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84–115PS 2003

DEPARTMENT OF VETERANS AFFAIRS BUDGET

REQUEST FOR FISCAL YEAR 2003

HEARING

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

FEBRUARY 13, 2002

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 107–20

(
COMMITTEE ON VETERANS’ AFFAIRS

CHRISTOPHER H. SMITH, New Jersey, Chairman

BOB STUMP, Arizona

MICHAEL BILIRAKIS, Florida

TERRY EVERETT, Alabama

STEPHEN E. BUYER, Indiana

JACK QUINN, New York

CLIFF STEARNS, Florida

JERRY MORAN, Kansas

HOWARD P. (BUCK) MCKEON, California

JIM GIBBONS, Nevada

MICHAEL K. SIMPSON, Idaho

RICHARD H. BAKER, Louisiana

ROB SIMMONS, Connecticut

ANDER CRENSHAW, Florida

HENRY E. BROWN, JR., South Carolina

JEFF MILLER, Florida

JOHN BOOZMAN, Arkansas

LANE EVANS, Illinois

BOB FILNER, California

LUIS V. GUTIERREZ, Illinois

CORRINE BROWN, Florida

JULIA CARSON, Indiana

SILVESTRE REYES, Texas

VIC SNYDER, Arkansas

CIRO D. RODRIGUEZ, Texas

RONNIE SHOWS, Mississippi

STEPHEN F. LYNCH, Massachusetts

SHELLEY BERKLEY, Nevada

BARON P. HILL, Indiana

TOM UDALL, New Mexico

SUSAN A. DAVIS, California

PATRICK E. RYAN, Chief Counsel and Staff Director

(II)
(III)

C O N T E N T S

February 13, 2002

Page

Department of Veterans Affairs Budget Request for Fiscal Year 2003 .............. 1

OPENING STATEMENTS

Chairman Smith ...................................................................................................... 1

Prepared statement of Chairman Smith ........................................................ 67

Hon. Lane Evans, Ranking Democratic Member, Full Committee on Veterans’

Affairs .................................................................................................................... 4

Hon. Silvestre Reyes, prepared statement of ........................................................ 69

Hon. Jerry Moran, prepared statement of ............................................................. 69

Hon. Steve Buyer ..................................................................................................... 5

Prepared statement of Congressman Buyer ................................................... 71

Hon. Vic Snyder ....................................................................................................... 22

Hon. Michael K. Simpson ........................................................................................ 25

Hon. John Boozman ................................................................................................. 27

Hon. Bob Filner ....................................................................................................... 28

Hon. Luis V. Gutierrez ............................................................................................ 30

Hon. Ciro D. Rodriguez ........................................................................................... 34

Hon. Julia Carson .................................................................................................... 36

Hon. Stephen F. Lynch ............................................................................................ 36

Hon. Baron P. Hill ................................................................................................... 38

Hon. Jeff Miller ........................................................................................................ 40

Hon. Shelley Berkley ............................................................................................... 41

WITNESSES

Cullinan, Dennis M., Director, National Legislative Service, Veterans of Foreign Wars of the United States ........................................................................... 55

Prepared statement of Mr. Cullinan ............................................................... 102

Fischl, James, Director, National Veterans Affairs and Rehabilitation Commission, The American Legion ............................................................................ 59

Prepared statement of Mr. Fischl ................................................................... 104

Fuller, Richard, National Legislative Director, Paralyzed Veterans of

America ................................................................................................................. 51

Prepared statement of Paralyzed Veterans of America ................................ 90

Jones, Bob, Executive Director, AMVETS ............................................................. 50

Prepared statement of Bob Jones .................................................................... 81

Jones, Richard, National Legislative Director, AMVETS .................................... 56

Prepared statement of Richard Jones ............................................................. 85

Juarbe, Jr., Hon. Frederico, Assistant Secretary for Veterans’ Training and

Employment, U.S. Department of Labor, accompanied by Charles S.

Ciccolella, Deputy Assistant Secretary, Veterans’ Training and Employment

Service, U.S. Department of Labor ..................................................................... 45

Prepared statement of Mr. Juarbe .................................................................. 79

Principi, Hon. Anthony J., Secretary, Department of Veterans Affairs, accompanied by Frances Murphy, M.D., MPH, Acting Under Secretary for Health;

Judge Guy McMichael, III, Acting Under Secretary for Benefits; Col. Robin

Higgins, Under Secretary for Memorial Affairs; Tim S. McClain, General

Counsel; and Mark Catlett, Principal Deputy Assistant Secretary For Management ................................................................................................................. 6

Prepared statement of Secretary Principi ...................................................... 72

Surratt, Rick, Deputy National Legislative Director, Disabled American

Veterans ................................................................................................................ 53
Page

IV

Surratt, Rick, Deputy National Legislative Director, Disabled American

Veterans—Continued

Prepared statement of Mr. Surratt ................................................................. 97

Weidman, Richard, Director of Government Relations, Vietnam Veterans of

America ................................................................................................................. 62

