U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

34–303 2007

THE U.S. DEPARTMENT OF VETERANS AFFAIRS 

BUDGET REQUEST FOR FISCAL YEAR 2008 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

FEBRUARY 8, 2007 

Serial No. 110–1 

Printed for the use of the Committee on Veterans’ Affairs 

( 


cprice-sewell on PROD1PC72 with HEARING
ii 

COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH, South Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

PHIL HARE, Illinois 

MICHAEL F. DOYLE, Pennsylvania 

SHELLEY BERKLEY, Nevada 

JOHN T. SALAZAR, Colorado 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

DAN BURTON, Indiana 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

GINNY BROWN-WAITE, Florida 

MICHAEL R. TURNER, Ohio 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

Malcom A. Shorter, Staff Director 

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. 


cprice-sewell on PROD1PC72 with HEARING
iii 

C O N T E N T S 

February 8, 2007 

Page 

The U.S. Department of Veterans Affairs Budget Request for Fiscal Year 

2008 ....................................................................................................................... 1 

OPENING STATEMENTS 

Hon. Bob Filner, Chairman, Full Committee on Veterans’ Affairs ..................... 1 

Prepared statement of Chairman Bob Filner ................................................. 62 

Hon. Steve Buyer, Ranking Republican Member, Full Committee on Veterans’ 

Affairs .................................................................................................................... 3 

Prepared statement of Congressman Buyer ................................................... 63 

Hon. Michael H. Michaud, Chairman, Subcommittee on Health ........................ 7 

Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance and 

Memorial Affairs .................................................................................................. 8 

Hon. Phil Hare ......................................................................................................... 8 

Hon. Ginny Brown-Waite ........................................................................................ 9 

Prepared statement of Congresswoman Brown-Waite .................................. 67 

Hon. Ciro D. Rodriguez ........................................................................................... 9 

Hon. John T. Salazar ............................................................................................... 9 

Prepared statement of Congressman Salazar ................................................ 67 

Hon. Doug Lamborn ................................................................................................ 10 

Prepared Statement of Congressman Lamborn ............................................. 67 

Hon. Joe Donnelly .................................................................................................... 10 

Hon. Gus M. Bilirakis ............................................................................................. 10 

Prepared statement of Congressman Bilirakis .............................................. 66 

Hon. Zachary T. Space ............................................................................................ 10 

Hon. Timothy J. Walz .............................................................................................. 11 

Prepared Statement of Congressman Walz .................................................... 68 

Hon. Henry E. Brown, Jr., prepared statement of ................................................ 65 

Hon. Jeff Miller, prepared statement of ................................................................ 65 

Hon. Corrine Brown, prepared statement of ......................................................... 68 

Hon. Cliff Stearns, prepared statement of ............................................................. 69 

WITNESSES 

U.S. Department of Veterans Affairs, Hon. R. James Nicholson, Secretary; 

accompanied by Michael J. Kussman, M.D., MS, MACP, Acting Under 

Secretary for Health, Veterans Health Administration; Hon. Daniel L. Cooper, Under Secretary for Benefits, Veterans Benefits Administration; Hon. 

William F. Tuerk, Under Secretary for Memorial Affairs, National Cemetery Administration; Paul J. Hutter, Acting General Counsel; Hon. Robert 

J. Henke, Assistant Secretary for Management; and Hon. Robert T. Howard, Assistant Secretary for Information Technology and Chief Information 

Officer .................................................................................................................... 11 

Prepared statement of Secretary Nicholson ................................................... 70 

American Legion, Paul A. Morin, National Commander ...................................... 46 

Prepared statement of Mr. Morin ................................................................... 82 

American Veterans (AMVETS), David G. Greineder, Deputy National Legislative Director .......................................................................................................... 52 

Prepared statement of Mr. Greineder ............................................................. 79 

Disabled American Veterans, Brian Lawrence, Assistant National Legislative 

Director ................................................................................................................. 49 

Prepared statement of Mr. Lawrence ............................................................. 93 

Paralyzed Veterans of America, Carl Blake, National Legislative Director ....... 44 

Prepared statement of Mr. Blake .................................................................... 97 


cprice-sewell on PROD1PC72 with HEARING
Page

iv 

Veterans of Foreign Wars of the United States, Dennis M. Cullinan, Director, 

National Legislative Service ................................................................................ 50 

Prepared statement of Mr. Cullinan ............................................................... 99 

Vietnam Veterans of America, John Rowan, National President ........................ 53 

Prepared statement of Mr. Rowan .................................................................. 105 

MATERIAL SUBMITTED FOR THE RECORD 

Pre-Hearing Questions and Responses for the Record: 

Hon. Bob Filner, Chairman, Committee on Veterans’ Affairs, to Hon. 

R. James Nicholson, Secretary, U.S. Department of Veterans Affairs, 

letter dated January 25, 2007 ...................................................................... 111 

Post-Hearing Questions and Responses for the Record: 

Written questions for the record submitted to the VA follow: 

Hon. Bob Filner, Chairman, Committee on Veterans’ Affairs, to Hon. 

R. James Nicholson, Secretary, U.S. Department of Veterans Affairs, 

letter dated March 5, 2007 ........................................................................... 130 

Hon. John Salazar to Hon. R. James Nicholson, Secretary, U.S. Department of Veterans Affairs, questions dated February 8, 2007 .................... 132 

Hon. Steve Buyer, Ranking Republican Member, Committee on Veterans’ 

Affairs, to Hon. R. James Nicholson, Secretary, U.S. Department of 

Veterans Affairs, letter dated February 20, 2007 ...................................... 133 

Hon. Henry E. Brown, Jr., to Hon. R. James Nicholson, Secretary, U.S. 

Department of Veterans Affairs, questions dated February 8, 2007 ........ 138 

Hon. Gus M. Bilirakis to Hon. R. James Nicholson, Secretary, U.S. Department of Veterans Affairs, questions dated February 8, 2007 ............ 139 

Hon. John Boozman, Ranking Republican Member, Subcommittee on Economic Opportunity, to Hon. R. James Nicholson, Secretary, U.S. Department of Veterans Affairs, questions dated February 8, 2007 ............ 140 

Hon. Ginny Brown-Waite to Hon. R. James Nicholson, Secretary, U.S. 

Department of Veterans Affairs, questions dated February 8, 2007 ........ 145 

Hon. Michael R. Turner to Hon. R. James Nicholson, Secretary, U.S. 

Department of Veterans Affairs, questions dated February 8, 2007 ........ 147 

Reports: 

‘‘The Fiscal Year 2008 Independent Budget for the Department of Veterans Affairs’’ ................................................................................................ 148 

‘‘Soldiers Returning from Iraq and Afghanistan: The Long-term Costs 

of Providing Veterans Medical Care and Disability Benefits, Faculty 

Research Working Papers Series,’’ by Linda Bilmes, John F. Kennedy 

School of Government, Harvard University, January 2007 ...................... 285 


cprice-sewell on PROD1PC72 with HEARING
(1) 

THE U.S. DEPARTMENT OF VETERANS AFFAIRS 

BUDGET REQUEST FOR FISCAL YEAR 2008 

THURSDAY, FEBRUARY 8, 2007 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON VETERANS’ AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:30 a.m., in Room 

334, Cannon House Office Building, Hon. Bob Filner [Chairman of 

the Committee] presiding. 

Present: Representatives Filner, Brown of Florida, Snyder, 

Michaud, Herseth, Mitchell, Hall, Hare, Salazar, Rodriguez, Donnelly, McNerney, Space, Walz, Buyer, Stearns, Moran, Baker, 

Brown of South Carolina, Miller, Boozman, Brown-Waite, Turner, 

Lamborn, Bilirakis. 

OPENING STATEMENT OF CHAIRMAN FILNER 

The CHAIRMAN. Good morning. This hearing of the House Committee on Veterans’ Affairs is in order. Thank you all for being 

here. I thank the Members of the Committee. 

We are here to welcome the Secretary of the VA and your staff, 

and we appreciate your spending the morning with us, maybe the 

afternoon, maybe all night. I do not know. But thank you for being 

here. 

You have characterized the budget for fiscal year 2008, Mr. Secretary, as a ‘‘landmark budget,’’ and we certainly appreciate that 

you are submitting a budget that calls for an increase for veterans’ 

healthcare, unlike the budget that was submitted 2 years ago. 

And I believe it does give us a basic framework from which to 

begin our analysis as to whether the VA’s budget submission will 

meet the needs of veterans in the coming fiscal year. 

Of course, our job as a Committee is to make sure that as we 

follow this ‘‘landmark budget’’, we do not get off course and lose our 

way. You have requested an increase for VA medical care of $1.9 billion over the level provided in the Joint Funding Resolution for 

2007. That is a 6 percent increase. 

We did provide this fiscal year a 12 percent increase over 2006. 

Both the Independent Budget that we will discuss in the panel 

after you, and The American Legion, both recommend more than 

a 12 percent increase for fiscal year 2008. 

The Vietnam Veterans of America recommend substantially 

more. So I look forward to your explanation as to why you believe 

the 6 percent increase will suffice for our veterans. 


cprice-sewell on PROD1PC72 with HEARING
2 

Your budget submission also states that $1.4 billion of your increase for medical care is attributable to inflation. Once this is 

factored in, the recommended increase leaves precious few dollars 

to meet the increasing needs of our nation’s veterans. 

And although the waiting list for new enrollees has indeed declined, and you are obviously to be applauded for that and we all 

appreciate that, I believe that no veteran should have to wait for 

healthcare appointments simply because the VA does not have the 

resources to care for that veteran. I would hope that you can assure 

the Committee that the budget request before us has the dollars 

to address this problem. Last year, your budget request claimed $197 million in effi- ciencies for a total of $1.1 billion. This year’s budget submission 

also claims ‘‘clinical and pharmacy cost avoidance,’’ in your words. 

Our Committee would like to know whether you believe you will 

achieve these efficiencies for 2007 and what exactly are your dollar 

estimates as to your efficiencies in these two areas for 2008. I see that you are requesting an additional $56 million for a total of $360 million for your mental health initiative. Your submission 

also claims that the VA plans to spend $3 billion for mental health 

services and, yet, the GAO reported last November that you failed 

to fully allocate the resources you pledged in 2005 and 2006 for 

that mental health initiative. 

In light of this report, I hope that the VA will fully allocate the $306 million for this initiative in 2007 and $360 million for 2008, 

and I hope you can assure us of that. And I would like to make 

sure you do answer the question, ‘‘Do you currently have the resources you need to address the mental healthcare needs of our 

veterans, especially in light of the significant mental issues that 

seem to plague those coming back from Iran and Afghanistan.’’ 

I have to note, and I know many on this Committee agree, if not 

all, that we are disappointed that you have once again brought forward legislative proposals as part of your budget submission. Instituting enrollment fees and increasing pharmacy co-payments have 

been rejected, as you know, year after year by this Congress. 

Last year, you claimed that the enactment of these proposals 

would reduce your need for discretionary healthcare dollars. This 

year, your proposals are deemed mandatory spending and are 

taken out of your own mandatory spending allocation. 

I hope you will explain to this Committee why you have offered 

these proposals again and the policy reasons for deeming the expected receipts from these proposals mandatory dollars. 

We both agree, we all agree, that the VA is facing an ever greater claims processing crisis—over 600,000 backlogged as of today. In 

light of this, I would expect your budget submission to aggressively 

request additional dollars to address this growing problem. 

But as I read the budget, and correct me if I am wrong when you 

testify, I see that your request for General Operating Expenses Account, which funds the claims processors at the heart of the process, is close to $9 million less than the amount provided for in the 

2007 funding resolution. 

I would like to know what steps you are taking to meet that 

challenge and why the VA has not requested a sizable increase in 

this account to address the claims backlog. 


cprice-sewell on PROD1PC72 with HEARING
3 

Your VA research request seeks less than you will receive under 

this year’s Joint Funding Resolution. I think you should be requesting at least an $18 million increase just to keep up with inflation. 

This is especially true when, once again, you are seeking more resources from other Federal sources and the budget for NIH is going 

to be static. 

I look for a full explanation of your information technology request, including transfers from other accounts. We have to ensure 

that the VA is moving in the right direction in Information Technology and that the funding level you receive in 2008 will lead to 

better security, more innovation, and fewer incidents like the one 

that occurred in Birmingham, Alabama last week. 

I know that you are seeking increases in both the Major and 

Minor Construction accounts, and I am sure we will all be interested in learning how you selected the projects for this request. 

There is much work to be done to ensure that the VA has the 

funding it needs in the coming fiscal year and to ensure that the 

VA spends the resources it receives properly and diligently. 

Mr. Secretary, we look forward to hearing from you this morning, 

to work closely with you to make sure that the needs of our veterans, especially in the midst of war and those returning from Iraq 

and Afghanistan and the veterans from our previous conflicts, are 

met. 

I would like to just add a personal note for my colleagues. As the 

Secretary and I have met and talked together on more than a few 

occasions since the change in the Congress, I appreciate that dialog. I appreciate your keeping me in touch with things that need 

to be touched upon. We will be traveling together to see some 

things in the VA that we want to do together. I think we have set 

up a good working relationship, Mr. Secretary, and I appreciate the 

response to the new situation, the new majority in this Congress. 

And I want to assure our colleagues on both sides of the aisle 

that we have, I think, established the basis of a relationship that 

we will be working together and that we will seek what is best for 

our veterans. 

I think your commitment does not need to be questioned on that, 

Mr. Secretary, and this Committee will work with you to ensure 

that every one of our veterans is cared for properly. 

I will yield to the Ranking Republican, Mr. Buyer, for a statement. 

[The prepared statement of Chairman Filner appears on p. 62.] 

OPENING STATEMENT OF HON. STEVE BUYER 

RANKING REPUBLICAN MEMBER 

FULL COMMITTEE ON VETERANS’ AFFAIRS 

Mr. BUYER. Thank you, Mr. Chairman, and good morning. I 

would like to welcome everyone to the first hearing of the 110th 

session of Congress. 

And, wow, Mr. Chairman, you have come a long way from sitting 

in this chair demanding that the Secretary resign 9 months ago. 

So I am glad you two have been able to work this out. 

For housekeeping, before we move into these questions, I have 

sent you a letter, Mr. Chairman, requesting next week for us to 

bring in the VSOs and the MSOs to go over the budget. 


cprice-sewell on PROD1PC72 with HEARING
4 

As you know, last year when we ended the joint hearings, we 

opened up the unprecedented access for the VSOs and the MSOs 

so we could get all of their testimonies prior to doing the budget 

views and estimates. And we also then did the look back, look 

ahead. So never before had the VSOs and the MSOs had such access to this Committee, and I am hopeful that you will give consideration to the request. 

Secondly, you still have not submitted to the minority a proposed 

budget for the operations of this Committee, and so you and I need 

to start out on a bipartisan basis and you do that by talking about 

the budget of this Committee. So I am still utterly dumbfounded, 

and so I still await that draft budget so you and I can move on 

with business. 

Mr. Secretary, I am glad you could be with us today to share 

with the Committee the President’s proposed budget for 2008. I 

commend you yet again for embracing the challenge of improving 

the VA’s budget process. 

Building on last year’s progress, when we had that hearing to examine the budget modeling and you disclosed the shortfall on a 

budget that you had inherited, you said you were going to take 

ownership of that budget, and you did that. And you are a man of 

your word, and you submitted to us a pretty big budget increase. 

Obviously with the challenges last fall, the Senate not completing its work, I compliment the Democrat majority in working 

with the budget that we had last year and we got that CR. We are 

interested in your input from us. 

I am sure you have had some management challenges over those 

last four months and what impact that is going to have upon your 

budget and whether or not you expect any carry-over funds into 

next year would be interesting to find out. 

Mr. Secretary, as you observe your second anniversary as the 

chief steward of our nation’s veterans, we can look back and note 

it has been a year of challenges and successes. I thank you for your 

willingness to squarely meet the challenges and commend you on 

your successes as you work with all Members of this Committee. 

Based on the priorities in the last Congress, this Committee focused on the disabled veterans, those with special needs, and the 

indigent veterans. We passed major legislative initiatives, Public 

Law 109–461, the ‘‘Veterans Benefits, Health Care, and Information Technology Improvement Act.’’ This bill was the result of a 

strong bipartisan effort of this Committee in concert with our colleagues in the Senate. They brought issues to the table. We 

brought issues to the table. And the democratic process worked. 

We also listened to 20 VSOs and MSOs and incorporated many 

of their suggestions. We authorized 24 major construction projects 

in 15 States, approved continued leasing of eight medical facilities 

and required VA to explore options for construction of a new medical facility in San Juan, Puerto Rico. 

With regard to our returning Iraq and Afghanistan veterans, we 

added 65 million to increase the number of clinicians treating posttraumatic stress disorder and improve their training. Public Law 

109–451 further authorized spending for collaboration in PTSD diagnosis and treatment between the VA and DoD. 


cprice-sewell on PROD1PC72 with HEARING
5 

We authorized more funding for additional blind rehabilitation 

specialists and increased the number of facilities where these specialists could be located. 

We expanded the eligibility for dependents’ education assistance 

to the spouse and child of a servicemember hospitalized or receiving outpatient care before the servicemember’s discharge for a total 

permanent service-connected disability. The intent here was to help 

enhance the spouse’s earning power as early as possible before discharge of the servicemember. We made Chapter 35 more flexible 

for you, Mr. Secretary, so you can be responsive to the spouses and 

the dependents. 

We restored entitlements for members of the National Guard and 

Reserves who care for the active duty during the school year. We 

extended work study provisions to ensure a veteran did not lose a 

job during the school year, and required the VA to report ways to 

streamline administration of the GI Bill to shorten the time to get 

that first check. 

And I look forward to working with the Chairman on his proposed improvements to the GI Bill. 

Listening to the VSOs and MSOs who expressed concerns about 

the veteran’s ability to afford a home, we authorized VA to guarantee co-op housing units, which are often the most affordable 

housing in many areas. And so if you have any comments on it, Mr. 

Secretary, please let us know. 

This Committee also focused on the disabled veteran-owned businesses, so we gave the VA the tools to increase the amount of business they do with veterans by giving service-disabled veteransowned business preference over all other set-side groups and ensuring that the survivors of veterans business owners who acquired 

ownership continue their veteran-owned status with the VA. 

The VSOs and MSOs also expressed the need to revitalize the 

veterans employment programs at the Veterans Employment and 

Training Service, so we made several changes to strengthen mandatory training for DVOPs and LEVRs, revise the incentive program to make it more effective, and establish a pilot licensing and 

credentialing program. 

And the VVA especially noted that the Department of Labor 

needed to develop regulations to implement the ‘‘Jobs For Vets 

Act,’’ so we did that too. 

Since this time last year, we have seen the Department embrace 

the idea of centralizing its IT under the VA’s CIO. I believe that 

this innovation has been seen as part of your legacy, Mr. Secretary, 

to the Department of Veterans Affairs, and I congratulate you. And 

I am sure Mr. Filner joins all Members of this Committee who 

unanimously supported and endorsed that move, and we congratulate you. 

As part of our work on IT, we engaged in a bipartisan fashion 

to increase data security in order to protect our Nation’s veterans. 

Recognizing that as you centralize that system, breaches are still 

going to occur, we set forth those mitigation efforts and gave you 

the tools. 

And so that is why we recognize that when you had this latest 

breach in Alabama, you did not see the outrage of alarm from Mr. 

Filner and myself because we pragmatically have given you the 


cprice-sewell on PROD1PC72 with HEARING
6 

tools and we understand these things are going to happen, and we 

want to work with you when they do. And we appreciate also the 

notification process that you have been giving to the Committee 

and to the Senate and the Armed Services Committee. 

We also worked through the complexities and will continue to 

work with the Charleston model, whether it is in Charleston, South 

Carolina or as we move with the facility in New Orleans. This is 

a new way and exciting way to build a hospital, and we want to 

work with you. 

It is our job also to preserve those areas of excellence and to 

work together in a bipartisan fashion to ensure every service of the 

Department meets its highest standards. One of the most important services remains the determination awarding of benefits, and 

I think, Mr. Chairman, you said it about right. The claims backlog 

has reached an all-time high. It is the big elephant in the room, 

and we have to go after this. 

To help lead the way, Mr. Chairman, I organized a Compensation of Benefits Accountability Task Force in December of 2005, and 

it had almost 1 year of work. They provided me a powerful work 

product with numerous recommendations, and I want to commend 

those who spent many hours working on this valuable product. 

Mr. Wartman, the Associate Legislative Director of PVA; Mr. Dorn, 

the National Service Director of AMVETS; Rick Wiedman the National Legislative Director of Vietnam Veterans of America; John 

Lopez, Chairman of the Association of Service-Disabled Veterans; 

and Mr. Smithston, the Assistant Director of the National Veterans 

Affairs and Rehabilitation Commission of The American Legion. 

Gentlemen, I thank you for your efforts. We will take that. We 

will work with the Chairman as we approach these issues along 

with the Secretary. 

It is also worth noting again this year, the President proposed 

substantial increases in the budgets of agencies focused on fighting 

the War on Terror, the Department of Defense and the Department 

of Homeland Secretary. 

I am pleased again this year, the Department of Veterans Affairs, an agency focused on caring for those who have borne the 

battle, also received a substantial increase of approximately 8 percent over the level contained in House Joint Resolution 20. 

At a time when much of the rest of the government received a 

2.2 percent increase, I believe this reflects a commitment of you, 

Mr. Secretary, and of the Administration to care for our nation’s 

veterans during time of war. 

As you know, Mr. Secretary, a budget is more than numbers and 

in the end, it must translate into real actions on the ground, for 

a positive effect on America’s veterans. As I look at this budget, I 

view it in light of my three top priorities which I discussed, focusing on the disabled, caring for the special needs, and the indigent. 

We have an obligation to those who bear those burdens of war 

and military service and their survivors, and our work must move 

toward fulfillment of that obligation. Therefore, I will judge this 

budget not just by the numbers, but for what it does for America’s 

veterans given these priorities. 

When you send us a budget of this magnitude, Mr. Secretary, I 

expect also to find those outcomes you seek successful. This ConVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
7 

gress is not a blank check. We will be looking for accountability. 

Generally I think this is a good budget. 

As we look at desired outcomes, we will work with the VSOs and 

the MSOs. I am hopeful we can do those hearings. If we cannot do 

those hearings, I invite all the VSOs and MSOs to be in touch with 

me to get your input. If you choose not to be in touch with me, then 

I understand what your positions are. 

Mr. Secretary, I applaud you for the direct and forthright budget 

process that you have used in developing this year’s budget. It appears to be the gimmicks of years past have been removed. And so 

I want to applaud you for that. That is a leadership statement that 

I took out of this budget when I looked at it. 

Mr. Secretary, last year, you brought us similar requests for the 

enrollment fees and co-pays. I recognize I am a minority here in 

Congress. I support co-pays. I support enrollment fees. When I created TRICARE for Life, I included those. 

There was an error that we made. When we opened up the process here on this Committee, we did not give sufficient management 

tools to the Executive Branch. That is an error that we made. And 

there is a lack of will for people to now give you those tools. So I 

understand what you are doing. 

At this point, I will yield back. 

[The prepared statement of Congressman Buyer appears on 

p. 63.] 

The CHAIRMAN. Thank you, Mr. Buyer. 

I will entertain short opening statements from our colleagues. 

Mr. Michaud. 

OPENING STATEMENT OF HON. MICHAEL H. MICHAUD 

CHAIRMAN, SUBCOMMITTEE ON HEALTH 

Mr. MICHAUD. Thank you very much, Mr. Chairman. 

This is an extremely important first hearing for our Committee. 

We have a responsibility to make sure that the VA is provided with 

the dollars that it needs and that the VA spends those dollars in 

a wise manner. 

Budgets do reflect our priorities and I think it is important for 

this Congress to make sure that veterans are high on our priority 

list. We have a lot of work to do in this Congress dealing with 

PTSD, homeless veterans, and making sure that the CBOCs under 

the CARES process are implemented. 

So with that, Mr. Chairman, I look forward to working with you 

and Ranking Member Buyer and the Ranking Member of my Subcommittee, the Subcommittee on Health, Mr. Miller, as we move 

forward in this Congress. Thank you very much, and I am looking 

forward to hearing both panels today as well. 

I yield back. 

The CHAIRMAN. Mr. Moran? 

Mr. MORAN. I have no opening statement. 

The CHAIRMAN. Thank you. 

Mr. Baker? 

Mr. BAKER. No statement at this time. 

The CHAIRMAN. Mr. Brown? 

Mr. BROWN OF SOUTH CAROLINA. No statement. 


cprice-sewell on PROD1PC72 with HEARING
8 

[The prepared statement of Congressman Brown of South Carolina appears on p. 65.] 

The CHAIRMAN. Mr. Miller? 

Mr. MILLER. No statement. 

[The prepared statement of Congressman Miller appears on 

p. 65.] 

The CHAIRMAN. Mr. Boozman? 

Mr. BOOZMAN. I have got a statement that I would like to submit—— 

The CHAIRMAN. Thank you. 

Mr. BOOZMAN.—in the interest of time. Thank you. 

[No statement was submitted.] 

The CHAIRMAN. Mr. Mitchell, Chairman of our Oversight Investigations Committee? 

Mr. MITCHELL. No. 

The CHAIRMAN. Mr. Hall, Chairman of our Disability Committee? 

OPENING STATEMENT OF HON. JOHN J. HALL 

CHAIRMAN, SUBCOMMITTEE ON DISABILITY ASSISTANCE 

AND MEMORIAL AFFAIRS 

Mr. HALL. I would just say that I am looking forward to working 

with you, Mr. Chairman, and Mr. Ranking Member and the Secretary and staff in providing a more seamless transition from active duty to veteran status, in retaining the facilities and not prematurely closing or discarding of Veterans Administration facilities 

before we know what the true demand will be in returning veterans coming back from the wars that we are currently fighting, 

and mainly in reducing what most people consider to be a scandalous backlog of claims and also a scandalous number of homeless 

veterans. So those are the priorities that would leap to the top of 

many for me, and look forward to working with you and thank you. 

The CHAIRMAN. Thank you, Mr. Hall. 

Mr. Hare? 

OPENING STATEMENT OF HON. PHIL HARE 

Mr. HARE. Thank you, Mr. Chairman. I look forward to serving 

with you on the Committee. 

I actively sought this Committee out because after working for 

Congressman Evans for 23 and a half years, I saw firsthand what 

veterans go through in our district and whether they are homeless 

and having to do stand-downs or whether it is the backlog, as my 

colleague has mentioned on the disability claims, you know, we can 

do better. 

And I think we have a responsibility to the veterans. I am concerned about the numbers of veterans that are coming back, whether or not we have the personnel and the facilities. And also, as you 

said, Mr. Secretary, in your statement, for those who have given 

the ultimate price to make sure that our veterans are honored with 

the services and the type of funeral befitting heroes. 

So I look forward to serving on the Committee, and thank you 

very much, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Hare. 

Ms. Brown-Waite. 


cprice-sewell on PROD1PC72 with HEARING
9 

OPENING STATEMENT OF HON. GINNY BROWN-WAITE 

Ms. BROWN-WAITE. Thank you, Mr. Chairman. I have a statement that I will submit. 

Once again, we are seeing the imposition of enrollment fees for 

category seven and eight. The Committee has rejected it soundly in 

the past and probably will again, and I am sorry to see that this 

keeps popping up. 

I look forward to hearing from the Secretary, but I will submit 

the full statement. I think we are all here to hear the Secretary 

and discuss the budget. 

The CHAIRMAN. Thank you. 

Ms. BROWN-WAITE. But thank you for the opportunity. 

[The prepared statement of Congresswoman Brown-Waite appears on p. 67.] 

The CHAIRMAN. And all the opening statements will be printed 

as part of the record. 

Mr. Rodriguez? 

OPENING STATEMENT OF HON. CIRO D. RODRIGUEZ 

Mr. RODRIGUEZ. Thank you, Mr. Chairman, for being here and 

thank you for allowing me just a few comments. 

I know my concerns, I still have a district that is spread some 

700 miles. We still have people that have to travel two, three hundred miles for services, and so I am going to continue to work on 

trying to get access to some of those individuals, as well as now the 

concerns that I personally have in terms of a lot of our national 

Guard and Reservists that are out there doing the Lord’s work and 

representing us in Iraq. 

Over 40 percent of our soldiers are out there and, yet, when they 

do retire will not have similar access to veteran services, and I 

think it is an area that we need to kind of revisit and check out. 

And in addition, I am also extremely concerned in terms of the 

waiting list that we are seeing and also the vacancies throughout 

our hospital systems and those areas that have not filled those vacancies. 

Thank you. 

The CHAIRMAN. Thank you. 

I skipped Mr. Salazar. I apologize. 

OPENING STATEMENT OF HON. JOHN T. SALAZAR 

Mr. SALAZAR. Thank you, Mr. Chairman. I will submit my full 

statement for the record. 

Mr. Secretary, I have enjoyed working with you over the years, 

being from Colorado as well. Two things that really have concerned 

me. 

I was out at Walter Reed Hospital on Monday and saw many of 

our soldiers returning from Iraq and Afghanistan. I spent time 

with a 25-year-old double amputee. I also met with a third soldier, 

a native from Colorado, out from Burlington, who was recently 

fitted with a prosthetic leg. And it is my understanding that this 

budget cuts funding for research of prosthetic limbs. I would certainly appreciate you looking into that and making sure that we 

can care for our returning troops. 

So with that, Mr. Chairman, I yield back. 


cprice-sewell on PROD1PC72 with HEARING
10 

[The prepared statement of Congressman Salazar appears on 

p. 67.] 

The CHAIRMAN. Thank you. 

Mr. Lamborn? 

OPENING STATEMENT OF HON. DOUG LAMBORN 

Mr. LAMBORN. Thank you, Mr. Chairman. I do have a full statement that I will submit for the record. 

But very briefly, I just want to say I am honored to be on this 

Committee and to be helping where I can with my other colleagues 

here for those who have served our country. And so I am just very 

excited and honored to be on this Committee. 

[The prepared statement of Congressman Lamborn appears on 

p. 67.] 

The CHAIRMAN. Thank you. 

Mr. Donnelly? 

OPENING STATEMENT OF HON. JOE DONNELLY 

Mr. DONNELLY. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for being here. 

During the time I was back home in the past few years, in our 

district, we had a complete meltdown in clinic service and wait 

times, and the pledge I gave to the folks back home was that I 

would come here to try and make sure that never happens again. 

And I actively sought out the opportunity to be on this Committee. 

In addition, we have been in limbo in our State in regards to our 

VA Hospital in Fort Wayne for a long, long time. And my commitment is to try to make sure, Mr. Secretary, with your help, that 

we end that limbo and make sure Fort Wayne is buttoned down 

and will be in service to us for a long, long time in the VA system 

in the years ahead. 

It is an honor to be on this Committee, and I want to make sure 

that those who are serving not only from my district but from all 

across the country that when they come back, they can get not only 

the physical care they need but the counseling that they may require as well. 

Thank you very, very much, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Donnelly. 

Mr. Bilirakis? 

OPENING STATEMENT OF HON. GUS M. BILIRAKIS 

Mr. BILIRAKIS. Yes. Thank you, Mr. Chairman. Thanks for scheduling this hearing. 

And I want to welcome the Secretary. And it is a top priority of 

mine to take care of our true American heroes, and it is an honor 

to serve on the Committee. And I will submit my statement to the 

record. Thank you. 

[The prepared statement of Congressman Bilirakis appears on 

p. 66.] 

The CHAIRMAN. Thank you. 

Fresh from his appearance on the ‘‘Colbert Report,’’ Mr. Space. 

OPENING STATEMENT OF HON. ZACHARY T. SPACE 

Mr. SPACE. Thank you for reminding me, Mr. Chairman. 


cprice-sewell on PROD1PC72 with HEARING
11 

The CHAIRMAN. You may speak as a Republican if you want. You 

had to watch the show to know what it is. 

Mr. SPACE. Rather than simply reiterate the remarks of my colleagues, let me state that I am just honored to be on this Committee and looking forward to the challenges that it represents. 

The CHAIRMAN. Thank you. 

Mr. Walz? 

OPENING STATEMENT OF HON. TIMOTHY J. WALZ 

Mr. WALZ. Thank you, Mr. Chairman, and thank you, Mr. Secretary, and all the gentlemen joining us today. 

I would like to give a special thank you to those of you who are 

from our VSOs who are sitting out here. For many years, I am a 

member of multiple organizations with you. I am a life member of 

some of those, and I spent a lot of years trying to make sure the 

people setting here heard what you had to say. 

So I cannot tell you how much I appreciate you being here. The 

only thing better is if you were sitting right alongside me. I am not 

quite sitting high enough on this thing to make that decision, but 

we appreciate you being here. 

Please know that this Committee is absolutely committed to solving these problems in a nonpartisan—it does not need to be bipartisan—these are nonpartisan issues of taking care of our veterans. 

And I thank the Chairman profusely for giving me this opportunity to do exactly that. 

[The prepared statement of Congressman Walz appears on p. 68.] 

The CHAIRMAN. Mr. Secretary, again, welcome. We hope you will 

introduce your staff at the table and then the floor is yours. 

STATEMENT OF HON. R. JAMES NICHOLSON, SECRETARY, U.S. 

DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY 

MICHAEL J. KUSSMAN, M.D., MS, MACP, ACTING UNDER SECRETARY FOR HEALTH, VETERANS HEALTH ADMINISTRATION; 

HON. DANIEL L. COOPER, UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS ADMINISTRATION; HON. WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS, NATIONAL CEMETERY ADMINISTRATION; PAUL J. 

HUTTER, ACTING GENERAL COUNSEL; HON. ROBERT J. 

HENKE, ASSISTANT SECRETARY FOR MANAGEMENT; AND 

HON. ROBERT T. HOWARD, ASSISTANT SECRETARY FOR 

INFORMATION TECHNOLOGY AND CHIEF INFORMATION 

OFFICER 

Secretary NICHOLSON. Thank you, Mr. Chairman, and good 

morning all. I have a written statement that I would like to submit 

for the record of this hearing, Mr. Chairman. 

The CHAIRMAN. So ordered. 

Secretary NICHOLSON. And I would like to introduce my colleagues that are with me at the table. I will start at my left and 

your right with the Under Secretary of Veterans Affairs for the National Cemetery Administration, Mr. Bill Tuerk. 

Next is the Under Secretary for Veterans Benefits Administration, Admiral Dan Cooper. You will have to grant him some indulgence. He spent most of his life below the sea in a submarine, but 

he is doing a great job. Next is the Acting Under Secretary for the 


cprice-sewell on PROD1PC72 with HEARING
12 

Health Administration, Dr. Mike Kussman. Mike has had a lot of 

experience including that of commanding Walter Reed Hospital. To 

my far right and your left is the Acting General Counsel of the VA, 

Mr. Paul Hutter. 

Next is the Assistant Secretary of the VA for Information Technology, and he is the Chief Information Officer of the VA, Mr. Bob 

Howard, or I should probably say General Bob Howard. 

And next to me is Assistant Secretary for Management of the 

VA. He is also the Chief Financial Officer of the VA, Mr. Bob 

Henke. 

Mr. Chairman, if you would permit me to preface my remarks by 

saying that I look forward very much to working with you in the 

110th Congress and particularly our Veterans Committee in a bipartisan, bicameral way as someone said, and I believe it strongly 

that taking care of veterans is not a partisan matter. It is a patriotic matter. 

And I look forward very much in that vein to working together, 

for us benefiting from your scrutiny, your oversight, and your support. 

I am here today to discuss President Bush’s 2008 budget proposals for the Department of Veterans Affairs. The President is requesting, using your term and mine, Mr. Chairman, a landmark 

budget of nearly $87 billion to fund our nation’s commitment to 

America’s veterans. 

This budget will allow us to expand the three core missions of 

the VA, those being to provide world-class healthcare, provide 

broad, fair, and timely benefits, and dignified burials in shrine-like 

settings for our nation’s veterans. 

This budget will allow us to continue our progress toward becoming a national leader in information technology and data security. 

I believe that with the right resources in the hands of the right 

people, anything and everything is possible when it comes to taking 

care of America’s veterans. 

At the VA, we have the right dedicated people. With the President’s proposed budget, we have the right resources too. The $87 

billion requested for the VA represents a 77 percent increase in 

veteran spending since this President took office on January 20th, 

2001. Medical care spending is up 83 percent. 

Mr. Chairman, I will outline the major portions of our proposed 

budget at this time. For the Veterans Health Administration, our 

total medical care request is $36.6 billion in budget authority for 

healthcare. VA healthcare is the best care anywhere. That sounds 

boastful. It is perhaps. Where I come from, they used to say it is 

not bragging if it is true. 

We have asked your staff to distribute to you some materials for 

you to peruse about what others are saying about the VA and the 

quality, the supremacy of its healthcare, medical journals, national 

media, institutions such as the Harvard University, who twice in 

the last 12 months cited the VA as providing the best healthcare 

and leading this Nation in healthcare delivery, safety, and technology. 

During 2008, we expect to treat about 5.8 million patients. This 

total is more than 134,000 or 2.4 percent above the 2007 estimate. 

Patients in priorities one to six, veterans with service-connected 


cprice-sewell on PROD1PC72 with HEARING
13 

conditions, lower incomes, special healthcare needs, and service in 

Iraq and Afghanistan will comprise 68 percent of the total patient 

population in 2008. They will account for 85 percent of our 

healthcare costs. I repeat, 68 percent of them will take 85 percent 

of our resources. 

The number of patients in priorities one to six will grow by 3.3 

percent from 2007 to 2008. In 2008, we expect to treat about 

263,000 veterans who served in Operation Iraqi Freedom and Operation Enduring Freedom. This is an increase of 54,000 or 26 percent above the number of veterans from these two campaigns that 

we anticipate will come to the VA for healthcare in this fiscal year. 

And it is 108,000 or 70 percent more than the number we treated 

in 2006. 

Regarding access to care, with the resources requested for medical care in 2008, the Department will be able to continue our exceptional performance dealing with access to healthcare. Ninety-six 

percent of primary care appointments and 95 percent of specialty 

care appointments will be scheduled within 30 days of the patient’s 

desired time for an appointment. 

We will minimize the number of new enrollees waiting for their 

first appointment to be scheduled. In the last 8 months, we reduced 

this number by 94 percent, and we will continue to place strong 

emphasis on this effort. 

Regarding mental health services, the President’s request in- cludes nearly $3 billion to continue our effort to improve access to 

mental health services across the country. The VA is a respected 

leader in mental health and PTSD research and care. About 80 

percent of the funds for mental health go to treat seriously mentally ill veterans, including those suffering from post-traumatic 

stress disorder. 

On medical research, the 2008 budget includes $411 million to 

support the VA’s unparalleled medical and prosthetic research program. This amount will fund nearly 2,100 different high-priority research projects to expand knowledge in areas most critical to veterans’ particular healthcare needs. 

Most notably, research in areas of mental illness, 49 million; 

aging, 42 million; health services delivery improvement, 36 million; 

cancer, 35 million; and heart disease, 31 million. Nearly 60 percent 

of our research budget is devoted to OIF–OEF healthcare issues. 

Regarding polytrauma care, I have traveled to three of our four 

polytrauma centers, and there is no doubt that these centers of 

compassion are where miracles are performed every day. 

In response to the need for such specialized medical services, the 

VA has expanded its four traumatic brain injury centers, which are 

in Minneapolis, Palo Alto, Richmond, and Tampa, expanded the 

system to have regional polytrauma centers, 17 additional of those 

accompanying the specialties of these traumatic brain injury centers, but in 17 more locations making them more accessible, more 

convenient to veterans who settle outside and around the country. 

These expanded 21 polytrauma network sites and clinic support 

teams will provide state-of-the-art treatment and, as I said, will 

provide it closer to the injured veterans’ homes. 

On seamless transition, one of the most important features of the 

President’s 2008 budget request is to ensure that servicemembers’ 


cprice-sewell on PROD1PC72 with HEARING
14 

transition from active duty to veteran status or a demobilized National Guard or Reserve person to civilian life is as smooth and 

hassle-free, as seamless as possible. 

And we will not rest until every seriously injured or ill service 

man or woman returning from combat in Iraq or Afghanistan receives the treatment that they need in a timely way and in a manner free of tension and hassle. 

The Veterans Benefits Administration, let me focus on veterans’ 

benefits and VA’s primary focus within the administration of benefits remains unchanged. As I said, delivering timely and accurate 

benefits to veterans and their families and improving the delivery 

of compensation and pension benefits has become an increasingly 

challenging issue, as several of you have noted so far, during the 

last few years. 

The volume of claims applications has grown substantially during just the last few years and is now the highest that it has been 

in a decade and a half. We received more than 806,000 claims in 

2006. We expect this high volume of claims to continue as we are 

projecting to receive about 800,000 claims a year in both 2007 and 

2008. 

However, through a combination of management and productivity improvements and our 2008 request to add approximately 

450 additional staff, we will improve our performance while maintaining the high quality that we have today. 

We expect to improve the timeliness of processing claims to 145 

days with this 2008 budget. We will make better use of new technologies and have more trained people to process and evaluate 

claims. With this budget, we project that we can reduce our claims 

processing time by 18 percent. 

For the National Cemetery Administration, we expect to perform 

nearly 105,000 interments in 2008 or 8.4 percent higher than those 

done in 2006. This is primarily the result of the aging of the World 

War II and Korean War veteran population and the opening of new 

cemeteries. Parenthetically, especially for those of you who are new 

in the Committee, every day in our country now, about 1,800 veterans die. There are slightly more than 24 million veterans, and 

about 1,800 every day pass away. About 600,000 a year pass away. 

And on a net basis, the veteran population in our country decreases 

between 400 and 500,000 a year currently. 

The President’s 2008 budget request includes $167 million in operations and maintenance funding to activate six new cemeteries 

and to meet the growing workload at existing cemeteries by increasing staffing and funding for contract maintenance, supplies, 

and equipment. 

For capital programs relating to the National Cemetery Administration, this budget request includes overall 1.1 billion in new 

budget authority for capital programs. It includes $727 million for 

major construction projects, $233 million for minor, $85 million in 

grants for State extended-care facilities, and $32 million in grants 

to build State veterans’ cemeteries. 

The 2008 request for construction funding for healthcare programs is $750 million. These resources will be devoted to the continuation of the Capital Asset Realignment for Enhanced Services 

or CARES Program. Over the last 5 years, $3.7 billion in total 


cprice-sewell on PROD1PC72 with HEARING
15 

funding has been provided for CARES. Within our request for 

major construction, resources are there to continue six medical facility projects that are already underway. They are in Pittsburgh, 

Las Vegas, Denver, Orlando, Lee County, Florida, and Syracuse, 

New York. 

Funds are also included for six new national cemeteries in Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, 

South Carolina; Jacksonville, Florida; southeastern Pennsylvania; 

and Sarasota County, Florida. For information technology, the VA’s 2008 budget request is $1.8 

billion, which includes the first phase of our reorganization of IT 

functions within the Department, and establishes a new IT management system in VA. This major transformation of IT will bring 

our program in line with the best practices in the IT industry. 

Greater centralization will play a significant role in ensuring that 

we fulfill my promise to make the VA the gold standard for data 

security within the Federal Government. To that end, our 2008 IT 

budget includes almost $70 million for enhanced cyber-security. 

Mr. Chairman, I know the Committee shares with me the concern about the VA’s ability to secure all our veterans’ personal information. There have been security incidents that are simply unacceptable, and I have made it a priority to assure our veterans 

that we are addressing their concerns. It is not that these incidents 

will never occur. But when they do, the VA now has a process to 

properly respond to them. 

We are encouraging all of our employees to report, including selfreporting, thefts or other losses of equipment whether in the workplace, at home, or on travel, so that we can strengthen our information security procedures through lessons learned, reviews, and 

personal accountability. 

The most critical IT project for our medical care program is the 

continued operation and improvement of the Department’s electronic health records. I have made it a point for the past year to 

praise our electronic health records for their ability to survive hurricanes Katrina and Rita, for example, where we had over 50,000 

veterans affected, and not one of them lost a health record. Compare that to the civilian record, where over a million people lost 

health records. 

Electronic health records are a presidential priority, and VA’s 

electronic health record system has been recognized nationally for 

increasing productivity, quality, and patient safety. 

Within this overall initiative, we are requesting $131.9 million 

for ongoing development and implementation of the Healthy VetVISTA system. This is the program to modernize our existing electronic health records. It will make use of standards that will enhance the sharing of data within VA as well as with other Federal 

agencies and public and private organizations. 

Additionally, Mr. Chairman, in closing, I want to take this opportunity to inform you and the Members of the Committee of my plan 

to create a new Special Advisory Committee to the Secretary. We 

have several of these Committees, some chartered by statute, some 

by regulation. This will be a very important Advisory Committee 

to me. It will be on the subject of OIF, OEF veterans and their 

families. 


cprice-sewell on PROD1PC72 with HEARING
16 

The panel of the Committee will include veterans, spouses, parents, combat veterans, and survivors. It will report directly to me 

and will focus on ensuring that all men and women with active 

military service in Iraq and Afghanistan are transitioned to the VA 

in that seamless manner that I spoke of earlier, seamless and informed. The Committee will pay particular attention to severely 

disabled veterans and their families. 

Mr. Chairman, this concludes my remarks. I look forward to your 

questions. Thank you. 

[The prepared statement of Secretary Nicholson appears on 

p. 70.] 

The CHAIRMAN. Thank you, Mr. Secretary, and I think all of us 

have had experience with advisory committees. They can really 

work well, so we congratulate you on setting that up. 

We will have a first round of questions, 5 minutes from each 

Member. That will include the Chair and the Ranking Member. 

The audience cannot see it, but we have a green, yellow, and red 

light system in front of us. So when you see the yellow light, you 

have got one more minute. And we will have a first round, and if 

there is a need for a second, we will do that too. 

Mr. Secretary, on the enrollment fees, last year you estimated 

that the proposal would cause almost 200,000 veterans to leave the 

VA. This year, you do not have an estimate as to the number of 

veterans who might leave the VA if the proposal is enacted and we 

start charging an enrollment fee in 2009. 

In addition, differently than last year, you deem any revenue 

that would be collected from an enrollment fee to be mandatory instead of discretionary revenue and subtracted, therefore, from the 

VA mandatory amounts. 

Do you have an estimate for how many veterans would leave the 

system if the enrollment fee was proposed? What is the policy that 

led you to change from the use of those fees from discretionary to 

mandatory? 

And I guess the same question enters all of our minds. Every 

year that you have been there, you have submitted an enrollment 

fee proposal. Each year, we reject it. Do you think this year will 

be any different, and why is it still in there? Why does it keep popping up like this? 

Secretary NICHOLSON. You are right, Mr. Chairman, we had had 

this discussion in the two previous times I have been up here on 

the budget. And I will tell you and the Members of the Committee 

that I support this system of a modest enrollment fee and co-payments. 

I think there is an equity there with retired military, for example, who go on TRICARE, and pay an enrollment fee and they pay 

a co-pay. These are people that may have served 30 or 35 years in 

the active military. And to ask a person to whom the VA is providing full medical care, which are only people, by the way, who 

have no service-connected disabilities, and who are working and 

have jobs and have incomes, to pay these modest fees to participate 

in this great system, to me, makes sense. It makes sense because 

of the equity that I have described, and it allows the VA again to 

give better care, have a system that serves those that really need 

it better. 


cprice-sewell on PROD1PC72 with HEARING
17 

And as to your question about why we did not have it in our proposal, again, it only applies to categories seven and eight. And the 

thing that is different about this year—there are two, I think, substantial differences. 

First, the approval of it is not assumed in this budget. So if you 

do not approve it, you the Congress, it will not work a deduction 

from this budget and the application of the funds in this budget. 

That is a change. 

Second, we have a progressive schedule in here. There would be 

no enrollment fee for anyone—and, again, we are only talking 

about people that have no service-connected injuries—but there 

would be no enrollment fee for anyone making less than $50,000, 

and that is new. For those that are in the income of 50 to 75,000, 

it would be $250 a year and so forth. 

Because we are not showing it as a policy initiative with efficiencies that would help fund this budget, it would take 18 months 

to implement and the funds would go to the Treasury in 2009 and 

subsequent years. And for a 10-year period, it would accrue to $1.1 

billion. 

The CHAIRMAN. Thank you. I agree it is better than last year’s. 

If it does not go through the mandatory budget, somewhere in the 

budget it is affected. So it is not as if it is free money somewhere 

that the President has not counted on in his mandatory budget. 

But I think it is dead on arrival, and you can tell the President he 

is going to have to make it up somewhere else. 

Mr. Buyer, you have 5 minutes. 

Mr. BUYER. Mr. Secretary, that is the attitude that I said that 

is here in Congress. We erred, yet Congress never likes to live up 

to our error when it is our fault. We love to bash you. We love to 

bash other people, blame other people for our mistakes. But these 

management tools are necessary. And we did not put them in, and 

we should have. 

And I erred when I created TRICARE for Life. I should have 

given some more of these cost containment management utilization 

tools to the Secretary of Defense and asked for these annual increases. That did not happen. Congress is unwilling to do that and 

especially at a time of war. 

And so the political speeches that could be used against a Member are so easy. So they are frightened, Members are. And so they 

would rather then throw their arm around the veteran and say I 

am going to stand with you rather than effectively managing government programs that we created. 

Now, I do compliment you because you adapted the recommendations that I did on the tiered process with regard to enrollment 

fees. And I agree with you, Mr. Secretary. I am the first to apologize because when I created the TRICARE for Life, I created those 

enrollment fees and co-pays, and now you have got that military 

retiree that you described, 30-year military retiree paying those 

things sitting next to someone who served one tour of duty who 

does not have to. 

And then there are Members of Congress who would tell that 

person who had one tour of duty, oh, well, you are entitled to lifetime healthcare. And then there are veterans’ groups out there that 

are advocating, well, that is the cost of national security. SocialVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
18 

ism? I do not think so. We fight for freedom. And if these individuals can then gain access to government programs, they ought to 

be willing to pay for it. 

I compliment you because you are having to manage a ghost population that is ebbing and flowing in and out of this system and 

it is very, very challenging. It is very, very difficult. Yet, we are not 

going to give you any management tools. 

You know what I would suggest when you have got these fees? 

I wish Congress would adopt them. I would not do them for deficit 

reduction as recommended. You know what I would do with them 

since you have got them on the mandatory side of the House? I 

would apply it to DIC. I would take those dollars. I would eliminate 

the offset with the survivor benefit plan. I would take those and 

say I will stand with the widows and the orphans. I mean, there 

are some things that we can do with those dollars. But you had an 

idea. I have one. Everybody has a particular idea. 

For an example of how difficult, Mr. Secretary, your challenge is, 

you came to us and we went into the budget modeling and we 

found out the errors and the stale data, and you said to this Committee I have a $975 million shortfall. Then the Senate, playing 

one-upmanship with the House, put in 1.5. Then a few months 

later, the carryover into the budget that you are to claim ownership 

over is $1.1 billion. 

Now, nobody ever even said anything about it. They said, oh, my 

gosh, you said $975 million. They gave you $1.5 billion. Your carryover was $1.1 billion. It is the challenge of trying to manage that 

system. 

And, Dr. Kussman, when you were on active duty, it was no different than managing TRICARE. When I chaired Personnel, guys 

would come over and you would testify on the military budgets and 

you would come up with shortfalls, and we would have to then 

come in in a military appropriations supplemental and plus it up 

because you are trying to manage the ghost population. And you 

are doing the very same thing in the ebbing and flowing of these 

people in and out of the systems. 

And you are absolutely right, Mr. Secretary, these are not the 

disabled. They are individuals who by choice are gaining access to 

that system. And why? A lot of them wanted access to the low-cost 

medications. 

So let me ask you this specific question. Mr. Secretary, I am sure 

you are aware in previous Congresses, in particular, the 102nd 

Congress back in the 1990, 1992 time frame, there were changes 

that were made to the Medicare, Medicaid programs to allow purchasing and gaining access to the Federal supply schedule. The 

Democratic controlled Congress immediately repealed it because it 

had an impact upon the price of drugs for veterans. 

What would the financial impact be on the VA of House Resolution 4 that just passed this House here in January when we said, 

alright, we are going to let Medicare Prescription Drug Purchasing 

Bill? What is the impact of that bill on VA drug pricing? 

Secretary NICHOLSON. Well, it is difficult for us to know that because we do not know whether we are going to be able to continue 

to access our pharmaceuticals in the same way and at the same 


cprice-sewell on PROD1PC72 with HEARING
19 

prices that we have been, which has been very efficient. And we 

certainly hope that we can continue to do that. 

We have a very unique distribution of pharmaceuticals in the 

VA, and it is extremely efficient. And it is another area of innovation that the VA has created that a lot of people look at. We dispense most of our pharmaceuticals through the mail. 

And I would invite any of you on the Committee, and I will say 

this generally, to visit any of these unique facilities we have, 

polytrauma centers and so forth. 

But one other unique thing that we have is called CMOP, which 

is a consolidated mailing of pharmaceuticals. And if you want to 

think Home Depot for the minute and maybe a bigger version, 

mega store, you go in there and you see these little carts running 

around on ball-bearing driven things, all computer driven, we dispense in those things about 100,000 prescriptions a day. And they 

go out UPS, FedEx, or through the mail, including registered and 

controlled substances in certain instances. 

So we have a very efficient system that allows us to serve so 

many patients. We dispensed over 200 million individual prescriptions last year. And I can only say I hope it does not affect us. I 

could not predict that. 

Mr. BUYER. Mr. Chairman, I note that the light is on. You provided information that it would cost between six to seven hundred 

million would be the maximum financial impact annually to the 

VA. Was that accurate? 

Secretary NICHOLSON. That this bill would? 

Mr. BUYER. Yes. 

Secretary NICHOLSON. I cannot verify that, Mr. Buyer. 

Mr. BUYER. Please do that. 

Secretary NICHOLSON. I will look and respond back. 

[The information was provided in the response to question one 

from Mr. Buyer’s post-hearing questions for the record, which appears on p. 133.] 

Mr. BUYER. Thank you. 

The CHAIRMAN. Thank you, Mr. Buyer. I see your new slogan. 

We can do it, you can help. 

Mr. BUYER. We what? 

The CHAIRMAN. We can help. You can do it, we can help. It is 

Home Depot’s slogan. 

[Laughter.] 

The CHAIRMAN. Alright. Mr. Michaud, you are recognized for 5 

minutes. 

Mr. MICHAUD. Thank you very much, Mr. Chairman. 

Thanks once again, Mr. Secretary. A couple of questions. 

How much of the money that you are requesting in this budget 

dealing with minor construction will be allocated for the construction of the new CBOCs that are recommended under the CARES 

process, and how many of the 156 high-priority CBOCs recommended under CARES have been built and are fully operational? 

Secretary NICHOLSON. At the end of fiscal 2006, we had 717 fully 

operational community-based outpatient clinics, CBOCs. 

Mr. MICHAUD. What is the number again? 

Secretary NICHOLSON. Seven hundred and seventeen. 

Mr. MICHAUD. Thank you. 


cprice-sewell on PROD1PC72 with HEARING
20 

Secretary NICHOLSON. There was an addition of eight new 

CBOCs in fiscal 2006. We have approved 24 so far in fiscal year 

2007. For 2008, we have not yet finalized the total. 

Mr. MICHAUD. Okay. And how much of the money in the minor 

construction are for the—have you set a certain amount aside or 

is all that going for—— 

Secretary NICHOLSON. Congressman Michaud, the CBOCs are 

not in the minor construction budgets. They are in the operating 

budgets of the VISNs. 

Mr. MICHAUD. Okay. Thank you. 

My next question dealing with PTSD. We have heard statistics 

that over 25 percent of the men and women coming back from Iraq 

or Afghanistan have some form of mental health issue or PTSD. I 

was reading an article the other day where the Minister of Defense 

of England figures that only 2 percent of their folks have a lasting 

form of PTSD. 

My question is, as it relates to PTSD, how does the VA, and how 

does the Department of Defense, determine or diagnose PTSD? Is 

there a difference in the diagnosis of PTSD? 

Secretary NICHOLSON. No, there is no difference. And I would 

maybe ask Dr. Kussman to expand on this very important subject. 

Let me give you an overview. 

Of those who have returned from OIF–OEF, which is over a million servicemembers, about 610,000 of them have returned to civilian life, either having been discharged or having come off active 

duty as a Reservist or Guardsman. 

Of that number, we have seen about a third. We have seen a little over 200,000, and we have screened each of them for any mental health problems, just as we do for physical health. 

And of that number, that 200,000, I think it is about 206,000 we 

have seen, for about 60,000 of them we have identified some mental health issue; that is because they have noted that they are having sleeplessness or some other symptom. 

And of that number, about half of them we are treating for 

PTSD. It is actually a little over half. That is about 39,000. So, you 

know, each of them, individually it is an important case. But as a 

percentage, you can see that, of the 200,000, it is a little less than 

20 percent. 

I would ask, Dr. Kussman, do you have anything to add? 

Dr. KUSSMAN. Thank you, sir. 

The diagnosis and evaluation of PTSD is the same for DoD and 

the VHA. We have a joint clinical practice guideline that we do together. So I think it is pretty standard how you evaluate people. 

Furthermore, besides all the outreach that we have in reference 

to mental health and PTSD in particular, when anybody comes to 

us of the 205,000 that the Secretary mentioned, there is a dropdown menu, as he said, to ask people whether you have the symptoms. 

The CHAIRMAN. Dr. Kussman, is your microphone on? 

Dr. KUSSMAN. I thought it was on. I was too far away. 

So I think that we have a very aggressive outreach both with our 

own system and in partnering with DoD for the post-deployment 

health risk assessment programs that are aggressively done, particularly with National Guard and Reserve 90 to 180 days after 


cprice-sewell on PROD1PC72 with HEARING
21 

they come back, to ask them if they have any issues related to the 

things consistent with mental health and PTSD. 

The CHAIRMAN. Thank you. 

Mr. Moran. 

Mr. MORAN. Mr. Chairman, thank you very much. 

Mr. Secretary, thank you for joining us this morning. 

I recently had what I call a veterans’ forum in one of my communities, and we had both the healthcare side of the VA and the benefits side of the VA. And it was evident that the healthcare side continues to receive more and more compliments all the time. 

In the time that I have been in Congress, it is clear to me that 

the VA has improved its delivery of healthcare, and veterans are 

appreciative, not that it is not without challenges and problems 

and individual circumstances. But on the benefit side, constant 

criticism of the time frame, the wait, the backlog. 

And I have a couple of questions, a specific question about, does 

this budget—how successfully will we be if we adopt the administration’s budget in eliminating the backlog of cases on the benefit 

side? 

And also a second question. I would like to see an Administration 

budget that tells us how we eliminate the category seven and eight 

discrimination. I would like to see the categories eliminated. I believe you have the authority every year to make that determination. And my assumption is that, based upon priorities and resources, you make the determination that the category seven and 

eight will remain in place. 

What would it take for us to work with the Department of Veterans Affairs to eliminate that distinction? 

And, finally, I want to tell you that I am working very closely 

with the VISN Director in Denver. The eastern part of your State 

and the western part of my State are inadequately cared for when 

it comes to clinics, and I am pleased to know that the VISN Director is in the process of adding a CBOC in our region. 

As you know, the eastern part of Colorado, the western part of 

Kansas is sparsely populated and many veterans have a 4- or 5- 

hour drive to either Wichita or to Denver in order to access even 

routine care. So I am thankful for the process as I see it occurring, 

and I am hopeful that you will encourage that a CBOC be located 

in western Kansas. 

And, finally, we are working on a veterans’ cemetery, and this 

may be a question for Under Secretary Tuerk, near Fort Riley, a 

State veterans’ cemetery. And I am interested in knowing whether 

the Administration’s budget provides for money for construction in 

fiscal year 2008. 

Thank you, Mr. Secretary. 

Secretary NICHOLSON. Thank you, Mr. Moran. Let me address 

these issues in the order you did. 

I appreciate the kind remark about veterans’ healthcare. Veterans’ benefits is a very important part of what we do. It is a very 

important part of the predicate for the VA in the first place, which 

is to make whole a person who raises their hand, takes the oath, 

and goes off and is in some way diminished as a result of that service, either physically or mentally. 


cprice-sewell on PROD1PC72 with HEARING
22 

And so while we take care of them on a contemporary basis in 

our healthcare, many of them need to be supported. So it is a very 

important activity, and we take it that way. And I wanted to compliment Chairman Filner and thank him because we are going to 

have a roundtable just on the subject of veterans’ benefits because 

it is a very complicated, massive undertaking. And I think it would 

benefit those that could make it to really learn about the internal 

workings of the veterans benefits system. 

I do not want to sound overly defensive in my response because 

I do not mean it that way. One of the reasons for the current condition is that our outreach, which has been very robust, is really 

working because veterans are responding, and the outreach is unprecedented. 

For example, those people that are on active duty in the military 

today benefit from the presence of over 140 outreach VA counselors 

imbedded in these active military installations to get them tutored, 

if you will, on what they are entitled to before they come off active 

duty. 

Well, we are doing a good job in marketing ourselves because 

they are coming in in very big numbers. As I said, last year, 

806,000 individuals presented themselves for benefits. 

But the other thing that is happening is that some of them are 

like me, they are getting longer in the tooth, and when you do that, 

you know, it is not just the arthritis in your knee, but it is the rotator in your shoulder and maybe it is something in your plumbing. 

And so the average of these now is about six different issues 

which means that they have to go to six different clinics for evaluations. And our system under the law is that we have to make some 

causal connection to that malady to their service, unless they are 

a Vietnam veteran where there are certain presumptions now due 

to their service in Vietnam, things like diabetes and leukemia. 

They do not have to make that verification if they served in Vietnam. 

And if we want to maintain the integrity of this system, you have 

to do it that way and you have to plumb for those records. And so 

that is kind of an overlay, and I hope this workshop, we can really 

get into it, maybe even walk you through a case and take a look 

at some of these files, some of which are two or three feet high for 

a 30-year member of the service. 

In this budget, we have a plan to bring this number down by 18 

percent. And I will say that when this Administration took over, 

the waiting time was well over 200 days. It is now at 171 days, 

which is too long. It is longer than I want it to be and certainly 

longer than the veterans want it to be. 

If we get this funding, we will be able to pull it down to 145 

days. We are also going to employ additional technology to perfect 

this VETSNET System, which is really starting to kick in and help. 

That is the overlay on that. 

The question about category sevens and eights is an important 

one. Historically there was open enrollment until January of 2003 

when eights were no longer enrollable. Eight is a person with no 

service-connection disability and have an income above a certain 

threshold. Priority seven veterans have lower incomes than priority 

eights. 


cprice-sewell on PROD1PC72 with HEARING
23 

It is a matter of resources. We have a war going on. We have 

people coming back with a very high priority. We have a record 

number of veterans coming to us for care. If you want to accept the 

proposition that there are not unlimited resources for this, then it 

is a matter of priority and that that priority judgment is right now 

that they are not enrollable. Most of them, by the way, have health 

insurance. 

Mr. MORAN. Mr. Secretary, what amount of money would it take 

to eliminate the distinction on seven and eight? 

Secretary NICHOLSON. My Chief Financial Officer just told me it would take $1.7 billion a year. But it is progressive and over 10 

years, it would be an additional $33 billion. 

