationwide.
Continued development and enhancement of data-centric benefits 
        integration with ``Virtual VA'' and modification of The Imaging 
        Management System (TIMS), which serve to replace paper-based 
        records with electronic files for acquiring, storing, and 
        processing claims data
    Virtual VA supports pension maintenance activities at three Pension 
Maintenance Centers. Further enhancement would allow for the entire 
claims and award process to be accomplished electronically.
    TIMS is the Education Service's system for electronic education 
claims files, storage of imaged documents, and workflow management. 
This initiative is to modify and enhance TIMS to make it fully 
interactive to allow for fully automated claims and award processing by 
Education Service and VR&E nationwide.
Upgrading and enhancement of training systems
    VA's Training and Performance Support Systems (TPSS) is a 
multimedia, multi-method training tool that applies Instructional 
Systems Development (ISD) methodology to train and support employee 
performance of job tasks. These TPSS applications require technical 
updating to incorporate changes in laws, regulations, procedures, and 
benefit programs. In addition to regular software upgrades, a help desk 
for users is needed to make TPSS work effectively.
    VBA initiated its ``Skills Certification'' instrument in 2004. This 
tool aids VBA in assessing the knowledge base of Veterans Service 
Representatives. VBA intends to develop additional skills certification 
modules to test Rating Veterans Service Representatives, Decision 
Review Officers, Field Examiners, Pension Maintenance Center employees, 
and Education Veterans Claims Examiners.
Accelerated implementation of Virtual Information Centers (VICs)
    By providing veterans regionalized telephone contact access from 
multiple offices within specified geographic locations, VA achieves 
greater efficiency and improved customer service. Accelerated 
deployment of VICs will more timely accomplish this beneficial effect.

    Congress has reduced funding for VBA initiatives every year since 
2001, from $82 million in Fiscal Year 2001 to $23 million in Fiscal 
Year 2006. The IB calls for restoration of funding for this purpose to 
the 2001 level, with a 5 percent adjustment for each year to cover 
inflation and increased demands upon the system. The IB therefore 
recommends that Congress provide $115.4 million for VBA initiatives in 
Fiscal Year 2008.
    The record should show we made many of these same recommendations 
last year, but unfortunately they did not attract supportive 
appropriations. The lack of funding for these existing VBA priorities 
manifests in reinforcing the existing backlogs and failing to serve 
disabled veterans.
    To meet its ongoing workload demands and to implement the important 
new initiatives the VA Vocational Rehabilitation and Employment Task 
Force recommended, VR&E needs increased staffing. As a part of its 
strategy to enhance accountability and efficiency, the Task Force 
recommended creation and training of 200 new staff positions for this 
purpose. Other new initiatives recommended by the Task Force also 
require an investment of personnel resources. With its increased 
reliance on contract services, VR&E also needs approximately 50 
additional FTE for management and oversight of contract counselors and 
employment service providers.
    VA has been striving to provide more timely and efficient service 
to its claimants for education benefits. Though the workload (number of 
applications and recurring certifications, etc.) increased by 11 
percent during Fiscal Year 2004 and Fiscal Year 2005, direct program 
FTEE were reduced from 708 at the end of Fiscal Year 2003 to 675 at the 
end of Fiscal Year 2005. Based on experience during Fiscal Year 2004 
and Fiscal Year 2005, it is very conservatively estimated that the 
workload will increase by 5.5 percent in Fiscal Year 2008. VA must 
increase staffing to meet the existing and added workload, or service 
to veterans seeking educational benefits will decline. Based on the 
number of direct program FTEE at the end of Fiscal Year 2003 in 
relation to the workload at that time, VBA must increase direct program 
staffing in its Education Service in Fiscal Year 2008 to 873 FTEE, 149 
more direct program FTEE than authorized for Fiscal Year 2006. With the 
addition of the 160 support FTEE as currently authorized, Education 
Service should be provided 1,033 total FTEE for Fiscal Year 2008.
    The benefit programs are effective for their intended purposes only 
to the extent VBA can deliver benefits to entitled veterans and 
dependents in a timely fashion. However, in addition to ensuring that 
VBA has the resources necessary to accomplish its mission in that 
manner, Congress must also make adjustments to the programs from time 
to time to address increases in the cost of living and needed 
improvements. We invite your attention to the IB itself for the details 
of those issues, but the following summarizes a number of 
recommendations to adjust rates and improve the benefit programs 
administered by VBA:

      Cost-of-living adjustments for compensation, specially 
adapted housing grants, and automobile grants, with provisions for 
automatic annual increases in the housing and automobile grants based 
on increases in the cost of living.
      A presumption of service connection for hearing loss and 
tinnitus for combat veterans and veterans who had military duties 
involving high levels of noise exposure who suffer from tinnitus or 
hearing loss of a type typically related to noise exposure or acoustic 
trauma.
      Removal of the provision that makes persons who first 
entered service before June 30, 1985, ineligible for the Montgomery GI 
Bill, along with other improvements to the program.
      No increase in, and eventual repeal of, funding fees for 
VA home loan guaranty.
      Increase in the maximum coverage and adjustment of the 
premium rates for Service-Disabled Veterans' Life Insurance.
      Increase in the maximum coverage available on policies of 
Veterans' Mortgage Life Insurance.
      Legislation to restore protections for veterans' benefits 
against awards to third parties in divorce actions.
      Legislation to increase Dependency and Indemnity 
Compensation for certain survivors of veterans, and to no longer offset 
DIC with Survivor Benefit Plan payments

    We hope the Committee will review these recommendations and give 
them consideration for inclusion in your legislative plans for 2007 and 
will support their funding in the eventual Congressional Budget 
Resolution for Veterans Benefits and Services for Fiscal Year 2008.
             the federal appeals court for veterans claims
    Another important component of our system of veterans' benefits is 
the right to appeal VA's benefits decisions to an independent court. 
The IB includes recommendations to improve the processes of judicial 
review in veterans' benefits matters. Again, we invite the Committee's 
attention to the IB for the details of these recommendations. In 
addition, the IB recommends that Congress enact legislation to 
authorize and fund construction of a courthouse and justice center for 
the United States Court of Appeals for Veterans Claims.
   a related and urgent concern: assured funding for va medical care
    A continuing major concern of this Independent Budget is gaining 
and keeping adequate funding for veterans medical care. Because the 
Administration typically seeks funding substantially below the amount 
necessary to maintain health care services for veterans and because 
discretionary appropriations have continually fallen short of what is 
needed, the IB supports legislation to fund VA medical care under a 
mandatory account or an assured formula to obviate the political 
wrangling we have observed every year for the past twelve fiscal years, 
and now including this year as well. Pending his return to duties in 
the Senate, Senator Tim Johnson of South Dakota has committed to the 
veterans service organization community his pledge to again introduce a 
bill this year that would resolve VA health care's chronic funding 
shortages. Mr. Chairman, as soon as practicable, we urge you to 
schedule a legislative hearing on this bill, and we ask for an 
opportunity to testify on its merits.
              the importance of national guard and reserve
    Benefits Mr. Chairman, the decade-long trend of the Nation's 
increasing reliance on National Guard, Air National Guard, and the 
Reserve forces of the Army, Navy and Marine Corps, Air Force and Coast 
Guard, for national security and disaster call-ups at home, and for 
peacekeeping and combat deployments overseas, bears no sign of 
abatement. Our reliance on Guard and Reserve forces has grown since the 
pre-Persian Gulf War era, and this trend continues even though both 
Reserve and active duty force levels remain far below their cold war 
peak.
    Since September 11, 2001, over 410,000 individuals who serve in 
National Guard and Reserve forces have been mobilized for a variety of 
military, police and security actions. Increasing demands on these 
serving members impose significant and repeated family separations and 
create additional uncertainties and interruptions in their civilian 
career opportunities. Furthermore, Guard and Reserve recruiting, 
retention, morale and readiness are already at considerable risk. The 
Nation cannot afford to promote the perception that we undervalue the 
great sacrifices and level of commitment being demanded from the Guard 
and Reserve community.
    Various incentive, service and benefit programs designed a half 
century ago for a far different Guard and Reserve philosophy and 
mission are no longer adequate to address demands on today's Guard and 
Reserve forces. Accordingly, we believe steps must be taken by Congress 
to upgrade National Guard and Reserve benefits and support programs to 
a level commensurate with the sacrifices being made by these patriotic 
volunteers. Such enhancements should provide Guard and Reserve 
personnel a level of benefits comparable to their active duty 
counterparts and provide one means to ease the tremendous stresses now 
being imposed on Guard and Reserve members and their families, and to 
bring the relevance of these benefits into 21st century application. 
With concern about the current missions of the Guard and Reserve 
forces, Congress must take necessary action to upgrade and modernize 
Guard and Reserve benefits, to include more comprehensive health care, 
equivalent Montgomery G.I. Bill educational benefits, and full 
eligibility for the VA Home Loan guaranty program.
    Mr. Chairman, the members of the serving Guard and Reserve forces 
are now ``veterans'' for purposes of the benefits and services 
authorized under Title 38, United States Code. However, the Code was 
fashioned over the past 65 years primarily to address the needs of the 
``citizen soldier,'' an individual who either enlisted in war or was 
conscripted, served the minimum enlistment or period required, then 
returned to civilian life as a veteran. The current generation of Guard 
and Reserve members present very different needs as a consequence of 
their service, and the kind and variety of service we demand of them as 
a Nation. We ask the Senate to closely examine the needs of Guard and 
Reserve members now serving and to consider measures to provide them 
with effective benefits and services of a grateful government.
                         attorneys in va claims
    Mr. Chairman, my final concern today is a serious one of DAV and 
also of some of our sister organizations, but in deference to some that 
take an alternate view, it is not a major issue in the Independent 
Budget. As directed by law, VA has a duty to assist veterans in 
developing and presenting their claims for disability. Congress 
established the Federal Court discussed above to hear disputes that 
arise after VA adjudicates those claims, and veterans possess the right 
by law to appeal their disagreements with decisions and to redress 
their grievances to a unique Board of Veterans Appeals. That self-
checking, unique, system exists because national veterans 
organizations, including the IBVSOs, have insisted historically that 
veterans' war injuries and other service-related health problems be 
dealt with in a humane manner, and without friction or rancor to the 
greatest extent practicable. Despite the problems we encounter in VBA 
decisionmaking and operations as related above, we believe that design 
works, although not as well as intended. The question before the Senate 
is resources to empower those mechanisms to work better and additional 
oversight to ensure it works as intended.
    The DAV believes that each veteran who is awarded compensation is 
entitled to full payment, and that no disabled veteran should be forced 
to obtain a private attorney to secure an accurate and humane 
disability rating from VA. Nevertheless, against the advice of the DAV 
and others, last year in Public Law 109-461 Congress authorized private 
attorneys and agents to engage for pay in veterans' disability claims 
representation duties, opening the way for significantly altering the 
foundations of the disability claims adjudication system--a system that 
has been in place since the founding of the Nation. We at DAV continue 
to believe this was an unwise action and ask for its repeal.
    Mr. Chairman, on adoption of a motion by Representative Stevenson 
Archer of Maryland, on December 22, 1813, the House of Representatives 
established the predecessor to its current Committee on Veterans 
Affairs, for the following stated purpose: ``to take into consideration 
all such petitions, and matters, or things, touching military pensions, 
and, also claims and demands originating in the Revolutionary War, or 
arising therefrom, as shall be presented, or shall or may come in 
question, and be referred to them by the House; and to report their 
opinion thereupon together with such propositions for relief therein, 
as to them shall seem expedient.'' [Emphasis added.] What this history 
demonstrates, Mr. Chairman, is that almost 200 years ago Congress, then 
playing a primitive executive role, intended to provide disabled 
Revolutionary veterans their rightful relief--and with expediency. 
While throughout our history that goal has never flagged, your 21st 
century injection of private attorneys into that non-adversarial 
process may serve to change it now.
    We at DAV do not believe private attorneys will ease resolution of 
veterans' claims, reduce the claims backlog, nor get these claims 
resolved on an expedient basis--the historical intent of Congress. We 
have been advised by professionals in VBA that your adding attorneys to 
the claims system will only complicate, lengthen and make more 
fractious the resolution of veterans' disability claims. As an 
organization that furnishes 260 National Service Officers to aid 
veterans with their claims, we believe our own work at DAV will be 
compromised and made much more expensive once private lawyers enter in. 
How such an inevitably contentious new direction will actually help 
sick and disabled veterans receive their just compensation, pension and 
survivor benefits, we cannot foretell, but we know it will not be easy. 
We ask the Committee to take legislative action to repeal this measure 
at the earliest date possible.
    Mr. Chairman, thank you for inviting DAV and other member 
organizations of the Independent Budget to testify before the Senate 
today. I will be happy to answer any of your or other Members' 
questions concerning these issues.

    Chairman Akaka. Thank you very much, Mr. Violante.
    Mr. Greineder?

 STATEMENT OF DAVID G. GREINEDER, DEPUTY NATIONAL LEGISLATIVE 
                        DIRECTOR, AMVETS

    Mr. Greineder. Thank you. Mr. Chairman, Mr. Craig, Members 
of the Committee, thank you for inviting AMVETS to this 
important hearing on VA's budget request for Fiscal Year 2008. 
As a co-author of the Independent Budget, AMVETS is pleased to 
give you our best estimates on the resources necessary to carry 
out the responsibilities of the National Cemetery 
Administration.
    The Administration requests approximately $167 million in 
discretionary funding for operations and maintenance of the 
NCA, $167.4 million for major construction, $24.4 million for 
minor construction, as well as $32 million for the State 
Cemetery Grants program. The members of the Independent Budget 
recommend Congress provide $218.3 million for the operational 
requirements of NCA, a figure that includes our National Shrine 
Initiative. In total, our funding recommendation represents a 
$51.5 million increase over the Administration's request.
    The national cemetery system continues to be seriously 
challenged. Adequate resources and developed acreage must keep 
pace with the increasing workload. The NCA expects to perform 
nearly 105,000 interments in 2008, an 8.4 percent increase 
since 2006. By 2009, annual interments are expected to reach 
117,000.
    Congress also needs to address the need for gravesite 
renovation and upkeep. Though there has been noteworthy 
progress made over the years, the NCA is still struggling to 
remove decades of blemishes and scars from military burial 
grounds across the country. Congress has approved funding in 
recent years aimed to restore the appearance of national 
cemeteries, but, frankly, more needs to be done. Therefore, we 
recommend Congress establish a 5-year, $250 million National 
Shrine Initiative to restore and improve the condition and 
character of NCA cemeteries. We recommend $50 million in Fiscal 
Year 2008 to begin this important initiative. By enacting a 5-
year program with dedicated funds and an ambitious schedule, 
the national cemetery system can fully serve all veterans and 
their families with the utmost dignity, respect, and 
compassion.
    For funding the State Cemetery Grants Program, the 
Independent Budget recommends $37 million for Fiscal Year 2008. 
The State Cemetery Grants Program is an important component of 
the NCA. It has greatly assisted States to increase burial 
services to veterans, especially those living in less densely 
populated areas not currently served by a national veterans 
cemetery.
    Many States have difficulty meeting the ``170,000 veterans 
within 75 miles'' requirement from national cemeteries, which 
is why the State grant program is so important. Since 1978, the 
VA has more than doubled the acreage available and accommodated 
more than a 100 percent increase in their burials through these 
grants.
    The Independent Budget also strongly recommends that 
Congress review a series of burial benefits that have eroded in 
value over the years. While these benefits were never intended 
to cover the full cost of burial, they now pay for just 6 
percent of what they covered in 1973. Our recommended increase 
is modest and will restore the allowance to its original 
proportion of burial expense, about 22 percent, and will tell 
veterans that their sacrifice is given the appreciation that is 
so well deserved.
    The NCA honors veterans with a final resting place that 
commemorates their service to this Nation. More than 2.7 
million soldiers who died in every war and conflict are honored 
by burial in a national cemetery. Our national cemeteries are 
more than a final resting place. They are hallowed ground to 
those who died in our defense and a memorial to those who 
served.
    Mr. Chairman, this concludes my statement. Thank you again.
    [The prepared statement of Mr. Greineder follows:]
               Prepared Statement of David G. Greineder, 
              Deputy National Legislative Director, AMVETS
    Chairman Akaka, Ranking Member Craig, and Members of the Committee:
    AMVETS is honored to join our fellow Veterans Service Organizations 
and partners at this important hearing on the Department of Veterans 
Affairs budget request for Fiscal Year 2008. My name is David G. 
Greineder, Deputy National Legislative Director of AMVETS, and I am 
pleased to provide you with our best estimates on the resources 
necessary to carry out a responsible budget for VA.
    AMVETS testifies before you as a co-author of The Independent 
Budget. This is the 21st year AMVETS, the Disabled American Veterans, 
the Paralyzed Veterans of America, and the Veterans of Foreign Wars 
have pooled their resources together to produce a unique document, one 
that has stood the test of time.
    The IB, as it has come to be called, is our blueprint for building 
the kind of programs veterans deserve. Indeed, we are proud that over 
60 veteran, military, and medical service organizations endorse these 
recommendations. In whole, these recommendations provide decisionmakers 
with a rational, rigorous, and sound review of the budget required to 
support authorized programs for our Nation's veterans.
    In developing this document, we believe in certain guiding 
principles. Veterans should not have to wait for benefits to which they 
are entitled. Veterans must be ensured access to high-quality medical 
care. Specialized care must remain the focus of VA. Veterans must be 
guaranteed timely access to the full continuum of health care services, 
including long-term care. And, veterans must be assured burial in a 
state or national cemetery in every state.
    Today, I will specifically address the National Cemetery 
Administration (NCA); however, I would like to briefly comment on the 
Administration's budget request coming out of the Office of Management 
and Budget (OMB) just 3 days ago.
    Everyone knows that the VA healthcare system is the best in the 
country, and responsible for great advances in medical science. VHA is 
uniquely qualified to care for veterans' needs because of its highly 
specialized experience in treating service-connected ailments. The 
delivery care system can provide a wide array of specialized services 
to veterans like those with spinal cord injuries and blindness. This 
type of care is very expensive and would be almost impossible for 
veterans to obtain outside of VA.
    Because veterans depend so much on VA and its services, AMVETS 
believes it is absolutely critical that the VA healthcare system be 
fully funded. It is important our Nation keep its promise to care for 
the veterans who made so many sacrifices to ensure the freedom of so 
many. With the expected increase in the number of veterans, a need to 
increase VA health care spending should be an immediate priority this 
year. We must remain insistent about funding the needs of the system, 
and the recruitment and retention of vital health care professionals, 
especially registered nurses. Chronic under funding has led to 
rationing of care through reduced services, lengthy delays in 
appointments, higher copayments and, in too many cases, sick and 
disabled veterans being turned away from treatment.
    Looking at the Administration's budget released last Monday, The 
Independent Budget recommends Congress provide $36.3 billion to fund VA 
medical care for Fiscal Year 2008. We ask you to recognize that the VA 
healthcare system can only bring quality health care if it receives 
adequate and timely funding.
    The best way to ensure VA has access to adequate and timely 
resources is through mandatory, or assured, funding. I would like to 
clearly state that AMVETS along with its Independent Budget partners 
strongly supports shifting VA healthcare funding from discretionary 
funding to mandatory. We recommend this action because the current 
discretionary system is not working. Moving to mandatory funding would 
give certainty to healthcare services. VA facilities would not have to 
deal with the uncertainty of discretionary funding, which has been 
inconsistent and inadequate for far too long. Most importantly, 
mandatory funding would provide a comprehensive and permanent solution 
to the current funding problem.
                  the national cemetery administration
    The Independent Budget acknowledges the dedicated and committed NCA 
staff who continue to provide the highest quality of service to 
veterans and their families despite funding shortfalls, aging 
equipment, and increasing workload. The devoted staff provides aid and 
comfort to hurting veterans' families in a very difficult time, and we 
thank them for their consolation.
    The NCA currently maintains more than 2.7 million gravesites at 124 
national cemeteries in 39 states and Puerto Rico. At the end of 2007, 
66 cemeteries will be open to all interments; 16 will accept only 
cremated remains and family members of those already interred; and 43 
will only perform interments of family members in the same gravesite as 
a previously deceased family member.
    VA estimates that about 27 million veterans are alive today. They 
include veterans from World War I, World War II, the Korean War, the 
Vietnam War, the Gulf War, the conflicts in Afghanistan and Iraq, and 
the Global War on Terrorism, as well as peacetime veterans. With the 
anticipated opening of the new national cemeteries, annual interments 
are projected to increase from approximately 102,000 in 2006 to 117,000 
in 2009. It is expected that one in every six of these veterans will 
request burial in a national cemetery.
    The NCA is responsible for five primary missions:
    (1) To inter, upon request, the remains of eligible veterans and 
family members and to permanently maintain gravesites;
    (2) To mark graves of eligible persons in national, state, or 
private cemeteries upon appropriate application;
    (3) To administer the state grant program in the establishment, 
expansion, or improvement of state veterans cemeteries;
    (4) To award a Presidential certificate and furnish a United States 
flag to deceased veterans; and
    (5) to maintain national cemeteries as national shrines sacred to 
the honor and memory of those interred or memorialized.
NCA Budget Request
    The Administration requests $166.8 million for the NCA for Fiscal 
Year 2008. The members of The Independent Budget recommend that 
Congress provide $218.3 million and 30 FTE for the operational 
requirements of NCA, the National Shrine Initiative, and the backlog of 
repairs. We recommend your support for a budget consistent with NCA's 
growing demands and in concert with the respect due every man and woman 
who wears the uniform of the United States Armed Forces.
    The national cemetery system continues to be seriously challenged. 
Though there has been progress made over the years, the NCA is still 
struggling to remove decades of blemishes and scars from military 
burial grounds across the country. Visitors to many national cemeteries 
are likely to encounter sunken graves, misaligned and dirty grave 
markers, deteriorating roads, spotty turf and other patches of decay 
that have been accumulating for decades. If the NCA is to continue its 
commitment to ensure national cemeteries remain dignified and 
respectful settings that honor deceased veterans and give evidence of 
the Nation's gratitude for their military service, there must be a 
comprehensive effort to greatly improve the condition, function, and 
appearance of all our national cemeteries.
    In accordance with ``An Independent Study on Improvements to 
Veterans Cemeteries,'' which was submitted to Congress in 2002, The 
Independent Budget again recommends Congress establish a 5-year, $250 
million ``National Shrine Initiative'' to restore and improve the 
condition and character of NCA cemeteries as part of the FY 2008 
operations budget.
    It should be noted that the NCA has done an outstanding job thus 
far in improving the appearance of our national cemeteries, but we have 
a long way to go to get us where we need to be. By enacting a 5-year 
program with dedicated funds and an ambitious schedule, the national 
cemetery system can fully serve all veterans and their families with 
the utmost dignity, respect, and compassion.
                   the state cemetery grants program
    The State Cemetery Grants Program (SCGP) complements the NCA 
mission to establish gravesites for veterans in those areas where the 
NCA cannot fully respond to the burial needs of veterans. Several 
incentives are in place to assist states in this effort. For example, 
the NCA can provide up to 100 percent of the development cost for an 
approved cemetery project, including design, construction, and 
administration. In addition, new equipment, such as mowers and 
backhoes, can be provided for new cemeteries. Since 1978, the 
Department of Veterans Affairs has more than doubled acreage available 
and accommodated more than a 100 percent increase in burials through 
this program.
    To help provide reasonable access to burial options for veterans 
and their eligible family members, The Independent Budget recommends 
$37 million for the SCGP for Fiscal Year 2008. The availability of this 
funding will help states establish, expand, and improve state-owned 
veterans' cemeteries.
    Many states have difficulties meeting the requirements needed to 
build a national cemetery in their respective state. The large land 
areas and spread out population in these areas make it difficult to 
meet the ``170,000 veterans within 75 miles'' national veterans 
cemetery requirement. Recognizing these challenges, VA has implemented 
several incentives to assist states in establishing a veterans 
cemetery. For example, the NCA can provide up to 100 percent of the 
development cost for an approved cemetery project, including design, 
construction, and administration.
Burial Benefits
    There has been serious erosion in the value of the burial allowance 
benefits over the years. While these benefits were never intended to 
cover the full costs of burial, they now pay for only a small fraction 
of what they covered in 1973, when the Federal Government first started 
paying burial benefits for our veterans.
    In 2001, the plot allowance was increased for the first time in 
more than 28 years, to $300 from $150, which covers approximately 6 
percent of funeral costs. The Independent Budget recommends increasing 
the plot allowance from $300 to $745, an amount proportionally equal to 
the benefit paid in 1973.
    In the 108th Congress, the burial allowance for service-connected 
deaths was increased from $500 to $2,000. Prior to this adjustment, the 
allowance had been untouched since 1988. The Independent Budget 
recommends increasing the service-connected burial benefit from $2,000 
to $4,100, bringing it back up to its original proportionate level of 
burial costs.
    The non-service-connected burial allowance was last adjusted in 
1978, and also covers just 6 percent of funeral costs. The Independent 
Budget recommends increasing the non-service-connected burial benefit 
from $300 to $1,270.
    The NCA honors veterans with a final resting place that 
commemorates their service to this Nation. More than 2.7 million 
soldiers who died in every war and conflict are honored by burial in a 
VA national cemetery. Each Memorial Day and Veterans Day we honor the 
last full measure of devotion they gave for this country. Our national 
cemeteries are more than the final resting place of honor for our 
veterans, they are hallowed ground to those who died in our defense, 
and a memorial to those who survived.
    Mr. Chairman, this concludes my testimony. I thank you again for 
the privilege to present our views, and I would be pleased to answer 
any questions you might have.

