MARCH 6, 2001

Mr. Chairman, Ranking Democratic Member Evans, members of the Committee, the Paralyzed Veterans of America (PVA) is honored, on behalf of our members and the Independent Budget, to present our views on the Department of Veterans Affairs’ (VA) budget for fiscal year (FY) 2002. We are proud to be one of the four co-authors, along with AMVETS, the Disabled American Veterans, and the Veterans of Foreign Wars, of the 15^th Independent Budget, a comprehensive policy document created by veterans for veterans.

The Independent Budget is an annual budget and policy review for veterans programs and represents an unprecedented joint effort by the veterans’ community to identify the major issues facing the veterans’ community today while serving as an independent assessment of the true resource and policy needs facing veterans. It is our distinct pleasure, once again, to be responsible for the health care recommendations and analysis, and I shall address these in my testimony today.

The VA medical system is a national asset. After years of chronic under-funding and fiscal neglect, the VA has seen budget increases for the past two fiscal years. It is essential that the health care increases realized over the last two years be continued in FY 2002. There must be continued and sustained investment in the national resource which is the VA health care system, investment in protecting and strengthening specialized services and in improving access and ensuring that the infrastructure exists to provide first-rate health care, as promised by the President and sought by our members.

To accomplish these goals, the Independent Budget recommends, for FY 2002, a $2.7 billion increase for VA medical care.

Every year, the VA requires additional funding in order to remain in the same place it was the previous year. This additional funding is required because of mandatory salary increases and the effects of inflation. For FY 2002, the Independent Budget estimates that these “uncontrollables” will require an increase of $1.3 billion.

In addition, the Independent Budget has identified a necessary increase of $848 million to cover the costs of institutional and non-institutional long-term care initiatives mandated by the Veterans Millenium Health Care and Benefits Act (P.L. 106-117) enacted last Congress.

This $848 million represents start up costs for the long-term care initiatives established in the Millennium Act two years ago that have yet to be implemented. The VA has a responsibility, and an historic duty, to meet the long-term care needs of an aging veteran population. It has the opportunity to do so in the most cost-effective and appropriate way by implementing the community and home-based care programs called for in the bill. It can also show that it can become a leader in the United States in providing long-term care in a country that has no broad based long-term care programs for older Americans and all Americans with disabilities.

The remainder of the recommended increase, $523 million, is slated to fund vitally needed initiatives. These initiatives include restoring spinal cord injury/dysfunction capacity, meeting the challenge of rising pharmaceutical costs, and maintaining VA capacity for mental health services.

Over the past 5 years the capacity of the VA to provide SCI care has been seriously degraded by substantial staff reductions despite the mandate instituted in 1996 by Congress to maintain system capacity. Local hospital officials reduced SCI staff to a point that they could operate only 65 percent of SCI/D beds reported as operational in 1996. Last year, the VA issued a directive establishing the minimally acceptable level of staffing and staffed beds at each SCI Center, and issued a memorandum regarding the need for local managers to identify and provide additional resources required to restore the mandatory staffing levels. The Independent Budget has requested $25 million in additional funding to begin this restoration work.

We have all read the news stories concerning the increased costs of pharmaceuticals faced by our citizens. The Independent Budget has estimated that these increased costs will total $65 million because of the increased patient load projected by the VA.

The Independent Budget recommends a $100 million increase for mental health programs, a first step in a three-year recommendation to add a total of $300 million to these vital programs. We have witnessed an unprecedented erosion of the VA’s capacity to provide specialized treatment within distinct dedicated programs for veterans with serious mental illness, substance-abuse problems, and post traumatic stress disorder. Extensive closures of specialized inpatient mental health programs, coupled with slashed budgets, have lead to the emergency situation faced by these vital programs. These programs must be protected and expanded in order to meet the needs of veterans.

The Independent Budget has recommended an increase for Medical Administration and Miscellaneous Operating Expenses (MAMOE) of $12 million, bringing this account up to $74 million. Funding shortfalls in the MAMOE account have left the VA unable to adequately implement quality assurance efforts or to provide adequate policy guidance within the 22 Veterans Integrated Service Networks (VISN). Veterans Health Administration headquarters staff play the essential role of providing leadership, policy guidance, and quality assurance monitoring under the decentralized VA health care system. It is important that these important roles be strengthened.

Another important asset of the VA is its Medical and Prosthetic Research Program. VA research plays a critical role in attracting first-rate clinicians to practice medicine and conduct research in VA health care facilities, keeping veterans’ health care at the cutting-edge of modern medicine. Advancements in medical treatment and technology developed in VA hospitals and laboratories have revolutionized modern health care and pioneered advances that are sustaining the health and quality of life of veterans and all Americans. As has been stated, “today’s research indeed creates tomorrow’s health care.”