Quickly on your mention of rural health, that is another legitimate challenge that we have in trying to be available to all veterans wherever they decide to live in our country. And many of 

them decide to live in rural areas. As we just said, we have 717 

clinics now, and 39 more in the pipeline. We are trying to get ourselves out there closer to where veterans are. 

We also are doing a lot more in our rural healthcare initiative 

for telehealth and telemedicine. At the end of the last Congress, 

the omnibus veterans bill mandated to us to put together an enhanced rural healthcare initiative, which we have now put a planning committee together to do that. 

The CHAIRMAN. Thank you, Mr. Moran. You brought up issues 

that I think we are going to take up as a Committee just focusing 

in on both those questions. 

Mr. MORAN. I thank the Secretary and I look forward to attending your forum on benefits. 

The CHAIRMAN. Thank you. 

Ms. Herseth. 

Ms. HERSETH. Thank you, Mr. Chairman. I would defer to any 

Member who was here prior to me. 

The CHAIRMAN. Okay. Mr. Hall, please. You have 5 minutes. 

Mr. HALL. Thank you, Mr. Chairman, and thank you, Mr. Secretary. 

The VA announced yesterday that it will be opening a new veterans center in Middletown, New York, right on the edge of my district, but in a location that will serve many veterans who live in 

my district, and I am grateful for that. 

I want to thank you on their behalf and mine and thank the Department and say that I look forward to working with you to make 

sure that it is fully staffed. I cannot say enough good things about 

these regional vet centers. 

And the first question for you is, is the VA allocating enough resources to ensure that these vet centers are fully staffed and functioning? 

Secretary NICHOLSON. I suppose, sir, that would be a value judgment that someone could decide. We think we are, and they are 

growing. Currently there are 207 Vet Centers and through this 

budget, there would be 232 of them. 

And additionally, in these Vet Centers, we are imbedding a mental health specialist and we are trying to staff them with Global 

War on Terror veterans to the extent that we can, as long as they 

meet the qualifications. 


cprice-sewell on PROD1PC72 with HEARING
24 

Mr. HALL. Thank you for that information. I guess time will tell, 

you know, as we see how well it is working. 

My second question is that I have heard feedback from veterans 

in my district and also from the management and staff at the 

Montrose and Castle Point VA facilities that they would be interested in a paperless outreach program so that veterans who are 

newly returning and maybe are shying away from getting involved 

in the system for various reasons can be spoken to by a staffer who 

visits them without having to fill out paperwork and at least have 

an offer of, you know, or a description of the services and benefits 

available to entice them to take that step of signing up. 

Have you considered such a thing? 

Secretary NICHOLSON. A paperless enrollment? 

Mr. HALL. Paperless outreach. 

Secretary NICHOLSON. Paperless outreach. Well, we do some of 

that. I mean, some of it is using technology such as e-mails and the 

Internet. I would have to consider it and, I guess, fully understand 

what you are envisioning there. 

Mr. HALL. Maybe at the round table, we can get into that. It may 

come up from other people, but I first heard that from vets and VA 

staff in my district. 

And as the Chair of the Subcommittee, which I am honored to 

be chairing, on Disability Assistance and Memorial Affairs, I wanted to ask you about the backlog. How many of those 600,000 or 

whatever the actual number is, approximate number of backlog 

claims are due to—how much of the problem is due to a technology 

fix that is needed and how much of it is due to a personnel shortage to process the claims or is there a third factor that I am missing? 

Secretary NICHOLSON. The question is that waiting time to adjudicate a claim, how much is personnel and how much is technology? It is probably a little bit of both of those. And, again, I do 

not know how much time you want to spend on this. 

But this system, as soon as it is kicked off, when a veteran files 

a claim, then we start doing what they call developing the claim. 

And they have to write, call, fax the veteran for certain pieces of 

information to verify the incident that is the subject of the claim. 

They have 60 days to respond. By law, they have 60 days to respond to each request. 

And the truth is that they have more than that because we are 

lenient on that. If they did not make the 60 days, that is not an 

absolute. But it can stretch the time period out. 

The technology piece that we are implementing with VETSNET 

is going to help more on the back end after we finally get the claim 

developed and adjudicated, to get it processed and get the pay 

starting to flow because then that is not a judgmental issue anymore. We are going to pick up several days with that. That is overdue, that technology, because this is the 21st century, and it is 

high time we do that. But that is going to happen in this budget. 

Mr. HALL. Thank you, Mr. Secretary and Mr. Chairman. 

The CHAIRMAN. Thank you. We will resume with Mr. Baker after 

a 5-minute recess. We will return at eleven o’clock exactly. 

[Recess.] 


cprice-sewell on PROD1PC72 with HEARING
25 

The CHAIRMAN. The Committee will resume. Thank you, Mr. Secretary, for spending this time with us. Mr. Baker from Louisiana 

is next for 5 minutes. 

Mr. BAKER. Thank you, Mr. Chairman. I shall work very diligently to get my comments in within the 5-minute allocation. 

Mr. Secretary, I need to provide a short narrative for the record 

and for Members of the Committee to understand the particular 

frustration which I share, but wish to make clear at the outset my 

frustration is neither with you, the Administration, nor the agency 

which you are charged to operate. 

For the Members, I need to go through just a quick explanation 

of how I got to where I am so it will make sense as to the questions 

I finally offer. 

Pre Katrina, the New Orleans veterans hospital served about 

500,000 visits annually of veterans in the region. Post Katrina, we 

have no hospital. We have been working since that point a conclusion as to how to best address this healthcare need. 

Six months after the storm’s land arrival, there was an MOU 

signed by the VA and State officials on February 23rd to evaluate 

the best and most advisable method of healthcare delivery. Only 2 

months later, on April 30th, there was issued a collaborative opportunity study group report which set out a way in which the LSU 

healthcare facility and the veterans’ healthcare needs could be 

jointly met. 

On page 30 of that report, Mr. Chairman, there was a time line 

established to set clear landmarks for the steps necessary. The 

LSU planning and programming was to have concluded by early 

2007, VA planning and programming to have concluded by early 

2007, with LSU land acquisition to have begun 2006, to be completed by 2007, with the ultimate completion of the facility, and 

opening by 2012. 

This plan was ultimately delivered to the Louisiana Recovery Authority, the entity created for resolution of post Katrina recovery. 

I would note as just some basic observations about very simple elements of the plan as outlined at that time, there were some concerns. 

First, the first 15 feet of elevation of the new structure would not 

be for patient occupancy. There would be a defend in place strategy 

adopted where people could stay within the facility for up to 8 days 

without external assistance. There would be consideration of an 

elevation of the perimeter of the site of post Katrina flood levels. 

I call that a levy in our terms. 

So what it means is that if we had a recurrence of the same circumstance, we would have an isolated facility capable of standing 

for 8 days surrounded by water that you could not get through by 

highway access. 

Whether or not an isolated island is appropriate for veterans’ 

healthcare, I do not know. Those are certainly things that need to 

be considered. But when the Recovery Authority considered adoption of the plan requiring $300 million of State funding, they denied all elements of the plan save for three. 

The legislature reacted to that by, since they are not in session, 

by consideration of an interim emergency ballot, a mail ballot to 

force the LRA to spend $300 million on the completion of this plan. 


cprice-sewell on PROD1PC72 with HEARING
26 

The trouble with that is the $300 million will actually come from 

the Department of HUD or CDBG money which the Secretary of 

HUD must approve, so we will have the State using Federal dollars 

to match Federal dollars. 

The further difficulty with the matter is to date, I am not aware 

of a plan that has been publicly submitted by any of the State officials for public discussion or consideration, and I do not know if 

there has been a demographic survey of patient distribution and 

where our veterans are, why there is necessity to insist on construction of a facility in urban New Orleans given the apparent 

concerns for patient safety, and whether or not there is a way to 

calculate the overall cost of the project without an operating plan 

in hand. 

Therefore, how could we possibly come up with a dollar cost figure for the State to match either on the Federal or State end without having such a business plan in the public domain? 

At the end of the day, I am only concerned about one thing from 

this perspective on this Committee, and that is getting healthcare 

restored for veterans in Louisiana at the earliest possible date. 

Given the time line in the well-conceived plan that I hope would 

be executed as it is outlined, it will be 2012 before we would open 

doors on a facility. 

Now, given the State’s inability, and this is my conclusion, given 

the State’s clear inability to provide the agency with a business 

plan outlining what it is we choose to do and how the shared responsibilities will be designated, Mr. Secretary, the MOU provides 

only one methodology for cancelation of the contract, and that is by 

either party to unilaterally withdraw by written notice to the other. 

There is no other term for elimination of the MOU. 

Will you at some point take it as an important public policy matter to establish a clear-cut date by which the State of Louisiana 

must provide you with a clear operating plan that outlines financial terms, business operations, and relationships between VA and 

the LSU healthcare providers or, in the alternative, how long do I 

tell veterans in Louisiana they have got to wait for Louisiana to 

get its act together? 

Secretary NICHOLSON. Well, thank you for that question, Congressman. It has a lot of parts to it and it is important. We have 

been working that really since just after Katrina. We have a collaborative work group. 

And I had a meeting in my office several weeks ago and told the 

people that were up from Louisiana, the decisionmakers from both 

LSU and the Recovery Authority that we at the VA essentially are 

ready to start a hospital. We have even selected the architectural 

and engineering firm. 

And we have entered into that memorandum of understanding 

with LSU because we think it makes great sense. 

Mr. BAKER. Mr. Secretary, if I may, because my time is limited, 

I want to commend you for your effort. As I said at the outset, this 

is not about your agency’s failure. This is about Louisiana’s failure 

to meet any reasonable time line. 

As I understand it, this was supposed to have been done and 

submitted to you and to Secretary Levitt, because this has a lot of 

moving parts, Mr. Chairman—this is also a general healthcare 


cprice-sewell on PROD1PC72 with HEARING
27 

issue that must be considered with another agency—but to have 

submitted to you in 2006 a plan for consideration and adoption. 

I am appreciative of the fact you are ready to move forward. The 

trouble is I do not know what we are ready to move forward with 

and where the State of Louisiana is going to get its money and by 

what time can I say either do it or do not. We are going to provide 

a healthcare facility in Louisiana one way or another. If they want 

to get their act together and be a participant, great. 

I think you are absolutely on target. This is a great plan if it can 

be better refined. But if they do not get to you, when? March, June, 

December? Is there any signal we can send back to folks in Louisiana and say let us get this thing done? 

Secretary NICHOLSON. There is a signal I think you can go back 

with, which is that our patience is wearing a little thin in that we 

want to get going. 

Mr. BAKER. Mine is gone. 

Secretary NICHOLSON. You know, it is not so easy. The sites do 

not grow on trees around there. The site that we are sort of focused 

on with LSU, the site is five feet under sea level and it is—— 

Mr. BAKER. Mr. Secretary, that is why in the authorization language adopted by this Committee 6, 8 months ago, I insisted on the 

inclusion of in or near New Orleans. That was of some controversy. 

People thought I was trying to move it to my back yard in Baton 

Rouge. I am not. I am trying to get a facility that will not flood, 

that veterans can get to when they need it. 

Siting is not the big issue. The State has to come up with an 

operational agreement on who is going to do what and who is going 

to pay for what. They have not done that. That is unacceptable. 

Secretary NICHOLSON. Well, you are right. And as I started to 

say, we told them we are ready to go. You show us that you have 

the site confirmed and that you have the money to do your part. 

Mr. BAKER. And they are going to get that from HUD. 

Secretary NICHOLSON. And when you have that, we are ready to 

be a partner and move out—— 

Mr. BAKER. Mr. Secretary, I do not—— 

Secretary NICHOLSON. —because it makes good sense to—— 

Mr. BAKER. I do not want to harangue endlessly, but I will formally write to you asking for a date by which you expect the State 

to give you an answer. We have to have closure. And if the State 

cannot perform to your expectations in a reasonable time line, it is 

the veterans who have the expectation of being served here. 

And this is not Democrat, Republican. This is not anything but 

people who are still dealing with the aftermath of a storm which 

was devastating, and this is an essential component of our recovery 

and it is absolutely necessary that we get this project underway. 

I again state for the record I appreciate your diligence, your 

work, your agency’s direction and motivation. This is not about you 

or your agency nor the Administration. This is about getting something done that is inexcusable if we do not move ahead. 

I thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Baker. And this is not just a 

problem for you. I think this is a national problem. And I just want 

to inform the Committee at Mr. Baker’s request, this Committee 

will go to New Orleans and the surrounding area, have a tour, and 


cprice-sewell on PROD1PC72 with HEARING
28 

have a hearing on this within a few months. And we can let Mr. 

Baker—— 

Mr. BAKER. And let me express my appreciation to you for that, 

Mr. Chairman. 

The CHAIRMAN. So we will be looking at this because it is part 

of a national necessity that we do this. 

Ms. BROWN OF FLORIDA. Mr. Chairman, would you yield to 

me—— 

The CHAIRMAN. I yield to Ms. Brown. 

Ms. BROWN OF FLORIDA. —on that subject because I have already 

gone and taken a look at the facility and was involved in the negotiations with the House and the Senate to make sure that it was 

authorized, and now I understand that it is funded and it is moving forward. 

A lot of times, New Orleans gets bogged down in a lot of things. 

I do not want the veterans in that area to be like the veterans in 

Orlando, waiting 25 years for a facility. 

So I am pleased that it is moving forward, working with the ultimate kind of campus when you have the urban campus, a college, 

and the community working together. So I am pleased that it is 

moving forward. 

And I have already gone down and taken a look at it. And the 

people in that area, they have waited too long for assistance. And 

the government has reacted too slowly, and I am very pleased that 

you are moving forward with this facility. 

The CHAIRMAN. Thank you, Ms. Brown. 

Mr. Mitchell, you are recognized for 5 minutes. Mr. Mitchell. 

Mr. MITCHELL. Thank you, Mr. Chairman. 

Mr. Secretary, I want to thank you and your staff for appearing 

before this Committee. I want you to know that I look forward to 

working with you. I believe that the best organizations are those 

that monitor their own performance and solve problems before they 

become too large and even more difficult to solve. 

I am proud to be the new Chairman of the Oversight and Investigations Subcommittee, and I look forward to working with you to 

find and correct small problems before they grow into large and 

costly catastrophic ones. 

As you know, since fiscal year 1999, the VA’s Inspector General’s 

Office has delivered a return on investment of over twenty-five to 

one for every dollar we have invested. This is accomplished in part 

through fines, penalties, restitution, savings, and cost avoidance. 

The Inspector General’s contract reviews have returned millions 

of dollars to the VA, yet the VA’s Inspector General’s Office is the 

smallest relative to its parent agency from among all the statutory 

Inspector Generals. If the number of employees in the IG’s Office 

were to grow to meet the ratio of the next smallest IG to parent 

agency ratio, the number of employees in the Office of the VA’s Inspector General would double. 

In fiscal year 2007, the IG had a significant budget shortfall. And 

in the Administration’s budget, the number of IG employees is cut 

even more. If the VA is to find and correct internal problems, find 

and implement best practices, and the Inspector General has a history of providing the VA with a significant and positive return on 

investment, shouldn’t the size, and this is the question, shouldn’t 


cprice-sewell on PROD1PC72 with HEARING
29 

the size of the Inspector General’s Office grow instead of shrink in 

this and future budgets? I think it should, and I am curious to find 

out why the Administration disagrees, and how can you explain the 

shortsightedness? 

Secretary NICHOLSON. First, let me say that I agree with your 

statement of the importance and cost effectiveness of the IG. In 

fact, since I have been in this job in 2 years, I really have come 

to respect the brilliance of the people that put this IG system into 

place in the government. 

I really welcome them and their services because this is a vast 

organization spread all over the world, including the Philippines 

and Guam, and it gives me some comfort that people are helping 

me watch these activities. 

And my impression based on discussions with our IG, who I consider a vital part of my management team, is that he is adequately 

staffed. They work very hard over there. And he would probably 

welcome your overture to expand, but he is a pretty forthcoming 

guy. And my impression is that he has got what he needs to do the 

job. 

Now, we did get an increase in this 2008 request right at the end 

so that he can hire some additional people. 

Mr. MITCHELL. Mr. Secretary, you are saying then that the IG 

is satisfied with the number of people he has and he thinks he can 

do an adequate job with the people he has? 

Secretary NICHOLSON. Yes, sir. 

Mr. MITCHELL. Thank you. 

The CHAIRMAN. I think you have a topic for one of your Subcommittee meetings. 

Mr. MITCHELL. Yes, we do. Thank you. 

The CHAIRMAN. Mr. Lamborn. 

Mr. LAMBORN. Thank you, Mr. Chairman. 

And, Mr. Secretary, thank you for coming today. And I have a 

broad question and a narrow question. 

First, my narrow question is, part of the length of time, and we 

are all concerned about how long it is taking for claims to be processed, is a mandatory 60-day waiting period on the part of the VA 

while the claimant is gathering material and information to substantiate his claim. And that is for the benefit of the claimant, the 

veteran, but has the consequence of prolonging this what, 170-day 

average period right now. 

So if we were as a Committee to take action to reduce that 60 

days to 50 or 40 days or something like that, and I know it is only 

procedural, it would have the effect of speeding up the whole process, but would require the veteran making a claim to speed up his 

or her activity. What would you feel about a proposal like that? 

Secretary NICHOLSON. It would speed it up, but it could work a 

hardship on some veterans because some of them use that time, either because they really need it to try to find a colleague that was 

in a unit to verify that they took a parachute jump that day and, 

you know, he did get hurt or he did land in a tree or he did serve 

here or there, which is the purpose of that. But if you narrowed 

that time period, it would speed it up. There is no question about 

it. 


cprice-sewell on PROD1PC72 with HEARING
30 

Mr. LAMBORN. Well, I know it is a waivable period right now, but 

maybe we should consider shortening that with extensions easily 

available. 

And then my second broader question is for you or the Under 

Secretary, Admiral Cooper. What does the budget propose for new 

technology or personnel to process claims and is that doing enough 

or at least can you tell us what you are proposing in the budget? 

Secretary NICHOLSON. I will comment and then ask Admiral Cooper if he would elaborate. 

We really need to be making better use of technology and we are 

now finally getting there. And Dan will comment on the VETSNET 

part of that. We could really highlight this in a workshop if we can 

have it and demonstrate to you that every veteran comes to us 

from the Department of Defense with a paper file. 

Now, this is parenthetical to your question, but we are now finally really starting to collaborate with DoD to get a common interconnected electronic medical record. We had a very good meeting 

and, in fact, announced this at a joint press conference the week 

before last. 

I had lunch this week with Deputy Secretary England of DoD 

with his key staff. This is finally starting to happen. But that is 

very prospective, and that will really help this down the road because those new veterans will come to us with electronic files. We 

do not have this paper chase that goes on. But we cannot do anything about it with the millions that are currently there. We have 

to deal with that. 

But I am going to ask Admiral Cooper if he would elaborate on 

the technology. 

Admiral COOPER. Yes, sir. Let me mention a couple of things. 

One, there is an increase in our budget this year for our primary 

resource, which is people. And we will have an increase with this 

budget of about 450 people. 

On top of that, the primary technology that we work with is a 

system called VETSNET. This system has had a rather tortuous 

past, but we have made a lot of progress in the last couple years. 

We have three of five components and we are fully utilizing those 

at every regional office today. Those are the components that help 

us to take in the claim and adjudicate the claim. 

The components we are working on now are those to help us pay 

the claim, pay it faster, pay it more effectively, and ensure the retroactive pay we send to a veteran is computed properly. It will also 

fight fraud. 

So it is the VETSNET System that we are working on wholeheartedly that will help us as far as technology goes. 

The CHAIRMAN. Thank you. 

Ms. Herseth, you are recognized for 5 minutes. 

Ms. HERSETH. Thank you, Mr. Chairman. 

And, Mr. Secretary, thank you for your testimony. 

As you may know, I am the Chair of the Economic Opportunities 

Subcommittee, continuing to work with my friend, Mr. Boozman 

from Arkansas, as we focus on the myriad of issues under our jurisdiction I want to pose a question specifically with regard to the VA 

Education Service in a moment. 


cprice-sewell on PROD1PC72 with HEARING
31 

But some of the questions raised have already dealt with access 

to healthcare for rural veterans. And in South Dakota, we have 

some CBOCs and others that have been proposed, and I just need 

to clarify with you a couple of things. 

First, you had mentioned in response to Mr. Michaud’s question 

about the minor construction projects that the CBOCs, actually, 

come out of the operating budget of the VISNs, but my understanding is that the VISNs submit business proposals for these 

clinics to the CARES Program, that the actual construction of the 

clinics comes under the minor construction projects and then the 

operation of the clinics does come out of the operating budget. 

So could you just clarify how that has worked in the past and 

then I do want to ask a parochial question about where you are 

with the fiscal year 2008 list that has yet to be finalized. 

Secretary NICHOLSON. I am pondering whether there are any exceptions because I know we are building almost a 100,000 square 

foot clinic in Columbus, Ohio, a non-inpatient clinic. So I reserve 

that question. 

But generally, the CBOCs do not fall into the minor construction 

budgets. They are funded out of the operating budgets of the 

VISNs and they are consequent to the CARES analysis that has 

gone on using a lot of demographic information. And the plans 

should be compliant with that master plan. 

As I said, we have 717. We did eight in 2006 and for 2007, we 

have approved 24 so far. And in 2008, can somebody help me? I do 

not think we know that, what that number is going to be. We are 

working on those business plans. 

Ms. HERSETH. I appreciate that, but as you determine that number, I assume you are analyzing what number you are going to finalize and propose for fiscal year 2008 based on the budget. And 

so which budget line item would you direct me to evaluate as it relates to how many new CBOCs would be approved and operational 

in fiscal year 2008? 

Secretary NICHOLSON. Well, for you, probably the best path 

would be to go take a look at the VERA allocation that would be 

for your VISN and what the CARES study has said about the 

needs of that VISN. 

I was just handed a note saying that our planning predicate in 

that number for 2008 is 29 new CBOCs. 

Ms. HERSETH. Twenty-nine additional? 

Secretary NICHOLSON. Yes. 

Ms. HERSETH. Okay. We will follow up on others, but let me just 

ask a question particular to the jurisdiction of the Economic Opportunities Subcommittee. 

For fiscal year 2006, as well as fiscal year 2007, the VA’s Education Service was allocated $19 million from the readjustment 

benefits account to enter into contracts with State Approving Agencies for purposes of approving courses for education under the 

Montgomery GI Bill and other related activities. 

Now, under Section 301 of Public Law 103–330, at the end of fiscal year 2007, the SAA funding would decrease to $13 million. Is 

the VA planning to, or are you requesting within what has been 

submitted already, resources to maintain funding levels at the 

2007 level? 


cprice-sewell on PROD1PC72 with HEARING
32 

Secretary NICHOLSON. I am going to ask Admiral Cooper to answer that, if you would. 

Admiral COOPER. No, ma’am. We have not requested that. That 

money, as you know, goes to the States who then hire the SAAs. 

It is my understanding that about 5 years ago it was increased to 

19 million, and it was stated that at this time, it would be reduced 

to 13 million. 

We are meeting next week or the following week with the SAA 

group as they come in to determine just what we will have to do 

with that. 

Ms. HERSETH. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Bilirakis. 

Thank you, Ms. Herseth. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it. 

I have a specific question with regard to my district. The James 

Hailey VA Medical Center in Tampa, Florida, is one of the busiest, 

if not the busiest, medical centers in the country. Parking is a critical issue at the facility. Veterans complain about having to drive 

for long periods of time to find a parking space. 

As part of the fiscal year 2007 budget submission, the Department included a project to, ‘‘improve patient parking at the Tampa 

VA Center, as a potential site for future construction.’’ 

What is the status of this proposed project and—well, if you can 

answer that question first, please. 

Secretary NICHOLSON. You are right, Congressman. We have had 

a real parking problem down there and we have taken steps to improve it. We have gotten and have applied about two and a half 

million dollars to that problem and acquired, I want to say—I remember looking at this yesterday—I think it is 2.6 acres of land 

that we have been able to acquire for additional parking on. And 

that is well underway, which will go a long way to alleviate the 

parking problem that does exist there. 

Mr. BILIRAKIS. Okay. I appreciate it. One additional question. 

An issue that I am particularly interested in is helping our 

servicemembers—I think John talked about this—returning from 

Operation Iraqi Freedom and Operation Enduring Freedom transition back into civilian life. 

Your testimony highlights the VA’s Coming Home to Work Initiative. How many veterans have taken advantage of this program? 

Secretary NICHOLSON. I will have to see if someone can help me 

with that number. One hundred and eighty-eight, I’m told. 

Mr. BILIRAKIS. One hundred and eighty-eight. What can we do 

to enhance or improve the program? 

Secretary NICHOLSON. That is a good question and is one that 

concerns me when I first came into this job and looked at those unemployment numbers of that age cohort of 20 to 25, which was 

then about three times the national rate for people that age. It has 

gone down now. It is about one and a half times more than the national rate. So it is still too high. 

I have made a lot of presentations to trade groups, National Governors Association trying to get people to reach out to hire veterans. The lead on this in the government is really at the Department of Labor, and so we are now collaborating with them. 


cprice-sewell on PROD1PC72 with HEARING
33 

It is a combined effort that is needed to get the employees of this 

country to realize what outstanding prospects for employment 

these veterans are, and certainly to include the injured veterans or 

the seriously injured veterans. We are doing that. We are trying to 

model that ourselves, and we have twenty-some people working in 

our headquarters now, some still as interns from Walter Reed and 

Bethesda. 

We have one boy that I would like to talk about so much because 

he came back in a coma, was in a coma for weeks. He had a spinal 

cord injury. They did not think he would ever walk. The system 

really performed miracles on him. He now works for us full time 

and came into my office recently with a smile on his face telling 

me he was going to run a 5K race. 

But his real satisfaction in the restoration—he is still handicapped some—but is the fact that he is working. He has a job. He 

has value. And that is the best thing we could do for these veterans. 

And so we are trying to leave no stone unturned. The lead with 

Federal resources for that is really DoL. 

Mr. BILIRAKIS. Thank you, Mr. Secretary. 

The CHAIRMAN. If I had not assumed this position, I would be 

tempted to say something like it seems like the coma is a good 

background for some people. 

Ms. Brown. 

Ms. BROWN OF FLORIDA. Thank you. 

Mr. Secretary, first of all, I always like to start out with the 

words of the first President of the United States, George Washington. The willingness with which our young people are likely to 

serve in any war, no matter how justified, shall be directly proportional as to how they perceive the veterans of earlier wars were 

treated and appreciated by their country. 

And with that, I want to thank you. The veterans in central Florida have been waiting 20 years in Orlando for a hospital and it is 

going to be announced soon, and that thank you for the cemetery 

in Jacksonville. And last, I understand yesterday a new vet center 

will be built in Gainesville. 

But coming to the overall issues that I am concerned with, every 

year, you all come forward and put up increasing co-payments and 

enrollment fees that the Congress rejects. And in your own estimate, it discourages veterans from enrolling, at least 200,000. And 

you still are not allowing new priority eight veterans into the system. 

And I was just doing a quick analysis. To fund that entire program, how much did you say it was, sir, $1.7 billion? Is that what 

you said? 

Secretary NICHOLSON. One point seven billion dollars for 2008 

and $33 billion over the next 10 years. 

Ms. BROWN OF FLORIDA. Well, you know, I was just looking at 

the news and most people up here cannot visualize a billion. But 

it’s my understanding, about $12 billion in Iraq that is unaccounted for. $12 billion. 

So we could entirely fund the veterans if we could just identify 

$1.7 billion, and that is one point—how many millions of veterans 

that we could fund, over a million veterans that we could fund if 


cprice-sewell on PROD1PC72 with HEARING
34 

we could identify those funds. So I think it is important that Members on both sides figure out where that money is. 

But another area. You all issued cuts to research that will come 

up with innovative ways to help people who have lost limbs because of this recent war. I do not understand that. Why would we 

be cutting research in that area? 

And lastly, we have had round-table discussions, lengthy discussions on security. And recently in Alabama, a portable computer 

hard drive containing personal information on veterans was reported missing from a VA facility in Birmingham, Alabama. I 

mean, I do not understand how that could happen after all of our 

discussions. 

So, thank you for your investment in Florida. Please address 

those issues that I pointed out. 

Secretary NICHOLSON. Yes, ma’am. Prosthetics, our prosthetics 

budget is up in this budget by 9 percent, up $1.3 billion in prosthetics. 

Ms. BROWN OF FLORIDA. Yes. I was asking about research because that is coming up with the newest technology to assist them. 

Is there a cut in the research? I guess that is what I am asking. 

Secretary NICHOLSON. The research budget, the overall VA portion of it is about level because we get grants both from Federal 

and non-Federal sources each year. So our overall research budget 

will be up in 2008 if it is approved. And the total amount would 

be about almost $1.4 billion, and that includes just under 2,100 different research projects which includes prosthetic research. And it 

is at 114 different locations around the United States. 

Ms. BROWN OF FLORIDA. And the question about the computer? 

Secretary NICHOLSON. I am sorry? 

Ms. BROWN OF FLORIDA. The computer, the computer that is 

missing from Birmingham, Alabama. 

Secretary NICHOLSON. Yes, ma’am. That is a data breach. It does 

not make you happy and it does not make me happy. 

Ms. BROWN OF FLORIDA. Did we fire anybody? 

Secretary NICHOLSON. Pardon? 

Ms. BROWN OF FLORIDA. Did we dismiss anyone, terminate? 

Secretary NICHOLSON. Well, no, we have not yet because it is still 

under a very active investigation by our Inspector General. And we 

do not have all of the facts in yet on it. We do not know yet the 

magnitude of it and we do not know yet what has happened in our 

chain of command. But those are under active investigation and, 

believe me, it has my attention and focus. 

And I will say about that, we have made a lot of progress. We 

are transforming that system. We have moved thousands of people 

that were decentralized into this IT sector, and they now work 

under an identified commander, if you will, and Assistant Secretary Howard. 

But I was asked this question a few weeks ago up here. At a 

press conference, somebody said can you guarantee me that there 

will be no more data breaches at the VA, and I said I cannot. And 

I cannot at this time. 

If I thought, you know, I had such a good team that we were 

going to win the pennant, but I could not guarantee we would not 

make any errors during the season, I cannot sit here today and tell 


cprice-sewell on PROD1PC72 with HEARING
35 

you we are even ready to win the pennant, let alone make any errors. 

But we have made tremendous progress. But we have a lot more 

to go because the system, this was a research—one of these 114 research sites. People need to get disciplined in the way they handle 

this data. In this case, this person alleges that his hard drive was 

lost. We do not know if it was lost. We do not know yet what was 

on it. 

Ms. BROWN OF FLORIDA. Mr. Secretary, how can we help you? 

Because when this happened, it compromises the veterans, their 

families, the entire system. I mean, because they could take that 

and they could—identity theft is so rampant. What can we do? 

Secretary NICHOLSON. I appreciate that question, maybe more 

than you realize. 

Ms. BROWN OF FLORIDA. I am sincere about this question. 

Secretary NICHOLSON. First and foremost, it is the violation of 

the privacy of the people that are involved, but it also sort of 

damps out all the other great work that we are doing here in this 

really great agency. And it gets a lot of attention and it pains me. 

I think you can help, A, by understanding it and as B, we may 

need some help in dealing with personnel, as far as ability to discipline them, because that is what it is going to take in the end 

is to have some examples, to have people realize that this is serious 

business, that we are serious, that they need to deal with 

encrypted information, they need to open that password protected 

device every time they go back on it instead of leaving it open. 

They need to deal with other people’s information as they would 

deal with their own privacy. And we are not there yet, but we have 

made a lot of progress. 

Ms. BROWN OF FLORIDA. Thank you, Mr. Secretary. 

The CHAIRMAN. Thank you. 

Mr. Brown. 

Mr. BROWN OF SOUTH CAROLINA. Thank you, Mr. Chairman, and 

thank you, Mr. Secretary for being here today and bringing your 

team along. 

My question is centered around the Charleston model that we 

have been working on for a goodly number of years. We are grateful for you and Dr. Perlin and others from the VA that have been 

down to try to work out some kind of a solution that will be able 

to unite some services between the VA and the Medical University 

of South Carolina. 

We are grateful for Mr. Michaud for coming down, who is now 

the Chairman of the Health Committee, and certainly the Chairman at that time, Mr. Buyer, for his interest and for all the consolidation and concerted efforts that have been put forth up to this 

time. 

I know last year as we passed the Construction Bill through the 

House and then finally to the Senate, there was a lot of debate 

about where we would go with it and finally, at the last moment, 

with the help of a lot of people—I am glad Ms. Brown was in the 

room as we debated with the Senate—finally come up with a resolve. And I think at that time, they included some $36 million for 

the Charleston plan. 


cprice-sewell on PROD1PC72 with HEARING
36 

And I am just wondering, in this budget, with moving forward 

the plan that you have for construction for the VA, where does the 

Charleston model fit into that? 

Secretary NICHOLSON. Thank you, Mr. Brown. 

As you know, I think we have an agreement with the Medical 

University of South Carolina to create a new model, a prototype of 

sharing medical equipment to avoid the redundancies when we are 

essentially collocated. And we expect a final contract for that, for 

implementation to be signed by the end of this month. 

Thirty-six point eight million dollars has been authorized for the 

continued planning and design of a collocated facility in Charleston, but it has not been appropriated. And we have not in this 

budget asked for an appropriation of that money. We support very 

much the collaboration. I think it makes a lot of sense avoiding 

redundancies, efficiencies and better care by having more acute 

care offerings in one location. 

But, again, we have to take a look at the whole panoply of issues 

and we have a CARES process also that guides us in prioritizing 

where new hospitals should go. And our estimate for the cost of 

this project would be about $550 million and on our priority list 

right now it is not on there. 

Mr. BROWN OF SOUTH CAROLINA. As we listened, you know, intently to Mr. Baker and his concern with New Orleans, and I did 

have the privilege to go there with you to look at the situation in 

New Orleans, Mr. Secretary, what we were hoping to do is be 

proactive in this location. We recognize that Charleston is in the 

same hurricane plain as New Orleans and we would be devastated 

with the current VA facilities if, in fact, we had a similar tide rise 

as we had in New Orleans. 

What we were hoping to do, particularly with the construction 

process now at the Medical University, is somehow or another coordinate some of those construction savings by including the VA 

hospital under this same time line. It seemed like by being 

proactive, it would save the taxpayers money, not just from the 

Federal level, but also from the State level in order to be able to 

work in a coordinated method now rather than try to duplicate the 

VA hospital at some later date once the whole plan has been implemented through the Medical University. 

I would hope, Mr. Secretary, that you would be more proactive 

in trying to implement some process now to try to get the process 

moving along. 

Secretary NICHOLSON. Well, I think, Congressman Brown, that 

this opportunity steering group that we have underway would be 

a good first step. And if we do some shared facilities, shared acquisitions, expensive diagnostic equipment and so forth, it would help 

demonstrate the value of that kind of collaboration. 

We also have a CMOP there in Charleston and we have that hospital which is generally in pretty good shape. Those that are new 

to the Committee may not know. We have 154 of these hospitals 

around the United States existing and the average age is 56 years 

old. The average age of the hospital in the civilian economy today 

is about 14 years. So we have some hospitals, some Members in the 

room know, that were built right after the Civil War. So it is a 

matter of prioritization. But we will continue to work it. 


cprice-sewell on PROD1PC72 with HEARING
37 

Mr. BROWN OF SOUTH CAROLINA. Okay. And I appreciate that. I 

know this hospital is probably in the high 40s itself. And I know 

with the planning, as it moves along, you know, will add another 

10 to 12 years to that. 

But I am saying there are some economics of scale that we can 

all benefit for the taxpayers if we can move that project forward 

now, and at least I would hope that we would commit some kind 

of design or engineering funding in this appropriation so we can at 

least, you know, do something besides just talk about it. 

Secretary NICHOLSON. Well, if, as I said, it is authorized and if 

it is appropriated, we will go to work. That is our job. 

Mr. BROWN OF SOUTH CAROLINA. Thank you very much. 

Mr. Boozman, I appreciate you yielding your time for me to make 

those questions. Thank you so much. 

The CHAIRMAN. Thank you, Mr. Brown. 

Mr. Snyder. 

Mr. SNYDER. That is ‘‘Boze’’ not ‘‘Booze,’’ Mr. Brown, Boozman. 

If we start calling him ‘‘Boozeman’’ he loses like 11 percent of his 

vote. 

[Laughter.] 

Mr. BROWN OF SOUTH CAROLINA. Yeah. But this is South Carolina talk. 

Mr. SNYDER. At least 11 percent. 

Mr. Secretary, I appreciate the work that you do on behalf of veterans. You have been at this long enough now that when you come 

before us, you probably can predict what Members are going to ask 

certain questions. And I want to follow up on what Ms. Brown was 

asking about, which is the research budget. We have talked about 

this in past years. The President’s request is for a fiscal year 2008 level of $411 mil- lion out of the VA budget. In fiscal year 2004, that was $405 million. And so if you just look at the biomedical inflation rate alone, 

we are down. That means we are down by almost $60 million. And so you can look at this two ways. One of them is that is $60 

million, that is in real dollars, that is real money. And so I hope 

you are talking to your researchers about the level of their morale 

and what things, you know, could be being done and what you call 

the high-priority research projects if you had the real dollars. 

Now, what you all will say is, well, you leverage other dollars, 

but there is two aspects to that. Number one is you expect help 

from other parts of the Federal budget. You expect help from NIH 

because you do not fund properly in your VA line item for research 

and have not for several years. 

Number two is if you would fund that at a level at least commensurate with the biomedical inflation rate, you would be able to leverage more dollars. I will accept your argument that you leverage 

moneys. 

And so I do not understand why we go through this each year, 

that we are not looking to at least keep up with the biomedical inflation rate. 

By the way, you are not alone in this. The Defense budget came 

out at our hearing a couple days ago or yesterday with Secretary 

Gates that the President’s budget and the Defense budget cuts 

basic research by 9 percent and applied research by 18 percent. 


cprice-sewell on PROD1PC72 with HEARING
38 

And Secretary Gates was very concerned when he heard that because he did not—I mean, I do not expect him to know. I do not 

expect you to know all these numbers. He did not know that that 

was what was being done. He was going to readdress that. 

So, again, please address this issue. Why do you all not feel a 

responsibility to at least have the President’s number, your number, keep pace with biomedical inflation, and it has not done that 

for several years now? 

Secretary NICHOLSON. Congressman, we look a lot at the total 

number and we have been pretty adroit at getting grants and 

matching. And if the research budget for 2006 was $1.29 billion, 

this research budget is up $1.38 billion in 2 years. So the overall 

budget—— 

Mr. SNYDER. You mean your prediction of what you will be able 

to leverage from other parts of the Federal budget at a time when 

we are under great fiscal stress in this country, you are betting on 

the ability of pulling dollars from other parts of the budget? 

Why not step forward and say you are right, fiscal year 2004, we 

have not kept pace with inflation, we are going to make our budget 

this year $469 million coming from the VA and we are going to leverage even more projects? I mean, how many more beyond the 

2,100 high-priority projects could you be funding if you would do 

what I have suggested? 

Secretary NICHOLSON. Well, I am going to point out to you, Congressman Snyder, that we also get money from the private sector. 

In fact, in—— 

Mr. SNYDER. I am aware of that. 

Secretary NICHOLSON. It is over $200 million. So it will not all 

be dependent on other parts of the Federal—— 

Mr. SNYDER. I did not say it all would. But substantial portions 

of it, you are counting on other parts of the Federal budget. 

Secretary NICHOLSON. I would also like to add that we analyzed 

the application of this and 60 percent of this research contemplated 

under this, and I think what is true of that is that what we are 

spending currently is applicable to OIF and OEF combatants. 

Mr. SNYDER. I appreciate what you are saying and I appreciate 

your chasing after the dollars from both private and public funds. 

But it still does not make sense to me why your number for medical research and what I think is one of the great medical research 

institutions in the world, in the world—— 

Secretary NICHOLSON. Thank you. 

Mr. SNYDER [continuing]. Does not even keep pace with the rate 

of biomedical inflation. It just does not make sense to me. On another topic, you mentioned the seamless transition with regard to 

medical records. Where are we at with regard to the single exit 

exam? 

Secretary NICHOLSON. I have a good report for that. That is 

working extremely well and expanding and allowing us to be very 

timely in the decisions that are coming out of those BDD sites. We 

now have that enterprise going at over 140 locations; most of those 

being DoD sites pre-separation mode. We are very pleased with that. 

Mr. SNYDER. Thank you, Mr. Secretary. Thank you for your work. 

The CHAIRMAN. Thank you. 

Mr. Boozman. 


cprice-sewell on PROD1PC72 with HEARING
39 

Mr. BOOZMAN. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, and your staff for being here. I appreciate your hard work. 

We had the opportunity to go to Iraq together and I really enjoyed that. And, you know, when you were there, you were there 

not as the former ambassador to the Vatican or, you know, as the 

Secretary of the VA, but I was really impressed that when you, you 

know, talked with the men and women that were over there, it was 

as an old Marine. So I really understand that you—— 

Secretary NICHOLSON. Excuse me. I am not a Marine. I am an 

Army Ranger. 

Mr. BOOZMAN. Okay. I am sorry. I am sorry for insulting you. 

[Laughter.] 

Mr. BOOZMAN. My dad did 20—— 

Secretary NICHOLSON. No disrespect to the Marines. 

Mr. BOOZMAN. Well, again, as a guy that understands. My dad 

did 20 years in the Air Force, so we look down on all of you. 

[Laughter.] 

Mr. BOOZMAN. But I appreciate the fact that you brought out 

that when you look at the record over the past 6 years, the VA 

spending has gone up dramatically. And in looking at the fiscal 

2007 request when you were here and really got beat up pretty 

good about veterans’ health and things, the reality is and the continued resolution, the numbers are the same, $25,512,000,000, on 

the total fiscal year 2007 request, $34,000,000,986. The House actually passed last year $35,024,000,000 and then we wound up in 

the continued resolution with $35 billion. 

So I appreciate your leadership on that. We also had the opportunity of getting a vet center and we are very pleased with that. 

And that is much needed. And, you know, there was some comment 

and some concern, and I share the concern about the staffing, that 

we are able to do that. 

But the reality is that staffing is not dependent on you. It is dependent on whether or not Congress gives you the funds to staff 

the center. Is that not right, if we are really—— 

Secretary NICHOLSON. Yes, sir. We would have to—— 

Mr. BOOZMAN. So, again, you know, we cannot have it both ways, 

you know. 

I have got just a quick question for Admiral Cooper about the expert education system, the TEES Program. What level of funding 

is proposed? And I guess again, what are the milestones that you 

hope to accomplish with that? Is that something that you need to 

get back with me on or—— 

Admiral COOPER. I can get back to you with a full answer. The 

fact is that the TEES system is one that we are looking forward 

to, but it is in really an embryo stage. We are in the development 

part of it. 

We have the different education programs and the goal is to be 

able to settle 90 percent of the claims without any hands-on. But 

we have a good ways to go, so let me get back to you with a more 

developed answer. 

Mr. BOOZMAN. Very good. One other thing real quick, Admiral. 

The Independent Living Program. Right now, I guess my question 

is, if Congress removed the 2,500 limitation on the new entrance 


cprice-sewell on PROD1PC72 with HEARING
40 

into the program in the Independent Living, how many additional 

FTEs would you require? What would be the cost involved in doing 

that? 

Admiral COOPER. The limitation is strictly on the number of people we can bring into the program per year. I do not think I would 

need more FTE in order to allow more people to come in, but it 

does present a problem over each year when more than 2,500 come 

in. So the limitation, I think, should be lifted, but I do not require, 

as I see it now, more FTE to execute that. 

Mr. BOOZMAN. So that is something that you feel also that we 

ought to look at lifting the limitation? 

Admiral COOPER. I think it is very important today to lift that, 

yes, sir. 

Mr. BOOZMAN. Okay. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Ms. Brown-Waite. 

Ms. BROWN-WAITE. I apologize for responding to an e-mail, and 

I want to thank the Secretary for being here. 

You know, as we look at the backlog of cases that are waiting 

a decision, I wonder how you can justify awarding five-figure bonuses to senior executives in VBA when there is such a rising backlog of cases. 

Secretary NICHOLSON. Well, let me review the numbers a bit. I 

said that we had 806,000 new claimants in 2006, the highest number of claimants in 15 years. And that is an extraordinarily large 

amount of claims, especially once you know what is involved in 

dealing with each one of these. And they did almost 800,000 

claims. They completed almost 800,000 claims. So they did pretty 

good yeoman work. 

We are requesting another 500 people in anticipation of the continued growth in claims. We are going to make better use of the 

VETSNET technology and with that, we will drive that time down. 

But that is going to take constant command attention and a lot of 

work by trained people. 

So I do not think it has been a shortcoming of theirs. It is not, 

I do not think, lack of diligence. It is just that it is a market phenomenon that people have really come in and we have worked outreach. 

I was in San Antonio 2 weekends ago for the dedication of the 

new Center for the Intrepid and I did not know they were going 

to be here, but there was a very nice display of VA benefits with 

several VA employees there handing out materials to the thousands of servicemembers who will become veterans, acquainting 

them with what they are entitled to. They are the same people that 

work in our regional office in Houston. 

So, you know, they are outreaching as well as processing. And it 

is just a matter of the dynamics of supply and demand and handling the demand, and we are driving down. And we will have it 

down to 145 days. So I would defend the compensation that we 

gave to those people. 

Ms. BROWN-WAITE. Just a quick question on that. Is the criteria 

for the bonuses public information or is it arbitrary? 


cprice-sewell on PROD1PC72 with HEARING
41 

Secretary NICHOLSON. I guess I would refer to counsel. I am sure 

it is public. It is not secret. 

Ms. BROWN-WAITE. Because you cannot find out what the bonuses are throughout the system unless you do a Freedom of Information request. So I just wanted to know if the information is 

available, what the criteria actually are for the bonuses. 

Mr. HUTTER. Yes, ma’am. The criteria are what we call the executive core qualifications, and all bonuses are measured against an 

evaluation by a senior manager, most of whom are at this table, 

of how an executive has met these executive core qualifications. 

They measure how well they lead change, how well they lead, are 

they results driven, and so forth. And those are public. 

Ms. BROWN-WAITE. Okay. If you would make sure that my office 

gets a copy of that. I have another question. I want to make sure 

that my time is not all used up. 

The CHAIRMAN. If the gentle lady would yield. On behalf of the 

Committee, we want to ask for that information to get to Ms. 

Brown-Waite. The criteria and the amount of the bonuses—— 

Ms. BROWN-WAITE. Correct. 

The CHAIRMAN [continuing]. All that information, please if you 

would get that to Ms. Brown-Waite. 

[The information has been provided to Ms. Brown-Waite and the 

Subcommittee on Oversight and Investigations in preparation for a 

hearing on this subject being held on June 12, 2007.] 

Ms. BROWN-WAITE [continuing]. The people who are enrolled in 

VA research. How long did it take to notify Congress? Was the data 

encrypted and was it password protected? And, you know, when did 

you find out because I know last year when we were here, it took 

so long for you to find out. I certainly hope you found out in an 

expedited manner. And I would like to know how soon Congress 

was notified. 

Secretary NICHOLSON. First let me say that incident is still under 

active investigation, and I do not know the magnitude of it. And 

it may be larger than that. We just do not know at this point. 

But I will say that the system that we put in place after the May 

incident worked and that the response was immediate. I found out 

immediately. The IG and FBI were brought into it immediately. 

Our team that we have organized for this went into effect. 

Again, the IG is working with the subject and there is some sensitivity about how public they really wanted this to be because of 

the investigation. But virtually everybody knew this the next day 

that we—— 

Ms. BROWN-WAITE. Who is everybody? 

Secretary NICHOLSON. Well, that is a good—— 

Ms. BROWN-WAITE. Who was everybody, sir? 

Secretary NICHOLSON. That is a fair question. Everybody did not 

know. We did not want everybody to know it. We notified the 

Chairman. We called the four corners, the Chairman of this Authorizing Committee, the Appropriating Committee in the House 

and similarly in the Senate, both Majority and Ranking Members. 

I, of course, notified the White House that this had occurred. So the 

response to the notifications, I think, were timely this time. 

Again, the whole thing is still under analysis, including forensic 

analysis of the devices. It appears it was not all encrypted. Some 


cprice-sewell on PROD1PC72 with HEARING
42 

of it was. All this is still under investigation. I would be happy to 

talk to you about it, I guess privately or in camera. But the IG has 

asked us to try to limit all we know. 

The CHAIRMAN. Ms. Brown-Waite, I do want to say that the Secretary tracked me down right away, gave me that information, I 

believe in full public disclosure, not just to one person. 

But the Secretary did convince me that a short time should be 

granted where the investigation could take place, and publication 

would harm that investigation. I took his advice on that, although 

the information eventually, you know, got out beyond that. 

And then at that point, the Secretary did do a press release and 

availability on that. But he notified all the people. We talked to 

each other and agreed that he ought to have that time. 

And I think the information through Birmingham got out faster 

than they would have wanted it, but we accepted the Secretary’s 

judgment that some more time—I mean, it was not a matter of 

months or weeks. It was a matter of days or hours that they wanted more time. 

We do need to get on to the second panel. Mr. Buyer, you asked 

for hopefully one question. 

Mr. BUYER. Well, I have got a couple here briefly. 

Mr. Hutter, as General Counsel, I want to thank you for the positive actions you took in the Regional Counsel’s Office in Indianapolis following the security breaches, so thank you very much for 

getting hold of that one. 

Next is to Under Secretary Tuerk. I would like for you to tell us 

about the National Shrine Program, where we stand with that. 

With regard to General Howard, our CIO, Mr. Secretary, thank 

you for bringing him. I note that for the IT account, you list $1.3 billion in nonpayroll and then $555 million in payroll because you now own these people. You have the personnel tail now. Does this include contractors? 

That is one of my questions. The other is, there is an inclusion of $231.9 million for information security in accordance with section 902 of Public Law 109–461. 

What exactly is that number? What are you buying to become compliant? 

And the last comment I had really is to you, Mr. Secretary. So 

as soon as I finish this comment, Mr. Secretary, if you can answer 

those questions. 

Mr. Secretary, I want to thank you for a couple of your initiatives. One is your innovative Coming Home to Work Program 

whereby you reach out to the disabled veterans and you get them 

into work as they are doing their rehabilitation, tapping into hope. 

Thank you very much. 

The other is the National Rehabilitative Special Events, your 

partnership with the United States Olympic Committee. Your contacts and your ties with the Olympic Committee have paid great 

dividends. You are giving great hope to a lot of disabled veterans 

and senior veterans as they participate in your events. 

Now, with this partnership, it helps not only in the rehabilitation, but it allows them now to aspire to levels within those sports 

that they never ever dreamed would be possible. So I want to 

thank you for your innovation in both of those. 


cprice-sewell on PROD1PC72 with HEARING
43 

Mr. HOWARD. Sir, your first question regarding the money to pay 

for contractors, that money is in the nonpay area. The 555 pays for 

full-time equivalent of VA employees, but all of the pay of people, 

so to speak, as well as material and what have you is in the nonpay portion for contractors. 

Mr. BUYER. I do not understand what that means. 

Mr. HOWARD. In other words, we have many, many contracts, 

you know, throughout all of our facilities and some of them are for 

equipment. Some of them are for services. Some of them are for 

both. 

Mr. BUYER. But you have control of that now? 

Mr. HOWARD. Yes, sir. 

Mr. BUYER. All right. Thank you. 

Mr. TUERK. Thank you, Mr. Buyer. I am glad to speak to you 

about our National Shrine Commitment. 

Through 2006, we had expended $99 million on projects with 

money that was discretely fenced off for National Shrine projects. 

In 2007, we intend to spend another approximately $16 million on 

National Shrine projects which will bring us up to $115 million. 

Since the consultant’s report came out in 2002, which identified 

some 928 projects that needed to be done with an estimated cost 

of some $280 million, through 2006, we had completed 269 of those 

projects. 

In this budget request, we are requesting $9.1 million to be 

fenced in our operations and maintenance account for National 

Shrine projects, and an additional two million to be expended from 

our minor construction account for National Shrine projects. 

I would also add, though, Mr. Buyer, that beyond the projects 

that are financed with National Shrine money specifically, everything we are doing in our maintenance activities, outside of money 

specifically fenced for National Shrine purposes, is geared toward 

improving the excellence of our cemeteries’ appearance. 

Furthermore, many of our other construction projects fold in National Shrine upgrades as part of a larger major or minor construction project. So the money that is fenced off specifically for National Shrine projects only tells part of the story of the progress we 

are making. 

A number that we look at that tells us how we are doing relates 

to feedback from the public. And in 2006, 97 percent of the people 

we asked in a survey rated the appearance of our National cemeteries as excellent. We have now set a goal to achieve a 99 percent 

response of excellent to that question. But that summarizes where 

we have been and where we are headed and where we are right 

now. 

Mr. BUYER. All right. Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the panel. And, Mr. Secretary, just one 

more followup to Ms. Brown-Waite’s issue that she raised. I wanted 

to thank you for getting our relationship off to the kind of start 

that we talked about by your quick notification of us. 

Again, we may not always agree on what should be public and 

what should not, but that communication is vital and I thank you. 

It turns out we were all at the same place, so the people you talked 

to were able to talk about it. But we appreciate the real rapid response. 


cprice-sewell on PROD1PC72 with HEARING
44 

You mentioned round tables. Several other people mentioned 

them. We are going to try on the Committee to have problem-solving sessions as opposed to hearings in which all the Members of 

the Committee, the stakeholders such as Veterans Service Organizations and, of course, the experts from your Administration would 

be around the same table trying to say, well, how do we solve the 

600,000 claim backlog, how do we get to where we all want to be. 

And I hope that we can try that and it becomes productive. 

Just lastly, as an introduction to the next panel also, just so the 

people who put together the Independent Budget and saw me waving it around for the last 5, 6 years or 8 years or 10 years, I am 

going to still wave it around even in this seat. 

They asked, I think, for a reasonable amount of additional funding, and I think this Committee when we have to formalize our 

own budget submissions will be closer to this figure than the Administration’s figure. 

I know that does not pain you to get more money and I know 

you have to back the President’s budget, but there were some questions raised, whether it is research or other areas that we think 

should be increased, and we will be getting our submission to the 

Budget Committee shortly. 

Thank you again for being here all morning. 

Secretary NICHOLSON. Thank you, Mr. Chairman. 

The CHAIRMAN. The next panel may join us. I promised in the 

past that the VSOs would come first and let the VA wait for that, 

but we will do that in the future. 

We want to thank the four groups that took the lead in putting 

together the Independent Budget for being here, Paralyzed Veterans of American, Disabled American Veterans, the Veterans of 

Foreign Wars, and AMVETS. Of course, we have The American Legion to give its thoughts on the budget and also the Vietnam Veterans of America will also do that. 

Again, I thank you for your efforts. We have looked at the Independent Budget for years and years and it has been closer to the 

mark than other budget recommendations. And I think the Committee’s advice to the Budget Committee that we have to do soon 

will be much closer to yours. I hope we endorse the Independent 

Budget. 

I have Mr. Blake from Paralyzed Veterans as first, but however 

you have decided to do that. 

STATEMENT OF CARL BLAKE, NATIONAL LEGISLATIVE 

DIRECTOR, PARALYZED VETERANS OF AMERICA 

Mr. BLAKE. Thank you, Mr. Chairman. Mr. Chairman, Members 

of the Committee, on behalf of the four organizations who co-authored the Independent Budget, I would like to thank you for the 

opportunity to testify today on the healthcare recommendations for 

fiscal year 2008. 

Before I begin, I would just like to mention that in the spirit of 

openness and cooperation, the IB VSOs extended an invitation last 

week to all the Committee staff and to all of the LAs for the Members of the Committee to come to a briefing where we could lay out 

the recommendations for the Independent Budget in advance of the 

President’s budget release. 


cprice-sewell on PROD1PC72 with HEARING
45 

I feel like by doing that, it fosters more cooperation among us all. 

I feel like the only way we can really get to where we need to go 

is for us to work together to get there. 

Unfortunately, even as we testify today, the Appropriations Bill 

for fiscal year 2007 has not been completed. Despite a positive outlook outlined in House Joint Resolution 20, the VA has been placed 

in a critical situation where it is cannibalizing dollars for other accounts to continue to provide medical services, jeopardizing not 

only the VA healthcare system but the actual healthcare of veterans. 

For fiscal year 2008, the Administration has requested $34.2 bil- lion for veterans’ healthcare, about a $1.9 billion increase over the 

levels established in House Joint Resolution 20. Although we recognize this as another step forward, it still does not meet the recommendations of the Independent Budget. For fiscal year 2008, we recommend approximately $36.3 billion, an increase of $4 billion over the 2007 level established in House 

Joint Resolution 20 and approximately $2.1 billion over the Administration’s request. For fiscal year 2008, the IB recommends approximately $29 billion for medical services. Our medical services’ recommendation includes $26.3 billion for current services, $1.4 billion for the increase 

in patient workload, 105 million for additional FTE, and a $1.1 billion increase for policy initiatives. 

For medical administration, the Independent Budget rec- ommends approximately $3.4 billion and, finally, for medical facilities, the IB recommends approximately $4 billion. This recommendation also includes an additional $250 million 

above the fiscal year 2008 baseline in order to begin to address the 

nonrecurring maintenance needs of the VA. 

Although the Independent Budget healthcare recommendation 

does not include additional funding to provide for the healthcare 

needs of category eight veterans now being denied enrollment into 

the system, we believe that adequate resources should be provided 

to overturn this policy decision. 

VA estimates that more than one and a half million category 

eight veterans will have been denied enrollment into the system by 

fiscal year 2008. Assuming a utilization rate of about 20 percent in 

order to reopen the system to these deserving veterans, the IB estimates that the VA will require about 366 million discretionary dollars. 

Although not proposed to have a direct impact on veterans’ 

healthcare, we are deeply disappointed that the Administration 

chose to once again recommend an increase in prescription drug copayments from eight to fifteen dollars and an index enrollment fee 

based on veterans’ incomes. 

Although the VA does not overtly explain the impact of these 

proposals, similar proposals in the past have estimated that nearly 

200,000 veterans will leave the system and more than one million 

veterans will choose not to enroll. 

It is astounding that this Administration would continue to recommend policies that would push veterans away from the best 

healthcare system in the world. Congress has soundly rejected 

these proposals in the past and we urge you to do so once again. 


cprice-sewell on PROD1PC72 with HEARING
46 

For medical and prosthetic research, the Independent Budget is recommending $480 million. This represents a $66 million increase 

over the 2007 level in the continuing resolution and $69 million 

over the administration’s request for fiscal year 2008. 

We are very concerned that the medical and prosthetic research 

account continues to face a virtual flat line in its funding level. Research is a vital part of veterans’ healthcare and an essential mission for our National healthcare system. 

In closing, to address the problem of adequate resources provided 

in a timely manner, the Independent Budget has proposed funding 

for veterans’ healthcare be removed from the discretionary process 

and be made mandatory. 

The budget and appropriations process over the last number of 

years demonstrates conclusively how the VA labors under the uncertainty of how much money it is going to get and equally important when it is going to get that money. 

In the end, it is easy to forget that the people who are ultimately 

affected by wrangling over the budget are the men and women who 

have served and continue to serve in harm’s way. 

Mr. Chairman and Members of the Committee, I would like to 

thank you again for the opportunity to testify, and I would be 

happy to answer any questions that you might have. 

[The prepared statement of Mr. Blake appears on p. 97.] 

The CHAIRMAN. Thank you, Mr. Blake. 

Commander Morin of The American Legion needs to get a plane, 

so we will hear from you next. Thank you, sir. 

STATEMENT OF PAUL A. MORIN 

NATIONAL COMMANDER, THE AMERICAN LEGION 

Mr. MORIN. Thank you, Mr. Chairman and Members of the Committee. Thank you for allowing me to testify before you today on 

the President’s fiscal year 2008 budget request on behalf of The 

American Legion. 

I will summarize and respectfully request that my complete 

statement be placed in the record. 

I trust each of you share the frustration of the veterans community over the imperfect budget process that is currently in place. 

Today we are here to discuss the fiscal year 2008 VA budget. At 

the same time, Congress is still considering the fiscal year 2007 

budget 4 months after the start of the fiscal year. 

Operating on a continuing resolution makes it very difficult for 

the Department of Veterans Affairs to serve veterans in an optimal 

manner. 

Praise of the VA healthcare delivery system continues to be expressed by medical experts and prestigious journals. However, 

across the country, VA officials are encouraged to try to outwit, 

outplay, and outlast the Federal budget process. 

Who will get how much and when is hardly the best business 

practice for an industry leader in providing healthcare and conducting research. 

The President’s budget request for fiscal year 2008 calls for medical care funding at $36.6 billion, which is about $1.8 billion less 

than The American Legion’s recommendation of $38.4 billion. 


cprice-sewell on PROD1PC72 with HEARING
47 

As the leader of America’s largest veterans’ organization, I want 

to express The American Legion’s thanks to the President for recommending a level of funding similar to that of which we proposed 

for medical care. The major difference is that the President’s budget request continues to offset the discretionary appropriations, its 

medical care collection fund goal of $2.4 billion, whereas The American Legion considers these funds as a supplement since they are 

for treatment of nonservice-connected medical conditions. 

Mr. Chairman, as you are aware, the President’s fiscal year 2008 

budget has proposed enrollment fees which would require some veterans to pay from $250 to $750 each year for VA healthcare. The 

proposal would also increase co-payments for prescription drugs to 

$15.00. Congress rejected similar proposals last year and The 

American Legion urges you to do the same this year. 

With respect to another issue of importance, The American Legion remains steadfastly in support of achieving adjudication of VA 

disability claims. As a nation at war, the expectation of increasing 

the number of new disability claims is obvious. The newest generation of wartime veterans rightly deserve timely adjudication of 

their claims. 

Again, the Secretary, Congress, and the veterans community 

must work toward meaningful solutions to the ever-increasing 

backlog of veterans’ disability claims. Increased funding and additional staffing is a solid first step toward change, and The American Legion appreciates the proposed increases in funding and additional personnel included in the President’s budget. 

The purpose of my being here is to discuss the President’s budget, reaffirm The American Legion’s budget recommendations, and 

continue to urge you and your colleagues to adequately fund the 

Nation’s best healthcare delivery system, 7-year CARES construction plan, medical and prosthesis research, State Extended Care 

Grant Program, State Veteran Cemetery Grant Program, VA 

claims and adjudication process, and a national Cemetery Administration. 

Each of these important areas is discussed in detail in our full 

statement. We are a Nation at war. Each of these budgetary concerns is clearly a part of the ongoing cost of war. 

Since becoming The American Legion’s National Commander in 

August, I have traveled across the Nation and overseas visiting 

with active-duty servicemembers, Reserve, and National Guard 

troops, veterans and their family. I am pleased to report that they 

all continue to do what this Nation expects of them. The men and 

women of the Armed Forces are truly dedicated professionals. 