    Chairman Akaka. Thank you very much, Mr. Greineder.
    And now Mr. Cullinan.

STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
     SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

    Mr. Cullinan. Thank you very much, Chairman Akaka, Senator 
Craig, distinguished Members of the Committee. It is certainly 
a pleasure to be here today on behalf of the men and women of 
the Veterans of Foreign Wars and the constituent members of the 
Independent Budget to discuss our recommendations on 
construction.
    The Department of Veterans Affairs construction budget for 
the past few years has been dominated by the CARES process. 
Throughout CARES, the IBVSOs were greatly concerned with the 
underfunding of the construction budget. Congress and the 
Administration did devote many resources to VA's 
infrastructure, preferring to wait for final results of CARES--
sorry--I meant to say, did not devote any resources to VA's 
infrastructure.
    In passing Independent Budgets, we warned against this, 
pointing out that there were a number of legitimate 
construction needs identified by local managers of VA 
facilities. A number of facilities were authorized, but funding 
was never appropriated with the ongoing CARES being used as the 
primary excuse. Within this context, and while generally 
appreciative of a good budget recommendation by the 
Administration, we must point out that the Fiscal Year 2008 
budget for the construction portion is far from adequate.
    Chairman Akaka, you have our written statement. I will just 
now highlight some of our major concerns in this context.
    In putting our construction recommendations together, we 
have our own in-house expertise, but we far from rely upon that 
alone. We also consult people outside of the VSO community. We 
look at things like the Pricewaterhouse study. The Presidential 
Task Force on VA has been a terrific source of information with 
respect to coming up with our calculations, our percentile 
adjustments on VA construction.
    When we are looking at the shape of VA facilities, we look 
at VA's own Facility Condition Assessment document as best we 
can lay our hands on it to come up with projections on that.
    We can tell you that Pricewaterhouse among others have 
pointed out that VA does not recapitalize its physical plant 
quickly enough. The Presidential Task Force, for example, 
recommends a recapitalization rate of 5 to 8 percent. I believe 
that at this time VA only recapitalizes--keeps up its 
infrastructure at a rate of about half of a percent, which 
would mean an average VA facility would have to last about 155 
years.
    For the medical portion of the construction budget, the IB 
recommends a 4 percent recapitalization rate. Well, that is 
about $1.4 billion. To emphasize this, we point to the fact 
that in 2004, then-Secretary Principi said before the House 
Veterans' Affairs Committee that major construction for VA 
under CARES would have to be at $1 billion a year for 5 years 
to keep up. In 2004, the VA got about $750 million for this 
purpose, and in subsequent years it was only about $.5 billion 
a year. So it is far below what was needed.
    With respect to major construction for medical care, this 
year the President's budget only asks for about $5.11 million 
for medical care, and it is far below what we are asking for, 
as I just mentioned the amount of $1.4 billion, which is 
actually a rather modest request.
    Lastly, we would point to the fact that the 2007 capital 
plan, that would only fund 8 of the partially funded projects 
out of the top list of 20. Furthermore, in the 2008 capital 
plan, again, the President's budget recommendation is only $511 
million. This would only fund 6 projects of the 12 partially 
funded that, as I just mentioned, are receiving some funding. 
Six others are not funded at all. And in that Capital Asset 
Plan, with respect to scored projects, those projects which 
have some sort of priority of attention, none of 27 is funded. 
So, in short, there is no funding for new projects in the 2008 
budget. We find that to be highly problematic.
    I will touch briefly on minor construction. The Capital 
Plan illuminates some 300 projects. The IB calls for $450 
million to address these--again, a modest request. We point to 
the fact that the Administration's budget for this purpose 
would only be about $180 million, again, for VHA.
    Another point here, in the initial planning document of 
CARES, it was there indicated that VA should have $2 billion 
under minor construction alone. Again, it is clear that we are 
falling behind in this capacity.
    Mr. Blake earlier talked about non-recurring maintenance. 
Again, this is a very serious concern. Industry standard, this 
should occur at about a rate of 2 to 4 percent per year or $800 
million to $1.6 billion. The VA's own Capital Asset Management 
Plan indicates $800 million to $1.6 billion a year in keeping 
with that calculation. Again, the Administration's budget only 
calls for about $573 million, falling far short.
    There are other things I would like to touch on, Mr. 
Chairman, but I see the red light blinking. Thank you very 
much.
    [The prepared statement of Mr. Cullinan follows:]
    Statement of Dennis M. Cullinan, Director, National Legislative 
         Service, Veterans of Foreign Wars of the United States
    On behalf of the 2.4 million men and women of the Veterans of 
Foreign Wars of the United States (VFW), this Nation's largest combat 
veterans' organization, I would like to thank you for the opportunity 
to testify today on the Fiscal Year 2008 budget for the Department of 
Veterans Affairs (VA).
    The VA construction budget has, for the past few years, been 
dominated by the Capital Asset Realignment for Enhanced Services 
(CARES) process.
    CARES is a system-wide, data-driven assessment of VA's capital 
infrastructure. It aimed to identify the needs of veterans to aid in 
the planning of future and realignment of current VA facilities to most 
efficiently meet those needs. It was not just a one-time evaluation but 
also the creation of a process and framework to continue to determine 
veterans' future requirements.
    Throughout the entire CARES process, The Independent Budget 
Veterans Service Organizations (IBVSOs) were highly supportive, as long 
as VA emphasized the ``ES''--enhanced services--portion of the acronym.

     2001--CARES pilot study in Network 12 (Chicago, Illinois; 
Wisconsin; and Upper Michigan) completed.
     2002--Phase II of CARES began in all other networks of VA 
individually, to be compiled in the Draft National CARES Plan.
     2003--August: Draft National CARES Plan submitted to CARES 
Commission to review and gather public input.
     2004--February: VA Secretary receives CARES Commission 
recommendations.
     2004--May: VA Secretary announces his decision on CARES, 
but calls for additional ``CARES Business Plan Studies'' at 18 sites 
throughout the country.

    These CARES Business Plan Studies are available on VA's CARES Web 
site, www.va.gov/cares. As of December 2006, only ten of these studies 
have been completed, despite VA's stated June 2006 deadline. The IBVSOs 
look forward to the final results so that implementation of these 
important plans can go forward.
    The IBVSOs believe that all decisions on CARES should be consistent 
with the CARES Decision document and its established priorities, or 
with the findings of the CARES Review Commission that largely confirmed 
those priorities. Proposed changes or deviation from the plan should 
undergo the same rigorous data validation as the original projects.
    CARES was intended to be an apolitical, data-driven process that 
looked out for the best interest of veterans throughout the entire 
system. We are certainly pleased that the Secretary and Members of 
Congress are interested in the future of VA capital facilities, but we 
urge all involved to maintain consistency with the apolitical process 
that, as agreed to by all parties--stakeholders included--would provide 
the best way to determine future VA infrastructure needs to 
sufficiently care for all veterans. This was the hallmark of the CARES 
plan.
    Throughout the CARES process, the IBVSOs were greatly concerned 
with the underfunding of the construction budget. Congress and the 
Administration did not devote many resources to VA's infrastructure, 
preferring to wait for the final results of CARES. In past Independent 
Budgets we warned against this, pointing out that there were a number 
of legitimate construction needs identified by the local manager of VA 
facilities. A number of facilities were authorized, including House 
passage of the ``Veterans Hospital Emergency Repair Act,'' but funding 
was never appropriated, with the ongoing CARES review being used as the 
primary excuse.
    At the time, the IBVSOs argued that a de facto moratorium on 
construction was unnecessary because of our conviction that a number of 
these projects needed to go forward and that they would be fully 
justified in any future plans produced through CARES. Despite this 
reasonable argument, funding never came, and VA lost progress on 
hundreds of millions of dollars that otherwise would have been invested 
to meet the system's critical infrastructure needs.
    The IBVSOs continue to believe that this deferral of all major VA 
construction projects was poor policy. In the five-plus years the 
process took, construction and maintenance improvements lagged far 
beyond what the system truly needed. With CARES nearly complete, 
funding has not yet been proposed by the Administration nor approved by 
Congress to address the very large project backlog that has grown.
    We note this year that both Veterans' Committees have considered 
legislation that would authorize resumption of VA major medical 
facility construction projects, but with the breakdown of the 
appropriations process, these projects died with the end of the 109th 
Congress.
    In July 2004, VA Secretary Anthony Principi testified before the 
Health Subcommittee of the House Committee on Veterans' Affairs. In his 
testimony, he noted that CARES ``reflects a need for additional 
investments of approximately $1 billion per year for the next 5 years 
to modernize VA's medical infrastructure and enhance veterans' access 
to care.'' Since that statement, however, the amount actually 
appropriated by Congress for VA major medical facility construction has 
fallen far short of that goal; in Fiscal Year 2007, the Administration 
recommended a paltry $399 million for major construction.
    After that 5-year de facto moratorium and without additional 
funding coming forth, VA facilities have an even greater need than they 
did at the start of the CARES process. Accordingly, we urge the 
Administration and the Congress to live up to the Secretary's words by 
making a steady investment in VA's capital infrastructure to bring the 
system up to date with the needs of 21st century veterans.
    For major construction, the IBVSOs recommend $1.602 billion in 
funding. This includes funding for the projects on VA's priority list, 
advanced planning, and for construction costs for a number of new 
national cemeteries in accordance with the NCA strategic plan.

 
------------------------------------------------------------------------
                                                        Funding (dollars
                       Category                           in thousands)
------------------------------------------------------------------------
CARES.................................................         1,400,000
Master Planning.......................................            20,000
Advanced Planning.....................................            45,000
Asbestos..............................................             5,000
Claims Analyses.......................................             3,000
Judgment Fund.........................................             2,000
Hazardous Waste.......................................             2,000
National Cemetery Administration......................            95,000
Staff Offices.........................................             5,000
Historic Preservation.................................            25,000
                                                       -----------------
    Total.............................................        $1,602,000
------------------------------------------------------------------------


    For minor construction, the IBVSOs recommend a total of 
$541 million, the bulk of which will go toward the more than 
100 minor construction projects identified by VA in its 5-year 
capital plan in Fiscal Year 2008.

 
------------------------------------------------------------------------
                                                        Funding (dollars
                       Category                           in thousands)
------------------------------------------------------------------------
CARES/Non-CARES.......................................           450,000
National Cemetery Administration......................            40,000
Veterans Benefits Administration......................            35,000
Staff.................................................             6,000
Advanced Planning.....................................            10,000
                                                       -----------------
    Total.............................................          $541,000
------------------------------------------------------------------------


Department of Veterans Affairs (VA) does not have adequate provisions 
        to protect against deterioration and declining capital asset 
        value.
    The last decade of underfunded construction budgets has led to a 
reduction in the recapitalization of VA's facilities. Recapitalization 
is necessary to protect the value of VA's capital assets by renewing 
the physical infrastructure to ensure safe and fully functional 
facilities. Failure to adequately invest in the system will result in 
its deterioration, creating even greater costs down the road.
    As in past years, we continue to cite the Final Report of the 
President's Task Force to Improve Health Care Delivery for our Nation's 
veterans (PTF). The PTF noted that in the period from 1996-2001, VA's 
recapitalization rate was 0.64 percent, which corresponds to an assumed 
building life of 155 years. When maintenance and restoration are 
factored into VA's major construction budget, VA annually invests less 
than 2 percent of plant replacement value in the system. The PTF 
observed that a minimum of 5 to 8 percent per year is necessary to 
maintain a healthy infrastructure and that failure to adequately fund 
could lead to unsafe, dysfunctional settings.
    Congress and the Administration must ensure that there are adequate 
funds for major and minor construction so that VA can properly reinvest 
in its capital assets to protect their value and ensure that health 
care can be provided in safe and functional facilities long into the 
future.
The deterioration of many Department of Veterans Affairs (VA) 
        properties requires increased spending on nonrecurring 
        maintenance.
    A Pricewaterhouse study looked at VA facilities management and 
recommended that VA spend at least 2 to 4 percent of its plant 
replacement value on upkeep. Nonrecurring maintenance (NRM) consists of 
small projects that are essential to the proper maintenance and to the 
preservation of the life span of VA's facilities. Examples of these 
projects include maintenance to roofs, replacement of windows, and 
upgrades to the mechanical or electrical systems.
    Each year, VA grades each medical center, creating a facility 
condition assessment (FCA). These FCAs give a letter grade to various 
systems at each facility and assign a cost estimate associated with 
repairs or replacement. The latest FCAs have identified $4.9 billion 
worth of necessary repairs in projects with a letter grade of ``D'' or 
``F.'' F's must be taken care of immediately, and D's are in need of 
serious repairs or represent pieces of equipment reaching the end of 
their usable life. Most of these projects would be reparable using NRM 
funds.
    Another concern with NRM is with how it is allocated. NRM is under 
the Medical Care account and is distributed to various VISNs through 
the Veterans Equitable Resource Allocation (VERA) process. While this 
does move the money toward the areas with the highest demand for health 
care, it tends to move money away from facilities with the oldest 
capital structures, which generally need the most maintenance. It also 
could increase the tendency of some facilities to use maintenance money 
to address shortfalls in medical care funding.
    VA should spend $1.6 billion on NRM to make up for the lack of 
proper funding in previous years and to keep VA on the right track with 
maintenance for the future.
    VA must also resist the temptation to dip into NRM funding for 
health-care needs, as this could lead to far greater expenses down the 
road.
Veterans and staff continue to occupy buildings known to be at 
        extremely high risk because of seismic deficiencies.
    The Independent Budget Veterans Service Organizations (IBVSOs) 
continue to be concerned with the seismic safety of the Department of 
Veterans Affairs (VA) facilities. The July 2006 Seismic Design 
Requirements report noted the existence of 73 critical VA facilities 
that, based on FEMA definitions, are at a ``moderately high'' or 
greater risk of seismic incident. Twenty-four of these have been deemed 
``very high'' risk, the highest standard.
    To address the safety of veterans and employees, VA includes 
seismic corrections in its annual list of projects to Congress. In 
conjunction with the Capital Asset Realignment for Enhanced Services 
process, progress is being made on eight of these facilities. More is 
needed, and, accordingly, funding will need to increase.
    For efficiency, most seismic correction projects should also 
include patient care enhancements as part of their total scope. Seismic 
correction typically includes lengthy and widespread disruption to 
hospital operations; it would be prudent to make medical care 
improvements at the same time to minimize disruptions in the future. 
While this approach is the most practical for the delivery of health 
care and services as well as for cost-effectiveness, it also results in 
higher upfront project costs, which would require an increase in the 
construction budget.
    Congress must appropriate adequate construction funding to correct 
these critical seismic deficiencies.
    VA should schedule facility improvement projects concurrently with 
seismic corrections.
Each Department of Veterans Affairs (VA) medical center needs to 
        develop a detailed master plan.
    This year's construction budget should include at least $20 million 
to fund architectural master plans. Without these plans, the Capital 
Asset Realignment for Enhanced Services (CARES) medical benefits will 
be jeopardized by hasty and short-sighted construction planning.
    The Independent Budget Veterans Service Organizations believe that 
each VA medical center should develop a facility master plan to serve 
as a clear roadmap to where the facility is going in the future. It 
should be an inclusive document that includes multiple projects for the 
future in a cohesive strategy.
    In many cases, VA plans construction in a reactive manner. Projects 
are funded first and then fitted onto the site. Each project is planned 
individually and not necessarily with respect to other ongoing projects 
or ones planned for the future. It is essential that each medical 
center has a plan that looks at the big picture to efficiently utilize 
space and funding. If all projects are not simultaneously planned, for 
example, the first project may be built in the best site for the second 
project. Master plans would prevent short-sighted construction that 
restricts, rather than expands, future options.
    Every new project in the master plan is a step in achieving the 
long-range CARES objectives. These plans must be developed so that all 
future projects can be prioritized, coordinated and phased. They are 
essential to efficiently use resources, but also to minimize disruption 
to VA patients and employees. Medical priorities, for example, must be 
adjusted for construction sequencing. If infrastructure changes must 
precede new construction, master plans will identify this so that 
schedules and budgets can be adjusted. Careful phasing is essential to 
avoid disrupting the delivery of medical care, and the correct planning 
of such will ensure that cost estimates of this phased-construction 
approach will be more accurate.
    There may be cases, too, where master planning will challenge the 
original CARES decisions, whether due to changing demand, unidentified 
need, or other cause. If CARES, for example, calls for the use of 
renovated space for a relocated program and a more comprehensive 
examination as part of a master plan later indicates that the site is 
impractical, different options should be considered. Master plans will 
help to correct and update invalid planning assumptions.
    VA must be mindful that some CARES plans involve projects 
constructed at more than one medical center. Master plans, as a result, 
most coordinate the priorities of both medical centers. Construction of 
a new SCI facility, for example, might be a high priority for the 
``gaining'' facility, but a lower priority for the ``donor'' facility. 
It may be best to fund and plan the two actions together, even though 
they are split between two different facilities.
    Another essential role of master planning is its use to account for 
three critical programs that VA left out of the initial CARES process: 
long-term care, severe mental illness, and domiciliary care. Because 
these were omitted, there is a strong need for a comprehensive plan, 
and a full facility master plan will help serve as a blueprint for each 
facility's needs in these essential areas.
    VA must ensure that each medical center develops and continues to 
work on long-range master plans to validate strategic planning 
decisions, prepare accurate budgets, and implement efficient 
construction that minimizes wasted expenses and disruptions to patient 
care.
    Congress must appropriate $20 million to allow each VA medical 
facility to develop architectural master plans to serve as roadmaps for 
the future.
    Each facility master plan should address long-term care, including 
plans for those with severe mental illness, and domiciliary care 
programs, which were omitted from the CARES process.
    VA must develop a format for these master plans so that there is 
standardization throughout the system, even though planning work will 
be performed by local contractors in each Veterans Integrated Service 
Network.
The Department of Veterans Affairs (VA) must develop a strategic plan 
        for the infrastructure needs of these important programs.
    The initial Capital Asset Realignment for Enhanced Services (CARES) 
plan did not take long-term care or the mental health considerations of 
veterans into account when making recommendations. We were pleased that 
the CARES Review Commission recognized the need for proper accounting 
of these critical components of care in VA's future infrastructure 
planning. However, we continue to await VA's development of a long-term 
care strategic plan to meet the needs of aging veterans. The Commission 
recommended that VA ``develop a strategic plan for long-term care that 
includes policies and strategies for the delivery of care in 
domiciliary, residential treatment facilities and nursing homes, and 
for older seriously mentally ill veterans.''
    Moreover, the Commission recommended that the plan include 
strategies for maximizing the use of state veterans' homes, locating 
domiciliary units as close to patient populations as feasible and 
identifying freestanding nursing homes as an acceptable care model. In 
absence of that plan, VA will be unable to determine its future capital 
investment strategy for long-term care.
VA must take a proactive approach to ensure that the infrastructure and 
        support networks needed by veterans will be there for them in 
        the future.
    We also concur with the CARES Commission's recommendations that VA 
take action to ensure consistent availability of mental health services 
across the system to include mental health care at community-based 
clinics along with the appropriate infrastructure to match demand for 
these specialized services. This is important in light of the growing 
demand for these types of services, especially among those returning 
from overseas in the wars in Iraq and Afghanistan.
    VA must develop a long-term care strategic plan to account for the 
needs of aging veterans now and into the future. This should include 
care options for older veterans with serious mental illnesses.
    VA must also develop plans to provide for the infrastructure needs 
associated with mental health care services, especially with the 
unprecedented current need for these services, and the likely 
tremendous long-term need of our returning servicemembers.
The Department of Veterans Affairs (VA) must not use empty space 
        inappropriately.
    Studies have suggested that the VA medical system has extensive 
amounts of empty space that can be reused for medical services. It has 
also been suggested that unused space at one medical center may help 
address a deficiency that exists at another location. Although the 
space inventories are accurate, the assumption regarding the 
feasibility of using this space is not.
    Medical facility planning is complex. It requires intricate design 
relationships for function, but also because of the demanding 
requirements of certain types of medical equipment. Because of this, 
medical facility space is rarely interchangeable, and if it is, it is 
usually at a prohibitive cost. Unoccupied rooms on the eighth floor, 
for example, cannot be used to offset a deficiency of space in the 
second floor surgery ward. Medical space has a very critical need for 
inter- and intradepartmental adjacencies that must be maintained for 
efficient and hygienic patient care.
    When a department expands or moves, these demands create a domino 
effect of everything around it, and these secondary impacts greatly 
increase construction expense and they can disrupt patient care.
    Some features of a medical facility are permanent. Floor-to-floor 
heights, column spacing, light, and structural floor loading cannot be 
altered. Different aspects of medical care have different requirements 
based upon these permanent characteristics. Laboratory or clinical 
spacing cannot be interchanged with ward space because of the needs of 
different column spacing and perimeter configuration. Patient wards 
require access to natural light and column grids that are compatible 
with room-style layouts. Labs should have long structural bays and 
function best without windows. When renovating empty space, if the area 
is not suited to its planned purpose, it will create unnecessary 
expenses and be much less efficient.
    Renovating old space rather than constructing new space creates 
only a marginal cost savings. Renovations of a specific space typically 
cost 85 percent of what a similar, new space would. When you factor in 
the aforementioned domino or secondary costs, the renovation can end up 
costing more and produce a less satisfactory result. Renovations are 
sometimes appropriate to achieve those critical functional adjacencies, 
but it is rarely economical.
    Many older VA medical centers that were rapidly built in the 1940s 
and 1950s to treat a growing veteran population are simply unable to be 
renovated for more modern needs. Most of these Bradley-style buildings 
were designed before the widespread use of air conditioning and the 
floor-to-floor heights are very low. Accordingly, it's impossible to 
retrofit them for modern mechanical systems. They also have long, 
narrow wings radiating from a small central core, which is an 
inefficient way of laying out rooms for modern use. This central core, 
too, has only a few small elevator shafts, complicating the vertical 
distribution of modern services.
    Another important problem with this unused space is its location. 
Much of it is not located in a prime location; otherwise it would have 
been previously renovated or demolished for new construction. This 
space is typically located in outlying buildings or on upper floor 
levels and is unsuitable for modern use.
    VA should develop a plan for addressing its excess space in non-
historic properties that are not suitable for medical or support 
functions due to their permanent characteristics or locations.
The Department of Veterans Affairs (VA) must continue to develop and 
        revise facility design guides for spinal cord injury/spinal 
        cord disorders.
    With the largest health-care system in the U.S., VA has an 
advantage in its ability do develop, evaluate, and refine the design 
and operation of its many facilities. Every new clinic's design can 
benefit from lessons learned from the construction and operation of 
previous clinics. VA also has the unique opportunity to learn from 
medical staff, engineers, and from its users--veterans and their 
families--as to what their needs are, allowing them to generate 
improvements to future designs.
    As part of this, VA provides design guides for certain types of 
facilities that provide care to veterans. These guides are rough tools 
used by the designer, clinician, staff, and management during the 
design process. These design guides, which are viewable on the 
Facilities Management Web page, cover a variety of types of care.
    These design guides, due to modernization of equipment and lessons 
learned at other facilities, should be revised regularly. Some of the 
design guides have not been updated in over a decade, despite the 
massive transition of the VA health-care system from an inpatient-based 
system. The Independent Budget Veterans Service Organizations (IBVSOs) 
understand that VA intends to regularly update these guides, and we 
would urge that increased funding be allocated to the Advanced Planning 
Fund to revise and update these essential guides.
    As in past years, the IBVSOs would note the need for guides for 
long-term care at spinal cord injury/dysfunction (SCI/D) centers. It is 
important that these guides be separate from the guides that call for 
acute care as the needs of the two are dramatically different.
    These facilities must be less institutional in their character with 
a more homelike environment. Rooms and communal space should be 
designed to accommodate patients who will be living at these facilities 
for a long time. They must include simple ideas that would improve the 
daily life of these patients. Corridor length should be limited. They 
should include wide areas with windows to create tranquil places or 
areas to gather. Centers should have courtyard areas where the climate 
is temperate and indoor solariums where it is not. We believe that a 
complete guideline for these facilities would also include a discussion 
of design philosophies that emphasize the quality of life of these 
patients, and not just the specific criteria for each space. Because 
the type of care these patients need is unique, it is essential that 
this type of design guidance is available to contracted architects.
    VA must revise and update their design guides on a regular basis.
    VA should develop a long-term care design guide for SCI/D centers 
to accommodate the special needs of these unique patients.
The Department of Veterans Affairs' extensive inventory of historic 
        structures must be protected and preserved.
    VA has an extensive inventory of historic structures, which 
highlight America's long tradition of providing care to veterans. These 
buildings and facilities enhance our understanding of the lives of 
those who have worn the uniform, and who helped to develop this great 
Nation. Of the approximately 2,000 historic structures, many are 
neglected and deteriorate year after year because of a lack of funding. 
These structures should be stabilized, protected, and preserved because 
of their importance.
    Most of these facilities are not suitable for modern patient care, 
and, as a result, a preservation strategy was not included in the 
Capital Asset Realignment for Enhanced Services process. As a first 
step in addressing its responsibility to preserve and protect these 
buildings, VA must develop a comprehensive program for these historic 
properties.
    VA must make an inventory of these properties, classifying their 
physical condition and their potential for adaptive reuse. Medical 
centers, local governments, nonprofit organizations or private sector 
businesses could potentially find a use for these important structures 
that would preserve them into the future.
    The Independent Budget Veterans Service Organizations recommend 
that VA establish partnerships with other Federal departments, such as 
the Department of the Interior, and with private organizations, such as 
the National Trust for Historic Preservation. Their expertise would be 
helpful in creating this new program.
    As part of its adaptive reuse program, VA must ensure that 
facilities that are leased or sold are maintained properly for 
preservation's sake. VA's legal responsibilities could, for example, be 
addressed through easements on property elements, such as building 
exteriors or grounds. We would point to the partnership between the 
Department of the Army and the National Trust for Historic Preservation 
as an example of how VA could successfully manage its historic 
properties.
    P.L. 108-422, the Veterans Health Programs Improvement Act, 
authorized historic preservation as one of the uses of a new capital 
assets fund that receives funding from the sale or lease of VA 
property. We applaud its passage, and encourage its use.
    VA must begin a comprehensive program to preserve and protect its 
inventory of historic properties.
    We thank you for allowing us to testify today, and we would be 
happy to answer any questions that you or the Committee may have.

