[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






EXAMINING THE IMPLICATIONS OF THE AFFORDABLE CARE ACT ON VA HEALTH CARE

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

                                HEARING

                               before the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       WEDNESDAY, APRIL 24, 2013

                               __________

                           Serial No. 113-17

                               __________

       Printed for the use of the Committee on Veterans' Affairs







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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

DOUG LAMBORN, Colorado               MICHAEL H. MICHAUD, Maine, Ranking
GUS M. BILIRAKIS, Florida            CORRINE BROWN, Florida
DAVID P. ROE, Tennessee              MARK TAKANO, California
BILL FLORES, Texas                   JULIA BROWNLEY, California
JEFF DENHAM, California              DINA TITUS, Nevada
JON RUNYAN, New Jersey               ANN KIRKPATRICK, Arizona
DAN BENISHEK, Michigan               RAUL RUIZ, California
TIM HUELSKAMP, Kansas                GLORIA NEGRETE MCLEOD, California
MARK E. AMODEI, Nevada               ANN M. KUSTER, New Hampshire
MIKE COFFMAN, Colorado               BETO O'ROURKE, Texas
BRAD R. WENSTRUP, Ohio               TIMOTHY J. WALZ, Minnesota
PAUL COOK, California
JACKIE WALORSKI, Indiana

            Helen W. Tolar, Staff Director and Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

















                            C O N T E N T S

                               __________

                             April 24, 2013

                                                                   Page

Examining The Implications Of The Affordable Care Act On VA 
  Health Care....................................................     1

                           OPENING STATEMENTS

Hon. Jeff Miller, Chairman,......................................     1
    Prepared Statement of Chairman Miller........................    40
Hon. Michael Michaud, Ranking Minority Member....................     2
    Prepared Statement of Hon. Michaud...........................    41
Hon. Jackie Walorski, Prepared Statement only....................    42

                               WITNESSES

Hon. Robert A. Petzel, M.D., Under Secretary for Health, Veterans 
  Health Administration, U. S. Department of Veterans Affairs....     4
    Prepared Statement of Hon. Petzel............................    42
    Accompanied by:

      Ms. Patricia Vandenberg MHA, BSN, Assistant Deputy Under 
          Secretary for Health for Policy and Planning, Veterans 
          Health Administration, U.S. Department of Veterans 
          Affairs

      Ms. Lynne Harbin, Deputy Chief Business Officer, Member 
          Services, Chief Business Office, Veterans Health 
          Administration, U.S. Department of Veterans Affairs
Lisa Zarlenga, Tax Legislative Counsel, U.S. Department of the 
  Treasury.......................................................     6
    Prepared Statement of Ms. Zarlenga...........................    44
    Accompanied by:

      Mr. Jason Levitis, Senior Advisor to the Assistant 
          Secretary for Tax Policy, U.S. Department of the 
          Treasury

                        QUESTIONS FOR THE RECORD

Letter and Questions From: Hon. Jeff Miller, Chairman, To: VA....    46
Questions From: Hon. Phil Roe, To: VA:...........................    47
Questions From: Hon. Jackie Walorski.............................    48
Pre-Hearing Questions From: HVAC Majority and VA Responses.......    48
Questions From: Hon. Phil Roe and VA Responses...................    53
Questions From: Hon. Jackie Walorski and VA Responses............    53

                   MATERIALS SUBMITTED FOR THE RECORD

Paralyzed Veterans of America (PVA)..............................    55
VA Congressional Report on Patient Protection and Affordable Care 
  Act (PPACA) Study and Report of Effect on Veterans Health Care.    58

 
EXAMINING THE IMPLICATIONS OF THE AFFORDABLE CARE ACT ON VA HEALTH CARE

                       Wednesday, April 24, 2013

                     U.S. House of Representatives,
                            Committee on Veterans' Affairs,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:15 a.m., in 
Room 334, Cannon House Office Building, Hon. Jeff Miller 
[Chairman of the Committee] presiding.
    Present: Representatives Miller, Bilirakis, Roe, Runyan, 
Benishek, Huelskamp, Amodei, Coffman, Wenstrup, Walorski, 
Michaud, Takano, Brownley, Kirkpatrick, Negrete McLeod, Kuster, 
O'Rourke, Walz.

              OPENING STATEMENT OF CHAIRMAN MILLER

    The Chairman. Good morning and welcome, everybody, to 
today's Full Committee hearing, Examining the Implications of 
the Affordable Care Act on the Department of Veterans Affairs' 
Health Care.
    As we all know, about three years ago, the Patient 
Protection and Affordable Care Act--or ObamaCare as it is 
commonly known--was signed into law.
    Today's hearing will focus on just one aspect of the law 
that I believe has received distressingly little attention from 
the Administration and the media to date, its potential 
implications for the VA health care system and the many 
veterans that it serves.
    Despite informing this Committee last summer that the 
department was developing a proactive communications strategy 
to inform veteran stakeholders about the potential impacts of 
the ACA, VA's Web site devotes just two sentences to the law 
stating that it, quote, ``Will not affect the current role VA 
has in the lives of America's veterans,'' end quote.
    But as we all know, stating that the so-called Affordable 
Care Act will not affect the department is not the same as 
saying that it won't affect veterans.
    Secretary Shinseki testified before this Committee earlier 
this month that the Affordable Care Act has important 
implications for VA.
    VA's fiscal year 2014 budget submission includes a request 
of $88.4 million to implement the provisions of the ACA and 
meet the department's responsibilities as a provider of minimum 
essential coverage.
    Buried in volume two of VA's budget submission--lacking 
context, justification, or supporting data--is a single 
statement alleging that VA assumes that it will experience a 
net enrollment increase as a result of the law.
    What that net increase may be, why VA believes it will 
occur, and what actions the department has taken to prepare for 
it are unknown at this time.
    Unfortunately, these are far from the only things we do not 
know. Less than a year from full implementation, we also do not 
know how veterans may respond to the new care options available 
to them and how enrollment and utilization of VA health care 
benefits may be affected, in turn; how increasing demands for 
health care services will affect competition for health care 
providers, and therefore VA's health care workforce and 
recruitment and retention efforts, particularly for hard to 
fill positions like psychiatrists; whether VA's current 
information technology systems are capable of fulfilling the 
law's data requirements which include identifying individuals 
who are enrolled in the VA health care system and reporting 
their coverage status to the Department of Treasury; or, if or 
whether the critical role of the VA health care system will 
change in the post-ACA national health care landscape.
    Sadly, I could continue. A report on uninsured veterans 
issued last month by the Robert Wood Johnson Foundation and the 
Urban Institute states that, ``it remains to be seen the extent 
to which uninsured veterans would seek coverage through 
Medicaid, the VA, or other options under ACA and whether and 
how this will vary across state lines.''
    Former VA Under Secretary for Health, Kenneth Kizer, 
published an article last year in which he stated, that ``the 
overall net effect of the ACA on the health care for veterans 
is uncertain at this time, although it will likely have a 
number of intended positive and unintended negative effects.''
    Where the health care of millions of veterans is concerned, 
unknowns of this magnitude this late in the game are 
unconscionable. According to VA, we have to implement the law 
before we can find out what effect it may have on our veterans.
    This House has voted more than 30 times to repeal and 
replace various elements of the ACA, and I have been proud to 
support that effort every time. It is no secret that I and many 
of my colleagues have been critical of the law from the start 
and remain even more critical of and concerned by it today.
    Increasingly, we are not alone. Just last week, Senator Max 
Baucus, one of the chief authors and primary advocates of the 
ACA, called the implementation of the law a train wreck. The 
American public cannot afford a train wreck. And what is more, 
our veterans do not deserve one.
    Thank you all for being here today, and I mean that with 
great sincerity.
    I yield to our Ranking Member, Mr. Michaud, for any opening 
statement that he may have.

    [The prepared statement of Chairman Miller appears in the 
Appendix]

           OPENING STATEMENT OF HON. MICHAEL MICHAUD

    Mr. Michaud. Thank you very much, Mr. Chairman, for holding 
this timely hearing today.
    I want to thank our panelists for coming as well. Look 
forward to hearing your testimony.
    While the Affordable Care Act does not change the VA health 
care system and is not targeted specifically at veterans, it 
includes provisions that could affect veterans and their 
families.
    In the light of the fast-approaching deadline contained 
within the ACA, it is important for this Committee to gauge 
where the Department of Veterans Affairs is in implementing the 
ACA.
    According to the Urban Institute, there are approximately 
13 million non-elderly veterans living in the United States. Of 
that population, 1.3 million or one in ten are uninsured. This 
means that there are 1.3 million veterans who will need to 
select some type of medical coverage within the next year.
    How many of these 1.3 million veterans are eligible for VA 
health care? I do not know if we know that yet. What is being 
done to encourage those eligible to come into the VA health 
care system? How can we help those not eligible to understand 
their options and find insurance elsewhere?
    I expect the department to have an aggressive communication 
plan in place to inform veterans about the Affordable Care Act 
and how it affects them, what and, if any, they can or need to 
do to maximize their VA benefits.
    It is imperative that conflicting messages do not get out 
there and confuse our veterans even more. VA at all levels 
should be prepared to assist veterans in navigating what is 
sure to be a confusing process.
    And I understand that veterans may choose to receive part 
of their care through VA and part through another system such 
as employer health insurance programs, exchanges, and/or 
Medicaid.
    Dual eligibility is not new to veterans, but it has been my 
observation that VA struggles with the minimizing fragmentation 
of care for those veterans who use more than one system.
    Accurate accountability, coordination, and engagement with 
external partners is essential in keeping track of where 
veterans receive their care, the quality of that care, and how 
it integrates for the health and well-being of that veteran.
    There are many factors that will play a role in the choice 
that veterans will be asked to make in the upcoming months. I 
am also interested in understanding what the factors are. Is it 
the proximity to a VA medical facility? Is it cost? Is it 
quality?
    It is believed that females within the household make the 
majority of the family's health-related decisions. VA needs to 
look at it for the servicewoman veterans and address this 
important veteran population as well.
    We know from studies that individual's health is highly 
dependent upon the family's well-being. When you include family 
members of veterans, the number of uninsured rises to 2.3 
million.
    The department's fiscal year 2014 budget request includes 
$85 million for the care of the estimated 66,000 new veterans 
VA has identified who may choose VA for their health care under 
the Affordable Care Act.
    The 2014 budget also includes $3.4 million in the 
information technology budget to build the functionality needed 
to meet the requirements in the Affordable Care Act such as 
identifying individuals who are enrolled in the VA health care 
programs that have been deemed as meeting the minimum essential 
health care coverage.
    I look forward to this hearing and look forward to VA on 
the methodology used in arriving at these numbers and to 
understand how the trends and expenditures will be tracked to 
ensure that there are adequate resources for VA to respond to 
changes based on the ACA.
    I believe that a smooth implementation can be achieved by 
2014 if VA engages effectively with other Federal agencies that 
it should engage with.
    So with that, Mr. Chairman, I yield back.

    [The prepared statement of Hon. Michaud appears in the 
Appendix]

    The Chairman. Thank you very much.
    Thank you to the first and only panel that is going to be 
here today before this Committee.
    With us from the Department of Veterans Affairs is the 
Honorable Dr. Robert Petzel, Under Secretary for Health. He is 
accompanied by Patricia Vandenberg, Assistant Deputy Under 
Secretary for Health and Policy and Planning, and Lynne Harbin, 
Deputy Chief Business Officer for the Member Services for VA's 
Chief Business Office.
    With us from the Department of Treasury is Lisa Zarlenga, a 
tax legislative counsel. She is accompanied by Jason Levitis, 
Senior Advisor to the Assistant Secretary for Tax Policy.
    Again, we sincerely appreciate you being here today.
    And, Dr. Petzel, you are now recognized to proceed with 
your testimony.

  STATEMENTS OF ROBERT A. PETZEL, UNDER SECRETARY FOR HEALTH, 
  VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS 
 AFFAIRS, ACCOMPANIED BY PATRICIA VANDENBERG, ASSISTANT DEPUTY 
 UNDER SECRETARY FOR HEALTH FOR POLICY AND PLANNING, VETERANS 
HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS AND 
 LYNNE HARBIN, DEPUTY CHIEF BUSINESS OFFICER, MEMBER SERVICES, 
  CHIEF BUSINESS OFFICE, VETERANS HEALTH ADMINISTRATION, U.S. 
DEPARTMENT OF VETERANS AFFAIRS; LISA ZARLENGA, TAX LEGISLATIVE 
COUNSEL, U.S. DEPARTMENT OF THE TREASURY, ACCOMPANIED BY JASON 
  LEVITIS, SENIOR ADVISOR TO THE ASSISTANT SECRETARY FOR TAX 
            POLICY, U.S. DEPARTMENT OF THE TREASURY

                 STATEMENT OF ROBERT A. PETZEL

    Dr. Petzel. Good morning. Thank you, Chairman Miller, 
Ranking Member Michaud, and Members of the Committee. I 
appreciate this opportunity to discuss the Department of 
Veterans Affairs' implementation of the Affordable Care Act.
    I have submitted my written testimony for the record.
    The Chairman. And without objection, it will be included.
    Dr. Petzel. Thank you.
    I also want to acknowledge in the audience the presence of 
the veteran service organization representatives. They are of 
invaluable assistance to us in meeting the challenges of caring 
for America's veterans.
    The Affordable Care Act puts in place comprehensive reforms 
that improve access to affordable health care coverage for 
everyone. The law allows all Americans to make health insurance 
choices that work for them while guaranteeing access to care 
for the most vulnerable people. It also provides new ways to 
reduce costs and improve the quality of health care.
    VA is committed to providing veterans and all other 
eligible beneficiaries timely access to high-quality health 
care services.
    Veterans currently enrolled in the VA health care system 
and current beneficiaries enrolled in VA's CHAMPVA or Spina 
Bifida program will experience no change in their VA 
administered health care programs, services, or benefits.
    VA currently provides high-quality, comprehensive health 
care to nearly nine million enrolled veterans and other 
beneficiaries and we will continue to do so under this new law.
    Since the enactment of the Affordable Care Act, VA has been 
hard at work to understand the law's impact on veterans, other 
beneficiaries, and VA's health care system and to prepare for 
implementation of the law.
    VA will continue to focus on providing personalized, 
proactive, veteran-centric health care. Our ongoing efforts for 
successful implementation include identifying and implementing 
the operational requirements that we need, putting in place 
information technology requirements, coordinating efforts 
directly with other Federal agencies such as the Department of 
Treasury and the Department of Health and Human Services.
    VA has focused on developing and providing proactive 
communications with veterans and beneficiaries.
    To oversee and ensure a comprehensive and coordinated 
approach to implementation, VA established a health reform 
integrated project team. The purpose of this team is to examine 
strategies and operational issues that affect veterans and VA 
as a result of the Affordable Care Act, steer the 
implementation of the law at VA, and provide a mechanism for 
information exchange.
    When key components of the Affordable Care Act are 
implemented on January 1st, 2014, they will provide some 
veterans with new options for health care through other 
programs.
    Some veterans may become eligible for Medicaid while others 
may become eligible for a tax credit to purchase health care 
coverage through the health insurance marketplace.
    These changes give VA the opportunity to communicate with 
veterans and other stakeholders about their implications.
    Under the Affordable Care Act, the Federal Government, 
state governments, insurers, employers, and individuals are 
given shared responsibility to reform and improve the 
availability, quality, and affordability of health insurance 
coverage in the United States.
    Starting in 2014, the individual shared responsibility 
provision calls for each individual to have a minimum essential 
health care coverage, qualify for an exemption, or make a 
payment when filing his or her Federal income tax return.
    Under the law, VA health coverage meets the definition of 
minimum essential coverage. This means that veterans enrolled 
with VA health care and beneficiaries enrolled in CHAMPVA and 
the Spina Bifida programs do not need to take any additional 
steps to meet the individual responsibility requirement 
outlined in the law.
    Additionally, under the Affordable Care Act, states have 
the option to expand their Medicare programs but are not 
required to do so. VA continues to monitor state decisions to 
determine the impact on VA beneficiaries in each of these 
locations.
    VA anticipates a modest net increase in enrollment as a 
result of the Affordable Care Act. The net increase will result 
from eligible non-enrolled veterans enrolling in VA health 
care. VA will ensure all veterans can quickly access accurate 
and understandable information on the Affordable Care Act 
provisions and their impact on veterans.
    Mr. Chairman, our work to effectively implement the 
provisions of the health care act will continue. We remain 
focused on providing veterans and other eligible beneficiaries 
timely access to the high-quality health care that our veterans 
have earned and deserve.
    My colleagues and I are prepared to respond to any 
questions you may have.

    [The prepared statement of Robert A. Petzel appears in the 
Appendix]

    The Chairman. Thank you, Doctor.
    Ms. Zarlenga, you may now proceed with your testimony.

                   STATEMENT OF LISA ZARLENGA

    Ms. Zarlenga. Good morning, Chairman Miller, Ranking Member 
Michaud, and Members of the Committee. I am pleased to appear 
before you today to discuss the Treasury Department's 
implementation of the Affordable Care Act as it relates to 
health care provided to our Nation's veterans including 
coverage through the Department of Veterans Affairs.
    Sir, I have also submitted my written testimony for the 
record.
    There is no higher priority than giving veterans the honor 
and benefits they have earned through their service and 
sacrifice to our Nation. We appreciate this Committee's 
commitment to veterans and look forward to working with you to 
ensure that their needs are met.
    The Treasury Department's work to implement the Affordable 
Care Act has been guided by this principle of serving our 
veterans. We have worked in close collaboration with the VA to 
help us understand the needs of veterans and the VA health 
programs.
    Our goal has been to ensure that the tax provisions of the 
Affordable Care Act protect the health care veterans have today 
while also giving them access to additional options.
    The Affordable Care Act provides for the establishment of 
affordable insurance marketplaces, also known as exchanges, 
which will open on October 1st, 2013 to help individuals 
compare health plans and enroll in the one that is best for 
them.
    The Affordable Care Act created a refundable premium tax 
credit to help make coverage offered through a marketplace 
affordable. A taxpayer may qualify for advanced payments of the 
premium tax credit which are paid directly to health insurance 
issuers and reduce the taxpayer's monthly premiums for health 
insurance.
    The premium tax credit is generally not available to an 
individual who is eligible to enroll in other minimum essential 
coverage which generally includes coverage through government 
sponsored programs and employer sponsored plans.
    In developing our regulations implementing the premium tax 
credit, we worked closely with the VA to ensure that the rules 
work properly for our Nation's veterans.
    As part of this process, we determined that the general 
policy that denies the premium tax credit to individuals who 
are eligible for government sponsored coverage could create 
problems for certain veterans and their families because 
eligibility for veterans' coverage cannot be firmly determined 
at the time the individual is seeking eligibility determination 
from the marketplace.
    So after consulting with our colleagues at VA and 
considering the issue, we concluded that a specific rule was 
needed to ensure that veterans were not inappropriately denied 
the premium tax credit.
    Accordingly, our proposed regulations contained a rule that 
treats an individual's eligibility for VA coverage only if he 
or she is actually enrolled in that coverage. The general 
result of this rule is that a veteran who is eligible for VA 
coverage may choose between enrolling in VA coverage or 
enrolling in coverage through the marketplace and, if eligible, 
receiving the premium tax credit that reduces the premium for 
that coverage.
    Our final regulations retain this general rule, but in 
addition, in the final regulations, we amended the rule to 
apply to non-veteran individuals such as dependents who may 
receive VA medical benefits under certain programs.
    Thus, the special eligibility rule applies not just to 
veterans but to individuals who are eligible for benefits under 
the Civilian Health and Medical program of the Department of 
Veterans Affairs or CHAMPVA and the VA's Spina Bifida health 
care program.
    Beginning in 2014, the Affordable Care Act generally 
directs non-exempt individuals to maintain minimum essential 
coverage for themselves and their dependents or make an 
individual responsibility payment with their Federal tax 
returns.
    Section 5000A of the Internal Revenue code which was added 
by the Affordable Care Act defines minimum essential coverage 
to include coverage under specified government sponsored 
programs, eligible employer sponsored plans, and health plans 
offered in the marketplace.
    The statute requires the secretary of Veterans Affairs in 
coordination with the secretary of Health and Human Services 
and the secretary of Treasury to determine which VA health care 
programs should be considered minimum essential coverage.
    In implementing our proposed regs under Section 5000A, we 
worked closely with the VA to identify those VA health care 
programs that provide comprehensive medical benefits.
    Based upon the recommendations of our VA colleagues, our 
proposed regulations specify that comprehensive medical 
benefits package authorized for eligible veterans, the CHAMPVA 
program, and the Spina Bifida program are each treated as 
minimum essential coverage for purposes of the individual 
coverage requirement.
    Thus, under the proposed regulations, veterans and other VA 
beneficiaries who are enrolled in these VA health care programs 
will satisfy the individual coverage provision of the 
Affordable Care Act.
    We will continue to consult with our VA colleagues as we 
prepare to issue final regulations on this provision before the 
end of this year.
    Ensuring implementation of the Affordable Care Act in a 
manner that understands and is responsive to the needs of our 
Nation's veterans is a top priority of the Department of the 
Treasury as outlined under the issues we addressed and recent 
guidance regarding the Affordable Care Act provisions within 
Treasury's jurisdiction.
    As we move forward with implementation, we look forward to 
working with the VA as well as with this Committee to ensure 
that the Affordable Care Act works as well as possible for the 
veterans and their families who have given so much to this 
country.
    My colleague, Mr. Levitis, and I would be happy to answer 
any questions that you have.