Veterans also continue to serve this Nation. You see them at burial details providing honors for their fallen comrades. You see them 

in the VA hospitals as volunteers. You see them responding to natural disasters to lend a helping hand. And you see them running 

programs that benefit children and youth of our country. 

Mr. Chairman, we must never forget that the families also continue to serve. In many ways, their service is far more demanding 

both emotionally and physically. Many survive those who have 

made or will be making the ultimate sacrifice in uniform of this 

Nation. 


cprice-sewell on PROD1PC72 with HEARING
48 

The American Legion budget recommendations that I presented 

in September 2006 are based in large part on the findings of boots 

on the ground, visits to medical facilities. We have found that the 

quality of treatment and service remains impressive. But the timely access to care is inconsistent at best. 

In addition, there are many deserving veterans locked out of the 

system because of the means test. They are categorized as priority 

eight veterans. These honorably discharged veterans, most, if not 

all, with the means of providing third-party reimbursement are 

prohibited from enrolling in the VA healthcare system. This includes, among others, military retirees and wartime veterans. 

Welcoming the newest generation of wartime veterans into the 

VA healthcare system is the right thing to do, and The American 

Legion supports the legislation that will extend VA healthcare from 

2 years to 5 years for returning servicemembers in the current 

Global War on Terrorism. However, denying this group of eligible 

veterans access to the system is wrong. 

Mr. Chairman and Members of the Committee, I know you may 

question how would we pay for reopening access to all eligible veterans. One way is quite simple. It is widely reported that the cost 

of VA medical care is approximately $2,000 less per patient than 

that of Medicare. If so, VA could be annually saving Medicare approximately four billion in mandatory funding. Should additional 

Medicare eligible veterans be enrolled, the potential savings to 

Medicare would be increased as well. 

Clearly allowing the VA to collect third-party reimbursements 

from Medicare is not only a cost savings measure, it is the right 

thing to do. The American Legion urges this Committee to explore 

the concept of Medicare reimbursement. 

Mr. Chairman, as I mentioned at the beginning of my statement, 

the budget process is not working as it should. The American Legion strongly believes changing VA medical care funding from discretionary to mandatory funding would go a long way toward healing the currently crippled budget process. And as we submit to 

members the booklet put out by a majority of the Veterans Service 

Organizations on assured funding. 

President Lincoln’s words, to care for him who shall borne the 

battle, guided the efforts of more than 218,000 VA employees who 

are committed to providing the best possible medical care, benefits, 

social support, and lasting memorials to veterans and their dependents and recognition of honorable service to this Nation. 

The American Legion looks forward to working with this Committee to ensure that these dedicated VA employees have the resources they need to carry out their important mission. 

Thank you, Mr. Chairman, for this opportunity to comment on 

the President’s fiscal year 2008 budget request for the Department 

of Veterans Affairs. 

[The prepared statement of Mr. Morin appears on p. 82.] 

The CHAIRMAN. Thank you, Commander, and thank you for what 

you do for your membership and our Nation’s veterans. 

Mr. Brian Lawrence from the DAV. 


cprice-sewell on PROD1PC72 with HEARING
49 

STATEMENT OF BRIAN LAWRENCE, ASSISTANT NATIONAL 

LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS 

Mr. LAWRENCE. Mr. Chairman, Members of the Committee, on 

behalf of the 1.3 million members of the Disabled American Veterans, thank you for the opportunity to present the recommendations of the 2008 Independent Budget and compare them to the 

President’s proposed budget for veterans’ programs. 

As you know, the IB is a budget and policy document that sets 

forth the collective views of the DAV, AMVETS, Paralyzed Veterans of America, and the Veterans of Foreign Wars. Each organization has a principal responsibility for a major component of the 

budget. My testimony focuses on the Veterans Benefits Administration. 

The President recommends that funding for VBA be increased by 

approximately $30 million. Obviously we are quite pleased that the 

President shares our perspective that increased funding is needed. 

Our recommendations for increases exceed the Administration’s 

both in overall dollar amounts and numbers of employees. However, our differences are relatively minor compared with other 

areas of the Federal budget. 

We hope that such minor differences can be resolved during the 

upcoming budget cycle in favor of disabled veterans who will rely 

on the services that VBA provides. 

The IB recommendation for overall VBA funding is $1.9 billion 

as compared to the President’s recommendation of $1.2. Differences 

in our recommendations are primarily due to the following reasons: 

One, the IB anticipates a continuation of a high number of disability claims. We based these estimates on two factors, ongoing 

hostilities in Iraq and Afghanistan and an aging veterans population. The Administration also expects an inclined rate in the number of claims, but does not expect it to be as sharp as in past years. 

The other reason for differences between the IB and the Administration’s numbers is that we believe VA Rating Board personnel 

should concentrate more on making accurate decisions and less on 

producing high numbers. Therefore, our ratio of workers to claims 

is larger than the Administration’s, resulting in a higher number 

of full-time employees. 

Along with recommendations for funding levels, the IB makes 

several suggestions for policy improvements. Since I am running 

short on time, I am going to focus on just the recent enactment of 

the provision allowing attorneys into the claims process. We are 

deeply concerned about the negative impact this might have. 

The VA claims system was designed to be open, informal, and 

helpful to veterans. It is reasonable to expect that the involvement 

of fee-charging lawyers and agents will impede productivity in the 

claims process and further bog down the system and eventually 

lead to the need for even more increases in staffing. 

For example, VA will have the responsibility of oversight and administration of fee agreements under which the Secretary is to pay 

the attorney directly from past-due benefits awarded to the veteran. Added costs to do so are likely to be substantial without commensurate added advantages or benefits for either the VA or veterans. 


cprice-sewell on PROD1PC72 with HEARING
50 

We hope that such unintended consequences will be considered 

by the Committee and this provision would be repealed. Once 

again, we appreciate the Committee’s interest in these issues and 

we appreciate the opportunity to testify today. 

Thank you. 

[The prepared statement of Mr. Lawrence appears on p. 93.] 

The CHAIRMAN. Thank you. And the full statements of all will be 

entered into the record. 

Mr. Cullinan. 

STATEMENT OF DENNIS M. CULLINAN 

DIRECTOR, NATIONAL LEGISLATIVE SERVICE 

VETERANS OF FOREIGN WARS OF THE UNITED STATES 

Mr. CULLINAN. Thank you very much, Mr. Chairman and distinguished Members of the Committee. On behalf of the men and 

women of the Veterans of Foreign Wars and the constitute Members of the Independent Budget, I thank you for holding today’s 

most important hearing. This is truly an essential component in 

doing the right thing by America’s veterans. 

Before I go into the construction budget, Mr. Chairman, I would 

like to again publicly thank you for restoring our joint hearings. 

We communicate with you and the various Members of this Committee and the Congress, all of us, the VFW, all of us do in a variety of ways directly, indirectly through hearings, through a lot of 

staff interaction, our grass roots. But these joint hearings are about 

more than just communication. They are very important, symbolic 

events for our membership to see their nationally elected leader 

present to you, the Congress. 

And I think that this event is also emblematic of the special relationship that the veterans community has with Congress, so it reflects well on all of us. So, again, I just want to thank you for that. 

I have a little aside on that matter too. The VFW’s national commanders have been presenting over in the Senate for the past 3 

years, and they have done a terrific job over there helping us out. 

But the truth be known, they do not have a room big enough for 

all of our people to fit into. So the prospect of being back in the 

caucus room again is again heartening. So I just thought I would 

mention that too. 

Getting to the construction programs, the Department of Veterans Affairs construction budget for the past year has been dominated by the capital asset for enhanced services, CARES. Through 

the CARES process, the IB VSOs were greatly concerned with the 

underfunding of the construction budget. 

Congress and the Administration did not devote many resources 

to VA’s infrastructure, preferring to wait for the final result of 

CARES. In past IBs, we warned against this, pointing out that 

there was a number of legitimate construction needs identified by 

local managers of VA facilities. A number of facilities were authorized, including the House passage of the ‘‘Veterans Hospital Emergency Repair Act,’’ but funding was never appropriated, with the 

ongoing CARES review being used as a justification. 

Within this context, while pointing to the fact that this is generally a very good budget, the President’s budget, for VA, unfortunately, the construction portion is far from adequate. 


cprice-sewell on PROD1PC72 with HEARING
51 

Mr. Chairman, in constructing the IB, we looked to our in-house 

resources. We talked to experts outside of the veterans community. 

We use industry standards, things like the PricewaterhouseCoopers 

study. The Presidential Task Force’s report on construction has 

been extremely important in helping us formulate our calculations 

on how much funding should be increased. 

When we are looking at the condition of VA properties, the infrastructure, we will look at things like the facility construction assessment to come up with our general assessment of what needs 

to get done for VA. And I think our projections have been not only 

good but actually quite moderate through the years. 

The PTF recommends a recapitalization rate about 5 to 8 percent. We are only asking for 4 percent. And, again, in this context, 

I think VA has been recapitalizing at something like half a percent 

a year, which means the average VA facility would have to stay 

functioning for 155 years. And that is just not going to happen. 

So I would argue that our recommendations are indeed moderate. When I reflect back to 2004, when then Secretary Anthony 

Principi testified before this Committee, he said it would take a billion dollars a year to fund CARES, which was then just an element 

of the construction planning process, $1 billion a year. 

Since that time, in 2004, they got about 750 million and every 

year after that, they have only gotten about half that much. So 

there is a real deficit there. There is a real problem. 

The President’s budget for medical care, not the entire, but the 

medical care portion of the construction is $511 million. The IB is 

asking for $1.4 billion. Again, that is about 4 percent of the capital 

value. 

Clearly the President’s recommendation, especially with everything that is going on now and the need to not only recapitalize, 

but there are urgent needs. We heard Mr. Baker speak earlier of 

what is going down in New Orleans. There is a lot of need for construction out there, and we have a lot of buildings that need help. 

For example, last year, in the 2007 capital plan, only eight of the 

partially funded projects out of the top twenty got any consideration whatsoever. The cost of these, by the way, would have been 

about $700 million. That is eight out of twenty only got any kind 

of consideration at all. 

In 2008, the $511 million that the President calls for in his budget would only fund six projects of the twelve partially funded 

projects. Six others are not funded at all. And that plan for 2008 

for the scored projects—scored projects are those projects that have 

some degree of priority in the VA’s overall scheme of things of what 

does and does not need to get built or done—none of the 27 would 

get any funding at all. 

So the short form of what I am saying here is there is no funding 

for any new construction in this particular budget, and clearly that 

just will not do. 

With respect to minor construction, the need for some 300 

projects has been identified. I see I am going over my time here. 

I am sorry, sir. Has been identified. The IB is calling for a funding 

level of $450 million. The President’s budget would only provide for 

about $180 million for VHA. It is not enough money. 


cprice-sewell on PROD1PC72 with HEARING
52 

The last point I will make, and it is an urgent one, with the initial planning process of CARES, they identified the need for $2 billion alone for minor construction. 

With that, I will conclude. Thank you, Mr. Chairman. Sorry I 

went over. 

[The prepared statement of Mr. Cullinan appears on p. 99.] 

The CHAIRMAN. Thank you, sir. 

And, Mr. Greineder, from AMVETS. 

STATEMENT OF DAVID G. GREINEDER, DEPUTY NATIONAL 

LEGISLATIVE DIRECTOR, AMERICAN VETERANS (AMVETS) 

Mr. GREINEDER. Thank you. Mr. Chairman, Members of the 

Committee, thank you for the opportunity to be here today. 

As a co-author of the Independent Budget, AMVETS is pleased 

to give you our best estimates on the resources necessary to carry 

out a responsible National Cemetery Administration budget for fiscal year 2008. 

I would first like to commend the committed NCA staff who provide the highest qualify of service to veterans and their families in 

times of tremendous grief. The devoted staff provides aid and comfort to hurting families in very difficult times, and we thank them 

for that. 

The Administration requests approximately $166.8 million in discretionary funding for operations and maintenance of NCA, as well 

as $32 million for the State Cemetery Grants Program. 

The Members of the Independent Budget recommend Congress 

provide $218.3 million for the operational requirements of the 

NCA, a figure that includes our national Shrine initiative. In total, 

our funding recommendation represents a $51.5 million increase 

over the Administration request. 

The National Cemetery system continues to be seriously challenged. Though there has been noteworthy progress made over the 

years, the NCA is still struggling to remove decades of blemishes 

and scars from military burial grounds across the country. Therefore, we again recommend Congress establish a 5-year, $250 million National Shrine initiative to restore and improve the condition 

and character of NCA cemeteries. We recommend $50 million in 

fiscal year 2008 to begin this important initiative. 

By enacting a 5-year program with dedicated funds and an ambitious schedule, the National Cemetery system can fully serve all 

veterans and their families with most dignity, respect, and compassion. 

For funding the State Cemetery Grants Program, the Independent Budget recommends $37 million for fiscal year 2008. The 

State Cemetery Grants Program is an important component of the 

NCA. It has greatly assisted States to increase burial services to 

veterans, especially those living in less densely populated areas not 

currently served by a national veterans cemetery. 

Many States have difficulty meeting the 170,000 veterans within 

75 miles requirement for a national cemetery, which is why the 

State Grant Program is so important. Since 1978, the VA has more 

than doubled the acreage available and accommodated more than 

100 percent increase in burials through these grants. 


cprice-sewell on PROD1PC72 with HEARING
53 

The Independent Budget also strongly recommends Congress review a series of burial benefits that have seriously eroded in value 

over the years. While these benefits were never intended to cover 

the full cost of burial, they now only pay for just 6 percent of what 

they covered when the program started in 1973. 

These recommendations are contained in my written testimony, 

but I would like to say our recommendations which represent a 

modest increase would restore the allowance to its original proportion of burial expense about 22 percent, and tell veterans that their 

sacrifice is given the appreciation it so well deserves. 

The NCA honors veterans with a final resting place that commemorates their service to this Nation. More than 2.7 million soldiers who died in every war and conflict are honored by a burial 

in a national cemetery. Each Memorial Day and Veterans Day, we 

honor the last full measure of devotion they gave for this country. 

Our national cemeteries are more than a final resting place; they 

are hallowed grounds to those who died in our defense and a memorial to those who served. 

Mr. Chairman, this concludes my statement. 

[The prepared statement of Mr. Greineder appears on p. 79.] 

The CHAIRMAN. Thank you. 

And, finally, the National President of the Vietnam Veterans of 

America, Mr. John Rowan. 

STATEMENT OF JOHN ROWAN 

NATIONAL PRESIDENT, VIETNAM VETERANS OF AMERICA 

Mr. ROWAN. Thank you, Mr. Chairman, Mr. Buyer, and the rest 

of the Members of the Committee. 

VVA, of course, is interested, and we have seen you swap chairs. 

One of you moved over to the left, left to the right. But we hope 

that the Committee as always will continue to work on behalf of 

veterans, and I believe that in a bipartisan, nonpartisan, whatever 

you want to call it, we have hope that you will work together to 

help us do the best we can. 

You have my statement, which will be added. I would also appreciate it if you could add into our official statement a report that 

was put out by Ms. Linda Bilmes from the Harvard University 

School, John F. Kennedy School of Government called ‘‘Soldiers Returning from Iraq and Afghanistan, the Long-Term Cost of Providing Veterans Medical Care and Disability Benefits.’’ If we could 

have that added into the record as part of our statement—— 

The CHAIRMAN. Without objection, that will occur. 

[The report by Linda Bilmes appears on p. 285.] 

Mr. ROWAN. It is very clear from looking at that study of the new 

veterans that we also need to go back and get Congress to reauthorize, or it has been authorized, to get the VA to finally complete 

the Vietnam veterans longitudinal study because that, too, we believe, will show the problems of the VA long term in their fiscal 

needs to deal with the problems of veterans long after the war has 

been over. 

It is within that regard that we talk about some of the—it is interesting. My five colleagues, one of them had to leave, we really 

appreciate a lot of the work done by the Independent Budget and 

group and go along with a lot of what they are saying. We just 


cprice-sewell on PROD1PC72 with HEARING
54 

think we need a little bit more than what, frankly, they are asking 

for. 

And we are looking particularly in the medical services alone almost seven billion extra, and we believe it is needed for many different reasons, not the least of which is that we do not believe that 

the increase in demand that the VA was even considering when the 

VA developed their budgets in the last several years and including 

even the new one. 

And it is not just the demand of the OIF or OEF new veterans 

coming out. It is the demand of the Vietnam veterans who are now 

coming to deal with the terms that they have received for having 

been exposed to Agent Orange, in my case 40 years ago. Many of 

us now are coming down with all of these conditions that are related to our service in Vietnam that are now causing us to go to 

the VA. 

I would be very interested to see that 800,000 claim number broken down into who actually reported new claims. Who are they? 

Obviously I think the number that was mentioned was 200 and 

something thousand of the new vets coming in by the Secretary. 

That means there has got to be about another 500,000 older veterans, coming into the system for the first time many of them. And 

we are coming in with our diabetes and our prostate cancer and all 

of these other issues. 

And to get back to the priority eights question, many of those 

people would be seven and eights because they have never had any 

problems until now all of a sudden they face these problems as 

they get them again in their later years. 

And even in the sevens, the zero percent disability people, it is 

interesting how many of them get a hundred percent, for example, 

prostate cancer and then drop back down to zero when they go 

through treatment. But they have to be monitored for the rest of 

their lives. They should be monitored in the VA system and not be 

forced to go out to the outside system if they have their own 

healthcare. 

So that is part of it. Again, part of our assessment of why we 

need additional money, in the budget, supposed budget savings the 

last time around, the so-called management efficiencies, they were 

not management efficiencies. They were staff deficiencies, because 

often when you go out to the VISN levels, you found that these people were cutting staff to accommodate their budget. 

And that is one of the reasons why we see a lot of places where 

they are having difficulty finding enough doctors, enough nurses, 

getting the people to get into those clinics, why we are seeing times 

being dragged on again with people not getting clinic appointments 

in reasonable time frames. 

And there are a whole bunch of other things that we think is just 

medical inflation. They do not keep up with it. We also think they 

use wrong formulations in the fact that they do not take into consideration we are not like the general population. 

Again, going back to the Vietnam veterans issues and even to 

some of the newer veterans, we have more healthcare issues than 

the general public does and we are coming down with them as we 

get older and, unfortunately, because of our exposures, either in 

Vietnam or in the Gulf War, to whatever was out there. 


cprice-sewell on PROD1PC72 with HEARING
55 

And one of the things on a smaller note, we would like to see the 

300 million go back in to restore the services for Agent Orange exposed veterans. We want to bring these veterans into the system, 

many of them for the first time. They have just never gone there. 

Some of them, you know, just again what is a disabled veteran? 

If you got out of the war and you managed to walk away from 

Vietnam and you did not get shot and you did not get hurt and you 

figure I am safe, I am good to go, you come home and 30 years 

later, you have got prostate cancer or you have got diabetes and 

you have got neuropathy and all of these other things are hitting 

you, and you read in the paper, well, it is because everybody has 

got diabetes or prostate cancer is now on television, everybody has 

got it, I am just getting old. No. You got it probably because you 

stepped foot in Vietnam 40 years ago and that is why you got it. 

We have a presumption of it. You are entitled to compensation 

for it. And if you are not in the system and you are not getting 

treated by the VA and even sometimes when you are treated by the 

VA, the doctors there do not know that you are entitled to compensation for some of these things. 

So we would urge you to take a look at all of that and particularly to deal with these newer veterans with some of their mental 

issues too. We do not believe anywhere near enough money is going 

to the mental health questions, to dealing with their PTSD problems or other problems when they come home. 

And, again, I just look forward to working with the new Committee and its new reconstruction, but, really old friends on the 

Committee on both sides of the aisle. And as we go forward, we are 

looking forward to seeing your working groups that you are talking 

about having. 

Thank you. 

[The prepared statement of Mr. Rowan appears on p. 105.] 

The CHAIRMAN. Thank you. Thank all of you. 

John, you used the phrase ‘‘step foot in Vietnam.’’ Did you do 

that explicitly because there is some concern over those who were 

in the Navy that maybe have been affected and did not step foot 

and, therefore, are not entitled to—— 

Mr. ROWAN. Well, there is a lot of discussion about stepping foot 

in a lot of places. Unfortunately, the law says now you had to step 

into the place. 

And there is an issue with regards to the Navy. There is also an 

issue with regards to people in other places. We are finally seeing 

more and more recognition of Korea, for example. We are finding 

out about all kinds of other exposures even in the stateside places. 

There is a real question somebody brought up to me one time. 

I forget what islands it was now. It was either Marshall’s or some 

place where again they stored this stuff while it was in transit and 

some of them are saying that they have been exposed to it there. 

The key question I believe is in the Vietnam veterans longitudinal studies. If we went back to that study and completed that 

study, we may find out a lot more information. If we look at our 

colleagues in Australia who have done a tremendous amount of 

work on this stuff, we would see that, not only for the Vietnam veterans but for their family members. 


cprice-sewell on PROD1PC72 with HEARING
56 

One of the things that still bothers us is that, you know, we only 

have spina bifida as the only example of an issue of secondary 

problems with relation to exposure to Agent Orange. Talking to a 

lot of our Vietnam veterans, we believe there is a lot more out 

there in that regard for a lot of other child illnesses that ought to 

be covered. 

The CHAIRMAN. Thank you. 

I would yield to Mr. Michaud. 

Mr. MICHAUD. Thank you very much, Mr. Chairman. 

A question for anyone from the Independent Budget. Looking at the number the Secretary gave us this morning of the $1.7 billion 

to restore priority eights compared to what the Independent Budget gives for a number, why such a disparity in the numbers? 

Mr. BLAKE. The $1.7 billion, I assume, includes the total amount 

for collections that would be received from that group of veterans 

that come in. The $366 million that we project is actual discretionary dollars. 

We have done some analysis to determine what we believe the 

total cost would be if the amount that would be received in collections from those veterans were brought into the system. We projected about $1.1 or $1.2 billion, but for real discretionary dollars 

for that group of veterans, we estimate about $366. 

Mr. MICHAUD. A question for Mr. Blake. You had mentioned that 

the enrollment fees will drive veterans out of the system. These enrollment fees and co-pays are different than what were presented 

in previous budgets. Do you really think that if someone is making $200,000, if they have to pay a $750 enrollment fee, it is going to drive them out of 

the system? 

Mr. BLAKE. Well, I would probably say that if somebody is making $200,000, I would believe that they probably have other 

healthcare to begin with. But that is not necessarily the case. To 

be perfectly honest with you, I believe this is a question that we 

are going to have to address this year. 

Kind of addressing what Mr. Buyer had brought up about this 

earlier, I think this is a case of where the Independent Budget just 

principally disagrees with the idea that these fees and co-pays 

should be increased or added. I would say that our response to the 

idea that it is an equalization with the retirees, 20- and 30-year retirees, that that question—our answer to that would be, well, if you 

want to equalize it, then remove the fees for those 20- and 30-year 

retirees, and then they are still equal. It is just a different way to 

accomplish, I guess, the same thing. 

And I am not certain that I believe the idea that it is strictly for 

a government management tool. I mean, I still believe that there 

is obvious budget implications that go along with these. So we recognize that this is an issue that is going to have to be addressed. 

I have to say from my perspective I find it not amusing, but 

quite interesting that the VA chose the method that they did to— 

they made it easy for Congress to reject these co-pays and fees because they do not have any immediate impact on the discretionary 

budget of the VA healthcare system. 

So I think they recognize the will of Congress with this issue 

and, yet, they continue to push the issue, and it concerns us that 


cprice-sewell on PROD1PC72 with HEARING
57 

ultimately it would still force people to leave the system. I do not 

believe they have factored into that 200,000 who would leave the 

system, that does not necessarily include the higher-income veterans. 

There are a lot of veterans who are on the margin who would 

probably fall into that category of veterans that would leave the 

system. But we do not have an exact analysis of how that would 

impact it. It would be kind of interesting to see maybe how that 

would play out over time. 

Mr. MICHAUD. And if we could, Mr. Chairman, request from the 

VA, I would be interested in finding out, since they did break it out 

to under $50,000, between $50,000 and $74,999, the number of veterans falling in those categories because I do not believe it is going 

to drive them out, if they are making $200,000, of the system. 

My next question is, and I know Mr. Lawrence brought it up, on 

attorney fees, and I know the VSOs are split on allowing attorneys 

to get involved into the system, how often do you think attorneys 

will get involved in the system? Do you think there is going to be 

a huge influx of attorneys or do you think it might be on an occasional basis? 

I guess I will ask those who are against them, and I guess the 

veterans who are in favor of the attorneys being involved in the 

system exactly how do you think the attorneys will be involved in 

the system? 

Mr. LAWRENCE. Well, their money, their funding comes from retroactive payments that the veteran would get, and there are some 

sizable retroactive benefits. And some of them, I mean, they would 

cherry pick. That is one of our concerns. You know, an attorney is 

not going to represent somebody that they do not see, you know, 

a payout at the end. 

We represent everybody and, you know, we provide a service. 

And I can see attorneys not doing that, cherry picking through the 

system, abusing the system, maybe even delaying claims longer so 

that the retroactive amount is larger. 

And, you know, it is conceivable that it would come to the point 

where people would feel they needed an attorney to accomplish 

something that should not require an attorney. As I stated, it is an 

open and simple system. And I just do not see how adding attorneys to that process would improve it. 

Mr. CULLINAN. Mr. Michaud, the VFW is also in the against 

them camp, so I would like to speak to that next. I mean, along 

with the prospect of individual abuse, the concern, of course, is 

what effect will the introduction of attorneys have on the system. 

Will it make it more adversarial? Will it compel our service officers 

to play a more litigious approach to, you know, pursuing veterans’ 

claims. 

The other thing I would like to talk about, though, is the prospect of an underlining irony. You know, in tort claims actions, you 

will have firms that are set up and they will come in representing 

various individuals in the courts, and oftentimes they have their 

own boards of expert witnesses. And I know there are a couple of 

examples of this where they are actually getting involved with veterans’ law. I think it is in Missouri that Joe was talking about. 

And what they are doing is they will bring on—its tinnitus. 

There is a type of severe tinnitus. This firm, I think it is in NeVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
58 

braska, has their own audiologist on board. And they are representing veterans with a severe form of tinnitus and, sure enough, 

their allowance rate is extraordinarily high. 

Now, by extension, I could see this applying to all sorts of other 

things. Take individual unemployability. For example, you could 

suddenly have attorneys getting very successful at representing 

lots of veterans before VA where suddenly I, you who might not 

have—and it costs the government then. And the consequences 

that could have for the survival of the system are a little bit 

daunting. 

Mr. GREINEDER. Mr. Michaud, AMVETS is also against the attorney bill that passed back in December. We join our colleagues at 

the DAV and VFW against it. And we actually passed a national 

resolution at our convention in August against the bill. 

One of our concerns is that any good lawyer entering the VA system will use the system to their advantage and, you know, causing 

more delays. We are already at a 600,000 backlog, so we are concerned about entrance of lawyers, what that will do to the system. 

Mr. ROWAN. We take the exact opposite opinion, I guess, from my 

colleagues. We have been always in favor of Vietnam Veterans of 

America bringing lawyers into the system. We think that veterans 

are entitled to legal representation like anybody else. 

And one only has to look at the Social Security system where 

lawyers have been brought in and nothing disastrous has occurred, 

and we have not seen people running amuck. In fact, what we have 

seen is people finally getting their due. 

Having been service rep and done claims work, anybody who 

says that system is not adversarial, boy, I tell you, it seemed to be 

very adversarial. 

And the other thing is, when you are filing claims and doing all 

that claims work, anything beyond the simplest claim and the most 

presumptive claims, for example, you are getting into some very interesting areas where you are writing briefs. Really good service 

reps who have been out there are practically parallels. They have 

to read law. They have to read sections of Title 38. They have got 

to quote things all over the place. 

We are really looking at, when we get into the appeals level of 

things, when you are up to the Board of Veterans Appeals, you are 

talking to attorneys all the time. In the Court of Veterans Appeals, 

you have got to be an attorney. I mean, who are we kidding here? 

I mean, attorneys are all over this place. They are all over the VA. 

They are the ones who are writing half the Title 38 in the first 

place. So attorneys are everywhere in the system except on our side 

of the table most of the time. 

The other thing is, you know, the gentleman just said what happens if we get all of these unemployability claims. Well, they are 

not going to get accepted unless they have got some legitimacy. 

Just because a lawyer goes in and brings the claim does not mean 

we are going to win. 

And if they are winning all these claims that they deserve, then 

that only means the system undeservedly kept veterans out from 

getting their due. 

So, you know, I think it needs to be watched, monitored very 

clearly. The Bar Association has to get involved, and these lawyers 


cprice-sewell on PROD1PC72 with HEARING
59 

cannot just be any lawyer. They need to go through some kind of 

training. We think that they ought to have that. But they would 

end up having some sort of practicality like Social Security lawyers. 

I had to go unfortunately through a process with my son who 

had a problem when he crushed his foot in a motorcycle accident 

and had to go on Social Security Disability, and we had to bring 

the lawyers into the system because there is no other way to beat 

that system. They just beat you down with all the legal aspects of it. 

And so, you know, unfortunately, the adversarial manner of the 

VA at certain levels, when you get into certain types of claims, you 

may very well have to have somebody able to write a really good 

legal brief to get past them. And so we are in favor of it. We do 

not think it is going to clog the system or make it any worse than 

it already is. 

The CHAIRMAN. Thank you. This is a subject we have not exhausted yet. 

Mr. Buyer. 

Mr. BUYER. Thank you. 

It is unfortunate The American Legion Commander had to leave 

to catch a plane. I think this was the first time in 15 years that 

I have been on this Committee that an American Legion Commander has testified at a budget hearing, and so I want to thank 

The American Legion Commander for coming. 

Up until the last Congress, Mr. Rowan, is the first time VVA had 

ever been invited to sit at the table. And therein lies part of the 

challenge this Committee has had. You have got the Independent 

Budget. We try to go through this budgetary process, but there are 

many Military Service Organizations and other organizations that 

get excluded and they do not get to this table. 

So, Mr. Cullinan, therein lies the huge difference between a philosophical approach. You choose theater over substance. Now, I understand as a military man the importance of a military parade. I 

am going to put on my uniform here in about 10 days, so I understand what a military parade can do, discipline, command and control, all those things are important. 

But to this Committee, the most important thing is for us to get 

timely input. And if you think that your input is the only input— 

actually, I do not think you believe that. But right now that is all 

we get. We just get the Independent Budget, The American Legion, 

and yours. And there is a whole bunch of other input that we need. 

But, yet, what is going to happen? We do not get that input until 

much later and it is going to be done in theater whereby the Commander then plays to his audience, i.e., the Members. We sit there 

and listen as the Commander plays to his audience, and then they 

give us input. But the input is now after the budget process has 

already been done, so now you have been relegated to the back 

bench and all you can do is play the part of the critic. 

And you cheer that. You say that is wonderful. That is great. I 

get my theater. I get to be a critic. No. I want you to participate 

substantively in the process, not just you, but the 20 VSOs and 

MSOs. The Military Service Organizations have been excluded 

from this process. And I am stunned now. I put together a process 

to bring them in and now they are being silenced. 


cprice-sewell on PROD1PC72 with HEARING
60 

I mean, let me just say this. In the 2 years that I chaired this 

Committee, here are the individuals that actually came into my office to work with me. It was not anyone from the big four. It was 

not anyone sitting at this table. It was not your organizations. It 

was General Matz with NAUS. It was Admiral Ryan with MOAA. 

It was Mr. Rowan with VVA. It was Rolling Thunder and the Patriot Guard Riders. That is who would come into my office and see 

me. 

The only time the commanders of the big four ever came in to 

see me is because they wanted to have their joint hearings back. 

No one even picked up the phone. No one even came to see me personally on any substantive issue in the 2 years which I chaired this 

Committee. I think that is stunning. I think America needs to 

know that. 

And so what did I have to do? I had to then put together a process on how to get their timely input. The best of all worlds, Mr. 

Cullinan, would have been to have done joint hearings prior to our 

budget views and estimates. I proposed that. That does not work 

because you want to do them at a time when you do your spring 

conferences when you bring all your Members out. So I understand 

all that, and we just could not get it worked out. 

Mr. Lawrence, I need some help. Where did you come up with 

FTE productivity being 100 claims per year? Where do you get 

that, because that is nine fewer than VBA? So where do you get 

that? 

Mr. LAWRENCE. That is just the formula that the IB has used. 

Mr. BUYER. Say again. 

Mr. LAWRENCE. We want claims workers to be able to concentrate more on quality rather than numbers. So logically that is 

going to require them to have a fewer number of claims, and the 

estimate that the IB has traditionally used is 100 per worker, 100 

claims per worker. 

Mr. BUYER. So it is an arbitrary number? 

Mr. LAWRENCE. No more arbitrary than 109 for the VA. Sir, I 

would also like to add—maybe I did not make a great impact on 

you when we did meet—but I personally met with you in a handful 

of meetings over the course of the last year. 

Mr. BUYER. I am referring to commanders. I am referring to commanders. 

Mr. LAWRENCE. You said nobody at this table. 

Mr. BUYER. Nobody at this table who represents national organizations. 

Mr. LAWRENCE. All right. 

Mr. BUYER. I apologize. Thank you for correcting me. 

Let me ask a question on burial details. Are your organizations 

getting the resources they need for burial details, ammunition necessary, upgrading of weapons? Can anybody answer that question? 

Mr. CULLINAN. I know that it has gotten better. There was a real 

problem for a while. For one thing, there was a type of per diem 

which was not made available unless certain uniform members. 

And that has been corrected, so that has helped quite a bit. 

You know, we would really have to poll our membership, though, 

to find out how well it is actually going. We are not getting a lot 

of complaints about it, and I know that that change in law really 


cprice-sewell on PROD1PC72 with HEARING
61 

made a difference for our people. And a lot of our people who volunteer for these assignments, they are not wealthy by any stretch of 

the imagination. This money was coming out of their own pockets. 

So that change helped a lot. 

Mr. BUYER. All right. Please go back and look at that a little bit 

further. If there are things that we need to do from our standpoint 

or communicate with the Armed Services Committee because for 

this increase the Secretary talked about with regard to burials, we 

are going to be responsive to you. Okay? 

Thank you. 

Mr. BLAKE. Mr. Buyer, can I make one statement real quick? 

Mr. BUYER. Yes, sir. 

Mr. BLAKE. I think I made clear last year that if I know I am 

not the subject matter expert on a particular issue, I will be glad 

to forward the question along or bring that person with me the 

next time. 

With regards to your question about the 100 claims per FTE, I 

would suggest maybe submit that question to us in writing because 

if you look inside the IB, there are a number of people involved in 

the writing. And I know who the individual is. I am pretty certain 

who the individual is who is responsible for that section and I am 

sure he would be glad to give you a better explanation of your 

question there. 

Mr. BUYER. Gentlemen, your answers, I think, coincide with the 

task force, that we want to make sure we get the best qualified 

people to adjudicate these claims. And I do not even know what the 

number would be if I were an adjudicator. But thank you. 

The CHAIRMAN. I want to thank you all. I want to personally 

thank everyone at the table for helping educate me over the last 

decade about your organizations. I think the Independent Budget 

is a tremendous job. As I said, I am going to recommend that we 

follow it in our own budget deliberations. 

I also want to make sure, everybody, again, thank you for agreeing to participate. On Monday, at one o’clock, all the Members of 

the Committee, Mr. Buyer, are invited to participate in what I am 

calling a summit, not a round table, but a square table, to, in fact, 

put in writing the agenda that we are going to pursue as a Committee over the next year. 

And we look forward to your participation in that, and we look 

forward to working with you. I love commanders, but I love you all 

too. And I appreciate that you all will be helping us as we progress. 

Mr. BUYER. Will the gentleman yield? 

The CHAIRMAN. I yield to Mr. Buyer. 

Mr. BUYER. As a gentleman from California, you recognize the 

challenges for Members to get back for those votes at 6:30, so as 

we do these round tables, I think it is a great idea to just recognize 

that Members are returning on these Mondays. So it makes it challenging for attendance. 

The CHAIRMAN. I appreciate hearing that, and I complained 

about that as a Californian for a long time. So we will make sure 

that that is taken into account. 

This meeting is adjourned, and we thank you all for participating. 

[Whereupon, at 1:30 p.m., the Committee was adjourned.] 


cprice-sewell on PROD1PC72 with HEARING
(62) 

A P P E N D I X 

Prepared Statement of Hon. Bob Filner 

Chairman, Full Committee on Veterans’ Affairs 

Welcome everyone to the hearing on the Fiscal Year 2008 Budget Submission of 

the Department of Veterans Affairs. 

Secretary Nicholson on Monday characterized the VA’s FY 2008 budget as a 

‘‘landmark’’ budget. 

I applaud the VA for submitting a budget that calls for an increase for veterans’ 

medical care, unlike the budget it submitted 2 years ago, and I believe it presents 

us a framework from which to begin our analysis as to whether the VA’s budget 

submission will meet the needs of veterans in the coming fiscal year. Our job as 

a Committee is to make sure that as we follow this ‘‘landmark’’ we are not led off 

course and lose our way. 

The VA has requested an increase for VA medical care of $1.9 billion over the 

level provided for in the joint funding resolution. This represents a 6 percent increase. The amount we provided this fiscal year is 12 percent more than we provided in FY 2006. The Independent Budget and The American Legion both recommend more than a 12 percent increase for FY 2008. The Vietnam Veterans of 

America recommend substantially more. I look forward to your explanations as to 

why you believe your 6 percent increase will suffice. 

Your budget submission states that $1.4 billion of your increase for medical care 

is attributable to inflation. Once this is factored in, your recommended increase 

leaves precious few dollars to meet the increasing needs of veterans. 

Although the waiting list for new enrollees has indeed declined, and I applaud you 

for that, I believe that no veteran should have to wait for a healthcare appointment 

simply because the VA does not have the resources to care for that veteran. Can 

you assure this Committee that your budget request has the dollars you need to address this problem? 

Last year, your budget request claimed an additional $197 million in ‘‘efficiencies’’ 

for FY 2007, for a total of $1.1 billion. This year’s budget submission also claims 

clinical and pharmacy ‘‘cost avoidance.’’ This Committee would like to know whether 

you believe you will achieve these ‘‘efficiencies’’ for FY 2007, and what exactly are 

your dollar estimates as to your ‘‘efficiencies’’ in these two areas for FY 2008. 

In the area of mental health, I see that you are requesting an additional $56 million for a total of $360 million for your Mental Health Initiative. Your budget submission also claims that the VA plans to spend $3 billion for mental health services. 

The GAO has reported in November that you failed to fully allocate the resources 

you pledged in FY 2005 and FY 2006 for your Mental Health Initiative. 

In light of this report, will the VA fully allocate the $306 million for this initiative 

in FY 2007, and the $360 million for FY 2008? Does the VA currently have the resources it needs to address the mental healthcare needs of our veterans, especially 

our veterans returning from Iraq and Afghanistan? 

I must note that I am disappointed that you have once again brought forward legislative proposals as part of your FY 2008 submission. Instituting enrollment fees 

and increasing pharmacy co-payments have been rejected year after year by Congress. Last year you claimed that enactment of these proposals would reduce your 

need for discretionary healthcare dollars. This year, your proposals are deemed 

‘‘mandatory’’ spending and are taken out of your overall mandatory spending. 

I would like you to explain to this Committee why you have offered these proposals again, and the policy reasons for deeming the proposed receipts from these 

proposals mandatory dollars. 

The VA is facing an ever-greater claims processing crisis. In light of this I would 

expect your FY 2008 budget submission to aggressively request additional dollars 

to address this growing problem. But I see that your request for General Operating 

Expenses, which funds claims processors, is close to $9 million less than the amount 

provided for in the joint funding resolution. What steps are you taking to meet this 


cprice-sewell on PROD1PC72 with HEARING
63 

challenge, and why has the VA not requested a sizable increase in this account in 

order to address the claims processing backlog? 

Your VA research request seeks less than you will receive under the joint funding resolution. You should be requesting at least an $18 million increase just to keep 

pace with inflation. This is especially true when once again you are seeking more 

resources from other Federal sources and the budget for the National Institutes for 

Health promises to be static. 

I look forward to a full explanation of your Information Technology request, including transfers from other accounts. We must ensure that the VA is moving in 

the right direction in IT and that the funding level you receive in FY 2008 will lead 

to better security, more innovation, and fewer incidences like the one that occurred 

in Birmingham, Alabama last week. 

I note that you seek increases in both Major and Minor construction. I know this 

Committee will be interested in learning how the VA selected the projects included 

in the FY 2008 request. 

There is much work to be done to ensure that the VA has the funding it needs 

in the coming fiscal year, and to ensure that the VA spends the resources it receives 

diligently. Mr. Secretary, we look forward to hearing from you this morning, and 

to working closely with you to make sure that the needs of our veterans, those returning from Iraq and Afghanistan, and the veterans from our previous conflicts, 

are met. f 

Prepared Statement of Hon. Steve Buyer 

Ranking Republican Member, Full Committee on Veterans’ Affairs 

Thank you. Mr. Chairman, good morning. I’d also like to welcome everyone to our 

first hearing of the 1st Session of the 110th Congress. 

Mr. Secretary, I am glad you can be with us today to share with the Committee 

the President’s proposed budget for 2008. I commend you for yet again embracing 

the challenge of improving the VA’s budgeting process. Building on last year’s 

progress, it appears that improving the integrity of the process has borne fruit with 

this budget. 

Mr. Secretary, as you observe your second anniversary as chief steward of our nation’s veterans we can look back and note that it has been a year of challenges and 

successes. I thank you for your willingness to squarely meet the challenges and commend you on those successes. 

Since this time last year, we passed a major legislative initiative—Public Law 

109–461—the Veterans Benefits, Health Care, and Information Technology Improvement Act of 2006. This bill was the result of a bipartisan effort led by this Committee in concert with our colleagues in the Senate. We listened to 20 VSOs and 

MSOs and incorporated many of their suggestions. We authorized 24 major construction projects in 15 states, approved continued leasing of 8 medical facilities and 

required VA to explore options for construction of a new medical facility in San 

Juan, Puerto Rico. With regard to our returning Iraq and Afghanistan veterans, we 

added $65M to increase the number of clinicians treating post traumatic stress disorder and improve their training. It further authorizes spending for collaboration in 

PTSD diagnosis and treatment between VA and DoD. We authorized more funding 

for additional blind rehabilitation specialists and increased the number of facilities 

where these specialists will be located. We expanded eligibility for Dependents Education Assistance to the spouse or child of a servicemember hospitalized or receiving 

outpatient care before the servicemember’s discharge for a total and permanent 

service-connected disability. The intent here was to help enhance the spouse’s earning power as early as possible before discharge of the servicemember. 

We made chapter 35 more flexible for spouses and dependents, we restored the 

entitlements for members of the National Guard and Reserves who are called to active duty during the school year, we extended work study provisions to ensure a veteran didn’t lose a job during the school year, and we required VA to report ways 

to streamline administration of the GI Bill to shorten the time to get that first check. 

Some expressed concerns about veterans ability to afford a home so we authorized 

VA to guarantee co-op housing units which are often the most affordable housing 

in many areas. 

Many asked us to help veteran, especially service-disabled veteran-owned businesses, so we gave VA the tools to increase the amount of business they do with 

veterans by giving service-disabled veteran-owned businesses preference over all 

other set-aside groups and ensuring the survivors of veteran businessowners who 

acquire ownership continue their veteran-owned status with VA. 

Service organizations also expressed the need to revitalize the veterans employment programs at the Veterans Employment and Training Service. So, we made 


cprice-sewell on PROD1PC72 with HEARING
64 

several changes to strengthen mandatory training for DVOPs and LVERs, revised 

the incentive program to make it more effective, and established a pilot licensing 

and credentialing program. And VVA especially, noted that DOL needed to develop 

regulations to implement the Jobs for Veterans Act. We did that too. 

Since this time last year, we have seen the Department embrace the idea of centralizing its IT under the VA’s CIO. I believe that this innovation will be seen as 

part of your legacy to the Department of Veterans Affairs. As part of our work on 

IT, we engaged in a bipartisan fashion to increase data security in order to protect 

our nation’s veterans. We have also worked through the complexities of the Charleston model, forging an exciting new way to approach hospital design and construction. 

It is our job to preserve those arenas of excellence and to work together in a bipartisan fashion to ensure every service the Department provides meets the highest 

standards. 

One of the most important services remains the determination and awarding of 

benefits. As you know, Mr. Secretary, the claims backlog has reached an all-time 

high. To help lead the way ahead, I organized a Compensation and Benefits Accountability Task Force in December 2005. After almost 1 year, they provided me 

a powerful work product with numerous recommendations. I want to commend 

those who spent many hours working on this valuable product—Blake Ortman, the 

Associate Legislative Director of PVA, James Doran, the National Service Director 

for AMVETS, Rick Weidman the National Legislative Director for Vietnam Veterans 

of America, John Lopez, the Chairman for the Association of Service Disabled Veterans, and Steve Smithson the Assistant Director, National Veterans Affairs and 

Rehabilitation Commission, the American Legion. Gentlemen, thank you for your 

good work. Mr. Secretary, I look forward to sharing this with you, as well as the 

Members of this Committee as we tackle this serious problem. 

It’s worth noting that again this year, the President has proposed substantial increases in the budgets of agencies focused on fighting the war on terror—the Department of Defense and the Department of Homeland Security. I am pleased that 

again this year, the Department of Veterans Affairs—an agency focused on caring 

for those who have borne the battle—has also received a substantial increase of approximately 8 percent over the level contained in H.J. Res. 20. At a time when much 

of the rest of government received a 2.2 percent increase, I believe this reflects the 

commitment of this Administration to care for our nation’s veterans during time of 

war. 

As you know Mr. Secretary, a budget is much more than numbers. In the end, 

it must translate into real actions on the ground that has a positive affect on America’s veterans. As I look at this budget, I view it in light of my top three priorities, 

which remain: 

• Caring for veterans who have service-connected disabilities, those with special 

needs, and the indigent. 

• Ensuring a seamless transition from military service to the VA. 

• And providing veterans every opportunity to live full, healthy lives. 

We have an obligation to those who bear the burdens of war and of military service—and to their survivors. Our work must move us toward the fulfillment of that 

obligation. 

Therefore I want to judge this budget not just by the numbers, but for what it 

does for America’s veterans. When you send us a budget of this magnitude, Mr. Secretary, I expect to also find those outcomes you seek for success. The Congress is 

not a blank check. We will be looking for accountability. Generally, I think this is 

a good budget. But as we look at desired outcomes, I want to review what we 

learned from the 20 VSOs and MSOs at last September’s ‘‘look back, look ahead 

hearing.’’ At that time, the issues most frequently cited as concerns were: (1) VBA 

and the claims backlog, (2) seamless transition, mental healthcare, and healthcare 

funding, and (3) improving the GI Bill. Mr. Secretary, I’d ask you to explain how 

this budget addresses each of these issues and improves the lives of our veterans. 

Mr. Secretary, I applaud you for the direct and forthright budgeting process that 

you have used in developing this year’s budget. There appear to be none of the gimmicks that were used in years past. 

That said, there are some concerns in the budget before us today: Mr. Secretary, 

last year you brought us a similar request for enrollment fees and increased co-pays. 

I personally agree that it is appropriate to ask for cost-sharing of veterans without 

service-connected disabilities. I applaud the fact that these legislative proposals do 

not reduce the discretionary medical care appropriations. However, I am concerned 

that this year, any funds collected under these proposals go directly to the U.S. 

Treasury. 


cprice-sewell on PROD1PC72 with HEARING
65 

Further, VA’s projects nearly 2.8 billion dollars in collections, 7 percent above last 

year’s projected collections. Given the agency’s track record, this appears to be overly optimistic. 

I am also concerned with your answer to the claims backlog. Simply throwing 

more money at the problem, is not the answer. I am troubled by what I would characterize as an insufficient use of technology and instead, the status quo—throw 

more people at the problem. We’ll continue this discussion throughout the year, Mr. 

Secretary, but I want you to know up front, I am not pleased. 

Budgets, systems, and programs are, after all, about service to veterans. As you 

mentioned in your opening remarks Mr. Secretary, you and I, along with Dr. 

Boozman and Mr. Salazar, traveled last year to Iraq and traced the path of wounded military personnel back through Germany to state-side military treatment facilities and ultimately to the VA hospitals. For me, this experience brought into sharp 

focus the issues facing today’s veterans. These brave men and women have sacrificed everything for this nation and we owe them our energy and diligence in making them whole again. 

Mr. Secretary, I thank you for appearing here today and look forward to your testimony. I also look forward to hearing from our second panel—those VSOs representing the Independent Budget and the American Legion. 

Mr. Chairman, I yield back. 

f 

Prepared Statement of Hon. Henry E. Brown, Jr. 

Mr. Chairman and Ranking Member Buyer, thank you for calling this hearing to 

examine the Administration’s budget request for Fiscal Year 2008. I look forward 

to hearing from Secretary Nicholson on our first panel and from representatives 

from many of our nation’s veterans service organizations later in the day. 

As past chair of both the Health and former Benefits Subcommittees, I am 

pleased that this budget continues the hard work our Committee and the Administration embarked upon just a few short years ago. In 2001, we had a VA that was 

receiving just over $20 billion for medical care. In the budget proposal we are discussing today, VA is in line to receive upward of $36 billion for veterans’ medical 

care. This accomplishment would not have been possible had it not been for the 

commitment made by this Committee, the Administration, and so many others in 

and out of Congress to our nation’s veterans. 

As the Congress and this Committee looks at the Administration’s current budget 

proposal, I am hopeful that we will do so in a way that focuses on the bipartisan 

concern we all have for the wellbeing of our nation’s veterans. The work done in 

our VA medical centers is of such importance, not only to veterans, but also for our 

entire nation. From developing new treatments to leading the world in the use of 

electronic medical records, the work of the VA truly is world class. 

That said, as with any organization, especially one as large as the VA, there is 

room for improvement. I am especially glad to see that this budget includes something that this Committee has called for the VA to do for a very long time. The centralized management of information technology (IT) systems and security contained 

in this budget will lead to improved security for the personal information of our nation’s veterans as well as provide the VA with the ability to improve service from 

the top down. 

In addition, I want to praise Secretary Nicholson and the Department of Defense 

for coming together under the banner of common sense to develop a joint medical 

records system for our service personnel and veterans. This will go a long way toward achieving the goal of seamless transition that this Committee has so actively 

pursued. 

In closing, Mr. Chairman, while I certainly have concerns with this budget and 

some of the funding decisions made by the Administration within certain accounts, 

overall I believe it sets a very solid starting point for Congress to build upon. I look 

forward to that process in the coming months. Again, Mr. Chairman, thank you for 

the time, which I now yield back. 

f 

Prepared Statement of Hon. Jeff Miller 

Thank you, Mr. Chairman for holding this hearing to discuss the fiscal year 2008 

funding for the Department of Veterans Affairs. 

I am committed to our responsibility to ensure that the budget we adopt will continue to meet both the complex needs of our new generation of younger veterans 

as well as maintain and improve the quality of services for our older veterans. 


cprice-sewell on PROD1PC72 with HEARING
66 

I want to thank the Secretary for his appearance before the Committee today and 

I thank you for your leadership. I also want to commend the manner in which you 

and your staff have responded to the emergent challenges in taking care of our veterans. 

I also appreciate the Veterans Service Organization representatives for participating in our hearing today. Your outlook on funding recommendations for veterans 

programs and input into the budget is of great value to me in this process. 

It is satisfying to see that after this Committee uncovered weaknesses in the process VA used to develop its healthcare budget in 2005, the budget request for fiscal 

year 2008 is more transparent. The Department proposes $36.6 billion for VA 

healthcare—the largest amount ever requested by any Administration. 

However, I would be remiss in not expressing my concern about the inclusion of 

legislative proposals to establish fees and increases in pharmacy co-payments for 

certain veterans without service-connected conditions similar to requests that Congress has rejected year after year. 

Having chaired the Subcommittee on Disabilities and Memorial Affairs last year, 

I am cautiously encouraged that the budget includes increased funding to reduce 

compensation processing time and improve accuracy. 

In the State of Florida, the VA patient workload is among the highest in the Nation and the demand for VA healthcare continues to grow, especially in Okaloosa 

County, the center of my Congressional District. 

Three years ago, the Capital Asset Realignment for Enhanced Services (CARES) 

Commission identified this Florida Panhandle region as underserved for inpatient 

care. In fact, it is the only market area in the VISN, VISN 16, without a medical center. 

The absence of a VA inpatient facility continues to be one of the biggest concerns 

of veterans who live in this area. Currently, many of these veterans have to drive 

to Mississippi to receive inpatient care. 

Bringing a full service VA hospital to the first district is something I have been 

fighting for. I look forward to working with the Department in support of VA’s overall capital construction program to address the issue of providing timely access to 

inpatient healthcare for veterans living in and around Okaloosa County. 

Collectively, we share the same goal of providing exceptional service to those who 

have served in our Armed Forces and sacrificed so much for our freedom. 

I hope that our hearing this morning will point the way toward close cooperation 

among all of us as advocates of our Nation’s veterans to respond to their evolving 

needs and those of their families. 

f 

Prepared Statement of Hon. Gus M. Bilirakis 

Mr. Chairman, I want to commend you for scheduling this timely hearing on the 

Administration’s Fiscal Year 2008 budget request for the Department of Veterans 

Affairs. I would also like to take a moment to welcome VA Secretary, Jim Nicholson, 

and our other witnesses to the Committee this morning. 

As a new Member of the Committee, I am anxious to hear directly from Secretary 

Nicholson on the Administration’s overall budget request for the upcoming fiscal 

year and how it addresses the needs of our nations’ veterans. I am also looking forward to hearing the recommendations of the authors of the Independent Budget as 

well as those of the other veterans’ service organizations (VSOs) testifying today. 

The VSOs often provide us with valuable insight into the day-to-day operations of 

the VA and its needs. 

There are a number of issues in the budget which are of specific interest to me, 

but rather than spending time to raise them now, I will wait until the question and 

answer period to discuss them. However, I do have some concerns regarding the legislative proposals that were included in the Administration’s budget request. 

As I understand these proposals, they would implement annual enrollment fees 

and increased prescription drug co-payments for Priority 7 and 8 veterans. I know 

that the Administration has made similar proposals in the past which Congress has 

rejected. I am very concerned about the impact these proposals would have on our 

nation’s veterans. As the Representative of a district with a large veterans’ population, I strongly believe that we must do everything we can to repay the great debt 

that we owe the men and women who answered the call to duty, and I hope that 

the Committee will carefully review these proposals before taking any action on them. 

Mr. Chairman, I look forward to working with you and the other Members of our 

Committee to ensure that our veterans receive the benefits they earned through 

their service to our country. 

f 


cprice-sewell on PROD1PC72 with HEARING
67 

Prepared Statement of Hon. Ginny Brown-Waite 

Thank you, Mr. Chairman, 

First, I would like to thank Secretary Nicholson for testifying before the Committee today. I have a great deal of respect for the work you have done since taking 

office, and am confident that you will continue to serve our nation’s veterans well. 

I am pleased that the President’s budget request would provide $86.75 billion for 

the Department of Veterans Affairs—a nearly 8 percent increase from the previous 

year. Having said that, I do have concerns about this budget. Once again, the President has included a proposal establishing an enrollment fee and increased prescription drug co-payments for category 7 and 8 veterans. I have always said that Congress should not impose any new fees without expanding access to care. In fact, I 

recently introduced legislation, H.R. 92, to ensure that veterans receive timely access to healthcare. Too many veterans are waiting too long for care, or worse, shut 

out of the VA’s system altogether. The President submits this proposal year after 

year, and every time I vehemently oppose it. This year will be no different. 

Some are saying that this budget does not provide adequate funding to the VA. 

I want to make certain that this budget will adequately meet the needs of those 

veterans seeking benefits and medical care. With increasing numbers of our brave 

men and women returning from Iraq and Afghanistan, the VA will face a significant 

strain for the near future. As Members of Congress, we have an obligation to ensure 

that those who served are receiving the care they need. Therefore, it is essential 

that Congress continue to direct funds and resources to areas in need, while bringing greater efficiency to the VA. 

Once again, thank you to all of today’s witnesses. I look forward to working with 

my colleagues in the 110th Congress to ensure that our nation’s veterans receive the 

care and support to which they are entitled. 

f 

Prepared Statement of Hon. John T. Salazar 

Mr. Chairman, Monday I visited with four soldiers from Colorado at the Walter 

Reed Army Medical Center. Monday also happens to be the day the President released his budget proposal for 2008. 

While at Walter Reed, I sat with a young man who took a shot gun blast at point 

blank range. 

Then I spent some time with a 25-year-old double amputee. 

The third soldier, a native of the Colorado plains, was recently fitted with a prosthetic left leg. 

And the fourth is a Lt. Col recovering from a bullet shattered right leg. 

These brave soldiers are representatives of the thousands of injured men and 

women of the U.S. Armed Forces that have returned from Afghanistan and Iraq. 

Over 50,000 troops have sustained serious injuries in this war. Yet the President 

is proposing an increase in VA health funding that fails to adequately fund the basic 

necessities of our future generation of war veterans. 

The President says his budget meets the growing healthcare needs of our Nation’s 

Veterans, yet fails to adequately fund medical care for Colorado’s 400,000 veterans, 

and troops returning from Iraq and Afghanistan. 

The President claims he’s expanding the Department’s ability to provide mental 

healthcare, yet this proposed budget fails the thousands of servicemembers returning from war with PTSD and other psychological traumas of war. 

With the President’s proposed budget, the Veteran’s Administration will be forced 

to shift resources from the care of our aging veteran population to address the needs 

of our most severely injured veterans returning from combat today. 

Mr. Chairman, the cost of this war must not be shouldered solely by the brave 

men and women who have fought for our freedoms. It is our responsibility to guarantee that our veterans get the benefits that they were promised the day they 

signed up for service. 

f 

Prepared Statement of Hon. Doug Lamborn 

Thank you, Mr. Chairman. 

It is an honor to be here in my first Veterans’ Committee hearing among veterans 

and their families, and those who have, in turn, dedicated themselves to serving 

these great patriots who have secured our nation’s very freedoms. 


cprice-sewell on PROD1PC72 with HEARING
68 

Mr. Buyer, thank you for your service as Ranking Member of this Committee and 

for your confidence in this freshman. I assure you that my service will be marked 

by energy, and a focus to ensure our veterans, their families, and their survivors 

that we have a system that makes timely and accurate decisions and efficiently delivers benefits to deserving beneficiaries. 

Admiral Cooper, I was glad to have been able to visit with you briefly; this is a 

complex area and has profound impact on our veterans and their families. 

These beneficiaries, we would all agree, shouldn’t have to grapple with the complexities, laws, regulations, and pressures generated from one side of Washington 

to another. They are already grappling with the pressures of illness, injury, the need 

for a pension, some college tuition, perhaps a life insurance policy or a home loan. 

No veteran should wait 6 months for a claims decision or years for an appeals 

decision. We must—and we will—work together in a bipartisan fashion and with 

you in the Administration to solve this problem. 

We will welcome fresh ideas, make room for promising partnerships, and keep the 

end goal in mind: veterans who are well-served by their government. 

Secretary Tuerk, I look forward to working with you. Your Administration has a 

reputation for efficiency and customer satisfaction. More must be done so that all 

of our national cemeteries meet shrine commitment standards. 

As we expand the number of national and state cemeteries, we should preserve 

if not accelerate our progress toward this vital commitment, which has enjoyed the 

Committee’s enduring support. 

Much must also be done before we can offer our veterans a burial option in a national or state cemetery within a reasonable drive from their residence. 

I look forward to the opportunity today to hear more on these and other issues 

of importance to our veterans and their families. 

Mr. Chairman, I yield back my time. 

f 

Prepared Statement of Hon. Timothy J. Walz 

Mr. Chairman, Members of the Committee and guests, let me express what a true 

honor it is for me to serve on this distinguished Committee. Having served 24 years 

in the Army National Guard and having deployed to Europe in support of Operation 

Enduring Freedom, I understand the need to keep our promise to America’s veterans. These brave men and women have admirably served their country with unflinching courage and valor. Crafting policy that serves their best interests is this 

Committee’s chief goal, and so I sincerely express my eagerness to work with each 

of you to meet that important goal. 

Today we turn our attention to the President’s Fiscal Year 2008 budget requests 

for the Department of Veterans Affairs and I want to thank the Secretary and other 

Department officials for joining us here today. I also want to thank the leaders of 

the various veterans service organizations that are here today. Thank you for the 

work that you do on behalf of all of our nation’s veterans. 

I am eager to listen to today’s testimony on the President’s budget request. While 

I am pleased to see a 6 percent increase in requested funding for VA medical care, 

a significant jump from the .4 percent increase requested for FY2006, I am concerned with some of the President’s proposals. The President’s request to increase 

pharmaceutical co-payments and to impose an enrollment fee on priority 7 and 8 

veterans presents serious concerns. Furthermore, the President has proposed a cut 

to VA Medical and Prosthetic Research, a far cry from increases drastically needed 

by NIH and requested by the Independent Budget. Finally, while the size and increasing workload of the Department of Veterans Affairs would seem to require considerable funding increases for the Office of the Inspector General, the President’s 

budget has instead proposed only slight increases for oversight. 

In conclusion, this budget request leaves me with important questions and concerns. I look forward to today’s testimony and to the opportunity to work with each 

of the Members of this Committee on the problems facing America’s veterans. 

Thank you. 

f 

Prepared Statement of Hon. Corrine Brown 

Chairman Filner, thank you for holding this hearing and inviting the Secretary 

to discuss the budget of the Department of Veterans Affairs. 

I would like to thank all the groups here today to speak on the VA budget. The 

groups that authored the Independent Budget: AMVETS, DAV, PVA and VFW; you 


cprice-sewell on PROD1PC72 with HEARING
69 

have continued to serve your country with this budget. Showing the inadequacies 

of veterans funding, whether Democrat or Republican, is important to the advancement of veterans rights. 

Mr. Secretary, thank you for coming today to discuss this budget. I do not agree 

with most of it, and there is much that I would change. 

First, I would like to thank you for all the building that will be going on in my 

district. I see there is money for the Orlando VA Medical Center and the Jacksonville cemetery. And yesterday the announcement of a new vet center to be built in 

Gainesville. 

Next, however, are the proposals that hurt individual veterans, the men and 

women who have served their country and have paid into THEIR system with their 

blood and sweat. 

Every year you include drug co-pays and enrollment fees. Every year, you do what 

you can to drive veterans out of the VA system. By your own estimate, enrollment 

fees would drive out over 200,000 veterans from the healthcare system they built 

and deserve. You still do not allow new Priority 8 veterans into the system. 

Every year, the Congress, Members of both the Republican and Democratic parties, reject co-pays and enrollment fees. 

And this year, you are balancing the budget on the backs of veterans even more 

blatantly than ever. The money raised with this tax on veterans’ health would go 

directly into the U.S. Treasury. 

How dare you use budget gimmicks and tricks to fund tax cuts for the wealthy? 

I cannot believe you are cutting VA medical and prosthetic research when ever 

more young men and women are coming back from Afghanistan and Iraq without 

limbs. We are doing remarkable things for these soldiers and to cut funding at this 

time says to current and future soldiers to not get hurt, because you will be on your 

own. 