With the bipartisan push to increase research funding for the National Institutes of Health, to double its funding over the course of five years, the VA Medical and Prosthetic Research program must not be left behind. The President is seeking a $2.8 billion increase to $23.1 billion. VA research is an important component of our national research effort. The Independent Budget advocates a $45 million increase to bring this account up to $395 million.

The President, on February 28, 2001, released his Administration’s “Blueprint for New Beginnings.” PVA has many questions concerning the Administration’s plans for the VA. Although we were heartened by the fact that the Administration has proposed an increase in discretionary spending for the VA, this “Blueprint” raises more questions than it answers. We look forward to seeing the full scope, and the complete rationale, of the Administration’s FY 2002 budget request for the VA in April.

The President’s “Blueprint” trumpets a discretionary spending increase for veterans of $1 billion. This $1 billion increase, of course, will not be fully realized by veterans’ health care. Traditionally, only approximately 90 percent of discretionary increases accrue to health care. As I stated before, the VA requires at least a $1.3 billion increase just to keep pace with FY 2001. This means that the President’s budget “Blueprint” falls short of what is required to maintain the status quo of the health care system for this coming year.

In addition, any additional funding needed to address claims backlogs will come at the expense of VA health care because these additional funds would lay claim to the finite pot of discretionary spending. It is essential that the claims process be fixed – we have argued for years that a benefit delayed is a benefit denied – but this vital work must not come at the expense of sick and disabled veterans.

The “Blueprint” assumes a transfer of health care liabilities. The Administration may argue that the increase for VA health care will be higher because of its assumption that $235 million in VA health care “liabilities” will be shifted to the Department of Defense (DOD). This will be implemented by proposed legislation that would mandate that veterans choose either DOD or VA to receive their health care. The budget assumes that 27 percent will switch to the DOD. There seems to be no justification for this percentage, and we have questions concerning how the figure of 27 percent was settled upon.

The President’s “Blueprint” assumes that the VA will realize “net mandatory savings totaling $2.5 billion over the next 10 years.” The OBRA Extenders are slated to save $2.3 billion over ten years and the elimination of the VA’s vendee home loan program is slated to save $228 million over the same time frame. None of these savings are available for FY 2002, and, in fact, eliminating the vendee home loan program is estimated to cost $19 million in FY 2002. Finally, these savings would not be available for discretionary programs unless budgetary legerdemaine is employed.

PVA awaits the final budget numbers to ascertain the role played by the Medical Care Collections Fund (MCCF) in any of these projections. As we have stated in the past, and firmly hold today, these funds should be used to augment, not replace, appropriated dollars to enhance the health care provided to veterans. The inflated collection estimates have never been reached in the past, and, in fact, have steadily declined each year since 1995 despite highly exaggerated yearly estimates of soaring receipts. Veterans should not be forced to pay the price for these failures to reach these rosy estimates.

The President’s “Blueprint” states that the “VA has begun the assessment phase of an infrastructure reform initiative that will result in a health care system with enhanced capabilities to treat veterans with disabilities or lower incomes living in underserved geographic areas. Savings from the disposal of underused VA facilities will support these improvements.” We await the details and we urge caution. It is not clear how, in a budget sense, these savings will be realized and directed to VA health care. We applaud the President’s desire to protect and augment the VA’s core missions, but we insist that the needs of veterans, not the needs of budgets, must come first.

We agree with Chairman Smith that “the proposed $1 billion increase in discretionary funding is a significant step in the right direction” and we are heartened that the Chairman also desires to push “for even more money in the final budget to address other pressing needs, such as long term care, chronic illnesses and transitional housing for homeless veterans.” We too believe that the Administration’s “Blueprint” is a step in the right direction, but much more is needed, and much more must be done.

We recognize that this Committee does not appropriate dollars, but you do authorize them. You serve as a resource, and as advocates, to the appropriators as they fashion budgetary policy. The authorization process must recognize the real resource requirements of the VA. We look to you, and your expertise in veterans’ issues, to help us carry this message forward, to your colleagues and to the public.

We need your help, and we offer our assistance, to ensure that the VA receives the funding it needs to ensure that veterans receive the health care they have earned, and the health care they have been promised. Let us move forward from our accomplishments of the last couple of years and build a strong, and continuing base, for the national asset that is the VA.

On behalf of the co-authors of the Independent Budget, I thank you for this opportunity to testify concerning the resource requirements of VA health care for FY 2002. I will be happy to answer any questions you might have.

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