    [The prepared statement of Lisa Zarlenga appears in the 
Appendix]

    The Chairman. Thank you very much for your testimony.
    And with that, I will yield myself five minutes for 
questions and, if necessary, we will do a second round of 
questions as well.
    The first thing I want to focus on is that veterans' 
disability compensation and pensions are generally exempt from 
Federal taxation. This goes to both of you.
    Under the ACA for the modified adjusted gross income 
calculation, would this same principle apply? In other words, 
are veterans' disability compensation and/or pensions excluded 
for the purposes of calculating income for eligibility for the 
premium tax credits?
    Ms. Zarlenga. Mr. Chairman, the computation of the modified 
adjusted gross income begins with adjusted gross income that is 
reported on your tax return. So anything that is excluded from 
gross income for normal tax purposes would also be excluded 
from the modified adjusted gross income. So these veterans' 
disability benefits would be excluded.
    The Chairman. So the question is, has VA estimated how many 
veterans will qualify for the credit and what plans is VA 
making to address the potential change in veteran utilization 
of the VA health care system?
    Dr. Petzel. VA has calculated how many people we think are 
going to be leaving us and how many people are going to be 
accrued to the system. In terms of who would be eligible for 
the tax credit, that would depend upon whether they elected to 
do that or not.
    I would have to turn to Ms. Harbin or to Pat for any 
specifics. But I am not aware that we have calculated who would 
be eligible for the tax credit.
    Pat.
    Ms. Vandenberg. Mr. Chairman, we have estimated the 
potential out migration due to the availability of the tax 
credit. However, as you stated so clearly in your opening 
comments, this whole phenomenon is going to be a function of 
veteran choice.
    So veterans as they look at their options will weigh their 
current service that they receive from VA, the scope of the 
service that we provide to them, the model of care that we 
have, and then they will look at what would they be purchasing 
if they asked for a tax credit and have to make that choice.
    There is no way for us to gauge in absolute terms what the 
ultimate determinant will be in that veteran's choice. So we 
have to make a certain set of assumptions.
    As Dr. Petzel indicated, we estimate that there could be up 
to a million veterans who could elect to avail themselves of 
the premium tax credit.
    Reciprocally, there are, as has already been referenced, a 
million plus veterans who are eligible to enroll with VA to get 
the coverage that will constitute minimal essential coverage. 
That is what gives rise to our net analysis that you alluded to 
earlier.
    The Chairman. So you're saying a million out, a million in?
    Ms. Vandenberg. That is the extreme range of the analysis 
that we have conducted thus far using the American community 
survey results and several simulation tools that help us to 
understand what drives an individual's choice in selecting 
insurance products.
    The Chairman. It is pretty coincidental that the numbers 
would balance themselves out, especially when the number is 
that high.
    But I guess the question that I would have is--you have a 
veteran with a family who may have a child who has a disability 
or something similar, the premium tax credit, I think, would be 
a draw for that veteran to leave the system and go into the 
private market given the fact that they have the ability to get 
the tax credit. Am I misinterpreting or is that correct?
    Dr. Petzel. Let me start just briefly with that and then we 
can--both individuals on my right and left have something to 
say.
    It depends on what kind of coverage they are able to get 
and what kind of co-pay, if you will, they have to provide. The 
plans range from covering 70 percent of the cost of health care 
to as much for the platinum plan as 90 percent.
    One is going to have to weigh whether the tax credit more 
than makes up for the co-pay or the expense that the individual 
that is in the marketplace is going to have to bear.
    Ms. Zarlenga. Yes. Mr. Chairman, we consulted with our 
colleagues at VA and we tried to coordinate a rule that would 
work the best for both agencies and the veterans.
    And as I stated in my testimony, one of our top priorities 
was to ensure that the tax provisions protect the current 
health care that veterans have today while giving them these 
additional options.
    That being said, my understanding is that the VA coverage 
is free with no premium. And even with the premium tax credit, 
individuals going to the exchange will have to pay for either 
equivalent coverage that is currently provided to veterans or 
even lesser coverage.
    And so I do not think that the premium tax credit itself 
will drive veterans to leave VA coverage and seek out coverage 
on the exchange, although there may be unique circumstances 
that, you know, drive a veteran to choose one plan over 
another.
    The Chairman. First of all, and I apologize, my time is 
running out, the care that is provided is not free. It was paid 
for a long time ago. And I know you did not mean it the way you 
said it.
    Ms. Zarlenga. Absolutely, sir.
    The Chairman. The issue is, though, the family members that 
VA does not care for. If a veteran cannot get the premium 
support if they are enrolled in VA, then they have to dis-
enroll from VA in order to pick up the premium support. Is that 
true?
    Ms. Zarlenga. Mr. Chairman, the family can still separately 
enroll in the exchange even if the veteran himself is covered 
through VA coverage if they otherwise qualify for the premium 
tax credit.
    The Chairman. Okay. I have follow-up questions, but I would 
like to go ahead and recognize Mr. Michaud.
    Mr. Michaud. Thank you very much, Mr. Chairman.
    Dr. Petzel, by January 1st of 2014, the VA must be in 
compliance with the Affordable Care Act.
    Under your implementation efforts for the information 
technology, VA has identified a system that is needed to 
support the ACA.
    Do you have any contingency plans in place if the latter 
part of the year that you look at it and you realize you cannot 
meet the implementation timeframe?
    Dr. Petzel. Congressman Michaud, we have a plan and $3.4 
million in the budget to provide for the IT links, particularly 
to IRS, that are necessary to be in compliance.
    We actually have much of this in place already and I am 
confident that we will be able to have all of the information 
exchange IT systems up and in place by the 1st of January.
    I would ask Lynne Harbin if she has anything to add to 
that.
    Ms. Harbin. Yes. Thank you, Ranking Member Michaud.
    VA has worked with CMS and the Federal marketplace both to 
better understand the business requirements and the flow of 
information.
    We have built an interface with the CMS hub so that when a 
veteran or beneficiary is applying for the tax credit, that 
query will come into the VA and we will be able to respond.
    We have actually already tested, began the testing process. 
We believe we are on track to have that in place before October 
1 of 2013.
    Mr. Michaud. Have you given any thoughts, because the 
states have to play a role if they go into the exchanges, what 
it is going to look like and what have you, what affect will it 
have for some states who do not want to participate working 
with Health and Human Services to make sure that they are on 
time to implement it come 2014? Do you see that as a problem 
and, if so, what are you doing to try to address that as it 
relates to our veterans' population?
    Dr. Petzel. We are in communication with the states. We do 
not anticipate an issue in terms of the reporting. What is, I 
think the important issue for us is in those 21 states that 
have elected not to enhance their Medicaid programs, what is 
going to be the reaction to both the state and the veteran 
community in terms of seeking other sources of care.
    And when we talk about a net effect of 66,000 or so people 
coming to us, the majority of those people we think are going 
to be coming to us because of differences in their Medicaid 
programs in different states so that we would expect to see 
perhaps more people coming from a state that did not enhance 
their Medicare program than from those states that did.
    Mr. Michaud. So we know that we have veterans who are 
enrolled in VA health care but do not rely on the VA for their 
primary health care coverage.
    If they chose to seek private health care insurance in the 
marketplace, can they still qualify? I am talking about the 
individual veteran.
    Dr. Petzel. Yes, they can. They can still be seen by us if 
they have sought care in the private sector. If they get care 
with us, they would not be eligible for the tax credit, just 
like if they get care with Medicare or with Medicaid, they 
would not be eligible for the tax credit. But, yes, they could 
seek care with us.
    Mr. Michaud. They can seek care, but as far as the tax 
credit, if they just use VA not as their primary health care, 
so they will not be eligible then for the tax credit, if I 
understand that correctly?
    Dr. Petzel. That is correct.
    I would ask Ms. Zarlenga if she has anything to add to 
that.
    Ms. Zarlenga. Right. The rule is, if they enroll in VA 
coverage, then they would not be eligible for the premium tax 
credit, Congressman. They could still enroll in a plan through 
the exchange, but they could only get the premium tax credit if 
they are not actually enrolled in VA coverage.
    Mr. Michaud. Have you looked at or was it ever brought up 
during your rulemaking process that if they only enrolled in VA 
for, you know, minor care but not as their primary health care 
whether or not they would receive tax credit for that primary 
care health coverage? Have you discussed that in the rulemaking 
process?
    Dr. Petzel. Enrollment is what decides it, not what kind of 
care or the volume of care. But if they are enrolled with us, 
then they would not be eligible for the tax credit.
    Ms. Zarlenga. Right. And our rules treat as minimum 
essential coverage the comprehensive VA coverage as well as the 
CHAMPVA and the Spina Bifida programs. I am not aware if there 
are smaller programs within VA, but those have not been 
designated to be minimum essential coverage. And it is the 
minimum essential coverage, enrollment in that that keeps you 
from getting the premium tax credit.
    The Chairman. That is what I was trying to drive at just a 
second ago and I think the Ranking Member was trying to ask the 
exact same question.
    The concern is veterans can dual enroll now and go back and 
forth from VA to other forms of health care coverage. And if I 
understand correctly, VA can bill third parties for services 
rendered, and use that money as supplemental dollars to the VA 
health care system.
    So will you not be losing those dollars if you do not allow 
a dual enrollment by the veteran?
    Dr. Petzel. That is correct. If there were people that were 
no longer dually enrolled, then we would not be able to bill 
their other insurance companies, if they were private sector. 
The majority of our dual enrollment comes from Medicare, but 
you are correct. We would not be able to bill if somebody 
decided just to enroll with us and not to have dual enrollment.
    The Chairman. Have you done a calculation yet based on the 
lost income to VA?
    Ms. Vandenberg. Mr. Chairman, we have done an initial 
evaluation and at this point, it is emerging what that impact 
will be. We do not estimate it to be a significant impact.
    We would be happy to discuss that with you in further 
detail in terms of the underpinnings. I did not bring that with 
me today, but I will take that for the record.
    The Chairman. Yeah. Did you say it was a significant impact 
or not?
    Ms. Vandenberg. It does not appear to be a significant 
impact at this point. We do have that analysis available. We 
could easily review that with you at your----
    Dr. Petzel. We would be delighted to meet with the staff or 
whatever and review that analysis.
    The Chairman. Thank you.
    I would like to ask that question to be answered for the 
record.
    Ms. Vandenberg. The record.
    The Chairman. Dr. Roe.
    Mr. Roe. I thank the Chairman.
    And that is a pretty easy number to find if you make less 
than $88,000 a year which is about 90 percent of the U.S. 
population. That would be probably most veterans would fall 
into that category if they have ability to have private health 
insurance like I have had all my life. So that should not be a 
hard one to figure out. You guys have got the data.
    The problem with the health care system in this country is, 
is it costs too much money. It is too expensive. Secondly, we 
have people who are out there at work every day and cannot 
afford it. And the Affordable Care Act was supposed to do that.
    And what happened was it has actually forced the cost way 
up and it may end up cutting the number of people who actually 
end up having private health insurance. It very well could. And 
this bill basically, this Affordable Care Act expanded greatly 
in some states, some areas that chose to do it, Medicaid, which 
is a program that is not working too well right now.
    And I can tell you I believe you are going to have a lot 
more people, Dr. Petzel, come. And the reason is because 
exactly what was pointed out by Treasury is that the subsidy, 
the tax credit is not going to be as much as what is going to 
be paid by the VA which is no co-pay.
    And people make economic decisions and veterans out there 
who are struggling right now, I think you are going to see an 
onslaught of people that come to the VA. I think there are 
going to be a lot more veterans use it because the other side, 
instead of making it more affordable, is making it less 
affordable for people. And so I think you are going to see more 
people.
    I have a question for Treasury. If the tax credit, the 
credit that you will get to buy insurance on the exchange, if a 
veteran chooses to go to the VA for his or her family, those 
family members can get that tax credit, is that correct, when 
we consider the VA minimum essential coverage? Am I right on 
that?
    Ms. Zarlenga. So what you are saying, Congressman, is that 
the----
    Mr. Roe. Here is a veteran over here going to the VA 
getting their health care and he has got family members.
    Ms. Zarlenga. And they are not----
    Mr. Roe. And they are going to get a subsidy.
    Ms. Zarlenga. --getting health care?
    Mr. Roe. Because they cannot get the care at the VA, they 
get a subsidy and buy it on exchange. Am I correct on that?
    Ms. Zarlenga. That is correct, yes.
    Mr. Roe. Well, am I also correct that in the private 
sector, if an employer provides minimal essential coverage, by 
the rules that I have read, they do not have to provide--the 
government does not provide subsidies for those family members, 
at least for the spouse to buy insurance on the exchange? Why 
that disparity?
    Ms. Zarlenga. Congressman, it is the nature of the way that 
the code is written. For employer sponsored coverage, 
affordability is determined based on the----
    Mr. Roe. But you see my point here?
    Ms. Zarlenga. Yes.
    Mr. Roe. Those are two exact same things and, yet, if I am 
out here in my private practice and I choose to cover my 
employees, I am not required to do exactly what you required 
someone who goes to the VA to do. Why is that?
    Ms. Zarlenga. There is just a difference in the way the 
code treats government sponsored coverage and employer 
sponsored coverage. And it is a rule that is unique to employer 
sponsored coverage.
    Mr. Roe. Who made the rule?
    Ms. Zarlenga. Pardon me?
    Mr. Roe. Who created that rule?
    Ms. Zarlenga. It is in the statute, sir.
    Mr. Roe. The rule is in the statute. We did not write the 
rule.
    Ms. Zarlenga. That is the way we----
    Mr. Roe. When we passed the Affordable Care Act, it was not 
in there. I read the bill. That was not in there. The 
rulemaking occurred afterwards.
    Mr. Levitis. Congressman----
    Ms. Zarlenga. Right. Go ahead.
    Mr. Levitis. --maybe I can try to explain.
    Mr. Roe. I tell you we do need an explanation because there 
are people out there that are going to lose their coverage.
    The other thing I think is very important, and I want to 
hear what you have got to say, is that we better doggone well 
explain to the veterans who use--for instance, myself. I have 
chosen not to use--I have good health insurance. I do not want 
to step in front of a veteran, and many of us are like this out 
there. I talk to veterans every day who have private health 
insurance. And we know there are a lot of guys and veterans 
struggling and we do not want to take up their slot.
    Well, we better doggone well explain to them that if they 
get some coverage, as Mr. Michaud said a little bit, that they 
can lose--they lose that benefit, that exchange benefit if that 
happens. In other words, they no longer can qualify for those, 
so they are now stuck essentially in the VA system. That is the 
first time I have heard of it was today.
    Now your answer.
    Ms. Zarlenga. Actually, Congressman, I would like to 
clarify a point that you just made.
    It is if the veteran has minimum essential coverage, then, 
or his family has minimum essential coverage, then they cannot 
get the premium tax credit. And so that minimum essential 
coverage has been defined to include the comprehensive VA 
coverage or the CHAMPVA or the Spina Bifida program.
    I mean, perhaps Dr. Petzel could explain if there are other 
small--you were saying small benefits. And my understanding is 
that the minimum essential coverage that VA provides is a 
comprehensive coverage.
    Mr. Roe. Back to why the other, if you could indulge me for 
30 seconds.
    Mr. Levitis. Sure. So, Congressman, the general way that 
the tax credit is set up is that an individual who is eligible 
for other coverage, be it government sponsored coverage or 
employer sponsored coverage, cannot get the tax credit. So the 
idea is, if you have other coverage, you are supposed to get 
that, not the tax credit.
    So in developing our regulations on the tax credit, we 
realized that that rule could create some issues for veterans 
because it may not always be possible to determine clearly 
whether, when they go to the exchange or the marketplace and 
try to get an advanced payment of the tax credit, whether they 
are eligible for VA coverage or not.
    So what we did is we created a rule that effectively gives 
veterans a choice whereas an individual who is eligible for 
employer sponsored coverage, generally they have to take that. 
An individual who is eligible for veterans' coverage can choose 
between taking the veterans' health coverage or they can also 
choose to get the tax credit.
    So our understanding in working with our colleagues from VA 
was that this would help veterans to be able to take advantage 
of either option and get the most help they could.
    Mr. Roe. I yield back.
    The Chairman. Am I the only Member of the Committee that is 
confused? What has just transpired, I am lost because you came 
back and you just made a clarification.
    Again, if a veteran is eligible to be in the VA system, is 
his family eligible to get a tax credit?
    Dr. Petzel. Yes.
    The Chairman. Okay.
    Ms. Zarlenga. Yeah. And our rule is actually based on 
whether the veteran is enrolled in the VA system.
    The Chairman. But there is a difference now between--
    Ms. Zarlenga. Right.
    The Chairman. --being enrolled and not enrolled.
    Ms. Zarlenga. That is right. If the veteran is not 
enrolled, then the veteran is also eligible to get the premium 
tax credit.
    The Chairman. Okay. Then there is the point. There is a 
reverse incentive for the service-connected veteran to stay in 
the system. What I am trying to figure out also concerns the 
calculation of household income.
    If a veteran stays in the system, how do you calculate the 
household income for the family members and whether or not they 
receive the tax credit?
    Ms. Zarlenga. Mr. Chairman, the income for the tax credit 
computation is based on household income. And so regardless----
    The Chairman. But if they are separated and you have the 
veteran in the VA system taking health care there, but the 
family is over here and they may not have any income.
    Ms. Zarlenga. That is right. I mean, a function of the 
statute looks to household income. The IRS really only has the 
ability to enforce household income because that is what is 
reported on the tax returns. The IRS does not have the ability 
to look to individual members of the household income unless 
they impose additional reporting requirements.
    And so by the function of looking at the household income, 
the veteran's income would be included. That being said, if the 
veteran has income that is excluded from gross income such as 
disability payments, that is not counted towards household 
income.
    The Chairman. Ms. Brownley.
    Ms. Brownley. Thank you, Mr. Chair.
    Dr. Petzel, I wanted to follow-up with you because I, you 
know, share your concern about Medicaid and the states 
expanding Medicaid and others not.
    I am wondering if you have done or have been able to do any 
kind of prediction or assessment in terms of, understanding 
that all states have not made any final decisions, I mean, but 
in terms of where the concentration of veterans might be 
relative to these states and those who are uninsured and what 
that impact is and do you know what the impact would be 
roughly?
    Dr. Petzel. Thank you Congresswoman Brownley.
    We have. As I said, 27 states have elected to expand 
Medicare and 21 states have decided not to. And there are three 
states that have not yet made a decision.
    Three of the states that have elected not to expand 
Medicare are very populous and have large--beg your pardon? I 
am sorry. Medicaid. My apologies.
    Three of the states are populous states and they have a 
large concentration of veterans. And we expect that, again, 
depending upon exactly what the Medicaid program will look 
like, that we would be seeing more people migrating towards the 
VA health care from those places than we would be in places 
that have expanded their Medicaid coverage.
    And, Pat, you might be able to----
    Ms. Vandenberg. Yes.
    Dr. Petzel. --add a little bit to that.
    Ms. Vandenberg. Yes. We are focusing on Florida and Texas 
in particular at this point. What we have done is taken our 
estimate of the uninsured and spread that over the states as 
best we can ascertain from the American community survey 
results that we have used, the census survey. And then we have 
looked at that in relationship to the states who are and are 
not going to expand Medicaid.
    We have also established a network of contacts within our 
VISNs who are establishing more explicit communication with 
state government regarding their intent, the scope of the 
services, the way they are going to deploy those services to 
Medicaid beneficiaries.
    And we are attempting to ascertain at this point what the 
attractiveness would be in those states where we are going to 
see Medicaid expansion and reciprocally in states that are not 
going to expand what the health care needs of those individuals 
might be so that we further hone our communication to those 
uninsured veterans.
    So we are trying to take both a macro approach at the 
highest level and then take it down to the micro level of the 
states and really drill down to get a closer linkage to state 
governments for this discussion.
    Dr. Petzel. An important aspect of this, Congresswoman, is 
what are the plans going to look like both in terms of Medicaid 
and in terms of what is on the insurance exchange and in the 
insurance marketplace.
    How are they comparing to VA health care and will it be 
economical for someone to forego their VA health care and get 
the tax credit, if you will, and participate in that program or 
enroll in Medicare?
    And there has been no crispness yet on the part of both the 
insurance industry and the Medicaid programs in defining 
exactly what their coverage is going to be. We are keeping as 
close track of it as we possibly can. But that is going to be 
an important determinant.
    Ms. Brownley. Thank you.
    And just another follow-up question, Dr. Petzel. And you 
mentioned your assurance that a plan will be in place for 
outreach and communications and the IT system will be up.
    I think you said it will be ready to implement in January 
of 2014. I just want to make sure that you are going to be 
ready. I think we need to be ready before that in terms of 
being sure to outreach when the implementation of the 
Affordable Care Act takes places.
    Dr. Petzel. Oh, I apologize. I meant the IT program. I did 
not know the question was referring to outreach. Our outreach 
program is nearing completion. We have developed a very 
comprehensive outreach program including multiple types of 
media.
    Our intention is that that will roll out in May and June 
concomitant with Health and Human Services' rollout of their 
information about the Affordable Care Act so that these two 
things will mesh together very, very well.
    Ms. Brownley. Could we submit that plan into the record 
that you have developed or is that possible?
    Dr. Petzel. Absolutely, yes, we can.
    Ms. Brownley. Great. Thank you.
    The Chairman. Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman.
    So if I understand it correctly, the result will be, I 
suspect, a significant expansion potentially in enrollees in VA 
health care because it does not have to be service-connected. 
It could be simply the means tested aspect of it; is that 
correct?
    Dr. Petzel. We expect that there will be, Congressman, some 
increase in enrollment. We expect that there will be some 
people who will leave us. And the net effect of this is what we 
have been talking about. And we are anticipating that in the 
early stages as this is rolled out in 2014 that this will be 
about 66,000 people.
    Mr. Coffman. So for those states that took the Medicaid 
option, I would assume that you would not see a lot of movement 
in those states.
    Dr. Petzel. Congressman, we think that it will be less.
    Mr. Coffman. Okay.
    Dr. Petzel. We think that it will be less. But, again, a 
big determining factor is going to be the nature of that 
Medicaid program and how does it measure up against what is 
available in terms of VA health care.
    Mr. Coffman. Okay.
    Dr. Petzel. We expect less.
    Mr. Coffman. Okay. Don't we know that at this time though?
    Dr. Petzel. No.
    Mr. Coffman. Oh, we do not? Okay. My other question would 
be in terms of the families. So it is not an issue from your 
perspective.
    So if you have a former member of the Armed Services and I 
think it is 180 days consecutive service to the country and 
they meet the eligibility criteria, let's say the means test 
aspect of the eligibility criteria, and they qualify for the 
VA, then what you are saying, and maybe this is a Treasury 
question, is that the family still then because the household 
income is unchanged would be eligible for whatever subsidies 
exist in the exchange?
    Dr. Petzel. I would say yes, but----
    Ms. Zarlenga. Yes, that is right. As long as the family's 
household income is between 100 percent and 400 percent of the 
Federal poverty line, then they could qualify for the premium 
tax credit on the exchange.
    Mr. Coffman. But how do you subtract out the servicemember 
from that equation? In other words, I understand the 
eligibility in terms of household income. But then let's say 
you have a two-parent family with three children. And so one of 
the adults is a servicemember that becomes VA eligible. Then 
they make that election.
    Ms. Zarlenga. Okay.
    Mr. Coffman. Okay? To your knowledge, is it required that 
the subsidy, that the premium be applied to all members of the 
family or is the servicemember subtracted out?
    Ms. Zarlenga. The premium, and I will let Jason talk a 
little bit more to the detail, but the premium is computed 
based on a percentage of household income which would include 
the veteran. But it is based on the premium paid for a 
benchmark plan that would only include the individuals who are 
covered by that plan.
    Mr. Coffman. Okay.
    Ms. Zarlenga. And so that is at a high level how the 
computation works.
    Mr. Coffman. Okay.
    Ms. Zarlenga. And I can let Jason talk a little bit more 
about that.
    Mr. Levitis. Sure. So the way that the tax credit tries to 
take into account the size of the family and the sort of 
resources it has to pay for health care is the amount of the 
tax credit is set so that the amount a family has to pay is a 
percentage of its income. And that percentage is based on the 
Federal poverty line and the Federal poverty line varies based 
on family size.
    So if you had a family of four or a family of five who had 
the same income, then the family of five would have to pay less 
because their income would be at a lower level relative to the 
Federal poverty line. So they would be thought to have less 
resources that they could spend towards their premium.
    Mr. Coffman. But I think the fundamental issue, the 
question really before us is that for--so a family of five 
walks in and one of the servicemembers again is eligible for VA 
care and makes that election. So the family is purchasing 
health insurance through the exchange.
    Is there some level of discrimination whereby the family is 
forced to pay for part of the servicemember in buying that 
policy through the insurance exchange who is covered by the VA?
    Mr. Levitis. Congressman, that is a very good question.
    The way that it works is that the amount that the family 
has to pay is the same generally whether they enroll, say, all 
five members of the family in the plan or just the four members 
and the veteran takes the VA coverage.
    Mr. Coffman. That is a problem. Mr. Chairman, that is a 
problem. I yield back.
    The Chairman. What happens if both parents have service-
connected disabilities and are able to use the VA system, but 
they have three children? How then do you calculate the premium 
subsidy for the three children?
    Ms. Zarlenga. So the actual computation is the difference 
between a percentage of your household income and the cost of a 
benchmark plan that is covering the individuals that you are 
actually going to cover on the exchange.
    And so you would go to the exchange and you would get a 
plan for the three children and you would look at what that 
benchmark premium costs. And then it is the difference between 
a percentage of your household income.
    That percentage varies depending upon how close to the 100 
percent or 400 percent of the poverty line the family is. And 
so it is based on a percentage of the household income, the 
difference between that and the premium for the benchmark plan.
    The Chairman. Dr. Petzel, don't you see this as a 
disincentive for the veteran to use the VA system because a 
service-connected veteran does not have to enroll in the VA 
system in order to receive their health care; is that correct?
    Dr. Petzel. That is correct.