And what about information security? Recently a portable computer hard drive, 

potentially containing personal information on veterans, was reported missing from 

a VA facility in Birmingham, AL. We held hearing after hearing last year about the 

loss of veterans’ data, obviously to no effect. 

Tell me, Mr. Secretary, what is going on with the data security promises you gave 

last year? 

Once again I am reminded of the words of the first President of the United States, 

George Washington: 

‘‘The willingness with which our young people are likely to serve in any war, no 

matter how justified, shall be directly proportional as to how they perceive the veterans of earlier wars were treated and appreciated by their country.’’ 

f 

Prepared Statement of Hon. Cliff Stearns 

Mr. Chairman, thank you for holding this hearing today on the Fiscal Year 2008 

budget for the Department of Veterans Affairs, and I thank Secretary Nicholson and 

our Veterans Service Organizations for being here. 

First I would like to take a moment to compliment the Secretary for the Department’s handling last year of the data breach incident. The Department responded 

quickly and effectively to the crisis to protect the identities of many veterans, averting what could have been an even greater breach of privacy. 

I would also like to say that we have worked well in the past with the Secretary 

on issues that are critical to veterans, increasing the number of clinics and working 

to bring a new veteran’s cemetery to the Jacksonville area. I am very pleased that 

one of your three highest priorities you have mentioned previously is to ‘‘ensure the 

burial needs of veterans and their eligible family members are met, and maintain 

veterans’ cemeteries as national shrines.’’ I was very pleased that the President authorized six new VA cemeteries Veterans’ Day 2004, including my over-a-decade-old 

bill for a VA cemetery in North Central Florida. 

I am pleased with the progress we have made on these issues, and look forward 

to more opportunities for collaboration. Florida is a premier retirement area for our 

nation’s veterans, with one of the highest numbers of veterans in its population, so 

naturally I am very interested in hearing suggestions for improvements from Secretary Nicholson. 

Mr. Secretary, I am greatly concerned about the claims backlog that is inhibiting 

the ability of veterans to receive benefits. It is an issue that we have worked on 

in the past, and it is my hope that we will accomplish much in this area through 

close collaboration with your Department in the coming year. 


cprice-sewell on PROD1PC72 with HEARING
70 

I stand firmly behind the President in his strengthening of the VA for today’s veterans. Taking care of veterans disabled by their service, and without other means, 

is a national commitment we must honor. 

I appreciate our veterans that are here today. I know that many of you travel 

great distances to come before us, and we are grateful to see you. 

Thank you again, Chairman Filner for the opportunity to hear our panelists, and 

examine the budget. 

f 

Prepared Statement of Hon. R. James Nicholson 

Secretary, U.S. Department of Veterans Affairs 

Mr. Chairman and Members of the Committee, good morning. I am pleased to be 

here today to present the President’s 2008 budget proposal for the Department of 

Veterans Affairs (VA). The request totals $86.75 billion—$44.98 billion for entitlement programs and $41.77 billion for discretionary programs. The total request is 

$37.80 billion, or 77 percent, above the funding level in effect when the President 

took office. 

The President’s requested funding level will allow VA to continue to improve the 

delivery of benefits and services to veterans and their families in three primary 

areas that are critical to the achievement of our mission: 

• to provide timely, high-quality healthcare to a growing number of patients who 

count on VA the most—veterans returning from service in Operation Iraqi Freedom and Operation Enduring Freedom, veterans with service-connected disabilities, those with lower incomes, and veterans with special healthcare needs; 

• to improve the delivery of benefits through the timeliness and accuracy of 

claims processing; and 

• to increase veterans’ access to a burial option in a national or state veterans’ 

cemetery. 

Ensuring a Seamless Transition from Active Military Service to Civilian Life 

The President’s 2008 budget request provides the resources necessary to ensure 

that service members’ transition from active duty military status to civilian life continues to be as smooth and seamless as possible. We will continue to ensure that 

every seriously injured or ill serviceman or woman returning from combat in Operation Iraqi Freedom and Operation Enduring Freedom receives the treatment they 

need in a timely way. 

Earlier this week I announced plans to create a special Advisory Committee on 

Operation Iraqi Freedom/Operation Enduring Freedom Veterans and Families. The 

panel, with membership including veterans, spouses, and parents of the latest generation of combat veterans, will report directly to me. Under its charter, the Committee will focus on the concerns of all men and women with active military service 

in Operation Iraqi Freedom or Operation Enduring Freedom, but will pay particular 

attention to severely disabled veterans and their families. 

We will expand our ‘‘Coming Home to Work’’ initiative to help disabled service 

members more easily make the transition from military service to civilian life. This 

is a comprehensive intergovernmental and public-private alliance that will provide 

separating service members from Operation Iraqi Freedom and Operation Enduring 

Freedom with employment opportunities when they return home from their military 

service. This project focuses on making sure service members have access to existing 

resources through local and regional job markets, regardless of where they separate 

from their military service, where they return, or the career or education they pursue. 

VA launched an ambitious outreach initiative to ensure separating combat veterans know about the benefits and services available to them. During 2006 VA conducted over 8,500 briefings attended by more than 393,000 separating service members and returning reservists and National Guard members. The number of 

attendees was 20 percent higher in 2006 than it was in 2005 attesting to our improved outreach effort. 

Additional pamphlet mailings following separation and briefings conducted at 

town hall meetings are sources of important information for returning National 

Guard members and reservists. VA has made a special effort to work with National 

Guard and reserve units to reach transitioning service members at demobilization 

sites and has trained recently discharged veterans to serve as National Guard Bureau liaisons in every state to assist their fellow combat veterans. 


cprice-sewell on PROD1PC72 with HEARING
71 

Each VA medical center and regional office has a designated point of contact to 

coordinate activities locally and to ensure the healthcare and benefits needs of returning service members and veterans are fully met. VA has distributed specific 

guidance to field staff to make sure the roles and functions of the points of contact 

and case managers are fully understood and that proper coordination of benefits and 

services occurs at the local level. 

For combat veterans returning from Iraq and Afghanistan, their contact with VA 

often begins with priority scheduling for healthcare, and for the most seriously 

wounded, VA counselors visit their bedside in military wards before separation to 

assist them with their disability claims and ensure timely compensation payments 

when they leave active duty. 

In an effort to assist wounded military members and their families, VA has placed 

workers at key military hospitals where severely injured service members from Iraq 

and Afghanistan are frequently sent for care. These include benefit counselors who 

help service members obtain VA services as well as social workers who facilitate 

healthcare coordination and discharge planning as service members transition from 

military to VA healthcare. Under this program, VA staff provide assistance at 10 

military treatment facilities around the country, including Walter Reed Army Medical Center, the National Naval Medical Center Bethesda, the Naval Medical Center 

San Diego, and Womack Army Medical Center at Ft. Bragg. 

To further meet the need for specialized medical care for patients with service in 

Operation Iraqi Freedom and Operation Enduring Freedom, VA has expanded its 

four polytrauma centers in Minneapolis, Palo Alto, Richmond, and Tampa to encompass additional specialties to treat patients for multiple complex injuries. Our efforts 

are being expanded to 21 polytrauma network sites and clinic support teams around 

the country providing state-of-the-art treatment closer to injured veterans’ homes. 

We have made training mandatory for all physicians and other key healthcare personnel on the most current approaches and treatment protocols for effective care of 

patients afflicted with brain injuries. Furthermore, we established a polytrauma call 

center in February 2006 to assist the families of our most seriously injured combat 

veterans and service members. This call center operates 24 hours a day, 7 days a 

week to answer clinical, administrative, and benefit inquiries from polytrauma patients and family members. 

In addition, VA has significantly expanded its counseling and other medical care 

services for recently discharged veterans suffering from mental health disorders, including post-traumatic stress disorder. We have launched new programs, including 

dozens of new mental health teams based in VA medical facilities focused on early 

identification and management of stress-related disorders, as well as the recruitment of about 100 combat veterans as counselors to provide briefings to 

transitioning service members regarding military-related readjustment needs. 

Medical Care 

We are requesting $36.6 billion for medical care in 2008, a total more than 83 

percent higher than the funding available at the beginning of the Bush Administration. Our total medical care request is comprised of funding for medical services 

($27.2 billion), medical administration ($3.4 billion), medical facilities ($3.6 billion), 

and resources from medical care collections ($2.4 billion). 

Legislative Proposals 

The President’s 2008 budget request identifies three legislative proposals which 

ask veterans with comparatively greater means and no compensable service-connected disabilities to assume a small share of the cost of their healthcare. 

The first proposal would assess Priority 7 and 8 veterans with an annual enrollment fee based on their family income: 

Family Income Annual Enrollment Fee 

Under $50,000 None 

$50,000–$74,999 $250 

$75,000–$99,999 $500 

$100,000 and above $750 


cprice-sewell on PROD1PC72 with HEARING
72 

The second legislative proposal would increase the pharmacy co-payment for Priority 7 and 8 veterans from $8 to $15 for a 30-day supply of drugs. And the last 

provision would eliminate the practice of offsetting or reducing VA first-party copayment debts with collection recoveries from third-party health plans. 

While our budget requests in recent years have included legislative proposals 

similar to these, the provisions identified in the President’s 2008 budget are markedly different in that they have no impact on the resources we are requesting for 

VA medical care. Our budget request includes the total funding needed for the Department to continue to provide veterans with timely, high-quality medical services 

that set the national standard of excellence in the healthcare industry. Unlike previous budgets, these legislative proposals do not reduce our discretionary medical 

care appropriations. Instead, these three provisions, if enacted, would generate an 

estimated $2.3 billion in mandatory receipts to the Treasury from 2008 through 

2012. 

Workload 

During 2008, we expect to treat about 5,819,000 patients. This total is more than 

134,000 (or 2.4 percent) above the 2007 estimate. Patients in Priorities 1–6—veterans with service-connected conditions, lower incomes, special healthcare needs, 

and service in Iraq or Afghanistan—will comprise 68 percent of the total patient 

population in 2008, but they will account for 85 percent of our healthcare costs. The 

number of patients in Priorities 1–6 will grow by 3.3 percent from 2007 to 2008. 

We expect to treat about 263,000 veterans in 2008 who served in Operation Iraqi 

Freedom and Operation Enduring Freedom. This is an increase of 54,000 (or 26 percent) above the number of veterans from these two campaigns that we anticipate 

will come to VA for healthcare in 2007, and 108,000 (or 70 percent) more than the 

number we treated in 2006. 

Funding Drivers 

Our 2008 request for $36.6 billion in support of our medical care program was 

largely determined by three key cost drivers in the actuarial model we use to project 

veteran enrollment in VA’s healthcare system as well as the utilization of 

healthcare services of those enrolled: 

• inflation; 

• trends in the overall healthcare industry; and 

• trends in VA healthcare. 

The impact of the composite rate of inflation of 4.45 percent within the actuarial 

model will increase our resource requirements for acute inpatient and outpatient 

care by nearly $2.1 billion. This includes the effect of additional funds ($690 million) 

needed to meet higher payroll costs as well as the influence of growing costs ($1.4 

billion) for supplies, as measured in part by the Medical Consumer Price Index. 

However, inflationary trends have slowed during the last year. 

There are several trends in the U.S. healthcare industry that continue to increase 

the cost of providing medical services. These trends expand VA’s cost of doing business regardless of any changes in enrollment, number of patients treated, or program initiatives. The two most significant trends are the rising utilization and intensity of healthcare services. In general, patients are using medical care services 

more frequently and the intensity of the services they receive continues to grow. For 

example, sophisticated diagnostic tests, such as magnetic resonance imaging (MRI), 

are now more frequently used either in place of, or in addition to, less costly diagnostic tools such as x-rays. As another illustration, advances in cancer screening 

technologies have led to earlier diagnosis and prolonged treatment which may include increased use of costly pharmaceuticals to combat this disease. These types 

of medical services have resulted in improved patient outcomes and higher quality 

healthcare. However, they have also increased the cost of providing care. 

The cost of providing timely, high-quality healthcare to our Nation’s veterans is 

also growing as a result of several factors that are unique to VA’s healthcare system. We expect to see changes in the demographic characteristics of our patient population. Our patients as a group will be older, will seek care for more complex medical conditions, and will be more heavily concentrated in the higher cost priority 

groups. Furthermore, veterans are submitting disability compensation claims for an 

increasing number of medical conditions, which are also increasing in complexity. 

This results in the need for disability compensation medical examinations, the majority of which are conducted by our Veterans Health Administration, that are more 

complex, costly, and time consuming. These projected changes in the case mix of our 

patient population and the growing complexity of our disability claims process will 

result in greater resource needs. 


cprice-sewell on PROD1PC72 with HEARING
73 

Quality of Care 

The resources we are requesting for VA’s medical care program will allow us to 

strengthen our position as the Nation’s leader in providing high-quality healthcare. 

VA has received numerous accolades from external organizations documenting the 

Department’s leadership position in providing world-class healthcare to veterans. 

For example, our record of success in healthcare delivery is substantiated by the results of the 2006 American Customer Satisfaction Index (ACSI) survey. Conducted 

by the National Quality Research Center at the University of Michigan Business 

School, the ACSI survey found that customer satisfaction with VA’s healthcare system increased last year and was higher than the private sector for the seventh consecutive year. The data revealed that inpatients at VA medical centers recorded a 

satisfaction level of 84 out of a possible 100 points, or 10 points higher than the 

rating for inpatient care provided by the private-sector healthcare industry. VA’s 

rating of 82 for outpatient care was 8 points better than the private sector. 

Citing VA’s leadership role in transforming healthcare in America, Harvard University recognized the Department’s computerized patient records system by awarding VA the prestigious ‘‘Innovations in American Government Award’’ in 2006. Our 

electronic health records have been an important element in making VA healthcare 

the benchmark for 294 measures of disease prevention and treatment in the U.S. 

The value of this system was clearly demonstrated when every patient medical 

record from the areas devastated by Hurricane Katrina was made available to all 

VA healthcare providers throughout the Nation within 100 hours of the time the 

storm made landfall. Veterans were able to quickly resume their treatments, refill 

their prescriptions, and get the care they needed because of the electronic health 

records system—a real, functioning health information exchange that has been a 

proven success resulting in improved quality of care. It can serve as a model for the 

healthcare industry as the Nation moves forward with the public/private effort to 

develop a National Health Information Network. 

The Department also received an award from the American Council for Technology for our collaboration with the Department of Defense on the Bidirectional 

Health Information Exchange program. This innovation permits the secure, realtime exchange of medical record data between the two departments, thereby avoiding duplicate testing and surgical procedures. It is an important step forward in 

making the transition from active duty to civilian life as smooth and seamless as 

possible. 

In its July 17, 2006, edition, Business Week featured an article about VA 

healthcare titled ‘‘The Best Medical Care in the U.S.’’ This article outlines many of 

the Department’s accomplishments that have helped us achieve our position as the 

leading provider of healthcare in the country, such as higher quality of care than 

the private sector, our nearly perfect rate of prescription accuracy, and the most advanced computerized medical records system in the Nation. Similar high praise for 

VA’s healthcare system was documented in the September 4, 2006, edition of Time 

Magazine in an article titled ‘‘How VA Hospitals Became the Best.’’ In addition, a 

study conducted by Harvard Medical School concluded that Federal hospitals, including those managed by VA, provide the best care available for some of the most 

common life-threatening illnesses such as congestive heart failure, heart attack, and 

pneumonia. Their research results were published in the December 11, 2006, edition 

of the Annals of Internal Medicine. 

These external acknowledgments of the superior quality of VA healthcare reinforce the Department’s own findings. We use two primary measures of healthcare 

quality—clinical practice guidelines index and prevention index. These measures 

focus on the degree to which VA follows nationally recognized guidelines and standards of care that the medical literature has proven to be directly linked to improved 

health outcomes for patients. Our performance on the clinical practice guidelines 

index, which focuses on high-prevalence and high-risk diseases that have a significant impact on veterans’ overall health status, is expected to grow to 85 percent in 

2008, or a 1 percentage point rise over the level we expect to achieve this year. As 

an indicator aimed at primary prevention and early detection recommendations 

dealing with immunizations and screenings, the prevention index will be maintained at our existing high level of performance of 88 percent. 

Access to Care 

With the resources requested for medical care in 2008, the Department will be 

able to continue our exceptional performance dealing with access to healthcare—96 

percent of primary care appointments will be scheduled within 30 days of patients’ 

desired date, and 95 percent of specialty care appointments will be scheduled within 

30 days of patients’ desired date. We will minimize the number of new enrollees 

waiting for their first appointment. We reduced this number by 94 percent from 


cprice-sewell on PROD1PC72 with HEARING
74 

May 2006 to January 2007, to a little more than 1,400, and we will continue to place 

strong emphasis on lowering, and then holding, the waiting list to as low a level 

as possible. 

An important component of our overall strategy to improve access and timeliness 

of service is the implementation on a national scale of Advanced Clinic Access, an 

initiative that promotes the efficient flow of patients by predicting and anticipating 

patient needs at the time of their appointment. This involves assuring that specific 

medical equipment is available, arranging for tests that should be completed either 

prior to, or at the time of, the patient’s visit, and ensuring all necessary health information is available. This program optimizes clinical scheduling so that each appointment or inpatient service is most productive. In addition, this reduces unnecessary appointments, allowing for relatively greater workload and increased patientdirected scheduling. 

Funding for Major Healthcare Programs and Initiatives 

Our request includes $4.6 billion for extended care services, 90 percent of which 

will be devoted to institutional long-term care and 10 percent to non-institutional 

care. By continuing to enhance veterans’ access to non-institutional long-term care, 

the Department can provide extended care services to veterans in a more clinically 

appropriate setting, closer to where they live, and in the comfort and familiar settings of their homes surrounded by their families. This includes adult day 

healthcare, home-based primary care, purchased skilled home healthcare, homemaker/home health aide services, home respite and hospice care, and community 

residential care. During 2008 we will increase the number of patients receiving noninstitutional long-term care, as measured by the average daily census, to over 

44,000. This represents a 19.1 percent increase above the level we expect to reach 

in 2007 and a 50.3 percent rise over the 2006 average daily census. The President’s request includes nearly $3 billion to continue our effort to improve 

access to mental health services across the country. These funds will help ensure 

VA provides standardized and equitable access throughout the Nation to a full continuum of care for veterans with mental health disorders. The resources will support 

both inpatient and outpatient psychiatric treatment programs as well as psychiatric 

residential rehabilitation treatment services. We estimate that about 80 percent of 

the funding for mental health will be for the treatment of seriously mentally ill veterans, including those suffering from post-traumatic stress disorder (PTSD). An example of our firm commitment to provide the best treatment available to help veterans recover from these mental health conditions is our ongoing outreach to veterans of Operation Iraqi Freedom and Operation Enduring Freedom, as well as increased readjustment and PTSD services. In 2008 we are requesting $752 million to meet the needs of the 263,000 veterans 

with service in Operation Iraqi Freedom and Operation Enduring Freedom whom 

we expect will come to VA for medical care. Veterans with service in Iraq and Afghanistan continue to account for a rising proportion of our total veteran patient 

population. In 2008 they will comprise 5 percent of all veterans receiving VA 

healthcare compared to the 2006 figure of 3.1 percent. Veterans deployed to combat 

zones are entitled to 2 years of eligibility for VA healthcare services following their 

separation from active duty even if they are not otherwise immediately eligible to 

enroll for our medical services. 

Medical Collections 

The Department expects to receive nearly $2.4 billion from medical collections in 

2008, which is $154 million, or 7.0 percent, above our projected collections for 2007. 

As a result of increased workload and process improvements in 2008, we will collect 

an additional $82 million from third-party insurance payers and an extra $72 million resulting from increased pharmacy workload. 

We have several initiatives underway to strengthen our collections processes: 

• The Department has established a private-sector based business model pilot tailored for our revenue operations to increase collections and improve our operational performance. The pilot Consolidated Patient Account Center (CPAC) is 

addressing all operational areas contributing to the establishment and management of patient accounts and related billing and collections processes. The 

CPAC currently serves revenue operations for medical centers and clinics in one 

of our Veterans Integrated Service Networks but this program will be expanded 

to serve other networks. 

• VA continues to work with the Centers for Medicare and Medicaid Services contractors to provide a Medicare-equivalent remittance advice for veterans who 

are covered by Medicare and are using VA healthcare services. We are working 

to include additional types of claims that will result in more accurate payments 


cprice-sewell on PROD1PC72 with HEARING
75 

and better accounting for receivables through use of more reliable data for 

claims adjudication. • We are conducting a phased implementation of electronic, real-time outpatient 

pharmacy claims processing to facilitate faster receipt of pharmacy payments 

from insurers. • The Department has initiated a campaign that has resulted in an increasing 

number of payers now accepting electronic coordination of benefits claims. This 

is a major advancement toward a fully integrated, interoperable electronic 

claims process. 

Medical Research 

The President’s 2008 budget includes $411 million to support VA’s medical and 

prosthetic research program. This amount will fund nearly 2,100 high-priority research projects to expand knowledge in areas critical to veterans’ healthcare needs, 

most notably research in the areas of mental illness ($49 million), aging ($42 million), health services delivery improvement ($36 million), cancer ($35 million), and 

heart disease ($31 million). 

VA’s medical research program has a long track record of success in conducting 

research projects that lead to clinically useful interventions that improve the health 

and quality of life for veterans as well as the general population. Recent examples 

of VA research results that are now being applied to clinical care include the discovery that vaccination against varicella-zoster (the same virus that causes chickenpox) decreases the incidence and/or severity of shingles, development of a system 

that decodes brain waves and translates them into computer commands that allow 

quadriplegics to perform simple tasks like turning on lights and opening e-mail 

using only their minds, improvements in the treatment of post-traumatic stress disorder that significantly reduce trauma nightmares and other sleep disturbances, 

and discovery of a drug that significantly improves mental abilities and behavior of 

certain schizophrenics. 

In addition to VA appropriations, the Department’s researchers compete for and 

receive funds from other Federal and non-Federal sources. Funding from external 

sources is expected to continue to increase in 2008. Through a combination of VA 

resources and funds from outside sources, the total research budget in 2008 will be 

almost $1.4 billion. 

General Operating Expenses 

The Department’s 2008 resource request for General Operating Expenses (GOE) is $1.472 billion. This is $617 million, or 72.2 percent, above the funding level in 

place when the President took office. Within this total GOE funding request, $1.198 

billion is for the administration of non-medical benefits by the Veterans Benefits Administration (VBA) and $274 million will be used to support General Administration 

activities. 

Compensation and Pensions Workload and Performance Management 

VA’s primary focus within the administration of non-medical benefits remains unchanged—delivering timely and accurate benefits to veterans and their families. Improving the delivery of compensation and pension benefits has become increasingly 

challenging during the last few years due to a steady and sizeable increase in workload. The volume of claims applications has grown substantially during the last few 

years and is now the highest it has been in the last 15 years. The number of claims 

we received was more than 806,000 in 2006. We expect this high volume of claims 

filed to continue, as we are projecting the receipt of about 800,000 claims a year 

in both 2007 and 2008. 

The number of active duty service members as well as reservists and National 

Guard members who have been called to active duty to support Operation Enduring 

Freedom and Operation Iraqi Freedom is one of the key drivers of new claims activity. This has contributed to an increase in the number of new claims, and we expect 

this pattern to persist. An additional reason that the number of compensation and 

pension claims is climbing is the Department’s commitment to increase outreach. 

We have an obligation to extend our reach as far as possible and to spread the word 

to veterans about the benefits and services VA stands ready to provide. 

Disability compensation claims from veterans who have previously filed a claim 

comprise about 55 percent of the disability claims received by the Department each 

year. Many veterans now receiving compensation suffer from chronic and progressive conditions, such as diabetes, mental illness, and cardiovascular disease. As 

these veterans age and their conditions worsen, we experience additional claims for 

increased benefits. 


cprice-sewell on PROD1PC72 with HEARING
76 

The growing complexity of the claims being filed also contributes to our workload 

challenges. For example, the number of original compensation cases with eight or 

more disabilities claimed nearly doubled during the last 4 years, reaching more than 

51,000 claims in 2006. Almost one in every four original compensation claims received last year contained eight or more disability issues. In addition, we expect to 

continue to receive a growing number of complex disability claims resulting from 

PTSD, environmental and infectious risks, traumatic brain injuries, complex combat-related injuries, and complications resulting from diabetes. Each claim now 

takes more time and more resources to adjudicate. Additionally, as VA receives and 

adjudicates more claims, this results in a larger number of appeals from veterans 

and survivors, which also increases workload in other parts of the Department, including the Board of Veterans’ Appeals. 

The Veterans Claims Assistance Act of 2000 has significantly increased both the 

length and complexity of claims development. VA’s notification and development duties have grown, adding more steps to the claims process and lengthening the time 

it takes to develop and decide a claim. Also, we are now required to review the 

claims at more points in the adjudication process. 

We will address our ever-growing workload challenges in several ways. First, we 

will continue to improve our productivity as measured by the number of claims processed per staff member, from 98 in 2006 to 101 in 2008. Second, we will continue 

to move work among regional offices in order to maximize our resources and enhance our performance. Third, we will further advance staff training and other efforts to improve the consistency and quality of claims processing across regional offices. And fourth, we will ensure our claims processing staff has easy access to the 

manuals and other reference material they need to process claims as efficiently and 

effectively as possible and further simplify and clarify benefit regulations. 

Through a combination of management/productivity improvements and an increase in resources in 2008 to support 457 additional staff above the 2007 level, we 

will improve our performance in the area most critical to veterans—the timeliness 

of processing rating-related compensation and pension claims. We expect to improve 

the timeliness of processing these claims to 145 days in 2008. This level of performance is 15 days better than our projected timeliness for 2007 and a 32-day improvement from the average processing time we achieved last year. In addition, we anticipate that our pending inventory of disability claims will fall to about 330,000 by the 

end of 2008, a reduction of more than 40,000 (or 10.9 percent) from the level we 

project for the end of 2007, and nearly 49,000 (or 12.9 percent) lower than the inventory at the close of 2006. At the same time we are improving timeliness, we will 

also increase the accuracy of our decisions on claims from 88 percent in 2006 to 90 

percent in 2008. 

Education and Vocational Rehabilitation and Employment Performance 

With the resources we are requesting in 2008, key program performance will improve in both the education and vocational rehabilitation and employment programs. The timeliness of processing original education claims will improve by 15 

days during the next 2 years, falling from 40 days in 2006 to 25 days in 2008. During this period, the average time it takes to process supplemental claims will improve from 20 days to just 12 days. These performance improvements will be 

achieved despite an increase in workload. The number of education claims we expect 

to receive will reach about 1,432,000 in 2008, or 4.8 percent higher than last year. 

In addition, the rehabilitation rate for the vocational rehabilitation and employment 

program will climb to 75 percent in 2008, a gain of 2 percentage points over the 

2006 performance level. The number of program participants will rise to about 

94,500 in 2008, or 5.3 percent higher than the number of participants in 2006. 

Our 2008 request includes $6.3 million for a Contact Management Support Center 

for our education program. These funds will be used during peak enrollment periods 

for contract customer service representatives who will handle all education calls 

placed through our toll-free telephone line. We currently receive about 2.5 million 

phone inquiries per year. This initiative will allow us to significantly improve performance for both the blocked call rate and the abandoned call rate. 

The 2008 resource request for VBA includes about $4.3 million to enhance our 

educational and vocational counseling provided to disabled service members through 

the Disabled Transition Assistance Program. Funds for this initiative will ensure 

that briefings are conducted by experts in the field of vocational rehabilitation, including contracting for these services in localities where VA professional staff are 

not available. The contractors would be trained by VA staff to ensure consistent, 

quality information is provided. Also in support of the vocational rehabilitation and 

employment program, we are seeking $1.5 million as part of an ongoing project to 

retire over 650,000 counseling, evaluation, and rehabilitation folders stored in reVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00080 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
77 

gional offices throughout the country. All of these folders pertain to cases that have 

been inactive for at least 3 years and retention of these files poses major space problems. 

In addition, our 2008 request includes $2.4 million to continue a major effort to 

centralize finance functions throughout VBA, an initiative that will positively impact operations for all of our benefits programs. The funds to support this effort will 

be used to begin the consolidation and centralization of voucher audit, agent cashier, 

purchase card, and payroll operations currently performed by all regional offices. 

National Cemetery Administration 

The President’s 2008 budget request includes $166.8 million in operations and 

maintenance funding for the National Cemetery Administration (NCA). These resources will allow us to meet the growing workload at existing cemeteries by increasing staffing and funding for contract maintenance, supplies, and equipment. 

We expect to perform nearly 105,000 interments in 2008, or 8.4 percent higher than 

the number of interments we performed in 2006. The number of developed acres 

(over 7,800) that must be maintained in 2008 will be 7.3 percent greater than last 

year. Our budget request includes $3.7 million to prepare for the activation of interment operations at six new national cemeteries—Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, South Carolina; Jacksonville, Florida; 

southeastern Pennsylvania; and Sarasota County, Florida. Establishment of these 

six new national cemeteries is directed by the National Cemetery Expansion Act of 

2003. 

The 2008 budget has $9.1 million to address gravesite renovations as well as 

headstone and marker realignment. These improvements in the appearance of our 

national cemeteries will help us maintain the cemeteries as shrines dedicated to 

preserving our Nation’s history and honoring veterans’ service and sacrifice. 

With the resources requested to support NCA activities, we will expand access to 

our burial program by increasing the percent of veterans served by a burial option 

within 75 miles of their residence to 84.6 percent in 2008, which is 4.4 percentage 

points above our performance level at the close of 2006. In addition, we will continue 

to increase the percent of respondents who rate the quality of service provided by 

national cemeteries as excellent to 98 percent in 2008, or 4 percentage points higher 

than the level of performance we reached last year. 

Capital Programs (Construction and Grants to States) 

VA’s 2008 request includes $1.078 billion in appropriated funding for our capital programs. Our request includes $727.4 million for major construction projects, 

$233.4 million for minor construction, $85 million in grants for the construction of 

state extended care facilities, and $32 million in grants for the construction of state 

veterans cemeteries. 

The 2008 request for construction funding for our healthcare programs is $750 million—$570 million for major construction and $180 million for minor construction. All of these resources will be devoted to continuation of the Capital Asset Realignment for Enhanced Services (CARES) program, total funding for which comes 

to $3.7 billion over the last 5 years. CARES will renovate and modernize VA’s 

healthcare infrastructure, provide greater access to high-quality care for more veterans, closer to where they live, and help resolve patient safety issues. Within our 

request for major construction are resources to continue six medical facility projects 

already underway: 

• Denver, Colorado ($61.3 million)—parking structure and energy development 

for this replacement hospital • Las Vegas, Nevada ($341.4 million)—complete construction of the hospital, 

nursing home, and outpatient facilities • Lee County, Florida ($9.9 million)—design of an outpatient clinic (land acquisition is complete) • Orlando, Florida ($35.0 million)—land acquisition for this replacement hospital • Pittsburgh, Pennsylvania ($40.0 million)—continue consolidation of a 3-division 

to a 2-division hospital • Syracuse, New York ($23.8 million)—complete construction of a spinal cord injury center. 

Minor construction is an integral component of our overall capital program. In 

support of the medical care and medical research programs, minor construction 

funds permit VA to address space and functional changes to efficiently shift treatment of patients from hospital-based to outpatient care settings; realign critical 


cprice-sewell on PROD1PC72 with HEARING
78 

services; improve management of space, including vacant and underutilized space; 

improve facility conditions; and undertake other actions critical to CARES implementation. Our 2008 request for minor construction funds for medical care and research will provide the resources necessary for us to address critical needs in improving access to healthcare, enhancing patient privacy, strengthening patient safety, enhancing research capability, correcting seismic deficiencies, facilitating realignments, increasing capacity for dental services, and improving treatment in special 

emphasis programs. We are requesting $191.8 million in construction funding to support the Depart- ment’s burial program—$167.4 million for major construction and $24.4 million for 

minor construction. Within the funding we are requesting for major construction are 

resources to establish six new cemeteries mandated by the National Cemetery Expansion Act of 2003. As previously mentioned, these will be in Bakersfield ($19.5 

million), Birmingham ($18.5 million), Columbia-Greenville ($19.2 million), Jacksonville ($22.4 million), Sarasota ($27.8 million), and southeastern Pennsylvania ($29.6 

million). The major construction request in support of our burial program also includes $29.4 million for a gravesite development project at Fort Sam Houston National Cemetery. 

Information Technology 

VA’s 2008 budget request for information technology (IT) is $1.859 billion. This 

budget reflects the first phase of our reorganization of IT functions in the Department which will establish a new IT management structure in VA. The total funding 

for IT in 2008 includes $555 million for more than 5,500 staff who have been moved 

to support operations and maintenance activities. Prior to 2008, the funding and 

staff supporting these IT activities were reflected in other accounts throughout the 

Department. 

Later in 2007 we will implement the second phase of our IT reorganization strategy by moving funding and staff devoted to development projects and activities. As 

a result of the second stage of the IT reorganization, the Chief Information Officer 

will be responsible for all operations and maintenance as well as development activities, including oversight of, and accountability for, all IT resources within VA. This 

reorganization will make the most efficient use of our IT resources while improving 

operational effectiveness, providing standardization, and eliminating duplication. 

This major transformation of IT will bring our program under more centralized 

control and will play a significant role in ensuring we fulfill my promise to make 

VA the gold standard for data security within the Federal Government. We have 

taken very aggressive steps during the last several months to ensure the safety of 

veterans’ personal information, including training and educating our employees on 

the critical responsibility they have to protect personal and health information, 

launching an initiative to expeditiously upgrade all VA computers with enhanced 

data security and encryption, entering into an agreement with an outside firm to 

provide free data breach analysis services, initiating any needed background investigations of employees to ensure consistency with their level of authority and responsibilities in the Department, and beginning a campaign at all of our healthcare 

facilities to replace old veteran identification cards with new cards that reduce veterans’ vulnerability to identify theft. These steps are part of our broader commitment to improve our IT and cyber security policies and procedures. 

Within our total IT request of $1.859 billion, $1.304 billion (70 percent) will be 

for non-payroll costs and $555 million (30 percent) will be for payroll costs. Of the 

non-payroll funding, $461 million will support projects for our medical care and 

medical research programs, $66 million will be devoted to projects for our benefits 

programs, and $446 million will be needed for IT infrastructure projects. The remaining $331 million of our non-payroll IT resources in 2008 will fund centrally 

managed projects, such as VA’s cyber security program, as well as management 

projects that support department-wide initiatives and operations like the replacement of our aging financial management system and the development and implementation of a new human resources management system. 

The most critical IT project for our medical care program is the continued operation and improvement of the Department’s electronic health record system, a Presidential priority which has been recognized nationally for increasing productivity, 

quality, and patient safety. Within this overall initiative, we are requesting $131.9 

million for ongoing development and implementation of HealtheVet-VistA (Veterans 

Health Information Systems and Technology Architecture). This initiative will incorporate new technology, new or reengineered applications, and data standardization 

to improve the sharing of, and access to, health information, which in turn, will improve the status of veterans’ health through more informed clinical care. This sysVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00082 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
79 

tem will make use of standards accepted by the Secretary of Health and Human 

Services that will enhance the sharing of data within VA as well as with other Federal agencies and public and private sector organizations. Health data will be stored 

in a veteran-centric format replacing the current facility-centric system. The standardized health information can be easily shared between facilities, making patients’ 

electronic health records available to them and to all those authorized to provide 

care to veterans. 

Until HealtheVet-VistA is operational, we need to maintain the VistA legacy system. This system will remain operational as new applications are developed and implemented. This approach will mitigate transition and migration risks associated 

with the move to the new architecture. Our budget provides $129.4 million in 2008 

for the VistA legacy system. Funding for the legacy system will decline as we advance our development and implementation of HealtheVet-VistA. 

In veterans benefits programs, we are requesting $31.7 million in 2008 to support 

our IT systems that ensure compensation and pension claims are properly processed 

and tracked, and that payments to veterans and eligible family members are made 

on a timely basis. Our 2008 request includes $3.5 million to continue the development of The Education Expert System. This will replace the existing benefit payment system with one that will, when fully deployed, receive application and enrollment information and process that information electronically, reducing the need for 

human intervention. 

VA is requesting $446 million in 2008 for IT infrastructure projects to support our 

healthcare, benefits, and burial programs through implementation and ongoing 

management of a wide array of technical and administrative support systems. Our 

request for resources in 2008 will support investment in five infrastructure projects 

now centrally managed by the CIO—computing infrastructure and operations 

($181.8 million); network infrastructure and operations ($31.7 million); voice infrastructure and operations ($71.9 million); data and video infrastructure and operations ($130.8 million); and regional data centers ($30.0 million). VA’s 2008 request provides $70.1 million for cyber security. This ongoing initiative 

involves the development, deployment, and maintenance of a set of enterprise-wide 

controls to better secure our IT architecture in support of all of the Department’s 

program operations. Our request also includes $35.0 million for the Financial and 

Logistics Integrated Technology Enterprise (FLITE) system. FLITE is being developed to address a longstanding material weakness and will effectively integrate and 

standardize financial and logistics data and processes across all VA offices as well 

as provide management with access to timely and accurate financial, logistics, budget, asset, and related information on VA-wide operations. In addition, we are asking 

for $34.1 million for a new state-of-the-art human resource management system 

that will result in an electronic employee record and the capability to produce critical management information in a fraction of the time it now takes using our antiquated paper-based system. 

Summary 

Our 2008 budget request of $86.75 billion will provide the resources necessary for 

VA to: 

• strengthen our position as the Nation’s leader in providing high-quality 

healthcare to a growing patient population, with an emphasis on those who 

count on us the most—veterans returning from service in Operation Iraqi Freedom and Operation Enduring Freedom, veterans with service-connected disabilities, those with lower incomes, and veterans with special healthcare needs; • improve the delivery of benefits through the timeliness and accuracy of claims 

processing; and • increase veterans’ access to a burial option by opening new national and state 

veterans’ cemeteries. 

I look forward to working with the Members of this Committee to continue the 

Department’s tradition of providing timely, high-quality benefits and services to 

those who have helped defend and preserve freedom around the world. 

f 

Prepared Statement of David G. Greineder 

Deputy National Legislative Director, American Veterans (AMVETS) 

Chairman Filner, Ranking Member Buyer, and Members of the Committee: 

AMVETS is honored to join our fellow veterans service organizations and partners 

at this important hearing on the Department of Veterans Affairs budget request for 


cprice-sewell on PROD1PC72 with HEARING
80 

fiscal year 2008. My name is David G. Greineder, Deputy National Legislative Director of AMVETS, and I am pleased to provide you with our best estimates on the 

resources necessary to carry out a responsible budget for VA. 

AMVETS testifies before you as a co-author of The Independent Budget. This is 

the 21st year AMVETS, the Disabled American Veterans, the Paralyzed Veterans of 

America, and the Veterans of Foreign Wars have pooled their resources together to 

produce a unique document, one that has stood the test of time. 

The IB, as it has come to be called, is our blueprint for building the kind of programs veterans deserve. Indeed, we are proud that over 60 veteran, military, and 

medical service organizations endorse these recommendations. In whole, these recommendations provide decisionmakers with a rational, rigorous, and sound review 

of the budget required to support authorized programs for our nation’s veterans. 

In developing this document, we believe in certain guiding principles. Veterans 

should not have to wait for benefits to which they are entitled. Veterans must be 

ensured access to high-quality medical care. Specialized care must remain the focus 

of VA. Veterans must be guaranteed timely access to the full continuum of 

healthcare services, including long-term care. And, veterans must be assured burial 

in a state or national cemetery in every state. 

Today, I will specifically address the National Cemetery Administration (NCA), 

however, I would like to briefly comment on the Administration’s budget request 

coming out of the Office of Management and Budget (OMB) just 3 days ago. 

Everyone knows that the VA healthcare system is the best in the country, and 

responsible for great advances in medical science. VHA is uniquely qualified to care 

for veterans’ needs because of its highly specialized experience in treating serviceconnected ailments. The delivery care system can provide a wide array of specialized 

services to veterans like those with spinal cord injuries and blindness. This type of 

care is very expensive and would be almost impossible for veterans to obtain outside 

of VA. 

Because veterans depend so much on VA and its services, AMVETS believes it 

is absolutely critical that the VA healthcare system be fully funded. It is important 

our nation keep its promise to care for the veterans who made so many sacrifices 

to ensure the freedom of so many. With the expected increase in the number of veterans, a need to increase VA healthcare spending should be an immediate priority 

this year. We must remain insistent about funding the needs of the system, and the 

recruitment and retention of vital healthcare professionals, especially registered 

nurses. Chronic under funding has led to rationing of care through reduced services, 

lengthy delays in appointments, higher co-payments and, in too many cases, sick 

and disabled veterans being turned away from treatment. 

Looking at the Administration’s budget, released on Monday, The Independent 

Budget recommends Congress provide $36.3 billion to fund VA medical care for fiscal year 2008. We ask you to recognize that the VA healthcare system can only 

bring quality healthcare if it receives adequate and timely funding. 

One option, and we believe the best choice, to ensure VA has access to adequate 

and timely resources is through mandatory, or assured, funding. I would like to 

clearly state that AMVETS along with its Independent Budget partners strongly 

supports shifting VA healthcare funding from discretionary funding to mandatory. 

We recommend this action because the current discretionary system is not working. 

Moving to mandatory funding would give certainty to healthcare services. VA facilities would not have to deal with the uncertainty of discretionary funding, which has 

been inconsistent and inadequate for far too long. Most importantly, mandatory 

funding would provide a comprehensive and permanent solution to the current funding problem. 

The National Cemetery Administration 

The Independent Budget acknowledges the dedicated and committed NCA staff 

who continue to provide the highest quality of service to veterans and their families 

despite funding shortfalls, aging equipment, and increasing workload. The devoted 

staff provides aid and comfort to hurting veterans’ families in a very difficult time, 

and we thank them for their consolation. 

The NCA currently maintains more than 2.7 million gravesites at 124 national 

cemeteries in 39 states and Puerto Rico. At the end of 2007, 66 cemeteries will be 

open to all interments; 16 will accept only cremated remains and family members 

of those already interred; and 43 will only perform interments of family members 

in the same gravesite as a previously deceased family member. 

VA estimates that about 27 million veterans are alive today. They include veterans from World War I, World War II, the Korean War, the Vietnam War, the Gulf 

War, the conflicts in Afghanistan and Iraq, and the Global War on Terrorism, as 

well as peacetime veterans. With the anticipated opening of the new national cemeVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00084 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
81 

teries, annual interments are projected to increase from approximately 102,000 in 

2006 to 117,000 in 2009. It is expected that one in every six of these veterans will 

request burial in a national cemetery. 

The NCA is responsible for five primary missions: (1) To inter, upon request, the 

remains of eligible veterans and family members and to permanently maintain 

gravesites; (2) to mark graves of eligible persons in national, state, or private cemeteries upon appropriate application; (3) to administer the state grant program in the 

establishment, expansion, or improvement of state veterans cemeteries; (4) to award 

a Presidential certificate and furnish a United States flag to deceased veterans; and 

(5) to maintain national cemeteries as national shrines sacred to the honor and 

memory of those interred or memorialized. 

NCA Budget Request 

The Administration requests $166.8 million for the NCA for fiscal year 2008. The 

members of The Independent Budget recommend that Congress provide $218.3 million and 30 FTE for the operational requirements of NCA, the National Shrine Initiative, and the backlog of repairs. We recommend your support for a budget consistent with NCA’s growing demands and in concert with the respect due every man 

and woman who wears the uniform of the United States Armed Forces. 

The national cemetery system continues to be seriously challenged. Though there 

has been progress made over the years, the NCA is still struggling to remove decades of blemishes and scars from military burial grounds across the country. Visitors to many national cemeteries are likely to encounter sunken graves, misaligned 

and dirty grave markers, deteriorating roads, spotty turf and other patches of decay 

that have been accumulating for decades. If the NCA is to continue its commitment 

to ensure national cemeteries remain dignified and respectful settings that honor 

deceased veterans and give evidence of the nation’s gratitude for their military service, there must be a comprehensive effort to greatly improve the condition, function, 

and appearance of all our national cemeteries. 

In accordance with ‘‘An Independent Study on Improvements to Veterans Cemeteries,’’ which was submitted to Congress in 2002, The Independent Budget again recommends Congress establish a 5-year, $250 million ‘‘National Shrine Initiative’’ 

to restore and improve the condition and character of NCA cemeteries as part of 

the FY2008 operations budget. 

It should be noted that the NCA has done an outstanding job thus far in improving the appearance of our national cemeteries, but we have a long way to go to get 

us where we need to be. By enacting a 5-year program with dedicated funds and 

an ambitious schedule, the national cemetery system can fully serve all veterans 

and their families with the utmost dignity, respect, and compassion. 

The State Cemetery Grants Program 

The State Cemetery Grants Program (SCGP) complements the NCA mission to establish gravesites for veterans in those areas where the NCA cannot fully respond 

to the burial needs of veterans. Several incentives are in place to assist states in 

this effort. For example, the NCA can provide up to 100 percent of the development 

cost for an approved cemetery project, including design, construction, and administration. In addition, new equipment, such as mowers and backhoes, can be provided 

for new cemeteries. Since 1978, the Department of Veterans Affairs has more than 

doubled acreage available and accommodated more than a 100 percent increase in 

burials through this program. 

To help provide reasonable access to burial options for veterans and their eligible 

family members, The Independent Budget recommends $37 million for the SCGP for 

fiscal year 2008. The availability of this funding will help states establish, expand, 

and improve state-owned veterans’ cemeteries. 

Many states have difficulties meeting the requirements needed to build a national 

cemetery in their respective state. The large land areas and spread out population 

in these areas make it difficult to meet the ‘‘170,000 veterans within 75 miles’’ national veterans cemetery requirement. Recognizing these challenges, VA has implemented several incentives to assist states in establishing a veterans cemetery. For 

example, the NCA can provide up to 100 percent of the development cost for an approved cemetery project, including design, construction, and administration. 

Burial Benefits 

There has been serious erosion in the value of the burial allowance benefits over 

the years. While these benefits were never intended to cover the full costs of burial, 

they now pay for only a small fraction of what they covered in 1973, when the Federal Government first started paying burial benefits for our veterans. 

In 2001 the plot allowance was increased for the first time in more than 28 years, 

to $300 from $150, which covers approximately 6 percent of funeral costs. The IndeVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00085 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
82 

pendent Budget recommends increasing the plot allowance from $300 to $745, an 

amount proportionally equal to the benefit paid in 1973. 

In the 108th Congress, the burial allowance for service-connected deaths was increased from $500 to $2,000. Prior to this adjustment, the allowance had been untouched since 1988. The Independent Budget recommends increasing the service-connected burial benefit from $2,000 to $4,100, bringing it back up to its original proportionate level of burial costs. 

The non-service-connected burial allowance was last adjusted in 1978, and also 

covers just 6 percent of funeral costs. The Independent Budget recommends increasing the non-service-connected burial benefit from $300 to $1,270. 

The NCA honors veterans with a final resting place that commemorates their 

service to this nation. More than 2.7 million soldiers who died in every war and conflict are honored by burial in a VA national cemetery. Each Memorial Day and Veterans Day we honor the last full measure of devotion they gave for this country. 

Our national cemeteries are more than the final resting place of honor for our veterans, they are hallowed ground to those who died in our defense, and a memorial 

to those who survived. 

Mr. Chairman, this concludes my testimony. I thank you again for the privilege 

to present our views, and I would be pleased to answer any questions you might 

have. 

f 

Statement of Paul A. Morin, National Commander, The American Legion 

Mr. Chairman and Members of the Committee: 

As The American Legion’s National Commander, I thank you for this opportunity 

to present the views of its 2.7 million members on the President’s Fiscal Year 2008 

budget request. 

The President’s FY 2008 budget request is designed to allow VA to address its 

three highest priorities: 

• Provide timely, high-quality healthcare to veterans who need VA the most—those 

with service-connected disabilities, lower incomes, special healthcare needs, and 

service in Operation Iraqi Freedom and Operation Enduring Freedom. 

• Address the significant increase in claims for compensation and pension. 

• Ensure the burial needs of veterans and their eligible family members are met, 

and maintain veterans’ cemeteries as national shrines. 

The American Legion will continue to work with the Secretary, Congress and the 

entire veterans’ community to ensure that VA is indeed capable of providing the 

highest quality healthcare services ‘‘. . . for him who shall have borne the battle and 

for his widow and his orphan.’’ In 1996, Eligibility Reform was enacted to reopen 

the VA healthcare system to all eligible veterans within existing appropriations. 

Therefore, the challenge faced is to make sure no veteran in need of healthcare is 

ever turned away from a VA medical care facility as a result of budgetary shortfalls. 

There is no question that all service-connected disabled veterans and economically 

disadvantaged veterans must receive timely access to quality healthcare; however, 

their comrades-in-arms should also receive their earned benefit—enrollment in the 

VA healthcare delivery system. Rather than supporting legislative proposals designed to drive veterans from the world’s best healthcare delivery system, The 

American Legion will continue to advocate new revenue streams to allow any veteran to receive VA healthcare. 

Equally as important, The American Legion remains steadfastly in support of 

achieving timely adjudication of VA disability claims and pensions. As a nation at 

war, the expectation of an increase in the number of new disability claims is apparent. The newest generation of wartime veterans rightly deserve timely adjudication 

of their claims. Again, the Secretary, Congress and the veterans’ community must 

work toward meaningful solutions to the ever-increasing backlog of veterans’ disability claims. Increased funding and additional staffing is a solid first step toward 

change. 

The American Legion fully supports the goals of the National Cemetery Administration. The addition of new national cemeteries and state veterans’ cemeteries is 

critical in meeting the growing need. 

With that in mind, The American Legion offers the following budgetary recommendations for selected discretionary programs within the Department of Veterans Affairs for FY 2008: 


cprice-sewell on PROD1PC72 with HEARING
83 

Program FY06 Funding President’s Request Legion’s Request 

Medical Care $30.8 billion $36.6 billion $38.4 billion

Medical Services $22.1 billion $27.2 billion $29 billion

Medical Administration $3.4 billion $3.4 billion $3.4 billion

Medical Facilities $3.3 billion $3.6 billion $3.6 billion

Medical Care Collections ($2 billion) ($2.4 billion) $2.4 billion*

Medical and Prosthetics 

Research $412 million $411 million $472 million

Construction 

Major $1.6 billion $727 million $1.3 billion

Minor $233 million $233 million $279 million

State Extended Care 

Facilities Grant Program $85 million $85 million $250 million

State Veterans’ Cemetery 

Grants Program $32 million $32 million $42 million

National Cemetery 

Administration $149 million $166 million $178 million

General Administration $294 million $274 million $300 million

Information Technology $1.2 billion $1.9 billion $1.9 billion

* Third-party reimbursements should supplement rather than offset discretionary funding. 

MEDICAL CARE 

The Department of Veterans Affairs’ standing as the nation’s leader in providing 

safe, high-quality healthcare in the healthcare industry (both public and private) is 

well documented. Now VA is also recognized internationally as the benchmark for 

healthcare services: 

• December 2004, RAND investigators found that VA outperforms all other sectors of the U.S. healthcare industry across a spectrum of 294 measures of quality in disease prevention and treatment; 

• In an article published in the Washington Monthly (Jan/Feb 2005) ‘‘The Best 

Care Anywhere’’ featured the VA healthcare system; 

• In the prestigious Journal of the American Medical Association (May 18, 

2005) noted that VA’s healthcare system has ‘‘. . . quickly emerged as a bright 

star in the constellation of safety practice, with system-wide implementation of 

safe practices, training programs and the establishment of four patient-safety 

research centers.’’; 

• The U.S. News and World Report (Jul 18, 2005) issue included a special report on the best hospitals in the country titled ‘‘Military Might—Today’s VA 

Hospitals Are Models of Top-Notch Care’’ highlighting the transformation of VA 

healthcare; 

• The Washington Post (Aug 22, 2005) ran a front-page article titled ‘‘Revamped 

Veterans’ Health Care Now a Model’’ that spotlights VA healthcare accomplishments; 

• In 2006, VA received the highly coveted and prestigious ‘‘Innovations in American Government’’ Award from Harvard’s Kennedy School of Government for its 

advanced electronic health records and performance measurement system; and 

• Recently, in January 2007, the medical journal Neurology wrote: ‘‘The VA has 

achieved remarkable improvements in patient care and health outcomes, and is 

a cost-effective and efficient organization.’’ 

Although VA is considered a national resource, the Secretary of Veterans Affairs 

continues to prohibit the enrollment of any new Priority Group 8 veterans, even if 

they are Medicare-eligible or have private insurance coverage. This prohibition is 

not based on their honorable military service, but rather on limited resources provided to the VA medical care system. For 2 years following receiving an honorable 

discharge, veterans from Operations Enduring Freedom and Iraqi Freedom are able 

to receive healthcare through VA, but many of their fellow veterans and those of 


cprice-sewell on PROD1PC72 with HEARING
84 

other armed conflicts may very well be denied enrollment due to limited existing 

appropriations. This is truly a national tragedy. 

As the Global War on Terrorism continues, fiscal resources for VA will continue 

to be stretched to their limits and veterans will continue to go to their elected officials requesting additional money to sustain a viable VA capable of caring for all 

veterans, not just the most severely wounded or economically disadvantaged. VA is 

often the first experience veterans have with the Federal Government after leaving 

the military. This nation’s veterans have never let this country down; Congress and 

VA should do its best to not let veterans down. 

The President’s budget request for FY 2008 calls for Medical Care funding to be 

$36.6 billion, which is about $1.8 billion less than The American Legion’s recommendation of $38.4 billion. The major difference is the President’s budget request 

continues to offset the discretionary appropriations by its Medical Care Collection 

Fund’s goal ($2.4 billion), whereas The American Legion considers this collection as 

a supplement since it is for the treatment of nonservice-connected medical conditions. 

Medical Services 

The President’s budget request assumes the enrollment of new Priority Group 8 

veterans will remain suspended. The American Legion strongly recommends reconsidering this ‘‘lockout’’ of eligible veterans, especially for those veterans who are 

Medicare-eligible, military retirees enrolled in TRICARE or TRICARE for Life, or 

have private healthcare coverage. Successful seamless transition from military service should not be penalized, but rather encouraged. This prohibition sends the 

wrong message to recently separated veterans. No eligible veteran should be ‘‘locked 

out’’ of the VA healthcare delivery system. 

The VA healthcare system enjoys a glowing reputation as the best healthcare delivery system in the country, so why ‘‘lock out’’ any eligible veteran, especially those 

that have the means to reimburse VA for services received? New revenue streams 

from third-party reimbursements and co-payments can supplement the ‘‘existing appropriations,’’ but sound fiscal management initiatives are required to enhance 

third-party collections of reasonable charges. 

In FY 2008, VA expects to treat 5.8 million patients (an increase of 2.4 percent). 

According to the President’s budget request, VA will treat over 125,000 more Priority 1–6 veterans in 2008 representing a 3.3 percent increase over the number of 

these priority veterans treated in 2007. Priority 7 and 8 veterans are projected to 

decrease by over 15,000 or 1.1 percent from 2007 to 2008. However, VA will provide 

medical care to non-veterans; this population is expected to increase by over 24,000 

patients or 4.8 percent over this same time period. In 2008, VA anticipates treating 

263,000 Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF) 

veterans, an increase of 54,000 patients, or 25.8 percent, over the 2007 level. 

The American Legion supports the President’s mental health initiative to provide 

$360 million to deliver mental health and substance abuse care to eligible veterans 

in need of treatment of serious mental illness, to include post-traumatic stress disorder. 

The American Legion remains opposed to the concept of charging an enrollment 

fee for an earned benefit. Although the President’s new proposal is a tiered approach targeted at Priority Groups 7 and 8 veterans currently enrolled, the proposal 

does not provide improved healthcare coverage, but rather creates a fiscal burden 

for the 1.4 million Priority Groups 7 and 8 patients. This initiative clearly projects 

further reductions in the number of Priority Groups 7 and 8 veterans leaving the 

system for other healthcare alternatives. This proposed vehicle for gleaning of veterans would apply to both service-connected disabled veterans as well as nonserviceconnected disabled veterans in Priority Groups 7 and 8. 

The American Legion also remains opposed to the President’s proposed increase 

in VA pharmacy co-pays from the current $8 to $15 for enrolled Priority Groups 7 

and 8 veterans. This proposal would nearly double current pharmacy costs to this 

select group of veterans. 

The American Legion recommends $29 billion for Medical Services, $1.8 billion 

more than the President’s budget request of $27.2 billion. 

Medical Administration 

The President’s budget request of $3.4 billion is a slight increase in FY 2006 funding level. VA plans to transfer 3,721 full-time equivalents from Medical Administration to Information Technology in FY 2008. The American Legion applauds the 

President recommending this level of funding. 


cprice-sewell on PROD1PC72 with HEARING
85 

Medical Facilities 

The President’s budget request of $3.6 billion is about $234 million more than the 

FY 2006 funding level. The American Legion agrees with this recommendation to 

maintain VA existing infrastructure of 4,900 buildings and over 15,700 acres. In FY 

2008, VA will transfer 5,689 full-time equivalents from Medical Facilities to Medical 

Services. It has been determined that the costs incurred for hospital food service 

workers, provisions and related supplies are for the direct care of patients which 

Medical Services is responsible for providing. 

Medical Care Collection Fund (MCCF) 

The Balanced Budget Act of 1997, Public Law 105–33, established the VA Medical 

Care Collections Fund (MCCF), requiring that amounts collected or recovered from 

third-party payers after June 30, 1997 be deposited into this fund. The MCCF is 

a depository for collections from third-party insurance, outpatient prescription copayments and other medical charges and user fees. The funds collected may only 

be used for providing VA medical care and services and for VA expenses for identification, billing, auditing and collection of amounts owed the Federal Government. 

The American Legion supported legislation to allow VA to bill, collect, and reinvest 

third-party reimbursements and co-payments; however, The American Legion adamantly opposes the scoring of MCCF as an offset to the annual discretionary appropriations since the majority of the collected funds come from the treatment of nonservice-connected medical conditions. Historically, these collection goals far exceed 

VA’s ability to collect accounts receivable. 

In FY 2006, VA collected nearly $2 billion, a significant increase over the $540 

million collected in FY 2001. VA’s ability to capture these funds is critical to its ability to provide quality and timely care to veterans. Miscalculations of VA required 

funding levels result in real budgetary shortfall. Seeking annual emergency supplemental is not the most cost-effective means of funding the nation’s model healthcare 

delivery system. 

Government Accountability Office (GAO) reports have described continuing problems in VHA’s ability to capture insurance data in a timely and correct manner and 

raised concerns about VHA’s ability to maximize its third-party collections. At three 

medical centers visited, GAO found an inability to verify insurance, accepting partial payment as full, inconsistent compliance with collections follow-up, insufficient 

documentation by VA physicians, insufficient automation and a shortage of qualified 

billing coders were key deficiencies contributing to the shortfalls. VA should implement all available remedies to maximize its collections of accounts receivable. 

The American Legion opposes offsetting annual VA discretionary funding by the 

arbitrarily set MCCF goal, especially since VA is prohibited from collecting any 

third-party reimbursements from the nation’s largest Federally mandated health insurer—Medicare. 

Medicare Reimbursement 

As do most American workers, veterans pay into the Medicare system without 

choice throughout their working lives, including active-duty. A portion of each 

earned dollar is allocated to the Medicare Trust Fund and although veterans must 

pay into the Medicare system, VA is prohibited from collecting any Medicare reimbursements for the treatment of allowable, nonservice-connected medical conditions. 

This prohibition constitutes a multi-billion dollar annual subsidy to the Medicare 

Trust Fund. The American Legion does not agree with this policy and supports 

Medicare reimbursement for VHA for the treatment of allowable, nonservice-connected medical conditions of allowable enrolled Medicare-eligible veterans. 

As a minimum, VA should receive credit for saving the Centers for Medicare and 

Medicaid Services billions of dollars in annual mandatory appropriations. 

MEDICAL AND PROSTHETICS RESEARCH 

The American Legion believes that VA’s focus in research should remain on understanding and improving treatment for conditions that are unique to veterans. 

The Global War on Terrorism is predicted to last at least two more decades. Service 

members are surviving catastrophically disabling blast injuries in Iraq, Afghanistan 

and elsewhere due to the superior armor they are wearing in the combat theater 

and the timely access to quality triage. The unique injuries sustained by the new 

generation of veterans clearly demands particular attention. There have been reported problems of VA not having the state-of-the-art prostheses, like DoD, and that 

the fitting of the prostheses for women has presented problems due to their smaller 

stature. 


cprice-sewell on PROD1PC72 with HEARING
86 

In addition, The American Legion supports adequate funding for other VA research activities, including basic biomedical research as well as bench-to-bedside 

projects. Congress and the Administration should encourage acceleration in the development and initiation of needed research on conditions that significantly affect 

veterans—such as prostate cancer, addictive disorders, trauma and wound healing, 

post-traumatic stress disorder, rehabilitation, and others jointly with DoD, the National Institutes of Health (NIH), other Federal agencies, and academic institutions. 

The American Legion recommends $472 million for Medical and Prosthetics Research in FY 2008, $61 million more than the President’s budget request of $411 

million. 

CONSTRUCTION 

Major Construction 

Over the past several years, Congress has kept a tight hold on the purse strings 

that control the funding needs for the construction program within VA. The hold 

out, presumably, is the development of a coherent national plan that will define the 

infrastructure VA will need in the decades to come. VA has developed that plan and 

it is CARES. The CARES process identified more than 100 major construction 

projects in 37 states, the District of Columbia, and Puerto Rico. Construction 

projects are categorized as major if the estimated cost is over $7 million. Now that 

VA has a plan to deliver healthcare through the year 2022, it is up to Congress to 

provide adequate funds. The CARES plan calls for, among other things, the construction of new hospitals in Orlando and Las Vegas and replacement facilities in 

Louisville and Denver for a total cost estimate of well over $1 billion alone for these 

four facilities. VA has not had this type of progressive construction agenda in decades. Major construction money can be significant and proper utilization of funds 

must be well planned out. The American Legion is pleased to see six medical facility 

projects (Pittsburgh, Denver, Orlando, Las Vegas, Syracuse, and Lee County, FL) 

included in this budget request. 

In addition to the cost of the proposed new facilities are the many construction 

issues that are virtually ‘‘put on hold’’ for the past several years due to inadequate 

funding and the moratorium placed on construction spending by the CARES process. 

One of the most glaring shortfalls is the neglect of the buildings sorely in need of 

seismic correction. This is an issue of safety. Hurricane Katrina taught a very real 

lesson on the unacceptable consequences of procrastination. The delivery of 

healthcare in unsafe buildings cannot be tolerated and funds must be allocated to 

not only construct the new facilities, but also to pay for much-needed upgrades at 

existing facilities. Gambling with the lives of veterans, their families and VA employees is absolutely unacceptable. 

The American Legion believes that VA has effectively shepherded the CARES 

process to its current state by developing the blueprint for the future delivery of VA 

healthcare—it is now time for Congress to do the same and adequately fund the implementation of this comprehensive and crucial undertaking. 

The American Legion recommends $1.3 billion for Major Construction in FY 2008, 

$573 million more than the President’s budget request of $727 million to fund more 

pending ‘‘life-safety’’ projects. 