    Chairman Akaka. Thank you. Thank you very much for your 
testimony.
    Mr. Robertson?

 STATEMENT OF STEVE ROBERTSON, DIRECTOR, NATIONAL LEGISLATIVE 
                  COMMISSION, AMERICAN LEGION

    Mr. Robertson. Thank you, Mr. Chairman, for the invitation. 
I would like to submit also for the record my official opening 
remarks, and instead I would like to talk more to the issues 
that were addressed at the initial panel.
    The comment about change, I have been here 19 years working 
in the legislative arena, and in that 19 years, there has been 
a lot of change. When I first came here, the biggest complaint 
I got from legionnaires around the country was the quality of 
care in the VA system. Now, people are trying to get into the 
system, and that is their biggest complaint. The quality of 
care is superb, and it is well documented. But a lot of the 
changes we have made have been good changes. Senator Craig, the 
only thing that I have not seen change is the way we go about 
funding the system, and that is driving me insane. I will give 
you an example: third-party collections.
    You know, when eligibility reform was passed in 1996, it 
was a good idea. It opened the system and made it easier to get 
the quality of care, the right place, the right type of care. 
It moved to an outpatient system where we were being proactive 
rather than reactive to treating patients, and we looked at 
ways to fund this. And at the time of eligibility reform, we 
really thought we were going to get Medicare reimbursements. We 
thought we would be reimbursed by all the insurance companies 
that participated. We even thought that the veterans that did 
not have insurance would be able to pay some toward the health 
care that they got.
    But, unfortunately, what we wound up with was a third-party 
collection goal that is very rarely achieved and is deducted 
from the appropriations. So, I mean, yes, we made a good 
change, but it turned around biting us. When you have a 
shortage in third-party collections, that is a real shortage.
    The issue of this enrollment fee--and I hear terms being 
switched around, calling it a ``premium'' or ``enrollment'' 
fee--what it is, is a user fee. You are paying to be able to 
use the system. And, unfortunately, there are service-connected 
veterans that are in Priority Groups 7 and 8, and at the 
rollout, I asked a specific question: ``Would the 0 percent 
service-connected non-compensable be required to pay the 
enrollment fee?'' And the answer was yes. And I would encourage 
the Committee to write that question and get it in black and 
white from the Secretary so we have it documented for the 
record.
    Medicare-eligible people that pay Part A, Part B, and Part 
D would also have to pay the Government once again to access 
the system that many of them were in the Greatest Generation 
that saved the country. And you are going to require them to 
pay this extra fee to the Government.
    Then you have got other people that have other insurance, 
TRICARE, TRICARE for Life, FEHBP. If they want to come to the 
VA, ``the best health care system in the country,'' you are 
going to tack on whatever amount of money that they are going 
to have to pay as an additional user fee for a system that they 
are entitled to have.
    You also have veterans that file a claim, a disability 
claim, and they are waiting on that claim to be decided. They 
may also be Priority Group 8s or 7s, and you are, again, asking 
them to pay while you are waiting for their claim to be 
finalized.
    Then you have recently separated veterans that did not 
serve in OEF/OIF. They may not even be able to enroll because 
they did not go overseas.
    The one thing I learned about the military is once you 
raise your hand and say, ``I will serve this country,'' from 
that point on you do not have another decision in the military 
except when you are ready to leave. So where you get assigned 
is not your choice. It is the Government's choice. But yet 
these veterans, even though their honorable military service 
may have occurred in a missile field in North Dakota, they are 
being denied access to a system that they should have access 
to.
    The increased number of claims, Senator Craig, that you 
asked about, that is kind of a self-induced thing because now 
we have said that the only way you can enroll in the system is 
if you are service-connected or economically indigent. So it is 
an incentive for people to file a claim so that they can 
qualify to go to the system that was there for them from the 
very beginning.
    There is also a lot of people who are facing up to 
disabilities that they previously had ignored. They were doing 
the John Wayne thing, you know: ``I fought the war. I won. I 
will go home now.'' But now whatever medical condition is 
manifested to where they need to have access to the system.
    There are also court decisions that drive claims to be 
reprocessed through that had originally been denied, but 
because of medical research, whatever, those claims now are 
valid. So they were denied initial access, and that is why they 
are refiling their claim, because it is the right thing to do.
    Mr. Chairman, I got to tell you, you have got a tough act 
to follow in Senator Craig. In my 19 years, I don't remember a 
Chairman holding as many hearings as Senator Craig held as 
Chairman. So you have got a tough act to follow. But you have 
got the staff and the people around you to make it work.
    Senator Craig. I am here to help him. There will be more.
    [Laughter.]
    Mr. Robertson. Thank you, Mr. Chairman. That concludes my 
remarks.
    [The prepared statement of Mr. Robertson follows:]
           Prepared Statement of Steve Robertson, Director, 
            National Legislative Commission, American Legion
    Mr. Chairman and Members of the Committee:
    I thank you for this opportunity to present the views of its 2.7 
million members on the President's Fiscal Year 2008 budget request.
    The President's Fiscal Year 2008 budget request is designed to 
allow VA to address its three highest priorities:
     Provide timely, high-quality health care to veterans who 
need VA the most--those with service-connected disabilities, lower 
incomes, special health care needs, and service in Operation Iraqi 
Freedom and Operation Enduring Freedom.
     Address the significant increase in claims for 
compensation and pension.
     Ensure the burial needs of veterans and their eligible 
family members are met, and maintain veterans' cemeteries as national 
shrines.
    The American Legion will continue to work with the Secretary, 
Congress and the entire veterans' community to ensure that VA is indeed 
capable of providing the highest quality health care services ``. . . 
for him who shall have borne the battle and for his widow and his 
orphan.'' In 1996, Eligibility Reform was enacted to reopen the VA 
health care system to all eligible veterans within existing 
appropriations. Therefore, the challenge faced is to make sure no 
veteran in need of health care is ever turned away from a VA medical 
care facility as a result of budgetary shortfalls.
    There is no question that all service-connected disabled veterans 
and economically disadvantaged veterans must receive timely access to 
quality health care; however, their comrades-in-arms should also 
receive their earned benefit--enrollment in the VA health care delivery 
system. Rather than supporting legislative proposals designed to drive 
veterans from the world's best health care delivery system, The 
American Legion will continue to advocate new revenue streams to allow 
any veteran to receive VA health care.
    Equally as important, The American Legion remains steadfastly in 
support of achieving timely adjudication of VA disability claims and 
pensions. As a nation at war, the expectation of an increase in the 
number of new disability claims is apparent. The newest generation of 
wartime veterans rightly deserve timely adjudication of their claims. 
Again, the Secretary, Congress and the veterans' community must work 
toward meaningful solutions to the ever-increasing backlog of veterans' 
disability claims. Increased funding and additional staffing is a solid 
first step toward change.
    The American Legion fully supports the goals of the National 
Cemetery Administration. The addition of new national cemeteries and 
state veterans' cemeteries is critical in meeting the growing need.
    With that in mind, The American Legion offers the following 
budgetary recommendations for selected discretionary programs within 
the Department of Veterans Affairs for Fiscal Year 2008:

 
----------------------------------------------------------------------------------------------------------------
                                                                                 President's
                          Program                             FY06 Funding         Request      Legion's Request
----------------------------------------------------------------------------------------------------------------
Medical Care..............................................     $30.8 billion      36.6 billion      38.4 billion
Medical Services..........................................      22.1 billion      27.2 billion        29 billion
Medical Administration....................................       3.4 billion       3.4 billion       3.4 billion
Medical Facilities........................................       3.3 billion       3.6 billion       3.6 billion
Medical Care Collections..................................       (2 billion)     (2.4 billion)      2.4 billion*
Medical and Prosthetics Research..........................       412 million       411 million       472 million
Construction:
Major.....................................................       1.6 billion       727 million       1.3 billion
Minor.....................................................       233 million       233 million       279 million
State Extended Care Facilities Grant Program..............        85 million        85 million       250 million
State Veterans' Cemetery Grants Program...................        32 million        32 million        42 million
National Cemetery Administration..........................       149 million       166 million       178 million
General Administration....................................       294 million       274 million       300 million
Information Technology....................................       1.2 billion       1.9 billion       1.9 billion
----------------------------------------------------------------------------------------------------------------
*Third-party reimbursements should supplement rather than offset discretionary funding.


                              medical care
    The Department of Veterans Affairs' standing as the Nation's leader 
in providing safe, high-quality health care in the health care industry 
(both public and private) is well documented. Now VA is also recognized 
internationally as the benchmark for health care services:
     December 2004, RAND investigators found that VA 
outperforms all other sectors of the U.S. health care industry across a 
spectrum of 294 measures of quality in disease prevention and 
treatment;
     In an article published in the Washington Monthly (Jan./ 
Feb. 2005) ``The Best Care Anywhere'' featured the VA health care 
system;
     In the prestigious Journal of the American Medical 
Association (May 18, 2005) noted that VA's health care system has ``. . 
. quickly emerged as a bright star in the constellation of safety 
practice, with system-wide implementation of safe practices, training 
programs and the establishment of four patient-safety research 
centers.'';
     The U.S. News and World Report (July 18, 2005) issue 
included a special report on the best hospitals in the country titled 
``Military Might--Today's VA Hospitals Are Models of Top-Notch Care'' 
highlighting the transformation of VA health care;
     The Washington Post (Aug. 22, 2005) ran a front-page 
article titled ``Revamped Veterans' Health Care Now a Model'' 
spotlights VA health care accomplishments;
     In 2006, VA received the highly coveted and prestigious 
``Innovations in American Government'' Award from Harvard's Kennedy 
School of Government for its advanced electronic health records and 
performance measurement system; and
     Recently, in January 2007, the medical journal Neurology 
wrote: ``The VA has achieved remarkable improvements in patient care 
and health outcomes, and is a cost-effective and efficient 
organization.''

    Although VA is considered a national resource, the Secretary of 
Veterans Affairs continues to prohibit the enrollment of any new 
Priority Group 8 veterans, even if they are Medicare-eligible or have 
private insurance coverage. This prohibition is not based on their 
honorable military service, but rather on limited resources provided to 
the VA medical care system. For 2 years following receiving an 
honorable discharge, veterans from Operations Enduring Freedom and 
Iraqi Freedom are able to receive health care through VA, but many of 
their fellow veterans and those of other armed conflicts may very well 
be denied enrollment due to limited existing appropriations. This is 
truly a national tragedy.
    As the Global War on Terrorism continues, fiscal resources for VA 
will continue to be stretched to their limits and veterans will 
continue to go to their elected officials requesting additional money 
to sustain a viable VA capable of caring for all veterans, not just the 
most severely wounded or economically disadvantaged. VA is often the 
first experience veterans have with the Federal Government after 
leaving the military. This Nation's veterans have never let this 
country down; Congress and VA should do its best to not let veterans 
down.
    The President's budget request for Fiscal Year 2008 calls for 
Medical Care funding to be $36.6 billion, which is about $1.8 billion 
less than The American Legion's recommendation of $38.4 billion. The 
major difference is the President's budget requests continues to offset 
the discretionary appropriations by its Medical Care Collection Fund's 
goal ($2.4 billion), whereas The American Legion considers this 
collection as a supplement since it is for the treatment of nonservice-
connected medical conditions.
Medical Services
    The President's budget request assumes the enrollment of new 
Priority Group 8 veterans will remain suspended. The American Legion 
strongly recommends reconsidering this ``lockout'' of eligible 
veterans, especially for those veterans who are Medicare-eligible, 
military retirees enrolled in TRICARE or TRICARE for Life, or have 
private health care coverage. Successful seamless transition from 
military service should not be penalized, but rather encouraged. This 
prohibition sends the wrong message to recently separated veterans. No 
eligible veteran should be ``locked out'' of the VA health care 
delivery system.
    The VA health care system enjoys a glowing reputation as the best 
health care delivery system in the country, so why ``lock out'' any 
eligible veteran, especially those that have the means to reimburse VA 
for services received? New revenue streams from third-party 
reimbursements and copayments can supplement the ``existing 
appropriations,'' but sound fiscal management initiatives are required 
to enhance third-party collections of reasonable charges.
    In Fiscal Year 2008, VA expects to treat 5.8 million patients (an 
increase of 2.4 percent). According to the President's budget request, 
VA will treat over 125,000 more Priority 1-6 veterans in 2008 
representing a 3.3 percent increase over the number of these priority 
veterans treated in 2007. Priority 7 and 8 veterans are projected to 
decrease by over 15,000 or 1.1 percent from 2007 to 2008. However, VA 
will provide medical care to non-veterans; this population is expected 
to increase by over 24,000 patients or 4.8 percent over this same time 
period. In 2008, VA anticipates treating 263,000 Operation Iraqi 
Freedom (OIF) and Operation Enduring Freedom (OEF) veterans, an 
increase of 54,000 patients, or 25.8 percent, over the 2007 level.
    The American Legion supports the President's mental health 
initiative to provide $360 million to deliver mental health and 
substance abuse care to eligible veterans in need of treatment of 
seriously mental illness, to include post-traumatic stress disorder.
    The American Legion remains opposed to the concept of charging an 
enrollment fee for an earned benefit. Although the President's new 
proposal is a tiered approach targeted at Priority Groups 7 and 8 
veterans currently enrolled, the proposal does not provide improved 
health care coverage, but rather creates a fiscal burden for the 1.4 
million Priority Groups 7 and 8 patients. This initiative clearly 
projects further reductions in the number of Priority Groups 7 and 8 
veterans leaving the system for other health care alternatives. This 
proposed vehicle for gleaning of veterans would apply to both service-
connected disabled veterans as well as nonservice-connected disabled 
veterans in Priority Groups 7 and 8.
    The American Legion also remains opposed to the President's 
proposed increase in VA pharmacy copays from the current $8 to $15 for 
enrolled Priority Groups 7 and 8 veterans. This proposal would nearly 
double current pharmacy costs to this select group of veterans.
    The American Legion recommends $29 billion for Medical Services, 
$1.8 billion more than the President's budget request of $27.2 billion.
Medical Administration
    The President's budget request of $3.4 billion is a slight increase 
in Fiscal Year 2006 funding level. VA plans to transfer 3,721 full-time 
equivalents from Medical Administration to Information Technology in 
Fiscal Year 2008. The American Legion applauds the President 
recommending this level of funding.
Medical Facilities
    The President's budget request of $3.6 billion is about $234 
million more than the Fiscal Year 2006 funding level. The American 
Legion agrees with this recommendation to maintain VA existing 
infrastructure of 4,900 buildings and over 15,700 acres. In Fiscal Year 
2008, VA will transfer 5,689 full-time equivalents from Medical 
Facilities to Medical Services. It has been determined that the costs 
incurred for hospital food service workers, provisions and related 
supplies are for the direct care of patients which Medical Services is 
responsible for providing.
Medical Care Collection Fund (MCCF)
    The Balanced Budget Act of 1997, Public Law 105-33, established the 
VA Medical Care Collections Fund (MCCF), requiring that amounts 
collected or recovered from third-party payers after June 30, 1997 be 
deposited into this fund. The MCCF is a depository for collections from 
third-party insurance, outpatient prescription copayments and other 
medical charges and user fees. The funds collected may only be used for 
providing VA medical care and services and for VA expenses for 
identification, billing, auditing and collection of amounts owed the 
Federal Government. The American Legion supported legislation to allow 
VA to bill, collect, and reinvest third-party reimbursements and 
copayments; however, The American Legion adamantly opposes the scoring 
of MCCF as an offset to the annual discretionary appropriations since 
the majority of the collected funds come from the treatment of 
nonservice-connected medical conditions. Historically, these collection 
goals far exceed VA's ability to collect accounts receivable.
    In Fiscal Year 2006, VA collected nearly $2 billion, a significant 
increase over the $540 million collected in Fiscal Year 2001. VA's 
ability to capture these funds is critical to its ability to provide 
quality and timely care to veterans. Miscalculations of VA required 
funding levels results in real budgetary shortfall. Seeking annual 
emergency supplemental is not the most cost-effective means of funding 
the Nation's model health care delivery system.
    Government Accountability Office (GAO) reports have described 
continuing problems in VHA's ability to capture insurance data in a 
timely and correct manner and raised concerns about VHA's ability to 
maximize its third-party collections. At three medical centers visited, 
GAO found an inability to verify insurance, accepting partial payment 
as full, inconsistent compliance with collections follow-up, 
insufficient documentation by VA physicians, insufficient automation 
and a shortage of qualified billing coders were key deficiencies 
contributing to the shortfalls. VA should implement all available 
remedies to maximize its collections of accounts receivable.
    The American Legion opposes offsetting annual VA discretionary 
funding by the arbitrarily set MCCF goal, especially since VA is 
prohibited from collecting any third-party reimbursements from the 
Nation's largest federally mandated, health insurer--Medicare.
Medicare Reimbursement
    As do most American workers, veterans pay into the Medicare system 
without choice throughout their working lives, including active-duty. A 
portion of each earned dollar is allocated to the Medicare Trust Fund 
and although veterans must pay into the Medicare system, VA is 
prohibited from collecting any Medicare reimbursements for the 
treatment of allowable, nonservice-connected medical conditions. This 
prohibition constitutes a multi-billion dollar annual subsidy to the 
Medicare Trust Fund. The American Legion does not agree with this 
policy and supports Medicare reimbursement for VHA for the treatment of 
allowable, nonservice-connected medical conditions of allowable 
enrolled Medicare-eligible veterans.
    As a minimum, VA should receive credit for saving the Centers for 
Medicare and Medicaid Services billions of dollars in annual mandatory 
appropriations.
                    medical and prothestics research
    The American Legion believes that VA's focus in research should 
remain on understanding and improving treatment for conditions that are 
unique to veterans. The Global War on Terrorism is predicted to last at 
least two more decades. Servicemembers are surviving catastrophically 
disabling blast injuries in Iraq, Afghanistan and elsewhere due to the 
superior armor they are wearing in the combat theater and the timely 
access to quality triage. The unique injuries sustained by the new 
generation of veterans clearly demands particular attention. There have 
been reported problems of VA not having the state-of-the-art 
prostheses, like DOD, and that the fitting of the prostheses for women 
has presented a problems due to their smaller stature.
    In addition, The American Legion supports adequate funding for 
other VA research activities, including basic biomedical research as 
well as bench-to-bedside projects. Congress and the Administration 
should encourage acceleration in the development and initiation of 
needed research on conditions that significantly affect veterans--such 
as prostate cancer, addictive disorders, trauma and wound healing, 
post-traumatic stress disorder, rehabilitation, and others jointly with 
DOD, the National Institutes of Health (NIH), other Federal agencies, 
and academic institutions.
    The American Legion recommends $472 million for Medical and 
Prosthetics Research in Fiscal Year 2008, $61 million more than the 
President's budget request of $411 million.
                              construction
Major Construction
    Over the past several years, Congress has kept a tight hold on the 
purse strings that control the funding needs for the construction 
program within VA. The hold out, presumably, is the development of a 
coherent national plan that will define the infrastructure VA will need 
in the decades to come. VA has developed that plan and it is CARES. The 
CARES process identified more than 100 major construction projects in 
37 states, the District of Columbia, and Puerto Rico. Construction 
projects are categorized as major if the estimated cost is over $7 
million. Now that VA has a plan to deliver health care through the year 
2022, it is up to Congress to provide adequate funds. The CARES plan 
calls for, among other things, the construction of new hospitals in 
Orlando and Las Vegas and replacement facilities in Louisville and 
Denver for a total cost estimate of well over $1 billion alone for 
these four facilities. VA has not had this type of progressive 
construction agenda in decades. Major construction money can be 
significant and proper utilization of funds must be well planned out. 
The American Legion is pleased to see six medical facility projects 
(Pittsburgh, Denver, Orlando, Las Vegas, Syracuse, and Lee County, FL) 
included in this budget request.
    In addition to the cost of the proposed new facilities are the many 
construction issues that are virtually ``put on hold'' for the past 
several years due to inadequate funding and the moratorium placed on 
construction spending by the CARES process. One of the most glaring 
shortfalls is the neglect of the buildings sorely in need of seismic 
correction. This is an issue of safety. Hurricane Katrina taught a very 
real lesson on the unacceptable consequences of procrastination. The 
delivery of health care in unsafe buildings cannot be tolerated and 
funds must be allocated to not only construct the new facilities, but 
also to pay for much-needed upgrades at existing facilities. Gambling 
with the lives of veterans, their families and VA employees is 
absolutely unacceptable.
    The American Legion believes that VA has effectively shepherded the 
CARES process to its current state by developing the blueprint for the 
future delivery of VA health care--it is now time for Congress to do 
the same and adequately fund the implementation of this comprehensive 
and crucial undertaking.
    The American Legion recommends $1.3 billion for Major Construction 
in Fiscal Year 2008, $573 million more than the President's budget 
request of $727 million to fund more pending ``life-safety'' projects.
Minor Construction
    VA's minor construction program has suffered significant neglect 
over the past several years as well. The requirement to maintain the 
infrastructure of VA's buildings is no small task. Because the 
buildings are old, renovations, relocations and expansions are quite 
common. When combined with the added cost of the CARES program 
recommendations, it is easy to see that a major increase over the 
previous funding level is crucial and well overdue.
    The American Legion recommends $279 million for Minor Construction 
in Fiscal Year 2008, $46 million more than the President's budget 
request of $233 million to address more CARES proposal minor 
construction projects.
        capital asset realignment for enhanced services (cares)
    In March 1999, GAO published a report on VA's need to improve 
capital asset planning and budgeting. GAO estimated that over the next 
few years, VA could spend one of every four of its health care dollars 
operating, maintaining, and improving capital assets at its national 
major delivery locations, including 4,700 buildings and 18,000 acres of 
land nationwide.
    Recommendations stemming from the report included the development 
of asset-restructuring plans for all markets to guide future investment 
decisionmaking, among other initiatives. VA's answer to GAO and 
Congress was the initiation and development of the Capital Asset 
Realignment for Enhanced Services (CARES) program.
    The CARES initiative is a blueprint for the future of VHA--a fluid, 
work in progress, in constant need of reassessment. In May 2004, the 
long awaited final CARES decision was released. The decision directed 
VHA to conduct 18 feasibility studies at those health care delivery 
sites where final decisions could not be made due to inaccurate and 
incomplete information. VHA contracted PricewaterhouseCoopers (PwC) to 
develop a broad range of viable options and, in turn, develop business 
plans based on a limited number of selected options. To help develop 
those options and to ensure stakeholder input, then-VA Secretary 
Principi constituted the Local Advisory Panels (LAPs), which are made 
up of local stakeholders. The final decision on which business plan 
option will be implemented for each site lies with the Secretary of 
Veterans Affairs.
    The American Legion is dismayed over the slow progress in the LAP 
process and the CARES initiative overall. Both Stage I and Stage II of 
the process include two scheduled LAP meetings at each of the sites 
being studied with the whole process concluding on or about February 
2006.
    It wasn't until April 2006, after nearly a 7-month hiatus, that 
Secretary Nicholson announced the continuation of the services at Big 
Spring, Texas, and like all the other sites, has only been through 
Stage I. Seven months of silence is no way to reassure the veterans' 
community that the process is alive and well. The American Legion 
continues to express concern over the apparent short-circuiting of the 
LAPs and the silencing of the stakeholders. The American Legion intends 
to hold accountable those who are entrusted to provide the best health 
care services to the most deserving population--the Nation's veterans.
    Upon conclusion of the initial CARES process, then-Secretary 
Principi called for a ``billion dollars a year for the next 7 years'' 
to implement CARES. The American Legion continues to support that 
recommendation and encourages VA and Congress to ``move out'' with 
focused intent.
              state extended care facility grants program
    Since 1984, nearly all planning for VA inpatient nursing home care 
has revolved around State Veterans' Homes and contracts with public and 
private nursing homes. The reason for this is obvious; VA paid a per 
diem of $59.48 for each veteran it placed in State Veterans' Homes, 
compared to the $354 VA pays to maintain a veteran for 1 day in its own 
nursing home care units.
    Under the provisions of title 38, United States Code, VA is 
authorized to make payments to states to assist in the construction and 
maintenance of State Veterans' Homes. Today, there are 109 State 
Veterans' Homes in 47 states with over 23,000 beds providing nursing 
home, hospital, and domiciliary care. Grants for Construction of State 
Extended Care Facilities provide funding for 65 percent of the total 
cost of building new veterans homes. Recognizing the growing long-term 
health care needs of older veterans, it is essential that the State 
Veterans' Home Program be maintained as a viable and important 
alternative health care provider to the VA system. The American Legion 
opposes any attempts to place moratoria on new State Veterans' Home 
construction grants. State authorizing legislation has been enacted and 
state funds have been committed. The West Los Angeles State Veterans' 
Home, alone, is a $125 million project. Delaying this and other 
projects could result in cost overruns from increasing building 
materials costs and may result in states deciding to cancel these much 
needed facilities.

