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82–233 2014

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 

GUS M. BILIRAKIS, Florida 

DAVID P. ROE, Tennessee 

BILL FLORES, Texas 

JEFF DENHAM, California 

JON RUNYAN, New Jersey 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MARK E. AMODEI, Nevada 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

PAUL COOK, California 

JACKIE WALORSKI, Indiana 

MICHAEL H. MICHAUD, Maine, Ranking 

CORRINE BROWN, Florida 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

ANN KIRKPATRICK, Arizona 

RAUL RUIZ, California 

GLORIA NEGRETE MCLEOD, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

TIMOTHY J. WALZ, Minnesota 

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. 

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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 

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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. 

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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. 

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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 individVACREP180 with DISTILLER

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uals 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. 

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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. 

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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 

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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 nonexempt 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, 

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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, 

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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 

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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 reacVACREP180 with DISTILLER

11 

tion 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. 

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12 

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 

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13 

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 vetVACREP180 with DISTILLER

14 

erans 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— 

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15 

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. 

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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. 

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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. 

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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? 

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19 

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 

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20 

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. 

VACREP180 with DISTILLER

21 

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. 

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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 

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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. 

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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. 

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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. 

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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? 

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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 

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that VA health care. But other individuals, it would be a veteranby-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—— 

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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 acVACREP180 with DISTILLER

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customed 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 

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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 

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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? 

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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? 

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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 

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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. 

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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 421⁄2

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 21⁄2 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 

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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 

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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? 

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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.] 

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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. 

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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. 

f 

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 wellbeing. 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. 

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1There 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. 2There 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. 

f 

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. 

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. 

f 

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. 

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1 VA analysis of the U.S. Census Bureau 2011 American Community Survey Public Use File 

(50 States and DC). 

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. 

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 

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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. 

f 

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. 

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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 

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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. 

f 

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 Dolores.Dunn@mail.house.gov 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 evalVACREP180 with DISTILLER

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uation 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. 

f 

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? 

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48 

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? 

f 

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 

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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 

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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 

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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? 

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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–CA 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 inforVACREP180 with DISTILLER

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mation 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. 

f 

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. 

f 

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 apVACREP180 with DISTILLER

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propriate 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 nonVA 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? 

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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. 

f 

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 serviceconnected 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 

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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 

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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 serviceconnected 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. 

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1These figures include costs incurred on behalf of all beneficiaries and participants of health 

programs sponsored by VA. 

f 

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. § 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. § 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: 

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 

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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. § 4191 

Per 26 C.F.R. § 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. § 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 

VACREP180 with DISTILLER

60 

Total Estimated Cost to Prepare Report: $3,171 

Æ 

VACREP180 with DISTILLER