Minor Construction 

VA’s minor construction program has suffered significant neglect over the past 

several years as well. The requirement to maintain the infrastructure of VA’s buildings is no small task. Because the buildings are old, renovations, relocations and 

expansions are quite common. When combined with the added cost of the CARES 

program recommendations, it is easy to see that a major increase over the previous 

funding level is crucial and well overdue. 

The American Legion recommends $279 million for Minor Construction in FY 

2008, $46 million more than the President’s budget request of $233 million to address more CARES proposal minor construction projects. 

Capital Asset Realignment for Enhanced Services (CARES) 

In March 1999, GAO published a report on VA’s need to improve capital asset 

planning and budgeting. GAO estimated that over the next few years, VA could 

spend one of every four of its healthcare dollars operating, maintaining, and improving capital assets at its national major delivery locations, including 4,700 buildings 

and 18,000 acres of land nationwide. 

Recommendations stemming from the report included the development of assetrestructuring plans for all markets to guide future investment decisionmaking, 

among other initiatives. VA’s answer to GAO and Congress was the initiation and 


cprice-sewell on PROD1PC72 with HEARING
87 

development of the Capital Asset Realignment for Enhanced Services (CARES) program. 

The CARES initiative is a blueprint for the future of VHA—a fluid work in 

progress, in constant need of reassessment. In May 2004, the long awaited final 

CARES decision was released. The decision directed VHA to conduct 18 feasibility 

studies at those healthcare delivery sites where final decisions could not be made 

due to inaccurate and incomplete information. VHA contracted Pricewaterhouse 

Cooper (PwC) to develop a broad range of viable options and, in turn, develop business plans based on a limited number of selected options. To help develop those options and to ensure stakeholder input, then-VA Secretary Principi constituted the 

Local Advisory Panels (LAPs), which are made up of local stakeholders. The final 

decision on which business plan option will be implemented for each site lies with 

the Secretary of Veterans Affairs. 

The American Legion is dismayed over the slow progress in the LAP process and 

the CARES initiative overall. Both Stage I and Stage II of the process include two 

scheduled LAP meetings at each of the sites being studied with the whole process 

concluding on or about February 2006. 

It wasn’t until April 2006, after nearly a 7-month hiatus, that Secretary Nicholson 

announced the continuation of the services at Big Spring, Texas, and like all the 

other sites, has only been through Stage I. Seven months of silence is no way to 

reassure the veterans’ community that the process is alive and well. The American 

Legion continues to express concern over the apparent short-circuiting of the LAPs 

and the silencing of the stakeholders. The American Legion intends to hold accountable those who are entrusted to provide the best healthcare services to the most deserving population—the nation’s veterans. 

Upon conclusion of the initial CARES process, then-Secretary Principi called for 

a ‘‘billion dollars a year for the next seven years’’ to implement CARES. The American Legion continues to support that recommendation and encourages VA and Congress to ‘‘move out’’ with focused intent. 

STATE EXTENDED CARE FACILITY GRANTS PROGRAM 

Since 1984, nearly all planning for VA inpatient nursing home care has revolved 

around State Veterans’ Homes and contracts with public and private nursing homes. 

The reason for this is obvious; VA paid a per diem of $59.48 for each veteran it 

placed in State Veterans’ Homes, compared to the $354 VA pays to maintain a veteran for 1 day in its own nursing home care units. 

Under the provisions of title 38, United States Code, VA is authorized to make 

payments to states to assist in the construction and maintenance of State Veterans’ 

Homes. Today, there are 109 State Veterans’ Homes in 47 states with over 23,000 

beds providing nursing home, hospital, and domiciliary care. Grants for Construction of State Extended Care Facilities provide funding for 65 percent of the total 

cost of building new veterans homes. Recognizing the growing long-term healthcare 

needs of older veterans, it is essential that the State Veterans’ Home Program be 

maintained as a viable and important alternative healthcare provider to the VA system. The American Legion opposes any attempts to place moratoria on new State 

Veterans’ Home construction grants. State authorizing legislation has been enacted 

and state funds have been committed. The West Los Angeles State Veterans’ Home, 

alone, is a $125 million project. Delaying this and other projects could result in cost 

overruns from increasing building materials costs and may result in states deciding 

to cancel these much-needed facilities. 

The American Legion supports: 

• increasing the amount of authorized per diem payments to 50 percent for nursing home and domiciliary care provided to veterans in State Veterans’ Homes; • the provision of prescription drugs and over-the-counter medications to State 

Veterans’ Homes Aid and Attendance patients along with the payment of authorized per diem to State Veterans’ Homes; and • allowing for full reimbursement of nursing home care to 70 percent service-connected veterans or higher, if the veteran resides in a State Veterans’ Home. 

The American Legion recommends $250 million for the State Extended Care Fa- cility Construction Grants Program in FY 2008, $165 million more than the President’s budget request. This additional funding will address more pending life-safety 

projects and new construction projects. 

STATE CEMETERY GRANTS PROGRAM 

The State Veterans’ Cemetery Grant Program is not intended to replace National 

Cemeteries, but to complement them. Grants for state-owned and operated cemeVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00091 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
88 

teries can be used to establish, expand and improve on existing cemeteries. States 

are planning to open 24 new state veterans’ cemeteries between 2007 and 2012. 

There are 60 operational cemeteries and two more under construction. Since NCA 

concentrates its construction resources on large metropolitan areas, it is unlikely 

that new national cemeteries will be constructed in all states. Therefore, individual 

states are encouraged to pursue applications for the State Cemetery Grants Program. Fiscal commitment from the state is essential to keep the operation of the 

cemetery on track. NCA estimates it takes about $300,000 a year to operate a state 

cemetery. The American Legion recommends $42 million for the State Cemetery Grants Pro- gram in FY 2008, $10 million more than the President’s budget request. 

NATIONAL CEMETERY ADMINISTRATION 

The mission of the National Cemetery Administration is to honor veterans with 

final resting places in national shrines and with lasting tributes that commemorate 

their service to this Nation. The National Cemetery Administration’s vision is to 

serve all veterans and their families with the utmost dignity, respect, and compassion. Every national cemetery should be a place that inspires visitors to understand 

and appreciate the service and sacrifice of this Nation’s veterans. 

National Cemetery Expansion 

The American Legion supported P.L. 108–109, the National Cemetery Expansion 

Act of 2003, authorizing VA to establish new national cemeteries to serve veterans 

in the areas of: Bakersfield, Calif.; Birmingham, Ala.; Jacksonville, Fla.; Sarasota 

County, Fla.; southeastern Pennsylvania; and Columbia-Greenville, S.C. All six 

areas have veterans’ populations exceeding 170,000, which is the threshold VA has 

established for new national cemeteries. By 2009, all six new national cemeteries 

should be open to serve veterans in these areas. 

There are approximately 24 million veterans alive today. Nearly 688,000 veteran 

deaths are estimated to occur in 2008. The total number of graves maintained by 

VA is expected to increase from 2.8 million in 2006 to just over 3.2 million by 2012. 

The VA expects that at least 12 percent of these veterans will request burial in a 

national cemetery. Considering the growing costs of burial services and the excellent 

quality of service the NCA is providing, The American Legion foresees that this percentage will be much greater. By 2012, four more national cemeteries are expected 

to exhaust their supply of available, unassigned gravesites. 

Congress must provide sufficient major construction appropriations to permit 

NCA to accomplish its stated goal of ensuring that burial in a national or state cemetery is a realistic option by locating cemeteries within 75 miles of 90 percent of 

eligible veterans. 

National Shrine Commitment 

Maintaining cemeteries as National Shrines is one of NCA’s top priorities. This 

commitment involves raising, realigning and cleaning headstones and markers to 

renovate gravesites. The work that has been done so far has been outstanding; however, adequate funding is key to maintaining this very important commitment. The 

American Legion supports NCA’s goal of completing the National Shrine Commitment within 5 years. This commitment includes the establishment of standards of 

appearance for national cemeteries that are equal to the standards of the finest 

cemeteries in the world. Operations, maintenance and renovation funding must be 

increased to reflect the true requirements of the NCA to fulfill this commitment. 

The American Legion recommends $178 million for the National Cemetery Administration in FY 2008, $12 million more than the President’s budget request. 

INFORMATION TECHNOLOGY 

The data theft that occurred in May of last year serves as a monumental wake 

up call to the nation. VA can no longer ignore IT security. The recovery of the laptop 

is indeed cause for optimism; however, we must not discount the possibility that 

every name on that list could still be subject to possible identity theft. The complete 

overhaul of VA IT is only in its beginning stages. Meanwhile, there are still unresolved security breaches within VA including the most recent theft of a laptop from 

a VA contractor. How many computers need to be stolen before veterans get some 

real assurances from the Federal Government that their information is not only 

safe, but that safeguards will be in place to help protect them against identity theft? 

The American Legion once again calls on VA and the Administration to keep its 

promise to veterans and provide free credit monitoring for 1 year. The American Legion is hopeful that the steps VA takes to strengthen its IT security will renew the 


cprice-sewell on PROD1PC72 with HEARING
89 

confidence and trust of veterans who depend on VA for the benefits they have 

earned. 

Funding for the IT overhaul should not be paid for with money from other VA 

programs. This would in essence make veterans pay for VA’s gross negligence in the 

matter. The American Legion hopes that Congress will not attempt to fix this problem on the backs of America’s veterans and from scarce fiscal resources provided 

to the VA healthcare delivery. 

VA has shown it can be a leader in the areas of care and service. Its accomplishments, from providing high quality medical care to leading the world in the development of electronic records, are indicators that VA can also be the nation’s leader 

in IT security. 

The American Legion believes that there should be a complete review of IT security governmentwide. VA isn’t the only agency within the government that needs 

to overhaul its IT security protocol. The American Legion would urge Congress to 

exercise its oversight authority and review each Federal agency to ensure that the 

personal information of all Americans is secure. The American Legion agrees with the President’s budget request for $1.9 billion 

for Information Technology in FY 2008. 

VA’s LONG–TERM CARE MISSION 

Historically, VA’s Long-Term Care (LTC) has been the subject of discussion and 

legislation for nearly two decades. In a landmark July 1984 study, Caring for the 

Older Veteran, it was predicted that a wave of elderly veterans had the potential 

to overwhelm VA’s long-term care capacity. Further, the recommendations of the 

Federal Advisory Committee on the Future of Long-Term Care in its 1998 report 

VA Long-Term Care at the Crossroads, made recommendations that serve as the 

foundation for VA’s national strategy to revitalize and reengineer long-term care 

services. It is now 2006 and that wave of veterans has arrived. 

Additionally, Public Law 106–117, the Millennium Act, enacted in November 

1999, required VA to continue to ensure 1998 levels of extended care services (defined as VA nursing home care, VA domiciliary, VA home-based primary care, and 

VA adult day healthcare) in its facilities. Yet, VA has continually failed to maintain 

the 1998 bed levels mandated by law. 

VA’s inability to adequately address the long-term care problem facing the agency 

was most notable during the CARES process. The planning for the long-term care 

mission, one of the major services VA provides to veterans, was not even addressed 

in the CARES initiative. That CARES initiative is touted as the most comprehensive analysis of VA’s healthcare infrastructure that has ever been conducted. 

Incredibly, despite 20 years of forewarning, the CARES Commission report to the 

VA Secretary states that VA has yet to develop a long-term care strategic plan with 

well-articulated policies that address the issues of access and integrated planning 

for the long-term care of seriously mentally ill veterans. The Commission also reported that VA had not yet developed a consistent rationale for the placement of 

long-term care units. It was not for the lack of prior studies that VA has never had 

a coordinated long-term care strategy. The Secretary’s CARES decision agreed with 

the Commission and directed VHA to develop a strategic plan, taking into consideration all of the complexities involved in providing such care across the VA system. 

The American Legion supports the publishing and implementation of a long-term 

care strategic plan that addresses the rising long-term care needs of America’s veterans. We are, however, disappointed that it has now been over 2 years since the 

CARES decision and no plan has been published. 

It is vital that VA meet the long-term care requirements of the Millennium 

Health Care Act and we urge this Committee to support adequate funding for VA 

to meet the long-term care needs of America’s Veterans. The American Legion supports the President’s $4.6 billion funding recommendation for FY 2008. 

HOMELESS VETERANS 

VA has estimated that there are at least 250,000 homeless veterans in America 

and approximately 500,000 experience homelessness in a given year. Most homeless 

veterans are single men; however, the number of single women with children has 

drastically increased within the last few years. Homeless female veterans tend to 

be younger, are more likely to be married, and are less likely to be employed. They 

are also more likely to suffer from serious psychiatric illness. 

Approximately 40 percent of homeless veterans suffer from mental illness and 80 

percent have alcohol or other drug abuse problems. It cannot go unnoticed that the 

increase in homeless veterans coincides with the under-funding of VA healthcare, 

which resulted in the downsizing of inpatient mental health capabilities in VA hosVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00093 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
90 

pitals across the country. Since 1996, VA has closed 64 percent of its psychiatric 

beds and 90 percent of its substance abuse beds. It is no surprise that many of these 

displaced patients end up in jail, or on the streets. The American Legion applauds 

VA’s recent plan to restore a good portion of this capacity. The American Legion believes there should be a focus on the prevention of homelessness, not just measures 

to respond to it. Preventing it is the most important step to ending it. 

The American Legion has a vision to assist in ending homelessness among veterans, by ensuring services are available to respond to veterans and their families 

in need before they experience homelessness. Toward that objective, The American 

Legion in partnership with the National Coalition for Homeless Veterans created a 

Homeless Veterans Task Force. The mission of the Task Force is to develop and implement solutions to end homelessness among veterans through collaborating with 

government agencies, homeless providers and other veteran service organizations. 

In the last 2 years, 16 homeless veterans workshops were conducted during The 

American Legion National Leadership Conferences, National Convention and MidWinter Conferences. Currently, there are 51 Homeless Veterans Chairpersons within The American Legion who act as liaison to Federal, state and community homeless agencies and monitor fundraising, volunteerism, advocacy and homeless prevention activities within participating American Legion Departments. 

The current Administration has vowed to end the scourge of homelessness within 

10 years. The clock is running on this commitment, yet words far exceed deeds. 

While less than 9 percent of the nation’s population are veterans, 34 percent of the 

nation’s homeless are veterans and of those 75 percent are wartime veterans. 

Homelessness in America is a travesty, and veterans’ homelessness is disgraceful. 

Left unattended and forgotten, these men and women, who once proudly wore the 

uniforms of this nation’s armed forces and defended her shores, are now wandering 

her streets in desperate need of medical and psychiatric attention and financial support. While there have been great strides in ending homelessness among America’s 

veterans, there is much more that needs to be done. We must not forget them. The 

American Legion supports funding that will lead to the goal of ending homelessness 

in the next 10 years. 

Homeless Providers Grant and Per Diem Program Reauthorization 

In 1992, VA was given authority to establish the Homeless Providers Grant and 

Per Diem Program under the Homeless Veterans Comprehensive Service Programs 

Act of 1992, P.L. 102–590. The Grant and Per Diem Program is offered annually 

(as funding permits) by the VA to fund community agencies providing service to 

homeless veterans. 

The American Legion strongly supports changing the Grant and Per Diem Program to be funded on a 5-year period instead of annually and a funding level increase to the $200 million level annually. 

VETERANS BENEFITS ADMINISTRATION (VBA) 

The VA has a statutory responsibility to ensure the welfare of the nation’s veterans, their families, and survivors. Providing quality decisions in a timely manner 

has been, and will continue to be, one of the VA’s most difficult challenges. 

Workload and Claims Backlog 

There are approximately 3.5 million veterans and beneficiaries currently receiving 

VA compensation and pension benefits. In 2006, VA added almost 250,000 new 

beneficiaries to the compensation and pension rolls. VA anticipates receiving about 

800,000 claims a year in 2007 and 2008. The current staffing levels do not enable 

VA to reduce the pending claims inventory and provide timely service to veterans; 

therefore, the President is requesting an increase of 457 full-time equivalents compensation and pension personnel. The productivity of the additional staff will increase throughout 2008 and in subsequent years as these new employees receive 

training and gain experience. VA believes the additional staffing will enable VBA 

to improve claims processing timeliness, reduce appeals workload, improve appeals 

processing timeliness, and enhance services to veterans returning from the Global 

War on Terrorism. 

The increasing complexity of VA claims adjudication continues to be a major challenge for VA rating specialists. Since judicial review of veterans’ claims was enacted 

in 1988, the remand rate of those cases appealed to the United States Court of Appeals for Veterans Claims (CAVC) has, historically, been about 50 percent. In a series of precedent-setting decisions by the CAVC and the United States Court of Appeals for the Federal Circuit, a number of longstanding VA policies and regulations 

have been invalidated because they were not consistent with statute. These court 

decisions immediately added thousands of cases to regional office workloads, since 


cprice-sewell on PROD1PC72 with HEARING
91 

they require the review and reworking of tens of thousands of completed and pending claims. 

As of August 19, 2006, there were more than 389,000 rating cases pending in the 

VBA system. Of these, 92,047 (23.6 percent) have been pending for more than 180 

days. According to the VA, the appeals rate has also increased from a historical rate 

of about 7 percent of all rating decisions being appealed to a current rate that fluctuates from 11 to 14 percent. This equates to more than 152,000 appeals currently 

pending at VA regional offices, with more than 132,000 requiring some type of further adjudicative action. 

Staffing 

Whether complex or simple, VA regional offices are expected to consistently develop and adjudicate veterans’ and survivors’ claims in a fair, legally proper, and 

timely manner. The adequacy of regional office staffing has as much to do with the 

actual number of personnel as it does with the level of training and competency of 

the adjudication staff. VBA has lost much of its institutional knowledge base over 

the past 4 years, due to the retirement of many of its 30-plus year employees. As 

a result, staffing at most regional offices is made up largely of trainees with less 

than 5 years of experience. Over this same period, as regional office workload demands escalated, these trainees have been put into production units as soon as they 

completed their initial training. 

Concern over adequate staffing in VBA to handle its demanding workload was addressed by VA’s Office of the Inspector General (IG) in a report released in May 

2005 (Report No. 05–00765–137, dated May 19, 2005). The IG specifically recommended, ‘‘in view of growing demand, the need for quality and timely decisions, 

and the ongoing training requirements, reevaluate human resources and ensure 

that the VBA field organization is adequately staffed and equipped to meet mission 

requirements.’’ The Under Secretary for Benefits has conceded that the number of 

personnel has decreased over the last few years. And the congressionally mandated 

Veterans’ Disability Benefits Commission is also closely looking at the adequacy of 

current staffing levels. 

It is an extreme disservice to veterans, not to mention unrealistic, to expect VA 

to continue to process an ever increasing workload, while maintaining quality and 

timeliness, with less staff. Our current wartime situation provides an excellent opportunity for VA to actively seek out returning veterans from Operations Enduring 

Freedom and Iraqi Freedom, especially those with service-connected disabilities, for 

employment opportunities within VBA. To ensure VA and VBA are meeting their 

responsibilities, The American Legion strongly urges Congress to scrutinize VBA’s 

budget requests more closely. Given current and projected future workload demands, regional offices clearly will need more rather than fewer personnel and The 

American Legion is ready to support additional staffing. However, VBA must be required to provide better justification for the resources it says are needed to carry 

out its mission and, in particular, how it intends to improve the level of adjudicator 

training, job competency, and quality assurance. 

GI BILL EDUCATION BENEFITS 

Over 96 percent of recruits currently sign up for the MGIB and pay $1,200 out 

of their first year’s pay to guarantee eligibility. However, only one-half of these military personnel use any of the current Montgomery GI Bill benefits. We believe this 

is directly related to the fact that current GI Bill benefits have not kept pace with 

the increasing cost of education. Costs for attending the average 4-year public institution as a commuter student during the 1999–2000 academic year was nearly 

$9,000. On October 1, 2005, the basic monthly rate of reimbursement under MGIB 

was raised to $1,034 per month for a successful 4-year enlistment and $840 for an 

individual whose initial active duty obligation was less than 3 years. The current 

educational assistance allowance for persons training full-time under the MGIB Selected Reserve is $297 per month. 

The Servicemen’s Readjustment Act of 1944, P.L. 78–346, the original GI Bill, provided millions of members of the Armed Forces an opportunity to seek higher education. Many of these individuals may not have been afforded this opportunity without the generous provisions of that act. Consequently, these former service members 

made a substantial contribution not only to their own careers, but also to the economic wellbeing of the country. Of the 15.6 million veterans eligible, 7.8 million took 

advantage of the educational and training provisions of the original GI Bill. Between 1944 and 1956, when the original GI Bill ended, the total educational cost 

of the World War II bill was $14.5 billion. The Department of Labor estimates that 


cprice-sewell on PROD1PC72 with HEARING
92 

the government actually made a profit, because veterans who had graduated from 

college generally earned higher salaries and, therefore, paid more taxes. 

Today, a similar concept applies. The educational benefits provided to members 

of the Armed Forces must be sufficiently generous to have an impact. The individuals who use MGIB educational benefits are not only improving their career potential, but also making a greater contribution to their community, state, and nation. 

The American Legion recommends the 110th Congress make the following improvements to the current MGIB: 

• The dollar amount of the entitlement should be indexed to the average cost of 

a college education including tuition, fees, textbooks, and other supplies for a 

commuter student at an accredited university, college, or trade school for which 

they qualify; • The educational cost index should be reviewed and adjusted annually; • A monthly tax-free subsistence allowance indexed for inflation must be part of 

the educational assistance package; • Enrollment in the MGIB shall be automatic upon enlistment; however; benefits 

will not be awarded unless eligibility criteria have been met; • The current military payroll deduction ($1,200) requirement for enrollment in 

MGIB must be terminated; • If a veteran enrolled in the MGIB acquired educational loans prior to enlisting 

in the Armed Forces, MGIB benefits may be used to repay those loans; • If a veteran enrolled in MGIB becomes eligible for training and rehabilitation 

under Chapter 31, of title 38, United States Code, the veteran shall not receive 

less educational benefits than otherwise eligible to receive under MGIB; • Separating service members and veterans seeking a license, credential, or to 

start their own business must be able to use MGIB educational benefits to pay 

for the cost of taking any written or practical test or other measuring device; • Eligible veterans shall have an unlimited number of years after discharge to 

utilize MGIB educational benefits; • Eligible veterans should have the right to transfer their earned benefits to their 

spouse and dependents; and • Eligible members of the Select Reserves, who qualify for MGIB educational benefits shall receive not more than half of the tuition assistance and subsistence 

allowance payable under the MGIB and have up to 5 years after their date of 

separation to use MGIB educational benefits. 

VOCATIONAL REHABILITATION AND EMPLOYMENT SERVICE (VR&E) 

The mission of the VR&E program is to help qualified, service-disabled veterans 

achieve independence in daily living and, to the maximum extent feasible, obtain 

and maintain suitable employment. The American Legion fully supports these goals. 

As a nation at war, there continues to be an increasing need for VR&E services to 

assist Operations Iraqi Freedom and Enduring Freedom veterans in reintegrating 

into independent living, achieving the highest possible quality of life, and securing 

meaningful employment. To meet America’s obligation to these specific veterans, VA 

leadership must focus on marked improvements in case management, vocational 

counseling, and—most importantly—job placement. 

The successful rehabilitation of our severely disabled veterans is determined by 

the coordinated efforts of every Federal agency (DoD, VA, DoL, OPM, HUD, etc.) 

involved in the seamless transition from the battlefield to the civilian workplace. 

Timely access to quality healthcare services, favorable physical rehabilitation, vocational training, and job placement play a critical role in the ‘‘seamless transition’’ 

of each and every veteran, as well as his or her family. 

Administration of VR&E and its programs is a responsibility of the Veterans Benefits Administration (VBA). Providing effective employment programs through 

VR&E must become a priority. Until recently, VR&E’s primary focus has been providing veterans with skills training, rather than providing assistance in obtaining 

meaningful employment. Clearly, any employability plan that doesn’t achieve the ultimate objective—a job—is falling short of actually helping those veterans seeking 

assistance in transitioning into the civilian workforce. 

Vocational counseling also plays a vital role in identifying barriers to employment 

and matching veterans’ transferable job skills with those career opportunities available for fully qualified candidates. Becoming fully qualified becomes the next logical 

objective toward successful transition. 

Veterans Preference in Federal hiring plays an important role in guiding veterans 

to career possibilities within the Federal Government and must be preserved. There 

are scores of employment opportunities within the Federal Government that educated, well-trained, and motivated veterans can fill—given a fair and equitable 


cprice-sewell on PROD1PC72 with HEARING
93 

chance to compete. Working together, all Federal agencies should identify those vocational fields, especially those with high turnover rates, suitable for VR&E applicants. Career fields like information technology, claims adjudications, debt collection, etc., offer employment opportunities and challenges for career-oriented applicants that also create career opportunities outside the Federal Government. 

GAO has also cited exceptionally high workloads for a limited number of staff 

members at VR&E offices. This increased workload hinders the staff’s ability to effectively assist individual veterans with identifying employment opportunities. In 

April 2005, the average caseload of a typical VR&E counselor approached 160 veterans. The American Legion is pleased that an additional number of 150 full-time 

equivalents will be hired and we applaud the President’s budget request for $159.5 

million in FY 2008. It is vital that Congress approve this request to adequately address the expected increase of veterans needing assistance. 

HOME LOAN GUARANTY PROGRAM 

VA’s Home Loan Guaranty program has been in effect since 1944 and has afforded nearly 17 million veterans the opportunity to purchase homes. The Home 

Loan programs offer veterans a centralized, affordable and accessible method of purchasing homes in return for their service to this nation. The program has been so 

successful over past years that not only has the program paid for itself but has also 

shown a profit in recent years. The American Legion believes that it is unfair for 

veterans to pay high funding fees of 2 to 3 percent, which can add approximate 

$3,000 to $11,000 for a first time buyer. The VA funding fee was initially enacted 

to defray the costs of the VA guaranteed home loan program. The current funding 

fee paid to VA to defray the cost of the home loan has had a negative effect on many 

veterans who choose not to participate in this highly beneficial program. Therefore, 

The American Legion strongly recommends that the VA funding fee on home loans 

be reduced or eliminated for all veterans whether active duty, reservist, or National 

Guard. 

Specially Adapted Housing 

The American Legion believes that with the increasing numbers of disabled veterans returning from Iraq and Afghanistan, the need for specially adapted housing 

is paramount. Therefore, The American Legion strongly recommends that the current $50,000 grant for specially adapted housing be increased to $55,000 and special 

home adaptations be increased from $10,000 to $12,300. Specially adapted housing 

grants are available for the installation of wheelchair ramps, chair lifts, modifications to kitchens and bathrooms and other adaptations to homes for veterans who 

cannot move about without the use of wheelchairs, canes or braces or who are blind 

and suffer the loss or loss of use of one lower extremity. Special home adaptation 

grants are available for veterans who are legally blind or have lost the use of both 

hands. 

SUMMARY 

Mr. Chairman and Members of the Committee, The American Legion appreciates 

the strong relationship we have developed with this Committee. With increasing 

military commitments worldwide, it is important that we work together to ensure 

that the services and programs offered through VA are available to the new generation of American service members who will soon return home. You have the power 

to ensure that their sacrifices are indeed honored with the thanks of a grateful nation. 

The American Legion is fully committed to working with each of you to ensure 

that America’s veterans receive the entitlements they have earned. Whether it is 

improved accessibility to healthcare, timely adjudication of disability claims, improved educational benefits or employment services, each and every aspect of these 

programs touches veterans from every generation. Together we can ensure that 

these programs remain productive, viable options for the men and women who have 

chosen to answer the nation’s call to arms. 

Thank you for allowing me the opportunity to appear before you today. 

f 

Statement of Brian Lawrence 

Assistant National Legislative Director, Disabled American Veterans 

Mr. Chairman and Members of the Committee: 

I am pleased to appear before you on behalf of the Disabled American Veterans 

(DAV), which is one of the four member organizations of The Independent Budget 

(IB). We appreciate the opportunity to present the recommendations of the fiscal 


cprice-sewell on PROD1PC72 with HEARING
94 

year (FY) 2008 IB and compare them to the President’s proposed FY 2008 budget 

for veterans’ programs. As you know, the IB is a budget and policy document that 

sets forth the collective views of the DAV, AMVETS, the Paralyzed Veterans of 

America (PVA), and the Veterans of Foreign Wars of the United States (VFW). Each 

organization has a principal responsibility for a major component of the budget. My 

testimony focuses on Department of Veterans (VA) benefit programs, which are administered by the Veterans Benefits Administration (VBA). VBA is further divided 

into the following services: Compensation and Pension (C&P), Vocational Rehabilitation and Employment (VR&E), Education, Loan Guaranty, and Insurance. VBA and 

its constituent departments are funded under the General Operating Expenses 

(GOE). 

The level of funding sought in the President’s FY 2008 budget for VBA is approximately $1.2 billion, an increase of $30 million over last year’s level. This amount 

falls far short of the IB assessment, which anticipates that VBA will require more 

than $1.9 billion to meet the needs of disabled veterans. The difference between the 

Administration’s and the IB proposals is more than $700 million. 

C&P Service 

With the Administration’s proposed budget, C&P Service would be authorized 

total 9,559 FTE, which is a total increase of 114. This recommendation does not appear to be aligned with the Administration’s stated goal to decrease the number of 

backlogged compensation claims. For nearly a decade, C&P has struggled to find a 

way to address claims processing problems and establish a viable long-term claims 

process. Despite its ongoing efforts, the backlog remains unacceptably high, and disabled veterans and their families suffer the consequences. While a number of factors 

play a role, the backlog has persisted primarily because of inadequate resources 

compounded by higher claims volumes. The disability claims workload from returning war veterans and veterans of previous periods has steadily increased since 2000. 

The IB anticipates that this trend will continue, considering the ongoing hostilities 

in Iraq and Afghanistan, as well as an aging veteran population. However, the VA 

perspective is that a slight decrease in the number of claims receipts will occur during 2007 and 2008. This prediction is somewhat troubling, considering that the VA 

funding shortfall that occurred in 2005 was attributed to error in estimating the 

number of future claims receipts. 

During both FY 2005 and FY 2006, the total number of compensation, pension, 

and burial claims increased by an average annual rate of 4.5 percent. During this 

same period, the number of pending claims increased by a total of more than 33 

percent. With an aging veterans’ population and ongoing hostilities in Iraq and Afghanistan, it is reasonable to expect a continuation of inclined rates. Assuming the 

annual percentage rate of growth remains the same as in preceding years, VA can 

expect 874,136 claims for C&P in FY 2007. Further complicating this issue is legislation requiring VA to invite veterans in six states to request review of past claims 

decisions and disability ratings. It is estimated that this outreach project will 

produce 56,000 additional claims. Given past claims processing times, much of this 

workload will carry over into FY 2008, making the new total more than 930,000 

claims in FY 2008. Clearly, VA will require more resources just to keep the backlog 

from growing, and it will require a significant increase in resources to fulfill the 

President’s goal to reduce and eventually eliminate the claims backlog. 

In its budget submission for FY 2007, VA projected production based an output 

of 109 claims per direct program FTE. The Independent Budget Veterans Service Organizations have long argued that VA’s production requirements do not allow for 

thorough development and careful consideration of disability claims, resulting in 

compromised quality, higher error and appeal rates, and even more overload on the 

system, and adding to the claims backlog. The IB asserts a more reasonable estimate of accurate productivity is 100 claims per FTE. With an estimated 930,000 

claims in FY 2008, that would require 9,300 direct program FTE. With the FY 2007 

level of 1,375 support FTE added, this would require C&P to be authorized 10,675 

total FTE for FY 2008. 

The IB estimates for the numbers of FTE do not accommodate the kinds of demands that may arise as a consequence of Congressional injection of attorneys into 

the claims process. The VA claims system was designed to be open, informal, and 

helpful to veterans. It is reasonable to expect that the involvement of fee-charging 

lawyers and agents will negatively impact productivity in the claims adjudication 

process and further bog down the system and eventually lead to the need for even 

more increases in C&P staffing. For example, VA will have the responsibility of 

oversight and administration of fee agreements under which the Secretary is to pay 

the attorney directly from past-due benefits awarded on the basis of the claim. We 


cprice-sewell on PROD1PC72 with HEARING
95 

believe this leaves open the possibility for abuse. Allowing fee-charging lawyers and 

agents into the system will profoundly change the administrative claims process to 

the detriment of veterans and other claimants. We believe there is a potential for 

wide-ranging unintended consequences that will be beneficial for neither claimants 

nor the government. Beyond the cost to veterans, added administrative costs for VA 

are likely to be substantial, without commensurate added advantages or benefits for 

either. 

In addition to recommending additional resources, the IB has identified two other 

critical areas that VA must address before it can reach its goal to reduce the backlog. First, it must continue to establish and improve training programs to enable 

newly hired C&P personnel to absorb the tremendous volume of information contained in the laws, regulations, and court decisions pertaining to veterans’ benefits 

claims. This is a monumental task in itself, and it is understandable that newly 

hired FTE require a considerable ‘ramp-up’ period before they are able to make accurate claims decisions. As you know, the DAV maintains a National Service Officer 

(NSO) corps of approximately 260 employees who represent and assist disabled veterans and their dependents throughout the claims process. Each NSO goes through 

a mandatory training period that lasts anywhere from 16 to 26 months before they 

are allowed to conduct unsupervised work. A similar extensive training program for 

VA claims personnel would help to reduce errors along with the number of appeals 

that are accumulating into a mountainous backlog. 

Second, C&P personnel must be accountable for the quality of work they produce. 

In the past, focus has primarily been on productivity. But producing a high number 

of claims decisions is detrimental if a significant number of them have to be reworked during an appeals process that adds months or years to the amount of time 

disabled veterans must wait for the benefits to which they are entitled. C&P personnel who consistently make errors and fail to improve despite remedial training 

must not be retained in a position where their numerous poor decisions impact disabled veterans. 

VA must establish a long-term strategy focused principally on attaining quality 

and not merely achieving production quotas in claims processing, or emphasizing 

how well and efficient it deals with the needs of new veterans of current wars. It 

must obtain supplementary resources for VBA, and it must invest these in that 

long-term strategy rather than reactively targeting them to short-term, temporary, 

and superficial gains. Only then can VBA proceed in a way that veterans’ needs are 

addressed timely with the effects of disability alleviated by prompt delivery of appropriate benefits. 

VR&E 

For VR&E Service, the President’s budget seeks funding for 1,260 FTE. The IB 

recommends 1,375 FTE for this business line. VR&E’s workload is expected to continue to increase primarily as a consequence of the war in Iraq and ongoing hostilities in Afghanistan. Also, given its increased reliance on contract services, VR&E 

needs additional FTE dedicated to management and oversight of contract counselors 

and rehabilitation and employment service providers. As a part of its strategy to enhance accountability and efficiency, the VA Vocational Rehabilitation and Employment Task Force recommended in its March 2004 report creation and training of 

new staff positions for this purpose. Other new initiatives recommended by the Task 

Force also require an investment of personnel resources. To implement reforms to 

improve the effectiveness and efficiency of its programs, the Task Force recommended that VA should add new FTE positions to the VR&E workforce. The FY 

2007 total of 1,125 FTE for VR&E should be increased by 250, to 1,375 total FTE. 

Education Service 

For Education Service, the President’s budget seeks funding for 894 FTE. While 

we appreciate the additional support, we believe the President’s recommended staffing level for Education Service falls short of what is needed. As it has with its other 

benefit programs, VA has been striving to provide more timely and efficient service 

to its claimants for education benefits. Though the workload (number of applications 

and recurring certifications, etc.) increased by 11 percent during recent years, direct 

program FTE were reduced from 708 at the end of FY 2003 to 675 at the end of 

FY 2005. Based on experience during FY 2004 and FY 2005, it is very conservatively estimated that the workload will increase by 5.5 percent in FY 2008. VA 

must increase staffing to meet the existing and added workload, or service to veterans seeking educational benefits will decline. Based on the number of direct program FTE at the end of FY 2003 in relation to the workload at that time, VBA must 

increase direct program staffing in its Education Service in FY 2008 to 873 FTE, 


cprice-sewell on PROD1PC72 with HEARING
96 

149 more direct program FTE than authorized for FY 2007. With the addition of 

the 160 support FTE as currently authorized, Education Service should be provided 

1,033 total FTE for FY 2008. 

Other Suggested Benefit Improvements 

The benefit programs are effective for their intended purposes only to the extent 

VBA can deliver benefits to entitled veterans and dependents in a timely fashion. 

However, in addition to ensuring that VBA has the resources necessary to accomplish its mission in that manner, Congress must also make adjustments to the programs from time to time to address increases in the cost of living and needed improvements. The IB makes a number of recommendations to adjust rates and improve the benefit programs administered by VBA. Some of those recommendations 

are: 

• Establish cost-of-living-adjustments (COLAs) for compensation, dependency and 

indemnity compensation (DIC). 

• Reject extension of provisions for rounding down compensation COLAs and 

allow current temporary provisions to expire. 

• Increase specially adapted housing grants and provide for automatic annual 

COLAs. 

• Increase automobile and adaptive equipment grants and provide for automatic 

annual COLAs. 

• Establish a grant to cover the costs of home adaptations for veterans who replace their specially adapted homes with new housing. 

• Increase rates of payment to veterans who are housebound or in need of regular 

aid-and-attendance due to service-connected disabilities. 

• Establish presumption of service connection for hearing loss and tinnitus for 

veterans whose military duties involved high level noise exposure or combat. 

• Protect veterans’ benefits against awards to third parties in divorce actions. 

• Eliminate remaining offset between career military retirement pay and VA compensation. 

• Eliminate offset between DIC and the Survivor Benefit Plan. 

• Increase DIC for survivors of military personnel who died on active duty. 

• Lower age requirement for reinstatement of DIC to re-married survivors of 

service-connected veterans, from 57 to 55 years of age. 

• Repeal funding fees for VA home loan guaranty. 

• Update premium schedule for SDVI to reflect current mortality tables. 

• Increase maximum protection of SDVI policies to at least $50,000. 

• Increase maximum protection of Veterans’ Mortgage Life Insurance from 

$90,000 to $150,000. 

• Reject recommendations to compensate service-connected disabilities through 

payment of lump-sum settlements to veterans. 

We invite the Committee’s attention to the section of the IB addressing the Benefit Programs for details on these and other IB recommendations for improvement. 

Another important component of our system of veterans’ benefits is the right to 

appeal VA’s benefits decisions to an independent court. The IB includes recommendations to improve the processes of judicial review in veterans’ benefits matters. Again, we invite the Committee’s attention to the IB for the details of these 

recommendations. In addition, the IB recommends that Congress enact legislation 

to authorize and fund construction of a courthouse and justice center for the United 

States Court of Appeals for Veterans Claims. 

Closing 

In preparing the IB, the four partners draw upon their extensive experience with 

the workings of veterans’ programs, their firsthand knowledge of the needs of America’s veterans, and the information gained from their continual monitoring of workloads and demands upon, as well as the performance of, the veterans’ benefits system. Historically, this Committee has acted favorably on many of our recommendations to improve services to veterans and their families, and we hope you will give 

our recommendations full and serious consideration again this year. 

f 


cprice-sewell on PROD1PC72 with HEARING
97 

Statement of Carl Blake 

National Legislative Director, Paralyzed Veterans of America 

Mr. Chairman and Members of the Committee, as one of the four co-authors of 

The Independent Budget, Paralyzed Veterans of America (PVA) is pleased to present 

the views of The Independent Budget regarding the funding requirements for the 

Department of Veterans Affairs (VA) healthcare system for FY 2008. 

PVA, along with AMVETS, Disabled American Veterans, and the Veterans of Foreign Wars, is proud to come before you this year marking the beginning of the third 

decade of The Independent Budget, a comprehensive budget and policy document 

that represents the true funding needs of the Department of Veterans Affairs. The 

Independent Budget uses commonly accepted estimates of inflation, healthcare costs 

and healthcare demand to reach its recommended levels. This year, the document 

is endorsed by 53 veterans’ service organizations, and medical and healthcare advocacy groups. 

Last year proved to be a unique year for reasons very different from 2005. The 

VA faced a tremendous budgetary shortfall during FY 2005 that was subsequently 

addressed through supplemental appropriations and additional funds added to the 

FY 2006 appropriation. For FY 2007, the Administration submitted a budget request that nearly matched the recommendations of The Independent Budget. These 

actions simply validated the recommendations of The Independent Budget once 

again. 

Unfortunately, even as we testify today, Congress has yet to complete the appropriations bill more than one-third of the way through the current fiscal year. Despite the positive outlook for funding as outlined in H.J. Res. 20, the FY 2007 Continuing Resolution, the VA has been placed in a critical situation where it is forced 

to ration care and place freezes on hiring of much needed medical staff. Waiting 

times have also continued to increase. Furthermore, the VA has had to cannibalize 

other accounts in order to continue to provide medical services, jeopardizing not only 

the VA healthcare system but the actual healthcare of veterans. It is unconscionable 

that Congress has allowed partisan politics and political wrangling to trump the 

needs of the men and women who have served and continue to serve in harm’s way. 

For FY 2008, the Administration has requested $34.2 billion for veterans’ 

healthcare, a $1.9 billion increase over the levels established in H.J. Res. 20, the 

continuing resolution for FY 2007. Although we recognize this as another step forward, it still falls well short of the recommendations of The Independent Budget. For 

FY 2008, The Independent Budget recommends approximately $36.3 billion, an increase of $4.0 billion over the FY 2007 appropriation level yet to be enacted and 

approximately $2.1 billion over the Administration’s request. 

The medical care appropriation includes three separate accounts—Medical Services, Medical Administration, and Medical Facilities—that comprise the total VA 

healthcare funding level. For FY 2008, The Independent Budget recommends approximately $29.0 billion for Medical Services. Our Medical Services recommendation includes the following recommendations: 

(Dollars in 

Thousands) 

Current Services Estimate $26,302,464 

Increase in Patient Workload $ 1,446,636 

Increase in Full-time Employees $ 105,120 

Policy Initiatives $ 1,125,000 

Total FY 2008 Medical Services $28,979,220 

In order to develop our current services estimate, we used the Obligations by Object in the President’s Budget to set the framework for our recommendation. We believe this method allows us to apply more accurate inflation rates to specific accounts within the overall account. Our inflation rates are based on 5-year averages 

of different inflation categories from the Consumer Price Index–All Urban Consumers (CPI–U) published by the Bureau of Labor Statistics every month. 

Our increase in patient workload is based on a 5.5 percent increase in workload. 

This projected increase reflects the historical trend in the workload increase over 

the last 5 years. The policy initiatives include $500 million for improvement of mental health services, $325 million for funding the fourth mission (an amount that 

nearly matches current VA expenditures for emergency preparedness and homeland 


cprice-sewell on PROD1PC72 with HEARING
98 

security as outlined in the 2007 Mid-Session Review), and $300 million to support 

centralized prosthetics funding. 

For Medical Administration, The Independent Budget recommends approximately $3.4 billion. Finally, for Medical Facilities, The Independent Budget recommends ap- proximately $4.0 billion. This recommendation includes an additional $250 million 

above the FY 2008 baseline in order to begin to address the non-recurring maintenance needs of the VA. 

Although The Independent Budget healthcare recommendation does not include 

additional money to provide for the healthcare needs of category 8 veterans now 

being denied enrollment into the system, we believe that adequate resources should 

be provided to overturn this policy decision. VA estimates that more than 1.5 million 

category 8 veterans will have been denied enrollment in the VA healthcare system 

by FY 2008. Assuming a utilization rate of 20 percent, in order to reopen the system 

to these deserving veterans, The Independent Budget estimates that VA will require approximately $366 million. The Independent Budget veterans service organizations 

(IBVSO) believe the system should be reopened to these veterans and that this 

money should be appropriated in addition to our Medical Care recommendation. 

Although not proposed to have a direct impact on veterans’ healthcare, we are 

deeply disappointed that the Administration chose to once again recommend an increase in prescription drug co-payments from $8 to $15 and an indexed enrollment 

fee based on veterans’ incomes. These proposals will simply add additional financial 

strain to many veterans, including PVA members and other veterans with catastrophic disabilities. Although the VA does not overtly explain the impact of these 

proposals, similar proposals in the past have estimated that nearly 200,000 veterans 

will leave the system and more than 1,000,000 veterans will choose not to enroll. 

It is astounding that this Administration would continue to recommend policies that 

would push veterans away from the best healthcare system in the world. Congress 

has soundly rejected these proposals in the past and we call on you to do so once 

again. 

For Medical and Prosthetic Research, The Independent Budget is recommending $480 million. This represents a $66 million increase over the FY 2007 appropriated 

level established in the continuing resolution and $69 million over the Administration’s request for FY 2008. We are very concerned that the Medical and Prosthetic 

Research account continues to face a virtual flatline in its funding level. Research 

is a vital part of veterans’ healthcare, and an essential mission for our national 

healthcare system. VA research has been grossly underfunded in comparison to the 

growth rate of other Federal research initiatives. We call on Congress to finally correct this oversight. 

The Independent Budget recommendation also recognizes a significant difference in our recommended amount of $1.34 billion for Information Technology versus the 

Administration’s recommended level of $1.90 billion. However, when compared to 

the account structure that The Independent Budget utilizes, the Administration’s 

recommendation amounts to approximately $1.30 billion. The Administration’s request also includes approximately $555 million in transfers from all three accounts 

in Medical Care as well as the Veterans Benefits Administration and the National 

Cemetery Administration. Unfortunately, these transfers are only partially defined 

in the Administration’s budget justification documents. Given the fact that the veterans’ service organizations have been largely excluded from the discussion of how 

the Information Technology reorganization would take place and the fact that little 

or no explanation was provided in last year’s budget submission, our Information 

Technology recommendation reflects what information was available to us and the 

funding levels that Congress deemed appropriate from last year. We certainly could 

not have foreseen the VA’s plan to shift additional personnel and related operations 

expenses. 

Finally, we remain concerned that the Major and Minor Construction accounts 

continue to be underfunded. Although the Administration’s request includes a fair 

increase in Major Construction from the expected appropriations level of $399 million to $727 million, it still does not go far enough to address the significant infrastructure needs of the VA. Furthermore, the actual portion of the Major Construction account that will be devoted to Veterans Health Administration infrastructure 

is only approximately $560 million. We also believe that the Minor Construction request of approximately $233 million does little to help the VA offset the rising tide 

of necessary infrastructure upgrades. Without the necessary funding to address 

minor construction needs, these projects will become major construction problems in 

short order. For FY 2008, The Independent Budget recommends approximately $1.6 

billion for Major Construction and $541 million for Minor Construction. 

In closing, to address the problem of adequate resources provided in a timely 

manner, The Independent Budget has proposed that funding for veterans’ healthcare 


cprice-sewell on PROD1PC72 with HEARING
99 

be removed from the discretionary budget process and made mandatory. The budget 

and appropriations process over the last number of years demonstrates conclusively 

how the VA labors under the uncertainty of not only how much money it is going 

to get, but, equally important, when it is going to get it. No Secretary of Veterans 

Affairs, no VA hospital director, and no doctor running an outpatient clinic knows 

how to plan and even provide care on a daily basis without the knowledge that the 

dollars needed to operate those programs are going to be available when they need 

them. 

Making veterans healthcare funding mandatory would not create a new entitlement, rather, it would change the manner of healthcare funding, removing the VA 

from the vagaries of the appropriations process. Until this proposal becomes law, 

however, Congress and the Administration must ensure that VA is fully funded 

through the current process. We look forward to working with this Committee in 

order to begin the process of moving a bill through the House, and the Senate, as 

soon as possible. 

In the end, it is easy to forget, that the people who are ultimately affected by 

wrangling over the budget are the men and women who have served and sacrificed 

so much for this nation. We hope that you will consider these men and women when 

you develop your budget views and estimates, and we ask that you join us in adopting the recommendations of The Independent Budget. 

This concludes my testimony. I will be happy to answer any questions you may 

have. 

f 

Statement of Dennis M. Cullinan, National Legislative Director 

Veterans of Foreign Wars of the United States 

On behalf of the 2.4 million men and women of the Veterans of Foreign Wars of 

the U.S. (VFW), this nation’s largest combat veterans’ organization, I would like to 

thank you for the opportunity to testify today on the Fiscal Year 2008 budget for 

the Department of Veterans Affairs (VA). 

The VA construction budget has, for the past few years, been dominated by the 

Capital Asset Realignment for Enhanced Services (CARES) process. 

CARES is a system-wide, data-drive assessment of VA’s capital infrastructure. It 

aimed to identify the needs of veterans to aid in the planning of future and realignment of current VA facilities to most efficiently meet those needs. It was not just 

a one-time evaluation but also the creation of a process and framework to continue 

to determine veterans’ future requirements. 

Throughout the entire CARES process, The Independent Budget veterans’ service 

organizations (IBVSOs) were highly supportive, as long as VA emphasized the 

‘‘ES’’—enhanced services—portion of the acronym. 

• 2001—CARES pilot study in Network 12 (Chicago, Illinois; Wisconsin; and 

Upper Michigan) completed. 

• 2002—Phase II of CARES began in all other networks of VA individually, to be 

compiled in the Draft National CARES Plan. 

• 2003—August: Draft National CARES Plan submitted to CARES Commission 

to review and gather public input. 

• 2004—February: VA Secretary receives CARES Commission recommendations. 

• 2004—May: VA Secretary announces his decision on CARES, but calls for additional ‘‘CARES Business Plan Studies’’ at 18 sites throughout the country. 

These CARES Business Plan Studies are available on VA’s CARES website, 

www.va.gov/cares. As of December 2006, only ten of these studies have been completed, despite VA’s stated June 2006 deadline. The IBVSOs look forward to the 

final results so that implementation of these important plans can go forward. 

The IBVSOs believe that all decisions on CARES should be consistent with the 

CARES Decision document and its established priorities, or with the findings of the 

CARES review commission that largely confirmed those priorities. Proposed changes 

or deviation from the plan should undergo the same rigorous data validation as the 

original projects. 

CARES was intended to be an apolitical, data-driven process that looked out for 

the best interest of veterans throughout the entire system. We are certainly pleased 

that the Secretary and Members of Congress are interested in the future of VA capital facilities, but we urge all involved to maintain consistency with the apolitical 

process that, as agreed to by all parties—stakeholders included—would provide the 

best way to determine future VA infrastructure needs to sufficiently care for all veterans. This was the hallmark of the CARES plan. 


cprice-sewell on PROD1PC72 with HEARING
100 

Throughout the CARES process, the IBVSOs were greatly concerned with the 

underfunding of the construction budget. Congress and the Administration did not 

devote many resources to VA’s infrastructure, preferring to wait for the final results 

of CARES. In past Independent Budgets we warned against this, pointing out that 

there were a number of legitimate construction needs identified by the local manager of VA facilities. A number of facilities were authorized, including House passage of the ‘‘Veterans Hospital Emergency Repair Act,’’ but funding was never appropriated, with the ongoing CARES review being used as the primary excuse. 

At the time, the IBVSOs argued that a de facto moratorium on construction was 

unnecessary because of our conviction that a number of these projects needed to go 

forward and that they would be fully justified in any future plans produced through 

CARES. Despite this reasonable argument, funding never came, and VA lost 

progress on hundreds of millions of dollars that otherwise would have been invested 

to meet the system’s critical infrastructure needs. 

The IBVSOs continue to believe that this deferral of all major VA construction 

projects was poor policy. In the five-plus years the process took, construction and 

maintenance improvements lagged far beyond what the system truly needed. With 

CARES nearly complete, funding has not yet been proposed by the Administration 

nor approved by Congress to address the very large project backlog that has grown. 

We note this year that both Veterans’ Committees have considered legislation 

that would authorize resumption of VA major medical facility construction projects, 

but with the breakdown of the appropriations process, these projects died with the 

end of the 109th Congress. 

In July 2004, VA Secretary Anthony Principi testified before the Health Subcommittee of the House Committee on Veterans’ Affairs. In his testimony, he noted 

that CARES ‘‘reflects a need for additional investments of approximately $1 billion 

per year for the next 5 years to modernize VA’s medical infrastructure and enhance 

veterans’ access to care.’’ Since that statement, however, the amount actually appropriated by Congress for VA major medical facility construction has fallen far short 

of that goal; in fiscal year 2007, the Administration recommended a paltry $399 million for major construction. 

After that 5-year de facto moratorium and without additional funding coming 

forth, VA facilities have an even greater need than they did at the start of the 

CARES process. Accordingly, we urge the Administration and the Congress to live 

up to the Secretary’s words by making a steady investment in VA’s capital infrastructure to bring the system up to date with the needs of 21st century veterans. 

For major construction, the IBVSOs recommend $1.602 billion in funding. This includes funding for the projects on VA’s priority list, advanced planning, and for construction costs for a number of new national cemeteries in accordance with the NCA 

strategic plan. 

Category 

Funding 

(Dollars in 

Thousands) 

CARES 1,400,000 

Master Planning 20,000 

Advanced Planning 45,000 

Asbestos 5,000 

Claims Analyses 3,000 

Judgment Fund 2,000 

Hazardous Waste 2,000 

National Cemetery Administration 95,000 

Staff Offices 5,000 

Historic Preservation 25,000 

TOTAL $1,602,000 

For minor construction, the IBVSOs recommend a total of $541 million, the bulk 

of which will go toward the more than 100 minor construction projects identified by 

VA in its 5-year capital plan in fiscal year 2008. 


cprice-sewell on PROD1PC72 with HEARING
101 

Category 

Funding 

(Dollars in 

Thousands) 

CARES/Non-CARES 450,000 

National Cemetery Administration 40,000 

Veterans Benefits Administration 35,000 

Staff 6,000 

Advanced Planning 10,000 

TOTAL $ 541,000 

Department of Veterans Affairs (VA) does not have adequate provisions to 

protect against deterioration and declining capital asset value. 

The last decade of underfunded construction budgets has led to a reduction in the 

recapitalization of VA’s facilities. Recapitalization is necessary to protect the value 

of VA’s capital assets by renewing the physical infrastructure to ensure safe and 

fully functional facilities. Failure to adequately invest in the system will result in 

its deterioration, creating even greater costs down the road. 

As in past years, we continue to cite the Final Report of the President’s Task 

Force to Improve Health Care Delivery for our Nation’s veterans (PTF). The PTF 

noted that in the period from 1996–2001, VA’s recapitalization rate was 0.64 percent, which corresponds to an assumed building life of 155 years. When maintenance and restoration are factored into VA’s major construction budget, VA annually invests less than 2 percent of plant replacement value in the system. The PTF 

observed that a minimum of 5 to 8 percent per year is necessary to maintain a 

healthy infrastructure and that failure to adequately fund could lead to unsafe, dysfunctional settings. 

Congress and the Administration must ensure that there are adequate funds for 

major and minor construction so that VA can properly reinvest in its capital assets 

to protect their value and ensure that healthcare can be provided in safe and functional facilities long into the future. 

The deterioration of many Department of Veterans Affairs (VA) properties 

requires increased spending on nonrecurring maintenance. 

A Price Waterhouse study looked at VA facilities management and recommended 

that VA spend at least 2 to 4 percent of its plant replacement value on upkeep. Nonrecurring maintenance (NRM) consists of small projects that are essential to the 

proper maintenance and to the preservation of the lifespan of VA’s facilities. Examples of these projects include maintenance to roofs, replacement of windows, and upgrades to the mechanical or electrical systems. 

Each year, VA grades each medical center, creating a facility condition assessment (FCA). These FCAs give a letter grade to various systems at each facility and 

assign a cost estimate associated with repairs or replacement. The latest FCAs have 

identified $4.9 billion worth of necessary repairs in projects with a letter grade of 

‘‘D’’ or ‘‘F.’’ F’s must be taken care of immediately, and D’s are in need of serious 

repairs or represent pieces of equipment reaching the end of their usable life. Most 

of these projects would be reparable using NRM funds. 

Another concern with NRM is with how it is allocated. NRM is under the Medical 

Care account and is distributed to various VISNs through the Veterans Equitable 

Resource Allocation (VERA) process. While this does move the money toward the 

areas with the highest demand for healthcare, it tends to move money away from 

facilities with the oldest capital structures, which generally need the most maintenance. It also could increase the tendency of some facilities to use maintenance 

money to address shortfalls in medical care funding. 

VA should spend $1.6 billion on NRM to make up for the lack of proper funding 

in previous years and to keep VA on the right track with maintenance for the future. 

VA must also resist the temptation to dip into NRM funding for health-care 

needs, as this could lead to far greater expenses down the road. 

Veterans and staff continue to occupy buildings known to be at extremely 

high risk because of seismic deficiencies. 

The Independent Budget veteran’s service organizations (IBVSOs) continue to be 

concerned with the seismic safety of the Department of Veterans Affairs (VA) facilities. The July 2006 Seismic Design Requirements report noted the existence of 73 


cprice-sewell on PROD1PC72 with HEARING
102 

critical VA facilities that, based on FEMA definitions, are at a ‘‘moderately high’’ 

or greater risk of seismic incident. Twenty-four of these have been deemed ‘‘very 

high’’ risk, the highest standard. 

To address the safety of veterans and employees, VA includes seismic corrections 

in its annual list of projects to Congress. In conjunction with the Capital Asset Realignment for Enhanced Services process, progress is being made on eight of these 

facilities. More is needed, and, accordingly, funding will need to increase. 

For efficiency, most seismic correction projects should also include patient care enhancements as part of their total scope. Seismic correction typically includes lengthy 

and widespread disruption to hospital operations; it would be prudent to make medical care improvements at the same time to minimize disruptions in the future. 

While this approach is the most practical for the delivery of healthcare and services 

as well as for cost-effectiveness, it also results in higher up front project costs, which 

would require an increase in the construction budget. 

Congress must appropriate adequate construction funding to correct these critical 

seismic deficiencies. 

VA should schedule facility improvement projects concurrently with seismic corrections. 

Each Department of Veterans Affairs (VA) medical center needs to develop 

a detailed master plan. 

This year’s construction budget should include at least $20 million to fund architectural master plans. Without these plans, the Capital Asset Realignment for Enhanced Services (CARES) medical benefits will be jeopardized by hasty and shortsighted construction planning. 

The Independent Budget veteran’s service organizations believe that each VA medical center should develop a facility master plan to serve as a clear roadmap to 

where the facility is going in the future. It should be an inclusive document that 

includes multiple projects for the future in a cohesive strategy. 

In many cases, VA plans construction in a reactive manner. Projects are funded 

first and then fitted onto the site. Each project is planned individually and not necessarily with respect to other ongoing projects or ones planned for the future. It is 

essential that each medical center has a plan that looks at the big picture to efficiently utilize space and funding. If all projects are not simultaneously planned, for 

example, the first project may be built in the best site for the second project. Master 

plans would prevent short-sighted construction that restricts, rather than expands, 

future options. 

Every new project in the master plan is a step in achieving the long-range CARES 

objectives. These plans must be developed so that all future projects can be 

prioritized, coordinated and phased. They are essential to efficiently use resources, 

but also to minimize disruption to VA patients and employees. Medical priorities, 

for example, must be adjusted for construction sequencing. If infrastructure changes 

must precede new construction, master plans will identify this so that schedules and 

budgets can be adjusted. Careful phasing is essential to avoid disrupting the delivery of medical care, and the correct planning of such will ensure that cost estimates 

of this phased-construction approach will be more accurate. 

There may be cases, too, where master planning will challenge the original 

CARES decisions, whether due to changing demand, unidentified need, or other 

cause. If CARES, for example, calls for the use of renovated space for a relocated 

program and a more comprehensive examination as part of a master plan later indicates that the site is impractical, different options should be considered. Master 

plans will help to correct and update invalid planning assumptions. 

VA must be mindful that some CARES plans involve projects constructed at more 

than one medical center. Master plans, as a result, most coordinate the priorities 

of both medical centers. Construction of a new SCI facility, for example, might be 

a high priority for the ‘‘gaining’’ facility, but a lower priority for the ‘‘donor’’ facility. 

It may be best to fund and plan the two actions together, even though they are split 

between two different facilities. 

Another essential role of master planning is its use to account for three critical 

programs that VA left out of the initial CARES process: long-term care, severe mental illness, and domiciliary care. Because these were omitted, there is a strong need 

for a comprehensive plan, and a full facility master plan will help serve as a blueprint for each facility’s needs in these essential areas. 

VA must ensure that each medical center develops and continues to work on longrange master plans to validate strategic planning decisions, prepare accurate budgets, and implement efficient construction that minimizes wasted expenses and disruptions to patient care. 


cprice-sewell on PROD1PC72 with HEARING
103 

Congress must appropriate $20 million to allow each VA medical facility to develop architectural master plans to serve as roadmaps for the future. 

Each facility master plan should address long-term care, including plans for those 

with severe mental illness, and domiciliary care programs, which were omitted from 

the CARES process. 

VA must develop a format for these master plans so that there is standardization 

throughout the system, even though planning work will be performed by local contractors in each Veterans Integrated Service Network. 

The Department of Veterans Affairs (VA) must develop a strategic plan for 

the infrastructure needs of these important programs. 

The initial Capital Asset Realignment for Enhanced Services (CARES) plan did 

not take long-term care or the mental health considerations of veterans into account 

when making recommendations. We were pleased that the CARES Review Commission recognized the need for proper accounting of these critical components of care 

in VA’s future infrastructure planning. However, we continue to await VA’s development of a long-term care strategic plan to meet the needs of aging veterans. The 

Commission recommended that VA ‘‘develop a strategic plan for long-term care that 

includes policies and strategies for the delivery of care in domiciliary, residential 

treatment facilities and nursing homes, and for older seriously mentally ill veterans.’’ 

Moreover, the Commission recommended that the plan include strategies for 

maximizing the use of state veterans’ homes, locating domiciliary units as close to 

patient populations as feasible and identifying freestanding nursing homes as an acceptable care model. In absence of that plan, VA will be unable to determine its future capital investment strategy for long-term care. 

VA must take a proactive approach to ensure that the infrastructure and support 

networks needed by veterans will be there for them in the future. 

We also concur with the CARES Commission’s recommendations that VA take action to ensure consistent availability of mental health services across the system to 

include mental healthcare at community-based clinics along with the appropriate infrastructure to match demand for these specialized services. This is important in 

light of the growing demand for these types of services, especially among those returning from overseas in the wars in Iraq and Afghanistan. 

VA must develop a long-term care strategic plan to account for the needs of aging 

veterans now and into the future. This should include care options for older veterans with serious mental illnesses. 

VA must also develop plans to provide for the infrastructure needs associated 

with mental healthcare services, especially with the unprecedented current need for 

these services, and the likely tremendous long-term need of our returning service 

members. 

The Department of Veterans Affairs (VA) must not use empty space inappropriately. 

Studies have suggested that the VA medical system has extensive amounts of 

empty space that can be reused for medical services. It has also been suggested that 

unused space at one medical center may help address a deficiency that exists at another location. Although the space inventories are accurate, the assumption regarding the feasibility of using this space is not. 

Medical facility planning is complex. It requires intricate design relationships for 

function, but also because of the demanding requirements of certain types of medical equipment. Because of this, medical facility space is rarely interchangeable, and 

if it is, it is usually at a prohibitive cost. Unoccupied rooms on the eighth floor, for 

example, cannot be used to offset a deficiency of space in the second floor surgery 

ward. Medical space has a very critical need for inter- and intradepartmental 

adjacencies that must be maintained for efficient and hygienic patient care. 