    The Chairman. Why would they enroll?
    Dr. Petzel. There would be no reason for them to enroll. 
And, again, they could still get their health care with us, but 
they do not have to be enrolled. And we are still working 
through what is going to be done in terms of the tax credit in 
that kind of a circumstance.
    The Chairman. And so do you see it again as a, if you will, 
perverse disincentive to the veteran to not enroll into the 
system and what impact is that going to have on VA being able 
to develop your budget over the coming years?
    Dr. Petzel. Well, Mr. Chairman, when you look at what is 
going to be available to that service-connected veteran on the 
outside and what is available to that individual within the VA, 
for a 100 percent service-connected or service-connected 
individual comes close to a platinum plan, maybe even exceeds 
that, there is virtually no expense associated with that health 
care coverage for that individual. They are not going to find 
that in the outside world. They are just not going to find it.
    The Chairman. Ms. Negrete McLeod.
    [No response.]
    The Chairman. Dr. Wenstrup.
    Mr. Wenstrup. Thank you, Mr. Chairman.
    Is a VA benefit given a value that is subsequently added to 
the net household income? If someone is receiving that benefit 
as though it is----
    Dr. Petzel. I will take the first crack at that, Dr. 
Wenstrup. And, no, they are not.
    Mr. Wenstrup. Okay.
    Dr. Petzel. You may want to comment further, but the health 
care benefit is not considered part of the family income, 
assets, or whatever.
    Ms. Zarlenga. Right. So a disability benefit----
    Mr. Wenstrup. No.
    Ms. Zarlenga. --is that what you are----
    Mr. Wenstrup. No.
    Ms. Zarlenga. So the vet----
    Mr. Wenstrup. No, a health care benefit.
    Ms. Zarlenga. Oh, a health care benefit. Yeah, it is not 
included in their gross income for purposes of determining the 
household income.
    Mr. Wenstrup. Okay. So is the family in any way penalized 
for the veteran in the family taking their VA benefits or 
enrolling in the VA? Are they penalized as far as tax credits 
or anything? I am just still kind of confused on the whole 
calculation process.
    Ms. Zarlenga. So the computation is that the credit is 
equal to the difference between what the family would have to 
pay for their benchmark plan. And that is the plan that is 
actually going to cover whoever is in the exchange.
    So if the veteran gets coverage through the VA and the rest 
of the family goes to the exchange, you would find a plan that 
covers the spouse and two children or just the children, 
whoever is not getting the VA coverage. And you would look at 
that, the premium cost for that plan.
    And then what the statute does is it looks at a percentage 
of the household income and it says basically we think that 
families should be able to pay that percentage of their income 
in premiums for health care.
    And so it takes the difference between what the statute 
thinks a family should be able to pay of their household income 
and the difference in the amount that you are paying on the 
exchange and the credit is the difference between that.
    And that credit is paid to the families to help them. 
Actually, it could be paid directly to the insurer or it could 
be claimed by the families later on their tax returns, but it 
helps them pay for the premiums on the exchange.
    Mr. Wenstrup. Thank you.
    I yield back.
    The Chairman. Ms. Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman.
    Secretary Petzel, I have a concern about the delivery of 
the medical services to these new enrollees.
    So my first question is, does the VA have capacity in its 
existing facilities to take 66,000 new enrollees?
    Dr. Petzel. The short answer, Congresswoman Kirkpatrick, is 
yes.
    Mrs. Kirkpatrick. So you will not need to expand any of 
your existing facilities?
    Dr. Petzel. We would not need to expand any of our existing 
facilities. We will be monitoring the health care providers 
that we have available and if we need to add health care 
providers, we would do that. That is part of what the $85 
million might be used for.
    But at the present time, we believe that we can absorb the 
66,000 new people with the $85 million that is in our 2014 
budget.
    Mrs. Kirkpatrick. And do you have a breakdown between rural 
and urban veterans, how many of those new enrollees are living 
in rural communities versus urban settings?
    Dr. Petzel. I do not have it with me, but we do and can 
provide that.
    Mrs. Kirkpatrick. If you could provide that to me.
    Dr. Petzel. We can.
    Mrs. Kirkpatrick. Then my other question is about the 
actual providers. I represent a very large rural district in 
Arizona. We have opened up some new VA clinics. We have a very 
difficult time getting doctors to staff those clinics. Lots of 
them have PAs, nurse practitioners.
    So do you have a plan? Have you discussed about how you are 
going to bring in more physicians into the VA system, more PAs, 
more nurse practitioners so that we can have more coverage at 
those levels?
    My concern is that it takes so long to get through medical 
school and we do not have enough physicians nationally as it 
is. And how is the VA going to deal with that?
    Dr. Petzel. Well, Congresswoman Kirkpatrick, we do not have 
any trouble attracting PAs and physicians into the VA system. 
The issues that we have are attracting them into rural areas. 
This is not just unique to the VA. This is a problem across the 
country as I am sure you know from looking at the health care 
community outside of the VA in those rural areas.
    And the ways that we are trying to cope with this, number 
one, using PAs and other substitutes for physicians when we can 
and, two, telehealth. We have now got a number of primary care 
telehealth clinics around the country mostly concentrated in 
Colorado which, of course, is highly rural like Arizona and New 
Mexico. And they have been very successful.
    That is where there is a nurse clinician at the site and 
the individual and the nurse clinician are connected to the 
primary care doctor at a remote area such as back at the 
medical center. And you would be surprised at how much of the 
primary care interaction and care can be delivered in that kind 
of a format where you have somebody that can do the physical 
exam things that are needed, where you have somebody that can 
monitor the blood pressure, et cetera.
    And I think that that is going to be an important part of 
our future ability to deal with the highly rural areas.
    Mrs. Kirkpatrick. Well, let me just express my concern 
again that I am afraid that veterans are going to be turned 
away from these rural clinics and sent to emergency rooms in 
the hospital because there is not a physician there, a primary 
care physician there, or overwhelming these clinics.
    And is that something that you are working on and 
addressing?
    Dr. Petzel. It is. And we are providing incentives for 
people to move into rural areas. We can provide debt 
forgiveness for medical school. We have a lot of flexibility in 
terms of our salaries. And we are pulling out all those stops 
to try and recruit into those highly rural areas.
    Mrs. Kirkpatrick. And is it possible to recruit some of the 
returning veterans from Iraq and Afghanistan who have been 
medics and have that kind of training? Is there an effort to do 
that, to get them to the rural areas?
    Dr. Petzel. There is an effort. I cannot say that it is 
specifically focused to rural areas, but there is an effort to 
recruit out of the military the clinical professionals that are 
leaving the military, absolutely.
    Mrs. Kirkpatrick. Well, let me just request that you do 
focus somewhat on the rural areas because all those veterans 
are really lacking in the delivery of services.
    Dr. Petzel. I hear you on it.
    Mrs. Kirkpatrick. So thank you, Secretary.
    I yield back.
    The Chairman: Ms. Walorski.
    Ms. Walorski. Thank you, Mr. Chairman.
    Dr. Petzel, I kind of have a different question, but I just 
returned from Afghanistan yesterday and I want to tell you that 
my respect and admiration for our brave men and women and what 
our military does is second to none, and I am just so grateful 
to our Nation and to our veterans, and yet I was perplexed by 
the questions that our servicemen from my district asked me. 
They are young men and women and they are already concerned 
about their VA benefits. And I thought how sad it is that they 
are carrying out these, you know, protecting our freedoms and 
at the same time they are concerned because of the things they 
hear about the benefits that they will or won't receive.
    The question I have is that, as we all know, January 1st of 
this year the President's medical device tax went into 
operation and I have already heard from medical device 
manufacturers in my district expressing concern how this new 
tax will raise the cost of life saving medical devices.
    Do you anticipate the medical device tax having any impact 
on the VA?
    Dr. Petzel. I beg your pardon. No, I don't expect it to 
have a significant impact on us.
    Ms. Walorski. And I find it interesting because the medical 
device tax is a huge issue in my district and we had access to 
a recent report issued by the VA that stated, ``The VA 
anticipates a 2.3 percent increase in costs to offset the 
negatively impacted profit margin for the vendors and 
manufacturers that will be paying the tax. This is based on 
commentary and published opinions that vendors will pass this 
additional tax on to all consumers, including the VA.''
    So what would have changed your opinion from the one on 
this report?
    Dr. Petzel. I will have to go back and take this for the 
record if you don't mind and find out what the analysis has 
shown here. I am just not familiar with what it has shown.
    Ms. Walorski. I would appreciate it because in my district 
one of things that we are finding from hospitals all the way 
down, this is a comprehensive progressive tax. Every single 
unit that touches these devices adds to the tax and what I have 
seen from our brave servicemen and women that I just came from 
in Afghanistan is they deserve the best of everything we can 
possibly give them, including these lifesaving medical devices 
and if that report is true, that that would be a significant 
hit.
    My question would be if you could follow up and get back to 
us is what is the cost to the VA going to be?
    Dr. Petzel. I will get back to you.
    Ms. Walorski. I appreciate it. Thank you. I yield back.
    The Chairman. Thank you, Dr. Petzel. I think your testimony 
earlier said that you expected 66,000, net individuals or new 
individuals coming into the VA system and an $85 million budget 
increase in 2014. Is that correct?
    Dr. Petzel. That is correct.
    The Chairman. The budget submission itself shows a net 
enrollment increase from 2013 to 2014 as 68,415. So am I to 
assume that the vast majority of people coming into the system 
are ACA veterans?
    Dr. Petzel. I am not recalling, Mr. Chairman, the net 
enrollment figure for--we expect enrollment to go up by about 
1.3 percent in 2014 in total, and I would have to do the quick 
math to see what kind of a number that yields.
    Mr. Chairman. Well, the reason I am asking is because you 
are asking for an additional 85 million to handle a number that 
it appears that you have already calculated for and so I will 
get a question to you for the record that is specific to that 
because I am looking back to the advance appropriation 2013 to 
2014 expecting an increase of 48,000. I am just trying to see 
if we can figure out where that additional money is going. Are 
we double counting, you know, what is happening?
    Mr. Michaud, I recognize you now?
    Mr. Michaud. Thank you, Mr. Chairman.
    Yeah, I want to just try to further understand, you know, 
whether or not the ACA would be a disincentive for veterans or 
an incentive for veterans to leave the VA health care system. 
And I know if you are, if I understand it correctly, if a 
veteran is enrolled in the VA, that qualifies that he will not 
be able to get the tax credit if he has a private plan.
    My concern is if you have a veteran that is enrolled in the 
VA just for prescription drugs and that veteran lives in a 
rural area and he has got family problems with his children and 
they prefer to have their health care taken care of locally, in 
order for them to get the tax credit he would have to disenroll 
from the VA in order to fully benefit from the tax credit.
    Ms. Zarlenga. Congressman, to just make sure I understand 
your question, the veteran is enrolled in the comprehensive VA 
coverage but all they use it for is----
    Mr. Michaud. Prescription drugs.
    Ms. Zarlenga. --prescription drug coverage.
    Mr. Michaud. They seek their primary care elsewhere for 
whatever reason because they would prefer, rather than travel a 
long distance in a rural area to get their health care closer 
to home, and then it gets into a whole other issue when you 
look at what if that a single parent veteran is enrolled in the 
VA, then you get into the whole issue about, can they stay on 
until they are 26 in their private health care plan.
    So there is a whole other slew of questions that concerns 
me that might encourage a veteran to disenroll from the VA.
    Ms. Zarlenga. One of the things that we were trying to 
accomplish with the rule that requires enrollment as opposed to 
just being eligible was to sort of give veterans, you know, 
access to--give them flexibility, access to options and also 
give them the ability to take advantage of the, you know, the 
great health care that VA provides for them today.
    Mr. Michaud. That is good. If I may follow up on that. That 
might be true if a veteran lives near a VA health care 
facility, but if you have a veteran that lives a distance away 
and it is a lot easier for that veteran to receive access 
closer to home if there is, you know, military sexual trauma 
involved, and they would rather go to their health care 
provider closer to home because VA does not provide those types 
of services.
    So that is a choice where that veteran will have to decide 
whether or not they are going to give up their primary care to 
disenroll from the VA because all they will need the VA for 
might be for prescription drugs, but then you get into the 
other situation, what do you do as a single parent that has 
health insurance, the VA coverage but also has health coverage 
for their children as well and they would not be eligible for, 
as I understand it, for the tax credit, correct, for a single 
parent?
    Ms. Zarlenga. Children would be subject to, if they are not 
enrolled in the VA coverage, then they would be eligible for 
the tax credit.
    Mr. Michaud. What happens if you have a single mom who is 
enrolled in the VA system?
    Ms. Zarlenga. She could still get coverage for her child on 
the exchange as long as the child is not enrolled in one of the 
other coverages.
    Mr. Michaud. But does she qualify for the tax credit?
    Ms. Zarlenga. With respect to her child, she does, she 
could. If she otherwise satisfied the income requirements and 
everything, she could get the tax credit with respect to her 
child that is enrolled in the exchange coverage.
    Mr. Michaud. Okay. So she still can receive coverage from 
the VA?
    Ms. Zarlenga. That is correct, yes. So I mean what we try 
to do is give veterans sort of the maximum flexibility. If they 
are not near a VA hospital, then they can still get the premium 
tax credit and enroll in a plan that may, you know, have 
providers that are closer to them.
    Mr. Michaud. Right. So if a veteran is covered by the VA 
and they do not live near a VA facility, they still can keep 
their health care coverage and get the tax credit?
    Ms. Zarlenga. Well, in order to get the tax credit, they 
would need to enroll in coverage on the exchange and not enroll 
in the VA coverage for them to get the credit, but they could 
still have their families get the credit if they wanted to 
actually enroll in the VA coverage.
    Mr. Michaud. But what about that veteran for whatever 
reason is still using his primary health care because he is 
getting the excellent care he needs because he lives a long 
distance away from the VA, say in this particular case, for 
military sexual trauma. They are already getting health care 
through their private insurance and that individual will have 
to make a decision they want to keep the tax credit, whether to 
unenroll from the VA. You are forcing a choice.
    Ms. Zarlenga. I think that is like--yeah.
    Mr. Michaud. I don't know if Dr. Petzel----
    Dr. Petzel. Yeah, that is correct, Congressman Michaud. If 
the veteran were enrolled in VA health care, whatever it might 
be, whether it is just getting medications or getting primary 
care. If they are enrolled, then they are not eligible. As an 
individual, they are not eligible to participate in the tax 
credit.
    They can still have other insurance. They might be engaged 
in Medicaid. They might be engaged in Medicare. They might have 
private insurance and they could still come to us, but they 
would not be able to get a tax credit.
    And so that the individual is going to have to weigh the 
value of the tax credit against the services that they are 
getting.
    Mr. Michaud. Thank you.
    Mr. Chairman. I think it is important for the record also 
that it is this Committee's understanding, you were talking 
about rural veterans, 40 percent of the veterans in this 
country live in what are termed rural areas. I think that you 
have brought to bear a very important point, Mr. Michaud.
    Dr. Benishek.
    Mr. Benishek. Thank you, Mr. Chairman. I am really worried 
about some of these assumptions that you guys made down there 
that this--there is going to be a net increase of 66,000 
people. I don't see that as being anywhere near correct. I 
mean, I don't see anybody disenrolling from VA. Why would 
anybody want to disenroll from the VA? I mean certainly not to 
get on Medicaid. You are not going to take Medicaid versus the 
VA. I will tell you that right now. I don't know where you got 
the idea that some people will prefer to be on Medicaid than 
get the benefits of the VA, but that is not a reality.
    Dr. Petzel. First of all, you wouldn't have to disenroll.
    Mr. Benishek. So you are saying this 66,000 is a net in the 
people that are not going to take it anymore versus those who 
are going to get it, so I don't see why anybody is going to 
disenroll. Explain me that.
    Dr. Petzel. I think it might have to do, Congressman, with 
proximity care, the accessibility of care. It might have to do 
with the specific----
    Mr. Benishek. Might. Might.
    Dr. Petzel.--circumstance. Absolutely. We are not going to 
know these things with absolute certainty until we get to the 
point of actually implementing the law.
    Mr. Benishek. What I was saying, and the whole point of 
this is, I think of this estimate of 66,000 is far short of the 
mark and if you are planning for 66,000, you are not going to 
be able to provide the care for what I think would be a 
millions people.
    I mean, how many veterans are out there now that are not 
enrolled in the VA?
    Dr. Petzel. I think the better number to look at, 
Congressman, is how many people are without----
    Mr. Benishek. I have asked the question. How many veterans 
are out there now that are eligible that are not enrolled?
    Dr. Petzel. Probably about 8 million.
    Mr. Benishek. What if all those people decide that because 
they are not going to have access to health care, they want to 
join the VA health care system? I mean, that is really that 
maximum number you are looking at, right? You didn't consider 
that. That is 8 million.
    Dr. Petzel. No, no, Congressman, those people, the vast 
majority of them already have health insurance.
    Mr. Benishek. What if they lose their health insurance?
    Dr. Petzel. That is a different circumstance, but they do 
now.
    Mr. Benishek. There are a lot of people losing their health 
care insurance under the Affordable Care Act, so is there any 
contingency about those people? I mean, I talked to lots of 
employers that are telling me that they are not going to be 
able to provide health care for their employees anymore because 
of the cost.
    I mean, I have an employer that tells me they can't even 
get a bid on his insurance for his 800 employees because of the 
uncertainty there. So what if he decides just to, I am going to 
pay the $1,000 fine and I am going to throw everybody in the 
exchange? That is a reality, so have you made any contingency 
about that? That is 8 million people we are talking about.
    Dr. Petzel. Congressman Benishek, our calculations are 
based on the uninsured, the veterans that we have identified as 
being----
    Mr. Benishek. That was a million.
    Dr. Petzel. And that is about--that is a million three. Of 
those million three, about a million of them are actually 
eligible for VA health care, so our calculation----
    Mr. Benishek. That is a long way from 66,000.
    Dr. Petzel. That is because we don't believe that all of 
those people are going to seek care with the VA.
    Mr. Benishek. Where are they going to get it, Medicaid?
    Dr. Petzel. They are going to get it from Medicaid. They 
are going to get it from insurance----
    Mr. Benishek. People are not going to accept Medicaid over 
VA, Dr. Petzel, I will tell you that right now. I mean, I have 
been taking care of patients for 30 years and, believe me, if 
you have a choice between the VA and Medicaid, they are going 
to go with the VA every time, so that is like a really, you 
know, ridiculous assumption. And if you are thinking that you 
are going to get by with only 66,000 increase, you are vastly 
mistaken. There are going to be a lot more people and then I 
don't see any plans, from what you guys are telling me, to 
being able to accept a million more people.
    This is really concerning, this whole assumption of 66,000 
increase is to me, is a real disaster in the making, so I guess 
I'm out of time. Or am I? Do I have a little more time? I guess 
I do.
    I just think these assumptions you made like this are 
really incorrect and I guess I don't know how you came across 
those assumptions. Do you have any idea?
    Dr. Petzel. Well, I absolutely do, and I would disagree 
with you, Congressman, that the assumptions are ridiculous. We 
very carefully have looked at this and we have particularly 
looked at the behavior of the individuals that might be 
eligible to move back and forth, and we think that the 
prediction of about 66,000 people is a good, is a good 
prediction.
    Mr. Benishek. Well, I can tell you as a physician for 30 
years, and I have a patient, he would much rather be in the VA 
than be on Medicaid and if they were eligible for the VA, they 
would join the VA, period, no doubt about it, no matter how far 
they got to travel because getting care through Medicaid is 
much more problematic than getting it through the VA, as 
difficult as the VA could be. But I will tell you that, you 
know, that is an assumption that is absolutely wrong in my 
experience. My time.
    The Chairman. Dr. Petzel, what happens if the scenario that 
Dr. Benishek refers to occurs and all of the sudden you do have 
a flood of individuals that come into the VA system? I mean, 
how do you handle that when you are already overburdened?
    Dr. Petzel. Mr. Chairman, we will assess this on a very 
close and regular basis. Again, we have to plan for what we 
think is the most likely possibility. You would not want us 
coming here and saying there are going to be a million new 
patients and we need X amount of money to do this.
    This is our best estimate based on a tremendous amount of 
work as to what the influx will be, and we will monitor this 
very closely. And if it proves not to be the case?
    Dr. Petzel. Then we will have to look at----
    The Chairman. Can you handle a twofold increase in your 
estimation? Could VA handle 136,000 new patients?
    Dr. Petzel. Yes.
    The Chairman. That is not a wild assumption. A million may 
be but a doubling of the number----
    Dr. Petzel. I would want to go back and look and do some 
calculations before I answered that definitively.
    The Chairman. Mr. O'Rourke.
    Mr. O'Rourke. Thank you, Mr. Chairman.
    If the number is close to 60, 120,000 or a million, how 
will these new enrollees impact the other programs within the 
VA system--job placement services, educational assistance, 
housing assistance? How are those going to be impacted and, 
also, how will you communicate the availability of those 
programs to the new enrollees?
    Dr. Petzel. Well, we would want to, Congressman--well, 
first of all, we would want to make them aware of those 
programs just like we would with every other new enrollee in 
the system. I can't speak specifically about the impact on 
those Veterans Benefits Administration programs and the effect 
that these new people coming in might have because I would need 
to talk with them about what the uptake is of the people that 
come into the medical system primarily and then are referred to 
VBA. I would be delighted to take that for the record.
    Mr. O'Rourke. Yeah, that would be a good one for us to work 
with your office on and just make sure that we understand the 
impact systemwide for all these enrollees, whatever the number 
is and to ensure that there is a plan to effectively 
communicate these other programs to them, so I appreciate that.
    Mr. Chairman, I yield back.
    The Chairman. Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
    Again, on the 66,000, the prediction, Dr. Petzel, describe 
the benefits of enrolling in the VA as opposed to an exchange 
because a lot of these veterans are already eligible. Give me 
an explanation as to why they would want to enroll in the VA as 
opposed to taking an exchange.
    Dr. Petzel. Thank you, Congressman Bilirakis. It is going 
to depend upon the individual veteran's circumstances, so let 
us take an example. Let us take an example of somebody who is a 
Priority 8 veteran, is eligible to enroll in the VA, that 
individual is going to have copays and other things within the 
VA system, and that would, the amount of that would have to be 
weighed against what the plan that he was enrolled or she was 
enrolled in at the exchange offered.
    It is a veteran-by-veteran decision. And you would then 
have to also take into account accessibility, availability at 
services, et cetera.
    It is very hard to predict any given individual--I can tell 
you, I think, what I will question that the service- connected 
individual who basically would have no copays and no expense 
for VA health care would very unlikely to be enrolling in a 
program in the exchange because there is just so much more 
value associated with that VA health care. But other 
individuals, it would be a veteran-by-veteran decision.
    Mr. Bilirakis. How did you come to this conclusion? I think 
it will be more than 66,000 as well. But how did you come to 
that conclusion, that net increase? How did you base that? How 
did you base it on--in other words, the quality of health care 
in the VA? Give me a little, elaborate a little bit on that.
    Dr. Petzel. Congressman, I will. Obviously, we couldn't 
interview or talk to each one of those million veterans that we 
think might be coming to us or not coming to us. We looked at 
the national survey of veterans which gives us information 
about what veterans do and what their choices might be, the 
survey of enrolled veterans which gives us good information 
about the experience of the people that are already with us and 
you can match what they do and their choices against their 
income and a number of other demographics, and we looked at the 
American Community Survey, which is the census survey that has 
questions on it that relate to veterans, are the best 
information sources about what choices people might make that 
we have available to us.
    I would ask just briefly if Ms. Vandenberg has anything to 
add to that because her office is the group that did that.
    Ms. Vandenberg. Just building on what Dr. Petzel just 
outlined, we have also engaged with our consulting actuary, 
Milliman, who is assisting us in understanding veteran behavior 
relative to the public at large. They are doing a lot of work 
for other clients who are assessing the implications of the 
Affordable Care Act and so we have drawn on some of their 
insights regarding what causes a consumer to make choices 
regarding coverage, costs, et cetera, so those are the 
resources that we have employed.
    Mr. Bilirakis. Thank you. I have one last question.
    Dr. Petzel, in your testimony you outlined three areas to 
help enhance the veterans' experience with the VA, including--I 
know you touched on this a little bit, but including providing 
each enrolled veteran with a personalized health benefits 
handbook, explaining costs and hours of operation and 
streamlining the VA enrollment application form and process.
    We are now less than a year away from a full implementation 
of the ACA. We are in the process of the VA for each of the 
three enhancements mentioned in your testimony. When will they 
have access to them?
    Dr. Petzel. Thank you, Congressman Bilirakis. The benefits 
handbook is done and out. The streamlining the enrollment, I 
think, is in process and probably is close to being done.
    I think the most important part about this, though, is the 
information outreach effort which we plan on rolling out in May 
and June in concert with Health and Human Services rollout 
about, their information about ACA, the Accountable Care Act in 
general.
    And maybe if we could just take 30 seconds, then, and go 
through the educational and outreach documents that are about 
to be going out.
    Ms. Harbin. Certainly. With our enrolled veterans in 
addition to that tailored veterans handbook that we just spoke 
about, we are rolling out----
    Mr. Bilirakis. Excuse me. The veteran will have access to 
the handbook.
    Ms. Harbin. The handbook has already been----
    Mr. Bilirakis. It is already done, but when will the 
veteran have access?
    Dr. Petzel. They have got it.
    Ms. Harbin. That is correct. We are wrapping that up. We 
had almost 8 million handbooks.
    Mr. Bilirakis. Okay.
    Ms. Harbin. We will continue mailing out new books to new 
enrollees as they come on board.
    In addition to that, we will be mailing out that one-time 
letter to all of our existing enrollees reminding them of their 
health care benefits with VA, as well as any information about 
the tax credits and things that they may need to do.
    We are also embarking on making changes to our Web sites. 
That includes VA.gov, My Healthy Vet, and the benefits portals.
    We have social media that is being developed, Twitter, 
Facebook, as well as our customer support, our call center.
    We have trained agents that are ready to address veteran 
and beneficiary inquiries, and we have printed materials that 
are being developed. Those include things like posters and 
brochures and fact sheets. Those will be ready for 
dissemination at our points of service that includes both our 
VBA regional offices, as well as the VA medical centers and our 
CBOCs, and that material will be available to be downloaded 