Prepared statement of Mr. Weidman ............................................................. 114

MATERIAL SUBMITTED FOR THE RECORD

Statements:

Air Force Sergeants Association ...................................................................... 125

Friends of VA Medical Care and Health Research (FOVA) .......................... 132

Table: FY 2003 Administration Request compared to Independent Budget,

prepared by The Independent Budget ................................................................ 89

Prehearing written committee questions and their responses:

Chairman Smith to Department of Veterans Affairs .................................... 140, 145

Congressman Bilirakis to Department of Veterans Affairs .......................... 151

Congressman Buyer to Department of Veterans Affairs ............................... 154

Congressman Simmons to Department of Veterans Affairs ......................... 161

Congressman Brown to Department of Veterans Affairs .............................. 162

Written committee questions and their responses:

Congressman Reyes to Department of Veterans Affairs ............................... 166

Congressman Evans to Department of Veterans Affairs .............................. 172

Congressman Filner to Department of Veterans Affairs .............................. 208

Congressman Reyes to Department of Labor ................................................. 210

Congressman Evans to The Independent Budget .......................................... 211

Chairman Smith to AMVETS .......................................................................... 213

Chairman Smith to Paralyzed Veterans of America ..................................... 214

Chairman Smith to Disabled American Veterans ......................................... 215

Congressman Reyes to Disabled American Veterans .................................... 219

Congressman Evans to The American Legion ............................................... 221
(1)

DEPARTMENT OF VETERANS AFFAIRS

BUDGET REQUEST FOR FISCAL YEAR 2003

WEDNESDAY, FEBRUARY 13, 2002

HOUSE OF REPRESENTATIVES,

COMMITTEE ON VETERANS’ AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 10 a.m., in room 334,

Cannon House Office Building, Hon. Chris Smith (chairman of the

committee) presiding.

Present: Representatives Smith, Evans, Filner, Gutierrez, Buyer,

Carson, Reyes, Snyder, Moran, Rodriguez, Lynch, Simpson, Berkley, Hill, Udall, Davis, Miller, and Boozman.

OPENING STATEMENT OF CHAIRMAN SMITH

The CHAIRMAN. The hearing will come to order.

I want to thank all of our witnesses for agreeing to appear today.

I also want to extend a very special welcome to the newest members of the Committee on Veterans’ Affairs: Jeff Miller of Florida

and John Boozman of Arkansas on the majority side; Stephen

Lynch of Massachusetts and Susan Davis of California on the minority side.

This committee has a long history, as I think everyone knows, of

addressing veterans’ issues in a bipartisan manner, and I believe

we must continue that tradition if we are to be effective in the

future.

the Administration’s budget proposal for the Department of Veterans Affairs represents the largest increase in spending ever proposed in terms of total dollars, $6 billion over last year for a total

of $58 billion.

In the most critical area, veterans’ health care, the Administration is requesting 22.7 in direct appropriations, in addition to 1.4

billion that is expected to be available through collecting co-payments and third party insurance payments, an increase of 1.4 billion in appropriated dollars, also a record in terms of total dollars.

We all recognize and commend the efforts of the Secretary in

fighting for this increase and his commitment to providing the best

possible care for our Nation’s veterans.

Yet despite these large increases, the Administration itself acknowledges that their proposal does not contain enough appropriated dollars to provide care for all of the veterans who are expected to seek care from the VA next year. According to the VA’s

calculations, an additional $1.1 billion would be needed.
2

To cover this shortfall, the Administration is proposing a new $1,500 deductible that would applied to Category 7 veterans in

order to increase collection and decrease the number of veterans

seeking health care through the VA. In fact, the VA has indicated

that one result of this proposal will be that 121,000 veterans will

leave the VA health care system. At a time when health care costs

continue to rise and our veterans population continues to age, Congress should not endorse a policy designed to discourage veterans

from obtaining health care from the VA. With all due respect, Mr.

Secretary, I believe this proposal is a non-starter, and I will oppose

it.

Ironically, last month the President signed legislation, H.R. 3447,

now Public Law 107–135, which contains a provision requiring the

VA to lower co-payments for near-poor veterans who live in highcost areas of the country. Thus, I question whether this new $1,500

deductible proposal fits the policy we so recently enacted into law.

It seems to me that the answer is not to turn away veterans and

their families, but to provide sufficient resources to the VA in order

to meet their needs. Last year, working in a bipartisan manner, the

committee was able to increase health care funding significantly,

although not by as much as I or others, including the members of

the Independent Budget who will testify later, would have

preferred.

We succeeded last year by presenting a serious, detailed, and bipartisan estimate of the legitimate needs of the VA health care system. We should do the same this year. Rather than seek a solution

that turns away veterans, we must work together to build a budget

proposal based on the principle, ‘‘leave no veteran behind.’’ Let me point out that by keeping veterans inside the VA health

care system, we will be investing health care funds in a system

that clearly has one of the world’s most advanced patient safety

programs, one in which the cost of the care may well be 25 to 30

percent less costly than comparable care in the private sector.