When a department expands or moves, these demands create a domino effect of 

everything around it, and these secondary impacts greatly increase construction expense and they can disrupt patient care. 

Some features of a medical facility are permanent. Floor-to-floor heights, column 

spacing, light, and structural floor loading cannot be altered. Different aspects of 

medical care have different requirements based upon these permanent characteristics. Laboratory or clinical spacing cannot be interchanged with ward space because 

of the needs of different column spacing and perimeter configuration. Patient wards 

require access to natural light and column grids that are compatible with room-style 

layouts. Labs should have long structural bays and function best without windows. 

When renovating empty space, if the area is not suited to its planned purpose, it 

will create unnecessary expenses and be much less efficient. 


cprice-sewell on PROD1PC72 with HEARING
104 

Renovating old space rather than constructing new space creates only a marginal 

cost savings. Renovations of a specific space typically cost 85 percent of what a similar, new space would. When you factor in the aforementioned domino or secondary 

costs, the renovation can end up costing more and produce a less satisfactory result. 

Renovations are sometimes appropriate to achieve those critical functional 

adjacencies, but it is rarely economical. 

Many older VA medical centers that were rapidly built in the 1940s and 1950s 

to treat a growing veteran population are simply unable to be renovated for more 

modern needs. Most of these Bradley-style buildings were designed before the widespread use of air conditioning and the floor-to-floor heights are very low. Accordingly, it’s impossible to retrofit them for modern mechanical systems. They also 

have long, narrow wings radiating from a small central core, which is an inefficient 

way of laying out rooms for modern use. This central core, too, has only a few small 

elevator shafts, complicating the vertical distribution of modern services. 

Another important problem with this unused space is its location. Much of it is 

not located in a prime location; otherwise it would have been previously renovated 

or demolished for new construction. This space is typically located in outlying buildings or on upper floor levels and is unsuitable for modern use. 

VA should develop a plan for addressing its excess space in non-historic properties 

that are not suitable for medical or support functions due to their permanent characteristics or locations. 

The Department of Veterans Affairs (VA) must continue to develop and revise facility design guides for spinal cord injury/spinal cord disorders. 

With the largest healthcare system in the U.S., VA has an advantage in its ability 

to develop, evaluate, and refine the design and operation of its many facilities. 

Every new clinic’s design can benefit from lessons learned from the construction and 

operation of previous clinics. VA also has the unique opportunity to learn from medical staff, engineers, and from its users—veterans and their families—as to what 

their needs are, allowing them to generate improvements to future designs. 

As part of this, VA provides design guides for certain types of facilities that provide care to veterans. These guides are rough tools used by the designer, clinician, 

staff, and management during the design process. These design guides, which are 

viewable on the Facilities Management webpage, cover a variety of types of care. 

These design guides, due to modernization of equipment and lessons learned at 

other facilities, should be revised regularly. Some of the design guides have not been 

updated in over a decade, despite the massive transition of the VA healthcare system from an inpatient-based system. The Independent Budget veterans’ service organizations (IBVSOs) understand that VA intends to regularly update these guides, 

and we would urge that increased funding be allocated to the Advanced Planning 

Fund to revise and update these essential guides. 

As in past years, the IBVSOs would note the need for guides for long-term care 

at spinal cord injury/dysfunction (SCI/D) centers. It is important that these guides 

be separate from the guides that call for acute care as the needs of the two are dramatically different. 

These facilities must be less institutional in their character with a more homelike 

environment. Rooms and communal space should be designed to accommodate patients who will be living at these facilities for a long time. They must include simple 

ideas that would improve the daily life of these patients. Corridor length should be 

limited. They should include wide areas with windows to create tranquil places or 

areas to gather. Centers should have courtyard areas where the climate is temperate and indoor solariums where it is not. We believe that a complete guideline 

for these facilities would also include a discussion of design philosophies that emphasize the quality of life of these patients, and not just the specific criteria for each 

space. Because the type of care these patients need is unique, it is essential that 

this type of design guidance is available to contracted architects. 

VA must revise and update their design guides on a regular basis. 

VA should develop a long-term care design guide for SCI/D centers to accommodate the special needs of these unique patients. 

The Department of Veterans Affairs’ extensive inventory of historic structures must be protected and preserved. 

VA has an extensive inventory of historic structures, which highlight America’s 

long tradition of providing care to veterans. These buildings and facilities enhance 

our understanding of the lives of those who have worn the uniform, and who helped 

to develop this great nation. Of the approximately 2,000 historic structures, many 

are neglected and deteriorate year after year because of a lack of funding. These 


cprice-sewell on PROD1PC72 with HEARING
105 

structures should be stabilized, protected, and preserved because of their importance. 

Most of these facilities are not suitable for modern patient care, and, as a result, 

a preservation strategy was not included in the Capital Asset Realignment for Enhanced Services process. As a first step in addressing its responsibility to preserve 

and protect these buildings, VA must develop a comprehensive program for these 

historic properties. 

VA must make an inventory of these properties, classifying their physical condition and their potential for adaptive reuse. Medical centers, local governments, nonprofit organizations or private sector businesses could potentially find a use for 

these important structures that would preserve them into the future. 

The Independent Budget veterans’ service organizations recommend that VA establish partnerships with other Federal departments, such as the Department of the 

Interior, and with private organizations, such as the National Trust for Historic 

Preservation. Their expertise would be helpful in creating this new program. 

As part of its adaptive reuse program, VA must ensure that facilities that are 

leased or sold are maintained properly for preservation’s sake. VA’s legal responsibilities could, for example, be addressed through easements on property elements, 

such as building exteriors or grounds. We would point to the partnership between 

the Department of the Army and the National Trust for Historic Preservation as 

an example of how VA could successfully manage its historic properties. 

P.L. 108–422, the Veterans Health Programs Improvement Act, authorized historic preservation as one of the uses of a new capital assets fund that receives funding from the sale or lease of VA property. We applaud its passage, and encourage 

its use. 

VA must begin a comprehensive program to preserve and protect its inventory of 

historic properties. 

We thank you for allowing us to testify today, and we would be happy to answer 

any questions that you or the Committee may have. 

f 

Statement of John Rowan 

National President, Vietnam Veterans of America 

Chairman Filner, Ranking Member Buyer and distinguished Members of the 

Committee, on behalf of all of our officers, Board of Directors, and members, I thank 

you for giving Vietnam Veterans of America (VVA) the opportunity to testify regarding the President’s fiscal year 2008 budget request for the Department of Veterans 

Affairs today. I am pleased to welcome so many new and returning Members onto 

the Committee this year. VVA looks forward to working with all of you to address 

the needs of the unique system created to serve our nation’s veterans. 

I particularly wish to thank you, Mr. Chairman, for your impassioned and erudite 

speech to the Majority caucus that resulted in $3.6 billion being added to the continuing resolution for healthcare at the Veterans Health Administration. Your willingness to take a strong stand when it was not yet the conventional wisdom once 

again helped America, particularly America’s veterans and our families. VVA 

thanks you for your strong leadership, and salutes your lifelong willingness to 

‘‘speak truth to power.’’ 

Mr. Chairman, several years ago, Vietnam Veterans of America developed a White 

Paper in support of the need for assured funding for the veterans healthcare system, 

which I know you have read and shared with others. I also know you have been 

a long-time supporter of legislation to achieve assured funding. You have always understood the need for such a mechanism to correct the problems in the current system of funding. As we have this discussion in regard to the FY ’08 budget for VA, 

the readily apparent need for this legislation has never been more pressing. We look 

forward to working with you to ensure its enactment. 

VVA does wish to recognize that this year’s request from the President for the 

VA Budget, while lacking in many other respects, is relatively free of budget gimmicks that have so plagued discussions in the past. VVA believes that this is due 

to the strong efforts of Secretary Nicholson in doing battle to strip out the favorite 

gimcrackery of that permanent staff over at the Office of Management and Budget 

(OMB). VVA commends the Secretary of Veterans’ Affairs in this regard for seeking 

to have an honestly presented budget proposal. 

Veterans Health Administration 

VVA is recommending an increase of $6.9 billion to the expected fiscal year 2007 

appropriation for the medical care business line. We recognize that the budget recVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00109 Fmt 6604 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
106 

ommendation VVA is making this year is extraordinary, but with troops in the field, 

years of underfunding of healthcare organizational capacity, renovation of an archaic and dilapidated infrastructure, and updating capital equipment and several 

cohorts of war veterans reaching ages of peak healthcare utilization, these are extraordinary times. It’s past time to meet these needs. 

In contrast to what is clearly needed, we believe the Administration’s fiscal year 2008 request for $2 billion more than the expected 2007 appropriation in the continuing resolution is inadequate. Unfortunately, we still are unsure of the bottom 

line for fiscal year 2007. While we certainly appreciate that the Congress is planning to restore funding for veterans healthcare in the continuing resolution (and it 

is essential that it does so to ensure the Department’s ability to meet ongoing obligations), the fact that VA is still uncertain about the amount of funding it will receive a third of the way through the fiscal year does, in and of itself, make the case 

for assured funding. The $2 billion increase the Administration has requested for medical care may almost keep pace with inflation, but it will not allow VA to enhance its healthcare 

or mental healthcare services for returning veterans, restore diminished staff in key 

disciplines like clinicians needed to care for hepatitis C, restore needed long-term 

care programs for aging veterans, or allow working-class veterans to return to their 

healthcare system. VVA’s recommendation does accommodate these goals, in addition to restoring eligibility to veterans exposed to Agent Orange for the care of their 

related conditions. 

I need not tell you about the many successes of the Department of Veterans Affairs in recent years. The veterans’ service organizations are often seen as critics 

of the Department. While we sometimes take exception to its policy decisions, we 

are also its most stalwart champions. Over the last decade the Veterans Health Administration (VHA) at VA has taken steps to become a higher quality, more accessible healthcare system. It has demonstrated great efficiency by almost doubling the 

number of veterans it treats while holding per capita costs relatively constant. It 

has developed hundreds of Community Based Outreach Clinics (CBOC). VHA has 

received many prestigious awards for excellence and innovation. While VVA remains 

extremely concerned about recent breaches that compromised veterans’ personal 

data, VVA appreciates the fact that VA has put together a computerized system of 

medical records that sets the standard for modern healthcare delivery. These 

achievements are to be celebrated. 

Yet these advances have not come without cost. For years, the veterans’ 

healthcare system has been falling behind in meeting the healthcare needs of some 

veterans. At the beginning of 2003, the former Secretary of Veterans Affairs made 

the decision to bar so-called priority 8 veterans from enrolling. In most cases, these 

veterans are not the well-to-do—they are working class veterans or veterans living 

on fixed incomes whose incomes are as little as $28,000 a year. It’s not uncommon 

to hear about such veterans choosing between getting their prescription drug orders 

filled and paying their utility bills. The decision to bar these veterans is still standing, and it is still troubling to thoughtful Americans. 

In addition to the current bar on healthcare enrollment, in recent years VA has 

sent Congress a budget that requires more cost sharing from veterans, and eliminates options for their care—particularly long term care. We appreciate that VA’s 

proposal this year has not presumed enactment of some of the cost-sharing legislative proposals Congress has opposed in the past. This may allow Congress more leeway to augment its request in concrete ways rather than merely filling deficits left 

by the Administration presuming that revenues and savings from these unpopular 

initiatives will be realized. 

Congress is to be commended for turning back many legislative requests for enrollment fees and outpatient cost increases, which would have jeopardized hundreds 

of thousands of veterans’ access to healthcare. Hard-fought Congressional add-ons, 

such as the $3.6 billion for fiscal year 2007 currently being debated as part of the 

continuing resolution, have kept the system afloat. The budget recommended by 

VVA in addition to the enactment of some assured funding mechanism will enable 

a robust healthcare system to meet the needs of all eligible veterans—now and in 

the future. 

Medical Services 

For medical services for fiscal year 2008, VVA recommends $34.5 billion including 

collections. This is approximately $5 billion more than the Administration’s request 

for fiscal year 2008. VVA is making its budget recommendations based on re-opening access to the millions of veterans disenfranchised by the Department’s policy decision of early 2003, that was supposed to be ‘‘temporary.’’ The former Ranking 

Member of this Committee, Lane Evans, discovered that a quarter million priority 


cprice-sewell on PROD1PC72 with HEARING
107 

8 veterans had applied for care in fiscal year 2005. Similar numbers of veterans 

have likely applied in each of the years since their enrollment was barred. Our 

budget allows 1.5 million new priority 7 and 8 veterans to enroll for care in their 

healthcare system. While this may sound like too great a lift for the system, use 

rates for priority 7 and 8 veterans are much lower than for other priority groups. 

Based on our estimates, it may yield only an 8% increase in demand at a cost of 

about $1.5 billion to the system for additional personnel, supplies and facilities. 

The budget ax has fallen hard on long-term care programs in the VA. About a 

decade ago, there was a major policy shift throughout the healthcare industry including with VA, which encouraged programs to deliver as much care as possible 

outside of beds. In many cases this has been a productive policy. Veterans value the 

convenience of using nearby community clinics for primary care needs, for example. 

However, the change took a great toll on the neuro-psychiatric and long-term care 

programs that housed and cared for thousands of veterans, often keeping them institutionalized for years. Instead of developing the significant community and outpatient infrastructures that would have been necessary to adequately replace the 

care for these most vulnerable veterans, the resources were largely diverted to other 

purposes. 

Where have these vets gone? The fiscally challenged Medicaid program supports 

many of those who need long-term care, adding an additional burden to the states. 

State homes play an important role in remaining the only VA-sponsored setting that 

provides ongoing, rather than rehabilitative or restorative, long-term care. VA’s 

mental health programs—some of the finest in the nation—as well as significant advances in pharmaceuticals continue to serve and allow many veterans to recover. 

However, what are in fact increasing waiting times for mental health programs and 

the lack of treatment options often contribute to incarceration and homelessness for 

the most vulnerable of these veterans. Sadly, we hear increasing numbers of stories 

of veterans of Iraq and Afghanistan whose inability to deal with readjustment postdeployment have lead them to the streets or even suicide. 

Mr. Chairman, Vietnam Veterans of America’s founding principle is: Never again 

will one generation of veterans abandon another. This is why we are imploring this 

Committee to ensure that VA has the imperative and the resources to bolster the 

mental health programs that should be readily available to serve our young veterans from Iraq and Afghanistan. Experts from within the Department of Defense 

estimate that as many as 17% of those who serve in Iraq will have issues requiring 

them to seek post-deployment mental health services and recent studies have shown 

that four out of five of the veterans who may need post-deployment care are not 

properly referred to such care. There is good reason to believe that even the rates 

forecast by DoD may be too low. 

VA has not made enough progress in preparing for the needs of troops returning 

from Iraq and Afghanistan—particularly in the area of mental healthcare. Its own 

internal champions—the Committee on Care of the Seriously Mentally Ill and the 

Advisory Committee on Post Traumatic Stress Disorder, for example, have expressed doubts about VA’s mental healthcare capacity to serve these newest vets. 

As recently as last March, VHA’s Undersecretary for Health Policy Coordination 

told one Commission that mental health services were not available everywhere, 

and that waiting times often rendered some services ‘‘virtually inaccessible.’’ The 

doubts about capacity to serve new veterans have reverberated in reports done by 

the Government Accountability Office (GAO). In addition, one recent working paper 

by Linda Bilmes of the John F. Kennedy School of Government at Harvard University estimates that in a ‘‘moderate’’ scenario in 2008 VA will require $1.8 billion to 

treat the veterans returning from Iraq and Afghanistan—much of this funding 

would be used to augment mental healthcare to properly serve these veterans. VA 

has projected that approximately 260,000 Global War on Terrorism (GWOT) veterans will use the VA healthcare system in FY 2008. VVA and others believe that 

more than 300,000 ‘‘new’’ veterans will use the VHA system in FY 2008. 

A further reason that VA has underestimated the need for medical services is that 

they continue to use the same formula that they use for CARES, which is a civilianbased model. Mr. Chairman, VVA has testified many times that the VHA must be 

a veterans’ healthcare system and not a general healthcare system that happens to 

see veterans. The model VA uses was designed for middle-class people who can afford HMOs or other such programs. It projects only one to three ‘‘presentations’’ 

(things wrong with) patients as opposed to the five to seven that is the average at 

VHA for veterans. Obviously one using the VA model will continually underestimate 

overall resources needed to care for the veterans who come to the system by using 

this civilian formula. Further, VHA has been consistent in underestimating the 

number of GWOT returnees who will seek services from the system in each of the 

last 4 years. VVA has corrected these errors in our projections. 


cprice-sewell on PROD1PC72 with HEARING
108 

In addition to the funds VVA is recommending elsewhere, we specifically recommend an increase of an additional billion dollars to assist VA in meeting the long 

term care and mental healthcare needs of all veterans. These funds should be used 

to develop or augment with permanent staff at VA Vet Centers (Readjustment 

Counseling Service or RCS), as well as PTSD teams and substance use disorder programs at VA Medical Centers and CBOC, which will be sought after as more troops 

(including demobilized National Guard and Reserve members) return from ongoing 

deployments. In addition, VA should be augmenting its nursing home beds and community resources for long term care, particularly at the State veterans’ homes. 

To assist in developing these programs and augmenting all areas of veterans’ 

care, VVA recommends funding to approximate the staff-to-patient ratio VA had in 

place before so much of its neuro-psychiatric and long-term care infrastructure was 

dismantled. This would allow VA to better ensure timely access to care and services. 

Studies have shown that inadequate staffing—particularly of nurses involved in direct care—is correlated with poorer healthcare outcomes in all medical disciplines. 

To allow the staffing ratios that prevailed in 1998 for its current user population, 

VA would have to add more than 20,000 direct care employees—MDs and nurses— 

at a cost of about $2.2 billion. 

The $2.2 billion funding for the staff shortfalls identified by VVA closely corresponds to the funding from unspecified so-called ‘‘management efficiencies’’ VA 

has had to shoulder throughout this Administration. It is important to realize that 

the effect of leaving these funding deficiencies unfulfilled is cumulative. That is, 

each year VA is forced to live with a greater hole in its budget. GAO has joined 

VSOs and Congress in questioning the extent to which VA has been able to identify 

and realize the so-called ‘‘savings’’ created by such proposed efficiencies. VA officials 

have advised GAO that the efficiencies identified in at least two recent budget proposals—FY 2003 and 2004—were developed to allow VA to meet its budget guidance 

rather than by detailed plans for achieving such savings (GAO–06–359R). In other 

words, the savings were justified only by the need to meet the Administration’s ‘‘bottom line.’’ I hope Congress agrees that this is no way to fund our veterans’ 

healthcare system. 

Finally, VVA believes Congress did a grave injustice to Vietnam-era veterans. For 

decades, veterans exposed to Agent Orange and other herbicides containing dioxin 

had been granted healthcare for conditions that were presumed to be due to this 

exposure. This special eligibility expired at the end of 2005 and, despite our request, 

Congress did not reauthorize it. Had Congress simply reauthorized existing authority, VA would have realized no new costs. Now we have heard that the Congressional Budget Office estimates that it will cost more than $300 million to restore 

this eligibility. Why this eligibility was allowed to expire seems more a matter of 

dollars than sense to VVA, given the ever mounting body of research that clearly 

points to conditions such as diabetes being linked to dioxin exposure. However, the 

pressing need now is to reinstate veterans with these conditions for the higher priority access to services that they deserve. 

Medical Facilities 

For medical facilities for fiscal year 2008, VVA recommends $5.1 billion. This is 

approximately $1.5 billion more than the Administration’s request for fiscal year 

2008. Maintenance of the healthcare system’s infrastructure and equipment purchases are often overlooked as Congress and the Administration attempt to correct 

more glaring problems with patient care. In FY 2006, in just one example, within 

its medical facilities account VA anticipated spending $145 million on equipment, 

yet only spent about $81 million. (The rest of the funds went just to meet operating 

costs to keep the facilities open and operating.) However, these projects can only be 

neglected for so long before they compromise patient care, and employee safety in 

addition to risking the loss of outside accreditation. The remainder of the funding 

was apparently shifted to other more immediate priority areas (i.e., keeping facilities operating in the short run). 

VA undertook an intensive process known as CARES (Capital Asset Realignment 

to Enhance Services) to ‘‘right size’’ its infrastructure, culminating in a May 2004 

policy decision that identified approximately $6 billion in construction projects. 

While for the reasons noted above the VA has consistently underestimated future 

needs by using a fatally flawed formula, thus far Congress and the Administration 

have only committed $3.7 billion of this all-too-conservative needed funding. 

We believe the CARES estimate to be extremely conservative given that the models projecting healthcare utilization for most services were based on use patterns in 

generally healthy managed care populations rather than veterans and that the patient population base did not include readmitting Priority 8 veterans, or significant 

casualties from the current deployments. Notwithstanding our concerns about the 


cprice-sewell on PROD1PC72 with HEARING
109 

methods used in CARES, very few of the projects VA agrees are needed have been 

funded since this time. Non-recurring maintenance and capital equipment budgets 

have also been grievously neglected as administrators have sought to shore up their 

operating funds. 

In a system in which so much of the infrastructure would be deemed obsolete by 

the private sector (in a 1999 report GAO found that more than 60% of its buildings 

were more than 25 years old), this has and may again lead to serious trouble. We 

are recommending that Congress provide an additional $1.5 billion to the medical 

facilities account to allow them to begin to address the system’s current needs. We 

also believe that Congress should fully fund the major and minor construction accounts to allow for the remaining CARES proposals to be properly addressed by 

funding these accounts with a minimum of remaining $2.3 billion. 

Medical and Prosthetic Research 

For medical and prosthetic research for fiscal year 2008, VVA recommends $460 

million. This is approximately $50 million more than the Administration’s request 

for fiscal year 2008. VA research has a long and distinguished portfolio as an integral part of the veterans’ healthcare system. Its funding serves as a means to attract top medical schools into valued affiliations and allows VA to attract distinguished academics to its direct care and teaching missions. 

VA’s research program is distinct from that of the National Institutes of Health 

because it was created to respond to the unique medical needs of veterans. In this 

regard, it should seek to fund veterans’ pressing needs for breakthroughs in addressing environmental hazard exposures, post-deployment mental health, traumatic brain injury, long-term care service delivery, and prosthetics to meet the multiple needs of the latest generation of combat-wounded veterans. 

Further, VVA brings to your attention that VA Medical and Prosthetic Research 

is not currently funding a single study on Agent Orange or other herbicides used 

in Vietnam, despite the fact that more than 300,000 veterans are now service-connected disabled as a direct result of such exposure in that war. This is unacceptable. 

Mr. Chairman, finally I urge this Committee to at long last urge your colleagues 

on the Appropriations Committee to use the power of the purse to compel VA to 

obey the law (Public Law 106–419) and conduct the long-delayed National Vietnam 

Veterans Longitudinal Study. VVA asks that you specifically request report language in the Appropriations bill for Military Construction, Veterans Affairs, and Related Areas that compels VA to advise the Appropriators and the Authorizers as to 

how VA plans to complete this study properly within 2 years, as a comprehensive 

mortality and morbidity study. 

Assured Funding for Veterans Health Care 

Once this Congress provides a budget that shores up VA medical services and facilities, it will need to ensure that VA continues to be funded at a level that allows 

it to provide high-quality healthcare services to the veterans that need them. That 

is where enactment of assured funding will come in. Once enacted, an assured funding mechanism will ensure that, at a minimum, annual appropriations cover the 

cost of inflation and growth in the number of veterans using VA healthcare. It will 

allow VA administrators some predictability in both how much funding it will receive and when it will be received resulting in higher quality and ultimately more 

cost-effective care for our veterans. 

Veterans Benefits Administration 

The Veterans Benefits Administration (VBA) is in even more acute need of additional resources and enhanced accountability measures now than they were a year 

ago. VVA recommends an additional 400 over and above the roughly 470 new staff 

members that are requested in the President’s proposed budget for all of VBA. 

Compensation & Pension 

VVA recommends adding one hundred staff members above the level requested 

by the President for the Compensation & Pension Service (C&P) specifically to be 

trained as adjudicators. Further, VVA strongly recommends adding an additional 

$60 million dollars specifically earmarked for additional training for all of those who 

touch a veterans’ claim, institution of a competency based examination that is reviewed by an outside body that shall be used in a verification process for all of the 

VA personnel, veteran service organization personnel, attorneys, county and state 

employees, and any others who might presume to at any point touch a veterans’ 

claim. 


cprice-sewell on PROD1PC72 with HEARING
110 

Vocational Rehabilitation 

VVA recommends that you seek to add an additional three hundred specially 

trained vocational rehabilitation specialists to work with returning servicemembers 

who are disabled to ensure their placement into jobs or training that will directly 

lead to meaningful employment at a living wage. It is clear that the system funded 

through the Department of Labor simply is failing these fine young men and women 

when they need assistance most in rebuilding their lives. 

VVA has always held that the ability to obtain and sustain meaningful employment at a living wage is the absolute central event of the readjustment process. 

Adding additional resources and much, much greater accountability to the VA Vocational Rehabilitation process is absolutely essential if we as a nation are to meet 

our obligation to these Americans who have served their country so well, and have 

already sacrificed so much. 

Accountability at VA 

So much of what VVA and the Congress find wrong or disturbing at the VA revolves around the pervasive issue of little or no accountability, or imprecise fixing 

of authority commensurate with accountability mechanisms that are meaningful 

(and vice versa) in all parts of the VA. 

Within the past year VA has finally made significant progress in meeting the minimum goal of at least 3% of all contracts and 3% of all subcontracts being let to 

service disabled veteran businessowners. Secretary Nicholson, and Deputy Secretary 

Mansfield, is to be commended on setting the pace for the Federal Government. It 

is instructive in this discussion, however, that the action directed by the Secretary 

to put achievement or substantial real progress toward meeting or exceeding the 3% 

minimum into the performance evaluation of each Director of the twenty-one Veterans Integrated Service Networks (VISNs) was a key element in VA to be the first 

large agency to reach the goal mandated by law. (Eighty-five percent of all VA procurement is through VHA, primarily through the VISNs) was the key element in 

this achievement. 

All people (particularly people with a great deal of responsibility who work long 

hours) care about what they feel they have to care about. Putting it in the performance evaluations means that those managers who ignore a requirement do not get 

an outstanding or superior rating, and hence no bonus. VVA, and now the VA in 

at least this one instance, has always found that it is amazing how reasonable almost all people can be when you have their full attention. 

There is no excuse for the dissembling and lack of accountability in so much of 

what happens at the VA. It can be cleaned up and done right the first time, if there 

is the political will to hold people accountable for doing their job properly. 

Lastly, there is no excuse for the continuation of the practice of VHA to ‘‘lose’’ tens 

of millions (sometimes hundreds of millions) of taxpayer dollars that are appropriated to VHA for specific purposes, whether that purpose be to restore organizational capacity to deliver mental health services, particularly for PTSD and other 

combat trauma wounds, or to conduct outreach to GWOT veterans as well as demobilized National Guard and Reserves returnees from war zone deployments. 

There is a consistent pattern of VA, particularly VHA, to either really not know 

what happened to large sums of money given to them for specific reasons, or they 

are not telling the truth to the Congress and the public. In either case, it is unacceptable, and cannot be tolerated any longer. 

In the proposed budget submittal, VVA struggled with accounting for the dollars 

footnoted in the President’s submittal as ‘‘Adjusted for IT.’’ We could not find an 

accurate accounting. When we asked in the 27 hours we had to prepare this submittal, it turns out that no one else that we have spoken to, including the VA officials, can fully explain at least $200(+) million of this ‘‘adjustment’’ either. And this 

is before they get their hands on the dollars. VVA urges this Committee and your 

colleagues on Appropriations to make this the year that this sloppy nonsense and 

dissembling is stopped once and for all. Accountability will only come about when 

the Congress absolutely demands that these folks be fully accountable for performance, and for accounting for each and every taxpayer dollar. 

Thank you again, Mr. Chairman. We look forward to working with you and this 

distinguished Committee to obtain an excellent budget for VA in this fiscal year, 

and to ensure the next generation of veterans’ wellbeing by enacting assured funding. I will be happy to answer any questions you and your colleagues may have. 


cprice-sewell on PROD1PC72 with HEARING
111 

PRE–HEARING QUESTIONS FOR THE RECORD 

Questions from Hon. Bob Filner, Chairman, Committee on Veterans’ Affairs, 

to Hon. R. James Nicholson, Secretary, U.S. Department of Veterans Affairs 

Committee on Veterans’ Affairs 

Washington, DC 

January 25, 2007 

Honorable R. James Nicholson 

Secretary 

Department of Veterans Affairs 

Washington, DC 20420 

Dear Mr. Secretary: 

In preparation for the Committee’s consideration of the President’s Budget for Fiscal Year 2008, we have developed the attached questions. If we do not get to all 

of them in the hearing, please respond in writing by February 16, 2007. 

Sincerely, 

BOB FILNER 

Chairman 

Enclosures 

Benefits: 

Question 1: The President has called for an increase in troops to Iraq. In light 

of the fact that the VA already has a 600,000 claims backlog, please describe in detail how the escalation of the war in Iraq will impair the VA’s ability to provide 

benefits. Also, does the Administration’s budget request for FY 2008 reflect this increased demand of VA services that will result from the additional troops serving 

in Operation Iraqi Freedom (OIF)? If yes, in what areas and in what amounts has 

the budget been altered to reflect the so-called ‘‘surge’’? 

Response: The 600,000 number referenced in your question represents total 

pending claims whether or not they require a disability rating decision. As of December 2006, there were 395,539 claims pending that required a rating decision. 

The vast majority of the non-rating issues pending are not likely to be affected 

by the current escalation in the war since they primarily deal with maintenance of 

veterans’ accounts that are already in receipt of benefits. Additionally many of these 

issues involve non-service connected disability and death pension. While we receive 

a high volume of non-rating issues, generally, they require minimal external development and are resolved quickly. 

There are several factors relating to increasing the size of Operation Iraqi Freedom (OIF) forces that may affect our ability to handle claims volume resulting from 

any increase in the number of troops deployed as part of OIF. Included in these are 

the following: 

1. The single strongest predictor of claim activity is the size of the active force. 

If the forces used for the ‘‘surge’’ are drawn from existing personnel serving 

on active duty, we believe that the downstream impact on claims will be less 

than if they are drawn from reserve component forces which would increase 

the size of the active force. 

2. The number of deployments impact claims activity. Multiple deployments increase the likelihood a service member will suffer from combat related disabilities such as post traumatic stress disorder. Additionally, there is an increased 

incidence of non-combat related disabilities based on the mere fact that the 

service member is on active duty for a longer duration. 

3. The duration of the deployment will also affect claim activity in the future. 

Lengthened tours expose soldiers to increased potential for injury. 

The Department of Veterans Affairs’ (VA) fiscal year (FY) 2008 budget submission 

does not reflect increased demand for benefits due to the surge since this strategy 

had not been decided when the budget was prepared. If the surge in forces in the 

combat theaters is drawing from existing active duty and already planned activation 

of Guard and reserve forces, we believe that we have already accounted for the 

surge in our 2008 projections. If not, we would anticipate some increase in claims 

receipts in FY 2008. 


cprice-sewell on PROD1PC72 with HEARING
112 

Question 2: Since the VA has previously failed to adequately predict the demand 

of services from returning veterans from OIF/Operation Enduring Freedom (OEF) 

what new methodology is the VA using to properly estimate need and services for 

these returning veterans? How does the FY 2008 budget reflect this new methodology? 

Response: We believe that we have accurately projected disability claims receipts 

since the beginning of combat operations in Afghanistan and Iraq. The table below 

shows our projections and actual receipts. 

Fiscal Year 

Receipts 

Projected Actual 

2004 767,051 771,115

2005 794,248 788,298

2006 811,947* 798,382* 

* These figures reflect the core rating receipts and do not include estimated/actual receipts due to the six state outreach effort. 

We believe that our current methodology is accurate. VA will be able to adjust 

its projections once the nature of the surge effort is known. 

Question 3: Please provide data concerning the number of claims received from 

veterans who served in the theater of operations for OIF/OEF and their survivors 

and the disposition (grant, denial) of such claims for compensation, pension, DIC 

and death pension. 

Response: Available data is based on a match between Department of Defense 

data on service members deployed in support of the Global War on Terrorism 

(GWOT) for the period September 11, 2001, through September 30, 2006, and VA 

data covering September 11, 2001, through August 30, 2006. 

This data reflects summary counts of compensation and pension (C&P) benefit activity among veterans deployed overseas in support of GWOT. This data match only 

identifies deployed GWOT veterans who have also filed a VA disability claim either 

prior to or following their GWOT deployment. Many GWOT veterans had earlier periods of service, and had filed for and received VA disability benefits before being 

reactivated. 

The Veterans Benefit Administration’s (VBA) computer systems do not contain 

any data that would allow us to attribute veterans’ disabilities to a specific period 

of service or deployment. 

For the period covered, 176,111 of nearly 634,000 GWOT veterans have filed a 

claim for disability benefits either prior to or following their GWOT deployment (approximately 28 percent). This includes survivors’ claims for dependency and indemnity compensation (DIC) and death pension. VA has processed nearly 2,000 DIC 

claims for survivors of Operation Enduring Freedom/Operation Iraqi Freedom (OEF/ 

OIF) service members who died in service. 

Question 4: With respect to question number three, what was the breakdown 

among Active Duty, Reservists and National Guard claimants? What percentages of 

claims were denied for each component? It has been reported that while 37% of Active Duty veterans have filed for service-related disability claims, only 20% of those 

in the National Guard or Reserves have filed similar claims. However, 18% of the 

claims filed by National Guard members and Reservists are denied, while only 8% 

of Active Duty claims are denied. 

Response: The following chart displays the disposition of claims filed by all identified GWOT veterans. 

Category Reserves Active Duty Total 

Deployed Servicemembers 371,974 952,445 1,324,419 

Deployed Veterans 339,498 294,369 633,867 


cprice-sewell on PROD1PC72 with HEARING
113 

Category Reserves Active Duty Total 

Claims Filed 68,623 107,488 176,111 

20% 37% 28% 

Claims Processed 50,953 85,343 136,296 

74% 79% 77% 

Claims Granted 41,744 78,716 120,460 

82% 92% 88% 

Claims Denied 9,209 6,627 15,836 

18% 8% 12% 

Claims Pending 17,670 22,145 39,815 

26% 21% 23% 

The following definitions are provided to assist in understanding this data: 

• Claims Denied: None of the veterans’ conditions meet eligibility requirements 

for service connection. This category includes a small number of veterans receiving nonservice-connected disability pension. • Claims Filed: The sum of ‘‘Claims Granted,’’ ‘‘Claims Denied,’’ and ‘‘Claims 

Pending.’’ • Claims Granted: At least one claimed condition meets eligibility requirements 

for service connection. For veterans who filed for more than one condition, this 

category includes full grants of all conditions as well as all combinations of disabilities granted and denied. It includes grants of all service-connected disabilities, from 0 to 100 percent, regardless of whether the veteran receives monetary compensation. • Claims Pending: VA is reviewing these veterans’ claims for compensation or 

pension benefits. This category includes appeals. • Claims Processed: The total of ‘‘Claims Granted’’ and ‘‘Claims Denied.’’ This 

does not include ‘‘Claims Pending.’’ 

VA makes absolutely no distinctions in processing claims from active duty or reserve personnel. All claims are considered using the same laws and regulations to 

determine entitlement to benefits and disability evaluations, and our goal is to ensure all veterans receive the benefits they have earned in service to this nation. We 

continue to examine the differences in this data for active duty and reserve veterans. While we do not yet fully understand the differences, we believe a significant 

factor may be length of service. The majority of service-related disabilities are 

chronic diseases or disabilities that develop over time. Generally, reserve service is 

shorter than regular active duty service, resulting in a reduced likelihood that these 

veterans developed chronic service-related disabilities. 

Question 5: With respect to individuals residing outside of the United States, 

please provide data concerning the number of claims received from veterans and 

their survivors and the disposition (grant, denial) of such claims for compensation, 

pension, DIC and death pension. Also, how many individuals living in the Philippines received VA benefits and what was the total amount? How many of these 

individuals do you expect to file for benefits in FY 2008 and what is the predicted 

amount? 

Response: Claims for individuals residing outside the United States are processed based on their country of residence. The Houston Regional Office processes 

claims for those residing in Mexico, the Caribbean and Central and South America. 

Claims from residents of Canada are processed by the White River Junction, 

Vermont Regional Office. The Pittsburgh Regional Office processes claims from all 

other international claimants. VA does not separately maintain data on the number 

of claims received or the disposition of those claims for individuals residing outside 

the United States. 

In January 2007, VA benefits totaling $12,655,000 were paid to 14,968 residents 

of the Philippines, during FY 2005, the last year for which data is available. VA 


cprice-sewell on PROD1PC72 with HEARING
114 

does not project numbers of expected claims or benefit amounts based on place of 

residence. Rather, budget projections are based on national projections of expected 

workload and other factors. 

Question 6: Please provide the breakdown of each insurance program under the 

jurisdiction of the VA. How many of these programs are self funded through premiums? What insurance programs and at what percent and amount derive funds 

from the Servicemembers Group Life Insurance (SGLI) program? 

Response: The insurance program administers six life insurance programs and 

supervises two additional programs for the benefit of servicepersons, veterans, and 

their beneficiaries. 

Self-Supporting Insurance Programs—The United States Government Life Insurance (USGLI), National Service Life Insurance (NSLI), Veterans’ Special Life Insurance (VSLI) and Veterans’ Reopened Insurance (VRI) are fully self-supporting programs with the exception of a small amount of funding in the NSLI program which 

is paid from appropriated funds for the costs of claims traceable to the extra hazards of service in the armed forces. Appropriated funds were $886,000 in 2006. 

These programs are no longer open to new issues and were established to meet the 

insurance needs of veterans at the time of their service. Each of these funds is operated in basically the same manner. Obligations are financed from offsetting collections and redemption of investments in U.S. Treasury securities. Expenses associated with the administration of each of these programs are financed from excess 

revenues of each fund. 

Service-Disabled Insurance Programs—The Service-Disabled Veterans’ Insurance 

(S–DVI) and Veterans’ Mortgage Life Insurance (VMLI) require annual subsidies to 

support these programs. The S–DVI program requires a subsidy because it provides 

life insurance protection to veterans with service-connected disabilities at standard 

premium rates and is, therefore, not self-supporting. Similarly, the VMLI program 

requires a subsidy because it provides mortgage protection life insurance at standard premium rates to disabled veterans who have received a grant for specially 

adapted housing. The subsidy required from appropriated funds for the S–DVI program in 2006 was $37.2 million. The VMLI program required $7.8 million of appropriated funds in 2006. 

Service Members’ Group Life Insurance (SGLI)—The SGLI program provides low 

cost group life insurance protection to persons on active duty and reservists in the 

military service. Service personnel separated from active duty and the reserves have 

the right to convert their SGLI coverage to renewable term insurance coverage offered by the VGLI program. SGLI also offers Family Service Members’ Group Life 

Insurance coverage for a service member’s spouse and children if the service member is on active duty or in the reserves. Maximum coverage for spouses is $100,000, 

or the amount of the service member’s SGLI, whichever is less. All dependent children are insured for $10,000 at no charge. The SGLI program is supervised by VA 

and administered, under a contractual agreement, by Prudential Financial through 

the Office of Service Members’ Group Life Insurance (OSGLI). The SGLI program 

is entirely self-supporting, except for any costs resulting from excess mortality traceable to the extra hazard of duty in the uniformed services. The extra hazard costs 

are reimbursed to the SGLI program by the Department of Defense (DoD). Extra hazard costs received from DoD were $405.2 million in 2006. 

Traumatic Injury Protection TSGLI—TSGLI is a traumatic injury protection rider 

under SGLI that provides for payment between $25,000 and $100,000 (depending 

on the type of injury) to any member of the uniformed services covered by SGLI who 

sustains a traumatic injury resulting in certain severe losses. The premium charged 

for this coverage is $1 per month from each service member insured under SGLI. 

This premium covers only the civilian incidence of such injuries with any excess program costs above the premiums collected to be paid by DoD. Public Law 109–13 established the TSGLI program as a rider under the SGLI program effective December 1, 2005. This law also contains a retroactive provision that provides a service 

member who suffered a qualifying loss on or after October 7, 2001, through and including November 30, 2005, with a benefit under TSGLI if the loss was a direct result of a traumatic injury incurred in OEF or OIF. DoD reimbursed the TSGLI program $202.7 million dollars in 2006, which was comprised of $28.0 million in startup funds for the TSGLI program, $157.6 for retroactive TSGLI claims, and $17.1 

million for prospective TSGLI claims. 

Question 7: Last year, Congress required that Vet Centers provide bereavement 

counseling to ‘‘all’’ immediate family members of a member of the Armed Forces who 

dies while on Active Duty. Will this new requirement significantly impact the VA? 


cprice-sewell on PROD1PC72 with HEARING
115 

Does the VA need to hire additional bereavement counselors to handle this increased mission requirement? 

Response: VA has addressed the need for Vet Center support in anticipation of 

OIF/OEF requirements. 

Since the inception of the Vet Center bereavement program in FY 2004, the families of over 900 military casualties have received bereavement services. Of these 900 

cases, almost 75 percent of the casualties were from Operation Enduring Freedom 

and Operation Iraqi Freedom. The number of visits provided to families is approximately 6,500 and the cost for the services is approximately $600,000. The capacity 

for the increase in current workload was factored into the current budget. The VA 

is providing these services; increases were anticipated and included in the current 

Vet Center budget estimate. 

In response to the growing numbers of veterans returning from combat in OEF/ 

OIF, the Vet Centers have hired additional staff and opened new centers. In February 2004, 50 global war on terrorism (GWOT) veterans were hired to augment the 

Vet Center existing staff. VA authorized a new 4-person Vet Center in Nashville, 

Tennessee in November 2004. An additional 50 GWOT veterans were hired in April 

2005 to further enhance services to veterans returning from combat in Afghanistan 

and Iraq. VA established two new Vet Centers (Atlanta, Georgia and Phoenix, Arizona) in April 2006. 

In February 2007 a major expansion of the Vet Center program was announced, 

23 new vet centers have been announced to be located in Montgomery, Alabama; 

Fayetteville, Arkansas; Modesto, California; Grand Junction, Colorado; Orlando, 

Fort Myers, and Gainesville, Florida; Macon, Georgia; Manhattan, Kansas; Baton 

Rouge, Louisiana; Cape Cod, Massachusetts; Saginaw and Iron Mountain, Michigan; 

Berlin, New Hampshire; Las Cruces, New Mexico; Binghamton, Middletown, Nassau 

County and Watertown, New York; Toledo, Ohio; Du Bois, Pennsylvania; Killeen, 

Texas: and Everett, Washington. 

Question 8: Pursuant to section 5313 of title 38, the VA limits the amount of 

VA compensation that may be paid to a veteran who is incarcerated in a ‘‘Federal, 

State or local penal institution’’ for more than 60 days for conviction of a felony. In 

FY 2006, what was the total amount of funds withheld under this statute? This 

statute was amended last year to include penal facilities run by private entities. 

What total amount of funds is the VA expected to withhold because of this change 

in law in FY 2008? 

Response: VA does not track funds withheld. We track overpayments, which are 

the amounts erroneously paid to beneficiaries who are incarcerated. For FY 2005, 

overpayments from the prison match with Social Security totaled approximately 

$23,786,000. Data is not yet available for FY 2006. 

VA does not separately track overpayments resulting from incarcerations in penal 

facilities run by private entities. However, VA withheld benefits, even prior to this 

legislation, if the privately operated penal facility was under contract to a governmental entity. We do not believe this change in law will significantly impact the 

amount of withholdings or overpayments due to incarceration in FY 2008. 

Question 9: Please provide for FY 2005 through 2006, the number of claims processed in each regional office in each year for each separate program: compensation 

(provide separate data concerning the number of claims involving 8 or more issues 

and 7 issues or less); dependency and indemnity compensation (DIC); disability pension; pension based upon age and death pension. 

Response: The attached spreadsheets contain the data requested. Disability pension includes veterans who have established eligibility based on age. VA does not 

track separately disability and age-based pension recipients. The specific claim 

types reported are: 

• Original compensation claims with one to seven issues 

• Original compensation claims with eight or more issues 

• Reopened compensation claims 

• All other rating related claims 

• Original pension claims 

• Reopened pension claims 

• Claims for death pension 

• Claims for dependency and indemnity compensation (DIC) 

Question 10: Please provide for each regional office and the Appeals Management Center the number of remanded appeals pending as of September 30, 2006, 


cprice-sewell on PROD1PC72 with HEARING
116 

the date the Notice of Disagreement was filed, the date of each remand by the 

Board of Veterans Appeals and the current status of the claim. 

Response: VBA and the Board of Veterans Appeals are currently gathering the 

data to respond to this request. We will provide this information when it becomes 

available. 

Question 11: Please provide the methodology and rationale for allocating resources to the six regional offices with the highest ratio of pending claims to full 

time employee equivalents (FTEE) and the six regional offices with the lowest ratio 

of pending claims to FTEE. Please include data on the number and type of FTEE 

at these offices, the number of pending claims and the total number of new claims 

(by type, compensation, pension, DIC, and death pension) for each such office in FY 

2006. 

Response: VBA’s compensation and pension resource allocation model does not 

allocate staffing based on pending work, or on the ratio of pending work to full time 

employee equivalents (FTEE) levels. Doing so would have the undesirable consequence of rewarding offices who are unable to reduce their pending inventories. 

Rather, the model is based on the following four factors: (1) receipts of incoming 

work, (2) accuracy, (3) timeliness, and (4) appellate work. Receipts are given the 

greatest weight as the single most important factor driving staffing requirements 

in regional offices and the factor least under an office’s control. The use of accuracy 

and timeliness measures balance one another, ensuring that staffing decisions are 

based on both output and accuracy. However, additional FTE is distributed to ROs 

who demonstrate high levels of quality and productivity. The appellate factor is derived from both output and timeliness measures, rewarding offices that effectively 

manage their appellate workload. To minimize large variations in staffing allocations from year to year, the model employs a 2-year average for each of these factors. 

The methodology is intended to allocate more resources to offices that receive a 

greater share of the workload, and process claims more efficiently and accurately. 

However, it is not viewed as an absolute standard for final staffing decisions. VBA 

leaders use the model as a guide, but then make some adjustments for special circumstances or unique missions performed by a regional office. To assist regional offices experiencing workload difficulties, VBA brokers claims that are ready for a decision to designated resource centers and to offices with higher capacity to finalize 

claims. 

Question 12: Please provide information concerning the number of FTEE assigned to the Board of Veterans Appeals and the Group 7 staff assigned to represent 

the Secretary at the Board and the ratio of staff to pending appeals at the Board 

and the Court respectively. 

Response: The Board of Veterans’ Appeals (Board) will be authorized 437 FTEE 

in FY 2007 upon passage of the FY 2007 Military Construction and Veterans Affairs 

and Related Agencies Appropriations Act. Under the third continuing resolution for 

FY 2007, the Board is authorized 427 FTEE. On September 30, 2006, there were 

40,265 appeals pending before the Board. The number of appeals pending before the 

Board includes the number of appeals physically at the Board (31,707), plus those 

appeals still in the field that the field offices have identified as ready for a Board 

hearing (8,558). Accordingly, the ratio of staff to pending appeals at the Board is 

1 to 92.1, based on 437 FTEE, and 1 to 94.3, based on 427 FTEE. There are 97 

FTEE, in the Office of General Counsel, currently assigned to Professional Staff 

Group VII (PSG VII), the Veterans Court Appellate Litigation Group. During FY 

2006, PSG VII received a total of 4,906 new cases. That number was comprised of 

3,656 new appeals from Board decisions, 79 new petitions for extraordinary relief, 

and 1,171 new applications for attorney fees under the Equal Access to Justice Act. 

During the first quarter of FY 2007, PSG VII received an additional 1,942 new 

cases, which consisted of 1,555 new appeals from Board decisions, 18 new writ petitions, and 369 new applications for attorney fees. As of December 31, 2006, the latest date for which we have complete data, there were 5,183 cases pending before 

the Veterans Court. Accordingly, the ratio of staff (97) to pending cases (5,183) is 

approximately 1 to 53 at the moment. 


cprice-sewell on PROD1PC72 with HEARING
117 

Lowest Ratio of Pending Claims to Full Time Employee Equivalents (FTEE) 

Station 

Ratio of 

Pending 

Claims 

to FTE 

Division 

Level 

Managers DRO RVSR 

VSR/Claims 

Examiner/ 

Supervisory 

VSR LIE/FE 

Clerk/ 

Claims 

Asst. 

Original 

Compensation 

Claims 

Received 

Original 

Pension 

Claims 

Received 

Initial 

Death/DIC 

Claims 

Received 

Salt Lake City 22.29 1 2 48 53 2 19 10,686 281 112 Jackson 23.93 2 5 26 57 6 15 2,689 527 398 Muskogee 25.29 2 8 62 100 11 28 4,344 574 856 Columbia 26.78 3 3 47 101 9 28 4,057 990 586 Fargo 31.15 1 2 7 19 2 2 1,060 173 90 Sioux Falls 32.53 1 1 8 16 3 5 812 167 90 

Highest Ratio of Pending Claims to Full Time Employee Equivalents (FTEE) 

Original 

Ratio of VSR/Claims Compen- Original Initial 

Pending Division Examiner/ Clerk/ sation Pension Death/DIC 

Claims Level Supervisory Claims Claims Claims Claims 

Station to FTE Managers DRO RVSR VSR LIE/FE Asst. Received Received Received Atlanta 68.76 2 12 43 128 11 40 6,838 1,358 1,024 New York 68.91 2 6 27 58 10 24 3,395 735 418 Montgomery 75.37 3 8 30 91 7 28 4,600 1,575 809 Detroit 78.23 2 10 33 85 8 30 5,404 811 463 Chicago 84.07 2 10 33 85 8 30 5,404 877 463 Des Moines 85.13 1 4 10 31 3 12 2,354 670 200 


cprice-sewell on PROD1PC72 with HEARING
118 

Question 13: Please provide a list of the number of cases in which the Secretary 

requested more than one extension of time for the same specific filing (such as 

record on appeal, brief or motion) in the United States Court of Appeals for Veterans Claims for cases which were filed in FY 2006. 

Response: Our data reflect that the Secretary sought more than one extension 

of time for a specific pleading in a total of 1,527 cases during FY 2006. It is worthy 

to note, however, that under the Court’s Rules of Practice and Procedure a party 

is not permitted to seek more than 45 days of extension time for a specific pleading, 

absent extraordinary circumstances. Thus, even when the Secretary sought more 

than one extension of time, the total extension time for that pleading rarely consumed more than 45 days. The Secretary filed a total of 27,238 pleadings during 

FY 2006, or an average of approximately 2,270 pleadings per month. 

Question 14: Please provide an update to the National Cemetery Administration’s strategic plan concerning national cemetery repair and maintenance efforts, 

including costs for activities completed in Fiscal Year 2006 and cost estimates for 

activities anticipated for Fiscal Year 2008. 

Response: The Millennium Act Report to Congress (Volume 2, National Shrine 

Commitment), issued in August 2002 provides a comprehensive assessment of the 

condition of VA’s national cemeteries. This information is used in the National Cemetery Administration’s (NCA) planning process to assist in prioritizing national 

shrine projects over a multi-year period. The report identified the need for 928 repair projects at an estimated cost of $280 million to ensure a dignified and respectful setting appropriate for each national cemetery. NCA is using the information 

and data provided in the report to plan and accomplish the repairs needed at each 

cemetery. Through FY 2006, NCA completed work on 269 projects, and initiated 

work on additional projects, with an estimated cost of $99 million. These projects 

account for about 44 percent of the deficiencies identified in the Millennium Act report. 

Repairs to address repair/maintenance needs are addressed in a variety of ways. 

Gravesite renovation projects to raise, realign, and clean headstones and markers 

and to repair sunken graves are addressed through NCA’s operations and maintenance (O/M) account. Infrastructure improvements to buildings, roads, irrigation 

systems, and historic structures are addressed with capital expenditures through 

the major and minor construction programs. In addition, cemetery staff are used to 

complete some repairs. 

The 2008 budget includes $9.1 million in NCA’s O/M account and $2 million in 

the minor construction request for national shrine projects. Future budget requests 

tied specifically to the shrine commitment will be prioritized within the context of 

Departmental priorities. For example, critical gravesite expansion projects require 

our immediate focus in order to keep existing cemeteries open and to ensure continued service to our nation’s veterans and their families. 

In addition to specific national shrine projects, a commitment to enhancing the 

appearance of the national cemeteries underlies all NCA activities. Over 30 percent 

of NCA’s operating budget is used for routine tasks such as mowing, trimming, and 

other maintenance work. These functions are equally critical to providing an enduring memorial to those we serve. 

NCA has also established an organizational assessment and improvement (OAI) 

program to ensure regular and consistent assessment of performance against established standards. Each national cemetery will be evaluated through site visits conducted on a cyclical basis. A total of 47 national cemeteries have been reviewed 

under OAI since the program’s inception in 2004. In addition, NCA has developed 

additional performance metrics that will be used to improve the appearance of its 

national cemeteries. Baseline data was collected in 2004 for three new performance 

measures designed to assess the condition of individual gravesites, including the 

cleanliness and proper alignment of headstones and markers. With this baseline 

data, NCA has identified the gap between current performance and the strategic 

goal for each measure. 

Question 15: Please provide data concerning the State Cemetery Grant Program, 

including the number of grants awarded in fiscal year 2006, total grant amounts, 

average grant amounts, and award locations. 

Response: In FY 2006, VA spent $17.8 million for grants associated with four 

projects to establish, expand, or improve State veterans cemeteries. The average 

grant award was $4.4 million. Grant funding was provided at the following locations: 


cprice-sewell on PROD1PC72 with HEARING
119 

Anderson, South Carolina ($5.2 million—New Cemetery) 

Radcliff (Ft. Knox), Kentucky ($8.5 million—New Cemetery) 

Redding, California ($300,000—New Cemetery) 

Wrightstown, New Jersey ($3.8 million—Cemetery Expansion) 

The FY 2007 and 2008 budget requests include $32 million for this program in 

each year. There is sufficient State interest in the grant program to use these funds. 

Question 16: For fiscal years 2006 and 2007, the VA’s Education Service was allocated $19 million from the Readjustment Benefits Account to enter into contracts 

with State Approving Agencies for purposes of approving courses of education under 

the Montgomery GI Bill and other related activities. Per section 301 of P.L. 103– 

330 at the end of fiscal year 2007, the SAA funding will decrease to $13 million. 

Does the VA plan to request resources to maintain funding at the fiscal year 2007 

levels? 

Response: VA does not plan to request resources to maintain funding at FY 2007 

level. 

Question 17: If not why not, and what is the Education Service’s plan to maintain program and outreach services, as well as fraud prevention and general oversight over the Montgomery GI Bill programs without the full complement of SAA 

personnel? 

Response: VA deeply values the outreach services performed by the State Approving Agencies (SAA). SAA’s are able to travel to many institutions across the 

United States and fulfill outreach efforts as well as their supervisory and approval 

functions. 

VA will assume their outreach duties, but has not yet had an opportunity to truly 

evaluate the impact of the reduction in SAA program funding. VA will evaluate the 

impact in the coming months if it becomes apparent that some necessary outreach 

is not being accomplished, we will reallocate resources. 

Question 18: Does the VA expect to hire additional Education Service staff? 

Response: In FY 2007, 32 direct FTEE are added for the Education program and 

another 14 FTEE will be added in FY 2008. 

Question 19: What are the current pending claim workloads for the following 

Montgomery GI Bill education programs: Ch. 30, Ch. 1606, Ch. 1607 and Ch. 35? 

Response: As of the end of January 2007, the numbers were as follows: 

Chapter 30: 33,620 

Chapter 1606: 10,734 

Chapter 1607: 3,213 

Chapter 35: 11,807 

Question 20: Please provide FTEE data with respect to all of VBA’s business 

lines, including any projected plans to increase or decrease in fiscal year 2008. 

Response: The table below depicts VBA FTEE data for 2006–2008 for our five 

business lines: (1) compensation & pensions (C&P) including burial, (2) education, 

(3) vocational rehabilitation & employment, (VR&E) (4) housing, and insurance. Increases to direct C&P, Education, and VR&E FTE levels will allow us to better address increasing workload and improve timeliness of claims processing. 

2006 FTE Levels (Actuals) 

C&P Edu VR&E Hsg Ins VBA 

Direct 7,858 726 948 747 397 10,676 

IT 439 73 44 147 30 732 

Support 989 91 119 148 55 1,402 

Totals 9,286 889 1,110 1,042 482 12,810 


cprice-sewell on PROD1PC72 with HEARING
120 

2007 FTE Levels (Projected) 

C&P Edu VR&E Hsg Ins VBA 

Direct 7,863 758 1,063 762 422 10,868 

IT 488 66 44 102 30 730 

Support 1,094 106 148 107 51 1,506 

Totals 9,445 930 1,255 971 503 13,104 

2008 FTE Levels (Requested) 

C&P Edu VR&E Hsg Ins VBA 

Direct 8,320 772 1,102 762 408 11,364 

IT 154 621 14 32 0 221 

Support 1,085 101 144 99 51 1,506 

Totals 9,559 894 1,260 893 459 13,065 

Note: In the 2008 budget request, 509 information technology (IT) FTEE have been transferred to the IT appropriation. 

Question 21: Please provide the Committee with any relevant data concerning 

fines, sanctions, penalties or fees assessed, pending or in negotiation thereof with 

a contractor concerning the Loan Guaranty Service’s property management program. 

Response: On December 19, 2006, VA notified Ocwen Loan Servicing LLC, VA’s 

property management service provider, of the intention to impose a penalty for deficiencies in performance during three different quarters. The penalty being assessed 

is in the amount of $1,322,001.43. Ocwen is filing an appeal of the proposed penalty; 

this appeal process is authorized by the contract. VA will consider the appeal and 

issue a decision upon completing its review of the documentation provided by 

Ocwen. 

Question 22: Please provide the total number of VR&E participants for each of 

the last three fiscal years, including the Independent Living program; additionally, 

please provide the VR&E caseload for each Regional Office for each of the last 3 

fiscal years; and finally, what is the amount needed to fully implement the VR&E 

Five Track Program throughout all the Regional Offices? 

Response: The table below represents the number of participants in the VR&E 

program, which represents all veterans actively involved in the program at the end 

of each fiscal year. The participants can be in any of the following case statuses: 

applicant, evaluation planning, extended evaluation, independent living, rehabilitation to employability, job ready status, and interrupted. 

Fiscal Year 

Number of 

Participants 

2006 89,791 

2005 92,703 

2004 94,851 

The following table illustrates the average caseload for VR&E counselors at each 

of the regional offices (RO) for the last 3 fiscal years. These figures do not reflect 

any impact of contractor support, which varies from RO to RO. A VR&E counselor’s 

workload may vary among ROs depending on their use of contractors for specialized 

services. 


cprice-sewell on PROD1PC72 with HEARING
121 

Station 

Number Station Name 

FY04 

Average 

Caseload 

FY05 

Average 

Caseload 

FY06 

Average 

Caseload 

340 Albuquerque Regional Office, NM 170 206 137 

463 Anchorage VAMROC, AK 148 168 242 

316 Atlanta Regional Office, GA 210 133 122 

313 Baltimore Regional Office, MD 150 149 164 

301 Boston Regional Office, MA 135 124 118 

307 Buffalo Regional Office, NY 179 165 207 

328 Chicago Regional Office, IL 203 166 131 

325 Cleveland Regional Office, OH 160 158 142 

319 Columbia Regional Office, SC 159 161 137 

339 Denver/Cheyenne Regional Office, CO 141 146 135 

333 Des Moines Regional Office, IA 94 181 136 

329 Detroit Regional Office, MI 149 172 150 

437 Fargo VAMROC, ND 107 129 139 

436 Fort Harrison VAMROC, MT 91 94 96 

308 Hartford Regional Office, CT 168 310 226 

459 Honolulu VAMROC, HI 116 112 103 

362 Houston Regional Office, TX 204 217 145 

315 Huntington Regional Office, WV 174 189 147 

326 Indianapolis Regional Office, IN 212 254 173 

323 Jackson Regional Office, MS 173 171 179 

334 Lincoln Regional Office, NE 259 277 198 

350 Little Rock Regional Office, AR 200 161 158 

344 Los Angeles Regional Office, CA 285 301 186 

327 Louisville Regional Office, KY 198 154 167 

373 Manchester Regional Office, NH 84 93 102 

358 Manila Regional Office, Philippines 142 148 130 

330 Milwaukee Regional Office, WI 123 111 108 

322 Montgomery Regional Office, AL 145 128 110 

351 Muskogee Regional Office, OK 139 135 110 

320 Nashville Regional Office, TN 156 190 147 

321 New Orleans Regional Office, LA 195 169 162 

306 New York Regional Office, NY 175 164 141 

309 Newark Regional Office, NJ 314 197 194 

343 Oakland Regional Office, CA 206 228 201 

310 Philadelphia Regional Office, PA 145 154 145 

345 Phoenix Regional Office, AZ 151 163 198 

311 Pittsburgh Regional Office, PA 114 131 131 


cprice-sewell on PROD1PC72 with HEARING
122 

Station 

Number Station Name 

FY04 

Average 

Caseload 

FY05 

Average 

Caseload 

FY06 

Average 

Caseload 

348 Portland Regional Office, OR 156 208 143 

304 Providence Regional Office, RI 132 95 133 

354 Reno Regional Office, NV 188 131 160 

314 Roanoke Regional Office, VA 293 270 164 

341 Salt Lake City Regional Office, UT 101 87 112 

377 San Diego Regional Office, CA 167 171 137 

355 San Juan Regional Office, PR 111 111 108 

346 Seattle Regional Office, WA 122 151 137 

438 Sioux Falls VAMROC, SD 167 184 150 

331 St. Louis Regional Office, MO 121 169 149 

335 St. Paul Regional Office, MN 245 192 143 

317 St. Petersburg Regional Office, FL 163 155 119 

402 Togas VAMROC, ME 148 347 221 

349 Waco Regional Office, TX 90 185 147 

372 Washington Regional Office, DC 194 247 152 

405 White River Junction VAMROC, VT 79 69 79 

452 Wichita VAMROC, KS 133 138 127 

460 Wilmington VAMROC, DE 151 154 162 

318 Winston-Salem Regional Office, NC 223 224 179 

The VR&E Five-Track to Employment Model has been fully deployed and implemented throughout all the regional offices. 

Health 

Question 1: The VA has been operating under a continuing resolution since the 

start of the fiscal year on October 1, 2006. P.L. 109–383 (H.J. Res. 102) provided 

the VA with the legal authority to transfer up to $683,970,000 from other accounts 

to the Medical Services Account. 

Question 1(a): On September 30, 2006, what unobligated funds were available 

to the VA? Please detail specific amounts for specific accounts. Please list unobligated balances at the start and end of FY 2006, FY 2005, and FY 2004 and please 

explain why the amounts available as unobligated were greater or less than the 

amounts from the previous two fiscal years. 