    The American Legion supports:
     Increasing the amount of authorized per diem payments to 
50 percent for nursing home and domiciliary care provided to veterans 
in State Veterans' Homes;
     The provision of prescription drugs and over-the-counter 
medications to State Veterans' Homes Aid and Attendance patients along 
with the payment of authorized per diem to State Veterans' Homes; and
     Allowing for full reimbursement of nursing home care to 70 
percent service-connected veterans or higher, if the veteran resides in 
a State Veterans' Home.
    The American Legion recommends $250 million for the State Extended 
Care Facility Construction Grants Program in Fiscal Year 2008, $165 
million more than the President's budget request. This additional 
funding will address more pending life-safety projects and new 
construction projects.
                     state cemetery grants program
    The State Veterans' Cemetery Grant Program is not intended to 
replace National Cemeteries, but to complement them. Grants for state-
owned and operated cemeteries can be used to establish, expand and 
improve on existing cemeteries. States are planning to open 24 new 
state veterans' cemeteries between 2007 and 2012. There are 60 
operational cemeteries and two more under construction. Since NCA 
concentrates its construction resources on large metropolitan areas, it 
is unlikely that new national cemeteries will be constructed in all 
states. Therefore, individual states are encouraged to pursue 
applications for the State Cemetery Grants Program. Fiscal commitment 
from the state is essential to keep the operation of the cemetery on 
track. NCA estimates it takes about $300,000 a year to operate a state 
cemetery.
    The American Legion recommends $42 million for the State Cemetery 
Grants Program in Fiscal Year 2008, $10 million more than the 
President's budget request.
                    national cemetery administration
    The mission of the National Cemetery Administration is to honor 
veterans with final resting places in national shrines and with lasting 
tributes that commemorate their service to this Nation. The National 
Cemetery Administration's vision is to serve all veterans and their 
families with the utmost dignity, respect, and compassion. Every 
national cemetery should be a place that inspires visitors to 
understand and appreciate the service and sacrifice of this Nation's 
veterans.
National Cemetery Expansion
    The American Legion supported P.L. 108-109, the National Cemetery 
Expansion Act of 2003, authorizing VA to establish new national 
cemeteries to serve veterans in the areas of: Bakersfield, Calif.; 
Birmingham, Ala.; Jacksonville, Fla.; Sarasota County, Fla.; 
southeastern Pennsylvania; and Columbia-Greenville, S.C. All six areas 
have veterans' populations exceeding 170,000, which is the threshold VA 
has established for new national cemeteries. By 2009, all six new 
national cemeteries should be open to serve veterans in these areas.
    There are approximately 24 million veterans alive today. Nearly 
688,000 veteran deaths are estimated to occur in 2008. The total number 
of graves maintained by VA is expected to increase from 2.8 million in 
2006 to just over 3.2 million by 2012. The VA expects that at least 12 
percent of these veterans will request burial in a national cemetery. 
Considering the growing costs of burial services and the excellent 
quality of service the NCA is providing, The American Legion foresees 
that this percentage will be much greater. By 2012, four more national 
cemeteries are expected to exhaust their supply of available, 
unassigned gravesites.
    Congress must provide sufficient major construction appropriations 
to permit NCA to accomplish its stated goal of ensuring that burial in 
a national or state cemetery is a realistic option by locating 
cemeteries within 75 miles of 90 percent of eligible veterans.
National Shrine Commitment
    Maintaining cemeteries as National Shrines is one of NCA's top 
priorities. This commitment involves raising, realigning and cleaning 
headstones and markers to renovate gravesites. The work that has been 
done so far has been outstanding; however, adequate funding is key to 
maintaining this very important commitment. The American Legion 
supports NCA's goal of completing the National Shrine Commitment within 
5 years. This commitment includes the establishment of standards of 
appearance for national cemeteries that are equal to the standards of 
the finest cemeteries in the world. Operations, maintenance and 
renovation funding must be increased to reflect the true requirements 
of the NCA to fulfill this commitment.
    The American Legion recommends $178 million for the National 
Cemetery Administration in Fiscal Year 2008, $12 million more than the 
President's budget request.
                         information technology
    The data theft that occurred in May of last year serves as a 
monumental wake up call to the Nation. VA can no longer ignore IT 
security. The recovery of the laptop is indeed cause for optimism; 
however, we must not discount the possibility that every name on that 
list could still be subject to possible identity theft. The complete 
overhaul of VA IT is only in its beginning stages. Meanwhile, there are 
still unresolved security breaches within VA including the most recent 
theft of a laptop from a VA contractor. How many computers need to be 
stolen before veterans get some real assurances from the Federal 
Government that their information is not only safe, but that safeguards 
will be in place to help protect them against identity theft? The 
American Legion once again calls on VA and the Administration to keep 
its promise to veterans and provide free credit monitoring for 1 year. 
The American Legion is hopeful that the steps VA takes to strengthen 
its IT security will renew the confidence and trust of veterans who 
depend on VA for the benefits they have earned.
    Funding for the IT overhaul should not be paid for with money from 
other VA programs. This would in essence make veterans pay for VA's 
gross negligence in the matter. The American Legion hopes that Congress 
will not attempt to fix this problem on the backs of America's veterans 
and from scarce fiscal resources provided to the VA health care 
delivery.
    VA has shown it can be a leader in the areas of care and service. 
Its accomplishments, from providing high quality medical care to 
leading the world in the development of electronic records, are 
indicators that VA can also be the Nation's leader in IT security.
    The American Legion believes that there should be a complete review 
of IT security governmentwide. VA isn't the only agency within the 
government that needs to overhaul its IT security protocol. The 
American Legion would urge Congress to exercise its oversight authority 
and review each Federal agency to ensure that the personal information 
of all Americans is secure.
    The American Legion agrees with the President's budget request for 
$1.9 billion for Information Technology in Fiscal Year 2008.
                      va's long-term care mission
    Historically, VA's Long-Term Care (LTC) has been the subject of 
discussion and legislation for nearly two decades. In a landmark July 
1984 study, Caring for the Older Veteran, it was predicted that a wave 
of elderly veterans had the potential to overwhelm VA's long-term care 
capacity. Further, the recommendations of the Federal Advisory 
Committee on the Future of Long-Term Care in its 1998 report VA Long-
Term Care at the Crossroads, made recommendations that serve as the 
foundation for VA's national strategy to revitalize and reengineer 
long-term care services. It is now 2006 and that wave of veterans has 
arrived.
    Additionally, Public Law 106-117, the Millennium Act, enacted in 
November 1999, required VA to continue to ensure 1998 levels of 
extended care services (defined as VA nursing home care, VA 
domiciliary, VA home-based primary care, and VA adult day health care) 
in its facilities. Yet, VA has continually failed to maintain the 1998 
bed levels mandated by law.
    VA's inability to adequately address the long-term care problem 
facing the agency was most notable during the CARES process. The 
planning for the long-term care mission, one of the major services VA 
provides to veterans, was not even addressed in the CARES initiative. 
That CARES initiative is touted as the most comprehensive analysis of 
VA's health care infrastructure that has ever been conducted.
    Incredibly, despite 20 years of forewarning, the CARES Commission 
report to the VA Secretary states that VA has yet to develop a long-
term care strategic plan with well-articulated policies that address 
the issues of access and integrated planning for the long-term care of 
seriously mentally ill veterans. The Commission also reported that VA 
had not yet developed a consistent rationale for the placement of long-
term care units. It was not for the lack of prior studies that VA has 
never had a coordinated long-term care strategy. The Secretary's CARES 
decision agreed with the Commission and directed VHA to develop a 
strategic plan, taking into consideration all of the complexities 
involved in providing such care across the VA system.
    The American Legion supports the publishing and implementation of a 
long-term care strategic plan that addresses the rising long-term care 
needs of America's veterans. We are, however, disappointed that it has 
now been over 2 years since the CARES decision and no plan has been 
published.
    It is vital that VA meet the long-term care requirements of the 
Millennium Health Care Act and we urge this Committee to support 
adequate funding for VA to meet the long-term care needs of America's 
Veterans. The American Legion supports the President's $4.6 billion 
funding recommendation for Fiscal Year 2008.
                           homeless veterans
    VA has estimated that there are at least 250,000 homeless veterans 
in America and approximately 500,000 experience homelessness in a given 
year. Most homeless veterans are single men; however, the number of 
single women with children has drastically increased within the last 
few years. Homeless female veterans tend to be younger, are more likely 
to be married, and are less likely to be employed. They are also more 
likely to suffer from serious psychiatric illness.
    Approximately 40 percent of homeless veterans suffer from mental 
illness and 80 percent have alcohol or other drug abuse problems. It 
cannot go unnoticed that the increase in homeless veterans coincides 
with the underfunding of VA health care, which resulted in the 
downsizing of inpatient mental health capabilities in VA hospitals 
across the country. Since 1996, VA has closed 64 percent of its 
psychiatric beds and 90 percent of its substance abuse beds. It is no 
surprise that many of these displaced patients end up in jail, or on 
the streets. The American Legion applauds VA's recent plan to restore a 
good portion of this capacity. The American Legion believes there 
should be a focus on the prevention of homelessness, not just measures 
to respond to it. Preventing it is the most important step to ending 
it.
    The American Legion has a vision to assist in ending homelessness 
among veterans by ensuring services are available to respond to 
veterans and their families in need before they experience 
homelessness. Toward that objective, The American Legion in partnership 
with the National Coalition for Homeless Veterans created a Homeless 
Veterans Task Force. The mission of the Task Force is to develop and 
implement solutions to end homelessness among veterans through 
collaborating with government agencies, homeless providers and other 
Veterans Service Organizations. In the last 2 years, 16 homeless 
veterans workshops were conducted during The American Legion National 
Leadership Conferences, National Convention and Mid-Winter Conferences. 
Currently, there are 51 Homeless Veterans Chairpersons within The 
American Legion who act as liaison to Federal, state and community 
homeless agencies and monitor fundraising, volunteerism, advocacy and 
homeless prevention activities within participating American Legion 
Departments.
    The current Administration has vowed to end the scourge of 
homelessness within 10 years. The clock is running on this commitment, 
yet words far exceed deeds. While less than 9 percent of the Nation's 
population are veterans, 34 percent of the Nation's homeless are 
veterans and of those 75 percent are wartime veterans.
    Homelessness in America is a travesty, and veterans' homelessness 
is disgraceful. Left unattended and forgotten, these men and women, who 
once proudly wore the uniforms of this Nation's Armed Forces and 
defended her shores, are now wandering her streets in desperate need of 
medical and psychiatric attention and financial support. While there 
have been great strides in ending homelessness among America's 
veterans, there is much more that needs to be done. We must not forget 
them. The American Legion supports funding that will lead to the goal 
of ending homelessness in the next 10 years.
Homeless Providers Grant and Per Diem Program Reauthorization
    In 1992, VA was given authority to establish the Homeless Providers 
Grant and Per Diem Program under the Homeless Veterans Comprehensive 
Service Programs Act of 1992, P.L. 102-590. The Grant and Per Diem 
Program is offered annually (as funding permits) by the VA to fund 
community agencies providing service to homeless veterans.
    The American Legion strongly supports changing the Grant and Per 
Diem Program to be funded on a 5-year period instead of annually and a 
funding level increased to the $200 million level annually.
                 veterans benefits administration (vba)
    The VA has a statutory responsibility to ensure the welfare of the 
Nation's veterans, their families, and survivors. Providing quality 
decisions in a timely manner has been, and will continue to be, one of 
the VA's most difficult challenges.
Workload and Claims Backlog
    There are approximately 3.5 million veterans and beneficiaries 
currently receiving VA compensation and pension benefits. In 2006, VA 
added almost 250,000 new beneficiaries to the compensation and pension 
rolls. VA anticipates receiving about 800,000 claims a year in 2007 and 
2008. The current staffing levels do not enable VA to reduce the 
pending claims inventory and provide timely service to veterans; 
therefore, the President is requesting an increase of 457 full-time 
equivalents compensation and pension personnel. The productivity of the 
additional staff will increase throughout 2008 and in subsequent years 
as these new employees receive training and gain experience. VA 
believes the additional staffing will enable VBA to improve claims 
processing timeliness, reduce appeals workload, improve appeals 
processing timeliness, and enhance services to veterans returning from 
the Global War on Terrorism.
    The increasing complexity of VA claims adjudication continues to be 
a major challenge for VA rating specialists. Since judicial review of 
veterans' claims was enacted in 1988, the remand rate of those cases 
appealed to the United States Court of Appeals for Veterans Claims 
(CAVC) has, historically, been about 50 percent. In a series of 
precedent-setting decisions by the CAVC and the United States Court of 
Appeals for the Federal Circuit, a number of longstanding VA policies 
and regulations have been invalidated because they were not consistent 
with statute. These court decisions immediately added thousands of 
cases to regional office workloads, since they require the review and 
reworking of tens of thousands of completed and pending claims.
    As of August 19, 2006, there were more than 389,000 rating cases 
pending in the VBA system. Of these, 92,047 (23.6 percent) have been 
pending for more than 180 days. According to the VA, the appeals rate 
has also increased from a historical rate of about 7 percent of all 
rating decisions being appealed to a current rate that fluctuates from 
11 to 14 percent. This equates to more than 152,000 appeals currently 
pending at VA regional offices, with more than 132,000 requiring some 
type of further adjudicative action.
Staffing
    Whether complex or simple, VA regional offices are expected to 
consistently develop and adjudicate veterans' and survivors' claims in 
a fair, legally proper, and timely manner. The adequacy of regional 
office staffing has as much to do with the actual number of personnel 
as it does with the level of training and competency of the 
adjudication staff. VBA has lost much of its institutional knowledge 
base over the past 4 years, due to the retirement of many of its 30-
plus year employees. As a result, staffing at most regional offices is 
made up largely of trainees with less than 5 years of experience. Over 
this same period, as regional office workload demands escalated, these 
trainees have been put into production units as soon as they completed 
their initial training.
    Concern over adequate staffing in VBA to handle its demanding 
workload was addressed by VA's Office of the Inspector General (IG) in 
a report released in May 2005 (Report No. 05-00765-137, dated May 19, 
2005). The IG specifically recommended, ``in view of growing demand, 
the need for quality and timely decisions, and the ongoing training 
requirements, reevaluate human resources and ensure that the VBA field 
organization is adequately staffed and equipped to meet mission 
requirements.'' The Under Secretary for Benefits has conceded that the 
number of personnel has decreased over the last few years. And the 
congressionally mandated Veterans' Disability Benefits Commission is 
also closely looking at the adequacy of current staffing levels.
    It is an extreme disservice to veterans, not to mention 
unrealistic, to expect VA to continue to process an ever increasing 
workload, while maintaining quality and timeliness, with less staff. 
Our current wartime situation provides an excellent opportunity for VA 
to actively seek out returning veterans from Operations Enduring 
Freedom and Iraqi Freedom, especially those with service-connected 
disabilities, for employment opportunities within VBA. To ensure VA and 
VBA are meeting their responsibilities, The American Legion strongly 
urges Congress to scrutinize VBA's budget requests more closely. Given 
current and projected future workload demands, regional offices clearly 
will need more rather than fewer personnel and The American Legion is 
ready to support additional staffing. However, VBA must be required to 
provide better justification for the resources it says are needed to 
carry out its mission and, in particular, how it intends to improve the 
level of adjudicator training, job competency, and quality assurance.
                       gi bill education benefits
    Over 96 percent of recruits currently sign up for the MGIB and pay 
$1,200 out of their first year's pay to guarantee eligibility. However, 
only one-half of these military personnel use any of the current 
Montgomery GI Bill benefits. We believe this is directly related to the 
fact that current GI Bill benefits have not kept pace with the 
increasing cost of education. Costs for attending the average 4-year 
public institution as a commuter student during the 1999-2000 academic 
year was nearly $9,000. On October 1, 2005, the basic monthly rate of 
reimbursement under MGIB was raised to $1,034 per month for a 
successful 4-year enlistment and $840 for an individual whose initial 
active-duty obligation was less than 3 years. The current educational 
assistance allowance for persons training full-time under the MGIB 
Selected Reserve is $297 per month.
    The Servicemen's Readjustment Act of 1944, P.L. 78-346, the 
original GI Bill, provided millions of members of the Armed Forces an 
opportunity to seek higher education. Many of these individuals may not 
have been afforded this opportunity without the generous provisions of 
that Act. Consequently, these former servicemembers made a substantial 
contribution not only to their own careers, but also to the economic 
well being of the country. Of the 15.6 million veterans eligible, 7.8 
million took advantage of the educational and training provisions of 
the original GI Bill. Between 1944 and 1956, when the original GI Bill 
ended, the total educational cost of the World War II bill was $14.5 
billion. The Department of Labor estimates that the government actually 
made a profit because veterans who had graduated from college generally 
earned higher salaries and, therefore, paid more taxes.
    Today, a similar concept applies. The educational benefits provided 
to members of the Armed Forces must be sufficiently generous to have an 
impact. The individuals who use MGIB educational benefits are not only 
improving their career potential, but also making a greater 
contribution to their community, state, and Nation.
    The American Legion recommends the 110th Congress make the 
following improvements to the current MGIB:

     The dollar amount of the entitlement should be indexed to 
the average cost of a college education including tuition, fees, 
textbooks, and other supplies for a commuter student at an accredited 
university, college, or trade school for which they qualify;
     The educational cost index should be reviewed and adjusted 
annually;
     A monthly tax-free subsistence allowance indexed for 
inflation must be part of the educational assistance package;
     Enrollment in the MGIB shall be automatic upon enlistment; 
however, benefits will not be awarded unless eligibility criteria have 
been met;
     The current military payroll deduction ($1,200) 
requirement for enrollment in MGIB must be terminated;
     If a veteran enrolled in the MGIB acquired educational 
loans prior to enlisting in the Armed Forces, MGIB benefits may be used 
to repay those loans;
     If a veteran enrolled in MGIB becomes eligible for 
training and rehabilitation under Chapter 31, of title 38, United 
States Code, the veteran shall not receive less educational benefits 
than otherwise eligible to receive under MGIB;
     Separating servicemembers and veterans seeking a license, 
credential, or to start their own business must be able to use MGIB 
educational benefits to pay for the cost of taking any written or 
practical test or other measuring device;
     Eligible veterans shall have an unlimited number of years 
after discharge to utilize MGIB educational benefits;
     Eligible veterans should have the right to transfer their 
earned benefits to their spouse and dependents; and
     Eligible members of the Select Reserves, who qualify for 
MGIB educational benefits shall receive not more than half of the 
tuition assistance and subsistence allowance payable under the MGIB and 
have up to 5 years after their date of separation to use MGIB 
educational benefits.
        vocational rehabilitation and employment service (vr&e)
    The mission of the VR&E program is to help qualified, service-
disabled veterans achieve independence in daily living and, to the 
maximum extent feasible, obtain and maintain suitable employment. The 
American Legion fully supports these goals. As a nation at war, there 
continues to be an increasing need for VR&E services to assist 
Operations Iraqi Freedom and Enduring Freedom veterans in reintegrating 
into independent living, achieving the highest possible quality of 
life, and securing meaningful employment. To meet America's obligation 
to these specific veterans, VA leadership must focus on marked 
improvements in case management, vocational counseling, and--most 
importantly--job placement.
    The successful rehabilitation of our severely disabled veterans is 
determined by the coordinated efforts of every Federal agency (DOD, VA, 
DOL, OPM, HUD etc.) involved in the seamless transition from the 
battlefield to the civilian workplace. Timely access to quality health 
care services, favorable physical rehabilitation, vocational training, 
and job placement play a critical role in the ``seamless transition'' 
of each and every veteran, as well as his or her family.
    Administration of VR&E and its programs is a responsibility of the 
Veterans Benefits Administration (VBA). Providing effective employment 
programs through VR&E must become a priority. Until recently, VR&E's 
primary focus has been providing veterans with skills training, rather 
than providing assistance in obtaining meaningful employment. Clearly, 
any employability plan that doesn't achieve the ultimate objective--a 
job--is falling short of actually helping those veterans seeking 
assistance in transitioning into the civilian workforce.
    Vocational counseling also plays a vital role in identifying 
barriers to employment and matching veterans' transferable job skills 
with those career opportunities available for fully qualified 
candidates. Becoming fully qualified becomes the next logical objective 
toward successful transition.
    Veterans Preference in Federal hiring plays an important role in 
guiding veterans to career possibilities within the Federal Government 
and must be preserved. There are scores of employment opportunities 
within the Federal Government that educated, well-trained, and 
motivated veterans can fill--given a fair and equitable chance to 
compete. Working together, all Federal agencies should identify those 
vocational fields, especially those with high turnover rates, suitable 
for VR&E applicants. Career fields like information technology, claims 
adjudications, debt collection, etc., offer employment opportunities 
and challenges for career-oriented applicants that also create career 
opportunities outside the Federal Government.
    GAO has also cited exceptionally high workloads for a limited 
number of staff members at VR&E offices. This increased workload 
hinders the staff's ability to effectively assist individual veterans 
with identifying employment opportunities. In April 2005, the average 
caseload of a typical VR&E counselor approached 160 veterans. The 
American Legion is pleased that an additional number of 150 full-time 
equivalents will be hired and we applaud the President's budget request 
for $159.5 million in Fiscal Year 2008. It is vital that Congress 
approve this request to adequately address the expected increase of 
veterans needing assistance.
                       home loan guaranty program
    VA's Home Loan Guaranty program has been in effect since 1944 and 
has afforded nearly 17 million veterans the opportunity to purchase 
homes. The Home Loan programs offer veterans a centralized, affordable 
and accessible method of purchasing homes in return for their service 
to this Nation. The program has been so successful over the past years 
that not only has the program paid for itself but has also shown a 
profit in recent years. The American Legion believes that it is unfair 
for veterans to pay high funding fees of 2 to 3 percent, which can add 
approximate $3,000 to $11,000 for a first-time buyer. The VA funding 
fee was initially enacted to defray the costs of the VA guaranteed home 
loan program. The current funding fee paid to VA to defray the cost of 
the home loan has had a negative effect on many veterans who choose not 
to participate in this highly beneficial program. Therefore, The 
American Legion strongly recommends that the VA funding fee on home 
loans be reduced or eliminated for all veterans whether active duty, 
reservist, or National Guard.
Specially Adapted Housing
    The American Legion believes that with the increasing numbers of 
disabled veterans returning from Iraq and Afghanistan, the need for 
specially adapted housing is paramount. Therefore, The American Legion 
strongly recommends that the current $50,000 grant for specially 
adapted housing be increased to $55,000 and special home adaptations be 
increased from $10,000 to $12,300. Specially adapted housing grants are 
available for the installation of wheelchair ramps, chair lifts, 
modifications to kitchens and bathrooms and other adaptations to homes 
for veterans who cannot move about without the use of wheelchairs, 
canes or braces or who are blind and suffer the loss or loss of use of 
one lower extremity. Special home adaptation grants are available for 
veterans who are legally blind or have lost the use of both hands.
                                summary
    Mr. Chairman and Members of the Committee, The American Legion 
appreciates the strong relationship we have developed with this 
Committee. With increasing military commitments worldwide, it is 
important that we work together to ensure that the services and 
programs offered through VA are available to the new generation of 
American servicemembers who will soon return home. You have the power 
to ensure that their sacrifices are indeed honored with the thanks of a 
grateful Nation.
    The American Legion is fully committed to working with each of you 
to ensure that America's veterans receive the entitlements they have 
earned. Whether it is improved accessibility to health care, timely 
adjudication of disability claims, improved educational benefits or 
employment services, each and every aspect of these programs touches 
veterans from every generation. Together we can ensure that these 
programs remain productive, viable options for the men and women who 
have chosen to answer the Nation's call to arms.
    Thank you for allowing me the opportunity to appear before you 
today.