Judging by the rising enrollments, it also appears that veterans

are voting for their favorite health care provider, they’re voting

with their feet, by seeking VA care in record numbers.

In fact, despite their funding limitations, the VA provides excellent health care for almost 5 million veterans and their families.

As a member of the Committee on Veterans’ Affairs for over 20

years, I have had the privilege of meeting with thousands of the

more than 220,00 VA employees, and they are indeed a unique national resource. Unlike health care systems, most of the employees

in the VA choose to work there out of a commitment to serving and

its veterans. And not coincidentally, many of them are veterans

themselves.

Our goal, therefore, must be to put federal health care dollars

where veterans are receiving their care. VA already has the authority to collect payments from veterans and third party insurers,

and they must continue their efforts to do a better job at that. The

Secretary has indicated his desire to do just that.

At the same time, we may need to examine current laws and

policies that prevent VA from collecting for the cost of care if enrolled veterans are members of HMOs or are covered by Medicare.

We need to see if there are ways to offset some of the cost of their
3

care through innovative approaches to these obstacles. The health

care provider actually providing the care should be the one getting

the money.

We must also take action to ensure that VA’s hospitals, outpatient clinics, research centers, and other facilities are properly

maintained. Last year, our committee reported out H.R. 811, and

the House later approved it, to provide $550 million in emergency

funding to repair, retrofit, and rehabilitate crumbling VA health

care facilities.

While I am pleased to see an increase in the Administration’s

major medical facility construction request, I continue to be concerned that we are failing to properly maintain the aging infrastructure of the VA health care system.

I would continue to urge our colleagues in the other body to move

this legislation, and I tried—and I know you did, as well, Mr. Secretary, repeatedly, to get them to move—and would hope the Administration would continue this year to try to procure that

amount.

Last year was indeed a productive year for the committee.

Working together with the leadership of our subcommittees, subcommittee chairmen Mr. Moran, Mr. Simpson, Mr. Buyer, our vice

chairman, Mr. Bilirakis, and the ranking members, who have

worked very hard, we were able to enact into law, and the President signed, five significant new bills.

Several others, again, are still pending over on the Senate side

and several we hope to act on in this committee. This year, we

must and we will aggressively seek to have these new laws swiftly

and faithfully implemented with full funding from the Congress.

Of particular urgency are the provisions of H.R. 2716, now Public

Law 107–95, the Homeless Veterans Comprehensive Assistance Act

of 2001.

Every night, as we all know, more than 250,000 homeless veterans are sleeping on the streets—on any given night, the equivalent

of 17 infantry divisions, more than the entire United States Marine

Corps.

It is absolutely imperative that the VA move rapidly to open the

10 new domicillaries authorized by our legislation, establish the

new technical assistance grant programs, and work with HUD to

implement the new Section 8 low-income housing voucher program.

We don’t have a minute to spare, and, again, we have an obligation, and again, we’ll be pushing hard so that no veteran will be

left behind.

We also approved legislation, H.R. 1291, now Public Law 107–

103, the Veterans Education and Benefits Expansion Act of 2001,

providing an historic increase for the Montgomery GI Bill program,

and we must ensure that it, too, is fully funded.

Finally, as I mentioned before, we also approved H.R. 3447, now

Public Law 107–135, the Department of Veterans Affairs’ Health

Care Programs Enhancement Act of 2001, which, in addition to

lowering out-of-pocket hospitalization costs for lower income veterans, requires the VA to establish new programs providing chiropractic care and service dogs for severely disabled veterans.

This new law also creates new incentives and recruitment programs to attract and retain nurses within the VA. We look forward
4

to the testimony on whether the budget proposal accommodates all

of these new and expanded programs.

Another important issue presented to the Congress by this budget concerns the Administration of employment assistance to jobseeking veterans. The GAO and numerous others have examined

the Veterans’ Employment and Training Service (VETS) and agree

that it is an agency mired in mismanagement, as evidenced by

their lack of vision, accountability, and results.

the Administration has proposed that it be transferred to the Department of Labor and that the funding be made available for competitive grants. Whether the Congress is ultimately persuaded that

this is the appropriate step, it is my belief that on this issue as

well, Congress cannot simply do nothing.

I am pleased that our subcommittee on Benefits Chairman Mike

Simpson and Ranking Member Silvestre Reyes have already held

a hearing on the need for reform of this program, and that they

have pledged to look very carefully at all that needs to be done to

deliver effective job-finding assistance to our veterans. They need

and deserve the support of all of us in their quest.

Mr. Secretary, I want to commend you for your stewardship of

the Department during the past year. You have been honest, you’ve

been approachable, and you’ve been effective.

More importantly, you have seized the helm and laid a very clear

course for the Department. I urge my colleagues to pay careful attention to the Secretary’s statement and look forward to working

with you to ensure that we leave no veteran behind.

I yield whatever time remains to Ranking Member Evans.