Response: The chart below shows start of year and end of year unobligated balances for FY 2004–FY 2006 for the total of the three medical care appropriations. 

Unobligated 

Balances 

(Dollars in Thousands) 

FY 2004 FY 2005 FY 2006 

Start of Year $823,282 $710,682 $1,149,225 

End of Year $710,682 $1,149,225 $590,611 

• VA reported to Treasury (via the SF 133) that the FY06 EOY unobligated balance was $589,863, or 748K lower than the amount shown above; please verify 

that $590,611 is the correct amount and whether the first quarter FY07 SF 133 

SOY balance will reflect the higher amount. 


cprice-sewell on PROD1PC72 with HEARING
123 

• The FY 2006 start of year unobligated balance was greater than FY 2004 and 

FY 2005 due to resources provided by the budget amendment (P.L. 109–54) and 

Hurricane supplemental received in late FY 2005 and increased collections. 

• The FY 2006 end of year unobligated balance was less than FY 2004 and FY 

2005 due to a higher level of expenditures supporting veterans’ healthcare. 

Question 1(b): As of September 30, 2006, please list all ‘‘carryover’’ funding 

available to the VA. Please detail specific amounts for specific accounts as well as 

listing which amounts were provided as 2-year funding as well as noting for which 

fiscal year amounts, or portions of these amounts, were first provided. 

Response: The chart below lists all carryover funding available to the three medical care appropriations as of September 30, 2006. 

Description 

Dollars in 

Thousands 

Medical Services: 

No-Year $227,745 

2-Year $139,617 

Hurricane Supplemental $34,389 

Total $401,751 

Medical Administration: 

2-Year $145,543 

Hurricane Supplemental $5,924 

Total $151,467 

Medical Facilities: 

No-Year $1,227 

2-Year $3,592 

Hurricane Supplemental $32,574 

Total $37,393 

Grand Total: 

No-Year $228,972 

2-Year $288,752 

Hurricane Supplemental $72,887 

Total $590,611 

Question 1(c): As of January 26, 2007, have you made any transfers pursuant 

to your authority under P.L. 109–383? Please provide detailed information if you 

have used this transfer authority, including from which accounts funds were transferred, and the amounts of any such transfers. 

Response: As of January 26, 2007, no transfers have been made pursuant to VA’s 

authority under Public Law 109–383. 

Question 1(d): Does the VA anticipate using this authority between January 26, 

2007 and February 5, 2007? 

Response: The Department has not used and does not anticipate using this authority between January 26, 2007 and February 5, 2007. 


cprice-sewell on PROD1PC72 with HEARING
124 

Question 1(e): What consequences, by specific account, do you foresee operating 

under a continuing resolution will have on VA activities at the end of FY 2007 and 

the start of FY 2008? 

Response: The proposed funding level of $32.7 billion approved by the House 

(H.J. Res. 20) on January 29, 2007, would fully fund medical care for veterans this 

fiscal year. If however, Congress were to hold us to the 2006 funding level VA would 

be short approximately $3 billion of the funding needed to meet the estimated demand for care in FY 2007. A shortage of this magnitude would have serious implications in all three accounts—existing employment levels could not be sustained, patient waiting times would increase dramatically, and healthcare operations could 

not be sustained at their current levels for the remainder of FY 2007. 

Question 2: CBOCs—Please provide a detailed list regarding the number of Community-Based Outpatient Clinics (CBOCs) which were approved in FY 2006 and FY 

2005, as well as those approved for FY 2007 through January 26, 2007. Please also 

provide a detailed list regarding the facilities approved and whether or not they 

have been activated. Of those activated, please provide detailed estimates as to the 

costs of each activation and the funding source, by account, of each activation. 

Response: Table 1 below depicts the Community-Based Outpatient Clinics 

(CBOCs) approved and activated FY 2005 and FY 2006. Table 2 below depicts 

CBOCs approved and not yet activated. No CBOCs have been activated in FY 2007. 

Table 1: CBOCs Approved and Activated FY 2005 and FY 2006 

VISN CBOC Name City State 

Type of 

Clinic: 

Contract 

(C) or 

VA (VA) 

Cost To 

Establish 

Clinic 

FY 2005 

3 Eastern Dutchess Pine Plains NY V $247,490 

4 Gloucester Sewell NJ V $54,525 

4 Northampton County Bangor PA V $198,853 

4 Warren North Warren PA V $183,438 

4 Uniontown Uniontown PA V $6,000 

4 Venango Oil City PA V $156,685 

7 Goose Creek North Charleston SC V $101,087 

8 The Villages/Sumter County The Villages FL V $500,000 

9 Dupont Louisville KY V $0 

9 Standiford Field Louisville KY V $0 

9 Memphis-South Clinic Memphis TN V $1,050,717 

9 Covington Memphis TN V $183,852 

9 Vine Hill Nashville TN V $120,000 

10 New Philadelphia New Philadelphia OH V $1,939,553 

10 Marion Marion OH V $487,166 

10 Ravenna Ravenna OH V $1,372,455 

15 Hanson/Hopkins County Hanson KY V $71,539 

16 Galveston County Site 1 Galveston Island TX C $123,227 

16 Galveston County Site 2 Galveston Island TX C $123,277 

18 Anthem/New River Anthem AZ V $114,117 


cprice-sewell on PROD1PC72 with HEARING
125 

Table 1: CBOCs Approved and Activated FY 2005 and FY 2006—Continued 

VISN CBOC Name City State 

Type of 

Clinic: 

Contract 

(C) or 

VA (VA) 

Cost To 

Establish 

Clinic 

FY 2005 

19 Rock Springs Rock Springs WY V $250,000 

21 Sail Bruno/North San Mateo San Bruno CA V $597,258 

County 

7 Athens Athens GA V $1,222,893 

16 Slidell Slidell LA V $260,000 

16 LaPlace/St. John* LaPlace LA V $2,260,000 

16 Hammond* Hammond LA V $2,260,000 

Costs to establish a clinic include all non-recurring startup costs such as equipment, furniture, IT needs and 

any lease buildout or construction costs. The costs do not include annual expenditures such as salary. 

* Startup costs are high due to having to purchase modular buildings. 

Table 2: Approved and To Be Activated 

VISN CBOC Name State 

4 Dover DE 

6 Hickory NC 

6 Lynchburg VA 

6 Norfolk VA 

6 Franklin NC 

6 Hamlet NC 

7 Bessemer AL 

8 Eastern Puerto Rico PR 

9 Morehead City KY 

9 Hazard KY 

9 Morristown/Hamblen TN 

16 Eglin AFB FL 

17 Conroe TX 

17 NE Bexar TX 

18 Globe/Miami AZ 

18 NW Tucson AZ 

18 SE Tucson AZ 

18 Thunderbird AZ 

20 Metro East OR 


cprice-sewell on PROD1PC72 with HEARING
126 

Table 2: Approved and To Be 

Activated—Continued 

VISN CBOC Name State 

20 Canyon County ID 

20 Central Washington WA 

20 Metro West OR 

21 American Samoa HI 

21 Fallon NV 

22 Orange City CA 

23 Bemidji MN 

23 Holdrege NE 

23 Spirit Lake IA 

23 Western Wisconsin WI 

Question 3: Non-Recurring Maintenance—Please list total expenditures for nonrecurring maintenance from the Medical Facilities Account, by month, for FY 2006. 

Please explain any variance from spend-out rates from the previous two fiscal years. 

Response: The table below presents non-recurring maintenance (NRM) expenditures, by month, for the past 3 fiscal years. The variance in first half of FY 2004 

relates to the implementation of the new three-appropriation structure directed in 

the appropriations act. The other variances between months are due to execution 

timing of NRM projects. 

NRM by Month (Cumulative) 

(Dollars in Millions) 

Month FY 2004 FY 2005 FY 2006 

Oct $0 $5 $16 

Nov $0 $10 $20 

Dec $0 $18 $27 

Jan $0 $26 $35 

Feb $0 $37 $45 

Mar* $1 $49 $53 

Apr $14 $57 $68 

May $32 $73 $80 

Jun $67 $90 $93 

Jul $103 $102 $119 

Aug $154 $146 $168 

Sep $360 $475 $412 

* Represents establishment of the three medical care appropriation 

accounting structure in FY 2004. 


cprice-sewell on PROD1PC72 with HEARING
127 

Question 4: Priority 8 Veterans—Please provide VA estimates as to the number 

of veterans affected by the Administration’s decision in January 2003 to end enrollment of new Priority 8 veterans. Please provide a total number, as well as the number by fiscal year. Please also provide an estimate as to amount of resources required to lift the enrollment ban, as well as the estimated amount contributed to 

the Medical Care Collection Fund (MCCF) per Priority 8 veteran per fiscal year. 

Response: The following table shows the impact of Priority 8 suspension on 

unique enrollment by fiscal year. 

2003 Cumulative12004 Cumulative22005 Cumulative32006 Cumulative42006 

Estimate5

2007 

Estimate5

2008 

Estimate5

Total Total Total Total Total Total Total 

93,228 192,419 263,257 331,754 830,203 1,254,460 1,570,503 

1Totals are cumulative and do not include enrollees who were initially denied enrollment and subsequently 

enrolled in an eligible priority. 2Does not include ineligible enrollees who died prior to FY 2004. 

3Does not include ineligible enrollees who died prior to FY 2005. 

4Does not include ineligible enrollees who died prior to FY 2006. 

5FY 2006–2008 data represent estimated cumulative impact of Priority 8 suspension—‘‘pent-up demand.’’ 

Data Source: ADUSH End of Year/Fiscal Year to Date Enrollment Files—Sep03, Sep04, Sep05, Sep06. 

March 2006 Model Enrollment Projections (BdgE1F0D0R0A0M5) 

Reopening Priority 8 enrollment in FY 2008 is estimated to increase enrollment 

in Priority 8 by approximately 1.6 million and require an increase in funding of $1.7 

billion. If the suspension on Priority 8 enrollees were lifted, the revenue associated 

with use by new Priority 8 enrollees for Medical Care Collections Fund (MCCF) first 

party co-payments and third party collections is estimated to be $591 million in FY 

2008. VA has serious concerns that this additional demand will strain VA’s capacity 

to provide timely, quality care for all enrolled veterans and lead to longer waits for 

care. VA must also consider the impact of this policy in future years. In 2017, this 

policy would increase Priority 8 enrollment by an estimated 2.4 million and would 

require an additional $4.8 billion. Over the next 10 years, resumption of Priority 8 

enrollment would require $33.3 billion in funding requirements. 

Question 5: OIF/OEF Veterans—Your estimate for the numbers of returning 

OIF/OEF veterans for FY 2006 was substantially off from the demand that you experienced. In addition, your estimates of the average medical care costs per returning servicemember were higher than what you experienced. Please provide us with 

the numbers of returning servicemembers you saw in FY 2006 as well as the total 

number of these veterans per priority group and the average cost per 

servicemember. 

Response: The chart below provides FY 2006 data for OEF/OIF veterans. 

FY 2006 OIF/OEF 

Unique Patients 

Priority Group Unique Patients 

1 16,360 

2 17,891 

3 29,500 

4 677 

5 49,461 

6 20,040 

7 2,799 

8 18,544 

Total Patients 155,272 

Obligations ($000) $404,840 

Cost Per Patient $2,607 


cprice-sewell on PROD1PC72 with HEARING
128 

Oversight 

Question 1: Testimony at previous Budget Hearings indicates that VA projects 

its budget requirements based on planned utilization of services by veterans. Budgeting problems arose in previous years when the Administration used improper projections to plan for its budget requirements in the ‘‘out years.’’ How do the ongoing 

military efforts in Iraq and Afghanistan affect VA’s budget projections? What ‘‘incountry’’—in harm’s way—troop levels are used for this projection? What is the 

source or rationale for these troop level and veterans service needs estimates? 

Response: VA does not use ‘‘in-country’’ troop levels in budget projections. VA 

has made every effort to account for the needs of OEF/OIF veterans within the actuarial model. The model has had several key methodological improvements, including 

development of separate enrollment, morbidity, and reliance assumptions for OEF/ 

OIF veterans based on their actual enrollment and usage patterns. However, many 

unknowns can impact the number and type of services that VA will need to provide 

OEF/OIF veterans, including the duration of the conflict, when OEF/OIF veterans 

are demobilized, and the impact of our enhanced outreach efforts. 

The number of veterans returning from Afghanistan being treated in the VA 

healthcare system is relatively small compared to the overall number of veterans 

already accessing VA healthcare and benefits (over 5.3 million). 

Question 2: In post-hearing questions following the February 8, 2006 budget 

hearing in response to ‘‘Efficiency’’ question ‘‘1.f,’’ concerning a lack of proper documentation for claimed savings, the Department advised the Committee that it had 

just begun to review the major process to establish policies and procedures to assure 

proper documentation is identified and control systems are developed to adequately 

track, monitor, validate, and record authentic instances of bona fide management 

savings throughout the 157 medical centers for which it is responsible. What is current ability for VA to adequately track, monitor, validate, and record authentic instances of bona fide management savings? What time and expense has been expended in designing and implementing this tracking, monitoring, validating, and recording system? 

Response: Management efficiencies are no longer included in the budget estimates and other assumptions and calculations are verified to enhance the fundamental quality of the estimates. VA has taken steps to improve its overall quality 

control and made technical changes to strengthen the accuracy of its formulation 

methodologies and assessments of cost savings in the FY 2007 and future budgets. 

During the execution year, VA is also monitoring budget performance with monthly reports to VA senior leaders and to the Office of Management and Budget (OMB), 

as well as with quarterly reports to Congress. 

Question 3: In post-hearing questions following the February 8, 2006 budget 

hearing in response to questions regarding VA’s Management Analysis/Business 

Process Reengineering (MA/BPR) program, VA advised the Committee that it was 

embarking on two pilot studies under MA/BPR. VA’s response provided a listing of 

items for monitoring and measurement beginning with ‘‘(1) baseline costs and Key 

Performance Indicators (KPIs)’’ and ending with ‘‘(4) costs to conduct the study and 

implement the MEO.’’ Please provide this information for each of the two pilot studies to the Committee for review. 

Response: The information requested is not yet available. Under the MA/BPR design, baseline operational costs and key performance indicators are established no 

later than the ANALYZE phase. For the pilot studies, VA’s objective is to complete 

the ANALYZE phase on or about July 31, 2007, at which time this information 

should be available for the majority of the sites being studied. Costs to conduct the 

study, which are considered part of the costs to implement the most efficient organization (MEO), are recorded cumulatively through the completion of each phase. Accordingly, information on pilot study costs accumulated through completion of the 

ENVISION phase should be available about April 30, 2007. Accumulated study costs 

through all phases should be available by VA’s target date for completion of the 

pilot studies, which is December 31, 2007 for the majority of sites. Other costs to 

implement the MEO, such as the purchase of new capital equipment, are reported 

as part of actual operational costs incurred during the SUSTAIN phase, which is 

the ongoing operation of the approved MEO after the study has been completed. Information on such costs is recorded and available when incurred. 


cprice-sewell on PROD1PC72 with HEARING
129 

Question 4: Last year VA advised the Committee that the offices of the VA Inspector General were staffed at the lowest ratio—OIG FTE to Parent Agency FTE— 

among all statutory Inspectors General in the Federal Government. The Committee 

acknowledges VA’s previous estimates that the VA OIG returns 15–20 dollars for 

each dollar invested in the OIG through fines, and other means. What was the rate 

of return for funds invested in the OIG in both FY 2005 and 2006 and what is the 

projected rate of return for FY 2007? What would be the impact of increasing the 

staffing of the VA OIG in terms of total dollars ‘‘returned’’? 

Response: In FY 2005 and 2006, the Office of the Inspector General (OIG) returned 30:1 and 13:1 for each dollar invested, respectively, through audit and inspection recommendations on the better use of funds; fines, penalties, restitution, 

savings and cost avoidance, and civil judgments as a result of criminal and administrative investigations; and $21.7 million in actual dollar contract review recoveries 

for the 2-year period—funds deposited back into VA’s Supply Fund. OIG estimates 

its return in FY 2007 will approximate 10:1 for each dollar invested, and will include an estimated $11 million in actual dollar recoveries from contract reviews 

going back into the Supply Fund. The decline in cost-benefit ratio for FY 2007 is 

partially attributed to a 40 FTEE reduction from the previous year. We would expect additional staffing resources to continue providing similar incremental returns. 


cprice-sewell on PROD1PC72 with HEARING
130 

POST–HEARING QUESTIONS FOR THE RECORD 

Questions from Hon. Bob Filner, Chairman, Committee on Veterans’ Affairs, 

to Hon. R. James Nicholson, Secretary, U.S. Department of Veterans Affairs 

Committee on Veterans’ Affairs 

Washington, DC 

March 5, 2007 

Honorable R. James Nicholson 

Secretary 

Department of Veterans Affairs 

Washington, DC 20420 

Dear Mr. Secretary: 

In reference to our Full Committee hearing on the VA Fiscal Year 2008 budget 

on February 8, 2007, I would appreciate it if you could answer the enclosed hearing 

questions by the close of business on March 30, 2007. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for materials for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively and singlespaced. In addition, please restate the question in its entirety before the answer. 

Sincerely, 

BOB FILNER 

Chairman 

Projected Costs for OEF/OIF Veterans (Bilmes Study)—Linda Bilmes of the 

John F. Kennedy School of Government at Harvard, in a paper released in January 

entitled ‘‘Soldiers Returning From Iraq and Afghanistan: The Long-Term Costs of 

Providing Veterans Medical Care and Disability Benefits,’’ has estimated that 

255,000 returning servicemembers will seek VA healthcare in 2007 at a total cost 

of $1.4 billion. Bilmes further estimates that this number will increase to 308,000 

in 2008 and cost $1.8 billion. The VA is estimating 209,000 returning 

servicemembers in 2007 and 263,000 in 2008. Bilmes estimates that the total costs 

of providing care to these veterans will be $315 billion by 2014. 

Question 1(a): In light of this study do you stand by your estimates concerning 

the number of returning OEF/OIF veterans? 

Response: In fiscal year (FY) 2008, the Department of Veterans Affairs (VA) estimates that it will treat over 263,000 Operation Enduring Freedom/Operation Iraqi 

Freedom (OEF/OIF) veterans at a cost of approximately $752 million. This estimate 

is based on the actual enrollment rates, age, gender, morbidity, and reliance on VA 

healthcare services of the enrolled OEF/OIF population. OEF/OIF veterans have significantly different VA healthcare utilization patterns than non-OEF/OIF enrollees, 

and this is reflected in the estimates above. For example, when modeling expected 

demand for post traumatic stress disorder (PTSD) residential rehab services for the 

OEF/OIF cohort, the model reflects the fact that they are expected to need three 

times the number of these services than non-OEF/OIF enrollees. The model also reflects their increased need for other healthcare services, including physical medicine, 

prosthetics, and outpatient psychiatric and substance abuse treatment. On the other 

hand, experience indicates that OEF/OIF enrollees seek about half as much inpatient acute medicine and surgery care from the VA as non-OEF/OIF enrollees. 

Question 1(b): Do you believe these cost estimates are accurate, and what is the 

VA currently doing to meet the increased costs and demands on the healthcare system that these veterans represent? 

Response: Many unknowns will influence the number and type of services that 

VA will need to provide OEF/OIF veterans, including the duration of the conflict, 

when OEF/OIF veterans are demobilized, and the impact of our enhanced outreach 

efforts. VA has estimated the healthcare needs of OEF/OIF veterans based on what 

we currently know about the impact of the conflict. To ensure that we are able to 

care for all returning OEF/OIF veterans, we have made additional investments in 

our medical care budget. 


cprice-sewell on PROD1PC72 with HEARING
131 

State Approving Agencies/Montgomery GI Bill—State Approving Agencies 

have partnered with the VA in the administration of veterans educational and training programs for nearly 60 years. Through the program approval and supervision 

process, they ensure that money spent on the Montgomery GI Bill is money well 

spent. Moreover, SAAs provide a critical assist in reducing the opportunities for 

fraud, waste and abuse throughout the system. For FY 2006 and 2007 the VA’s 

Education Service was allocated $19 million from the Readjustment Benefits Account to enter into contracts with State Approving Agencies for purposes of approving courses of education under the Montgomery GI Bill and other related activities. 

Per section 301 of P.L. 103–330 at the end of fiscal year 2007, the SAA funding will 

decrease to $13 million. 

Question 2(a): Does the VA plan to request resources to maintain funding at the 

fiscal year 2007 levels? 

Response: VA does not plan to request resources to maintain funding at FY 2007 

level. 

Question 2(b): If not why not, and what is the Education Service’s plan to maintain program and outreach services, as well as fraud prevention and general oversight over the Montgomery GI Bill programs without the full complement of 8M personnel? 

Response: VA will assume the outreach duties performed by the State Approving 

Agencies (SAA). VA will evaluate the impact in the coming months. If it becomes 

apparent that some necessary outreach is not being accomplished, we will reallocate 

resources. Additionally, VA will continue to monitor the performance of SAAs in 

conducting program approvals, fraud prevention, and general oversight. If SAAs operating at the new funding levels are unable to perform these services, then the Department will reallocate existing VA staff and resources to cover the services previously provided by the SAAs. Our ultimate concern is always for the effective administration of educational benefits to our veterans. 

Mental Health Spending—The VA’s FY 2008 budget submission requests an additional $56 million, for a total of $360 million, for the VA’s Mental Health Initiative. The GAO reported in November that you failed to fully allocate the resources 

you had pledged for the Mental Health Initiative in FY 2005 and FY 2006. 

Question 3: Will the VA fully allocate the $306 million for this initiative in FY 

2007, and the $360 million sought in FY 2008? 

Response: Yes. More than 95 percent of the funds for FY 2007 have been committed. We are closely monitoring the use of the funds in the field. We are prepared 

to recover those funds that may go unspent as a result of delays in hiring and to 

reinvest them in meritorious projects proposed by the Veterans Integrated Service 

Networks (VISN). 

Funds for FY 2008 will be committed for continuation of programs initiated in FY 

2007. 

VA Mental Health Effort—According to the VA’s FY 2008 budget submission, 

the VA ‘‘plans to spend a total of $3 billion to continue our efforts to improve access 

to mental health services across the country.’’ The GAO report on spending on the 

Mental Health Initiative from November stated that for FY 2006, the VA was ‘‘expected to spend more than $2 billion on mental health services.’’ The FY 2008 budget submission includes $360 million for the Mental Health Initiative, and $311 million for outpatient mental health. 

Question 4(a): Can you provide details concerning the remainder of your mental 

health spending for FY 2008? 

Response: For efficiency, the allocation of FY 2007 and FY 2008 funds were combined. A number of programs will be implemented and expanded during FY 2007, 

and continued during FY 2008 to ensure spending of the total amount of funding 

for the 2 years. The allocation of FY 2008 funds to specific programs is outlined in 

the table as follows. 


cprice-sewell on PROD1PC72 with HEARING
132 

FY 2007 and FY 2008 Proposed Mental Health 

Initiative Spending Plan FY 2007 FY 2008 Change 

Continuation of FY 2005 and FY 2006 Recurring 

Initiated Activities 166,296,744 166,296,744 0 

Primary Care/Mental Health Integration 38,380,506 55,691,153 17,310,647 

Suicide prevention coordinators (156 sites) 8,624,890 16,249,780 7,624,890 

Psychosocial Rehabilitation (PSR) 15,138,061 23,587,385 8,449,324 

Mental Health Intensive Case Management 

(MHICM): Rural, multiple teams, etc. 10,185,091 12,345,644 2,160,553 

Homeless Program Initiatives 17,556,002 17,342,238 ¥213,764 

Substance Use Disorders 4,624,702 9,096,072 4,471,370 

Mental Health staff in Community Based Outpatient Clinics (CBOCs) 15,290,157 21,883,139 6,592,982 

Operation Enduring Freedom/Operation Iraqi 

Freedom (OEF/OIF) in reach 3,490,567 5,102,231 1,611,664 

Post Traumatic Stress Disorder (PTSD), including 

Dual Diagnosis and Military Sexual Trauma 

(MST) Resource program 4,979,157 5,115,401 136,244 

Telemental Health 7,018,000 3,100,000 ¥3,918,000 

EES training 600,000 600,000 0 

Centers of Excellence 3,000,000 4,950,000 1,950,000 

Gulf Coast market survey 196,659 0 ¥196,659 

Vet Center staff enhancement 3,379,923 10,531,046 7,151,123 

TBI Transitional Housing 2,500,000 5,000,000 2,500,000 

Other activities including training in evidencebased psychotherapy 4,849,541 3,109,167 ¥1,740,374 

TOTAL 306,110,000 360,000,000 53,890,000 

Question 4(b): Although your budget states that you are spending $3 billion on 

mental health, is this enough to meet the needs of veterans? In what areas, given 

additional resources, do you believe the VA should be doing more? 

Response: The total budget of $3 billion is adequate both to meet the needs of 

returning veterans and those from prior eras. It will allow expansion of access for 

veterans entering the VA, and expansion of programs for veterans from prior eras. 

One area in which VA could be doing more is in working with families of veterans 

with mental health problems. It would be useful for VA mental health providers to 

work with families, even before the veteran came to VA for care. Providers could 

meet with families, help to evaluate symptoms they report, educate them about care 

needs and available resources, counsel them about how to manage symptoms, and 

collaborate with them to get the veteran into treatment. VA does provide bereavement counseling to families of servicemembers killed in action. 

f 

Questions from Hon. John Salazar to Hon. R. James Nicholson, Secretary, 

U.S. Department of Veterans Affairs 

Question 1: Mr. Secretary, I represent Colorado’s 3rd Congressional District. 

Colorado’s 3rd makes up over 50 percent of the State of Colorado. Much of which 

is rural. 

There are approximately 75,000 veterans that live in my district. Many of these 

veterans must travel as much as 5 hours through winding mountain roads to reach 

the VA Center in Denver. Can you tell me how you plan to address the issue of 

access to healthcare services for our veterans living in rural areas and can you 

please tell me the status of the CBOC proposed for Craig, Colorado? 


cprice-sewell on PROD1PC72 with HEARING
133 

Response: VA plans to establish an outreach clinic in the Craig, Colorado area 

this fiscal year. An Outreach Clinic is a part-time, VA-staffed clinic that will provide 

access to healthcare services for veterans living in rural Colorado. 

Question 2: In the past, you have opposed allowing VA to contract for services 

in rural areas. Do you plan to oppose similar legislation if it’s introduced again and 

why? 

Response: VA contracts for services on a case by case basis in rural (and urban) 

settings when VA does not have the capability, capacity, or expertise to provide the 

necessary service within a defined service area. VA also has contracted for care for 

extraordinary hardship or humanitarian reasons. VA does not support a general policy of contracting out all care for patients in rural settings. 

f 

Questions from Hon. Steve Buyer, Ranking Republican Member, 

Committee on Veterans’ Affairs, to Hon. R. James Nicholson, Secretary, 

U.S. Department of Veterans Affairs 

Committee on Veterans’ Affairs 

Washington, DC 

February 20, 2007 

Honorable R. James Nicholson 

Secretary 

Department of Veterans Affairs 

810 Vermont Avenue, NW 

Washington, DC 20420 

Dear Mr. Secretary: 

In reference to our Committee hearing of February 8, 2007, I would appreciate 

your response to the enclosed additional questions for the record by close of business 

Wednesday, March 14, 2007. 

It would be appreciated if you could provide your answers consecutively on letter 

size paper, single spaced. Please restate the question in its entirety before providing 

the answer. 

Thank you for your cooperation in this matter. 

Sincerely, 

Steve Buyer 

Ranking Republican Member 

Question 1: In January, the House passed H.R. 4, which would eliminate the prohibition on the Department of Health and Human Services (HHS) from interfering 

in setting prescription drug prices and require HHS to negotiate prices charged 

under Medicare prescription drug plans. What impact would this change in law 

have on VA’s ability to negotiate favorable discounts from pharmaceutical companies and VA’s prescription drug costs? 

Response: H.R. 4 amends the Medicare Modernization Act by removing the noninterference language which prevents the Secretary of the Department of Health 

and Human Services (HHS) from negotiating drug prices directly with pharmaceutical manufacturers and by requiring semi-annual reports to Congress on the impact of the negotiations. H.R. 4 does not permit HHS to establish drug formularies 

as a negotiation tool. 

H.R. 4 itself, as currently proposed, is likely to have no negative financial impact 

on the Department of Veterans Affairs (VA) drug procurement costs because it does 

not reference in any way section 603 of Public Law (P.L.) 102–585 which gives VA 

a 24 percent discount off commercial drug prices. 

Question 2: In recent years, VA has experienced significant cost escalation in the 

construction of medical facilities. For example, the estimate for the construction of 

a new medical facility in Denver has almost doubled, now topping over $646 million. 

Question 2(a): What are the causes for these increases? 

Response: The Department, along with other government agencies and private 

sector businesses and individuals, is experiencing a significant growth in the cost 

of construction as a result of the booming construction economy worldwide. The sigVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00137 Fmt 6621 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
134 

nificant demand for contractors, labor and building materials has produced significant increases in pricing. This has been further exacerbated by higher petroleum 

prices on both petroleum based building products and fuel as well as construction 

related impacts of the hurricanes of 2004 and 2005 including Katrina. 

Question 2(b): What steps has VA taken to prevent such escalation in the future? 

Response: In order to position the Department to best deal with this situation, 

VA has taken several steps. These include developing a more detailed market analysis of individual geographic location to ensure the best available information is 

used when establishing the escalation rates to be used in the cost estimate. There 

is consideration to market timing to the extent practical in order to bid the project 

at a time when there is the best opportunity to have the greatest competition by 

the contracting community. VA has also begun to employ more extensive 

preplanning before a project is placed in the budget to be sure that all issues relating to scope, building systems, and constructability have been identified and their 

costs identified. 

Question 2(c): What is the status of a possible collaborative arrangement in Denver between VA and 000 or the University of Colorado? 

Response: The University of Colorado Hospital has completed its plan for buildout for the Fitzsimons Campus. Sharing of space with VA is not included in their 

build-out plans. The possible areas for short term clinical collaboration remain much 

the same as they currently exist: buying and selling of services between the facilities. Once VA has relocated to the Fitzsimons Campus, other opportunities might 

arise for the buying and selling of services related to high technology equipment, 

specialized laboratory tests, and specialized patient treatments. 

The Department of Defense (DoD) has renewed its interest in sharing in the Denver VA facility replacement project and that option is being explored. The project 

initially included outpatient and administrative space for DoD that would be constructed by VA and then leased by DoD. The need for inpatient care was addressed 

by additional hospital beds that would be used to care for DoD patients. VA would 

charge DoD for inpatient care at a reduced cost. This option remains viable today 

but would increase the square footage and the cost of the current project. 

Question 3: In 2004, the Secretary agreed with the CARES Commission’s recommendation that a new medical facility was needed in Orlando. However, almost 

3 years later, this project has not advanced. 

Question 3(a): When will the site for the new Orlando facility be identified? 

(Originally, the site was scheduled to be identified last summer.) 

Response: The Secretary announced on March 1, 2007, the selection of Lake 

Nona as the site for the new Orlando facility. 

Question 3(b): What is the cause for delay? 

Response: A number of actions have taken place since the decision was made to 

construct a new VA medical center in Orlando. These have included: 

• a study to determine whether the site of the existing clinic would be adequate 

to support a new medical center (it was determined that a new site was required); 

• appointment of a site selection board by the Secretary to recommend the best 

site for the new medical center; 

• advertisement for new sites; 

• a comprehensive technical evaluation of proposed sites; 

• a public hearing with veterans and other stakeholders; 

• an environmental assessment of the two preferred sites: Lake Nona and International Corporate Park; and 

• publication of a finding of no significant impact (FONSI) and notice of availability. 

These many actions were required to assure the best site was selected for the new 

Orlando medical center, and to satisfy Federal land acquisition requirements. 

Question 3(c): How will this impact the cost of and time table for constructing 

a new facility? 

Response: As site selection was underway, VA also contracted for preliminary 

studies and schematic design. As a result preliminary studies, work on schematic 


cprice-sewell on PROD1PC72 with HEARING
135 

design, and studies to define space requirements are underway. By performing site 

selection and schematic design concurrently, VA has minimized the impact on cost 

and time for the project. 

Question 4: VA was required to submit to Congress a master plan for the West 

Los Angeles campus in 1998. To date, a master plan has not been submitted. 

Response: To comply with section 707 of the Veterans Programs Enhancement 

Act of 1998 (P.L. 105–368), a 25 year master plan was developed for the West Los 

Angeles campus in April 2001. The master plan was completed and involved public 

meetings and the formation of a land use action committee. The master plan also 

included an environmental assessment. The master plan was shelved due to overwhelming public comments against the plan. Numerous letters were written opposing adoption of the proposed master plan. 

Question 4(a): What is the cause for the delay in developing a master plan for 

West Los Angeles? 

Response: After the 2001 master plan was shelved, the decision was made to develop a master plan as part of the Capital Asset Realignment for Enhanced Services 

(CARES) initiative. The CARES initiative would set some of the parameters about 

functions and probable locations of healthcare facilities on the campus that could 

be used to develop a new master plan. This approach seemed to fit best with the 

overall intent of CARES, which is to determine the best use of VA’s assets and the 

best configuration of these assets. Once these decisions on assets are made, the local 

communities can interact with VA through publicly held CARES local advisory 

panel meetings. 

Question 4(b): When do you expect to issue a final decision on the options for 

reusing excess land at West Los Angeles? 

Response: The final Stage 2 CARES Report for West Los Angeles will be completed in July 2007. It will provide information to the Secretary on the advantages 

and disadvantages of each option selected for detailed study. 

Question 5: As part of the President’s Management Agenda, the Executive Brand 

Management Scorecard is used to track how well agencies are executing governmentwide initiatives. VA achieved ‘‘green’’ status on the scorecard for the Federal 

Government’s real property initiative in 2006. What is VA doing to maintain this 

‘‘green’’ status? 

Response: VA continues to move forward aggressively on the Federal Government’s real property initiative with a true capital investment life cycle approach. 

Real property is managed from planning/investment through performance monitoring and disposal. 

Planning/Investment 

The Department will continue to work toward achieving the goals, objectives, and 

milestones laid out in the VA Asset Management Plan, 5-Year Capital Plan, disposal plans, and sustainment model (used to maintain VA infrastructure at the current level). Development will continue through (1) implementation of VA’s CARES 

program and (2) focus on deferred maintenance. 

CARES Implementation Status 

A total of 36 CARES projects are in process. One project, an enhanced-use lease 

in Chicago, is complete. Two projects are new; the status of the remaining 33 

is as follows: 

• Construction documents prepared—6 

• Construction begun—14 

• Schematics/design development in process—13 

Eighteen sites were selected for further independent study. The one in Gulfport 

has been eliminated due to its loss during Hurricane Katrina. 

CARES Business Plan Studies 

Along with previous CARES projects selected in FY 2006 and FY 2007 for implementation, there are a number of sites where further study is required to determine 

suitability for future healthcare and re-use activities. These studies will include 

evaluating outstanding healthcare issues to recommend healthcare delivery options, 

developing capital plans, as well as determining the highest and best use for 

unneeded VA property. Completion of the studies going into more detailed analyses 

(Stage 2) is anticipated by the end of 2007. 


cprice-sewell on PROD1PC72 with HEARING
136 

Firms have been awarded the contract to assist the Secretary in reaching final 

healthcare decisions and re-use options. CARES planning data have been updated 

with FY 2003 actual use and refinement in planning assumptions for categories of 

care, including long-term and mental healthcare. This improved data will be utilized 

in the validation of construction plans and the annual strategic planning process. 

The following table identifies the locations being studied and their current status: 

Health Care, Capital Plan 

and Re-Use Studies 

Comprehensive Capital Plan 

and Re-Use Studies 

Study current in Stage 2: Study pending Stage 1 decision: 

• Boston, MA • West Los Angeles, CA 

Completed studies: Studies currently in Stage 2: 

• New York—Reject consolidation of 2 VA • Canadaigua, NY 

medical centers • Lexington, KY • Louisville, KY—Study validated need for • Livermore, CA 

replacement hospital • Montrose/Castle Point, NY • Big Spring, TX—Keep existing service in 

Big Spring; use Planning process to Completed studies: 

explore contracting and/or expansion in 

market including domiciliary • White City, OR—Construct new • Walla Walla, WA—Construct new ambu- domiciliary 

latory care center contract inpatient care • St. Albans—Replace existing facilities 

in capital planning process with nursing home outpatient clinics and • Montgomery, AL—Maintain inpatient domiciliary; VA to develop capital plan 

services; major modernization for new construction on site and a re-use • Waco, TX—Retain all current services plan for the campus • Muskogee, OK—Keep facility and imple- • Perry Point, MD—Upgrade entire 

ment increase in psychiatric beds campus, continue and complete re-use 

plan. 

Removed from the study due to damage from 

Hurricane Katrina: 

• Gulfport, MS 

Financial Analysis Study 

• Poplar Bluff—Keep facility; is cost effective to provide inpatient care 

At Walla Walla, St. Albans, Louisville, Perry Point and Montgomery VA medical 

centers (VAMC), capital investment proposals were developed for consideration in 

the next (FY 2009–2014) 5-year capital plan. For the new Louisville VAMC, a site 

selection committee has been established by the Under Secretary for Health. 

The Secretary decided to retain all current services at Waco, Texas, and establish 

a center of excellence for post-traumatic stress disorder as part of VA’s internal 

planning process. Waco will also pursue reuse of vacant buildings and land through 

VA’s enhanced-use lease program. 

The Secretary directed the VAMC in Walla Walla, Washington, to use existing 

contracting authority to provide inpatient and nursing home care and to explore 

partnerships and other opportunities to better use the historic campus. 

In White City, Oregon, the Secretary directed that a capital plan be developed 

that (1) combines new construction and renovation; (2) replaces several domiciliary 

buildings through new construction; and (3) expands ambulatory specialties and outpatient mental health services. The master plan is also to consider enhanced-use 

leasing opportunities, which are currently being reviewed by the ‘‘reuse’’ contractor 

under Phase 3 reuse/redevelopment. For St. Albans, New York, the Secretary directed that a capital plan for new construction be developed for a new nursing 

home, domiciliary and outpatient clinic. The VAMC is leading the effort, designing 

the new medical components of the campus, and the reuse contractor has developed 

the Phase 3 Reuse/Redevelopment report. 

Deferred Maintenance 

VA will continue to fund construction to upgrade and replace existing facilities 

and fund repairs needed to improve VA-owned buildings. 

Performance Monitoring 

VA will continue to integrate its efforts on real property with VA’s energy program. Real property management focuses on the inventory of assets, their mission 

alignment, use, condition and cost. The energy program is implementing metering, 


cprice-sewell on PROD1PC72 with HEARING
137 

energy sustainability and a renewable program. Goals include reducing energy use 

in both existing and planned buildings, and increasing the use of renewable energy 

as a percent of facility electricity use. These programs are mutually supportive and 

together provide a global strategy for improved real property performance management. 

VA will continue to monitor real property performance in each of the areas noted 

above, reporting to the Office of Management and Budget (OMB) and VA Management Performance Review Board. Analysis will be conducted and actions identified 

for improved performance. 

Disposal and Enhanced Use Leases 

Lastly, VA will continue to use disposal and enhanced use lease (EUL) authority 

to relieve the Department of its responsibility for non mission-dependent, underused 

and vacant space. In FY 2006, VA was no longer responsible for 77 buildings. VA 

used the following methods to transfer responsibility: 6 buildings via sales, 19 buildings via demolition, and 52 buildings via enhanced-use lease. In FY 2007, 4 buildings (18,000 square feet) have been disposed of; an additional 99 buildings (including Gulfport and Marlin) and over 2.2 million gross square feet are planned for disposal or EUL by the end of the year. 

Question 6: To your knowledge, are you or the Under Secretary for Health or 

any of your staff pursuing a proposal to standardize self monitoring blood glucose 

supplies and equipment at this time? Is the Department continuing to pursue a proposal to standardize self monitoring blood glucose equipment through a single national contract, even though the FY 2006 VA Appropriations Act specifically prohibits VA from replacing the current system by which VISNs select and contract for 

blood glucose testing supplies and monitoring equipment? 

Response: VA, to include the Secretary, Under Secretary for Health or any of the 

staff, is not pursuing a national proposal to standardize self monitoring blood glucose (SMBG) supplies and equipment at this time. The Military Quality of Life and 

Veterans Affairs and Related Agencies Appropriations Act of 2006 prohibits VA from 

pursuing new contracts. Specifically, section 220 ‘‘prohibits the expenditure of any 

funds available to the Department on implementation of a national standardization 

contract for diabetes monitoring systems.’’ 

Decisions on which SMBG products are offered to veterans cannot be made at the 

national level and now must be made at the Veterans Integrated Service Network 

(VISN) level. 

Question 7: I understand that in March of 2006, the Deputy Under Secretary of 

Health for Operations and Management sent a memo to the VISN directors notifying them of enacted legislation prohibiting VA from replacing the current system 

by which VISNs select and contract for blood glucose testing supplies and monitoring equipment. However, it has been reported that some VISN directors are continuing to prepare for a national standardization of diabetes monitoring supplies 

and equipment. Are you aware of any correspondence to the VISN directors on this 

topic since last year? 

Response: The memo entitled ‘‘Termination of Proposal to Standardize Blood 

Glucose Devices’’ dated March 17, 2006 is still in effect. No other direction has been 

given to the field to reverse or change this memorandum. VISN field sites continue 

to use VISN procedures to select and contract for these supplies and equipment. 

Question 8: I understand that notwithstanding Congressional actions that prohibit VA from moving forward with the standardization of blood glucose testing supplies, vendor competition has produced VA savings on the purchase of such supplies. 

Please provide me with VA’s purchasing costs for blood glucose testing supplies and 

the annual savings the Department has achieved since September 2005? 

Response: Vendor competition has not produced meaningful savings on blood glucose testing supplies. With the exception of a $0.01 price reduction for one low volume blood glucose testing strip, VA’s unit prices have remained unchanged for the 

period September 2005 through December 2006. VA’s expenditures during this time 

period were $77,346,967. Without the $0.01 reduction, VA’s costs would have been 

$77,440,347. Therefore, VA saved a modest $93,380 (0.1 percent) from the price reduction from September 2005 through December 2006. 

f 


cprice-sewell on PROD1PC72 with HEARING
138 

Questions from Hon. Henry E. Brown, Jr. to Hon. R. James Nicholson, 

Secretary, U.S. Department of Veterans Affairs 

Question 1: Mr. Secretary, you budget request $40 million for advance planning 

under the Veterans Health Administration. Can you provide a breakdown of where 

the Department plans to dedicate those funds? 

Response: The FY 2008 advance planning funds will be used for several purposes 

including the early planning and design of projects expected to be included in the 

FY 2009 budget, support for the VISNs in developing the project capital asset applications for the FY 2010 projects, development of space and design standards, environmental and other studies, as well as supporting our ongoing CARES projects design. 

Question 2: Mr. Secretary, I have reviewed the Department’s 5-year capital plan 

and find only one mention, in passing, of the joint-use advanced planning at Johnson VAMC in Charleston. Is this because the VA was only authorized to conduct 

planning activities at the end of the 109th Congress, or are there additional reasons 

why this important project was not included in the Department’s 5-year plan or 

budget request? 

Response: The $36.8 million intended for advanced planning funds were authorized at the end of the 109th Congress, but not appropriated. The Veterans Health 

Administration (VHA) has many major construction projects that are identified in 

our 5-year capital plan that have a higher priority, based on significant safety and 

environmental quality concerns, for funding at this time. 

Question 3: Outside of the absence of advance planning for Charleston in this 

year’s budget, are you continuing to support development of that project, and who 

are the new national VA leaders from VHA who are leading the effort for VA? 

Response: Replacement of the Ralph H. Johnson VA Medical Center in Charleston, SC is an undertaking that has a competitive disadvantage when viewed with 

the other major construction priorities of VA at this time. The Medical Center Director at Charleston, and the President of Medical University of South Carolina 

(MUSC), will continue to lead a local group who will explore collaboration options 

in Charleston between VA and MUSC. 

Question 4: Mr. Secretary, I understand that you have recently made favorable 

comments about the innovative plan for increased VA and university collaboration/ 

integration being developed at Charleston between the Johnson VAMC and the 

Medical University of South Carolina. If Congress appropriates the funds to proceed 

with planning as authorized under last year’s VA Authorization bill, will you proceed aggressively with that planning, given that Charleston is at high risk for hurricane damage? Can we make progress fast enough to avoid a New Orleans/Katrinalike catastrophe in Charleston? 

Response: VA and MUSC have long enjoyed a productive and mutually beneficial 

affiliation. The local group headed by the Medical Center Director and the President 

of MUSC, will continue to explore collaboration opportunities between VA and 

MUSC. An example of this collaboration is the procurement of high cost medical 

equipment. Contracts for these arrangements are very close to being signed, and VA 

is poised to procure the equipment. VA will purchase the equipment and it will be 

placed in MUSC facilities. In return, veterans will receive free or significantly discounted clinical services up to the purchase price of the equipment. Veterans and 

the citizens of South Carolina will both benefit from this arrangement. 

Normally to deal with hurricanes, VA’s policy is to harden, or hurricane strengthen. A VA study showed we would not need a new facility to do this, and the Johnson 

VAMC meets current hurricane structural standards. We still believe the priorities 

outlined in the President’s Budget should be enacted into law. If, however, Congress 

funds a project not in the President’s Budget and the President signs the bill into 

law, this would be considered direction and we would proceed. In such a scenario, 

where it would rise to a top priority, it is projected that it would take 5 to 6 years 

to build a hurricane-strengthened facility. 

f 


cprice-sewell on PROD1PC72 with HEARING
139 

Questions from Congressman Gus M. Bilirakis to Hon. R. James Nicholson, 

Secretary, U.S. Department of Veterans Affairs 

Tampa Parking Situation: 

The James Haley VA Medical Center (VAMC) in Tampa, Florida is one of the 

busiest, if not the busiest, medical centers in the country. Parking is a critical issue 

at the facility. Veterans complain about having to drive around for long periods of 

time looking for an available parking space. This issue has been highlighted in numerous paper stories in my local papers. 

Question 1: As part of the Fiscal Year 2007 budget submission, the Department 

included a project to ‘‘improve patient parking’’ at the Tampa VAMC as a potential 

future construction project. What is the status of this proposed project? 

Response: The 2007 Construction Budget Submission (5-Year Capital Plan) identified an effort to improve patient parking at the Tampa VAMC. Toward that end, 

VISN 8 submitted a major construction proposal for FY 2008 to expand the Tampa 

polytrauma unit that included a parking garage to increase access for these patients 

and relieve parking congestion at Tampa. While the project scored high, it was not 

funded due to other priorities ahead of it. 

VA is presently going through the major project application review and scoring 

cycle for the FY 2009 budget. The Tampa proposal, for polytrauma unit expansion 

to include a parking garage, has been revised and resubmitted as part of the FY 

2009 budget planning cycle. It is currently going through the validity review process 

where it will again be scored to determine its standing in VHA’s national 

prioritization list for FY 2009 major construction funding cycle. 

Question 2: What is the Department doing to address the parking in the interim? 

Response: The medical center currently leases parking spaces at a nearby mall 

and operates continuous shuttles for patients, visitors, and employees from approximately 6 a.m. to 9 p.m. Additionally, they participate in the North Tampa Transportation Initiative, which supports van pooling and public transportation. Through 

this initiative, they have established 10 van pools, thereby reducing the number of 

parking spaces needed for employees by 51. An additional acquisition proposed for 

FY 2007, is the Alpha property (3.6 acres) across the street from the Tampa VAMC, 

which will produce approximately 650 parking spaces. A station level project will 

be required to address necessary grading and drainage of the property before parking can commence. The project to purchase this property is on the FY 2007 list for 

funding. 

PVA Land Purchase: 

Question 3: The Tampa VA is also in the process of purchasing some land near 

the facility from a local Paralyzed Veterans of America (PVA) chapter. I’ve been told 

that the sale is just awaiting your signature to be finalized. When do you anticipate 

signing the approval papers? 

Response: The Secretary has approved the purchase and the offer to sell has 

been accepted, VA closed on March 12. 

Coming Home to Work Program: 

Question 4: One issue that I am particularly interested in is helping our 

servicemembers returning from Operation Iraqi Freedom and Operation Enduring 

Freedom transition back into civilian life. Your testimony highlights the VA’s ‘‘Coming Home to Work’’ initiative. How many veterans have taken advantage of this program? 

Response: Information for FY 2007 through the end of January shows that: 

• 16 service members are participating in active work experience programs with 

Federal agencies while awaiting discharge or return to duty orders; 

• 121 service members are receiving early intervention services in preparation for 

work experience programs, including vocational counseling, testing, and administrative support necessary for successful placement in a work experience program; 

• 108 veterans participating in the ‘‘Coming Home to Work’’ (CHTW) program at 

a military treatment facility were referred to their local regional office for continuation of Vocational Rehabilitation and Employment (VR&E) services; 

• 24 service members have returned to active duty following early intervention 

services; and 

• 7 veterans have been hired directly by their work experience employers upon 

discharge from active duty. 

f 


cprice-sewell on PROD1PC72 with HEARING
140 

Questions from Hon. John Boozman, Ranking Republican Member, 

Subcommittee on Economic Opportunity, to Hon. R. James Nicholson, 

Secretary, U.S. Department of Veterans Affairs 

Question 1: The Budget shows education performance goals as 25 and 12 days 

for original and supplemental claims respectively and translates to reductions of 

37.5% and 31%, based on the latest FY 2007 performance reports. How do you propose to accomplish these very significant reductions with only 12 additional direct 

FTE and anticipated increase of claims by about 33,000? 

Response: We expect to make substantial progress toward these FY 2008 goals 

by the end of FY 2007. In the first 5 months of FY 2007, we have reduced the average age of pending original claims by 30 percent, and the average age of supplemental claims by 39 percent. Our current targets for the end of FY 2007 are 35 days 

to process original claims and 15 days to process supplemental claims, leaving reductions of 10 days for original claims and 3 days for supplemental claims to be 

achieved in FY 2008. In FY 2003, with similar resources, we achieved similar reductions: from 34 days to 23 days for original claims, and from 16 days to 12 days for 

supplemental claims. 

Question 2: In addition to having sufficient staff to meet performance goals, it 

is necessary to distribute those resources properly throughout the system. For example, there is significant difference in the time to determine eligibility for the voc 

rehab program ranging from about a month in San Diego to about 4 months here 

in DC, with other stations being only slightly more timely than the DC office. Several weeks ago, the staff asked for a report comparing the percentage of national 

workload and direct staff for each business line in each regional office. When do you 

anticipate we will receive that report? 

Response: One of the largest influences on timeliness of vocational rehabilitation 

and employment (VR&E) is the variance of services provided to service members 

and veterans at each regional office (RO). The San Diego RO and the Washington 

RO are good examples of how timeliness is affected due to the nature and scope of 

individualized services provided at each station. For example, San Diego supports 

an extensive Disabled Transition Assistance Program (DTAP), which is a key element in receiving completed claims with assigned disability ratings. Rapid claims 

processing through DTAP enables the San Diego VR&E office to provide immediate 

case management services to applicants of the program. Both organizations support 

their diversified case management needs by using a balance of vocational rehabilitation counselors and contractors. 

The attached spreadsheet compares the percentage of the national workload and 

direct staff for each business line in each regional office. The following information 

will further clarify the employee distribution for the compensation and pension programs. 

The compensation and pension resource allocation model is based on four factors: 

(1) receipts of incoming work, (2) appellate work, (3) accuracy, and (4) timeliness. 

Receipt of incoming work is given the greatest weight as the single most important 

factor driving staffing requirements. Receipts include the rating workload shown on 

the attached spreadsheet as well as the non-rating workload (income and dependency adjustments, burial claims, etc.), public contact and outreach activities, and 

work performed by the fiduciary staff. Factoring in accuracy and timeliness ensures 

that staffing decisions are based on both output and quality. To minimize large variations in staffing allocations from year to year, the model uses a 2-year average for 

each of these factors. 

Adjustments are made to the allocations developed by the model for special missions assigned to many of our ROs. The attached spreadsheet shows that compensation and pension staffing for FY 2006 was 7,377 full time employees (FTE). Of these, 

431 FTE (6 percent) were allocated to stations with special claims processing missions. The largest segment of special mission staffing supports workload 

‘‘brokering.’’ Cases are sent from offices with high inventories to one of 12 ROs 

staffed with a resource center to assist other ROs in developing and/or rating ‘‘brokered’’ claims. These resource centers and the ‘‘brokering’’ strategy help to balance 

workload and staffing across all ROs. 

Beginning in 2006, rating work for Benefits Delivery at Discharge (BOD) claims 

was consolidated at the Salt Lake City and Winston-Salem ROs. There are currently 

136 employees at Winston-Salem and Salt Lake City processing only BOD claims. 

Other consolidations of claims processing and related functions include, radiation 

exposure claims to Jackson; claims from residents of Mexico to Houston; foreign 

claims to Pittsburgh; and the Special Issues Helpline at St. Louis. 

Pension Maintenance Centers in Philadelphia, St. Paul, and Milwaukee are allocated a combined total of 448 employees to process pension maintenance actions, 


cprice-sewell on PROD1PC72 with HEARING
141 

such as income and dependency adjustments. On the spreadsheet, these resources 

are shown under the heading of ‘‘Pension’’ and are not included in the totals under 

the heading ‘‘Compensation.’’ 

The ‘‘FY2007 Dee’’ columns for FTE on the spreadsheet show the actual number 

of personnel on hand at each station. Most regional offices have hired subsequent 

to that date and are continuing to recruit additional claims processors and support 

personnel. 

Question 3: What is the level of funding proposed for The Expert Education System (TEES), and what major milestones will that funding accomplish, and when do 

you anticipate that application coming online, and what will be the total cost to develop and field that system? 

Response: The Expert Education System (TEES) comprises a suite of business 

applications engineered with a common architecture that work synergistically to 

achieve the goal of automated processing of education benefit claims with minimal 

human intervention. TEES incrementally delivers business improvements that will 

enable VA to provide educational benefits to veterans in a more timely and efficient 

manner. TEES will be accomplished in two distinct phases. 

The first phase comprises near-term delivery of business applications to replace 

aging stand-alone applications. This strategy enables VA to quickly target critical 

business functionality. 

The focus of phase two will be the development and deployment of the new education rules-based automated eligibility and award processing system. Incorporating 

rules-based technology will ensure consistency and accuracy of decisions rendered. 

The following are major milestones and associated levels of funding for TEES: 

Milestones Description 

Projected 

Duration 

FY 2008 

Funding 

(Millions) 

Phase I 

Business Assess the continued development of TEES, 07/07–10/07 

Assessment including reviewing the potential for 

integration with the Financial Award 

Processing System (FAS). 

Requirements Gather and define business requirements 08/07–01/08 

Definition associated with ECAP, Chapter 30 PC and 

Workstudy. 

Design and Build Design and build ECAP, Chapter 30 PC and 

Workstudy. 

10/07–09/08 $2.5 

Test and Certify Test and certify the ECAP, Chapter 30 PC 

and Workstudy applications. 

01/08–10/08 $0.5 

Implementation Deploy ECAP, Chapter 30 PC and Workstudy 

to Regional Processing Offices. 

04/08–12/08 $0.5 

Phase 2 

Requirements Gather and define business requirements 07/07–09/08 

Definition for building a new rules-based automated 

eligibility and award processing system. 

Data Conversion Convert legacy Educational data and 

incorporating it into the new Education 

System. 

10/08–09/11 

Design and Build Design and build the new rules-based 

automated eligibility and award processing 

system. 

10/08–09/11 

Test and Certify Test and certify the new rules-based 

automated eligibility and award processing 

system. 

10/08–09/11 

Implementation Deployment of the new rules-based automated 

eligibility and award processing system. 

10/08–09/11 

FY 2008 Total $3.5 


cprice-sewell on PROD1PC72 with HEARING
142 

Question 4: VA projects a 2.5% increase in Voc Rehab workload and is requesting 

about 40 additional staff to bring the total VR&E staff to 1,260 to meet that increase. The Independent Budget suggests you will need 1,375 FTE. First how do you 

estimate the workload increase? Second, what positions will the new FTE fill? And 

third, what will be the average caseload for your direct service staff at that manning 

level? 

Response: The workload for the Vocational Rehabilitation & Employment 

(VR&E) program, which dictates staffing levels, is projected to increase based on 

factors such as the Global War on Terrorism, the economy, and the processing rate 

of claims. The national workload at the beginning of FY 2007 was 89,126, with 621 

counselors. This yields an average caseload per counselor of 144. VR&E service estimates the workload for FY 2008 will increase to 93,865 cases. To manage the increase in workload, the FY 2008 budget submission includes an additional 59 FTE, 

including 5 contract specialists, 5 employment coordinators, 4 FTE to support the 

new FY 2008 process consolidation initiative, and 45 vocational rehabilitation counselors (VRCs). VR&E service recommends that the ROs with the highest workload 

to counselor ratios be allocated the majority of the additional VRCs. This would balance the caseload ratio at each RO and bring the average caseload per counselor 

to 141. VR&E service uses contract professionals to meet the needs of variances in 

caseloads. Contract professionals augment VR&E staff by conducting initial evaluations, program case management, and job readiness and employment services. 

Question 5: VA has had significant problems fielding new computer systems to 

support the Department’s missions. To this point, the Veterans Affairs Committee 

has given VA a relatively free hand in developing and fielding new systems. I believe it is time that we do an annual authorization of VA IT programs just as we 

do for construction. What is The Department’s position on an annual authorization 

for IT systems? 

Response: Committee on Veterans’ Affairs has encouraged the Department over 

the past year to centralize the management of information technology (IT). The VA 

Chief Information Officer (CIO) now has control over the development of IT systems 

and solutions, and has begun to implement rigorous standards and processes for articulating IT needs and managing IT development projects. These process improvements will result in outcome improvements in the delivery and fielding of IT solutions. IT is a demanding and challenging environment. As such, the VA CIO needs 

flexibility to meet rapidly changing requirements as well as respond to unforeseen 

circumstances. VA does not believe use of an annual authorization process will lead 

to better planning and execution of IT efforts. VA would look forward to in-depth 

discussions during the year with Members and staff on the direction and challenges 

VA is facing with critical projects. VA believes this would better serve the development and implementation of the necessary IT systems to support delivery of services 

to the Nation’s veterans. This would ensure an ever changing environment that the 

VA CIO would have the flexibility to address issues within programs. 

Question 6: How many veterans are currently waiting to enter the Independent 

Living program? If Congress removed the 2,500 limitation on new entrants into the 

independent living, how many additional FTE and other costs would be needed? 

Response: No veterans are currently waiting to enter the Independent Living 

(IL) program. The count of veterans who have entered the program begins on the 

first day of each fiscal year. Action must usually be taken in early August to prevent 

exceeding the statutory limit of 2,500 new cases. From then until the end of the fiscal year on September 30, veterans may experience a delay in entering the program. 

VR&E anticipates that there will be a steady increase of new IL cases over the 

next 10 years based on historical data and the need for increased IL by Operation 

Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans. It is anticipated 

that the steady increase will occur given that disabilities worsen over time and the 

need for IL may arise several years after discharge. 

The following table provides a 10-year projection of the number of cases over the 

2,500 cap for each year, the costs associated with the extra cases, and the FTE 

needed over the current staffing level. 

The first year cost is $2,095,500. The cost over 5 years is $26,598,145. The 10- 

year cost is $76,765,365. We estimate that there will be a growth rate of 10 percent 

in 2008 and 2009, and that this rate will diminish to 5 percent in 2010 and reach 

a normal growth rate of around 2 percent beginning in 2011, assuming that the 

OEF/OIF conflicts have ended. 


cprice-sewell on PROD1PC72 with HEARING
143 

Fiscal 

Year # Above Limit 

$ Increase over 

Current Limit* 

FTE Increase over 

Current Staffing** 

2008 250 2,095,500 5 

2009 525 4,505,025 11 

2010 676 5,940,012 14 

2011 739 6,649,552 15 

2012 804 7,408,056 16 

2013 870 8,216,280 17 

2014 937 9,070,160 19 

2015 1,006 9,981,532 20 

2016 1,076 10,942,920 22 

2017 1,147 11,956,328 23 

* An economic assumption for the President’s budget cost-of-living increase was used in 

the calculations for FY 2008 through 2017. 

** Assuming caseloads of 50 IL-only cases per counselor, rounded to whole FTE. 

Question 7: Much is made about the backlog in disability claims. Would you describe for the Members what happens to a cohort of 1,000 claims as they work 

through the system from the regional office to the Court of Appeals for Veterans 

claims? 

Response: 

Rating Process 

When a veteran submits a claim, a claim file is established or requested from 

storage and the file is placed under control. The Veterans Claims Assistance Act 

(VCAA) requires VA to provide written notice to claimants of the evidence required 

to substantiate a claim and of which party (VA or the claimant) is responsible for 

acquiring that evidence. Under VCAA, VA’s duty to assist the claimant in perfecting 

and successfully prosecuting his or her claim extends to obtaining government and 

private records, and obtaining all necessary medical examinations and medical opinions. The claimant has 60 days to respond to VA’s request for information or submit 

substantiating evidence. As a claim progresses, additional notifications to the veteran may be required. After the evidence is received or after all notice periods have 

ended, the claim and evidence are reviewed. A rating decision is then prepared and 

the award or denial is processed. 

Appeal Process 

Veterans can appeal decisions denying service connection for any conditions 

claimed. They may also appeal the effective date of an award and the evaluation 

assigned to a disability. An appeal is initiated when the veteran files a Notice of 

Disagreement (NOD). Approximately 13 percent of all rating decisions result in an 

NOD. For every 1,000 rating decisions, 130 veterans on average would file a notice 

of disagreement. 

If the appeal cannot be resolved at the regional office, VA issues a Statement of 

the Case (SaC). The veteran may then perfect the appeal and have it sent to the 

Board of Veterans’ Appeals (Board) by filing a VA Form 9. About 50 percent of veterans who initially file an NOD formalize an appeal. This means around 65 of the 

130 veterans appeal to the Board. 

If the veteran submits new evidence that does not resolve the appeal, VA will 

issue a Supplemental Statement of the Case (SSOC). After the regional office issues 

an SSOC, the claims file is reviewed for completeness and is certified as ready for 

the Board. The regional office then transfers the record to the Board. The Board reviews the appeal and decides to grant the appeal, deny the appeal, or remand the 

appeal to the regional office or the Appeals Management Center for additional development and processing. 

If the veteran disagrees with the Board’s decision, he or she has 120 days from 

the date of the final Board decision to file an appeal to the Court of Appeals for 

Veterans Claims (CAVC). The CAVC may grant, deny, dismiss, or remand the appeal. Less than 1 percent of all regional office decisions are appealed to the CAVC. 


cprice-sewell on PROD1PC72 with HEARING
144 

Growth of Disability Claims Workload 

The number of veterans filing initial disability compensation claims and claims 

for increased benefits has increased every year since FY 2000. Disability claims 

from veterans of all periods increased from 578,773 in FY 2000 to 806,382 in FY 

2006. For FY 2006 alone, this represents an increase of nearly 228,000 claims or 

38 percent over the 2000 base year. 