from the Web.
    Mr. Bilirakis. Very good. What about the non-enrollees. You 
talked about the veterans that you are sending out a one-time 
letter to all those that are enrolled. What about those that 
aren't enrolled?
    Ms. Harbin. Thank you, Chairman. That is an excellent 
question. We are also preparing to communicate with them 
regarding VA's health benefit plan. We have information about 
the care that we offer, as well as guiding them through the 
enrollment process.
    We are doing some Web site changes, including a new online 
tool that will help veterans make decisions about VA health 
care and inform them, as well as guide them through that 
enrollment application.
    We are doing some social media as well, public service 
announcements, and again our call center is available and will 
be posted so that veterans have a single place to go to get 
answers to their questions.
    Mr. Bilirakis. Thank you, Mr. Chairman. I yield back.
    The Chairman. You have got a big task in front of you and I 
get that, but I'm very, very concerned about the ability to 
provide the information to the veteran. Are you in this booklet 
talking about the fact that you can no longer be dual enrolled? 
I mean, obviously you can be if you want to pay, the extra 
premium, but there have been a lot of veterans out there that 
have enjoyed dual enrollment and I envision a veteran being in 
the system and going over here and having health care over here 
or disenrolling from VA and VA either appropriately or 
inappropriately notifying IRS and all of the sudden the veteran 
gets hammered because the veteran just doesn't know, and they 
get penalized because they have been accustomed to this system, 
for so long and all of the sudden we are changing the system.
    Dr. Petzel. Mr. Chairman, if I just could comment on that. 
First of all, the benefits books does not have anything in it 
about ACA. That is a book that just describes the benefits that 
they are eligible for.
    The Chairman. This is a huge change in the system and you 
don't have anything in there about the ACA. You based your 
whole model on behavior of the veteran population. This is 
going to change that behavior drastically, and that is why Dr. 
Benishek was asking the question, how could you have confidence 
in the models that you are using when they have all been based 
on past participation that is going to be upvented on the 31st 
of this year.
    Dr. Petzel. The benefits books is intended, Mr. Chairman, 
to--and started being rolled out more than a year ago, to make 
people very cognizant of what they are eligible for in VA. The 
material that is going to be rolled out in May and June to all 
of our enrollees is going to very explicitly explain to them 
what their choices are and what is available and then provide 
them access to interactive Web sites and to call centers where 
they can get their specific questions answered.
    We think we are going to be able to provide our enrollees 
with a lot of very specific information and help them evaluate 
the choices they are going to make. The veterans that aren't 
engaged with us will have to be reached through public service 
announcements that lead them to our Web sites, lead them to the 
other material that we have.
    The Chairman. Dr. Petzel, I guarantee you every Member 
sitting at this dais, and all 435 House Members know how to 
reach the veterans in their community better than a public 
service announcement. We can put a letter in their mailbox. We 
can call them on the telephone, 30,000 veterans a night, if we 
need to in order to do that. VA needs to come up into the 21st 
Century and stop using public service announcements.
    I am very fearful that you--the entire health care system 
is changing and you are telling the veterans what their 
benefits are, but you are not really telling them how their 
relationship is changing because of the Affordable Care Act.
    Dr. Petzel. That is what the material that we are going to 
be rolling out, Mr. Chairman, is intended to do. And I want to 
take you up on your offer. One of the things that we need is 
your help in educating and your constituents about what is 
happening, about what is going on and we will provide it in any 
form that you would like or you need, whatever kind of 
materials that you would like to have because we are going to--
we depend on you.
    Veterans talk to you. They talk to all the representatives. 
They talk to their service organization people to spread the 
word in those kinds of forums about what is available and what 
is happening. I think I very much appreciate that offer.
    Mr. Bilirakis. The word that I am going to spread is going 
to be much different than the word that you are going to spread 
because I am going to tell them about the difference that they 
are about to run into at the end of the year and, you know, I 
believe that you do provide quality health care and some of the 
best in the world within the VA system, but I see a 
disincentive for the veteran coming up at the end of the year, 
particularly the rural veteran and what they are going to have 
to go through. I can see the IRS coming in, penalizing the 
veteran for making a very simple mistake because they have been 
accustomed to doing something for a number of years. VA is 
obviously not interested in helping them cross that bridge that 
was created by the government, but you know, we would be more 
than willing to help in any way that we can to help the veteran 
population get through this huge change within the system.
    Mr. Amodei, do you have any questions?
    Mr. Amodei. Thank you, Mr. Chairman.
    I think I understand what you are saying about those folks 
that are enrolled. What is the general number of people who are 
not enrolled in your system at this point in time?
    Dr. Petzel. There are probably 8 million veterans that are 
not enrolled that would be eligible. Let me direct this 
question, are they eligible, that would be eligible for us.
    We focused on the uninsured as being the people that are 
going to be confronted with choices about what they do because 
they are going to have to have minimum essential coverage and 
they are going to look to turn someplace to get that minimal 
essential coverage. And so the question that I think that 
affects us the most is what are those people going to do? How 
much of them are going to seek VA care as their minimal 
essential coverage.
    Mr. Amodei. Doctor, when you refer to those people, are you 
talking about the uninsured in that group?
    Dr. Petzel. I am talking about the one million uninsured 
that are eligible for VA care, correct.
    Mr. Amodei. How would you describe your demographic 
knowledge of those folks who are insured through somebody else 
who are eligible for VA membership in the context of the coming 
ACA? And I will tell you why I ask the question, because I 
think that is a 7 million potential pool who is--and I 
understand what you said about case by case and is there an 
exchange, is there not?
    But that is something when health care turns upside--excuse 
me--health care matriculates into the ACA tie that has 
potential, huge impacts on who your clients are going to be.
    And so I am asking the question because if your assumption 
is that those 7 million are going to kind of stay in other 
programs, I hope you are really good at that because it is the 
only group that I have heard of that is like, we don't care how 
that is going, we will stick with what we are doing.
    I think people are going to be shopping big time and if you 
are one of the options, that influx issue concerns me.
    Dr. Petzel. We have, Congressman, the biggest piece of 
information we have about that group of people is a survey that 
is done by the Census Bureau and our survey of enrolled 
veterans and trying to extrapolate what those enrolled veterans 
say to that unenrolled population and the Committee had some 
details, but this is our vast rendering of all of that data in 
terms of what people will do that--I will let you continue.
    Mr. Amodei. And before you do, let me just say this. This 
is no disrespect to you, but the ``what is going to happen'' is 
a daily changing thing based on regulations from multiple 
sources ahead of schedule, behind the schedule, money for this, 
money for that, so I am not attempting to blame the VA, but I 
don't know how you are going to predict what is going to happen 
to that group when quite frankly many people within a few 
blocks of where we are sitting now, with all due respect on 
both sides of the fence are not sure what is going to happen.
    Ms. Vandenberg. Thank you for the opportunity to respond to 
your observation. Let me just say on a personal note I have 
characterized these changes and, Chairman Miller, I would agree 
with what you said earlier as probably the most profound waive 
of change that we are going to see in America in health care 
since in the advent of Medicare and Medicaid, and I am old 
enough to remember I was in nursing school and those pieces of 
legislation were enacted, so I have been a student of this 
evolving phenomenon and this is a C-change beyond anything that 
we have seen.
    That said, when we do our survey of enrollees annually, we 
observe that in their self reporting, 77 percent of our 
currently enrolled veterans have at least one other form of 
health care coverage and so have gleaned certain insight from 
that insofar as to meet the requirement for minimal essential 
coverage. An individual only has to have one form of coverage.
    So to your question about those currently non-enrolled 
potentially eligible individuals, we believe that a certain 
portion of that population already has other forms of coverage. 
Yes, they are eligible, but if they already have another form 
of coverage, we also look at segmenting our overall enrolled 
population between those who are under 65 and those who are 
over 65, and more than half of our population is over 65. They 
are enrolled, for the most part, in Medicare, and so that will 
suffice as their minimal essential coverage as well.
    I couldn't agree more that this is extraordinarily complex, 
that our tools to assess the impact are not perfect, but we 
have tried to take, as Dr. Petzel has said several times now, 
the insight from the American Community Survey, our prior 
veteran surveys that encompasses individuals who are not 
currently enrolled, our survey of enrollees, and work through 
that with our actuary to estimate, and this is our estimate.
    The Chairman. Did you ask on your surveys how many veterans 
would leave the system and take the additional dollars of tax 
credit? Was that a question that was asked over the last year?
    Ms. Vandenberg. We have added a question to the survey of 
enrollees going forward.
    The Chairman. You did not have it over the last year?
    Ms. Vandenberg. No, sir, we did not.
    The Chairman. Why do you think that was?
    Ms. Vandenberg. Because at the time that we were fielding 
that survey and getting our clearance to deploy that survey, 
the particulars of the impact of the Affordable Care Act in 
relationship to veterans enrollment, vis-a-vis what we have 
discussed this morning with the Department of Treasury, we are 
not completely confirmed. And so it would have been a 
speculative question.
    Mr. Chairman. When did they get confirmed? This morning?
    Ms. Vandenberg. No, sir. We have been working with the 
Department of Treasury for a year now.
    Mr. Chairman. Because Dr. Petzel says it is very difficult 
to be able to ascertain from the veteran population who would 
stay in the VA and who would go out into the exchange or take 
the tax credit. No, it wouldn't. Just ask the question of those 
that are enrolled, ``What would you do?''
    Dr. Petzel. Mr. Chairman, the problem is that they would 
have to understand all of the options. You are not going to be 
able to do that on the survey. The best information is going to 
be garnered after the roll out of the information about ACA in 
May and June and after we have rolled out our information.
    Mr. Chairman. Do you know who you sound like?
    Dr. Petzel. No.
    Mr. Chairman. Speaker Pelosi made a comment very similar to 
what you are saying. She said we have to pass the ACA before we 
know what is in it. Now you are telling me that you got to roll 
it out before people know what is in it.
    Who is going to help them? Are you going to help them 
understand it? Because what you have said so far is you are 
just going to tell them about all the good things that VA does, 
but you are not going to help the veteran. Who is going to help 
them make that decision?
    Dr. Petzel. Oh, no, that is not what I said, Mr. Chairman. 
We are going to explain to them what their options are under 
ACA. We are going to lead them through, hopefully, a decision 
process. We are not just going to tell them what is available. 
There will be information available about what the ObamaCare 
Act is offering, but you get a benefits book.
    The benefits book is a different phenomena. The benefits 
books, sir, was to describe to them, going back a year and a 
half, actually started two years ago, what their benefits were, 
so there was a clear delineation.
    Mr. Chairman. I am sorry. I thought it was something that 
was done in response----
    Dr. Petzel. No.
    Mr. Chairman. --to the ACA. I apologize. That was a 
misunderstanding on my part.
    Mr. Michaud.
    Mr. Michaud. Thank you. And I could understand the dilemma 
you are in as far as trying to get the information to the 
veterans so they can make their decisions. And I know what you 
are saying, Dr. Petzel, as far as you wouldn't be able to do it 
later on because there are some states that don't know what 
their exchange is going to look like and it is problematic 
because the system is not in place, so it is going to be more 
difficult, particularly for those states that are falling 
behind.
    But my question actually does deal with information in 
making sure the veterans have as much information as possible 
to make the right decision, so here is an example. You have a 
veteran that lives in the state that, in the far corner of a 
state, that is surrounded by, or three other states border that 
state. So that veteran goes into the VA to want to know what is 
the benefit for them. Can they enroll in the VA or would the 
enrolling in ACA be better?
    Since they live in a corner where you have four states that 
might have a different plan, how are you going to help that 
veteran understand which might be better for them because that 
would mean the VA employee would have to be very familiar with 
four different plans, depending on where that veteran goes? I 
am not sure in those particular cases whether if it is on a 
border state, whether a veteran would have to go to one state 
or the other state for their health care, which means that the 
employee would have to realize four different states.
    Ms. Zarlenga. Congressman, I just wanted to clarify that as 
far as the exchange goes, I believe that an individual is 
eligible to, you know, purchase a plan on the exchange in their 
rating area or in their state, so I don't think they can shop 
around.
    Mr. Michaud. No, my question, a veteran goes to VA, says I 
am not enrolled in the VA, I am thinking about enrolling in the 
VA, what is the best option? And that veteran might have, 
depending on where they live in that particular state, their VA 
facility might be in any one of those four states. I am not 
sure of the example, so how are you going to be able to give 
that veteran the best information that you can because that VA 
employee, in order to give that advice, they would have to know 
what the four states' plan is, plus the VA program.
    Dr. Petzel. In those circumstances we would have to have 
the information available as you point, Congressman Michaud. 
And one of the best ways to do that, probably is to have this 
organized around the networks where we know that then would 
cover the various states. But you are right, there are places 
in New England, particularly where there would be a variety of 
different options and we need to make sure that there is 
information available about all of it.
    Mr. Michaud. Yeah, because it will make a big difference to 
that veteran because it would be confusing enough, then, for 
the VA employee, having to know VA, plus if they are going to 
advise them, what might be the best plan. They will have four 
states or more, depending on where they are located that 
potentially would have to do.
    My second question is, what is Health and Human Services 
doing to educate someone that is talking to them about, for 
instance, you could have a veteran that doesn't plan on going 
to the VA system, doesn't know what their benefits are, but 
they actually might go to the state to look at the exchanges? 
Is Health and Human Service providing the information about VA 
health care as well, and how are they providing that 
information to the veteran that might just go to them instead 
of the VA?
    Dr. Petzel. Ms. Vandenberg.
    Ms. Vandenberg. We have been working closely with Health 
and Human Services and at this point they are amenable to 
including certain information on their Web site. They will not 
include the VA on the marketplace because technically we are 
not an insurance product that can be listed in the insurance 
marketplace for the general public to evaluate. So we have had 
a good working relationship with HHS.
    We are also in close coordination with them regarding their 
communication rollout. They have begun a series of regional 
meetings and we have active engagement with them in the HHS 
regions with our network VISN points of contact participating 
in those conversations out in the field so that we can assure 
synchronization of their message going out with our message to 
veterans.
    Mr. Michaud. I am not sure if they are doing questionnaire-
type questions when people apply for ACA. Could they have a 
couple of questions on their, number one, have you served in 
the armed forces and, number two, if so, are you receiving 
health care benefits today from the VA?
    Ms. Vandenberg. We continue to be in dialogue with them 
about the inclusion of that type of a question so that we have 
a flag that we can pick up early in the process.
    Mr. Michaud. And where are they on their decision because 
if they are cooperating with HHS, then those two questions, 
will be very important to find out whether or not a veteran 
might be eligible for VA health care but doesn't know it.
    Ms. Vandenberg. I think that decision is pending at HHS.
    Mr. Michaud. Hopefully it is common sense. My last question 
is about the IRS, to follow up on the Chairman's concern. Since 
this is new and as we move forward with implementation, it 
probably might be a little rough start getting going and you 
could have a veteran that does make a mistake or VA makes a 
mistake that could trigger a penalty that the veteran would 
have to pay. So how lenient will the IRS be as far as where 
someone might be penalized because of the letter of the law, 
but because of a mistake that caused them to do that. How hard 
are you coming down on people who might unintentionally be in 
noncompliance?
    Ms. Vandenberg. Congressman, I think the penalty that you 
are talking about is the penalty for not--the individual 
responsibility payment for not having minimum essential 
coverage, and so I think you are probably referring to the 
veterans who have no coverage. They currently are not enrolled 
in, or have VA coverage or do not have any other coverage.
    But my understanding of the way that the 5000A proposed 
regulations work is we have defined as minimum essential 
coverage, the comprehensive VA benefits, the CHAMPVA program 
and the Spina Bifida program. If the veteran is in any of those 
programs, they have minimum essential coverage and they will 
not be subject to a penalty, and I don't--is that limited to 
enrolled?
    Dr. Petzel. Yes.
    Ms. Vandenberg. It is limited to enrolled. Okay.
    If they do not have that coverage and they do not enroll in 
another plan, then they would be subject to the individual 
responsibility payment. The statute sort of phases in that 
payment, so it starts off very low for the first year. I think 
the statute understood that people probably make mistakes, you 
know, the first couple of years and so the penalties are 
intended to reflect that. So they are low for the first couple 
of years and they phase out.
    Mr. Michaud. But what if they are not identified correctly 
and they are penalized? Is there a mechanism to prevent that 
from happening, my first question? My second question, what if 
a veteran actually is in the VA, says I am covered, no problem, 
but his spouse might not be?
    Ms. Vandenberg. Right.
    Mr. Michaud. So what about that situation?
    Ms. Vandenberg. Congressman, there will be a form that 
people fill out with their tax returns to say whether they and 
their dependents are covered by a health insurance plan. And so 
if a spouse is not covered, that would be reported, self 
reported, on the form. And then, you know, the penalty would 
be, you know, computed based on how many people in your 
coverage family do not actually have coverage.
    Mr. Michaud. What if they don't file an income tax form?
    Ms. Vandenberg. There is an exception to the individual 
responsibility payment. If you have income below the filing 
threshold so that you do not have to file an income tax return, 
you are not liable for the penalty at all, and you don't have 
to file a return to tell the IRS that you are not liable for 
the penalty.
    Mr. Michaud. So you still didn't answer the question. So if 
someone did make a mistake or whatever in filing the tax form, 
is an honest mistake, how lenient is the IRS going to be? Are 
you going to come down with a hammer on every case, or are you 
going to say, well, it is just getting implemented now and we 
are going to be flexible, and yes, people have made mistakes 
rightly or wrongly, but we are not going to be penalizing them 
right from the get-go.
    Ms. Vandenberg. You know, I think that by making mistakes, 
that means you didn't enroll in coverage at all, and, you know, 
I think that generally there are a number of--well, first you 
would look to whether you would have any exceptions. There are 
a number of exceptions in the individual responsibility 
payment, one of which is whether the coverage would be 
affordable based on your household income.
    There are other exceptions for, you know, hardship, for 
religious convictions, for things like that. So you first go 
through the litany of exceptions to see if you are, in fact, 
subject to the penalty.
    But if you report that you don't have coverage and that you 
weren't eligible for any of the exceptions, then for the first 
year of the penalty amount is very low in my understanding. I 
don't know exactly how the IRS would administer you. You know, 
I am happy to look into that to see how they would administer 
it if someone reports a penalty for the first year.
    Mr. Michaud. Okay, thank you.
    Mr. Chairman. Dr. Roe.
    Mr. Roe. I thank the Chairman.
    I have been a veteran for 38 years and a physician for 
42\1/2\ years, and this is the most uncertain time in my career 
right now about how health care is going.
    I talk to my colleagues, and I know Dr. Petzel mentioned 
that he was having problems in rural areas of finding 
physicians and there is no question that that is true and you 
are having to push care to lower and lower level providers.
    We sat here for 2\1/2\ hours talking about this and these 
are knowledgeable people that I am around, smart, knowledgeable 
people, and I don't think we fully understand what you are 
talking about. How in the world is a booklet going to explain 
that to somebody out where I live and I did a townhall Monday 
night. I could have spent the whole townhall and everybody else 
would have walked out scratching their head because I don't 
think anybody understands it. Private business doesn't 
understand it.
    And from Mr. Michaud and the Chairman, both, I think they 
are incentives to get out the VA system and to get into the VA 
system. There are incentives that are pushing you both ways, 
depending on where you live, as Mr. Michaud pointed out.
    If you live in an urban area, your incentives may be one 
thing and maybe another. And by the way, I want to ask a 
question that has just a little chuckle. Who thought up the 
individual responsibility payment? It is a tax. Who dreamed 
that little acronym up?
    Ms. Vandenberg. I think it is actually in the title of the 
provision.
    Mr. Roe. I love all of these little things like that. Let 
us call it what it is and it is a tax if you don't buy it. My 
question is how in the world--and two questions. How long is 
the form you got to fill out to decide whether you have the 
coverage or not? Is it just one little checkbox or is it a 
multiple thing? Is it two pages, then pages to add it to your 
already overly complicated tax form?
    And it is not your fault. The Congress wrote all this 
stuff. I am not fussing at you guys. You are just doing what we 
directed you to do. But is it that?
    And then how in the world are you going to monitor--I think 
there are 130 million people working. I don't know how many 
tax--you probably know that better--that have jobs. At least 
130 millions tax returns sent in each year. And how do you 
monitor that?
    How do you have the capacity to know anything this 
complicated that every person--and then what happens, as Mr. 
Michaud said, if you just decide not to check the box, how long 
is it going to take you to chase me down? I just decided I am 
not going to tell you--or I check ``yes'' and I don't have 
insurance.
    Ms. Vandenberg. Well, Congressman, I haven't actually seen 
the form, but my understanding is the IRS has been working very 
diligently on all the information reporting forms and the forms 
that the individuals will fill out and they are keenly aware of 
trying to keep it simply and short. I don't think they are 
trying to add a number of questions at all. I mean, my 
understanding is that they are looking at sort of something as 
simple as a check box.
    My understanding of the way that the IRS will actually 
implement----
    Mr. Roe. Want to bet a steak dinner on that?
    Ms. Vandenberg. Like I said, I haven't seen the form yet, 
but the way that the IRS will actually administer all of this 
is there is sort of a series of information reportings, you 
know, the IRS will be receiving information returns from the 
exchanges from private health insurers and from employers to 
report what coverage they are providing for individuals and the 
IRS will have the ability to sort of cross check these 
information returns in order to determine who is covered and 
who is entitled to the premium tax credit.
    Mr. Roe. Is Medicaid considered--you may not know this and, 
Dr. Petzel, you may not either, but is Medicaid considered an 
essential benefits--and by the way, have any of you all read 
what is in the essential benefits package? I have and it looks 
pretty comprehensive to me. It looked like as good as--I mean, 
does Medicaid cover that? Is that an essential benefits package 
if you get Medicaid? And that varies from state to state, 
remember.
    And what happens when the state doesn't expand Medicaid? Is 
the current Medicaid plan an essential benefits package? 
Because I can tell you what ours was fifteen years ago in 
Tennessee which we voted, the governor elected not to be, not 
to form a state exchange and, number two, not to expand 
Medicaid. And the Medicaid has been paired down and down and 
down because what it provides because of costs.
    Dr. Petzel. Doctor Roe, Medicaid is considered to be 
minimum essential coverage. The plans still may vary and the 
eligibility is the thing that I think people are talking about 
when they talk about expansion, any of those people eligible 
for Medicaid.
    Mr. Roe. Let me stop you there because if you look at what 
we provide now in Tennessee, what we provided before twenty 
years ago was a platinum-plus plan. But right now, if private 
business could provide the Medicaid, their costs would be a lot 
lower. And what has happened is, there are two standards there, 
and when there is no question of this and just hearing what you 
have said, because Medicaid doesn't provide anything near what 
I provide in my own practice, and yet I think we probably just 
barely make the essential benefits package.
    Ms. Zarlenga. Congressman, my understanding of what the 
minimum central coverage has to cover is they have to cover, 
you know, they have to cover the categories of essential health 
benefits, but they don't need to cover every single benefit 
that is listed as an essential health benefit in order to 
qualify as minimal essential coverage.
    Mr. Roe. Again, Mr. Chairman, Ranking Member, thank you for 
having this hearing today which didn't clear the smoke out the 
room maybe, but helped a little bit and I think we need to 
continue to do this because I definitely, Dr. Petzel, want to 
see the booklet go out and explain this to our veterans next 
month because we spent two hours and haven't explained it to 
me, yet.
    So with that, I yield back.
    Mr. Chairman. Thank you very much.
    Mr. Michaud said he has no more questions. The questions 
that I have we can submit to you for the record.
    I do want to go back, Dr. Petzel, to your testimony in your 
opening statement where you do talk about the proactive efforts 
that VA has taken, including assessing the potential impacts 
and opportunities presented by the Affordable Care Act. And 
then you come on down to about the sixth or seventh bullet that 
talks about assessing VA's enrollment business processes and 
identifying opportunities for enhancing veteran experience, 
including providing each enrolled veteran with a personalized 
health benefits handbook in order to make the veteran aware of 
their health care benefits.
    So to me, I draw the conclusion that this new handbook is 
in relationship to the ACA. No need to make a comment. I am 
just saying that is where it came from.
    One other question that I had. You mentioned Priority 8 
veterans a few minutes ago. You haven't lifted the Priority 8 
ban that is out there now. Those that are not currently 
enrolled cannot get into the VA system, correct?
    Dr. Petzel. That is correct. We have not changed that.
    Mr. Chairman. Do you intend to change it?
    Dr. Petzel. No, there is no plan to change it.
    Mr. Chairman. Okay. And also, for the record, in some 
prehearing materials, VA stated that the department used a 
contractor to assess the potential impacts of the ACA on the VA 
health care system. Is that correct?
    Dr. Petzel. Yes, we did have some brief services from a 
contractor.
    Mr. Chairman. Would you provide the Committee a copy of 
that report?
    Dr. Petzel. We will.
    Mr. Chairman. In a timely fashion?
    Dr. Petzel. Absolutely.
    Mr. Chairman. Thank you very much. And with that, I want to 
say thank you very much to you for being here for over two 
hours now. We are very appreciative of that.
    All Members will have five legislative days to revise and 
extend their remarks, add extraneous materials. Without 
objection, so approved. And with that, this hearing is 
adjourned.