OPENING STATEMENT OF HON. LANE EVANS, RANKING DEMOCRATIC MEMBER, FULL COMMITTEE ON VETERANS’

AFFAIRS

Mr. EVANS. Thank you, Mr. Chairman, and good morning, Mr.

Secretary. Welcome to you and your colleagues. We look forward to

your testimony today.

The VA has many serious problems, but when the VA has problems, so do the veterans of this country. Mr. Secretary, you have

not made these problems, but they have found you. And if they are

not resolved quickly, they could become your legacy.

The VA has a budgetary shortfall this year; they have acknowledged it. But I think it’s even bigger than reported. Today we’re examining a new budget for veterans, but it is, in my opinion, a

major disappointment.

We are told it provides $25 billion in so-called resources for medical care; $800 million of these resources are for retirees’ benefits

costs. These costs are being shifted to the VA from the Office of

Personnel Management. It’s clear that OPM never has considered

these costs as veterans’ medical care resources.

Many times statements are made about veterans being our main

concern. We all ought to appreciate these sentiments. But that’s too

little. It won’t solve the problems we all know exist. What we do

for veterans is far more important than what we say about them.

VA needs about $26 billion in appropriations for medical care

next year. Some say we can’t afford it—that appropriating $26 billion for our veterans will increase the deficit. It will increase the
5

budgetary deficit by less than 8⁄10 of 1 percent. Not only can we afford it, we must afford it.

I look forward to hearing your testimony this morning, Mr. Secretary, and thank you, Mr. Chairman, for yielding the time.

The CHAIRMAN. Thank you very much, Mr. Evans.

We will have to break shortly, regrettably, for two votes.

Chairman Moran, I understand you have an opening statement?

Mr. MORAN. Mr. Chairman, I’ll just have my opening statement

put in the record, and I’ll take the opportunity to question the Secretary at the appropriate time. Thank you.

[The prepared statement of Congressman Moran appears on p.

69.]

The CHAIRMAN. Mr. Reyes.

Mr. REYES. Thank you, Mr. Chairman. I also have a statement

for the record, and I want to welcome the Secretary here this morning.

[The prepared statement of Congressman Reyes appears on p.

69.]

The CHAIRMAN. Thank you, Mr. Reyes. Mr. Buyer.

OPENING STATEMENT OF HON. STEVE BUYER

Mr. BUYER. I would like my statement submitted for the record.

The CHAIRMAN. Without objection, so ordered.

[The prepared statement of Congressman Buyer appears on p.

71.]

Mr. BUYER. I want to thank you, and let me thank Dr. Murphy

for an issue we worked on after September 11 on how we can move

education from on how to treat casualties of chemical, biological,

radiological, moving that piece into the VA. As a nexus, we have

122 VA hospitals affiliated with medical schools across the country.

Dr. Murphy did a very good job of helping put together a bill

that’s going to move through Congress. So I want to thank her for

doing that.

It’s easy to take swipes at the VA. It’s really easy. But when you

get in it, you find there are a lot of people who are working very

hard. I want to congratulate you for your historic increase in this

budget and I think this conference committee working together

with you, we can go a long way.

I yield back.

The CHAIRMAN. Thank you, Mr. Buyer. Dr. Snyder? Or Mr.

Boozman?

I want to thank, again, my colleagues for coming out. We have

to be voting, and we’ll return.

I’d like to just introduce our very distinguished witness, and then

when we come back we’ll go right to his testimony.

The Honorable Anthony J. Principi, Secretary of Veterans Affairs. Secretary Principi has a long history of service to our Nation

and in just his first year at the helm, he has brought all his knowledge, energy and enthusiasm to the cause of supporting our Nation’s 25 million veterans and their dependents.

Secretary Principi has a wealth of knowledge, having previously

served as Deputy Secretary of the VA in the first Bush administration.
6

He was chairman of the Federal Quality Institute in 1991 and

chairman of the Commission on Servicemembers and Veterans

Transition Assistance established by Congress in 1996.

He has extensive private sector experience as well, having served

as president of QTC Medical Services, senior vice president at

Lockheed Martin IMS, and as a partner in the San Diego law firm

of Luce, Forward, Hamilton & Scripps.

He also knows his way around Capitol Hill, having served as

chief counsel and staff director of both the Senate Armed Services

and Veterans’ Affairs Committees.

Secretary Principi is a graduate of the Naval Academy, he is a

combat-decorated Vietnam veteran, and Seton Hall law school

graduate—that’s in my state, of course, and we’re very proud of it.

Secretary Principi has served our Nation proudly, and we are very

happy to have him here this morning.

And again, I apologize for this recess, but we will get right to

your testimony upon returning.

Secretary PRINCIPI. Thank you, Mr. Chairman.

The CHAIRMAN. We are in a brief recess.

[Recess.]

The CHAIRMAN. The hearing will resume.

Mr. Secretary, you’ve already been introduced. We do hope you

will proceed, and we look forward to your testimony.