The primary factors leading to the sustained high levels of claims activity are: Operation Enduring Freedom/Operation Iraqi Freedom (OEF/OIF); more beneficiaries 

on the rolls, with resulting additional claims for increased benefits; improved and 

expanded outreach to active-duty service members, guard and reserve personnel, 

survivors, and veterans of earlier conflicts; and implementation of combat related 

special compensation (CRSC) and concurrent disability and retired pay (CDRP) programs by the Department of Defense (DoD). 

The number of veterans receiving compensation has increased by almost 400,000 

since 2000—from just over 2.3 million veterans to nearly 2.7 million in 2006. This 

increased number of compensation recipients, many of whom suffer from chronic 

progressive disabilities such as diabetes, mental illness, and cardiovascular disabilities, will continue to stimulate more claims for increased benefits in the coming 

years as these veterans age and their conditions worsen. 

VA is committed to increased outreach efforts to active-duty personnel. These outreach efforts result in significantly higher claims rates. Original claim receipts increased from 111,672 in FY 2000 to 217,343 in FY 2006—a 95 percent increase. 

The Veterans’ Claims Assistance Act (VCAA) has significantly increased both the 

length of time and the specific requirements of claims development. VA’s notification 

and development duties increased as a result of VCAA, adding more steps to the 

claims process and lengthening the time it takes to develop and decide a claim. 

Since enactment, we are required to review the claims at additional points in the 

decision process. 

The greater number of disabilities veterans now claim, the increasing complexity 

of the disabilities being claimed, and changes in law and Court decisions affecting 

the decision process pose additional challenges to timely processing the claims workload. As the number of claimed conditions increases, the potential for additional unclaimed but secondary, aggravated, and inferred conditions increases as well. The 

increasing number of claimed conditions also significantly increases the potential for 

appeal. 

Question 8: Housing construction costs are escalating rapidly and the average 

adapted housing grant is bumping up against the maximum $50,000 limit. The 

budget request does not include additional funding for an increase in the limit. Does 

the Department intend to submit a legislative request to improve this important 

program to improve the lives of our most seriously disabled veterans? 

Response: VA intends to consider such a legislative proposal during the upcoming FY 2009 legislative cycle. 

Question 9: How many FTE are needed to administer the chapter 1606/1607 education programs, what are the other costs such as equipment, and does 000 reimburse VA for those costs? 

Response: We estimate that both of these programs combined will represent approximately 20 percent of the students receiving benefits in FY 2008. The same percentage of claims processing FTE will be needed to administer these programs, 

equating to 80 FTE, plus equipment needs (PCs, printers, etc.). 

Chapters 1606 and 1607 are processed using VBA’s existing Benefits Delivery 

Network (BON). We have not distributed the costs of operating and maintaining the 

BON by benefit program. There are other administrative costs involved with these 

programs such as direct mailing, outreach, etc. 

DoD reimburses VA for the actual benefit moneys that are disbursed but not for 

the administrative costs. 

Question 10: Your goal for veteran home ownership is 104% of the non-veteran 

ownership rate. The U.S. Census lists the national home ownership for the general 

population at 68.9%. What is the current veteran home ownership rate? 

Response: Our goal is for veteran home ownership to be 104 percent of the home 

ownership rate of the general population. The U.S. Census Bureau reports the home 

ownership rate for the general population was 68.9%, at the close of FY 2006. The 

corresponding figure for veteran home ownership was 82 percent. 

f 


cprice-sewell on PROD1PC72 with HEARING
145 

Questions from Hon. Ginny Brown-Waite to Hon. R. James Nicholson, 

Secretary, U.S. Department of Veterans Affairs 

Question 1: What has the VHA done to correct the serious malpractice of data 

storage that endangers all veterans’ data in VA research facilities? 

Response: Recent events both inside and outside VA have highlighted the potential vulnerability of sensitive information, including patient data in research studies. VA is committed to protecting this sensitive information, and on February 6, 

2007, implemented a comprehensive Security and Privacy Review of all VA research 

activities. The review consists of new training requirements and a project-by-project 

certification process focused on research data storage and security for all VA research. In response to the data incident at the Birmingham VAMC, on January 25, 

2007, all research at the Birmingham VAMC Health Services Research and Development (HSR&D) Research Enhancement Award Program (REAP) was suspended. 

A formal review by the Office of Inspector General and the Office of Research Oversight is ongoing. As a precaution, on February 16, 2007, all research at the other 

six HSR&D REAP sites was suspended, pending a site visit assessment by the Office of Information and Technology accompanied by the Office of Research and Development and VHA Privacy Office. 

Question 2: The FY2008 IT cyber-security budget requests $70.1 million. What 

are the specific initiatives by line item that this money purchases? 

Response: The IT cyber security program includes 18 initiatives, as follows: 

Initiative FY 2008 

Cyber Security Management $28.7M 

Certification & Accreditation 7.5 

Identity Safety and Risk Management 6.0 

Policy Development and Maintenance 5.7 

Training, Awareness and Education 5.4 

FISMA Reporting 2.3 

Security Inspection 1.8 

Field Security Operations $41.4M 

Enterprise Encryption and Data Protection 7.0 

Maintenance/Support Services 6.5 

Enterprise Framework 5.5 

Antivirus 5.4 

Vulnerability Assessment and Penetration 4.0 

Patch Management 3.4 

Encryption 2.7 

Testing 2.2 

Intrusion Prevention 1.9 

E-Authentication 1.9 

Media Disposal 0.5 

COOP 0.4 

Total $70.10M 


cprice-sewell on PROD1PC72 with HEARING
146 

Question 3: When will the Department fully deploy the Education Expert System? 

Response: The projected date to fully deploy TEES is September 2011. The 

phased approach of delivering discrete modules of business functionality enables VA 

to target priority business functionality and benefit from their incorporation into the 

business process as more strategic modules are developed. 

Question 4: The budget requests $35 million in FY2008 for the FLITE program, 

which is the rebranding of the failed debacle of the CoreFLS program. How much 

was spent on the CoreFLS program before it bellied up? 

Response: The core financial and logistics system (coreFLS) project was designed 

to provide VA with a state-of-the-art integrated financial and logistical capability 

that would eliminate existing material weaknesses, and replace legacy financial and 

logistic applications. However, unexpected technical and programmatic challenges 

forced VA to shut down coreFLS and reexamine our approach. As a result, VA is 

now pursuing the development and implementation of the FLITE program which 

will also provide an integrated financial/logistics management solution that will satisfy the Federal Financial Management Improvement Act and related regulatory requirements. More importantly, FLITE will expand upon the work completed under 

coreFLS by refining the list of business requirements and interface specifications, 

standardizing business processes, and incorporating lessons learned into program 

and risk management plans associated with the creation of a simple, high performance, cost effective financial management component. FLITE is different from 

coreFLS because VA is engaged in more upfront planning, communication and coordination across the administrations. Out year budget request will enable VA to 

complete development and integration of these components and deploy the system 

accordingly. The total expended on the coreFLS project was $233.5 million. 

Question 5: Please provide a line-by-line authorization of each modernization 

project and a hard date of implementation. 

Response: VA modernization projects are defined as those initiatives currently 

planned or underway to: (1) move applications off the benefits delivery network 

(BON) platform and/or (2) move legacy client-server applications to the One VA ‘‘to 

be’’ enterprise architecture. These projects are: 

Project Authorization Planned Implementation Date 

VETSNET Compensation and • August 2007—complete 

Development Pension Maintenance and 

Operations OMB Exhibit 

300 

compensation 

• February 2008—Survivor 

Benefits 

• August 2008—Income Based 

• Pension 

• May 2009—conversion of all 

SON records complete 

TEES TEES OMS Exhibit 300 • Effort undergoing scope and 

Development re-baseline review 

BON Migration VA Computing • Effort in planning stage (rough 

Project Infrastructure OMB 

Exhibit 300 

estimate) 

• September 2011 

YBA Application YBA Application • FY 2008 initiative—planning 

Migration Pro- Migration Project OMS estimate 

gram (VAMP) Exhibit 300 • July 2012 

Question 6: Development of the VHA scheduling application is over 10 years old 

and still not implemented. Why? How much money has been spent on the scheduling project to date? 

Response: The purpose of the VA scheduling project, which began in May 2001, 

is to develop a future business model intended to support (1) improved access to 

care for veterans, (2) decreased wait times for appointments, and (3) increased provider availability all intended to improve patient care. Application development 


cprice-sewell on PROD1PC72 with HEARING
147 

began in 2002 and has been underway for 5 years. VA is taking a phased approach 

to implement the application, as the move from a 25-year-old legacy system to a new 

infrastructure is understandably complex. This phased approach is part of the 

HealtheVet overarching strategic plan to modernize veterans health information 

systems and technology architecture (VistA) software. The scheduling project is now 

nearing development completion with costs to date (FY 2001 through FY 2006) totaling $66.5 million. Initial testing for both the application and new HealtheVet platform will be fielded at the first VA medical center in summer 2007. 

f 

Questions from Hon. Michael R. Turner to Hon. R. James Nicholson, 

Secretary, U.S. Department of Veterans Affairs 

Question 1: In the budget proposals reviewed by the House Veteran’s Affairs 

Committee, two main categories of VA long-term care include Non-institutional Extended Care (which includes home care), and Nursing Home Care (which includes 

VA nursing facilities and contract facilities). VA nursing facilities allow our nation’s 

veterans long-term care often connected with a range of other medical services. It 

has been the policy of the VA that home care and contract facilities are used to supplement VA nursing home care. However, neither home care nor contract facilities 

are to be used as a substitute for traditional VA nursing facility when a VA nursing 

home facility is available and better suited to meet the veteran’s needs. Does this 

continue to be the policy of the VA, and in light of the Administration’s current 

budget request, how can the VA ensure that the use of home care and contract facilities won’t undermine veteran’s access to VA nursing facilities? 

Response: VA continues to hold to the philosophy, in keeping with practice patterns in the private sector, to provide patient-centered long-term care services in the 

least restrictive setting that is suitable for a veteran’s medical condition and personal circumstances, and whenever possible in home and community-based settings. 

This approach honors veterans’ preferences at the end of life and helps to maintain 

relationships with the veteran’s spouse, family, friends, and faith community. Nursing home care should be reserved for situations in which the veteran can no longer 

be safely maintained in the home and community. 

The current budget request will support continued expansion of access to VA’s 

spectrum of non-institutional home and community-based long-term care services 

while sustaining capacity in VA’s own nursing home care units and the community 

nursing home program, and continuing to support modest growth in capacity in the 

State veterans home program. VA long-term care is comprised of a dynamic array 

of services provided in residential, outpatient, and inpatient settings that can be deployed as needed to meet a veteran’s changing healthcare needs over time. 


cprice-sewell on PROD1PC72 with HEARING
148 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.001
149 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.002
150 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.003
151 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.004
152 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.005
153 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.006
154 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.007
155 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.008
156 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.009
157 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.010
158 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.011
159 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.012
160 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.013
161 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.014
162 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.015
163 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.016
164 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.017
165 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.018
166 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.019
167 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.020
168 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.021
169 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.022
170 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.023
171 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.024
172 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.025
173 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.026
174 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.027
175 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.028
176 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.029
177 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.030
178 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.031
179 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.032
180 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.033
181 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.034
182 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.035
183 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.036
184 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.037
185 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.038
186 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.039
187 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.040
188 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.041
189 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.042
190 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.043
191 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.044
192 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.045
193 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.046
194 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.047
195 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.048
196 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.049
197 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.050
198 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.051
199 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.052
200 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.053
201 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.054
202 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.055
203 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.056
204 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.057
205 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.058
206 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.059
207 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.060
208 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.061
209 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.062
210 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.063
211 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.064
212 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.065
213 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.066
214 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.067
215 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.068
216 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.069
217 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.070
218 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.071
219 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.072
220 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.073
221 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.074
222 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.075
223 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.076
224 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.077
225 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.078
226 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.079
227 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.080
228 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.081
229 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.082
230 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.083
231 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.084
232 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.085
233 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.086
234 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.087
235 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.088
236 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.089
237 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.090
238 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.091
239 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.092
240 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.093
241 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.094
242 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.095
243 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.096
244 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.097
245 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.098
246 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.099
247 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.100
248 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.101
249 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.102
250 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.103
251 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.104
252 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.105
253 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.106
254 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.107
255 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.108
256 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.109
257 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.110
258 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.111
259 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.112
260 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.113
261 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.114
262 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.115
263 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.116
264 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.117
265 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.118
266 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.119
267 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.120
268 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.121
269 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.122
270 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.123
271 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.124
272 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.125
273 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.126
274 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.127
275 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.128
276 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.129
277 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.130
278 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.131
279 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.132
280 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.133
281 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.134
282 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.135
283 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.136
284 


cprice-sewell on PROD1PC72 with HEARINGInsert 34303A.137
285 

1Department of Veterans Affairs, Office of Public Affairs, ‘‘America’s Wars,’’ September 30, 

2006. This document shows that the number of non-mortal woundings in the Global War on Terror (combining Iraq, Afghanistan and surrounding duty stations) as of 9/30/06 was 50,508 compared with 2,333 deaths in battle plus 707 other deaths in theater. The comparison numbers 

for previous conflicts are as follows: Desert Storm/Desert Shield: 1.2 wounded per fatality; Vietnam: 2.6 wounded per fatality; Korea: 2.8 wounded per fatality; World War II: 1.6 wounded per 

fatality; World War I: 1.8 wounded per fatality; Civil War (union): .7 wounded per fatality; War 

of 1812: .5 wounded per fatality; American Revolution: .7 wounded per fatality. Note: the VA 

defines non-mortal wounded as those who are ‘‘medically evacuated from theatre.’’ The Pentagon 

has several definitions, but the daily casualty reports on its website use a narrower definition 

referring to those wounded by shrapnel, bullets, and so forth. Using this narrow definition, the 

Iraq conflict has a ratio of 8 wounded per fatality—still much higher than any previous war 

in U.S. history. 

SOLDIERS RETURNING FROM IRAQ AND AFGHANISTAN: The Long-term 

Costs of Providing Veterans Medical Care and Disability Benefits 

Linda Bilmes 

Kennedy School of Government, Harvard University 

The views expressed in the KSG Faculty Research Working Paper Series are 

those of the author(s) and do not necessarily reflect those of the John F. Kennedy 

School of Government or of Harvard University. Faculty Research Working Papers have not undergone formal review and approval. Such papers are included in 

this series to elicit feedback and to encourage debate on important public policy 

challenges. Copyright belongs to the author(s). Papers may be downloaded for 

personal use only. 

EXECUTIVE SUMMARY: 

This paper analyzes the long-term needs of veterans returning from the Iraq and 

Afghanistan conflicts, and the budgetary and structural consequences of these 

needs. The paper uses data from government sources, such as the Veterans Benefit 

Administration Annual Report. The main conclusions of the analysis are that: 

(a) the Veterans Health Administration (VHA) is already overwhelmed by the volume of returning veterans and the seriousness of their healthcare needs, and it will 

not be able to provide a high quality of care in a timely fashion to the large wave 

of returning war veterans without greater funding and increased capacity in areas 

such as psychiatric care; 

(b) the Veterans Benefits Administration (VBA) is in need of structural reforms 

in order to deal with the high volume of pending claims; the current claims process 

is unable to handle even the current volume and completely inadequate to cope with 

the high demand of returning war veterans; and 

(c) the budgetary costs of providing disability compensation benefits and medical 

care to the veterans from Iraq and Afghanistan over the course of their lives will 

be from $350–$700 Billion, depending on the length of deployment of U.S. soldiers, 

the speed with which they claim disability benefits and the growth rate of benefits 

and healthcare inflation. 

Key recommendations include: increase staffing and funding for veterans medical 

care particularly for mental health treatment; expand staffing and funding for the 

‘‘Vet Centers,’’ and restructure the benefits claim process at the Veterans Benefit 

Administration. 

This paper was prepared for the Allied Social Sciences Association Meetings in 

Chicago, January, 2007. The views expressed here are solely those of the author 

and do not represent any of the institutions with which she is affiliated, now or in 

the past. 

Introduction 

The New Year has brought with it the grim fact that 3,000 American soldiers 

have been killed so far in Iraq. A statistic that merits equal attention is the unprecedented number of U.S. soldiers who have been injured. As of September 30, 2006, 

more than 50,500 U.S. soldiers have suffered non-mortal wounds in Iraq, Afghanistan and nearby staging locations—a ratio of 16 wounded servicemen for every fatality.1 This is by far the highest killed-to-wounded ratio in U.S. history. For example, 


cprice-sewell on PROD1PC72 with HEARING
286 

2 Ibid. 

3 As of September 30, 2006, 1,406,281 unique service members have been deployed to the wars 

in Iraq and Afghanistan, according to the Department of Defense, Defense Manpower Data Center, and ‘‘Contingency Tracking System.’’ The Veterans Health Administration (VHA) Office of 

Public Health and Environmental Hazards, November 2006 uses the number 1.4 million (as of 

November 2006). The Veterans Benefits Administration (VBA) lists 1,324,419 unique servicemen 

deployed to GWOT as of May 2006 (prepared by VBA/OPA&I, 7/20/06). 4 Based on an analysis of the first Gulf War in 1991, using the Gulf War Veterans Information 

System (GWVIS August 2006, chart on ‘‘Gulf War Veteran Outpatient Stays’’), there were 

297,125 veterans from that conflict who used VA medical care, or 48.4%. If the same percentages of Iraq/Afghan veterans use VA medical care then VA should expect approximately 700,000 

new patients from the 1.4 million existing servicemen. Increasing the number of unique servicemen deployed will increase medical and disability usage. 5 Veterans’ disability pay is an entitlement program, like Medicare and Social Security. Once 

a veteran has been approved to receive disability pay, he or she is entitled to receive an annual 

payment and cost-of-living adjustments. The average age of a servicemen is about 25 years of 

age, therefore given current life expectancy rates, 40 years is a reasonable amount of years to 

project payment of benefits, even assuming the veteran does not claim for some years following 

the period of service. 6 Bilmes, Linda and Stiglitz, Joseph, The Economic Costs of the Iraq War: An Appraisal Three 

Years After the Beginning of the Conflict, NBER Working Paper 12054 (http://www.nber.org/papers/w12054), February 2006. The long-term budgetary costs associated with veterans health and disability cited in that paper ranged from $77bn to $179bn (depending on the length of the 

war), based on a population of 550,000 unique Iraqi war veterans. After we published this 

paper, a number of veteran’s organizations including the American Legion and Veterans for 

America, contacted us in appreciation of our highlighting the needs of veterans. Veterans for 

America has particularly encouraged further research to understand the needs of the returning 

GWOT veteran’s community. 7The Bilmes/Stiglitz cost of war paper did not include the costs of Afghanistan or other areas 

outside of Iraq in the GWOT. Had we included those costs, the total cost of war would have 

increased by 15–20%. 8 As of 9/30/06, some 421,206 (30%) of 1,406,281 unique service members had been deployed 

twice or more to the wars in Iraq and Afghanistan. Army Times, December 11, 2006, page 14, 

from the Department of Defense, Defense Manpower Data Center, ‘‘Contingency Tracking System.’’ 

in the Vietnam and Korean wars there were 2.6 and 2.8 injuries per fatality, respectively. World Wars I and II had fewer than 2 wounded servicemen per death.2

While it is welcome news and a credit to military medicine that more soldiers are 

surviving grievous wounds, the existence of so many veterans, with such a high 

level of injuries, is yet another aspect of this war for which the Pentagon and the 

Administration failed to plan, prepare and budget. There are significant costs and 

requirements in caring for our wounded veterans, including medical treatment and 

long-term healthcare, the payment of disability compensation, pensions and other 

benefits, reintegration assistance and counseling, and providing the statistical documentation necessary to move veterans seamlessly from the Department of Defense 

payroll into Department of Veterans Affairs medical care, and to process VA disability claims easily. 

To date, 1.4 million U.S. servicemen have been deployed to the Global War on 

Terror (GWOT), the Pentagon’s name for operations in and around Iraq and Afghanistan.3 The servicemen who have been officially wounded are a small percentage of 

the veterans who will be using the veteran’s administration medical system. Hundreds of thousands of these men and women will be seeking medical care and claiming disability compensation for a wide variety of disabilities that they incurred during their tours of duty.4 The cost of providing such care and paying disability compensation is a significant long-term entitlement cost that the U.S. will be paying for 

the next 40 years.5

The objective of this paper is to examine the structural and budgetary requirements for caring for the returning war veterans from Iraq and Afghanistan, in 

terms of U.S. capacity to pay disability compensation, provide high quality medical 

care, and provide other essential benefits. The paper grew out of a previous paper 

that was co-authored in January 2005 with Columbia University professor Joseph 

Stiglitz, in which the overall costs of the war in Iraq were estimated to exceed $2 

trillion. One of the long-term costs cited in that paper was the cost associated with 

providing healthcare and disability benefits to veterans.6 This paper expands on 

that topic. 

Unlike the previous paper,7 this study does not differentiate between veterans returning from Iraq, or Afghanistan or adjacent locations (such as Kuwait, an important staging post for Iraq) in the GWOT, for three reasons. First, nearly one-third 

of the servicemen involved in the war have been deployed two or more times and 

many of them have served both in Iraq and Afghanistan, and/or other locations.8

Second, the data available from the VA does not distinguish between the wars in 


cprice-sewell on PROD1PC72 with HEARING
287 

9 As of 12/28/06, the DoD website listed 22,565 wounded in Operation Iraqi Freedom and 1,084 

wounded in Operating Enduring Freedom (Afghanistan). As noted previously, this is a narrower 

definition of injuries than the one used by the Veterans Administration, which lists 50,508 nonmortal woundings as of 9/30/06. 10 Using the claims patterns from Gulf War I is almost certainly too conservative because that 

war was much shorter and relied primarily on aerial bombardment, whereas the current wars 

involve long deployments and ground warfare. However it provides a baseline for the current 

Iraq/Afghan wars. 

Iraq and Afghanistan. Third, for the purposes of estimating the long-term costs of 

taking care of the returning veterans it does not matter where they served. However 

it is worth noting that the overwhelming majority of the deaths and injuries incurred in the GWOT have been in Iraq. Among those listed as wounded on the Pentagon’s casualty reports, more than 95% have been injured in Iraq.9

This paper will analyze the following aspects of the returning veterans’ needs. 

1. Disability compensation 

• Projected Cost 

• Backlog of Pending Claims 

2. Medical care 

• Capacity issues 

• Projected Cost 

• Veterans Centers 

• Transitioning from the Department of Defense to VA care 

3. Overall assessment of U.S. readiness to meet its obligations to veterans 

4. Recommendations 

Methodology 

All statistics used in this paper are from government sources, including publications of the Veterans Benefit Administration (VBA), Veterans Health Administration (VHA), and other VA offices, as well as from the Congressional Budget Office, 

the Government Accountability Office, the Department of Defense, and Congressional testimony. The numbers are based on the servicemen involved in Operation 

Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF, Afghanistan) unless 

otherwise noted. 

The cost and structural requirements for returning veterans will depend on several factors, including the number of U.S. troops stationed in the region and how 

long they are deployed; the rate of claims and utilization of health resources by returning troops, and the rate of increase in disability payment and healthcare costs 

over time. The model developed allows the user to vary these assumptions and may 

be obtained with permission from the author’s website. The current analysis has 

been performed under three ‘‘base’’ scenarios that reflect, broadly the three options 

now under consideration for the war. 

• Low Scenario: The low scenario assumes that the U.S. begins withdrawing troops 

in 2007 and that all U.S. servicemen are home by 2010. This pattern is roughly 

in parallel with the recommendations of the bipartisan Baker Commission that 

reported to President Bush in November 2006. This scenario assumes that we will 

not deploy any new troops beyond the 1.4 million already participating in the war. 

It assumes that 44% of U.S. troops will claim for disability payment over a period 

of years, with 87% of claims granted, following the same claims pattern as the 

first Gulf War in 1991.10 The low scenario assumes that soldiers will initially receive the VA’s 2005 average recurring benefit and that the annual rate of increase 

will be 2.8% to reflect a cost-of-living adjustment only. (As opposed to the actual 

growth rate over the past 10 years which is 6.1%). The medical usage in this scenario is based on the lowest possible uptake of medical care and a rate of increase 

that is below the historical rate of healthcare inflation. In short, this scenario 

shows the absolute basement level—the lowest possible cost of providing medical 

care and disability benefits to soldiers returning from Iraq and Afghanistan under 

the most optimistic assumptions. 

• Moderate Scenario: The moderate scenario is based on the current course of the 

war. This scenario uses the Congressional Budget Office’s expected deployment 

figures, which would involve a gradual drawdown of troops but maintain a small 

U.S. force in the region through 2015. Under this scenario, the total unique servicemen involved in the conflict will be 1.7 million, that is, 300,000 additional 

troops rotated in over the period of years. Nearly 20,000 new troops are regularly 

deployed into the two war zones each month, before any ‘‘surge’’ or escalation of 


cprice-sewell on PROD1PC72 with HEARING
288 

11Footnote: Analysis of DMDC’s Contingency Tracking System shows 57,462 new first-time 

deployments between June 2006 and September 2006, an average 19,154 per month. 12 Ibid, page 33, ‘‘Benefits delivery network,’’ RCS 20–0221. 13See Veterans Benefits Administration ‘‘Annual Benefits Report’’ (ABR), 2005, page 17 for 

definition of disability compensation and see VA Disability Compensation Program, Legislative 

History, VA Office of Policy, Planning and Preparedness 2004 for principles behind the program. 14 Ibid, page 24, lists $1,304 for 10% and $31,611 for 100%, but those with 100% disability 

also receive additional payments that combined result in an annual payment of approximately 

$44,000. 15 Ibid, page 33. 

the conflict is considered.11 This scenario uses the first Gulf War as the basis for 

predicting the level of troops who will claim disability benefits, the rate of approval of the claims, and the utilization of medical resources. However a growth 

rate of 4.4% is projected for claims benefits, half way between the base cost-ofliving adjustment and the actual growth rate of 6.1%. 

• High ‘‘Surge’’ Scenario: This scenario assumes that troop levels will surge in 2007 

and that the total participation in the war over time will eventually reach 2 million unique servicemen by 2016. It also models the potential that half the veterans claim disability payments, which is a reasonable possibility given the ferocity of the conflict and the number of second and third deployments. This model 

also looks at the impact of growth in claims benefit payments and healthcare 

costs based on the actual growth rates over the past 10 years. If the U.S. decides 

to increase troops and all trends on disability and healthcare continue as they 

have in the past, this model presents the resulting cost consequences. 

The costs estimated in this study are budgetary costs to the U.S. government directly associated with the payment of disability benefits and medical treatment for 

returning OIF/OEF war veterans. The costs do not include the interest payments 

on the debt that is being incurred in borrowing money to finance the war. Future 

cash flows were discounted at a rate of 4.75% reflecting current long-term U.S. borrowing rates. 

1. Disability Compensation 

There are 24 million living veterans, of whom roughly 11% receive disability benefits. Overall, in 2005 the U.S. currently paid $23.4 billion in annual disability entitlement pay to veterans from previous wars, including 611,729 from the first Gulf 

War, 916,220 from Vietnam, 161,512 Korean War veterans, 356,190 World War II 

veterans and 3 veterans of World War I.12

All 1.4 million servicemen deployed in the current war effort are potentially eligible to claim some level of disability compensation from the Veterans Benefits Administration. Disability compensation is a monetary benefit paid to veterans with 

‘‘service-connected disabilities’’—meaning that the disability was the result of an illness, disease or injury incurred or aggravated while the soldier was on active military service. Veterans are not required to seek employment nor are there any other 

conditions attached to the program. The explicit congressional intent in providing 

this benefit is ‘‘to compensate for a reduction in quality of life due to service-connected disability’’ and to ‘‘provide compensation for average impairment in earnings 

capacity.’’ The principle dates back to the Bible at Exodus 21:25, which authorizes 

financial compensation for pain inflicted by another.13

Disability compensation is graduated according to the degree of the veteran’s disability, on a scale from 0 percent to 100 percent, in increments of 10%. Annual benefits range from a low of $1,304 per year for a veteran with a 10% disability rating 

to about $44,000 in annual benefits for those who are completely disabled.14 The 

average benefit is $8,890 although this varies considerably; Vietnam veterans average about $11,670.15 Additional benefits and pensions are payable to veterans with 

severe disabilities. Once deemed eligible, the veteran receives the compensation payment as a mandatory entitlement for the remainder of their lives, like Medicare and 

Social Security. 

There is no statute of limitations on the amount of time a veteran can claim for 

most disability benefits. The majority of veteran’s claims are within the first few 

years after returning, but some disabilities do not surface until years later. The VA 

is still handling hundreds of thousands of new claims from Vietnam era veterans 

for post-traumatic stress disorder and cancers linked to Agent Orange exposure. 

The process for ascertaining whether a veteran is suffering from a disability, and 

determining the percentage level of a veteran’s disability, is complicated and 

lengthy. A veteran must apply to one of the 57 regional offices of the Veterans Benefits Administration (VBA), where a claims adjudicator evaluates the veteran’s service-connected impairments and assigns a rating for the degree to which the veteran 


cprice-sewell on PROD1PC72 with HEARING
289 

16GAO, ‘‘Veterans Benefits Administration: Problems and Challenges Facing Disability 

Claims Processing,’’ GAO Testimony before the Subcommittee on Oversight and Investigations, 

House Committee on Veterans’ Affairs, May 18, 2000. 17 Ibid. 18 ‘‘Veterans Benefits: Further Changes in VBA’s Field Office Structure could help improve 

disability claims processing,’’ GAO–06–149, December 2005. 19 Ibid. 20The VBA’s backlog of pending claims was 399,751 as of December 9, 2006 (VBA Monday 

Morning Workload Report). 21The average time to process a claim is 177 days as of 9/06 and average time to process an 

appeal is 657 days (VA Performance and Accountability Report FY 2006). 22 Bearing Point, Health Care/Financial Services industry report, September 14, 2006. 23 Veterans for America, interview with Paul Sullivan, program director, 11/06. 24 ‘‘Veterans Benefits Improvement Act of 1994’’ (Public Law 103–446) and ‘‘Persian Gulf War 

Veterans Act of 1998 (P.L. 105–277). 

is disabled. For veterans with multiple disabilities, the regional office combines the 

ratings into a single composite rating. If a veteran disagrees with the regional office’s decision he or she can file an appeal to the VA’s Board of Veterans Appeals. 

The Board makes a final decision and can grant or deny benefits or send the case 

back to the regional office for further evaluation. Typically a veteran applies for disability in more than one category, for example, a mental health condition as well 

as a skin disorder. In such cases, VBA can decide to approve only part of the 

claim—which often results in the veteran appealing the decision. If the veteran is 

still dissatisfied with the Board’s decision to grant service connection or the percentage rating, he or she can further appeal it to two even higher levels of decisionmakers.16

Most employees at VA are themselves veterans, and are predisposed to assisting 

veterans obtain the maximum amount of benefits to which they are entitled. However, the process itself is long, cumbersome, inefficient and paperwork-intensive. 

The process for approving claims has been the subject of numerous GAO studies and 

investigations over the years. Even in 2000, before the current war, GAO identified 

longstanding problems in the claims processing area. These included large backlogs 

of pending claims, lengthy processing times for initial claims, high error rates in 

claims processing, and inconsistency across regional offices.17 In a 2005 study, GAO 

found that the time to complete a veteran’s claim varied from 99 days at the Salt 

Lake City regional office to 237 days at the Honolulu, Hawaii office.18

The backlog of pending claims has been growing since 1996. In 2000, VBA had 

a backlog of 69,000 pending initial compensation claims, of which one-third had 

been pending for more than 6 months.19 Today, due in part to the surge in claims 

from the Iraq/Afghan wars, VBA has a backlog of 400,000 claims.20 VBA now takes 

an average of 177 days (6 months) to process an original claim, and an average of 

657 days (nearly 2 years) to process an appeal.21 This compares unfavorably with 

the private sector healthcare/financial services industry, which processes an annual 

30 billion claims in an average of 89.5 days per claim, including the time required 

for claims that are disputed.22

Projected Demand for Benefits among OIF/OEF Veterans 

It is difficult to predict with certainty the number of veterans from the two current wars who will claim for some amount of disability. The first Gulf War provides 

a baseline number although the Iraq and Afghanistan war has been longer and has 

involved more ground warfare than the Desert Storm conflict, which relied largely 

on aerial bombardment and 4 days of intense ground combat. However, in both conflicts, a number of veterans were exposed to depleted uranium that was used in 

anti-tank rounds fired by U.S. M1 tanks and U.S. A10 attack aircraft. Many disability claims from the first Gulf War stem from exposure to depleted uranium, 

which has been implicated in raising the risk of cancers and birth defects. Gulf War 

veterans also filed disability claims related to exposures to oil well fire pollution, 

low-levels of chemical warfare agents, experimental anthrax vaccines, and experimental anti-chemical warfare agent pills called pyridostigmine bromide, the antimalaria pill Lariam, skin diseases, and disorders from living in the hot climate,23

which are likely to be cited in the current conflict. However, the number of disability claims in the Iraq/Afghan wars is likely to be higher due to the significantly 

longer length of soldier’s deployments, repeat deployments, and heavier exposure to 

urban combat. 

Following the Gulf War the criteria for receiving benefits were widened by Congress based on evidence of widespread toxic exposures.24 The same criteria for 

healthcare and benefits eligibility still apply to veterans of the Iraq and Afghanistan 


cprice-sewell on PROD1PC72 with HEARING
290 

25 In fact, the VA does not distinguish, for the purpose of claims processing, between the end 

of the first Gulf War and the present conflict (38 USC section 101(33) defines the Gulf War as 

starting on August 2, 1990, and continuing until either the President or the Congress declares 

an end to it and 38 CFR 3.317 defines the locations of the conflict). 26For Gulf War, the total claims filed to date are 271,192, of which 205,911 have been approved, 20,382 were denied and 34,899 are still pending (GWVIS, August 2006, p. 7: Granted 

Service Connection + Denied Service Connection + Claims Pending). 27Gulf War total annual payment $4.3 billion (Ibid., VBA, ABR 2005 pp. 33). 28 VHA, Office of Public Health and Environmental Hazards, November 2006. 29 VBA ‘‘Compensation and Benefit Activity among Veterans Deployed to the GWOT,’’ July 20, 

2006, obtained under Freedom of Information Act by the National Security Archive at George 

Washington University. 30 Ibid, ABR 2005, p. 33. 31Of the 50,508 non-mortally wounded soldiers in OIF/OEF there are at least 10,000 serious 

injuries such as brain injuries, spinal and amputations, according to DoD sources. See also 

Wallsten and Kosec, AEI–Brookings Working Paper 05–19, September 2005, estimate of 20% serious brain injuries, 6% amputees and 24% other serious injuries. 32The figures in Table 1 represent the present value of disability benefits over 40 years for 

eligible veterans projected under the three scenarios described. 

wars.25 Forty-four percent of those veterans filed disability claims for a variety of 

conditions and 87% were approved.26 The U.S. currently pays about $4 billion annually in disability payments to veterans of Desert Storm/Desert Shield.27

Of the 1.4 million U.S. servicemen who have so far been deployed in the Iraq/Afghan conflicts, 631,174 have been discharged as of September 30, 2006. Of those 

46% are in the full-time military and 54% are reservists and National Guardsmen.28

Therefore the total population that is potentially eligible for disability benefits is 

this number (631,174). To date 152,669 servicemen have applied for disability benefits and of those, 104,819 have been granted, 34,405 are pending and 13,445 have 

been rejected. This implies an approval rate of 88% to date.29

We have estimated the cost of providing disability benefits to veterans under 

three scenarios. Under the low scenario, we expect that as in the first Gulf War, 

44% of the current veterans will eventually claim disability, with an approval rate 

of 87%. We estimate that the remaining 900,000 troops will be discharged in equal 

installments over the next 4 years bringing all U.S. troops home by 2010. We expect 

the same percentage of these troops to claim for disabilities, with the same approval 

rate, within a further 5 years. We have assumed that on average, claims are lower 

than average rate, at the lower rate of new claimants from the first Gulf War of 

$6,506.30 This is probably an excessively conservative assumption because it 

projects the same rate of serious injuries as occurred in Gulf War I, when in fact 

we already know that more than the actual rate of serious injuries is much higher.31

The moderate scenario assumes that the war continues through 2014 with a total 

deployment of 1.7 million over the course of the war, and with gradually reduced 

deployment. It assumes that a slightly higher percentage of eligible veterans (50%) 

make claims, which is more realistic given deployment lengths. This scenario uses 

the actual average VA benefit payment of $8,890. It assumes the rate of increase 

in benefits is 4.4%, midway between the mandatory Cost of Living Adjustment and 

the actual 10-year growth rate of 6.1%. The high scenario models the impact of a 

surge in forces bringing the total unique deployments to 2 million. It assumes 50% 

of eligible forces claim benefits and a rate of 6.1% increase, which is the actual rate 

over the past 10 years. It further assumes a higher rate of medical inflation (10% 

vs. 8% in the low and moderate scenarios). 

Table 1: Long-term Cost of Veterans Disability Benefits 32

Scenario Low Moderate High 

Disability Benefits ($bn) 67.63 109.98 126.76 

Backlog of Pending Disability Claims 

The issue is not simply cost but also efficiency in providing disabled veterans with 

their benefits. In addition to all the problems detailed above, the Iraq and Afghan 

war veterans are filing claims of unusually high complexity (see table 3). To date, 

the backlog of pending claims from these recent war veterans is 34,000, but the vast 

majority of servicemen from this conflict have not yet filed their claims. Even without the projected wave of claims, the VA has an overall backlog of 400,000, including thousands of Vietnam era claims. Including all pending claims and other paperVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00294 Fmt 6621 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
291 

33 VBA’s ‘‘Monday Morning Report’’ of pending claims and other work performed at regional 

offices, cites: 11/25/06: 604,380; 11/26/05: 525,270; 11/27/04: 465,623. 34This projection based on the moderate scenario described previously, based on 1.7 million 

unique servicemen and CBO troop deployment figures through 2014. 35 38 USC section 1710. 36 VHA, Office of Public Health and Environmental Hazards, November 2006, Ibid, p. 14. 

work, the VA’s backlog has increased from 465,623 in 2004 to 525,270 in 2005 to 

604,380 in 2006.33

The fact that the VBA is largely sympathetic to the plight of disabled veterans 

should not obscure the fact that this system is already under tremendous strain. If 

only one-fifth of the returning veterans who are eligible claim in a given year, and 

the total claims reaches a high of 38% effective rate (44%–88% approval rate), the 

number of likely claims at the VBA over the next 10 years can be expected to rise 

from 104,819 to more than 600,000.34 (See table 2). 

Table 2: Projected Increase in Disability Claims (moderate scenario) 

Disability Benefits 2006 2007 2008 2009 2010 2011 2012 

Discharged 118,758 118,758 118,758 118,758 118,758 118,758 

cum 118,758 237,517 356,275 475,034 593,792 712,551 

Eligible claimants 

Existing discharged 

non-claimants 526,355 526,355 526,355 526,355 526,355 526,355 526,355 

Newly discharged — 118,758 237,517 356,275 475,034 593,792 712,551 

Total potential claimants 645,113 763,872 882,630 1,001,389 1,120,147 1,238,906 

Claim rate 22% 22% 27% 33% 38% 44% 44% 

New claims — 140,312 207,678 287,958 381,154 487,264 538,924 

Current beneficiaries 104,819 104,819 104,819 104,819 104,819 104,819 104,819 

Total claims (number) 104,819 245,131 312,497 392,777 485,973 592,083 643,743 

Total claims ($bn) 0.93 2.27 2.89 3.63 4.49 5.47 5.95 

If nothing is done to address the problem, the claims backlog will continue to grow 

throughout the period of the war, along with growing inequity between different regional offices. A key question is: what is a reasonable amount of time for the U.S. 

to make a disabled veteran wait for a disability check? This paper proposes several 

actions that could reduce the length of time for processing from zero to 90 days. (Described in more detail in section 4: Recommendations). These include: (a) greater 

use of the ‘‘Vet Centers’’ to provide assistance for veterans to file their claims, (b) 

automatically granting all or some of the claims, with subsequent audits to deter 

fraud, and (c) streamlining and technologically upgrading the claims system into a 

‘‘fast track’’ where veterans receive a quick decision on most claims. 

2. Veterans Medical Care Shortfall 

The VA’s Veterans Health Administration provides medical care to more than 5 

million veterans each year. This care includes primary and secondary care, as well 

as dental, eye and mental healthcare, hospital inpatient and outpatient services. 

The care is free to all returning veterans for the first 2 years after they return from 

active duty; thereafter the VA imposes co-payments for various services, with the 

amounts related to the level of disability of the veteran.35

The VA has long prided itself on the excellence of care that it provides to veterans. In particular, VA hospitals and clinics are known to perform a heroic job in 

areas such as rehabilitation. Medical staff is experienced in working with veterans 

and provides a sympathetic and supportive environment for those who are disabled. 

It is therefore of utmost importance that the quality of care be maintained as the 

demand for it goes up. 

However, the demand for VA medical treatment is far exceeding what the VA had 

anticipated. This has produced long waiting lists and in some cases simply the absence of care. To date, 205,097, or 32% of the 631,174 eligible discharged OEF/OIF 

veterans have sought treatment at VA health facilities. These include 35% of the 

eligible active duty servicemen (101,260) and 31% of the eligible Reservists/Guards 

(103,837). To date, this number represents only 4% of the total patient visits at VA 

facilities—but it will grow. According to the VA, ‘‘As in other cohorts of military veterans, the percentage of OIF/OEF veterans receiving medical care from the VA and 

the percentage of veterans with any type of diagnosis will tend to increase over time 

as these veterans continue to enroll for VA healthcare and to develop new health 

problems.’’ 36

The war in Iraq has been noteworthy for the types of injuries sustained by the 

soldiers. Some 20% have suffered brain trauma, spinal injuries or amputations; anVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00295 Fmt 6621 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
292 

37Paul Sullivan, Program Director of Veterans for America, 12/23/06 interview. 38Frances Murphy, May 2006, Psychiatric News. 39GAO–06–430R, ‘‘VA Health Care Budget Formulation,’’ pp. 18–20. 

other 20% have suffered other major injuries such as amputations, blindness, partial blindness or deafness, and serious burns. 

However, the largest unmet need is in the area of mental healthcare. The strain 

of extended deployments, the stop-loss policy, stressful ground warfare and uncertainty regarding discharge and leave has taken an especially high toll on soldiers. 

Thirty-six percent of the veterans treated so far—an unprecedented number—have 

been diagnosed with a mental health condition. These include PTSD, acute depression, substance abuse and other conditions. According to Paul Sullivan, a leading 

veterans advocate, ‘‘The signature wounds from the wars will be (1) traumatic brain 

injury, (2) post-traumatic stress disorder, (3) amputations and (4) spinal chord injuries, and PTSD will be the most controversial and most expensive.’’ 37 (See Table 3.) 

Table 3: VHA Office of Public Health, November 2006 

Frequency of Possible Diagnoses Among Recent Iraq and Afghan Veterans 

Diagnosis 

(Broad ICD–9 Categories) 

(n = 205,097) 

Frequency * % 

Infectious and Parasitic Diseases (001–139) 21,362 10.4 

Malignant Neoplasms (140–208) 1,584 0.8 

Benign Neoplasms (210–239) 6,571 3.2 

Diseases of Endocrine/Nutritional/Metabolic Systems (240–279) 36,409 17.8 

Diseases of Blood and Blood Forming Organs (280–289) 3,591 1.8 

Mental Disorders (290–319) 73,157 35.7 

Diseases of Nervous System/Sense Organs (320–389) 61,524 30.0 

Diseases of Circulatory System (390–459) 29,249 14.3 

Disease of Respiratory System (460–519) 36,190 17.6 

Disease of Digestive System (520–579) 63,002 30.7 

Diseases of Genitourinary System (580–629) 18,886 9.2 

Diseases of Skin (680–709) 29,010 14.1 

Diseases of Musculoskeletal System/Connective System (710–739) 87,590 42.7 

Symptoms, Signs and Ill Defined Conditions (780–799) 67,743 33.0 

Injury/Poisonings (800–999) 35,765 17.4 

* Hospitalizations and outpatient visits as of 9/30/2006; veterans can have multiple diagnoses with each 

healthcare encounter. 

A veteran is counted only once in any single diagnostic category but can be counted in multiple categories, 

so the above numbers add up to greater than 205,097. 

Additionally, far more returning Iraqi war veterans (than those in previous conflicts) are likely to seek such help, in part due to awareness campaigns run by veteran’s organizations through the press. There is no reliable data on the length of 

waiting lists for returning veterans, but even the VA concedes that they are so long 

as to effectively deny treatment to a number of veterans. In the May 2006 edition 

of Psychiatric News, Frances Murphy, M.D., the Under Secretary for Health Policy 

Coordination at VA, said that mental health and substance abuse care are simply 

not accessible at some VA facilities. When the services are available, Dr. Murphy 

asserted that, ‘‘waiting lists render that care virtually inaccessible.’’ 38

The VA curiously maintains that it can cope with the surge in demand, despite 

much evidence to the contrary. For the past 2 years, the VA ran out of money to 

provide healthcare. In FY 2006, the VA was obliged to submit an emergency supplemental budget request for $2 billion, which included $677 million to cover an unexpected 2% increase in the number of patients (half of which were OIF/OEF patients), $600 million to correct its inaccurate estimate of long-term care costs, and 

$400 million to cover an unexpected 1.2% increase in the costs per patient due to 

medical inflation. The previous year, (FY 2005), VA requested an additional $1 billion, of which one-quarter was for unexpected OIF/OEF needs and remainder was 

related to overall under-estimation of patient costs, workload, waiting lists, and dependent care. The GAO analysis of these shortfalls concluded that they were due 

to the fact that VA was modeling its projections based on 2002 data, before the war 

in Iraq began.39

The budget shortfalls and the statement by Dr. Murphy suggest that the volume 

of veterans returning from Iraq and Afghanistan will not be able to obtain the 

healthcare they need, particularly for mental health conditions. Such veterans are 

at high risk for unemployment, homelessness, family violence, crime, alcoholism, 


cprice-sewell on PROD1PC72 with HEARING
293 

40This amount is calculated by estimating the budget 2006 supplemental budget request for 

OIF/OEF veterans per additional patient, using the GAO analysis in GAO–06–430R. 41 VHA, Office of Public Health and Environmental Hazards, Ibid. 42The NPV is calculated over 40 years, at a discount rate of 4.75%, with a peak rate of 50% 

veterans claiming care by 2016. 43 High scenario assuming 10% medical inflation rate. 

and drug abuse, all of which impose an additional human and financial burden on 

the nation. In addition, many of these social services are provided by state and local 

governments which are already under tremendous strain. 

Projected Medical Costs 

The number of veterans who will eventually require treatment can be estimated 

using a baseline of the utilization during the first Gulf War, in which the VA is providing medical care to 48% of veterans. The average annual cost of treating veterans 

in the system is now $5,000,40 although it is difficult to know whether the more 

grievous injuries and disabilities of the current conflict will drive up costs per patient. 

The costs of providing medical care have been calculated under the three scenarios. Under the low scenario, under which the U.S. will deploy no new troops, the 

ceiling for medical care is 48% of OIF/OEF veterans. If half of all veterans eventually seek medical treatment from the VA that will produce a demand of some 

700,000 veterans. However, due to the fact that veterans are eligible for free care 

during the first 2 years after discharge, we can expect a wave of returning war veterans within 2 years of their discharge date. Additionally, since active duty veterans 

claim medical care at a higher rate (than Guards/Reservists) and have been deployed in more of the most hazardous front-line task come home, we can expect that 

the average cost of treating such veterans increases as well as a high level of demand.41

If the demand for medical care increases as projected to some 700,000 or more 

veterans, there is a serious risk that the VA, which is already overwhelmed, will 

be unable to meet the medical needs of returning OIF/OEF veterans. Additional 

staff is needed in important areas such as brain trauma units and mental health. 

The VA also needs to expand systems such as triage nursing, to help leverage scarce 

medical resources. 

Even assuming that no more troops are deployed, the long-term cost of treating returning veterans will reach $208 billion. This however assumes that the supply 

of healthcare exists to treat them. If the number of troops continues to grow as in 

the moderate then cost of providing lifetime care rises to $315 billion. The annual 

budget payment under this scenario will reach $3bn by 2010 and more than double 

by 2014. (See Table 4.) 

Table 4: Projected Cost of Providing VA Medical Care (moderate 

scenario) 42

MEDICAL COSTS 2006 2007 2008 2009 2010 2011 2012 2013 2014 

Total Discharged 631,174 749,932 868,691 987,449 1,106,208 1,224,966 1,343,725 1,462,483 1,581,242 

% OIF/OEF veterans seeking care 32.50% 33.96% 35.49% 37.09% 38.76% 40.50% 42.32% 44.23% 46.22% Total OIF/OEF veterans seeking care 205,132 254,696 308,305 366,224 428,731 496,123 568,711 646,827 730,822 Cost/medical claim $ 5,000 $ 5,400 $ 5,832 $ 6,299 $ 6,802 $ 7,347 $ 7,934 $ 8,569 $ 9,255 Total cost ($bn) 1.0 1.4 1.8 2.3 2.9 3.6 4.5 5.5 6.8 

NPV $315.23 

However, these scenarios are conservative in assuming that only half of the returning veterans will eventually seek medical treatment from the VA and that the 

level of healthcare inflation will remain constant at 8%. Under a worst-case scenario, if troops levels rise to 2 million and if health inflation rises to the doubledigit levels experienced during the 1990s, we can expect the total cost of providing 

lifetime medical care to veterans to reach $600bn.43

Veterans Centers 

How can the VA possibly handle the number of returning troops who require care, 

as well as their families, especially for mental health conditions? Perhaps the most 

creative and successful innovation in the VA in the past two decades has been the 

introduction of the ‘‘Vet Centers’’—207 walk-in storefront centers where veterans or 

their families can obtain counseling and reintegration assistance. The centers, operated by VA’s ‘‘Readjustment Counseling Service’’ are popular with veterans and 

their families and—at a total cost of some $100m per year—provide a highly costVerDate Aug 31 2005 09:26 Jul 23, 2007 Jkt 034303 PO 00000 Frm 00297 Fmt 6621 Sfmt 6621 E:\HR\OC\34303.XXX 34303

cprice-sewell on PROD1PC72 with HEARING
294 

44Opinion based on conversations with veterans organizations. 45 Vet Center costs document, page 3B–11. 46October 2006 report issued by the House Veterans Affairs Committee, testimony by Vet 

Center managers. 47 Active Duty denial rate is 7.6 percent compared with National Guard and Reserve denial 

rate of 17.8 percent. See Footnote 28. 48 Congressional testimony of Jack McCoy, VBA, March 16, 2006, http://www.va.gov/OCA/testimony/hvac/sdama/060316JM.asp and a VA fact sheet indicate 26,000 BDD claims in 2003, 

39,000 in 2004, and 46,000 in 2005. http://www1.va.gov/opa/fact/tranasst.asp. 

effective option for veterans who are not in need of acute medical care. The Vet Centers are particularly helpful for families, for example they provide a venue for a soldier’s spouse to seek guidance if the veteran is showing mental distress but will not 

seek help. They also supply bereavement counseling to surviving families of those 

killed during military service. And they offer a friendlier environment often staffed 

with recent OEF/OIF combat veterans and other war veterans—unlike VA regional 

offices which tend to be stuffy, bureaucratic offices located in downtown locations.44

To date, 144,000 veterans have sought assistance at these centers.45 However the 

demand for their services is threatening their ability to provide care. Vet Center 

managers recently surveyed by Congress said that in 50% of the Centers, the increasing workload is affecting their ability to treat veterans. Some 40% of the Vet 

Centers have directed veterans for whom individualized therapy would be appropriate into group therapy, and more than one-quarter of the Centers have limited 

or plan to limit family therapy. Nearly 17% have established waiting lists (or are 

in the process of setting them up).46

Currently the centers do not assist veterans in filing disability claims, but provided that the facility had sufficient secure storage space to handle such documents, 

there is no reason why they could not. The VA has recommended hiring an additional 1,000 claims adjudicators—who could be placed in the Vet Centers (an average of 5 each) to help veterans figure out how to claim. The cost of expanding the 

number of centers, hiring additional staff and placing more claims adjudicators in 

the centers is minimal. 

Transition from DoD Payroll to VA Care 

One of the chief bottlenecks in the current system is the soldier’s transition from 

the DoD payroll into the VA benefit system. There are three primary ways that a 

soldier makes this transition. 

A veteran who is discharged regularly, and has some level of disability will typically have to wait 6 months before receiving his or her disability check from the 

VA. This is a period during which the veterans, particularly those in a state of mental distress, are most at risk for serious problems, including suicide, falling into substance abuse, divorce, losing their job, or becoming homeless. 

A second route is to exit via the ‘‘Benefits Delivery at Discharge’’ (BDD) program. 

This successful program allows soldiers to process their claims up to 6 months prior 

to discharge, so they can begin receiving benefits as soon as they leave the military. 

However, the use of this route has become much more difficult due to the extended 

deployments, the use of ‘‘stop-loss’’ orders, and the resulting unpredictability about 

when a soldier will be discharged. Additionally, this program is not available to Reservists and Guardsmen, who comprise 40% of the forces in Iraq and Afghanistan. 

The VBA claim denial rate is twice as high for Reserve and Guard veterans, possibly due in part to their lack of access to BDD.47 Consequently the usage of this 

apparently better route has not been increasing as would have been expected.48

For veterans who are more seriously wounded, the process is more complicated 

as they transition from medical facilities run by DoD into medical facilities run by 

the VA. For example a wounded veteran may be treated initially at Walter Reed 

Army Hospital and then transferred to a VA facility. Veterans experience some difficulties in securing the maximum amount of disability benefits at discharge during 

such transitions, due to a lack of compatibility between the DoD and VA paperwork 

and tracking systems. The VA complains that the records they receive from DoD are 

delayed or contain errors, in many cases it is the situation where the data that is 

tracked is not compatible. This not only creates unnecessary problems in moving 

veterans through the system but it also makes it more difficult for the data to be 

analyzed in medical and other studies. 

Additionally there are the problems caused by the Pentagon’s poor accounting system. GAO investigators have found that DoD pursued hundreds of battle-injured 

soldiers for payment of non-existent military debts—because DoD financial systems 

erroneously reported that they were indebted. For example, one Army Reserve Staff 

Sergeant, who lost his right leg below the knee, was forced to spend 18 months disputing an erroneously recorded debt of $2,231 which prevented him from obtaining 


cprice-sewell on PROD1PC72 with HEARING
295 

49GAO–06–494, ‘‘Hundreds of Battle-Injured GWOT Soldiers Have Struggled to Resolve Military Debts.’’ 50 However, the availability of medical care may vary significantly by region. 51Total lifetime costs over 40 years, discounted at 4.75% under scenarios described. 52This paper considers only the budgetary costs of veterans care. Standard economic theory 

would treat disability benefits as a transfer payment and deduct these from the economic and 

social loss associated with veteran’s reduced economic lives. This was the methodology used in 

(stiglitz paper). 

a mortgage to purchase a home. Another staff sergeant who suffered massive brain 

damage and PTSD had his pay stopped and utilities turned off because the military 

erroneously recorded a debt of $12,000. Hundreds of injured soldiers may be in this 

situation.49

Overall Assessment and Cost 

Overall the U.S. is not adequately prepared for the influx of returning servicemen 

from Iraq and Afghanistan. There are three major areas in which it is not prepared: 

claims processing capacity for disability benefits; medical treatment capacity, in 

terms of the number of healthcare personnel available at clinics throughout the 

country, particularly in mental health; and third, there is no preparation for paying 

the cost of another major entitlement program. 

As discussed earlier, the backlog in claims benefit is already somewhere between 

400,000 and 600,000. Unless major changes are made to this process, the number 

of claims pending and requiring attention will reach some 750,000 within the next 

2 years and the pendency period will increase proportionately, resulting in more veterans falling though the cracks that could have been avoided. In addition, veterans 

whose claims reach different centers in different parts of the country will have widely different experiences, proving highly unfair to those who just happen to be located in areas of greater backlog. 

The quality of medical care is likely to continue to be high for veterans with serious injuries treated in VA’s new polytrauma centers. However, the current supply 

of care makes it unlikely that all facilities can offer veterans a high quality of care 

in a timely fashion. Veterans with mental health conditions are most likely to be 

at risk because of the lack of manpower and the inability of those scheduling appointments to distinguish between higher and lower risk conditions. If the current 

trends continue, the VA is likely to see demand for healthcare rising to 750,000 veterans in the next few years, which will overwhelm the system in terms of scheduling, diagnostic testing, and visiting specialists, especially in some regions.50

The cost of providing disability benefits and medical care, even under the most 

optimistic scenario that no additional troops are deployed and the claims pattern 

is only that of the previous Gulf War, would suggest that at a minimum the cost 

of providing lifetime disability benefits and medical care is $350 billion. If the number of unique troops increases by another 200,000 to 500,000 over a period of years, 

this number may rise to as high as nearly $700bn. (See Table 5.) The funding needs 

for veterans’ benefits thus comprise an additional major entitlement program along 

with Medicare and Social Security that will need to be financed through borrowing 

if the U.S. remains in deficit. This will in turn place further pressure on all discretionary spending including that for additional veterans’ medical care. 

Table 5: Total Veterans Disability and Medical Costs 51

LOW MODERATE HIGH 

Disability 67.6 109.5 126.8 

Medical 282.2 315.2 536.0 

TOTAL ($Bn) 349.8 424.7 662.8 

In the Context of the Overall Costs of the War 

Veteran’s disability benefits and medical care are two of the most significant longterm costs of the war. As shown in our previous analysis of the costs of the war, 

the war has both budgetary and economic costs. This paper focuses only on the 

budgetary costs of caring for veterans. It does not take into account the value of 

lives lost, or effectively lost due to grievous injury. Nor does it take into account 

the economic impact of the large number of veterans living with disabilities who 

cannot engage in full economic activities.52


cprice-sewell on PROD1PC72 with HEARING
296 

53KM World, June 1999. 

Recommendations 

(a) Medical Care 

The Veterans Health Administration will not be able to sustain its high quality 

of care without greater funding and increased capacity in areas such as psychiatric 

care and brain trauma units. In addition, more funding should be provided for readjustment counseling services by social workers at the Vet Centers. Even doubling 

the amount of funding for counseling at the Vet Centers is a small amount compared to the funds now being requested for additional recruiting of new soldiers. 

(b) Disability Claims Backlog 

There are at least three potential methods of reducing the number of pending 

claims. Perhaps the easiest would be to ‘‘fast track’’ returning Iraq and Afghan war 

veteran’s claims in a single center staffed with a highly experienced group of adjudicators who could provide most veterans with a decision within 90 days. At a minimum, all simple claims could be dispatched in this manner. During the past decade, private sector health insurance companies have reengineered their processes 

and adopted technologies, such as new automated data capture and document processing systems that have dramatically improved their ability to handle large volumes of information. This has allowed the industry to bring the average claim processing time down to 89.5 days. For example, the firm Noridian used technology to 

enable operators to process four to five times more claims in the same amount of 

time as under their old system, and to speed the form retrieval process for better 

customer service.53

The VA has proposed a more typically governmental solution of adding 1,000 more 

claims adjudicators. Even apart from the cost of $80m or so of adding these personnel, the question is whether adding additional personnel to a cumbersome system is the best possible way to speed up transactions and improve service. A better 

idea would be to expand the Vet Centers to offer some assistance in helping veterans figure out their disability claims. The 1,000 claims experts could be placed inside the Vet Centers (5 per center), thus enabling veterans and their families to obtain quick assistance for many routine claims. Vet Centers would only require minor 

modifications (secure storage space, additional computers and offices) to fill this 

role. 

The best solution might be to simplify the process—by adopting something closer 

to the way the IRS deals with tax returns. The VBA could simply approve all veterans’ claims as they are filed—at least to a certain minimum level—and then audit 

a sample of them to weed out and deter fraudulent claims. At present, nearly 90 

percent of claims are approved. VBA claims specialists could then be redeployed to 

assist veterans in making claims, especially at VA’s ‘‘Vet Centers.’’ This startlingly 

easy switch would ensure that the U.S. no longer leaves disabled veterans to fend 

for themselves. 

The cost of any solution that reduced the backlog of claims is likely to be an increased number of claims, and a quicker pay-out. If 88% of claims were paid within 

90 days instead of the 6 months to 2 years currently required, the additional budgetary cost is likely to be in the range of $500m in 2007. 

Conclusions 

President Bush is now asking for more money to spend on recruiting in order to 

boost the size of the Army and deploy more troops to Iraq. But what about taking 

care of those same soldiers when they return home as veterans? The number of veterans who are returning home with injuries or disabilities is large and growing. We 

have not paid careful enough attention, or devoted sufficient resources, to planning 

for how to take care of these men and women who have served the nation. 

There has been a tendency in the media to focus on the number of U.S. deaths 

in Iraq, rather than the volume of wounded, injured, or sick. This may have led the 

public to underestimate the deadliness and long-term impact of the war on civilian 

society and the government’s pocketbook. Were it not for modern medical advances 

and better body armor, we would have suffered even more loss of life. 

One of the first votes facing the new Democratic-controlled Congress will be yet 

another ‘‘supplemental’’ budget request for $100+ billion to keep the war going. The 

last Congress approved a dozen such requests with barely a peep, afraid of ‘‘not supporting our troops.’’ If the new Congress really wants to support our troops, it 

should start by spending a few more pennies on the ones who have already fought 

and come home. 


cprice-sewell on PROD1PC72 with HEARING
297 

Limitations of Data 

This paper has been prepared based on the best available data from VA sources, 

CBO, GAO, and veterans organizations. Reconciling this data has therefore been 

done to try to generate realistic estimates, but is not precise. It is also difficult to 

predict with certainty the uptake in the military of benefits and medical care. In 

all cases this study has been done conservatively, for example it is entirely possible 

that after the length and grueling nature of this war, that a much higher number— 

perhaps 2⁄3 of returning veterans—would seek disability benefits and/or healthcare 

and the estimates in this paper prove too low. 

Issues Not Addressed 

This paper has not attempted to address the cost of taking care of wounded and 

disabled Iraqi soldiers in Iraq. A number of studies have estimated the fatalities in 

Iraq, but there are few studies of the number of injuries among the Iraqi military. 

As the U.S. continues to place an emphasis on developing the Iraqi military to replace it, it is worth asking what the cost to that country will be of providing medical 

care and any kind of long-term benefits to those who are fighting. This study excludes VBA benefits such as education, insurance, vocational rehabilitation, and 

home loan guaranty programs. This study also excludes private, state, and local 

healthcare, disability, and employment benefits for returning veterans. 

Acknowledgements 

This paper was prepared with the invaluable assistance of Tony Park, a student 

at the Kennedy School of Government, and Paul Sullivan, Director of Research and 

Analysis at Veterans for America. Their contributions are gratefully acknowledged. 

Æ 


cprice-sewell on PROD1PC72 with HEARING