    [Whereupon, at 12:22 p.m., the Committee was adjourned.]



                            A P P E N D I X

                              ----------                              

            Prepared Statement of Hon. Jeff Miller, Chairman
    The Committee will come to order.
    Good morning, and welcome to today's Full Committee hearing, 
``Examining The Implications Of The Affordable Care Act On The 
Department of Veterans Affairs (VA) Health Care.''
    As we all know, about three years ago, the Patient Protection and 
Affordable Care Act (A-C-A)--or, ObamaCare as it is commonly known - 
was signed into law.
    Today's hearing will focus on just one aspect of the law that I 
believe has received distressingly little attention from the 
administration and the media to-date--its potential implications for 
the VA health care system and the many veterans it serves.
    Despite informing this Committee last summer that the department 
was developing a proactive communications strategy to inform veteran 
stakeholders about the potential impacts of the A-C-A, VA's Web site 
devotes just two sentences to the law, stating that it, `` . . . will 
not affect the current role [VA] has in the lives of America's 
veterans...''
    But, as we all know, stating that the so-called ``Affordable Care 
Act'' will not affect the department, is not the same as saying it 
won't affect veterans.
    Secretary Shinseki testified before this Committee earlier this 
month that, ``the [Affordable Care Act] has important implications for 
VA.''
    VA's fiscal year (f-y) 2014 budget submission includes a request of 
eighty-eight point four million dollars to implement the provisions of 
the A-C-A and meet the department's responsibilities as a provider of 
minimum essential coverage.
    Buried in volume two of VA's budget submission--lacking context, 
justification, or supporting data--is a single statement alleging that 
VA assumes that it will experience a net enrollment increase as a 
result of the law.
    What that ``net increase'' may be, why VA believes it will occur, 
and what actions the department has taken to prepare for it are 
unknown.
    Unfortunately, these are far from the only things we don't know. 
Less than a year from full implementation, we also don't know:
    -How veterans may respond to the new care options available to them 
and how enrollment and utilization of VA health care benefits may be 
affected in turn;
    -How increasing demand for health care services will affect 
competition for health care providers and, in turn, VA's health care 
workforce and recruitment and retention efforts, particularly for hard-
to-fill positions like psychiatrists;
    -Whether VA's current information technology systems are capable of 
fulfilling the law's data requirements, which include identifying 
individuals who are enrolled in the VA health care system and reporting 
their coverage status to the department of the treasury; or,
    -If or whether the critical role of the VA health care system will 
change in the post-A-C-A national health care landscape.
    Sadly, I could continue.
    A report on uninsured veterans issued last month by the Robert Wood 
Johnson Foundation and the Urban Institute states that, ``it remains to 
be seen the extent to which uninsured veterans would seek coverage 
through medicaid, the VA, or other options under A-C-A and whether and 
how this will vary across states.''
    Former VA Under Secretary for Health, Dr. Kenneth Kizer [ky-z-er], 
published an article last year, in which he stated, ``the overall net 
effect of the A-C-A-- on health care for veterans is uncertain at this 
time, although it will likely have a number of intended positive and 
unintended negative effects.''
    Where the health care of millions of veterans is concerned, 
unknowns of this magnitude this late in the game are unconscionable.
    Nancy Pelosi famously remarked that we had to pass the A-C-A-- 
before we could find out what is in it.
    And now, according to VA, we have to implement it before we can 
find out what effect it may have on our veterans.
    This house has voted more than thirty times to repeal and replace 
various elements of the A-C-A and I have been proud to support that 
effort every time.
    It is no secret that I and many of my colleagues have been critical 
of the law from the start and remain even more critical of--and 
concerned by--it today.
    Increasingly, we are not alone.
    Just last week, Senator Max Baucus--one of the chief authors and 
primary advocates of the A-C-A--called implementation of the law a 
``train wreck.''
    The american public cannot afford a train wreck.
    And, what's more, our veterans do not deserve one.
    Thank you all for being here today.

                                 
               Prepared Statement of Hon. Michael Michaud
    Thank you, Mr. Chairman, for holding this timely hearing today.
    While the Affordable Care Act, or ACA, does not change the VA 
health care system and is not targeted specifically at veterans, it 
includes provisions that could affect veterans and their families.
    In light of the fast approaching deadlines contained within the 
ACA, it is important for this Committee to gage where the Department of 
Veterans Affairs is in the implementation process.
    According to the Urban Institute there are approximately 13 million 
non-elderly veterans living in the United States. Of that population 
1.3 million, or one in 10, are uninsured. This means there are 1.3 
million veterans who will need to select some type of medical coverage 
within the next year.
    How many of these 1.3 million veterans are eligible for VA health 
care? What is being done to encourage those eligible to come into the 
VA health system? How can we help those not eligible to understand 
their options and find insurance elsewhere?
    I expect the Department to have an aggressive communications plan 
in place to inform veterans about the ACA, how it affects them, and 
what, if anything, they can or need to do to maximize their VA 
benefits, be compliant with ACA, and find good, quality health care.
    It is imperative that conflicting messages do not get out there and 
confuse veterans. VA, at all levels, should be prepared to assist 
veterans in navigating what is sure to be a confusing process.
    I understand that veterans may choose to receive part of their care 
through VA and part through another system such as employer health 
insurance programs, exchanges and/or Medicaid.
    Dual eligibility is not new to veterans, but it has been my 
observation that VA struggles with minimizing fragmentation of care for 
those veterans who use more than one system.
    Accurate accountability, coordination and engagement with external 
partners is essential in keeping track of where veterans receive their 
care, the quality of that care, and how it integrates for the health 
and well-being of the veteran.
    There are many factors that will play a role in the choices that 
veterans will be asked to make in the coming months. I am also 
interested in understanding what these factors are.
    Is it proximity to a VA medical facility? Is it cost? Or quality?
    It is believed that females within a household make the majority of 
the family's health-related decisions. VA needs to look at its services 
for women veterans and address this important veteran population's 
needs.
    We know from studies that individual health is highly dependent on 
family well-being. When you include family members of veterans, the 
number of uninsured rises to 2.3 million.
    The Department's fiscal year 2014 budget request includes $85 
million for the care of the estimated 66,000 new veterans VA has 
identified who may choose VA for their health care under the ACA.
    The 2014 budget also includes $3.4 million in the Information 
Technology budget to build the functionality needed to meet 
requirements in the ACA such as identifying individuals who are 
enrolled in VA health care programs that have been deemed as meeting 
the minimum essential health care coverage.
    I look forward to hearing from VA on the methodology used to arrive 
at those numbers, and to understand how the trends and expenditures 
will be tracked to ensure there are adequate resources for VA to 
respond to changes based on ACA.
    I believe that a smooth implementation can be achieved by 2014 if 
VA engages effectively with other Federal agencies.
    With that Mr. Chairman, I yield back.

                                 
               Prepared Statement of Hon. Jackie Walorski
    Mr. Chairman and Ranking Member, it's an honor to serve on this 
Committee.
    I thank you for holding this hearing on such an important issue for 
our veterans.
    The Patient Protection and Affordable Care Act (P.L. 111-148, 
PPACA) is a law shrouded in uncertainty. The complex implementation of 
PPACA raises questions that do not always have concrete answers.
    For the 50,000 veterans back in Indiana's Second Congressional 
District \1\, and the approximately 22,000,00 \2\ veterans overall in 
this country, the PPACA could greatly impact how and where they receive 
their health care. These veterans will undoubtedly be forced to decide 
where they can access the best care that addresses their unique 
situation.
---------------------------------------------------------------------------
    \1\ There are an estimated 53,318 veterans in IN-02. This data was 
compiled on 09/30/2012, based on the district lines from the 112th 
Congress. http://www.va.gov/vetdata/Veteran--Population.asp.
    \2\ There are an estimated 22,700,000 veterans in the United 
States. Department of Veterans Affairs, Office of the Actuary, Veteran 
Population Projections Model (VetPop), 2007, Table 5L. http://
www.va.gov/vetdata/docs/quickfacts/Population-slideshow.pdf.
---------------------------------------------------------------------------
    The Department of Veterans Affairs must be prepared to handle these 
changes. They must be vigilant as the PPACA is enacted and be 
responsive to veteran concerns. Most importantly, the VA must provide 
answers that ensure greater clarity and not further confusion.
    I look forward to working with my colleagues and our panelists, 
today, to ensure the Department of Veterans Affairs is prepared for the 
impact the Patient Protection and Affordable Care Act will have on 
their health care system.
    Thank you.