STATEMENT OF HON. ANTHONY J. PRINCIPI, SECRETARY, DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY

FRANCES MURPHY, M.D., MPH, ACTING UNDER SECRETARY

FOR HEALTH; JUDGE GUY McMICHAEL, III, ACTING UNDER

SECRETARY FOR BENEFITS; COL. ROBIN HIGGINS, UNDER

SECRETARY FOR MEMORIAL AFFAIRS; TIM S. McCLAIN, GENERAL COUNSEL; AND MARK CATLETT, PRINCIPAL DEPUTY

ASSISTANT SECRETARY FOR MANAGEMENT

Secretary PRINCIPI. Thank you, Mr. Chairman, Mr. Evans, members of the committee. I’m pleased to be here today to discuss the

President’s 2003 budget proposal for the Department of Veterans

Affairs.

I want to thank you, Mr. Chairman, and Mr. Evans, and all the

members of the committee for the very, very tremendous advocacy

on the part of our Nation’s veterans and for my department and

all you do for us.

We sometimes differ in approach, but that’s what this process is

all about: to find the right approach and to do what’s right for our

Nation’s veterans. We look forward to working with you and the

ranking member and the members of the committee to that end.

The fiscal year 2003 budget request for the Department of Veterans Affairs does, indeed, reflect the largest increase ever proposed

for veterans’ discretionary programs. Despite today’s national

emergency, a time when increases in discretionary spending averaged about 2 percent, VA’s discretionary spending increased by 7

percent.

I am proud of this budget, and I’m grateful to the President for

his support.

We are requesting $58 billion for veterans’ benefits and services,

$30.1 billion for entitlement programs; and $27.9 billion for discre-
7

tionary programs. This is an increase of $6.1 billion over the 2002

enacted level.

Our budget increases VA discretionary funding by $3.1 billion

over the 2002 level, including medical care collections.

Increases for specific programs are as follows: a 7 percent in- crease in medical programs, or $1.57 billion, and I’ve taken out the

money on this transfer of funds for health care costs and retirement costs and $260-some-odd million for the deductible. The $1.57

billion is real, and it’s very large. A $17 million increase for burial services; $94 million for the administration of veterans’ benefits; and a $64 million increase for

capital programs and other grants, and departmental administration.

Our budget request also includes $197 million, as you know, for

a new grant activity to replace programs currently administered by

the Department of Labor.

I’m very pleased that we’re working with the assistant secretary,

Fred Juarbe, who heads the veterans’ program for the potential

transition of that program to see how we can enhance it and ensure it meets its intended benefit, and that is to ensure that veterans, all veterans and especially those who are separating from active duty, disabled veterans, and the veterans with severe employment handicaps receive the benefits they have earned through

their service to our Nation.

Our request for medical care is for $25 billion, including the $1.5

billion in collections. With these funds, we will be able to provide

care for nearly 4.9 million patients, 3.3 percent more than we expect to care for in fiscal year 2002.

Perhaps we’re the victim of our own success in many ways, but

the VA has seen extraordinary growth in our workload since open

enrollment came about in the mid-1990s; 38 percent overall growth

in workload in the number of Priority’s 1–6 veterans who are coming to us for care, that’s grown from 2.4 million to 3.4 million; and

an addition in Category 7 veterans, a 500 percent increase since

1996.

At the current rate, Category 7, just one category alone, will comprise about 42 percent of the VA’s patient enrollees by the year

2010. The annual rate of growth averages 30 percent over the last

6 years.

I might point out that when we started open enrollment in 1996,

Category 7’s were 3 percent of our enrollees, and today they are 33

percent.

With no changes, the cumulative Priority 7 cost will be $20 billion between 2003 and 2007.

I believe the reason for this tremendous increase is primarily because of the improved quality in VA health care. This is not my father’s VA. It is a much improved health care delivery system with

over 600 clinics throughout the country providing convenient access

for our Nation’s veterans to get to the VA health care system.

Of course, we’ve seen HMO failures, we’ve seen fluctuations in

the economy. We have a tremendous pharmacy benefit. And I think

all of these factors, and perhaps others, have led to this tremendous, tremendous growth in the number of veterans who have come

to us for care.
8

I’m very proud that record numbers have come to the VA and

have chosen VA as their health care provider. That’s what we have

tried to do, and we have been successful.

However, meeting their future needs will require extraordinary

efforts on everyone’s part. The President requesting, and the Congress approving, a record appropriation, will necessitate VA further

improving our stewardship of the resources that have been entrusted to us on the part of our veterans.

I believe that we are doing our part. We need to do more, but

we are working hard.

For example, we’re making substantial improvements in billing

and collecting from third-party insurers. We expect to collect more

than $1 billion this year, and with continuing increases in 2003

and beyond.

We are taking steps to improve our documentation, our coding,

and our functions of billing and collections, and we will look very

seriously at consolidating those functions, not just in 21 networks,

but centrally, to ensure that we’re efficient and we’re effective.

We’re making difficult decisions through our CARES initiative.

As you know, I recently announced the decision to close one of

the four medical centers in Chicago and to consolidate those services in the other three, primarily the west side facility, and to build

a new SCI and a new Blind Rehab Center at our Hines facility and

to look at greater joint cooperation between DOD and VA at our

North Chicago facility.