    Chairman Akaka. Thank you very much for your testimony, Mr. 
Robertson.
    Mr. Rowan?

 STATEMENT OF JOHN ROWAN, NATIONAL PRESIDENT, VIETNAM VETERANS 
                           OF AMERICA

    Mr. Rowan. Good afternoon. Chairman Akaka and Senator Craig 
and Senator Brown, thank you for allowing the Veterans Service 
Organizations to testify this morning on the VA budget, giving 
us access at the beginning of this process.
    While we tend to agree with the IB folks about a lot of 
their numbers, we believe that they are still a little low. We 
actually think that we need another $6.9 billion rather than $4 
billion, and we have a chart that we have broken out much of 
that dollars and cents, which we have put in as part of our 
testimony. One of the biggest chunks is almost $2 million and 
change to cover these so-called management deficiencies, which 
were really staff deficiencies, that the VISNs made do with 
what they could and basically cut staff to fit the budget that 
they got.
    I would also ask the Senate if they could allow us to put 
into the record as part of our testimony the study by Ms. Linda 
Bilmes from Harvard Kennedy School of Government on ``Soldiers 
Returning from Iraq and Afghanistan: The Long-Term Costs of 
Providing Veterans Medical Care and Disability Benefits,'' a 
study that she had done, which is pretty enlightening.
    Chairman Akaka. That study will be included in the record.
    Mr. Rowan. Thank you, sir.
    As I said, we believe that there is a whole host of reasons 
why we think this needs more money into this budget that has 
been proposed, not the least of which is what we think is an 
undercount in both numbers of new veterans coming into the 
system and old veterans coming into the system, many for the 
first time. As I testified last year before this Committee, we 
believe that Vietnam veterans in particular are coming down 
with many Agent Orange-related illnesses that they are entitled 
to get compensation and health care for that are now 
manifesting themselves today--the whole diabetic problem, the 
whole problem with prostate cancer, lung cancer, all kinds of 
other conditions, which in and of themselves must drive up the 
need for medical care by veterans in the VA system. And, 
unfortunately, it is very expensive care and often 
multidisciplinary care, as was pointed out earlier in the 
Secretary's testimony.
    When we file a claim today, a veteran often is not filing a 
single claim. They are filing multiple claims with multiple 
issues, either secondary conditions attached to the original 
condition or multiple different conditions. And so the 800,000 
claims we talk about being submitted is really God knows how 
many actual issues of health care. And what the impact is on 
the VA health care system has got to be substantial.
    So, again, we would like to see a breakdown also of how 
many people who have been put aside that are no longer eligible 
for the system and really who they are, this whole dollar-and-
cents thing is throwing around it. I doubt very much if there 
is any $200,000 income family or income veteran running to get 
to the VA in reality. It has got to be a very small number. And 
Senator Craig mentioned earlier how the significant percentage 
of the veterans in the system that are eligible for Medicare 
only seems to me another reason why we ought to get the 
Medicare money back into the VA system. I would venture to say 
that many of those people are also service-connected disabled 
veterans who are entitled to health care no matter what. So it 
will be really interesting to see a more in-depth analysis of 
all of that.
    There were some other issues raised. Senator Murray raised 
the whole issue about inpatient PTSD programs. There are VISNs 
in this country that do not have inpatient programs in their 
VISN, and so we see a lot of time veterans traveling far 
distances to get inpatient care. Having come from New York, I 
know that Batavia has an excellent inpatient care program that 
I know of from dealing with the people in their alumni 
association who take care of them after they have gone through 
the program, dealing with veterans from all across this country 
who come to that facility because it is well known and does a 
very good job. And they have just opened a new women's 
facility, which is going to be real interesting to see what 
happens with that, with, unfortunately, the significant number 
of women now in the system.
    As we wind down, I would also echo what Steve said about 
the zeros. The zero percenters, one must remember, may have 
been 100 percenters at one time, and the classic example of 
that is the prostate cancer person. You get a Vietnam vet who 
has got prostate cancer gets 100 percent while they are 
diagnosed with prostate cancer. If they are lucky enough to go 
through a treatment that takes care of their cancer, they are 
dropped down to zero. But as everybody will tell you, they need 
to come back regularly for significant care and review to make 
sure that their cancer does not come back somewhere else.
    Thank you.
    [The prepared statement of Mr. Rowan follows:]
         Prepared Statement of John Rowan, National President, 
                      Vietnam Veterans of America
    Chairman Akaka, Ranking Member Craig and distinguished Members of 
the Committee, on behalf of all of our officers, Board of Directors, 
and members, I thank you for giving Vietnam Veterans of America (VVA) 
the opportunity to testify today regarding the President's Fiscal Year 
2008 budget request for the Department of Veterans Affairs. I am 
pleased to welcome so many new and returning Members onto the Committee 
this year. VVA looks forward to working with all of you to address the 
needs of the unique system created to serve our Nation's veterans.
    Mr. Chairman, several years ago, Vietnam Veterans of America 
developed a White Paper in support of the need for assured funding for 
the veterans health care system, which I know you have read and shared 
with others. I also know you have been a long-time supporter of 
legislation to achieve assured funding. You have always understood the 
need for such a mechanism to correct the problems in the current system 
of funding. As we have this discussion in regard to the FY 2008 budget 
for VA, the readily apparent need for this legislation has never been 
more pressing. We look forward to working with you to ensure its 
enactment.
    VVA does wish to recognize that this year's request from the 
President for the VA Budget, while lacking in many other respects, is 
relatively free of ``budget gimmicks'' that have so plagued discussions 
in the past. VVA believes that this is due to the strong efforts of 
Secretary Nicholson in doing battle to strip out the favorite 
``gimcrackery'' of that permanent staff over at the Office of 
Management and Budget (OMB). VVA commends the Secretary of Veterans 
Affairs in this regard for seeking to have an honestly presented budget 
proposal.
                     veterans health administration
    VVA is recommending an increase of $6.9 billion to the expected 
Fiscal Year 2007 appropriation for the medical care business line. We 
recognize that the budget recommendation VVA is making this year is 
extraordinary, but with troops in the field, years of underfunding of 
health care organizational capacity, renovation of an archaic and 
dilapidated infrastructure, updating capital equipment, and several 
cohorts of war veterans reaching ages of peak health care utilization, 
these are extraordinary times. It's past time to meet these needs.
    In contrast to what is clearly needed, we believe the 
Administration's Fiscal Year 2008 request for $2 billion more than the 
expected 2007 appropriation in the continuing resolution is inadequate. 
Unfortunately, we still are unsure of the bottom line for Fiscal Year 
2007. While we certainly appreciate that the Congress is planning to 
restore funding for veterans health care in the continuing resolution 
(and it is essential that it does so to ensure the Department's ability 
to meet ongoing obligations), the fact that VA is still uncertain about 
the amount of funding it will receive a third of the way through the 
fiscal year does, virtually in and of itself, make the case for assured 
funding.
    The $2 billion increase the Administration has requested for 
medical care may almost keep pace with inflation, but it will not allow 
VA to enhance its health care or mental health care services for 
returning veterans, restore diminished staff in key disciplines like 
clinicians needed to care for Hepatitis C, restore needed long-term 
care programs for aging veterans, or allow working-class veterans to 
return to their health care system. VVA's recommendation does 
accommodate these goals, in addition to restoring eligibility to 
veterans exposed to Agent Orange for the care of their related 
conditions.
    I need not tell you about the many successes of the Department of 
Veterans Affairs in recent years. The Veterans Service Organizations 
are often seen as critics of the Department, but while it's true that 
we sometimes take exception to its policy decisions we are, in fact, 
also its most stalwart champions. Over the last decade the Veterans 
Health Administration (VHA) at VA has taken steps to become a higher 
quality, more accessible health care system. It has demonstrated great 
efficiency by almost doubling the number of veterans it treats while 
holding per capita costs relatively constant. It has developed hundreds 
of Community Based Outreach Clinics (CBOCs). VHA has received many 
prestigious awards for excellence and innovation. While VVA remains 
extremely concerned about recent breaches that compromised veterans' 
personal data, VVA appreciates the fact that VA has put together a 
computerized system of medical records that sets the standard for 
modern health care delivery. These achievements are to be celebrated.
    Yet, these advances have not come without a cost. For years, the 
veterans' health care system has been falling behind in meeting the 
health care needs of some veterans. At the beginning of 2003, the 
former Secretary of Veterans Affairs made the decision to bar so-called 
Priority 8 veterans from enrolling. In most cases, these veterans are 
not the well-to-do--they are working-class veterans or veterans living 
on fixed incomes as little as $28,000 a year. It's not uncommon to hear 
about such veterans choosing between getting their prescription drug 
orders filled and paying their utility bills. The decision to bar these 
veterans is still standing, and it is still troubling to thoughtful 
Americans.
    In addition to the current bar on health care enrollment, in recent 
years VA has sent Congress a budget that requires more cost-sharing 
from veterans, and eliminates options for their care--particularly 
long-term care. We appreciate that VA's proposal this year has not 
presumed enactment of some of the cost-sharing legislative proposals 
Congress has opposed in the past. This may allow Congress more leeway 
to augment its request in concrete ways rather than merely filling 
deficits left by the Administration presuming that revenues and savings 
from these unpopular initiatives will be realized.
    Congress is to be commended for turning back many legislative 
requests for enrollment fees and outpatient cost increases, which would 
have jeopardized hundreds of thousands of veterans' access to health 
care. Hard-fought Congressional add-ons, such as the $3.6 billion for 
Fiscal Year 2007 currently being debated as part of the continuing 
resolution, have kept the system afloat. The budget recommended by VVA 
in addition to the enactment of some assured funding mechanism will 
enable a robust health care system to meet the needs of all eligible 
veterans--now and in the future.
                            medical services
    For medical services for Fiscal Year 2008, VVA recommends $34.5 
billion, including collections. This is approximately $5 billion more 
than the Administration's request. VVA is making its budget 
recommendations based on re-opening access to the millions of veterans 
disenfranchised by the Department's policy decision of early 2003 that 
was supposed to be ``temporary.'' The former ranking member of the 
House Veterans' Affairs Committee, Lane Evans, discovered that a 
quarter-million Priority 8 veterans had applied for care in Fiscal Year 
2005. Similar numbers of veterans have likely applied in each of the 
years since their enrollment was barred. Our budget allows 1.5 million 
new Priority 7 and 8 veterans to enroll for care in their health care 
system. While this may sound like too great a lift for the system, use 
rates for Priority 7 and 8 veterans are much lower than for other 
priority groups. Based on our estimates, it may yield only an 8 percent 
increase in demand at a cost of about $1.5 billion to the system for 
additional personnel, supplies and facilities.
    The budget axe has fallen hard on long-term care programs in VA. 
About a decade ago, there was a major policy shift throughout the 
health care industry, including with VA, which encouraged programs to 
deliver as much care as possible outside of beds. In many cases this 
has been a productive policy. Veterans value the convenience of using 
nearby community clinics for primary care needs, for example.
    However, the change took a great toll on the neuro-psychiatric and 
long-term care programs that housed and cared for thousands of 
veterans, often keeping them institutionalized for years. Instead of 
developing the significant community and outpatient infrastructures 
that would have been necessary to adequately replace the care for these 
most vulnerable veterans, the resources were largely diverted to other 
purposes.
    Where have these vets gone? The fiscally challenged Medicaid 
program supports many of those who need long-term care, adding an 
additional burden to the states. State homes play an important role in 
remaining the only VA-sponsored setting that provides ongoing, rather 
than rehabilitative or restorative, long-term care. VA's mental health 
programs--some of the finest in the Nation--as well as significant 
advances in pharmaceutical therapies continue to serve and allow many 
veterans to recover. However, what are in fact increasing waiting times 
for mental health programs and the lack of treatment options often 
contribute to incarceration and homelessness for the most vulnerable of 
these veterans. Sadly, we hear increasing numbers of stories of 
veterans of Iraq and Afghanistan whose inability to deal with 
readjustment post-deployment have lead them to the streets or even 
suicide.
    Mr. Chairman, Vietnam Veterans of America's founding principle is: 
``Never again will one generation of veterans abandon another.'' This 
is why we are imploring this Committee to ensure that VA has the 
imperative and the resources to bolster the mental health programs that 
should be readily available to serve our young veterans from Iraq and 
Afghanistan. Experts from within the Department of Defense estimate 
that as many as 17 percent of those who serve in Iraq will have issues 
requiring them to seek post-deployment mental health services and 
recent studies have shown that four out of five of the veterans who may 
need post-deployment care are not properly referred to such care. There 
is good reason to believe that even the rates forecast by DOD may be 
too low.
    VA has not made enough progress in preparing for the needs of 
troops returning from Iraq and Afghanistan--particularly in the area of 
mental health care. Its own internal champions--the Committee on Care 
of the Seriously Mentally Ill and the Advisory Committee on Post-
Traumatic Stress Disorder, for example--have expressed doubts about 
VA's mental health care capacity to serve these newest vets. As 
recently as last March, VHA's Undersecretary for Health Policy 
Coordination told one commission that mental health services were not 
available everywhere, and that waiting times often rendered some 
services ``virtually inaccessible.'' The doubts about capacity to serve 
new veterans have reverberated in reports done by the Government 
Accountability Office (GAO). In addition, one recent working paper by 
Linda Bilmes of the John F. Kennedy School of Government at Harvard 
University estimates that in a ``moderate'' scenario in 2008 VA will 
require $1.8 billion to treat the veterans returning from Iraq and 
Afghanistan--much of this funding would be used to augment mental 
health care to properly serve these veterans. VA has projected that 
approximately 260,000 Global War on Terrorism (GWOT) veterans will use 
the VA health care system in FY 2008. VVA and others believe that well 
more than 300,000 ``new'' veterans will use the VHA system in FY 2008.
    A further reason that VA has underestimated the need for medical 
services is that they continue to use the same formula that they use 
for CARES, which is a civilian-based model. Mr. Chairman, VVA has 
testified many times that the VHA must be a ``veterans' health care 
system'' and not a general health care system that happens to see 
veterans if the VHA is to properly and adequately address the needs of 
veterans, particularly veterans who are sick or injured in military 
service. The model VA uses was designed for middle-class people who can 
afford HMOs or other such programs. It projects only one to three 
``presentations'' (things wrong with) patients as opposed to the five 
to seven that is the average at VHA for veterans. Obviously, one using 
the VA model will continually underestimate overall resources needed to 
care for the veterans who come to the system by using this civilian 
formula. Further, VHA has been consistent in underestimating the number 
of GWOT returnees who will seek services from the system in each of the 
last 4 years. VVA has corrected these errors in our projections.
    In addition to the funds VVA is recommending elsewhere, we 
specifically recommend an increase of an additional billion dollars to 
assist VA in meeting the long-term care and mental health care needs of 
all veterans. These funds should be used to develop or augment with 
permanent staff at VA Vet Centers (Readjustment Counseling Service, or 
RCS), as well as PTSD teams and substance use disorder programs at VA 
Medical Centers and CBOCs, which will be sought after as more troops 
(including demobilized National Guard members and Reservists) return 
from ongoing deployments. In addition, VA should be augmenting its 
nursing home beds and community resources for long-term care, 
particularly at the State veterans' homes.
    To assist in developing these programs and augmenting all areas of 
veterans' care, VVA recommends funding to accommodate the staff-to-
patient ratio VA had in place before VA had dismantled so much of its 
neuro-psychiatric and long-term care infrastructure. This would allow 
VA to better ensure timely access to care and services. Studies have 
shown that inadequate staffing--particularly of nurses involved in 
direct care--is correlated with poorer health care outcomes in all 
medical disciplines. To allow the staffing ratios that prevailed in 
1998 for its current user population, VA would have to add more than 
20,000 direct-care employees--MDs and nurses--at a cost of about $2.2 
billion.
    The $2.2 billion funding for the staff shortfalls identified by VVA 
closely corresponds to the funding from unspecified ``management 
efficiencies'' VA has had to shoulder throughout this Administration. 
It is important to realize that the effect of leaving these funding 
deficiencies unfulfilled is cumulative. That is, each year VA is forced 
to live with a greater hole in its budget. GAO has joined VSOs and 
Congress in questioning the extent to which VA has been able to 
identify and realize the so-called savings created by such proposed 
efficiencies. VA officials have advised GAO that the efficiencies 
identified in at least two recent budget proposals--FY 2003 and FY 
2004--were developed to allow VA to meet its budget guidance rather 
than by detailed plans for achieving such savings (GAO-06-359R). In 
other words, the savings were justified only by the need to meet the 
Administration's ``bottom line.'' I hope Congress agrees that this is 
no way to fund our veterans' health care system.
    Finally, VVA believes Congress did a grave injustice to Vietnam-era 
veterans. For decades, veterans exposed to Agent Orange and other 
herbicides containing dioxin had been granted health care for 
conditions that were presumed to be due to this exposure. This special 
eligibility expired at the end of 2005 and, despite our request, 
Congress did not reauthorize it. Had Congress simply reauthorized 
existing authority, VA would have realized no new costs. Now we have 
heard that the Congressional Budget Office estimates that it will cost 
more than $300 million to restore this eligibility. Why this 
eligibility was allowed to expire seems more a matter of dollars than 
sense to VVA, given the ever-mounting body of research that clearly 
points to conditions such as diabetes being linked to dioxin exposure. 
However, the pressing issue now is to reinstate veterans with these 
conditions for the higher priority access to services that they 
deserve.
                           medical facilities
    For medical facilities for Fiscal Year 2008, VVA recommends $5.1 
billion. This is approximately $1.5 billion more than the 
Administration's request for Fiscal Year 2008. Maintenance of the 
health care system's infrastructure and equipment purchases are often 
overlooked as Congress and the Administration attempt to correct more 
glaring problems with patient care. In FY 2006, in just one example, 
within its medical facilities account VA anticipated spending $145 
million on equipment, yet only spent about $81 million. (The rest of 
the funds went just to meet costs to keep the facilities open and 
operating.) However, these projects can only be neglected for so long 
before they compromise patient care, and employee safety in addition to 
risking the loss of outside accreditation. The remainder of the funding 
was apparently shifted to other more immediate priority areas (i.e., 
keeping facilities operating in the short run).
    VA undertook an intensive process known as CARES (Capital Asset 
Realignment to Enhance Services) to ``right-size'' its infrastructure, 
culminating in a May 2004 policy decision that identified approximately 
$6 billion in construction projects. While for the reasons noted above 
the VA has consistently underestimated future needs by using a fatally 
flawed formula, thus far Congress and the Administration have only 
committed $3.7 billion of this all too conservative needed funding.
    We believe the CARES estimate to be extremely conservative given 
that the models projecting health care utilization for most services 
were based on use patterns in generally healthy managed care 
populations rather than veterans and that the patient population base 
did not include readmitting Priority 8 veterans, or significant 
casualties from the current deployments. Notwithstanding our concerns 
about the methods used in CARES, very few of the projects VA agrees are 
needed have been funded since this time. Non-recurring maintenance and 
capital equipment budgets have also been grievously neglected as 
administrators have sought to shore up their operating funds.
    In a system in which so much of the infrastructure would be deemed 
obsolete by the private sector (in a 1999 report GAO found that more 
than 60 percent of its buildings were more than 25 years old), this has 
and may again lead to serious trouble. We are recommending that 
Congress provide an additional $1.5 billion to the medical facilities 
account to allow them to begin to address the system's current needs. 
We also believe that Congress should fully fund the major and minor 
construction accounts to allow for the remaining CARES proposals to be 
properly addressed by funding these accounts with a minimum of 
remaining $2.3 billion.
                         medical and prosthetic
    Research For medical and prosthetic research for Fiscal Year 2008, 
VVA recommends $460 million. This is approximately $50 million more 
than the Administration's request for Fiscal Year 2008. VA research has 
a long and distinguished portfolio as an integral part of the veterans' 
health care system. Its funding serves as a means to attract top 
medical schools into valued affiliations and allows VA to attract 
distinguished academics to its direct-care and teaching missions.
    VA's research program is distinct from that of the National 
Institutes of Health because it was created to respond to the unique 
medical needs of veterans. In this regard, it should seek to fund 
veterans' pressing needs for breakthroughs in addressing environmental 
hazard exposures, post-deployment mental health, traumatic brain 
injury, long-term care service delivery, and prosthetics to meet the 
multiple needs of the latest generation of combat-wounded veterans.
    Further, VVA brings to your attention that VA Medical and 
Prosthetic Research is not currently funding a single study on Agent 
Orange or other herbicides used in Vietnam, despite the fact that more 
than 300,000 veterans are now service-connected disabled as a direct 
result of such exposure in that war. VVA submits that this is 
unacceptable.
    Mr. Chairman, finally I urge this Committee to at long last urge 
your colleagues on the Appropriations Committee to use the power of the 
purse to compel VA to obey the law (Public Law 106-419) and conduct the 
long-delayed National Vietnam Veterans Longitudinal Study. VVA ask that 
you specifically request report language in the Appropriations bill for 
Military Construction, Veterans Affairs, and Related Agencies that 
compels VA to advise the Appropriators and the Authorizers as to how VA 
plans to complete this study properly within 2 years, as a 
comprehensive mortality and morbidity study.
               assured funding for veterans' health care
    Once this Congress provides a budget that shores up VA medical 
services and facilities, it will need to assure that VA continues to be 
funded at a level that allows it to provide high-quality health care 
services to the veterans that need them. That is where enactment of 
assured funding will come in. Once enacted, an assured funding 
mechanism will ensure that, at a minimum, annual appropriations cover 
the cost of inflation and growth in the number of veterans using VA 
health care. It will allow VA administrators some predictability in 
both how much funding it will receive and when it will be received, 
resulting in higher quality and ultimately more cost-effective care for 
our veterans.
                    veterans benefits administration
    The Veterans Benefits Administration (VBA) is in even more acute 
need of additional resources and enhanced accountability measures now 
than it was a year ago. VVA recommends an additional 400 over and above 
the roughly 470 new staff members that are requested in the President's 
proposed budget for all of VBA.
                         compensation & pension
    VVA recommends adding one hundred staff members above the level 
requested by the President for the Compensation & Pension Service (C&P) 
specifically to be trained as adjudicators. Further, VVA strongly 
recommends adding an additional $60 million specifically earmarked for 
additional training for all of those who touch a veteran's claim, 
institution of a competency-based examination that is reviewed by an 
outside body that shall be used in a verification process for all of 
the VA personnel, veteran service organization personnel, attorneys, 
county and state employees, and any others who might presume to at any 
point touch a veteran's claim.
                       vocational rehabilitation
    VVA recommends that you seek to add an additional 300 specially 
trained vocational rehabilitation specialists to work with returning 
servicemembers who are disabled to ensure their placement into jobs or 
training that will directly lead to meaningful employment at a living 
wage. It is clear that the system funded through the Department of 
Labor simply is failing these fine young men and women when they need 
assistance most in rebuilding their lives.
    VVA has always held that the ability to obtain and sustain 
meaningful employment at a living wage is the absolute central event of 
the readjustment process. Adding additional resources and much greater 
accountability to the VA Vocational Rehabilitation process is 
absolutely essential if we as a Nation are to meet our obligation to 
these Americans who have served their country so well, and have already 
sacrificed so much.
                          accountability at va
    So much of what VVA and the Congress on both sides of the aisle 
find wrong or disturbing at the VA revolves around the general and all-
pervasive issue of little or no accountability, or imprecise fixing of 
authority commensurate with accountability mechanisms that are 
meaningful (and vice versa) in all parts of the VA.
    Within the past year, VA has finally made significant progress in 
meeting the minimum goal of at least 3 percent of all contracts and 3 
percent of all subcontracts being let to service-disabled veteran 
business owners. Secretary Nicholson and Deputy Secretary Mansfield are 
to be commended on setting the pace for the Federal Government. It is 
instructive in this discussion, however, that the action directed by 
the Secretary to put achievement or substantial real progress toward 
meeting or exceeding the 3 percent minimum into the performance 
evaluation of each Director of the 21 Veterans Integrated Service 
Networks (VISNs) was a key element enabling VA to be the first large 
agency to reach the goal mandated by law. Some 85 percent of all VA 
procurement is through VHA, primarily through the VISNs is the key 
factor in this achievement.
    All people (particularly people with a great deal of responsibility 
who work long hours) care about what they feel they have to care about. 
Putting it in the performance evaluations means that those managers who 
ignore a requirement do not get an outstanding or superior rating, and 
hence no bonus. VVA, and now the VA in at least this one instance, has 
always found that it is amazing how reasonable almost all people can be 
when you have their full attention.
    There is no excuse for the dissembling and lack of accountability 
in so much of what happens at the VA. It can be cleaned up and done 
right the first time, it there is the political will to hold people 
accountable for doing their job properly.
    Lastly, there is no excuse for the continuation of the practice of 
VHA to ``lose'' tens of millions (sometimes hundreds of millions) of 
taxpayer dollars that are appropriated to VHA for specific purposes, 
whether that purpose be to restore organizational capacity to deliver 
mental health services, particularly for PTSD and other combat trauma 
wounds, or to conduct outreach to GWOT veterans as well as demobilized 
National Guard and Reserve returnees from war zone deployments. There 
is a consistent pattern of VA, particularly VHA, to either really not 
know what happened to large sums of money given to them for specific 
reasons, or they are not telling the truth to the Congress and the 
public. In either case, it is unacceptable and cannot be tolerated any 
longer.
    In the proposed budget submittal, VVA struggled with accounting for 
the dollars footnoted in the President's submittal as ``Adjusted for 
IT.'' We could not find an accurate accounting. When we asked, it turns 
out that no one that we have spoken to, including VA officials, can 
fully explain at least $200 million-plus of this ``adjustment'' either. 
And this is before they get their hands on the dollars. VVA urges this 
Committee and your colleagues on Appropriations to make this the year 
that this sloppy nonsense and dissembling is stopped once and for all. 
Accountability will only come about when Congress absolutely demands 
that these folks be fully accountable for performance, and for 
accounting for each and every taxpayer dollar.
    Thank you again, Mr. Chairman. We look forward to working with you 
and this distinguished Committee to obtain an excellent budget for VA 
in FY 2008, and to ensure the next generation of veterans' well-being 
by enacting assured funding. I will be happy to answer any questions 
you and your colleagues may have.