                                 
              Prepared Statement of Robert A. Petzel, M.D.
    Good morning, Chairman Miller, Ranking Member Michaud, and Members 
of the Committee. Thank you for the opportunity to discuss the 
Department of Veterans Affairs' (VA) implementation of the Affordable 
Care Act and the law's impact on VA's health care system and the 
Veterans we serve. I am accompanied today by Ms. Patricia Vandenberg, 
Assistant Deputy Under Secretary for Health for Policy and Planning, 
and Ms. Lynne Harbin, Deputy Chief Business Officer, Member Services, 
Chief Business Office, both from the Veterans Health Administration 
(VHA).
    The Affordable Care Act puts in place comprehensive reforms that 
improve access to affordable health coverage for everyone and protect 
consumers. The law allows all Americans to make health insurance 
choices that work for them while guaranteeing access to care for our 
most vulnerable, and provides new ways to bring down costs and improve 
quality of care. Since the Affordable Care Act's enactment, VA has been 
proactive in working to understand the law's impact on Veterans, other 
beneficiaries, and VA's health care system; and in preparing for 
implementation of the law. VA is preparing for Affordable Care Act 
implementation, with a focus on providing personalized, Veteran-centric 
health care. Our ongoing efforts include, for example, developing data 
tools, coordinating directly with other Federal agencies, including the 
Internal Revenue Service (IRS) and the Department of Health and Human 
Services (HHS).
    VA is committed to providing Veterans and other eligible 
beneficiaries timely access to high-quality health services. VA's 
health care mission covers the continuum of care providing inpatient 
and outpatient services, including pharmacy, prosthetics, mental 
health, long-term care in both institutional and non-institutional 
settings, and readjustment counseling. VA currently provides health 
care to nearly 9 million enrolled Veterans and other beneficiaries, 
primarily dependents and survivors. Enrollment in VA health care 
programs meets the Affordable Care Act requirement to maintain minimum 
essential coverage. This means that Veterans enrolled in VA health care 
and beneficiaries enrolled in the Civilian Health and Medical Program 
of the Department of Veterans Affairs (CHAMPVA) and Spina Bifida 
program do not need to obtain additional coverage as a result of 
Affordable Care Act.
    VA welcomes new enrollees for health care on a daily basis. 
Veterans currently enrolled in the VA health care system and current 
beneficiaries enrolled in VA's CHAMPVA or Spina Bifida program will 
experience no change in their VA-administered health care programs, 
services, or benefits. VA will continue to provide high quality, 
comprehensive health care.
    VA remains proactive in ensuring it is prepared to meet the 
Affordable Care Act requirements. One of VA's initial steps to plan a 
successful implementation and fulfill the requirements of the 
Affordable Care Act was to form an internal workgroup prior to the 
Affordable Care Act's enactment. This workgroup reviewed the drafts of 
the Affordable Care Act legislation to examine the potential impact to 
Veterans. Once the Affordable Care Act was enacted, VA has continued to 
monitor the national landscape to understand the impact that state 
decisions on Medicaid and Health Insurance Marketplaces may have on 
Veterans.
    The remainder of my statement will highlight the most significant 
provisions to Veterans and VA and present the current steps VA is 
taking to ensure the effective implementation of the Affordable Care 
Act. It will describe the effect of the Affordable Care Act on Veterans 
and other VA health care recipients, anticipated outcomes of the law, 
and VA's response to the modest but expected net increase in 
enrollment.
I. Affordable Care Act Background and its Key Provisions to VA
    Certain Affordable Care Act provisions began taking effect in 2010 
soon after the law was enacted, and most elements of the Affordable 
Care Act are expected to be implemented by January 1, 2014. Under the 
Affordable Care Act, the Federal government, State governments, 
insurers, employers, and individuals are given shared responsibility to 
reform and improve the availability, quality, and affordability of 
health insurance coverage in the United States. Starting in 2014, the 
individual shared responsibility provision calls for each individual to 
have minimum essential health coverage (known as minimum essential 
coverage) for each month, qualify for an exemption, or make a payment 
when filing his or her federal income tax return. Under the law, VA 
coverage meets the definition of minimum essential coverage.
    Under the Affordable Care Act States have the option to expand 
their Medicaid programs but are not required to do so. VA continues to 
monitor state decisions to determine the impact on VA beneficiaries in 
those locations.
    Other Affordable Care Act provisions include the establishment of 
Health Insurance Marketplaces (also referred to as ``Exchanges''), 
where individuals and small businesses can easily compare policies and 
premiums and shop for coverage. Certain individuals, based on their 
income, may be eligible for tax credits to defray the cost of health 
insurance premiums. VA is committed to increasing awareness among 
eligible Veterans of VA health care benefits, an excellent health care 
option that meets the Affordable Care Act definition of minimum 
essential coverage.
II. Current VHA Preparation, Coordination, and Implementation Efforts
    VHA has proactively prepared for health reform by examining the key 
provisions of the law, identifying the implications for Veterans and 
VA, and conducting analyses to estimate the potential impact of the law 
on VA enrollment, demand for services, workforce, and costs. 
Additionally, VA is taking steps to ensure a coordinated and 
collaborative approach to Affordable Care Act implementation. VA 
estimates that there are approximately 1.3 million uninsured Veterans 
who may be eligible for, but not enrolled in, VA health care. \1\ While 
these Veterans will be a major focus of education and outreach efforts, 
VA will ensure all Veterans can quickly access accurate and 
understandable information on the Affordable Care Act's provisions and 
the impact on VA health care.
---------------------------------------------------------------------------
    \1\ VA analysis of the U.S. Census Bureau 2011 American Community 
Survey Public Use File (50 States and DC).
---------------------------------------------------------------------------
    VHA implementation efforts fall into four broad categories: (1) 
data analysis; (2) communications; (3) operations; and (4) information 
technology. The VHA Office of the Assistant Deputy Under Secretary for 
Health for Policy and Planning, in collaboration with the Chief 
Business Office, is coordinating health reform efforts within VHA. 
Proactive efforts to date include the following:

      Assessing the potential impacts and opportunities 
presented by the Affordable Care Act;
      Monitoring the national health reform landscape;
      Developing plans and materials for outreach to Veterans;
      Identifying, initiating, and testing information system 
changes needed to support the Affordable Care Act;
      Assessing VA's enrollment business processes and 
identifying opportunities for enhancing the Veteran experience, 
including:

    I  Providing each enrolled Veteran with a personalized Health 
Benefits Handbook in order to make Veterans of their health care 
benefits and enable them to compare those benefits to other health care 
options. Each enrolled Veteran is able to read information specific to 
his or her health care benefits - priority group, co-pay amount, 
servicing VA medical facility and more - providing a personal link 
between the Veteran and VA;
    I  Expanding call center hours of operations to respond to Veteran 
inquiries concerning VA health care benefits and the Affordable Care 
Act; and
    I  Streamlining the VA enrollment application form and process.

      Engaging with other Federal agencies including IRS and 
HHS to identify areas for collaboration and to ensure that VA is in 
compliance with Affordable Care Act requirements.

    To oversee VA's efforts, and to ensure a comprehensive and 
coordinated approach to implementation, the Under Secretary for Health 
established a VHA Health Reform Integrated Project Team (IPT). The 
purpose of IPT is to examine strategic and operational issues that 
affect Veterans and VA as a result of the Affordable Care Act, steer 
the implementation of Affordable-Care-Act-related activities, and 
provide a mechanism for information exchange. It is comprised of 
representatives from across the Department, to include VHA, Veterans 
Benefits Administration (VBA), and Office of the Secretary.
III. Continued Delivery of High Quality, Comprehensive Health Care
    VA will continue to provide eligible Veterans with high quality, 
comprehensive health care they have earned through their service. 
Additionally, the law provides that VA health care coverage meets the 
definition of minimum essential coverage under the Affordable Care Act. 
This means that Veterans who are enrolled in VA health care programs, 
along with beneficiaries in the CHAMPVA and Spina Bifida program, do 
not need to take any additional steps to comply with the individual 
responsibility requirement outlined in the Affordable Care Act.
    When key components of the Affordable Care Act are implemented on 
January 1, 2014, they will provide some Veterans, who are not currently 
eligible for VA health coverage, with new options for health care 
through other programs. Some veterans may become eligible for Medicaid, 
while others may become eligible for a tax credit to purchase health 
coverage through the Health Insurance Marketplace. These changes give 
VA the opportunity to communicate with Veterans and other stakeholders. 
VA's robust medical benefits package provides the full continuum of 
health care services for enrolled beneficiaries and there are no 
enrollment premiums or deductibles.
    VA continues to be a leader on Veterans health issues with a 
commitment to ensuring the highest quality health care possible for our 
Nation's Veterans. VA anticipates a modest net increase in enrollment 
as a result of the Affordable Care Act. The net increase will result 
from eligible non-enrolled Veterans enrolling in VA health care. The VA 
medical care budget for fiscal year (FY) 2014 seeks $85 million to 
ensure VA is prepared to respond to additional Veteran enrollment and 
utilization of health care services. In addition, the FY 2014 VA 
Information Technology budget includes $3.4 million to build out 
technology functionality related to the Affordable Care Act.
Conclusion
    Mr. Chairman, our work to effectively implement the provisions of 
the Affordable Care Act continues. We remain focused on providing 
Veterans and other eligible beneficiaries timely access to high-quality 
health care services. We appreciate your support and encouragement in 
identifying and resolving challenges as we find new ways to care for 
Veterans. VA is committed to providing the highest quality of care, 
which our Veterans have earned and deserve. We appreciate the 
opportunity to appear before you today. My colleagues and I are 
prepared to respond to any questions you may have.

                                 
                  Prepared Statement of Lisa Zarlenga
    Tax Legislative Counsel, U.S. Department of the Treasury
    Before the House Committee on Veterans Affairs
    April 24, 2013
    Good morning, Chairman Miller, Ranking Member Michaud, and Members 
of the Committee. I am pleased to appear before you today to discuss 
the Treasury Department's implementation of the Affordable Care Act as 
it relates to health care provided to our Nation's veterans, including 
coverage through the Department of Veterans Affairs (VA). I am 
accompanied today by Mr. Jason Levitis, Senior Advisor to the Assistant 
Secretary for Tax Policy.
Background
    There is no higher priority than giving veterans the honor and 
benefits they have earned through their service and sacrifice for our 
Nation. We appreciate this Committee's commitment to veterans and look 
forward to working with you to ensure that their needs are met.
    The Treasury Department's work to implement the Affordable Care Act 
has been guided by this principle of serving our veterans. We have 
worked in close collaboration with the VA to help us understand the 
needs of veterans and VA health programs. Our goal has been to ensure 
that the tax provisions of the Affordable Care Act protect the health 
care veterans have today while also giving them access to additional 
options.
Veterans Eligibility for Premium Tax Credits
    The Affordable Care Act provides for the establishment of 
Affordable Insurance Marketplaces (also known as Exchanges), which will 
open on October 1, 2013, to help individuals compare health plans and 
enroll in the one that is best for them. The Affordable Care Act 
created a refundable premium tax credit to help make coverage offered 
through a Marketplace affordable by reducing the out-of-pocket premium 
cost paid by individuals and families. A taxpayer may qualify for 
advance payments of the premium tax credit, which are paid directly to 
health insurance issuers and reduce a taxpayer's monthly premiums for 
health insurance.
    The premium tax credit is generally not available to an individual 
who is eligible to enroll in other ``minimum essential coverage,'' 
which generally includes coverage through government-sponsored programs 
and employer-sponsored plans.
    In developing our regulations implementing the premium tax credit, 
we worked closely with the VA to ensure that the rules worked properly 
for our Nation's veterans. As part of this process, we determined that 
the general policy that denies the premium tax credit to individuals 
eligible for government-sponsored coverage could create problems for 
certain veterans and their families because eligibility for veterans' 
coverage cannot be firmly determined at the time an individual is 
seeking an eligibility determination at a Marketplace for advance 
payments of the premium tax credit.
    After consulting with our colleagues at VA and considering this 
issue, we concluded that a specific rule was needed to ensure that 
veterans were not inappropriately denied the opportunity to receive a 
premium tax credit to lower the monthly premium of a health insurance 
plan purchased in a Marketplace. Accordingly, our proposed regulations 
contained a rule that treats an individual as eligible for VA coverage 
only if he or she is actually enrolled in the coverage. The general 
result of this rule is that a veteran who is eligible for VA coverage 
may choose between enrolling in VA coverage or enrolling in coverage 
through a Marketplace and if eligible, receiving a tax credit that 
reduces the monthly premium of a health insurance plan purchase in a 
Marketplace. Our final regulations retain this general rule. In 
addition, to avoid excluding individuals who are eligible for VA 
medical benefits but who are not veterans, we amended the rule to apply 
to non-veteran individuals (such as dependents) who may receive VA 
medical benefits under certain programs. Thus, the special eligibility 
rule applies not just to veterans but to individuals who are eligible 
for benefits under the Civilian Health and Medical Program of the 
Department of Veterans Affairs (CHAMPVA) or the VA's Spina Bifida 
Health Care program.
VA health coverage and the individual coverage requirement
    Beginning in 2014, the Affordable Care Act generally directs non-
exempt individuals to maintain minimum essential coverage for 
themselves and their dependents or make an individual responsibility 
payment on their federal income tax return.
    Section 5000A of the Internal Revenue Code, added by the Affordable 
Care Act, defines minimum essential coverage to include coverage under 
specified government-sponsored programs, coverage under an eligible 
employer-sponsored plan, and coverage under a health plan offered in a 
Marketplace. The statute requires the Secretary of Veterans Affairs, in 
coordination with the Secretary of Health and Human Services and the 
Secretary of the Treasury, to determine which VA health care programs 
should be considered minimum essential coverage for purposes of the 
Affordable Care Act. In implementing our proposed regulations under 
section 5000A, we worked closely with the VA to identify those VA 
health care programs that provide comprehensive medical benefits. Based 
upon the recommendations of our VA colleagues, our proposed regulations 
specify that the comprehensive medical benefits package authorized for 
eligible veterans, the CHAMPVA program, and the comprehensive health 
care program for certain children suffering from spina bifida are each 
treated as minimum essential coverage for purposes of the individual 
coverage requirement. Thus, under the proposed regulations, veterans 
and other VA beneficiaries who are enrolled in these VA health care 
programs will satisfy the individual coverage provision of the 
Affordable Care Act. We will continue to consult with our VA colleagues 
as we prepare to issue final regulations on this provision before the 
end of the year.
Conclusion
    Ensuring implementation of the Affordable Care Act in a manner that 
understands and is responsive to the needs of our Nation's veterans is 
a top priority of the Department of the Treasury. I have outlined above 
some of the issues we addressed in recent guidance regarding the 
Affordable Care Act provisions within Treasury's jurisdiction. As we 
move forward with implementation, we look forward to working with the 
VA as well as with this Committee to ensure that the Affordable Care 
Act works as well as possible for the veterans and their families who 
have given so much to our country. My colleague, Mr. Levitis, and I 
would be happy to answer any questions you might have.

                                 
                        Questions For The Record

     Letter and Questions From: Hon. Jeff Miller, Chairman, To: VA

    June 24, 2013

    The Honorable Robert A. Petzel, M.D.
    Under Secretary for Health
    U.S. Department of Veterans Affairs
    810 Vermont Avenue, NW
    Washington, DC 20420

    Dear Dr. Petzel:

    On Wednesday, April 24, 2013, you testified before the Committee 
during an oversight hearing entitled, ``Examining the Implications of 
the Affordable Care Act on the Department of Veterans Affairs Health 
Care.''As a follow-up to the hearing, I request that you respond to the 
attached questions and provide the requested materials in-full by no 
later than close of business on Monday, July 21, 2013.
    If you have any questions, please contact Dolores Dunn, Staff 
Director for the Subcommittee on Health, at [email protected] 
or by calling (202) 225-9154.
    Your timely response to this matter and your commitment to our 
nation's veterans are both very much appreciated.
    With warm personal regards,

    Sincerely,

    JEFF MILLER
    Chairman

    CJM/dd/sg

   Questions for the Record from the Honorable Jeff Miller, Chairman
    1. In response to questioning during the hearing, Ms. Vandenberg 
stated that, ``. . .we have estimated the potential out migration due 
to the availability of the tax credit ...[however] . ..there is no way 
for us to gauge in absolute terms what the ultimate determinant will be 
in that veteran 's choice so we have to make a certain set of 
assumptions.'' Ms. Vandeberg further stated that VA has used, ``... 
several simulation tools that help us to understand what drives an 
individual 's choice in selecting insurance products.''
    - Please provide the estimated number of veterans expected to 
``migrate'' out of the VA health care system as a result of the ACA and 
the assumptions VA used to arrive at that estimated numbers and why.
    - Please describe the simulation tools that Ms. Vandenberg 
referenced.
    2. Former VA Under Secretary for Health, Dr. Kenneth Kizer, 
published an article in the Journal of the American Medical Association 
last year regarding the potential effect of the Affordable Care Act on 
health care for veterans. In that article, he suggested VA take three 
steps to better define and quantify the potential effects of the law 
for our veterans. Those three steps are: (1) conduct a comprehensive 
evaluation of the effects of multiple health plan eligibility on access 
to and quality of care for VA enrollees; (2) conduct a systematic 
assessment of current and projected VA health care workforce needs and 
service utilization vulnerabilities and review options for addressing 
them; and (3) develop a shared vision of the VA health care syste1n 
post-ACA that considers the effects of increased health care insurance 
coverage on VA's role as a safety net provider, declining numbers of 
World War II and Vietnam War veterans, the increasing number of female 
veterans, and measures that may be taken to address federal budget 
problems.
    - Please describe any and all actions the Department has taken 
regarding the three recommendations above, either in response to Dr. 
Kizer's article or otherwise.
    3. A March 2013 policy brief by the Robert Wood Johnson Foundation 
and the Urban Institute states that, ``. ..it will be important to 
asses the extent to which VA provider supply meets the demand for care 
and to implement efforts to reduce fragmentation of care among veterans 
enrolled in both VA and other coverage ...''
    - Do you agree that the ACA will lead to increased fragmentation of 
care for our veterans? Why or why not? Please explain.
    - Please describe any and all actions the Department has taken to 
address potential care fragmentation that may occur as a result of the 
ACA.
    4. A report VA provided to the House Ways and Means Committee 
states that, ``[a]t this time, VA cannot accurately assess the 
potential impact of the annual fee on health insurance providers; 
however, VA will assess the impact of this provision after it goes into 
effect.''
    - What, if any, attempts were made by VA to assess the potential 
impact of this provision and why were such attempts unsuccessful?
    - Given that VA has abandoned assessment of this provision until 
``after it goes into effect,'' what assurance do you have that VA will 
be able to account for any unknown impacts it may have on VA's current 
funding levels?
    5. What steps has VA taken to ensure that VA remains able to 
attract and maintain its health care workforce amid potentially growing 
demand for health care professionals and increased competition with 
other health care entities? How will VA 's current recruitment and 
retention efforts need to adjust? Has the current VA workforce begun to 
see the effects of such increased competition? If so, how? If not, when 
do you expect to begin seeing such effects and how is VA preparing for 
it?
    6. VA provided Committee staff with information last year 
indicating that approximately six point seven million veterans under 
the age of sixty-five fall within the age range that would be eligible 
for the premium assistance tax credit. If the IRS' proposed rules are 
implemented, veterans within this income range who are enrolled in VA 
will become ineligible for the premium tax credit.
    - Of these veterans, how many are currently enrolled in VA health 
care system?
    - How is VA intending to inform these veterans - particularly those 
who are not currently enrolled but may be considering it - of their 
options under the ACA?
    7. The Request for Information entitled, ``VA Implementation 
Support for the ACA,'' VA posted on Fed-Biz-Opps earlier this year 
states that, ``[a]s VA implements the A-C-A in 2013, it recognizes that 
VA must better understand the large health care environment at both the 
national and state level.'' The RFI includes three action items, the 
third of which requests assistance in identifying the data systems or 
exchanges that could assist VA in understanding the choices veterans 
are making with regard to the A-C-A and how VA might need to adjust its 
communications towards them as a result.
    - What information or expertise does VA believe it is currently 
lacking that it needs moving forward and how has this impacted VA 's 
efforts to understand and implement the law to-date?
    - Please explain why action item number three - as opposed to the 
other two - is not due to be completed until April 30, 2014, and 
describe any and all proactive steps the Department is taking to 
understand how veterans might react to the ACA and how VA might need to 
communicate with them as a result of those reactions.
    8. What, if any, budgetary impact will the implementation of the 
ACA have on the VA health care system in FY 2015 and beyond? Please 
explain in detail.

                                 
          Question for the Record from the Honorable Phil Roe
    1 . Has VA projected what effects, if any, the cuts to graduate 
medical education could have on future staffing and number of residents 
available to medical centers?