However, for us to continue to treat all veterans, I believe that

higher income veterans and primarily their insurance companies

will have to share in the cost of providing care.

So the medical care budget does include a proposal for a $1,500

deductible for Priority 7 veterans, and I want to stress that this deductible does not apply to any service-connected disabled veteran.

It does not apply to any veteran pensions or any low-income veteran. It does not apply to any veteran in receipt of aid and attendance. It does not apply to any former POW.

It does not apply to any veteran who is at the VA receiving care

for any exposure to environmental hazards, be it Agent Orange or

Persian Gulf War Syndrome. It doesn’t apply to the few World War

I veterans who still come to us for care.

It only applies to those veterans who are non-service connected

and have higher income, the fastest growing of our veteran

population.

We want to do this in a way that ensures that we do have a safety net for those who become seriously ill in our Category 7’s, and

I want to also stress that this initiative does not deny care to anyone. We will keep our health care system open to all veterans, including those who may have other health care coverage.

If they are insured, we will seek reimbursement of that deductible from their insurance companies, and we hope that deductible

will provide an incentive for Category 7 veterans to let us know

when they do have insurance so that we can bill their insurance

companies.

If they do not have insurance, and they cannot afford to pay,

then we will work out a repayment plan with them to ensure that
9

they still come to us for care, but that they can pay that portion

of the deductible in a way that meets their incomes and whatever.

In addition to a record increase in medical care, VA’s clinical research program is funded at the highest level in history with a

partnership of government, universities, and the private sector. Over $1.46 billion will be invested in 2003, $409 million in direct

appropriations, $401 million in support from the VA medical care

appropriation, and support in the form of salaries, support for our

clinical researchers, $460 million from federal organizations such

as DOD and NIH, and $196 million from universities and other private institutions. This investment is relevant to the medical needs

of the entire nation, and will enhance future quality of life.

In veteran benefits, we’re requesting $1.2 billion for 2003. We

have hired over 1,000 new workers and we expect to hire an additional 125 with the funds allocated to us, and we hope that these

new employees, once they’re trained, will allow us to continue

progress towards dramatic improvements in claim processing timeliness and continued improvements in accuracy, which I know is an

issue of importance and concern to all members of this committee,

as well as to myself.

We have studied claims processing long enough. We had a Task

Force headed by Admiral Cooper, who will soon be the new under

secretary of veterans’ benefits, assuming the Senate consents to his

nomination, and now it’s time to end the Powerpoint presentations

and get on with the implementation of those recommendations.

Under Judge McMichael’s leadership, we have, in fact, done that.

We’ve had focused, disciplined implementation of those Task Force

recommendations, and I’m confident that in a short period of time,

the backlog is going to come down.

To give you an example, in January of 2001, we decided 29,036

claims for that month of January. This past January 2002, we decided 62,536 claims.

That’s a dramatic improvement in getting veterans the decisions

they need, the disability compensation they need to get on with

their lives. I’m very, very proud of that, and I hope we can continue

to make an inroad into that backlog.

But then again, with the diabetes claims and the duty to assist

and other initiatives, that backlog continues to remain high.

I will conclude in just one moment, Mr. Chairman, if I may. I

know I’m running longer than the 5 minutes.

Our capital funding program and grant program is at $536 million, and this is the largest request since 1996. You pointed out,

Mr. Chairman, our capital infrastructure needs, and I believe this

will help make some inroads there.

Our budget includes funding for two new national cemeteries in

the vicinity of Pittsburgh and Miami, improvements at Willamette,

Oregon, and $138 million to operate our national cemetery system.

We are working very, very diligently to implement the one VA

information technology enterprise architecture developed in 2001,

and are working toward development of a strong program for cyber

security.

Finally, I would like to mention that shortly we will begin to review the procurement reform Task Force recommendations that I

believe will allow us to be a better purchaser of medical supplies
10

and services, pharmaceuticals, and equipment. I look forward to receiving that procurement reform Task Force report and getting on

with the implementation so that we can save dollars that can be

used to expand the reach of health care.

Again, I appreciate the opportunity to testify, Mr. Chairman, Mr.

Evans, members of the committee, and I look forward to your questions.

[The prepared statement of Secretary Principi appears on p. 72.]

The CHAIRMAN. Thank you very much, Mr. Secretary. Your full

statement—I read it last night, it was very comprehensive and I

appreciate the details you included in it—will be made a part of the

record without objection.

Just a couple of opening questions. I’ve read the Independent

Budget and I’ve read the testimonies that have been submitted by

our witnesses who will appear later, and there’s a concern, a gap,

if you will, in terms of what is needed to continue or just retain

current services.

John Baldwin with the PVA, speaking for the Independent Budg- et, talks about $25 billion, and that’s not including monies that

would come in from the medical care collections, and I know you’re

working very hard to increase that.

