STATEMENT OF
MICHAEL J. KUSSMAN, MD, MS, MACP
UNDER SECRETARY FOR HEALTH
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES

June 20, 2007

        Good morning, Mr. Chairman and Members of the Committee. I am pleased to be invited here today to address the current policy and status of Priority Group 8 veterans.

        The Department of Veterans Affairs ( VA) mission is to serve veterans through a variety of benefits and services. Prior to 1996, VA was primarily a hospital-based health-care system. Over the last two decades, VA has moved to an outpatient-care-based system with over 1200 access points. This shift enhances service and access to health care for veterans and has been accomplished with the support of Congress, veterans' service organizations, and other stakeholders.

         VA resources are focused on its highest priority medical care mission - to provide service to recent combat veterans and veterans with service-connected disabilities, lower incomes, and special needs. Veterans not meeting these criteria (higher-income and non-disabled) were able to receive VA medical care only on a case-by-case, space-available basis until 1999. Implementation of the Veterans Health Care Eligibility Reform Act of 1996 (Public Law 104-262) directed VA to establish a system of annual patient enrollment managed in accordance with seven priority groups and contingent upon available resources. Congress further required the enrollment system be managed in a manner ensuring the provision of timely and high-quality care to enrollees.

        Between 1999 and 2002, the Secretary determined each year that all categories of veterans were able to enroll. However, greater recognition of the high-quality care provided by VA, more accessible locations, and rapid growth in the population of higher-income and non-disabled veterans (from 2% to over 30% of enrollees) threatened VA's ability to deliver quality and timely care to service-connected and lower-income veterans. In the Department of Veterans Affairs Health Care Programs Enhancement Act of 2001, (Public Law 107-135) Congress created another priority level - Priority Group 8. Priority Group 8 includes veterans who do not have compensable service-connected disability and whose household incomes exceed geographical based means test. To preserve care for higher priority veterans, VA discontinued enrolling Priority Group 8 in 2003. Lower-priority veterans who were already enrolled as Priority 8s in the system before 2003, however, retained their eligibility and today comprise 27 percent of all enrollees. Moreover, VA has authority to enroll combat-theater veterans returning from OEF/ OIF in VA's health care system during their period of eligibility, making them able to receive any needed medical care or services.

         To understand Priority Group 8 veterans, it is important to understand the Priority Group system established by law for the Department. Our priorities are as follows:

• Priority Group 1

  • Veterans with service-connected disabilities rated 50% or more disabling.

Priority Group 2

Priority Group 3

Priority Group 4

Priority Group 5

Priority Group 6

Priority Group 7

Priority Group 8

        In enacting this legislation, Congress recognized the great obligation owed to veterans requiring care for their service-connected disabilities, with special needs, and low income veterans - these groups encompass our highest priority.

        In 2003, to ensure the quality and improve the timeliness of health care provided to veterans in higher enrollment-priority categories in an environment of increased demand from older veterans, VA suspended the enrollment of additional veterans who are in the lowest statutory enrollment category (Priority Group 8), as required by the Eligibility Reform Act.

        Today, meeting the health care needs of our current enrollees and effectively responding to the needs of a new generation of veterans from Operation Enduring Freedom ( OEF) and Operation Iraqi Freedom ( OIF) are VA's highest priorities.

        In FY 2006, VA enrolled approximately 200,000 additional enrollees raising the total to nearly 7.9 million enrollees. In FY 2006, VA provided care to almost 5.5 million unique patients, an increase of 200,000 from the previous year. VA projects that number to rise to approximately 5.8 million unique patients in FY 2008. These figures represent significant increases from the 2.7 million veterans receiving care in 1996.

        The President's FY 2008 budget is based on the Department's needs for providing enrolled veterans with timely, high-quality health care. Changes in the demographic characteristics of our previously enrolled patient population account for a significant portion of the increased resource requirements in our FY08 budget request. Our patients, as a group, will be older, will seek care for more complex medical conditions, and will be more heavily concentrated in the higher cost priority groups.

        Patients in Priorities 1-6-veterans with service-connected conditions or special health care needs, or lower incomes, and recently discharged combat veterans-will comprise 68 percent of the total patient population in 2008, but they will account for 85 percent of our health care costs. The number of patients in Priorities 1-6 will grow by 3.3 percent from 2007 to 2008.

        Based on the President's FY08 budget, we expect to treat about 263,000 veterans who served in Operation Enduring Freedom and Operation Iraqi Freedom ( OEF/ OIF), an increase of 54,000 (or 26 percent) from our 2007 estimates and 108,000 (or 70 percent) more than the number we treated in 2006.

         VA assigns great importance to the prompt processing of disability compensation claims, which veterans are submitting for an increasing number and variety of medical conditions, resulting in the need for more complex, costly, and time-intensive disability compensation medical examinations by the Veterans Health Administration. These projected changes in the case mix of our patient population and the growing complexity of our disability claims process result in greater resource needs, which we have included in our FY08 budget request. Many of the benefits claims awaiting decision will require a medical evaluation, and VHA's projections for demand and our budget is based on providing this service and reducing this backlog.

        Since the onset of combat operations in Iraq and Afghanistan, VA has provided new services and adjusted our resource allocations to address the unique medical needs of returning veterans. VA established the Polytrauma System of Care, expanded our Readjustment Counseling Service by establishing new Vet Centers across the country, and instituted significant changes to our mental health system to address post-traumatic stress disorder and suicide, among other issues. VA has authority to enroll combat-theater veterans returning from OEF/ OIF in VA's health care system, making them eligible to receive any needed medical care or services. When OEF/ OIF veterans seek care from VA they are placed in priority Category 6 and make no co-payments for covered conditions potentially related to their theater of combat service. Veterans with service in Iraq and Afghanistan continue to account for a rising proportion of our total veteran patient population. In 2008, they will comprise 5 percent of all veterans receiving VA health care compared to the 2006 figure of 3.1 percent.

        Currently, the President's Budget fully funds enrolled veterans in Priority Groups 1 through 7. Our budget also fully funds those Priority Group 8 veterans already in the system - as well as those returning veterans who will migrate to this group at the expiration of their post two-year enhanced enrollment authority. This will ensure no veteran currently in the system will be denied care. However, as demand for health care services continues to grow, VA must, of course, allocate resources according to the priorities set by law.

        The increased demand for VA services is set against a backdrop of changes in the overall health care system. The shift from inpatient to outpatient care, increased emphasis on health promotion, and disease prevention has made new demands on infrastructure and resources, while the increased use of new technologies and pharmaceuticals has added significantly to costs.

        In keeping with Congress' requirement to establish and manage a system of annual patient enrollment, VA annually reviews the demand for services and the resources required to assure timely and high quality services.

        We believe the current restriction on enrollment of new Priority Group 8 veterans is necessary to maintain the timeliness and quality of the health care we provide to currently enrolled veterans. This policy allows VA to focus on fulfilling its mission of meeting the health care needs of those veterans given higher priority by Congress, i.e., service-connected veterans, those returning from combat, those with special needs, and those with lower levels of income.

        The restriction on enrollment of new Priority 8 veterans has proven to be effective in focusing our health care resources on these highest priority patients. This system is consistent with the priority health care structure enacted by Congress.

        This concludes my prepared statement. I would be pleased to answer any questions you or any of the members of the Committee may have.