    [The working paper prepared by Linda Bilmes of the John F. Kennedy 
School of Government, Harvard University, follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    My questions are for all of our witnesses. What are your 
views on VA's capacity to provide needed rehabilitation, case 
management, and community reintegration services for veterans 
with traumatic brain injuries and to help their families as 
caregivers? How can VA improve services to veterans with 
traumatic brain injuries and their families to help them 
recover and lead full, productive lives?
    I'd like to call on Mr. Blake first.
    Mr. Blake. Well, Senator Akaka, what I would say first is, 
I believe the VA is doing a great job already of doing their 
best to address the needs of particularly the veterans with 
traumatic brain injury. I think that has probably established 
itself, along with PTSD, as being at the forefront of 
conditions being experienced by the OIF/OEF veterans.
    Being a user of the VA Medical Center in Richmond, I see 
what they do there, and I think that it is yeoman's work what 
they do there. They do a lot with a lot less than any other 
system outside of the VA would probably be able to handle.
    I would say that right now the best thing that could be 
done for the VA would be to complete appropriations work for 
their current year because all we are doing is putting them in 
a bind where even the most important services, which I would 
consider TBI and a lot of the specialized services to be, are 
also being strapped to the limits because they cannot hire new 
staff; they have even had to cut staff in a lot of cases 
because it is just not there. And for us to continue to expect 
the VA to provide these much needed services under the 
situation it is in is just unacceptable.
    Chairman Akaka. Mr. Violante?
    Mr. Violante. Thank you, Mr. Chairman. I am not sure VA has 
the capacity. I mean, this seems to be the disability from this 
war, and, unfortunately, the range of severity is almost 
negligible in some individuals to totally severe in others. And 
I think VA needs to focus a lot more resources, number one, on 
identifying individuals that have been exposed to IEDs, whether 
that be minor exposure or whatever, because we are going to see 
a lot more of these individuals probably coming forward with 
disabilities in the future. So I think VA definitely needs more 
resources focused on this area.
    Chairman Akaka. Mr. Greineder?
    Mr. Greineder. Thank you, Mr. Chairman. I would agree with 
my colleagues here at the table. I think VA has done a 
tremendous job on TBI issues and mental health issues. And I 
would say that, you know, to get VA the timely funding so they 
can cover their staff shortages and cover their needs in that 
area, as well as the funding area.
    Chairman Akaka. Mr. Cullinan?
    Mr. Cullinan. Thank you, Mr. Chairman. I would agree that 
VA to this point is doing a terrific job with respect to 
dealing with these issues. I certainly have to associate myself 
with Mr. Blake's remarks, though, that it is very important to 
get them the money on time. They simply cannot keep on doing 
this without getting enough money on time.
    The other thing, things like TBI and certain force injuries 
are uncharted medical and scientific ground, so the area of 
research really has to be looked at. We have to identify those 
individuals, and we have to be able to find out what the things 
are that are going to beset these individuals as well, and how 
they can be addressed. So the research is key.
    Chairman Akaka. Mr. Robertson?
    Mr. Robertson. Yes, sir. It is very interesting, I was 
talking to a psychiatrist about this very subject, and he was 
telling me that most of the TBI injuries, the family members 
are the ones that are seeing the difference in their conduct 
and their behavior, and it is the families that are referring 
them into the hospitals.
    I am thinking that maybe we have to do a lot more outreach 
of educating the family members and spouses, whether it is a 
video to show them what signs they should be looking for or the 
kinds of conducts or symptoms traditionally associated with 
this kind of injury.
    The other thing is the separation physicals. I think it is 
just absolutely critical that when they separate these kids 
that have been in theater, they ask them specifically: Were you 
around IEDs? Were you involved in an automobile accident where 
your Humvee rolled over? Anything that could be documented to 
show that there was a head injury, because most of these, as 
you well know, there are no marks left behind. It is kind of 
like being shot with a bullet made of ice that melts and the 
evidence is gone, but the results are still pretty traumatic.
    Chairman Akaka. Mr. Rowan?
    Mr. Rowan. Yes, sir. I would concur with my colleagues, 
particularly Steve's point. I had dinner with some people from 
Walter Reed recently, and one of the people there was a young 
lady who had gotten banged up in Afghanistan. And she got sent 
back to Germany and everything seemed fine, except she then had 
a massive stroke that put her in a wheelchair. So that point 
really comes home about following up with them.
    Also, we do a terrible job in families. I mean, one of the 
problems the VA has is we have never figured out what to do 
with families in any issues--PTSD, physical injury, whatever. 
And, I mean, I can only say thank God for Fisher Houses in 
dealing with the folks that are sitting in these places. And, I 
do not know, maybe we need to work on an appeal in the private 
sector to develop more Fisher Houses next to the VAs as well as 
next to Walter Reed and Brooks Army Medical Center and other 
places like that. But we need to do something.
    Chairman Akaka. Well, I thank you very much for your 
responses. Before I call on Senator Craig, I just want to tell 
you that we both want to have joint sessions with VSOs here in 
Congress. And I want you to know that it is going to come back, 
and we look forward to that.
    Senator Craig?
    Senator Craig. Mr. Chairman, thank you very much. One 
question and then one comment.
    First and foremost, let me tell you that the Independent 
Budget serves a very valuable role in our assessment of and 
evaluation of the Administration and the VA's budget, and its 
presentation and your involvement in it is not taken lightly.
    The President's request for medical care exceeds the 
Independent Budget recommendations when $2.3 billion in 
expected collections are factored in. Your organizations, 
however, do not factor in the expected collections and instead 
seek full funding from appropriated dollars alone. You do not 
all have to answer that, but, Carl, possibly you and others 
could explain why you don't factor in the expected dollars now 
that we have a very real track record in the budget as to what 
those collections are.
    Mr. Blake. Well, Senator Craig, this point was also 
addressed when we had our meetings with your staff, and I think 
it is a good point, and it is one of those things where the 
historical trends in the past have borne out that the VA was 
really incapable of meeting its collections estimates. And I 
would be lying if I did not say that it is something that the 
further down the line we go, the more we will have to kind of 
re-evaluate it as the VA proves whether it is able to actually 
do it.
    The problem still remains. Although they may collect, let's 
just say, for instance, 90 percent of their collection 
estimates this year, there is no guarantee that next year they 
will not turn right around once again and collect 40 percent or 
35 percent. So there is too much risk, I believe, in laying too 
much on funding the VA health care system in estimates where 
there is far too much variation in how much collections VA is 
actually going to recognize.
    Senator Craig. OK.
    Mr. Robertson. Since the American Legion is not part of the 
IB, I will not have an answer from the Legion's perspective. We 
have always seen this as treatment for people other than the 
service connected, the ones where Title 38 says ``the Secretary 
shall provide  .  .  .'' That usually covers Priority Groups 1 
through 6. And then it says, ``The Secretary may provide  .  .  
.'' and that is the 7s and 8s.
    So we have always had the mindset that when the 
discretionary appropriation is made, it is really made for the 
1s through the 6s, and that the 7s and 8s, when eligibility 
reform was established, every veteran that registered that was 
a 7 and 8 had to agree to allow third-party collections and 
copayments. So they agreed to bring money into the system. 
Where the breakdown has taken place is, number one, the vast 
majority of our enrollees that are 7s and 8s are Medicare 
eligible, and VA is prohibited by law from billing Medicare. 
That is one.
    The other one is that if you have an insurance company that 
says, ``If you go outside the PPO of our network of doctors, 
then it is on you.'' And in that situation, when we send the 
bill to them, they send it back and say, ``I am sorry. They 
went outside the network. We do not have to pay you anything.'' 
So I was very pleased to see that VA has worked with Medicare 
in developing a reasonable charge formula, I guess, that is 
consistent with what Medicare uses when they start sending 
these bills out to more insurance companies. So, hopefully, 
more insurance companies will start looking at that and say, 
``Yes, that is an acceptable charge,'' and go ahead and pay it.
    But throughout the history of the third-party collections, 
they have never, ever, ever met their goal. And when you are 
short of money and that is part of your discretionary 
appropriations, that means it impacts directly at the health 
care facility.
    Senator Craig. Well, thank you all, and the reason I say 
that, we cannot ignore the obvious, and the obvious is the 
record. The VA brought in $1.7 billion in collections in 2004, 
$1.89 billion in 2005, $2 billion in 2006, and is on the pace 
to collect $2.2 billion this year.
    I think it is reasonably safe to assume they are going to 
meet that target of $2.3 billion, and what I find us doing is 
ignoring one mighty big slush fund--a $2.3 billion slush fund 
sitting out in VA.
    Now, I hope you are not blinded by your pursuit of a 
totally funded entitlement program by ignoring the opportunity 
of reasonable revenue.
    Mr. Robertson. May I please respond?
    Senator Craig. Well, no.
    [Laughter.]
    Senator Craig. Let me make one other observation, Steve.
    Mr. Robertson. I will write you a letter.
    Senator Craig. Please do. Now, I am serious about this.
    Mr. Robertson. I am, too.
    Senator Craig. It is worthy of an open discussion as to 
what we are all about here because of the obvious increased 
demands for veterans' appropriate and necessary funding. Also, 
you know, I am allowed to change my mind on occasion, but when 
I do, it usually makes headlines. I, therefore, appreciate your 
ability to change your minds. But let me put into the record, 
Mr. Chairman, testimony from the DAV in 1996, which means 
somebody changed their mind, and it says here--and this is the 
representative of the DAV at that time saying to the then-
Chairman: ``But everybody else who comes to the system''--and 
we are talking about the new priorities--``Mr. Chairman, is 
going to have to pay their own way as they would in any other 
system, through either copayments, deductibles, or private 
insurance. So if there is an assumption on the cost of this 
bill being predicated upon all these new veterans coming into 
the system and not paying for their care, then it is a faulty 
assumption and one that drives the cost up.'' That was 1996. 
Frankly, almost every veterans organization has changed their 
mind.
    Now, having said that, I think what is also important, the 
DAV goes on to say, ``In the Independent Budget DAV proposes, 
along with AMVETS, PVA, and VFW, that the Secretary have the 
discretion to treat these parties at their own expense. We do 
not request that they be entitled to VA medical care. We 
believe it would be in the best interest of the veterans and 
the VA to allow these parties to use VA care at their own 
expense.'' That was then. This is now. And in that stretch of 
time, we have seen a phenomenal growth in this budget, and 
appropriately so. None of us deny that.
    We have explained this before. You have explained it 
before. I am not criticizing. But I do believe, Mr. Chairman, 
it is important to let the record show there has been a 
significant shift in attitude about funding and funding 
priorities at a time when money is no less difficult to come by 
as it relates to providing our veterans with appropriate 
service. That is why, Steve, I wanted to go on and complete 
this. I am running fast to catch up with myself to get to 
another meeting, and, gentlemen, I would never deny you access 
to the record to express why you have changed and why you see 
it as necessary to change the position that was held then by 
your organizations and what is held today.
    Thank you, Mr. Chairman.
    [Hearing transcript excerpt follows:]
Hearing Transcript Excerpt, Veterans Health Care Eligibility Priorities 
(Part I), Held on March 20, 1996, Senate Committee on Veterans' Affairs
    Chairman Simpson. Which veterans should receive free medical care 
from the Federal Government and what services should they receive?
    Mr. Gorman (DAV). I think the premise today that you would build a 
system on really was the premise it was built on when it was first 
enacted, and that is to take care of the wartime disabled veteran . . . 
we believe as an organization of service-connected veterans that that's 
who the system should treat primarily.
    Mr. Vitikacs (The American Legion). I certainly would concur that 
service disabled veterans are the primary constituents of the VA 
medical care system. I think that if we were newly creating a VA system 
today, we would also support the current eligibility where veterans 
unable to defray the cost of their own health care would be given 
consideration.
    Mr. Currieo (VFW). I believe anyone who in the service of their 
country was injured or disabled in any way that needs medical treatment 
once they leave that military service, if they were injured and 
disabled in the line of duty, which doesn't necessarily mean combat, it 
could be training accidents, should be entitled to some type of health 
care once they leave the service without any expense to themselves.
    Mr. Mansfield (PVA). I think, in response to some of the questions, 
what PVA is looking for is we think that service-connected veterans, 
catastrophically disabled veterans, veterans with limited income are 
those that ought to be the focus of VA providing health care. Other 
veterans with funding streams to be retained by the VA are what we're 
talking about in additional care.
    Chairman Simpson. If you say expanded and improved VA health 
benefits won't open the floodgates, then are you saying to us that 
veterans will not seek free care? If so, why not?
    Mr. Gorman (DAV). Although all these veterans may be eligible for 
care, and they are all eligible for care now, our proposal does not in 
any way stipulate or even imply that their care would not be paid for 
by somebody. The service-connected veteran and the Category A veteran 
as defined in the bill would continue to be provided care with 
appropriated dollars, as it should be.  . . . But everybody else who 
comes to the system, Mr. Chairman, is going to have to pay their own 
way, as they would in any other system, through either copayments, 
deductibles, or private insurance. So if there's an assumption on the 
cost of this bill being predicated upon all these new veterans coming 
into the system and not paying for their care, then it is a faulty 
assumption and one that drives the cost up.
    Mr. Vitikacs (The American Legion). The American Legion has never, 
and will never, advocate the VA be a charity system. . . . In addition 
to VA achieving greater efficiencies and reducing redundancies within 
the VIS networks and to right-size the system through mission changes, 
we believe that the way to arrive at budget neutrality is through 
developing new revenue sources into the system. . . .
    Senator Rockefeller (post-hearing Question For the Record). To what 
extent do you think it is important that access to VA care be provided 
to (a) Higher income veterans with no service-connected disabilities? 
(b) Dependents of veterans?
    Mr. Gorman (DAV). In the Independent Budget, DAV proposes, along 
with AMVETS, PVA, and VFW, that the Secretary have the discretion to 
treat these parties at their own expense. We do not request that they 
be entitled to VA medical care. We believe it would be in the best 
interest of veterans and VA to allow these parties to use VA care at 
their own expense.
    Mr. Vitikacs (The American Legion). The American Legion believes 
that higher income nonservice-connected veterans and certain dependents 
of eligible veterans should be permitted access to the VA health care 
system by paying premiums, copayments and deductibles. These additional 
revenue streams would help to ensure the long-term viability of the VA 
health care system. . . The normal appropriations process would ensure 
funding for Category A veterans and the conversion of VA to a market-
based, managed care system would attract other paying customers.

    Chairman Akaka. Thank you very much. Your words and your 
statement is now part of the record, Senator Craig.
    We will submit the rest of the questions that Committee 
Members have to you for the record.
    I want to thank you all for your responses. We look forward 
to working with you on veterans' issues this year. The hearing 
on the Fiscal Year 2008 Budget for Veterans' Programs is now 
adjourned.
    [Whereupon, at 12:30 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

             Prepared Statement of the American Federation 
                    of Government Employees, AFL-CIO
                              introduction
    The American Federation of Government Employees, AFL-CIO, which 
represents more than 600,000 Federal employees who serve the American 
people across the Nation and around the world, including roughly 
150,000 employees in the Department of Veterans Affairs (VA), is 
honored to submit a statement regarding the VA's Fiscal Year (FY) 2008 
budget.
    AFGE commends Chairman Akaka for his leadership in securing 
adequate funding for veterans in the face of VA's unpredictable budget 
process. It is time to give veterans more predictability through an 
assured funding process. As Chairman Akaka so eloquently stated last 
month, ``VA must not be seen simply as another department or agency 
coming hat in hand to seek funding.'' The evidence of a broken funding 
process is overwhelming: a $3 billion shortfall 2 years ago, hiring 
freezes, hospitals operating in the red, and 400,000 pending benefit 
claims last year, while this year, the VA is operating on its twelfth 
continuing resolution in thirteen years.
    AFGE members see first hand both the costs of war and the costs of 
a discretionary VA funding formula. Chronic underfunding and financial 
uncertainty cause tremendous wear and tear on VA services and the 
employees who provide them. Our members who work in the Veterans Health 
Administration (VHA) and Veterans Benefits Administration (VBA) express 
growing anxiety, sometimes bordering on desperation over the lack of 
resources, staffing and training they need to do their jobs. Many VBA 
employees who process the claims of service-connected veterans were 
themselves once on the receiving end of the claims process. Many social 
workers in VHA providing PTSD treatment bring their own valuable 
veteran's perspective to their jobs. The large numbers of veterans in 
low wage VA jobs who launder hospital bed linens and clear the snow on 
hospital grounds take particular pride in meeting the needs of fellow 
veterans. In short, AFGE speaks for employees and veterans in calling 
for a strong and predictable VA budget because we too believe that 
shortchanging veterans is unacceptable.
                        need for more oversight
    Adequate funding goes hand in hand with adequate oversight. 
Congress and the public must be able to determine whether these 
precious dollars are being spent cost effectively and in the best 
interests of veterans. Unfortunately, there is far too little 
transparency in VA spending at the present time. As the Government 
Accountability Office (GAO) has found, the VA does a poor job of budget 
forecasting, relying on incorrect assumptions. In the first quarter of 
Fiscal Year 2006, VHA treated nearly 34,000 more returning OIF and OEF 
veterans than it had predicted it would treat for the entire year. The 
VA does not adequately track how many health care dollars are spent on 
illegal cost comparison studies, according to another GAO study. 
Finally, last year, GAO found that millions of dollars budgeted for 
mental health strategic initiatives had not been spent.
    Stronger reporting requirements for VA spending are badly needed. 
It appears that the VA has suffered no consequences for filing several 
years of incomplete reports on contracting out that are required by 
Federal law (38 U.S.C. Sec.  305). It also appears that the quarterly 
reports required by the Fiscal Year 2006 VA appropriations law have not 
provided much of a vehicle for oversight. For example, those quarterly 
reports should help track the movement of funds between the three 
medical care categories. Yet, AFGE members continue to report 
``borrowing'' between medical accounts. Along the same lines, the 
proposed budget does not adequately explain why 5,689 food service jobs 
suddenly fit better in Medical Services than Medical Facilities.
    AFGE also urges the Committee to conduct oversight of other problem 
spending areas. First, it is very difficult to determine how much VHA 
spends on direct patient care FTEs as compared to supervisory and 
administrative FTEs. We are especially concerned about the enormous 
growth in VISN budgets. One of the original goals of the VISN 
reorganization was to reduce the need for management positions, and 
each VISN was expected to have 8 to 10 FTEs. Yet currently, total VISN 
employment is nearly three times that amount (638 FTEs). Seven of the 
23 VISNs have 30 or more employees. AFGE also encourages more oversight 
of VHA dollars spent on bonuses.
            the president's fiscal year 2008 budget proposal
    As proud and longtime supporters of the Independent Budget (IB), 
AFGE's overall concern with the President's budget proposal is that the 
proposed funding levels for VHA and VBA fall short of the IB's 
recommendations, which forecasts veterans' needs using sound, 
systematic methodology. We also concur with the IB's recommendation to 
restore eligibility to Category 8 veterans. AFGE rejects doubling of 
copays, new user fees or any other policies that shift costs to 
moderate income veterans and shrink deficits by pushing veterans away.
    Despite the Administration's contentions, this proposed budget is 
not gimmick-free. Even though drug copays and user fees are not part of 
this year's medical care budget, the Administration acknowledges that 
these dollars could affect its 2009 appropriations request. Another 
familiar gimmick is to follow a strong first year budget with a 
decrease in funding over the next 4 years; according to the Center for 
Budget and Policy Priorities, veterans' health care would undergo large 
cuts between 2008 and 2012.
Fee Basis Care
    One of the most harmful byproducts of underfunding is excessive 
reliance on contract care. Federal law and good policy dictate that fee 
basis care should be provided to veterans in limited circumstances. 
AFGE is concerned that the proposed Fiscal Year 2008 budget continues a 
dangerous trend toward increased reliance on fee basis care, in lieu of 
hiring more VA medical professionals and timely construction of new 
hospitals and clinics. The number of outpatient medical fee basis 
visits estimated for Fiscal Year 2008 represents a 27 percent increase 
in 3 years. Veterans deserve a better explanation of VA's growing 
reliance on fee basis care, in the face of constant accolades in the 
medical community about the quality of VA health care. AFGE also has 
concerns about the potential of VA's newest fee basis initiative, 
Project HERO, to waste scarce medical dollars by increased use of 
contract care.
Long Term Care
    The Administration has once again failed to propose adequate 
funding for institutional long term care. There are insufficient 
resources in the community to shift large numbers of aging and disabled 
veterans to noninstitutional care. Some veterans must remain in 
institutional care and need beds that are currently in short supply. In 
addition, AFGE questions estimates in the proposed budget that predict 
declines in operating levels for rehabilitative, psychiatric, nursing 
home and domiciliary care.
VBA
    The proposed priority system for processing OIF and OEF claims 
leaves many unanswered questions. Admiral Cooper's assurance at the 
budget briefing that this new system will ``hopefully'' not impact 
other veterans already facing long delays in claims processing is not 
enough. VBA needs to hire enough staff to process all benefit claims in 
a timely manner. Specific legislation should be required to impose any 
priority system in VBA.
    The proposed budget does not contain adequate justification for its 
request for dollars to conduct new contracting out pilot projects for 
medical exams to determine service-connected disabilities and income 
matching. AFGE strongly encourages this Committee to inquire as to 
whether it is in veterans' interests to contract out this work, and 
whether doing so violates competition requirements in the OMB A-76 
Circular and 2006 Transportation-Treasury Appropriations law.
    The proposed increase in staff for the processing of disability 
claims is a step in the right direction. However, the proposed decrease 
in staff for the Pension Maintenance Centers is definitely a step in 
the wrong direction. Currently, the Pension Maintenance Centers have 
too few authorizers to review cases, while adjudicators are pressured 
to give claims a limited review to meet production standards. If VBA 
proceeds with plans to shift the processing of original pension claims 
from the Regional Offices to the Pension Maintenance Centers, 
additional staff will be needed.
                      reports from the front lines
    The following examples illustrate how underfunding and financial 
uncertainly adversely impact the delivery of health care to veterans:
Nurses
     Pay: Despite widely recognized problems with recruitment 
and retention, RNs in every VISN report problems with the locality pay 
process established by 2000 nurse legislation. Managers often refuse to 
provide locality pay increases even after conducting surveys, claiming 
lack of funds. The result is a worsening of the current nurse 
recruitment and retention problem and fewer nurses at veterans' 
bedsides.
     Contract Nurses: Turning to contract nurses as a stopgap 
solution wastes scarce dollars and impacts quality. AFGE commends 
Chairman Akaka and Senator Salazar for requesting a GAO study of the 
growing VA practice of using contract nurses to address nursing 
shortages resulting from budget-driven hiring freezes.
     Floating: Another frequently used stopgap solution that 
hurts patient care is requiring nurses to rotate between two or more 
short-staffed clinics.
     Mandatory Overtime: Despite provisions in 2004 legislation 
to reduce mandatory nurse overtime, hospitals continue to rely on 
mandatory overtime to address staffing shortages.
     Patient Safety Equipment: AFGE urges this Committee to 
ensure that all VA medical facilities have the funds to purchase 
patient lifting equipment that reduce nurse back injuries and patient 
tears.
Physicians and Dentists
    In every VISN, physicians and dentists report difficulty getting 
adequate market pay increases and performance pay awards, despite clear 
language in 2004 physicians pay legislation. Facility directors have 
contended that they lack the funds to increase pay and give awards, 
even before they convened any panels to set market pay or conducted 
evaluations of individual physician performance. Management also cries 
``budget'' in refusing to reimburse physicians for continuing medical 
education, again despite clear language in Title 38 entitling full-time 
physicians to up to $1,000 per year.
    On call physicians are routinely scheduled for weekend rounds and 
are not provided any compensation time for weekend work. Primary care 
panel sizes are at maximum levels regardless of the complexity of 
various cases. Physicians with heavy workloads must also cover large 
patient loads of other doctors on leave as there are no additional 
physicians available.
    The results of these ill-advised policies are widespread shortages 
of specialty physicians throughout the VA, and shorthanded primary care 
clinics with enormous patient caseloads.
Delays in Diagnostic Testing
    Short staffing causes significant delays in medical testing. 
According to recent report from a VISN 20 facility, veterans there face 
significant delays in obtaining sleep studies because the sleep clinic 
lacks adequate staff to review the results. As a result, it takes 5 to 
6 months to get reports read (over double the wait time a year ago). 
The facility is also experiencing extensive delays in getting the 
results of bone density studies because the Imaging Department has only 
one part-time employee to read the scans.
Mental Health
    Due to a chronic shortage of psychiatrists in many facilities, new 
veterans entering the VA health care system must wait several months to 
see a psychiatrist. While there has been an increase in hiring of new 
social workers, the level is still below that of 10 years ago. Heavier 
caseloads prevent social workers from spending more time with patients 
and providing other support such as visiting patients at homeless 
shelters.
                               conclusion
    AFGE greatly appreciates the opportunity to submit our views and 
recommendations to the Senate Committee on Veterans Affairs. We look 
forward to working with Chairman Akaka and Ranking Member Craig to 
ensure that the VA budget adequately meets the needs of our veterans in 
Fiscal Year 2008 and beyond. We believe assured funding and increased 
oversight are essential to meeting that goal.
                                 ______
                                 