                                 
       Question for the Record from the Honorable Jackie Walorski
    1. On January lst of this year, the President's medical device tax 
went into effect. I have already heard from medical device companies in 
the Second District of Indiana expressing concern over how this new tax 
will raise the cost of life saving medical devices. A recent report 
issued by VA stated, ``...VA anticipates a 2.3 percent increase in 
costs to offset the negatively impacted profit margin for the vendors/
manufacturers that will be paying the tax. This is based on commentary 
and published opinions that vendors will pass this additional cost on 
to all consumers, including VA.''
    - In a time of strict budget scrutiny, how does VA plan to absorb 
these additional costs?
    - Does the Department have a contingency plan in place should costs 
for medical devices continue to rise?
    - Can you ensure the Committee that a veteran will not go without 
or have to sacrifice quality as a result of the President's medical 
device tax?
    2. In your testimony, you cite developing data tools as one way the 
VA is preparing for implementation of the ACA. Can you explain what 
these data tools are and when they will be ready for veterans to 
access?
    3. In your testimony, you say the VA, ``anticipates a modest net 
increase in enrollment as a result of the Affordable Care Act.'' You 
continue to say that ``the net increase will result from eligible non-
enrolled Veterans enrolling in VA health care.''
    - How is VA certain these veterans will utilize the VA health care 
system?
    - Has VA prepared for a potential significant decrease in enrollees 
and the potential effects it will have on the VA health care system as 
a result of the ACA?
    4. In a presentation VA submitted to this Committee last July, one 
of the slides states that the Center for Medicare and Medicaid Services 
Center for Consumer Information and Oversight (CCIIO) has collaborated 
with the VA to, ``develop educational/outreach package for enrolled 
veterans who are not eligible to receive premium tax and veterans who 
are not currently enrolled in the VA health care system.'' Where can 
these materials be accessed?

                                 
       Pre-Hearing Questions From HVAC Majority and VA Responses
    1. In response to questioning during the hearing, Ms. Vandenberg 
stated that, `` . . . we have estimated the potential out migration due 
to the availability of the tax credit . . . [however] . . . there is no 
way for us to gauge in absolute terms what the ultimate determinant 
will be in that veteran's choice so we have to make a certain set of 
assumptions.'' Ms. Vandenberg further stated that VA has used, `` . . . 
several simulation tools that help us to understand what drives an 
individual's choice in selecting insurance products.''
    - Please provide the estimated number of veterans expected to 
``migrate'' out of the VA health care system as a result of the ACA and 
the assumptions VA used to arrive at that estimated numbers and why.

    Response: The Affordable Care Act (ACA) expands affordable, 
comprehensive health care coverage options for some Veterans, both 
through the Health Insurance Marketplaces and through expansion of 
Medicaid in states that choose to expand their programs to all 
individuals below 138 percent of the poverty level. VA assumes that 
currently enrolled Veterans who become eligible for Medicaid will 
generally choose to stay with VA. VA also assumes that some Veterans 
who would have enrolled in VA (under current Medicaid eligibility 
rules) and live in a state that expands its Medicaid program may choose 
to enroll in Medicaid instead of VA. ACA also provides premium tax 
credits for eligible individuals to purchase health care coverage 
through the Health Insurance Marketplaces. However, in order to receive 
the premium tax credit, a Veteran may not be enrolled in the VA health 
care system.

    - Please describe the simulation tools that Ms. Vandenberg 
referenced.

    Response: The analysis to estimate the impact of ACA on VA health 
care was based on data from three sources - the 2010 Public Use 
Microdata Sample (PUMS) files from the American Community Survey, The 
Lewin Group's Health Benefit Simulation Model (HBSM), and the VA 
Enrollee Health Care Projection Model (EHCPM). The HBSM predicts how 
Veterans' health care choices might change as a result of ACA. These 
projected changes are then applied to the EHCPM to obtain estimated 
expenditure impacts.
    The 2010 PUMS data from the American Community Survey (ACS)is the 
only source of information about Veterans and their health care 
coverage that is publicly available on a large scale. The ACS routinely 
asks respondents about their Veteran status and surveys approximately 
250,000 Veterans each year. PUMS data are used in conjunction with the 
Lewin Group's HBSM to predict an individual's chances of moving from 
one health insurance status to another as a result of ACA. These 
chances are based on individual-level factors, such as the individual's 
Federal poverty level (FPL) group, whether the individual is employed, 
employer type, and employer size. For an individual in a given initial 
health coverage status, the HBSM will predict the individual's chance 
of remaining in the same coverage status or moving to another status 
after implementation of ACA. Once the HBSM transition probabilities 
have been assigned to each Veteran in the PUMS dataset, estimates are 
derived for the total Veteran population based on the population weight 
available for each respondent in the PUMS files. The projected changes 
in health coverage status were then incorporated into the EHCPM to 
estimate the impact of ACA on VA health care.
    To estimate the VA utilization associated with those Veterans 
projected to ``migrate out,'' VA's consulting health actuary, Milliman, 
Inc., analyzed the health care utilization of the enrolled Veteran 
population by priority group (1-8) and assigned each enrollee into one 
of 39 health care utilization profiles. These profiles were designed to 
identify and sort enrollees into a spectrum of high use of VA services 
down to non-users of VA services. Based on the distribution of 
enrollees estimated to disenroll, Milliman created a composite 
utilization profile of this group of Veterans.

    2. Former VA Under Secretary for Health, Dr. Kenneth Kizer, 
published an article in the Journal of the American Medical Association 
last year regarding the potential effect of the Affordable Care Act on 
health care for veterans. In that article, he suggested VA take three 
steps to better define and quantify the potential effects of the law 
for our veterans. Those three steps are: (1) conduct a comprehensive 
evaluation of the effects of multiple health plan eligibility on access 
to and quality of care for VA enrollees; (2) conduct a systematic 
assessment of current and projected VA health care workforce needs and 
service utilization vulnerabilities and review options for addressing 
them; and, (3) develop a shared vision of the VA health care system 
post-ACA that considers the effects of increased health care insurance 
coverage on VA's role as a safety net provider, declining numbers of 
World War II and Vietnam War Veterans, the increasing number of female 
Veterans, and measures that may be taken to address federal budget 
problems.

    - Please describe any and all actions the Department has taken 
regarding the three recommendations above, either in response to Dr. 
Kizer's article or otherwise.

    Response: VA is currently analyzing Dr. Kizer's recommendations 
regarding the effects of multiple health plan eligibility on access to 
and quality of care for VA enrollees. VA is also examining the effects 
of increased health care insurance coverage under ACA on Veterans, and 
has examined the ACA's potential impacts on VA's workforce. VA 
continues to assess options to continue to recruit and retain high 
quality health care providers.
    In terms of other actions the Department has taken, when ACA was 
enacted, VA began a systematic and comprehensive review to identify how 
ACA might impact the VA health care delivery system. This review was 
done with the assistance of The Lewin Group and VA has provided a copy 
of The Lewin Group's comprehensive report to the Committee following 
the April 24, 2013, hearing. VA chartered an integrated project team 
(IPT) with representatives from VA, Veterans Health Administration 
(VHA), Veterans Benefits Administration (VBA), and the Office of 
Information and Technology (OIT) to examine the strategic and 
operational issues impacting VA. The IPT meets regularly to ensure ACA 
is implemented in a coordinated manner and formed subgroups to look at 
specific issues in the areas of policy, information technology, and 
operations and communications. VA has also established routine meetings 
to communicate with VHA field staff and to collect information on ACA 
implementation at the local level. VA has also developed a 
comprehensive communication plan and materials for Veterans and their 
families to educate them that VA's health care programs represent 
minimum essential coverage and that VA health care does not change as a 
result of ACA. In addition, VA has also been collaborating with other 
Federal agencies to implement ACA. These engagements have been overall 
very positive and VA appreciates the efforts of other agencies to 
assist in educating Veterans about ACA.
    VA's strategic planning recognizes the changing landscape of health 
care and the changing dynamics of the Veteran population. In 2020, the 
Veteran population in America is projected to be 12 percent female and 
7 percent Hispanic, with the percentage of young, tech-savvy Veterans 
projected at 40 percent according to VA's Veteran population projection 
model (VetPop). In the next 20 years, Veterans will reflect gender and 
minority shifts similar to the general population and the types of 
health and services provided by VA will have to change to serve a more 
diverse population. Implementation of the ACA will offer some Veterans 
new options for health care and VA is actively preparing to assist 
Veterans in understanding these new optionsTo address the fiscal 
constraints facing the Federal Government, VA recognizes opportunities 
that exist today for better coordinating care for beneficiaries with 
multiple health coverage eligibilities and reducing the waste and 
inefficiencies in health care delivery that exist today. To that end, 
VA is developing strategies to provide Veterans with personalized, 
proactive, patient-driven health care and establish itself as a highly 
effective, innovative, data-driven, evidence-based, continuously 
improving, and reliable health care system. VA's future includes 
recognition as a leader for population health improvement strategies, 
personalized care, and maximizing health outcomes in a cost-effective 
and sustainable manner.

    3. A March 2013, policy brief by the Robert Wood Johnson Foundation 
and the Urban Institute states that `` . . . it will be important to 
assess the extent to which VA provider supply meets the demand for care 
and to implement efforts to reduce fragmentation of care among veterans 
enrolled in both VA and other coverage . . . ''

    - Do you agree that the ACA will lead to increase fragmentation of 
care for our veterans? Why or why not? Please explain.

    Response: VA recognizes that many enrolled Veterans already have 
some other form of public or private health insurance. According to the 
2012 VHA Survey of Veteran Enrollees' Health and Reliance upon VHA, VA 
estimates that 77 percent of enrolled Veterans have some other form of 
health coverage. VA's providers actively seek to obtain this 
information from Veteran patients in order to better coordinate the 
Veteran's health care treatment and services. VA continually strives to 
improve care coordination and has worked to electronically exchange 
medical information with non-VA providers.

    - Please describe any and all actions the Department has taken to 
address potential care fragmentation that may occur as a result of the 
ACA.

    Response: Care coordination is an area of focus for VA through 
efforts such as the Patient Aligned Care Team model and electronic 
exchange of medical information. VA recognizes the importance of 
coordinating health care for Veterans and other beneficiaries. To 
assist in these efforts, VA is developing communications materials for 
VA staff regarding ACA, highlighting the importance of improving care 
coordination, and raising awareness of potential care fragmentation.

    4. A report VA provided to the House Ways and Means Committee 
states that, ``[a]t this time, VA cannot accurately assess the 
potential impact of the annual fee on health insurance providers; 
however, VA will assess the impact of this provision after it goes into 
effect.''

    - What if any, attempts were made by VA to assess the potential 
impact of this provision and why were such attempts unsuccessful?

    Response: Because health insurance companies will gain millions of 
new customers as a result of the Affordable Care Act, the law includes 
an annual fee on health insurance issuers and applies to calendar years 
beginning in 2014. Once this provision goes into effect in 2014, VA 
will conduct further analyses to assess if there is an impact of this 
provision on VA.

    - Given that VA has abandoned assessment of this provision until 
``after it goes into effect,'' what assurance do you have that VA will 
be able to account for any unknown impacts it may have on VA's current 
funding levels?

    Response: Once the annual fee on health insurance issuers goes into 
effect in 2014, VA will monitor the fee and respond as necessary.

    5. What steps has VA taken to ensure that VA remains able to 
attract and maintain its health care workforce amid potentially growing 
demand for health care professionals and increased competition with 
other health care entities? How will VA's current recruitment and 
retention efforts need to adjust? Has the current VA workforce begun to 
see the effects of such increased competition? If so, how? If not, when 
do you expect to begin seeing such effects and how is VA preparing for 
it?

    - What steps has VA taken to ensure that VA remains able to attract 
and maintain its health care workforce amid potentially growing demand 
for health care professionals and increased competition with other 
health care entities?

    Response: Recognizing that competition has always been a challenge 
for recruitment and retention of health care professionals, VHA will 
continue to:

      Offer scholarship programs open to non-VHA employees to 
help graduate practitioners who will provide obligated service within 
VHA facilities;
      Authorize student loan repayment for hard-to-recruit 
clinical providers with educational debt under the Education Debt 
Reduction Program; and
      Support extensive recruitment and marketing and 
advertising campaigns targeting health care providers through 
www.vacareers.va.gov and affiliated Facebook, Twitter, and other social 
media and broadcast media campaigns.

    VHA will continue to maximize the utilization of hiring 
flexibilities and retention incentives such as: expediting the title 38 
United States Code (U.S.C.) hiring process; authorizing higher rates of 
pay based on specialized skill; utilizing retention, relocation, and 
recruitment incentives as appropriate; Student Loan Repayment Program; 
flexibilities in work schedules; and educational assistance programs. 
VHA is also establishing and implementing a succession planning 
framework to maintain skilled and ample leadership within the 
Administration.
    VHA will continue to evaluate the pay ranges, alignment of 
specialties, recommend additional specialties, and make recommendations 
regarding pay limitations and exceptions.
    VHA will maintain nationally acclaimed research and development 
programs at its medical centers to engage clinicians interested in 
research. VA conducts the largest education and training effort for 
health professionals in the United States. Further, through its 
extensive workforce development and succession planning activities, VA 
sponsors or funds clinical education and training programs for health 
care professionals in over 40 disciplines. The graduates of these VA-
sponsored and affiliate-sponsored training programs provide a ready 
resource of future staff who understand Veterans and their unique 
needs, who have received state-of-the-art clinical education in 
evidence-based treatments at VA, and whose skills and abilities have 
already been demonstrated during their training programs. VHA will 
continue to maintain active affiliation agreements with medical schools 
nationwide and rotate medical residents and fellows through VHA 
facilities for training.

    - How will VA's current recruitment and retention efforts need to 
adjust?

    Response: While ACA may increase competition for primary care 
providers and other occupations, VHA views the direct competition for 
providers as a familiar and increasing operational challenge. In fiscal 
year (FY) 2012, VHA managers hired more than 30,340 employees. VHA 
representation at job fairs nationally has positively contributed to 
the recruitment of new employees. VHA's Healthcare Recruitment and 
Marketing team continues to partner with VA's Veteran Employment 
Services Office to successfully recruit Veterans nationwide. VHA will 
continue to monitor workforce trends, such as onboard and losses by 
occupation through a robust succession planning process that will 
promote key recruitment and retention strategies that foster VHA's 
ability to compete for workers in the health care industry.
    To further address this challenge, the following actions were 
initiated:

      Established a VHA workgroup to develop strategies to 
improve orientation and retention of physicians during the first 2-5 
years of employment;
      Established VHA employee scholarship programs that 
increase the number of new health care providers and enhance the 
credentials for current providers; and
      Launched the Strategic Recruitment Initiative for VHA 
Health Professions Trainees to improve recruitment of medical residents 
exiting medical school.

    - Has the current VA workforce begun to see the effects of such 
increased competition? If so, how? If not, when do you expect to begin 
seeing such effects and how is VA preparing for it?

    Response: VHA has always been in direct competition with the 
private sector medical community for physicians, nurses, and other 
clinical and allied health providers. In response to this competition, 
VHA commissioned the National Recruitment Program (NRP) in 2009. NRP 
provides VHA with an in-house team of professional health care 
recruiters. These ``headhunters'' employ advanced, private industry 
recruitment practices to fill the agency's most mission critical 
clinical vacancies. The team is comprised of 21 professional health 
care recruiters, one geographically based in each Veterans Integrated 
Service Network (VISN) (except VISN 12). VHA national recruiters have 
doubled the private industry average since 2011 that validates the 
program's demonstrated success. In FY 2013, NRP recruited a total of 
514 clinical providers. This is a notable achievement given that 82 
percent of NRP hires are physicians in scarce specialties with 
significantly higher salaries.

    6. VA provided committee staff with information last year 
indicating that approximately 6.7 million veterans under the age of 
sixty-five fall within the age range that would be eligible for the 
premium assistance tax credit. If the IRS' proposed rules are 
implemented, veterans within this income range who are enrolled in VA 
will become ineligible for the premium tax credit.

    - Of these veterans, how many are currently enrolled in VA health 
care system?

    Response: At present, the best estimates of income levels for the 
enrolled Veteran population are obtained from the Survey of Veteran 
Enrollees' Health and Reliance Upon VA (SOE). Estimates from the latest 
SOE with the same year as the Veteran population estimates (FY 2011), 
suggest that there are approximately 1.8 million Veterans under the age 
of 65 with incomes between 138 and 400 percent of the FPL are currently 
enrolled in the VA health care system. This estimate includes all 
priority categories.

    - How is VA intending to inform these veterans - particularly those 
who are not currently enrolled but may be considering it - of their 
options under the ACA?

    Response: VA has developed a comprehensive strategic communications 
plan to guide VA leadership and staff while informing and communicating 
with Veterans, eligible beneficiaries, and other stakeholders regarding 
the ACA implementation. In addition to communicating with enrolled 
Veterans and beneficiaries, VA is exploring ways to reach uninsured 
Veterans to increase awareness of VA health care programs and benefits 
and encourage the Veteran to consider VA health care enrollment to 
allow them to access comprehensive, affordable coverage and meet their 
ACA health care coverage requirements.
    VA intends to communicate with uninsured Veterans receiving other 
VA benefits such as compensation, pension, or education benefits via 
direct mail. VA will also seek to collaborate with the Department of 
Health and Human Services (HHS), the Department of Labor (DOL), 
Veterans Service Organizations (VSO), and states to identify and 
outreach to Veterans who are uninsured. VA is also planning several 
different outreach activities for this population to include print, 
online, and social media.

    7. The Request for Information entitled, ``VA Implementation 
Support for the ACA,'' VA posted on Fed-Biz-Opps earlier this year 
states that, ``[a]s VA implements the A-C-A in 2013, it recognizes that 
VA must better understand the large health care environment at both the 
national and state level.'' The RFI includes three action items, the 
third of which requests assistance in identifying the data systems or 
exchanges that could assist VA in understanding the choices veterans 
are making with regard to the A-C-A and how VA might need to adjust its 
communications towards them as a result.

    - What information or expertise does VA believe it is currently 
lacking that it needs moving forward and how has this impacted VA's 
efforts to understand and implement the law to-date?

    Response: Some Veterans will have new options for health care as a 
result of ACA. Currently, there is no national database that tracks the 
type of health insurance Veterans or Americans in general have chosen. 
With the implementation of ACA, VA desires to have a more complete, in 
near real-time, understanding of Veterans' choice regarding health 
coverage. As with any database, appropriate measures must be taken to 
ensure individuals' privacy is protected and information is released 
only on a need to know basis. Current data is limited to only survey 
information such as the American Community Survey and VHA's SOE. These 
surveys, while informative, do not always provide information at a very 
granular level of detail.

    - Please explain why action item number three - as opposed to the 
other two - is not due to be completed until April 30, 2014, and 
describe any and all proactive steps the Department is taking to 
understand how veterans might react to the ACA and how VA might need to 
communicate with them as a result of those reactions.

    Response: The ACA's expansion of coverage and major market reforms 
will not be fully implemented until January 2014. In order to better 
understand how data on Veteran health insurance coverage might be 
collected/ monitored, VA believes that gathering this information in 
early 2014 will better help VA conduct analyses and assessments.

    8. What, if any, budgetary impact will the implementation of the 
ACA have on the VA health care system in FY 2015 and beyond? Please 
explain in detail.

    Response: ACA puts in place comprehensive reforms that improve 
access to affordable health coverage, allows all Americans to make 
health insurance choices that work for them while guaranteeing access 
to care for our most vulnerable, and provides new ways to bring down 
costs and improve quality of care. The Act has various implications for 
VA. For example, new tax credits and marketplaces for insurance provide 
a wider range of alternatives for patients. The 2014 budget requests 
$85 million for VA to fulfill multiple responsibilities as a provider 
of Minimum Essential Coverage under ACA, including: (1) providing 
outreach and communication on ACA to Veterans; (2) reporting to 
Treasury on VA-covered individuals; and (3) providing a written 
statement to each individual on their coverage by January 2015. Final 
2015 funding levels for this initiative will be determined during the 
2015 budget process when update data and metrics on these programs' 
funding needs are available.

                                 
          Questions for the Record from the Honorable Phil Roe
    1. Has VA projected what effects, if any, the cuts to graduate 
medical education could have on future staffing and number of residents 
available to medical centers?

    Response: VA will be conducting analyses to better understand the 
implications of changes to graduate medical education on VA's ability 
to recruit and retain physicians. Medicare is the largest funder of 
GME. VA conducts its GME program in partnership with the Nation's 
medical schools and academic medical centers, and fully funds its 
proportionate share of GME costs. VA training has been found to 
significantly increase the likelihood of future physician recruitment. 
If VA affiliated schools of medicine and academic medical centers 
choose to decrease the number of physician resident training positions 
for any reason, this may influence the number of available sponsorships 
for VA rotations and future VHA hiring.

                                 
      Questions for the Record from the Honorable Jackie Walorski
    1. On January 1st of this year, the President's medical device tax 
went into effect. I have already heard from medical device companies in 
the Second District of Indiana expressing concern over how this new tax 
will raise the cost of life saving medical devices. A recent report 
issued by VA stated, ``VA anticipates a 2.3 percent increase in costs 
to offset the negatively impacted profit margin for the vendors/
manufacturers that will be paying the tax. This is based on commentary 
and published opinions that vendors will pass this additional cost on 
to all consumers, including VA.''

    - In a time of strict budget scrutiny, how does VA plan to absorb 
these additional costs?

    Response: VA anticipates that the total cost associated with this 
new tax will have minimal impact on its medical equipment procurement 
budget. VA will continue to evaluate and monitor the impact of the 
medical device tax and develop appropriate contingency plans as 
necessary to offset these costs in its medical equipment procurement 
budget.

    - Does the Department have a contingency plan in place should costs 
for medical devices continue to rise?