The Legion’s number is $23.1 billion, and they emphasize that

medical care collections are to be seen as a supplement and not an

offset, again, to just continue current services.

And again, as I indicated at the outset, I don’t think there’s sup- port in Congress for the $1,500 deductible. I certainly don’t support

it.

I know you have to go through the very difficult process of being

cut by OMB.

What we’ll try to do on this committee is to, as faithfully as possible, get to the number to meet a needs-based budget rather than

something that is just moving the deck chairs around, and that’s

a big objective.

Sir, I would ask you to comment, if you would, on this significant

gulf between your request and what the Independent Budget suggests, $24.5 billion for medical health care.

The second question would be on the whole Millennium Health

Care Act, which we all supported. It was bipartisan. It went

through a very rigorous House-Senate Conference Committee. We

did write you last April, Mr. Evans and I. We did get a response

back. We appreciate that.

But your response basically suggests that it is not

implementable, that the goals set out and the capacity capabilities

could not be met.

Again, if it means more money, that’s what we need to be all

about, and we fight for appropriations and for the budget.

But, you know, this is the law. Can you provide us within, say,

a month, 30 days, a plan to implement that law faithfully? And if

you could, speak to that issue, I’d appreciate it.

Secretary PRINCIPI. Certainly, Mr. Chairman.

Again, I’m pleased that we have a record budget. You asked what

it would take to maintain current services, without the deductible,

I’m assuming, to continue to have open enrollment for any veteran

who comes to the system, and to maintain high quality and reason-
11

able waiting times for an appointment, which we’re already finding

that some of our clinics are extending beyond acceptable levels.

Based upon that question, and not to appear to be asking for more money, it would probably take about $2.7 billion to maintain

current services, $1.1 billion of which will be realized through the

deductible.

So indeed, the deductible is an important component of it, from a revenue perspective, so I will say about $2.5 billion to maintain

current services.

With regard to the Millennium Bill issue on long-term care, we

are in compliance, I might add, with two of the three parts of that

provision dealing with non-institutional care for the basic benefit

package and also for the 70 percent service-connected disabled.

Where we’ve had difficulty in recent years is with the institutional component that only counts VA nursing home beds. This

component does not count State nursing home beds, which we have

made a big investment in, Congress has made a big investment in,

and we pay per diem for each veteran in the home, as well as community nursing homes, because we have found that veterans like

to be closer to their residences, rather than at a VA nursing home

further away.

I would request the committee’s consideration of including in the

census not just VA nursing home beds but also State nursing home

beds (which VA has increased), and community nursing home beds,

as well as the non-institutional portion, to try to keep veterans in

their homes as long as possible, because they prefer to be cared for

in their homes rather than in nursing homes; that would: include

hospital-based home care, adult day care, respite care, all of which

are so important in improving their quality of life.

I think if there’s some way we could work out a floor that takes

into consideration the other institutional components and the noninstitutional components, we would have a better package of benefits.

Of course, if you increase the budget in one area, you’ve got to

take money away from another area. The question is: where do we

take away?

Do we take away from the community-based outpatient clinics or

from acute care in general? That’s been the struggle that we have

had to deal with over the past couple years.

The CHAIRMAN. Thank you. I do hope that, if you could, provide

us with a plan to implement this, because, you know, my sense is

that, the capacity has shrunk.

I understand the argument of what’s happening on the State

level, but obviously there’s almost a balloon of need, particularly

with our World War II veterans, who, if they were available, would

require the services; so I look forward to working with you on that.

I want to say very clearly that I know we fought the inside fight

very, very hard to try to get as much funding as humanly possible.

Many of us on this committee will look at your number, I certainly

will, as a floor. We will try to increase it, because we think you

need the resources to care for the veterans which you and your

staff care about so very much.

I do want to commend you for fighting so hard.

Secretary PRINCIPI. Thank you very much, Mr. Chairman.
12

The CHAIRMAN. My time is up, but we ’re concerned about the

national emergency mission, and I’m sure some of the other members will get into some questions along those lines, but I want to

thank you again for your leadership.

Chairman Moran.

Mr. MORAN. Mr. Chairman, thank you. Mr. Secretary, thank you

and your staff, fellow secretaries, for being here.

I also will joint our chairman in commending you for your efforts

on behalf of veterans and in this budget process, where we are

today. I know it was in large part due to your leadership.

There are troubling aspects of this budget, and as Chairman Smith has indicated, the $1,500 deductible is one that stands out

in all of our minds, I assume yours as well.

I am interested in a couple of things about that. You indicated

that, in your testimony, that we would expect veterans, and I think

more significantly, their insurance companies, to pay that deductible.

Do we have numbers that suggest how many of those veterans are insured and such that the $1,500 is not coming from the veteran but from their insurance carrier?

Secretary PRINCIPI. A small percentage identify insurance coverage. We don’t know if those are the only ones who have insurance. There’s never really been much of an incentive to identify insurance.

I believe that a deductible would, in fact, increase the number

who would advise us that they have insurance, and we could increase our third-party collections.

But it’s a relatively small percentage.