         Prepared Statement of the Friends of VA Medical Care 
                          and Health Research
    On behalf of the Friends of VA Medical Care and Health Research 
(FOVA), thank you for your continued support of the Department of 
Veterans Affairs (VA) Medical and Prosthetic Research Program. FOVA is 
a coalition of over 80 national academic, medical and scientific 
societies; voluntary health and patient advocacy groups; and Veterans 
Service Organizations committed to ensuring high-quality health care 
for our Nation's veterans. The FOVA organizations greatly appreciate 
this opportunity to submit testimony on the President's proposed Fiscal 
Year (FY) 2008 budget for the VA research program. For Fiscal Year 
2008, FOVA recommends an appropriation of $480 million for VA Medical 
and Prosthetic Research and an additional $45 million for research 
facilities upgrades to be appropriated through the VA Minor 
Construction account.
    FOVA recognizes the significant budgetary pressures this committee 
bears and thanks both the House and Senate Committees on Veterans 
Affairs for their Fiscal Year 2007 views and estimates with regard to 
the VA Medical and Prosthetic Research program. The committees' 
recommended increases in VA research funding of between $28 million and 
$51.5 million over the President's Fiscal Year 2007 budget request for 
the VA research program affirm your ongoing support for improving the 
health of our Nation's veterans. FOVA also thanks Senators Akaka and 
Craig for their strong leadership of this committee and for leading 
efforts in the Senate to encourage the Senate Committee on 
Appropriations to appropriately fund the VA research program. FOVA 
looks forward to working with you to develop views and estimates for 
Fiscal Year 2008 that reflect this same commitment to medical research 
for the benefit of veterans and, ultimately, all Americans.
     va medical and prosthetic research is necessary for superior 
                          veterans health care
    Recent stagnate funding has jeopardized the national leadership 
status of the VA research program. Significant growth in the annual VA 
research appropriation is necessary to continue to achieve 
breakthroughs in health care for the current population of veterans and 
to develop new means for addressing the health care needs of the 
Nation's new veterans.
    For Fiscal Year 2008, the Bush Administration has yet again 
recommended a budget that cuts funding for the VA research program. 
When biomedical inflation is considered--the Biomedical Research and 
Development Price Index for Fiscal Year 2008 is projected at 3.7 
percent--the research program will be cut even more significantly than 
the $1 million in current dollars. Just to keep pace with the previous 
year's spending, an additional $15 million, for a total of $427 
million, is required.
    FOVA's $480 million recommendation for VA research funding 
represents an inflation adjustment for the program against the Fiscal 
Year 2003 baseline. Unfortunately, this recommendation does not even 
address the additional funding needed to address emerging needs for 
more research on posttraumatic stress disorder (PTSD), long-term 
treatment and rehabilitation of veterans with polytraumatic blast 
injuries, and genomic medicine.
    The VA Medical and Prosthetic Research program has been one of the 
Nation's premier research endeavors. The program has a strong history 
of success as illustrated by the following examples of VA 
accomplishments:

     Developed effective therapies for tuberculosis.
     Invented the implantable cardiac pacemaker, helping many 
patients prevent potentially life-threatening complications from 
irregular heartbeats.

     Performed the first successful liver transplants.
     Developed the nicotine patch.
     Found that an implantable insulin pump offers better blood 
sugar control, weight control, and quality of life for adult-onset 
diabetes than multiple daily injections.
     Identified a gene associated with a major risk for 
schizophrenia.
     Launched the first treatment trials for Gulf War Veterans' 
Illnesses, focusing on antibiotics and exercise.
     Began the first clinical trial under the Tri-National 
Research Initiative to determine the optimal antiretroviral therapy for 
HN infection.
     Launched the largest-ever clinical trial of psychotherapy 
to treat PTSD.
     Demonstrated the effectiveness of a new vaccine for 
shingles, a painful skin and nerve infection that affects older adults.
     Discovered--via a 15-year study of 5,000 individuals--that 
secondhand smoke exposure increases the risk of developing glucose 
intolerance, the precursor to diabetes.

    VA strives for improvements in treatments for conditions with a 
prevalence among veterans greater than in the general population, 
including: diabetes, substance abuse, mental illnesses, heart diseases, 
and prostate cancer. The VA research program also focuses its efforts 
on service connected conditions, including spinal cord injury, 
paralysis, amputation, and sensory disorders.
    VA is equally obliged to develop better responses to the grievous 
conditions suffered by veterans of Operation Iraqi Freedom (OIF) and 
Operation Enduring Freedom (OEF), such as extensive bums, multiple 
amputations, compression injuries, and mental stress disorders. 
Additional increases are also necessary for continued support of new 
initiatives in neurotraumas, including head and cervical spine 
injuries; wound and pressure sore care; pre- and post-deployment health 
issues with a particular focus on post-traumatic stress disorder; and 
the development of improved prosthetics and strategies for 
rehabilitation from polytraumatic injuries. These returning OIF and OEF 
veterans have high expectations for returning to their active 
lifestyles and combat.
    The seamless mental and physical reintegration of these soldiers is 
a challenge, but the VA Medical and Prosthetic Research Program can and 
will address these needs. However, without appropriate funding, VA will 
be ill-equipped to address the needs of the returning veteran 
population while also researching treatments for diseases that affect 
veterans throughout the course of their lives and for which they will 
seek treatment from VA medical facilities.
    To address these long-term needs, VA has a distinct opportunity to 
recreate its health care system and provide progressive and cutting 
edge care for veterans through genomic medicine. Innovations in genomic 
medicine will allow the VA to track genetic susceptibility for disease 
and develop preventative measures; predict response to medication; and 
modify drugs and treatment to match an individual's unique genetic 
structure. VA is the obvious choice to undertake substantial research 
in genomic medicine as the largest integrated health care system in the 
world with an advanced and industry-leading electronic health record 
and a dedicated population for sustained research, ethical review, and 
standard processing.
    While advances in genomic medicine show promise in aiding the 
discovery of new, personalized treatments for diseases prevalent among 
many veterans seeking treatment at VA hospitals, there is also evidence 
that genomic medicine will greatly help in the treatment and 
rehabilitation of returning OIF/OEF veterans. For instance, research 
can target the human genome for insight into individual capacity for 
the healing of wounds. Additional studies have considered the 
differences between genes that aid in healing and genes that cause 
inflammation and its sideeffects. Advancements in this field can 
drastically influence the treatment of injured soldiers and may play a 
large role in the long-term treatment of surgical patients and 
amputees.
    The VA genomic medicine project will require sustained increases in 
funding for the VA research program over the next decade, at least. A 
VA pilot program for banking genetic information that involves 20,000 
individuals and 30,000 specimens (with the capacity to hold 100,000 
specimens) provides estimates that approximately $1,000 will be 
necessary to conduct genetic analyses of each specimen. The potential 
advances that can be achieved with regard to PTSD and veteran-related 
diseases rely on an expansion of tissue banking as the crucial 
information generating step that will inform future ongoing research 
and the development of new treatments.
            va research facilities must be updated to meet 
                        scientific opportunities
    State-of-the-art research requires state-of-the-art technology, 
equipment, and facilities in addition to highly qualified and committed 
scientists. Modem research cannot be conducted in facilities that more 
closely resemble high school science labs than university-class spaces. 
Modern facilities also help VA recruit and retain the best and 
brightest clinician scientists. In recent years, funding for the VA 
Minor Construction Program has failed to provide the resources needed 
to maintain, upgrade, and replace aging research facilities. Many VA 
facilities have run out of adequate research space, and ventilation, 
electrical supply, and plumbing appear frequently on lists of needed 
upgrades along with space reconfiguration. Under the current system, 
research must compete with other facility needs for basic 
infrastructure and physical plant improvements which are funded through 
the minor construction appropriation.
    FOVA appreciates the inclusion within the House-passed Military 
Quality of Life and Veterans' Affairs and Related Agencies Fiscal Year 
2007 appropriations bill of an additional $12 million to address 
research facility infrastructure deficiencies. The House Committee on 
Appropriations also gave attention to this problem in the House Report 
accompanying the Fiscal Year 2006 appropriations bill (P.L. 109-114), 
which expressed concern that equipment and facilities to support the 
research program may be lacking and that some mechanism is necessary to 
ensure VA's research facilities remain competitive. The report noted 
that more resources may be required to ensure that research facilities 
are properly maintained to support VA's research mission. To assess 
VA's research facility needs, Congress directed VA to conduct a 
comprehensive review of its research facilities and report to Congress 
on the deficiencies found, along with suggestions for correction. 
Unfortunately, in its Fiscal Year 2008 budget submission, VA stated 
that this review, already underway for the past year, will take an 
additional 3 years to complete.
    Meanwhile, in May, 2004, Secretary of Veterans Affairs Anthony J. 
Principi approved the Capital Asset Realignment for Enhanced Services 
(CARES) Commission report that called for implementation of the VA 
Undersecretary of Health's Draft National CARES Plan. The CARES Plan 
recommended at least $87 million to renovate existing research space. 
FOVA believes this estimate should be sufficient justification for an 
increase in the minor construction program to begin a significant 
modernization program. However, based on pre-2004 assessments of VA 
research facilities, FOVA believes a complete assessment of research 
infrastructure needs will likely require a facilities improvement 
investment of more than $300 million across the 75 VA medical centers 
that conduct significant amounts of VA funded research. The urgency of 
VA funding for facilities is more heightened now than ever given the 
difficulties facing many affiliated non-profit research corporations, 
which have historically contributed to the modernization of VA research 
facilities.
    FOVA believes Congress should establish and appropriate a funding 
stream specifically for research facilities using the VA assessment 
resulting from the Fiscal Year 2006 report language. In the meantime, 
to ensure that funding is adequate to meet both immediate and long-term 
needs, FOVA recommends an annual appropriation of $45 million in the 
minor construction budget dedicated to research facilities 
improvements. This appropriation is a critical interim step to ensure 
VA can continue to conduct state-of-the-art research.
         the integrity of va's intramural, peer-review system 
                           must be preserved
    As a perquisite for membership, all FOVA organizations agree not to 
pursue earmarks or designated amounts for specific areas of research in 
the annual appropriation for the VA research program. The coalition 
urges you to take a similar stance in regard to Fiscal Year 2008 
funding for VA research for the following reasons:

     The VA research program is exclusively intramural. Only VA 
employees holding at least a five-eighths salaried appointment are 
eligible to receive VA research awards originating from the VA research 
appropriation. Compromising this principle by designating funds to 
institutions or investigators outside of the VA undermines an extremely 
effective tool for recruiting and retaining the highly qualified 
clinician-investigators who provide quality care to veterans, focus 
their research on conditions prevalent in the veteran population, and 
educate future clinicians to care for veterans .
     VA has well-established and highly refined policies and 
procedures for peer review and national management of the entire VA 
research portfolio. Peer review of proposals ensures that VA's limited 
resources support the most meritorious research. Additionally, 
centralized VA administration provides coordination of VA's national 
research priorities, aids in moving new discoveries into clinical 
practice, and instills confidence in overall oversight of VA research, 
including human subject protections, while preventing costly 
duplication of effort and infrastructure. Earmarks have the potential 
to circumvent or undercut the scientific integrity of this process, 
thereby funding less than meritorious research.
     VA research encompasses a wide range of types of research. 
Designating amounts for specific areas of research minimizes VA's 
ability to fund ongoing programs in other areas and forces VA to delay 
or even cancel plans for new initiatives. Biomedical research inflation 
alone, estimated at 3.8 percent for Fiscal Year 2005, 3.5 percent for 
Fiscal Year 2006, and 3.7 percent for Fiscal Year 2007, has reduced the 
purchasing power of the R&D appropriation by $44.9 million over just 3 
years. In the absence of commensurate increases, VA is unable to 
sustain important research on diabetes, hepatitis C, heart diseases, 
stroke and substance abuse, or address emerging needs for more research 
on post traumatic stress disorder and long-term treatment and 
rehabilitation of polytraumatic blast injuries. While Congress 
certainly should provide direction to assist VA in setting its research 
priorities, earmarked funding exacerbates ongoing resource allocation 
shortages.
            va medical and prosthetic research will thrive 
                           with your support
    With its modest research funding, the VA Medical and Prosthetic 
Research Program has yielded the important scientific discoveries 
outlined above, competed successfully for over $1 billion annually in 
funding from other governmental research programs as well as the 
private sector, produced multiple Nobel Laureates and recipients of 
other major research recognitions, and added over 2,900 papers annually 
to the scientific literature. However, VA's modest funding has also 
required that scientific awards be capped at $125,000 annually, a level 
significantly lower than the average award amount for the National 
Institutes of Health, for example. The $125,000 cap is also lower than 
the cap on funding from earlier in this decade, a tradeoff VA 
leadership has had to make to continue funding the same number of 
grants it has historically supported. Modest funding has also limited 
the capacity of the VA career development program and forced VA to cut 
funding to important program areas including aging, degenerative 
diseases of bones and joints, infectious diseases, and kidney 
disorders.
    Congresses' strong past support for the VA research program has 
been encouraging. FOVA believes the crises and opportunities facing VA 
research necessitate a significant boost in Federal funding for the 
program. With such funding, VA can maintain its leadership role in 
developing resources to address the immediate health care needs of 
veterans emerging from OIF/OEF as well as the long-term needs of these 
veterans and those who served the country in the 20th century.
    Again, FOVA appreciates the opportunity to present our views to the 
Committee. While research challenges facing our Nation's veterans are 
significant, if given the resources, we are confident the expertise and 
commitment of the physician-scientists working in the VA system will 
meet the challenge.
    [The Inflation Adjusted VA Research Appropriations chart follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                            aFOVA Membership
    Administrators of Internal Medicine
    Alliance for Academic Internal Medicine
    Alliance for Aging Research
    American Academy of Child and Adolescent Psychiatry
    American Academy of Neurology
    American Academy of Orthopaedic Surgeons
    American Association for the Study of Liver Diseases
    American Association of Anatomists
    American Association of Colleges of Nursing
    American Association of Colleges of Osteopathic Medicine
    American Association of Colleges of Pharmacy
    American Association of Spinal Cord Injury Nurses
    American Association of Spinal Cord Injury Psychologists and Social 
Workers
    American College of Chest Physicians
    American College of Clinical Pharmacology
    American College of Physicians
    American College of Rheumatology
    American Dental Education Association
    American Federation for Medical Research
    American Gastroenterological Association
    American Geriatrics Society
    American Heart Association
    American Hospital Association
    American Lung Association
    American Military Retirees Association
    American Occupational Therapy Association
    American Optometric Association
    American Osteopathic Association
    American Paraplegia Society
    American Physiological Society
    American Podiatric Medical Association
    American Psychiatric Association
    American Psychological Association
    American Society for Bone and Mineral Research
    American Society for Pharmacology and Experimental Therapeutics
    American Society of Hematology
    American Society of Nephrology
    American Thoracic Society
    Association for Assessment and Accreditation of Laboratory
     Animal Care International
    Association for Research in Vision and Ophthalmology
    Association of Academic Health Centers
    Association of American Medical Colleges
    Association of Professors of Medicine
    Association of Program Directors in Internal Medicine
    Association of Schools and Colleges of Optometry
    Association of Specialty Professors
    Association of VA Chiefs of Medicine
    Association of VA Nurse Anesthetists
    Blinded Veterans Association
    Blue Star Mothers of America
    Clerkship Directors in Internal Medicine
    Coalition for Health Services Research
    Digestive Disease National Coalition
    Federation of American Societies for Experimental Biology
    Gerontological Society of America
    Gold Star Wives
    Hepatitis Foundation International
    International Foundation for Functional Gastroenterological 
Disorders
    Juvenile Diabetes Research Foundation International
    Legion of Valor of the USA, Inc.
    Medical Device Manufacturers Association
    Medicine-Pediatrics Program Directors Association
    Military Officers Association of America
    National Alliance on Mental Illness
    National Association for the Advancement of Orthotics and 
Prosthetics
    National Association for Uniformed Services
    National Association of VA Dermatologists
    National Association of VA Physicians and Dentists
    National Association of Veterans' Research and Education 
Foundations
    National Mental Health Association
    Nurses Organization of Veterans Affairs
    Osteogenesis Imperfecta Foundation
    Paralyzed Veterans of America
    Paralyzed Veterans of America Spinal Cord Research Foundation
    Partnership Foundation for Optometric Education
    Society for Investigative Dermatology
    Society for Neuroscience
    Society for Women's Health Research
    Society of General Internal Medicine
    Spinal Cord Research Foundation
    The Endocrine Society
    United Spinal Association
    Veterans Affairs Physician Assistant Association
    Veterans of the Vietnam War and the Veterans Coalition
    Vietnam Veterans of America
                                 ______
                                 
         The Independent Budget Response to Written Questions 
 Submitted by Hon. Daniel K. Akaka, Chairman, U.S. Senator from Hawaii
    Question 1. I would like your comments on VA's proposed enrollment 
fee and increase in the prescription drug copayment for Priority 7 and 
8 veterans-both of which the Administration has repeatedly proposed. 
What are the implications of these policies? How many veterans do you 
estimate would be drive out of the system?
    Answer. Although the Administration's proposal will not have direct 
impact on veterans' health care funding, we are deeply disappointed 
that the Administration chose to once again recommend an increase in 
prescription drug copayments from $8 to $15 and an indexed enrollment 
fee based on veterans' incomes. These proposals will simply add 
additional financial strain to many veterans, including veterans with 
catastrophic disabilities. Although the VA does not overtly explain the 
impact of these proposals, similar proposals in the past have estimated 
that nearly 200,000 veterans will leave the system and more than 
1,000,000 veterans will choose not to enroll.
    It is astounding that this Administration would continue to 
recommend policies that would push veterans away from the best health 
care system in the world. The Independent Budget contends that veterans 
should not have to pay an additional price to utilize the VA health 
care system, when that price was already paid through their service. 
Furthermore, it is not appropriate to compare the VA system and these 
new proposed fees to the TRICARE system and the fees that enrolled 
retirees pay. TRICARE serves as an insurance program both for the 
retiree and his or her family. A veteran's family has only limited 
access to the VA health care system. We appreciate the fact that 
Congress has soundly rejected these proposals in the past and we hope 
that you will do so once again.

    Question 2. How long should a veteran or dependent have to wait to 
have his or her claim decided?
    Answer. While the IB does not make recommendations regarding a 
specific amount of time considered reasonable for a veteran to await a 
claims decision, we appreciate Chairman Akaka's question and effort to 
establish a benchmark for the Department of Veterans Affairs (VA) to 
strive for in claims processing times. The IB does not normally make 
such recommendations because we believe the VA should continually 
strive to increase efficiency, though its primary focus should be on 
producing accurate decisions that must not be appealed. Not 
withstanding this position, the IB would be pleased with the progress 
made if VA were able to attain the goals it has already established for 
itself. In 2001, the Secretary of Veterans Affairs' Claims Processing 
Task Force goal was to reduce the waiting period by fifty percent. 
According to the VA Web site, the average processing time then was 202 
days, so the goal was to reduce it to 101 days. The Veterans' Claims 
Assistance Act of 2000 and other factors have impacted that goal and 
the VA's new goal is to reduce claims processsing time to 145 days. 
Clearly, disabled veterans should have to wait as little as possible to 
receive benefits to which they are entitled, but a 145-day waiting 
period would certainly be preferable to the length of time that is 
currently required. Again, while efficiency is important, the FY 2008 
IB emphasizes that VA's main focus should be on quality rather than 
quantity.

    Question 3. As you know, improved cooperation between VA and DOD to 
achieve a seamless transition between the two Departments for 
separating servicemembers is one of my top priorities. I was glad to 
see The Independent Budget's recommendation that VA and DOD ensure that 
servicemembers have a seamless transition from military to civilian 
life. Please share your thoughts on what the Departments can do to 
improve on their performance and reach this goal.
    Answer. The Independent Budget Veterans Service Organizations 
(IBVSO) believe that regardless of who is responsible for addressing 
weaknesses in the process, seamless transition is a responsibility that 
both agencies must bear equally. Time and again, progress has been 
stymied by a combination of a lack of leadership priority and 
oversight, bureaucratic inertia, and technological backwardness. It is 
disconcerting comparing the current state of the seamless transition 
process to the potential extraordinary accomplishments of which the DOD 
and VA are capable. We recommend greater vigilance from Congress in its 
oversight responsibilities on issues hampering the seamless transition 
of servicemembers, possibly through an informal workgroup for point 
specific issues regarding strategic goals in the Joint Strategic Plan 
approved by the VA-DOD Joint Executive Committee. Additionally, we 
recommend joint committee hearings with the Senate Committee on Armed 
Services for greater transparency and oversight of the VA-DOD Joint 
Executive Council activities including the implementation of the Joint 
Strategic Plan.
    Issues regarding fundamental components of the process remain to 
which we address recommendations including the development of 
electronic medical records that are interoperable and bidirectional, 
allowing for two-way electronic exchange of computable health 
information; occupational and environmental exposure data; and, an 
electronic Discharge Document (DD) 214. At a minimum, this would allow 
VA to expedite the process and give the servicemember faster access to 
health care and benefits. In addition, implementing a mandatory single 
separation physical as a prerequisite of promptly completing the 
military separation process would address many issues in the 
transitioning of benefits and services for servicemembers entering 
civilian life. Although the physical examinations of demobilizing 
reservists have improved in recent years, there are still a number of 
soldiers who ``opt out'' of the physical examinations, even when 
encouraged by medical personnel to obtain them. Finally, we recommend 
additional funding for the Army Wounded Warrior Program and Marine for 
Life programs to allow for appropriate expansion of these programs to 
address the needs of more seriously disabled soldiers and Marines. With 
a high number of severely injured servicemembers returning from Iraq 
and Afghanistan, it is essential that Congress and the Administration 
support and enhance these successful programs.

    Question 4. Given that VBA continues to fall behind in workload 
pending versus workload completed, what are some immediate steps that 
can be taken to give some relief to veterans who are waiting to have 
their claims adjudicated?
    Answer. The IB appreciates the Chairman's innovative perspective 
with regard to providing benefits to disabled veterans as quickly as 
possible. Clearly, doing so would require some degree of certainty that 
such veterans will be eligible for service-connected benefits. 
Otherwise, such a grant would merely create an overpayment and 
indebtedness to the Government for veterans whose claim is denied. The 
VA already utilizes authority to grant immediate benefits via 
``memorandum ratings'' to veterans, such as those severely injured in 
combat, who will unquestionably be entitled to at least twenty percent 
service connected disability compensation. The memorandum rating is a 
temporary rating that is for the purpose of establishing entitlement to 
Vocational Rehabilitation and Employment (VR&E). With entitlement to 
VR&E established, disabled veterans can begin their lengthy transition 
into the civilian job market and lifestyle.
    Perhaps this process could be used as a template to deliver 
additional benefits to disabled veterans awaiting their final rating 
decisions. Most importantly, VA should have sufficient resources to 
enable it to make timely claims decisions. This would take into 
consideration the irreducible amount of time required for responses to 
requests for information, including turnaround time for mailing; the 
minimum number of days in queue to maintain minimum inventory necessary 
for having work on hand, maintaining even production; and, reasonable 
task times.