    Response: Each year VA updates the actuarial model estimates to 
incorporate the most recent data on health care utilization rates, 
actual program experience, and other factors, such as economic trends 
in unemployment and inflation. By updating the model's inputs and 
revisiting the assumptions that underlie the actuarial projections each 
year, VA is able to produce budget estimates that more accurately 
reflect the projected model demands of enrolled Veterans. VA will 
monitor the medical device tax and develop appropriate contingency 
plans as necessary.

    - Can you ensure the Committee that a Veteran will not go without 
or have to sacrifice quality as a result of the President's medical 
device tax?

    Response: No sacrifice in health care provided to Veterans is 
envisioned as a result of the medical device tax.

    2. In your testimony, you cite developing data tools as one way the 
VA is preparing for implementation of the ACA. Can you explain what 
these data tools are and when they will be ready for veterans to 
access?

    Response: VA has developed an online Health Benefit Explorer tool. 
This tool asks the user to answer a few questions about themselves to 
learn about the VA health benefits for which they may qualify. The tool 
provides the user with a description of those benefits and any out-of-
pocket costs. This tool was launched in the summer of 2013 and is 
available on VA's ACA landing page at www.va.gov/aca.

    3. In your testimony, you say the VA, ``anticipates a modest net 
increase in enrollment as a result of the Affordable Care Act.'' You 
continue to say that ``the net increase will result from eligible non-
enrolled Veterans enrolling in VA health care.''

    - How is VA certain these veterans will utilize the VA health care 
system?

    Response: VA has proactively prepared for health reform by 
examining the key provisions of the law, identifying the implications 
for Veterans and VA, and conducting analyses to estimate the potential 
impact of the law on VA enrollment, demand for services, workforce, and 
costs. VA estimates the impact of ACA on VA to be a net increase of 
66,000 additional Veteran enrollees and increased expenditures of $85 
million in FY 2014. This estimate of 66,000 represents the net increase 
in enrollment due to ACA. VA believes that those most likely to enroll 
or choose non-VA coverage options are those Veterans who enter or leave 
VA health care with a low reliance on VA health care. VA health care 
program for Veterans constitutes minimum essential coverage (MEC).

    - Has VA prepared for a potential significant decrease in enrollees 
and the potential effects it will have on the VA health care system as 
a result of the ACA?

    Response: Beginning in January 2014, Veterans in some states will 
be eligible for Medicaid because the ACA allows states to expand 
Medicaid coverage to all individuals below 138 percent of the poverty 
level. VA assumes that currently enrolled Veterans who become eligible 
for Medicaid will generally choose to stay with VA. VA also assumes 
that some Veterans who would have enrolled in VA (under current 
Medicaid eligibility rules) and live in a state that expands its 
Medicaid program may choose to enroll in Medicaid instead of VA. ACA 
also provides premium tax credits for eligible individuals to purchase 
health care coverage through the Health Insurance Marketplaces. 
However, in order to receive the premium tax credit, a Veteran may not 
be enrolled in the VA health care system.
    VA's robust medical benefits package provides the full continuum of 
health care services for enrolled Veterans and there are no enrollment 
premiums or deductibles.

    4. In a presentation VA submitted to this Committee last July, one 
of the slides states that the Center for Medicare and Medicaid Services 
Center for Consumer Information and Insurance Oversight (CCIIO) has 
collaborated with the VA to ``develop educational/outreach package for 
enrolled Veterans who are not eligible to receive premium tax and 
Veterans who are not currently enrolled in the VA health care system.''

    - Where can these materials be accessed?

    Response: In the presentation VA submitted to this Committee last 
July, VA indicated that it has ``proposed to collaborate with CCIIO to 
develop an educational/outreach package for enrolled Veterans who are 
not eligible to receive premium tax credits and Veterans who are not 
currently enrolled in the VA health care system.'' VA continues to 
engage with the Centers for Medicare and Medicaid Services to identify 
opportunities to conduct outreach to Veterans. Examples of potential 
opportunities include providing educational materials for Navigator and 
other consumer assistance programs training. Another partnership VA has 
initiated is with the Health Resources and Services Administration 
(HRSA) to provide VA information when HRSA funds its community health 
centers outreach efforts on ACA.

                                 
                   Materials Submitted For The Record

                     PARALYZED VETERANS OF AMERICA
    Chairman Miller, Ranking Member Michaud, and members of the 
Committee, Paralyzed Veterans of America (PVA) appreciates the 
opportunity to submit a statement for the record on the pending 
implementation of the Affordable Care Act (ACA) and its impact on the 
Department of Veterans Affairs (VA) health care system. PVA is a strong 
supporter of the ACA and we were very involved in the legislative 
efforts to develop and enact the ACA. Many of the provisions of this 
legislation will certainly benefit our members, particularly as members 
of the community of people with disabilities. Veterans with 
disabilities and people with disabilities have long faced 
discrimination from the health insurance industry. With this in mind, 
we would like to offer some observations as it relates to issues raised 
during the full Committee hearing held on April 24, 2013.
    PVA was pleased that the ACA recognized the importance and value of 
VA health care services by designating those services as ``minimum 
essential coverage'' in order to satisfy the health care benefits 
requirements of the ACA. This designation applies to basic health care 
services as well as those services provided by the Civilian Health and 
Medical Program of the VA (CHAMPVA) and services provided to children 
of certain veterans with spina bifida. Additionally, if someone is 
enrolled in one of these programs, they will satisfy the ``personal 
responsibility'' (or individual mandate) rules of the ACA. Moreover, it 
is important that compensation for service-connected disabilities is 
excluded from consideration of gross income under present Internal 
Revenue Service (IRS) rules that will dictate eligibility for the 
premium tax credit.
    We also recognize the concerns raised by the Committee as it 
relates to the interaction of the ACA's premium tax credits (which are 
intended to aid individuals and families with modest incomes to afford 
health care coverage) with veterans enrolled in the VA. Not 
surprisingly, if a veteran is enrolled in the VA, or a family member is 
enrolled in CHAMPVA or the Spina Bifida program, that individual will 
not be eligible for the premium tax credits offered through plans in 
the health exchanges. This could pose a problem for those veterans or 
family members who use the VA for specialized services, like spinal 
cord rehabilitation, blinded rehabilitation, and polytrauma care, but 
because they live far from a VA facility (possibly in a rural setting), 
choose to use private insurance for basic primary care needs. This 
scenario would exclude the veteran from access to the premium tax 
credit. Fortunately, family members of the veteran can still get 
coverage in a health exchange and be eligible for the premium tax 
credit.
    We do however echo the concerns raised by members of the Committee 
about the lack of clarity on the value of the premium tax credits, 
particularly for the family members who have ``minimum essential 
coverage'' through the VA. It was our understanding, based on the 
remarks of the officials from the Treasury Department who testified, 
that the premium charged to a family member in the health exchanges 
would be based on the income of the individuals enrolled in the 
exchange. This leads us to conclude that the earned income of a veteran 
who is already enrolled in the VA for health care coverage should not 
affect family members' premiums who are enrolled in the exchange. It is 
critical that the Administration clarify this question quickly so as to 
ensure that veterans and their families are able to make a decision 
that best suits their health care needs and accounts for their ability 
to deal with the costs of health care.
    Much like the members of the Committee, PVA has real concerns about 
the impact on utilization of VA health care services once the ACA is 
implemented. The VA estimates that 66,000 new veteran enrollees will 
come into the system as a result of the ACA. Moreover, the 
Administration's FY 2014 budget request that was recently released 
reflects a resource need of $85 million in additional funding for FY 
2014 to meet that projected increase in demand. PVA, along with the co-
authors of The Independent Budget--AMVETS, Disabled American Veterans, 
and Veterans of Foreign Wars--questioned the validity of those 
estimates in our testimony before the House VA Committee. Additionally, 
the VA has not fully explained why it would need $85 million in 
additional funding for FY 2014 but absolutely no new funding for FY 
2015 (as explained in the FY 2014 budget request). It is important to 
point out that there are currently eight million veterans not currently 
enrolled in the VA health care system who would otherwise be eligible 
for enrollment. Moreover, of that eight million, approximately one 
million of those veterans are uninsured. This opens the real 
possibility that a significant number of new veterans (particularly 
those who are uninsured) might choose to enroll in the VA health care 
system. In fact, PVA would encourage as many veterans as possible to 
enroll in the VA for health care given the quality of care available.
    PVA also believes that more veterans would choose to enroll in the 
VA versus enrolling in one of the health exchanges that will be 
established as a result of the ACA because the health care benefits 
package available from the VA ranks as one of the best when balanced 
against private insurance plans. We recognize that for many veterans 
the choice will be based on the value of the services being provided by 
the VA versus the value of the premium tax credit. The premium tax 
credit issue could be particularly complicated if the rules as they 
apply to family members of veterans enrolled in the VA are not 
clarified expeditiously.
    PVA also shares the concerns raised by members of the Committee 
about the role VA must play to inform veterans about the health care 
options they will have. The VA outlined a plan to conduct outreach 
beginning in May or June of this year through website changes, public 
service announcements, call center preparations and other 
communications through social media. While the VA has apparently been 
working with the Center on Medicare and Medicaid Services (CMS) to 
interface in some fashion with health plans in the exchanges through 
this outreach, it apparently has not developed a comprehensive plan to 
ensure that veterans are making good decisions about their health care 
options once ACA goes into effect. It remains unclear whether the main 
focus for VA will be educating veterans and their families about VA 
health benefits or about informing them of VA health benefits in the 
context of the ACA and where they might go for more detailed 
information about benefits under the ACA. For example, family members 
covered under CHAMPVA may be unaware that their dependent coverage ends 
at age 22 whereas they could extend that dependent coverage to age 26 
under a health exchange plan.
    With this thought in mind, we believe the Committee and Congress 
need to enact legislation immediately to change the eligibility age for 
dependent children enrolled in CHAMPVA to age 26 so as to align this 
benefit with all other health care programs. At this time, the only 
qualified dependents that are not covered under a parent's health 
insurance policy are those of 100 percent service-connected disabled 
veterans covered under CHAMPVA. We strongly urge the Committee to 
approve H.R. 288, the ``CHAMPVA Children's Protection Act of 2013,'' 
introduced by Ranking Member Michaud that would increase the 
eligibility age to 26.
    Similar to the information concerns from the VA perspective, we 
cannot emphasize enough the importance of the Department of Health and 
Human Services (HHS) making available detailed information about the VA 
being an option for veterans seeking health care coverage. The websites 
for the different health exchanges will not include information about 
the VA health care system because the VA is not an option available 
through those exchanges. We also agree with the Committee's emphasis 
that any applications to the health care exchanges include an 
opportunity to indicate military service so as to prompt veterans to 
consider VA health care as an option. We have concerns that HHS still 
has this issue ``pending'' for consideration. It should be a mandatory 
requirement on the exchange application. The Committee and Congress 
should continue to press HHS to ensure that veterans and service 
members coming to the health exchanges are made aware of additional 
information about their health care options through the VA. In 
addition, CMS is in the process of developing a cadre of ``navigators'' 
to assist people with enrollment in health exchanges and in exploring 
their coverage options. Training of these navigators should include, at 
a minimum, the knowledge to connect veterans and their families with 
appropriate sources of information about the range of benefits 
available to them.
    Another issue that was raised during the hearing that we have 
serious concerns about is the enrollment of Priority Group 8 veterans. 
Currently, VA provides a very narrow limit for individuals enrolling as 
new Priority Group 8 veterans. We believe that VA should consider 
reopening enrollment to ``all'' Priority Group 8 veterans. However, 
according to VA Under Secretary for Health Petzel during the hearing, 
the VA has no plans at this time to change the limitations on 
enrollment of Priority Group 8 veterans. We believe that this is 
unacceptable because this policy decision serves to eliminate a health 
care option that might be the best health care option available to this 
group of veterans. The limitation on Priority Group 8 enrollment could 
drive veterans into a health exchange that might provide a lesser 
health care benefit or face the prospect of paying a penalty as a 
result of the individual mandate. With this thought in mind, Congress 
should make available all necessary resources to allow VA to reopen 
enrollment for all Priority Group 8 veterans so as to ensure that they 
are afforded the opportunity to make the best health care decision 
available.
    Moreover, many veterans who might otherwise be eligible for VA 
health care as Priority Group 7 veterans face the prospect of having 
their options limited by decisions at the state level regarding 
Medicaid. Some Priority Group 7 veterans who are currently uninsured 
and are not particularly high income earners could be served by 
Medicaid under the rules established by the ACA which sets the income 
level at 138 percent of the federal poverty level. Unfortunately, three 
states with large veteran populations have not yet decided whether to 
implement the Medicaid expansion, and 21 additional states have already 
announced that they will not expand Medicaid.
    We also believe that the VA must get a better handle on the numbers 
of service-connected disabled veterans it serves who are not required 
to enroll in the health care system in order to receive care. This 
scenario has obvious implications for proper implementation of the ACA, 
particularly with regards to premium tax credits. A veteran receiving 
care in the VA without being enrolled could then enroll in a local 
health plan through an exchange and then conceivably receive care 
through both avenues while also being eligible for the premium tax 
credit. It is imperative that the Administration clarify how it would 
handle such a scenario and whether or not the VA's rules about 
providing services to unenrolled veterans would have to change. 
Moreover, the Department of Treasury needs to explain whether a veteran 
in this situation would be exposed to any subsequent penalties if it is 
discovered that he or she was using VA health system benefits while 
also being enrolled in a health exchange.
    PVA also believes that the Committee and Congress, as well as the 
Administration charged with implementing the ACA, must take into 
consideration the impact of the ACA on low income elderly and disabled 
veterans in receipt of VA pension. While these veterans have access to 
the VA health care system under Priority Group 5, their family incomes 
are obviously limited. However, we are not certain whether VA pension 
is excluded from consideration as countable income under IRS rules. If 
VA pension is considered countable income, a veteran's family's 
eligibility for the premium tax credit could be negatively impacted.
    Ultimately, PVA believes the ACA has the potential to significantly 
broaden access to health insurance coverage for millions of Americans 
and we support its continued implementation. Additionally, we would 
like to commend the Committee for beginning the oversight now on the 
ACA and its relationship to the VA, and we encourage the Committee to 
continue monitoring the impact on veterans and their families. We thank 
you again for the opportunity to submit comments for the record. We 
would be happy to take any questions that you might have.
Information Required by Rule XI 2(g)(4) of the House of Representatives
    Pursuant to Rule XI 2(g)(4) of the House of Representatives, the 
following information is provided regarding federal grants and 
contracts.
                            Fiscal Year 2013
    No federal grants or contracts received.
                            Fiscal Year 2012
    No federal grants or contracts received.
                            Fiscal Year 2011
    Court of Appeals for Veterans Claims, administered by the Legal 
Services Corporation--National Veterans Legal Services Program-- 
$262,787.

                                 
                  DEPARTMENT OF VETERANS AFFAIRS (VA)
  Congressional Report on Patient Protection and Affordable Care Act 
       (PPACA) Study and Report of Effect on Veterans Health Care
Purpose
    The purpose of this report is to comply with requirements of 
section 9011 of the Patient Protection and Affordable Care Act (Public 
Law (P.L.) 111-148).
Background
    The PPACA was enacted in March 201O and represents comprehensive 
reform of the health care delivery and financing system in the United 
States. PPACA includes new reporting requirements for VA. Specifically, 
section 9008 of PPACA, which imposes new annual fees on branded 
prescription pharmaceutical manufacturers and importers, requires the 
Secretary of Veterans Affairs to report to the Secretary of the 
Treasury the total amount paid for each branded prescription drug 
procured by VA for its beneficiaries for each covered entity, and for 
each branded prescription drug of the covered entity. As of the date of 
this report, VA has submitted reports for calendar years (CY) 2009 and 
201O to the Internal Revenue Service (IRS).
    Additionally, section 9011 of PPACA requires the Secretary of 
Veterans Affairs to conduct a study on the effect (if any) of the 
provisions of sections 9008, 9009, and 9010 of PPACA on:

    1. The cost of medical care provided to Veterans, and

    2. Veterans' access to medical devices and branded prescription 
drugs.

    The Secretary of Veterans Affairs is required to report the results 
of the study to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate not later 
than December 31, 2012.
    We note that section 9009 of PPACA was repealed by section 1405(d) 
of PL. 111-152, the Health Care and Education Reconciliation Act of 
2010 (HCERA), but would have imposed an annual fee on medical device 
manufacturers and importers. In repea.ling section 9009, Congress did 
not amend VA's reporting requirement in section 9011, but did add a 
provision in the Internal Revenue Code (l.R.C.) on medical device 
taxes.
    Section 1405(a) of HCERA added I.RC. Sec.  4191 , which imposes a 
tax on the sale of any taxable medical device by manufacturers, 
producers, or importers for sales after December 31, 2012. As a means 
of addressing the requirement in section 9011 of PPACA to study and 
report on section 9009, we have evaluated and report on the potential 
impact of the medical device tax in l.R.C. Sec.  4191.
    Section 9010 of PPACA imposes an annual fee on health insurance 
providers and applies to calendar years beginning in 2014. We note that 
both sections 9008 and 9010 were amended by HCERA.
Methodology
    In preparing this report, VA constituted an internal workgroup of 
subject matter experts to collect and evaluate available information 
pertinent to the two study questions.
Section 9008
    Based on the IRS supplied list of National Drug Codes defined as 
``branded prescription drugs'', the following VA branded prescription 
drug costs \1\ (i.e. paid to covered entities) have been reported to 
IRS by VA in accordance with section 9008:
---------------------------------------------------------------------------
    \1\ These figures include costs incurred on behalf of all 
beneficiaries and participants of health programs sponsored by VA.

    CY 2009: $3,308,954,508 (submitted 7/22/2011)
    CY 2010: $3,362,519,524 (submitted 2/14/2012)
    CY 2011: due 2013
    CY 2012: due 2014
    CY 2013: due 2015

    VA Pharmacy Benefits Management Services (PBM) is responsible for 
overseeing the administration of VA's pharmacy benefits program. In 
that capacity, PBM interacts with covered entities on a daily basis. 
These interactions involve issues of drug pricing, drug contracting, 
and clinical data associated with the covered entities' branded 
prescription drugs used in VA. Decisions on drug selection are based on 
safety, efficacy, and cost (in that order) and Veterans' access to 
branded drugs is not anticipated to change as a result of section 9008. 
Generic drugs are used when clinically appropriate as they are usually 
the most cost effective choices.
    Branded prescription drugs are used when they are clinically 
appropriate and there is not a generic alternative that has equal or 
superior safety and efficacy. To date, PBM has not received specific 
indications from ``covered entities'' that prices charged to VA may 
change due to the additional fees on branded prescription drugs.
l.R.C. Sec.  4191
    Per 26 C.F.R. Sec.  48.4191-2, there are certain devices which are 
exempted from the definition of ``taxable medical device.'' 77 Fed. 
Reg. 72924, at 72934. The majority of items provided by VA's Prosthetic 
and Sensory Aids Service are excluded, primarily under the ``Retail 
Exemption'' clause.
    For purposes of evaluating the impact of the medical device tax in 
l.R.C. Sec.  4191, VA considered only the following medical devices (p 
ease note, thisis not a comprehensive list of all of VA's medical 
devices):

      all surgical implants and devices, including biological 
implants;
      home dialysis equipment;
      ventilators; and
      continuous airway pressure machines

    For items not on national contract, VA anticipates a 2.3 percent 
increase in costs to offset the negatively impacted profit margin for 
the vendors/manufacturers that will be paying the tax. This is based on 
commentary and published opinions that vendors will pass this 
additional cost on to all consumers, including VA.
    Veterans' access to medical devices will not be an issue in fiscal 
year 2013 given the current budget; projected need and any increased 
costs (due to increased tax) will be covered by the existing budget. 
The impact on access in future years is contingent on the sustained 
adequacy of VA's budget to provide medical devices to meet Veterans' 
needs, and potentially at more costly levels.
Section 9010
    As discussed above, section 9010 imposes an annual fee on health 
insurance providers beginning in 2014. At this time, VA cannot 
accurately assess the potential impact of the annual fee on health 
insurance providers; however, VA will assess the impact of this 
provision after it goes into effect.
Other insights
    According to an informal assessment of the impact of these 
provisions conducted by VA's consulting actuary, the presence of the 
annual fees on branded prescription pharmaceutical manufacturers and 
importers imposed by section 9008 is thought to be a factor in the 
rising Average Wholesale Price (AWP) trends over the last 2 years, but 
changes in Medicare Part D pricing are also a significant known driver. 
VA has no evidence that the annual fees by section 9008 are driving a 
rise in AWP, but cannot rule out these fees being a factor in future 
AWP trends.
Summarv
    Based on a study of currently available information and the input 
of subject matter experts, VA believes the abovementioned provisions 
have not yet had an observable impact on either the cost of medical 
care provided to Veterans or Veterans' access to medical devices and 
branded prescription drugs.
    VA will continue to monitor the effect of the additional taxes and 
fees on branded prescription drugs, health insurance providers and 
medical devices on the cost of medical care provided to Veterans and on 
Veterans' access to medical devices and branded prescription drugs.
      Estimate of Cost to Prepare Congressionally-Mandated Report
                               ATTACHMENT
    Short Title of Report: Impact of Certain Taxes and Fees on the Cost 
of Medical Care Provided to Veterans and Veterans Access to Medical 
Devices and Branded Prescription Drugs
    Report Required By:Patient Protection and Affordable Care Act - 
Public Law 111-148
    The statement of cost for preparing this report is shown below.
    Manpower Cost: $3,171
    Contract(s) Cost: $0
    Other Cost: $0
    Total Estimated Cost to Prepare Report: $3,171

                                 
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