    Question 5. The Department of Veterans Affairs Personnel 
Enhancement Act of 2004 was intended to reform the pay and performance 
system used by VA for hiring and retaining its physicians and dentists. 
Now that we are in the first full year of implementation, can you give 
us a sense of how well VA has implemented this legislation and if it is 
truly assisting VA in recruiting and retaining the best and brightest 
physicians?
    Answer. We do not detect any notable change in VA's pace or methods 
for recruiting physician staff that we can attribute to enactment of 
Public Law 108-445. We are confident that VA managers of health care 
want to obtain the ``best and brightest'' in physicians and all staff 
who care for veterans, but we cannot verify that result with any 
objective data that can be linked to passage of the Act. We are 
concerned about whether VA's stated support for its passage, provided 
by the Under Secretary for Health at a hearing before your House 
counterpart on October 23, 2003, has been fulfilled. The Under 
Secretary testified as follows:

    ``Also, a national shortage of many physician specialties critical 
to our health care mission further affects our ability to fill key 
vacancies. In these shortage specialties, VA total compensation lags 
behind private or academic sectors by as much as 67 percent. If we are 
to maintain our tertiary care capability and our capacity to offer a 
full range of health care services to veterans, including those now 
serving in far away parts of the world, we must be able to offer 
competitive salaries. For several specialties, we are losing staff 
faster than we can hire them. In some critical specialties, our 
turnover rate exceeds 25 percent a year. Many facilities are not 
actively recruiting, as Mr. Rodriguez pointed out, to fill some key 
vacancies because they simply cannot find viable candidates at current 
VA salary rates. It is estimated that there are over 900 such positions 
nationwide for physician specialties. Non-competitive pay and benefits 
are also reflected in dramatic increases in our scarce specialty, fee 
basis, and contractual expenditures. These expenditures, which are 
necessitated when we cannot hire physicians, have risen from $180 
million a year in 1995 to over $850 million a year last year. 
Additionally, we increasingly must hire non-U.S. citizens under the 
VA's J-1 visa waiver authority, and international medical graduates now 
constitute almost 30 percent of our entire VA physician workforce. The 
problems with the current system are clear. Special pay rates are fixed 
in statute so that over time, their values are eroded by inflation, and 
VA pay falls behind the market. We now pay the maximum authorized 
amounts for some scarce specialists, and have no discretion under 
existing statute to pay more to retain these mission critical 
employees.''

    The premise in Congressional passage of the bill was that these 
numbers (of vacancies in specialty physicians, and the costs for 
contracting for scarce medical specialists) would both fall. The 
overall indication was that the Veterans Health Administration would 
position itself--using this authority--to make itself a more attractive 
employment opportunity for specialists, and that specialists would 
respond.
    One of the requirements of the Act is that VA submits a report to 
the Committee 18 months post enactment, reporting its effects on 
recruitment and retention. We hope VA will address at least some of 
these questions in providing that report to the Committee.
    In monitoring implementation of this legislation, we were disturbed 
at VA's exclusionary approach to developing compensation panels, 
setting parameters for market pay and establishment of performance pay 
incentives. We have learned that VA would not allow outside 
consultation with labor organizations representing VA physicians on any 
of these matters, despite the stated intention of your Committee that 
VA physicians be consulted in establishing these policies. Also, 
funding shortages in VA facilities essentially negated the promise of 
significant performance pay being made available to fulfill the 
purposes of the Act. In a number of networks, local management was 
given the option of setting arbitrary caps on performance pay that were 
imposed universally and preventing any significant rewards for 
outstanding performance, while VA physicians working within the 
performance plans were penalized if they failed to meet those expected 
levels of productivity. We understand that the American Federation of 
Government Employees was refused in its effort under the Freedom of 
Information Act to obtain statistical information from VA dealing with 
the establishment of compensation panels, the policies governing that 
work, and of salary ranges those panels set, even though it is 
difficult for us to understand the claimed ``sensitive'' nature of this 
information.
    For all these reasons, The Independent Budget Veterans Service 
Organizations are concerned about the status of VA physician pay as a 
consequence of enactment of Public Law 108-445, and we hope the 
Committee will use its oversight authority to closely monitor VA 
actions.
                                 ______
                                 
    The Independent Budget Response to Written Questions Submitted 
    by Hon. Larry E. Craig, Ranking Member, U.S. Senator from Idaho
    Question 1.  The IB's recommendation of 9,300 direct FTE for the 
C&P service appears to be based on an assumption that VA will receive 
over 870,000 claims in Fiscal Year 2008 plus an additional 56,000 
claims based on the six state outreach that occurred in 2006. VA, on 
the other hand, has estimated that it will receive 800,000 total claims 
in Fiscal Year 2008 and is not projecting any additional work in Fiscal 
Year 2008 based on the six state outreach, which ultimately generated 
only 8,000 additional claims.
    Using the IB's math of 100 claims per FTE, if VA's projection of 
800,000 claims is accurate, wouldn't the 8,300 direct FTE requested by 
the Administration be more than adequate?
    Response. Yes, if VA's projection that it will receive 800,000 
claims is accurate, 8,300 FTE would be adequate based on the IB 
recommendation of 100 claims per FTE. However, the IB is confident that 
its projection of more than 870,000 future claims receipts is more 
precise. The disability claims workload from returning war veterans and 
veterans of previous periods has steadily increased since 2000. During 
both Fiscal Year 2005 and Fiscal Year 2006, the total number of 
compensation, pension, and burial claims increased by an average annual 
rate of 4.5 percent. During this same period, the number of pending 
claims increased by a total of more than 33 percent. With an aging 
veterans population and ongoing hostilities in Iraq and Afghanistan, it 
is reasonable to expect a continuation of inclined rates. Assuming the 
annual percentage rate of growth remains the same as in preceding 
years, VA can expect 874,136 claims for C&P in Fiscal Year 2007. 
However, the VA perspective is that a slight decrease in the number of 
claims receipts will occur during 2007 and 2008. This prediction is 
somewhat troubling, considering that the VA funding shortfall that 
occurred in 2005 was attributed to error in estimating the number of 
future claims receipts.

    Question 2. You recommend a 63 percent increase for the Veterans 
Benefits Administration, an increase of $737 million. I see that you 
propose $115 million for information technology initiatives, but it 
would appear that what remains is far too high to account for the extra 
staffing you propose (assuming an average cost of $85,000 for one FTE 
according to VA's budget documents) and for general inflationary 
increases.
    Please explain how you arrived at your recommended increase for 
VBA.
    Response. The Independent Budget recommendations for the Veterans 
Benefits Administration for Fiscal Year 2008 are significantly higher 
than the previous year primarily because our baseline from which we 
began our calculations was significantly higher than what appears to be 
the appropriated level in H.J. Res. 20. We do not believe that the 
current services level (appropriated level) adequately addressed the 
true needs and problems facing VBA. In fact, we believe that this level 
was wholly inadequate. The Fiscal Year 2007 appropriated level only 
allows the VA to barely keep its head above water. It does nothing to 
actually allow the VBA to reduce the backlog that it is dealing with. 
Not only that, the backlog is actually growing. It makes no sense to 
say that the Fiscal Year 2007 appropriated level is sufficient as a 
baseline to determine what will be needed to address the claims 
workload next year. The Independent Budget's Fiscal Year 2008 
recommendations reflect what we believe it will take for the VBA to 
meet the needs of current and future veterans and actually start making 
progress on the claims backlog, and not just get by, as has been the 
case for many years. That accounts for the largest difference in our 
recommendations. The Independent Budget believes that the current 
baseline does not provide the VBA with a reasonable starting point to 
address the rapidly growing claims backlog.
    From that starting point, the bulk of the increase in our 
recommendation comes from an increase in the compensation and pension 
(C&P) line item. Based on our calculations, inflationary increases 
total approximately $105 million over the Fiscal Year 2007 projected 
appropriation. Our compensation and pension recommendation also 
includes nearly $143 million for additional FTEE. This is derived from 
our estimated C&P average salary and benefits of approximately $100,000 
for an additional 1,375 new FTEE. Finally, as you mention, our C&P 
increase includes the $115 million for the information technology 
initiatives. This accounts for our total increase in C&P over what we 
believe the available amounts will be from the appropriations bill.
    The remaining increase in VBA is through inflationary increases to 
the primary accounts and modest increases in FTEE for Vocational 
Rehabilitation and Education.

    Question 3. The Independent Budget proposes a $500 million 
initiative to expand mental health services, with a specific emphasis 
on PTSD care.
    Please discuss briefly with us what you see as VA's shortcomings in 
mental health treatment and what you see the $500 million increase in 
services doing to fill the gaps your organizations have identified.
    Response. As reported in the Fiscal Year 2008 Independent Budget, 
we are generally pleased with the direction VA has taken and the 
progress it has made with respect to implementing the National Mental 
Health Strategic Plan (MHSP). However, we assert that gaps remain in 
mental health services that still need to be addressed. The additional 
funding that we recommended is not intended to be earmarked for 
specific mental health programs, but instead is meant to boost the VA's 
efforts to adapt to the emerging and often unique needs of the newest 
generation of combat service personnel while continuing to address the 
chronic and acute needs of older veterans. We view this funding as 
necessary above the projected current services amounts that the VA will 
devote to the mental health care needs of these men and women.
    Some additional insight on this issue from the perspective of The 
Independent Budget is necessary. In November 2006, the Government 
Accountability Office (GAO) issued a report on resources allocated for 
VA's MHSP initiatives. The GAO found that VA did not allocate all of 
the funding it planned in Fiscal Year 2005 for new mental health 
initiatives to address identified gaps in mental health services. 
Additionally, the GAO reported that the VA Central Office did not 
inform Veterans Integrated Service Network (VISN) and medical center 
officials that certain funds were to be used for these specific mental 
health initiatives, and therefore it is likely some funds went for 
other health care priorities. It is unacceptable that funding 
priorities that were clearly outlined were not properly managed, 
particularly at the VISN and lower levels.
    Furthermore, VA has intensified its outreach efforts to Operation 
Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans and reports 
that the relatively high rates of health care utilization among this 
group reflect the fact that these veterans have ready access to VA 
health care, which is available without charge for 2 years following 
separation from service for problems related to their wartime service. 
With increased outreach, internal mental health screening efforts now 
underway and expanded access to health care for OEF/OIF veterans, we 
are concerned that VA continues to underestimate the numbers of these 
veterans who will be seen for various mental health problems in VA 
facilities. This in itself could result in a shortfall in funding 
necessary to meet the demand. Additionally, VA has not yet developed an 
appropriate screening tool or treatment plan for veterans with mild 
traumatic brain injury (TBI). VA mental health providers believe they 
are ill-prepared to properly access, diagnosis and treat these types of 
patients in a multi-disciplinary manner, and that a strategic TBI plan 
should be developed and implemented immediately.
    Finally, although VA has improved access to mental health services 
at its 800-plus community-based outpatient clinics (CBOCs), such 
services are still not readily available at all sites. Neither has VA 
yet achieved its goal of integrating mental health staff in all its 
primary care clinics. Also, we remain concerned about the capacity in 
specialized post-traumatic stress disorder (PTSD) programs and the 
decline in availability of VA substance-use disorder programs of all 
kinds, including the virtual elimination of inpatient detoxification 
and residential treatment beds.
    Although additional funding has been dedicated to improving 
capacity in some programs, VA mental health providers continue to 
express concerns about inadequate resources to support, and consequent 
rationed access to, the specialized services they provide.
                                 ______
                                 
                                                 February 12, 2007.
Hon. Daniel K. Akaka,
Chairman, U.S. Senate Committee on Veterans' Affairs,
Russell Senate Office Building,
Washington, DC.
    Dear Mr. Chairman: You have been advised of an opinion by Mr. 
Joseph A. Violante that opposition to the right legal representation in 
VA claims process exists. See: page 9 of his statement of February 13, 
2007, to the Committee. I write to state the reason that opposition 
exists, how it is factually wrong and how Mr. Violante's statement is 
rife with an internal inconsistency. Once that is understood, I submit 
the wisdom of permitting, not ``forc[ing],'' as he repeatedly argues, 
veterans to obtain a private attorney will be quite apparent.
    Opposition to the right to obtain legal counsel in the claims 
process is, I submit, based on a desire to maintain the status quo 
where DAV and a few other VSOs have a virtual monopoly on 
representation of veterans until the final BVA decision. To be sure, 
there is and has been a large cadre of lay representatives who for 
years have done good work on behalf of veterans. That has changed. 
Coupled with the inability of lay veteran service officers to cope with 
the increase in the volume of claims, the claims process has become 
very complex, indeed as complex as personal injury tort litigation. It 
may be argued, with some validity, that the advent of judicial review 
was, to some extent responsible. The fact remains the benefits system 
is complex, over burdened and understaffed including lay veteran 
service officers. As I said in my letter of last year to the then 
Chairman of this Committee, there is more than enough room for VSO and 
attorney representation in the claims process.
    Mr. Violante laments, and probably correctly, ``that VA's 
production requirements do not allow for thorough development and 
careful consideration of disability claims, resulting in compromise 
decisions and, higher appeal rates and even more overload on the 
system.'' Id. at p. 9. He also notes that the Inspector General's 
survey of the VBA adjudicators revealed that ``nearly half of the VBA 
adjudicators admitted that many claims are decided without adequate 
record development.'' Id. My years on the Court convince me that he is 
correct. How then can it be validly argued as he does, that ``adding 
attorneys to the claims system will only complicate, lengthen and make 
more fractious the resolution of veterans disability claims''? He 
simply asserts he has ``been advised by professionals in the VBA'' as 
to this conclusion. It is a highly dubious conclusion, and a self 
serving and convenient viewpoint. The professional obligations of 
lawyers, which is an enforceable duty, is to ensure an adequate record 
is compiled and presented, a thorough analysis of statutory and 
regulatory rights and duties is formulated and argued to the 
adjudicator which will bring the claim to issue for decision. That duty 
is the antithesis of fractioness. I add that since the Court's creation 
a national bar of competent attorneys has arisen. It is governed by 
disciplinary mechanisms which are lacking in the VSO scheme.
    I close with this observation: In our society today, everyone but 
veterans with claims is free to have lawyer representation, and they 
are wise to seek it given our system of rights and duties. Even a 
convicted felon is entitled to counsel, as is a Social Security 
claimant. Why should veterans be deprived of the right everyone else 
has? Veterans are no longer deemed wards of the state requiring 
protection from historically perceived predators possessed only of self 
interest. They should be entitled to representation of their choice.
    I implore this Committee to leave the right to select 
representation at the NOD stage as was enacted in the last Congress as 
a first step to permitting that choice to extend to the initial claims 
level.
            Sincerely,
                                          Frank Q. Nebeker,
                                             Chief Judge (Retired).
                                 ______
                                 
                                                 February 13, 2007.
Hon. Daniel K. Akaka,
Chairman, Senate Committee on Veteran's Affairs,
Russell Senate Office Building,
Washington, DC.
    Dear Mr. Chairman: Written testimony has been submitted by the 
Disabled American Veterans (DAV) for February 13 hearing on the FY 2008 
budget. In that written testimony, the DAV representative addresses, at 
pp. 9-10 the issue of attorneys in VA claims.
    Last year, in Public Law 109-461, Congress specifically provided 
that veterans would be permitted the option to retain counsel for 
representation in the claims process at the departmental level. In the 
testimony submitted for the February 13 hearing, the DAV advocates 
repeal of that provision of Public Law 109-461.
    As General Counsel of the Veterans' Administration (1985-1990), 
Acting General Counsel of the Department of Veterans Affairs (1990), 
and as a judge on the U.S. Court of Appeals for Veterans Claims (1990-
2005; Chief Judge 2004-2005), I have been heavily engaged in the 
ongoing debate regarding judicial review. During that period, I have 
witnessed many changes in the veterans' claims system and I have 
developed a full appreciation of the needs of veterans and the 
strengths and weaknesses of the veterans' claims system. I am also a 
Vietnam veteran with 5 years active duty and retired after almost 25 
years of active reserve duty in the U.S. Army.
    In advocating repeal, the DAV states its belief that, ``no disabled 
veteran should be forced to retain a private attorney.'' That statement 
is without basis in the context of Congress' purpose in permitting 
veterans, if they so choose, to retain attorney representation at the 
departmental level. The DAV goes on to state, without identifiable 
support, that, ``your adding attorneys to the claims system will only 
complicate, lengthen and make more fractious the resolution of 
veterans' disability claims.'' This is an argument that was made in the 
late 1980s in opposition to the Veterans Judicial Review Act which 
created the Court of Veterans Appeals, now the United States Court of 
Appeals for Veterans Claims. That argument, at that time, became a non-
negotiable political position on the part of the VA and a number of 
veterans' organizations. It is no longer a valid position, as evidenced 
by the actions of the last Congress and by the fact that the provision 
in Public Law 109-461 had substantial support from veterans' groups.
    The Honorable Frank Q. Nebeker, the first Chief Judge of the U.S. 
Court of Appeals for Veterans Claims, in a letter to you regarding this 
subject, points out the weak and misleading nature of the DAV testimony 
and also points out that, although veterans have had the benefit of 
judicial review for more than 16 years, until the last Congress, 
``everyone but veterans with claims is free to have lawyer 
representation.'' I repeat his question to you: ``Why should veterans 
be deprived of the right everyone else has?''
    I strongly urge you and the Members of the Committee to resist any 
attempt to repeal the provisions of Public Law 109-461 granting 
veterans the option to retain an attorney to represent them at the VA 
level.
            Sincerely,
                                           Donald L. Ivers,
                                             Chief Judge (Retired),
                         U.S. Court of Appeals for Veterans Claims.
                                 ______
                                 
                                      Lung Cancer Alliance,
                                    Washington, DC, March 22, 2007.
Hon. Daniel K. Akaka,
Chair, U.S. Senate Committee on Veterans' Affairs,
Senate Russell Building,
Washington, DC.
    Dear Mr. Chairman: As Chairman of the Board of Directors of Lung 
Cancer Alliance I would like to express our strong support for The 
Independent Budget and would appreciate this letter being included in 
the Committee's hearing record on the FY08 budget for the Veterans' 
Administration.
    In particular we would like to bring to your Committee's attention 
the recommendation in The Independent Budget for a $3 million Lung 
Cancer Early Detection and Disease Management Research Pilot program, a 
copy of which is attached to this letter for inclusion in the hearing 
record.
    As a longtime VSO and lung cancer patient, I am concerned with the 
plight of all Veterans at risk for this disease. Lung cancer kills more 
Americans than the next five cancers combined. Repeated studies have 
shown that Veterans, for a host of reasons, die of lung cancer at a 
greater rate than their fellow Americans who did not serve. I believe 
that the Department of Veterans Affairs will be facing a wave of 
service connected lung cancer victims as Vietnam Veterans enter their 
sixties when the disease most commonly presents.
    This is a stealth cancer that usually takes decades to develop. By 
the time symptoms do become apparent, the disease is already at late 
stage. Currently, only 16 percent of cases are diagnosed at an early 
stage when the cancer is curable. For the taxpayer and the VA, the 
benefits to screening are economic as well as humanitarian: it costs 
half as much to treat someone in Stage One as it does to treat a late 
stage lung cancer patient. The alternatives are clear: pay now and save 
lives, or pay double for dying patients.
    The relatively small investment of $3 million in a pilot early 
detection research program gives Congress and the Department an 
extraordinary opportunity to get ahead of the problem, saving dollars 
and lives in the process. No one contests the fact that CT scanning can 
detect lung cancer at its earliest stage.
    Several long term, large population trials have demonstrated that 
the current 85 percent mortality rate can be reversed through early 
detection and treatment. While more studies and trials are underway, it 
is imperative that at a minimum a pilot research program be 
simultaneously carried out among a high risk Veteran population.
    I urge the Committee to include this pilot research program in the 
FY08 budget authorization and appropriations for the Department of 
Veterans Affairs.
            Respectfully,
                                           Philip J. Coady,
                                       Rear Admiral, USN (Retired),
                       Chairman of the Board, Lung Cancer Alliance.
                                 ______
                                 

                Lung Cancer Screening and Early Disease 
                        Management Pilot Program

    More than 50 percent of new lung cancer cases are diagnosed in 
former smokers, including many who had quit 20 or 30 years ago. Another 
15 percent of new lung cancer cases occur in people who have never 
smoked, with possible causes including radon, asbestos, Agent Orange 
and other herbicides, beryllium, nuclear emissions, diesel fumes, and 
other toxins.
    Over the next six years, one million Americans will die from lung 
cancer, most within months of diagnosis. It is the leading cause of 
cancer death, responsible for nearly 30 percent of all cancer 
mortality, more than breast, prostate, colon, liver, melanoma, and 
kidney cancers combined.
    Since Congress passed the National Cancer Act in 1971, the five-
year survival rates for breast, prostate, and colon cancers have risen 
to 88 percent, 99 percent, and 65 percent respectively, primarily 
because of major funding investments in research and early detection 
for those cancers. Lung cancer's five-year survival rate is still at 15 
percent, reflective of the persistent underfunding of research and 
early detection. Lung cancer now kills three times as many men as 
prostate cancer and nearly twice as many women as breast cancer.
 Impact on Military and Veteran Populations
    The Department of Defense (DOD) routinely distributed free 
cigarettes and included cigarette packages in K-rations until 1976. The 
1997 Harris report to the Department of Veterans Affairs (VA) 
documented the higher prevalence of smoking and exposure to 
carcinogenic materials among the military and estimated costs to VA and 
TRICARE in the billions of dollars per year. For example, the 
percentage of Vietnam veterans who ever smoked is more than 70 percent, 
double the civilian ``ever smoked'' rate of 35 percent. Asbestos in 
submarines, Agent Orange, Gulf War battlefield emissions, and other 
toxins are additional factors that have led to a 25 percent higher 
incidence and mortality rate for lung cancer among veteran populations.
    A 2004 report by the Board on Health Promotion and Disease 
Prevention (HPDP) of the Institute of Medicine (IOM), ``Veterans and 
Agent Orange: Length of Presumptive Period for Association Between 
Exposure and Respiratory Cancer (2004),'' concluded that the 
presumptive period for lung cancer is 50 years or more. Another report 
issued in 2005 by the HPDP, ``The Gulf War and Health: Volume 3, Fuels, 
Combustion Products and Propellants (2005),'' concluded that there is 
sufficient evidence for an association between battlefield combustion 
products and lung cancer.
    Lung cancer is an indolent cancer that takes decades to develop, 
and in most cases no symptoms present until the cancer is already at 
late stage. Thus, while the disease may initiate under circumstances 
encountered during service under the DOD, the disease burden will fall 
most heaavily on VA, and to a lesser extent on TRlCARE. Because of the 
predominance of late stage diagnoses, more than 60 percent of lung 
cancer patients die within the first year, and late stage treatment is 
more than twice as costly as early stage.
 Justification
    On October 26, 2006, the New England Journal of Medicine published 
the results of a l3-year study on CT screening of 31,500 asymptomatic 
people by a consortium of 40 centers in 26 states and 6 foreign 
countries. Lung cancer was diagnosed in 484 participants, 85 percent at 
stage 1 (versus 16 percent nationally) and the estimated 10-year 
survival rate for those treated promptly is 92 percent (versus a 15 
percent 5-year survival rate nationally).
    The benefits of this early detection and disease management 
protocol should be extended to veterans, especially those whose active 
duty service has placed them at higher risk for lung cancer.
 Legislative History
    Senate Report 108-087 on the Department of Defense Appropriations 
Bill, 2004 contains the following language:
    ``Lung Cancer Screening--The Committee' urges the Secretary of 
Defense, in consultation with the Secretary of Veterans Affairs, to 
begin a multi-institutional lung cancer screening program with 
centralized imaging review incorporating state-of-the-art image 
processing and integration of computer assisted diagnostic tools.''
    Senate Report 109-286, Military Construction and Veterans Affairs 
and Related Agencies Appropriations Bill, 2007 contains the following 
language:
    ``Lung Cancer Screening--The Committee encourages the Secretary of 
Veterans Affairs to institute a pilot program for lung cancer 
screening, early diagnosis and treatment among high-risk veteran 
populations to be coordinated and partnered with the International 
Early Lung Cancer Action Program and its member institutions and with 
the designated sites of the National Cancer Institute's Lung Cancer 
Specialized Programs of Research Excellence. The Department shall 
report back to the Committee on Appropriations within 90 days of 
enactment of this act, on a proposal for this program.''
 Department of Energy (DOE) and Lung Cancer
    Over the past eight years the DOE Office of Environment, Safety and 
Health has supported a medical screening program for DOE defense 
nuclear workers who were exposed to toxic and radioactive substances. 
The Worker Health Protection Program was originally authorized under 
Section 3162 of the 1993 Defense Authorization Act and has been funded 
through DOE appropriations. Currently more than 7,000 workers at seven 
different munitions plant sites are being screened free of charge 
annually for lung cancer. In FY 06, funding was increased to $14 
milllon to cover an expansion of sites and the number of participants.
                            recommendations
    VA should request and Congress should appropriate at least $3 
million to conduct a pilot screening program for veterans at high risk 
of developing lung cancer.
    VA should partner with the International Early Lung Cancer Action 
Program to provide early screening of veterans at risk.

    [The Independent Budget for Fiscal Year 2008 follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    

  

                                  
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