Dr. Murphy?

Dr. MURPHY. Probably about 15 percent of the veterans who receive health care from VHA identify insurance. The majority of

them, however, have Medigap coverage, and the average reimbursement for the Medigap payment is about 13 percent of our

billable amount.

Mr. MORAN. How does that apply to Category 7 and whether or

not they have insurance?

Dr. MURPHY. Based on a priority.

Mr. MORAN. It’s got to be a higher percentage, I assume, perhaps

than other veterans would have insurance?

Dr. MURPHY. Yes, but overall it’s about 15 percent.

Mr. MORAN. Okay. Was the $1,500 chosen for any reason, other

than the number of dollars necessary to make the budget work?

Secretary PRINCIPI. The average cost for VA health care is approximately $1,800 for Category 7’s, and the $1,500 was chosen

based upon that $1,800 figure.

Mr. MORAN. What’s the relationship between the $1,800 and the

$1,500? That’s the amount we believe veterans are able to afford

or that’s the amount necessary to cover the cost of providing the

service?

Secretary PRINCIPI. We believe that would allow us to cover the

majority of the cost of providing the service, and that’s why that $1,500 was chosen.

Mr. MORAN. In December, when you proposed, when the department proposed a cutoff in enrollment of Priority 7 veterans because
13

of funding shortages, you indicated that certain management

changes and procedures could result in savings sufficient to help us

meet that so-called shortfall.

We’ve asked for what those management changes might be.

We’ve requested kind of a briefing on those management changes.

Is something in the works that you believe results in sufficient

savings to meet the enrollment of Category 7 veterans?

Secretary PRINCIPI. I certainly do. In 2002, we estimate just about $300 million in management savings and another $316 million in 2003.

The kinds of efficiencies that I envision, and that the Veterans

Health Administration has embraced, are consolidations of many of

our administrative functions, IT, finance, and supply.

We have a procurement reform Task Force that will shortly submit recommendations on the standardization of medical/surgical

supplies, equipment, utilizing our shared purchasing power, clinical

operations, and other consolidations throughout our system.

We believe there are efficiencies that can be achieved in our

health care delivery system and those figures are realistic.

Mr. MORAN. Is there a plan of what those management changes

might be and the anticipated changes that would come from each

one? Is there something we can review?

Dr. MURPHY. We do have a list of mandated efficiencies that each

network was asked to accomplish. Some of them had already

begun, some of these consolidations of administrative functions in

the past.

In addition, we’ve asked our centralized programs to take a 2

percent efficiency in their allocated budget, and that money will be

returned to the field.

Mr. MORAN. Are there efficiencies to be found in additional cooperation with the Department of Defense or do you see that as an

increase in cost?

Dr. MURPHY. There will be some additional efficiencies there. It

will take us some time to come to agreement with the Department

of Defense, so I don’t believe many of those increased receipts will

occur this year.

Mr. MORAN. You indicated back in, Mr. Secretary, back in February that we couldn’t afford to maintain nursing home beds, despite a congressional requirement that you do so.

In our Health Care Improvement Act that was just signed by the

President earlier this year, we have requirements for maintaining

capacity related to substance abuse, traumatic brain injury, and

other programs.

Are we anticipating an inability to comply with that law?

Secretary PRINCIPI. No.

Mr. MORAN. Can we maintain those facilities in each VISN?

Secretary PRINCIPI. By and large, all of our capacity for spinal

cord injury disorders, spinal rehabilitation, seriously mentally ill,

homeless, PTSD, are at or about the capacity requirement.

The program that is below the capacity requirement is substance

abuse, but everything else is up, and I believe we are in

compliance.

Mr. MORAN. Mr. Secretary, thank you for your testimony. I respect you and your work and look forward to working with you and
14

the department as we attempt to take care of the veterans of our

country.

Secretary PRINCIPI. Thank you, sir.

The CHAIRMAN. The chair recognizes Mr. Reyes.

Mr. REYES. Thank you, Mr. Chairman.

Mr. Secretary, first and foremost, let me thank you for coming

to my veterans town hall meeting last August. I’m hopeful that

you’ll be able to return back to El Paso again.

Believe me, I think all of us know that you’re riding a horse you

didn’t pick. Somebody else picked the horse. You got to ride him.

That’s part of the process.

But there’s a couple of areas that I’d like to ask you about. The

first one deals with the backlogs. Since the beginning of this fiscal

year, benefits backlogs have gone up some 50,000 cases.

However, when reading your testimony and when looking at the

issue of instructions to the VA offices across the country, I’m concerned that there are a number of new hires, brand new employees

in a lot of these offices.

For instance, I’ll give you an example. In Waco, I think 32 percent are new hires, so they are, in essence, trying to learn the job,

while at the same time they’ve gotten these marching orders from

you in terms of reducing the backlog.

I, like every member of this committee, and people that don’t understand veterans’ issues, would like nothing more than to reduce

those backlogs.

However, I’m concerned, given the statistics that we’re starting

to see, that it’s leading to decisions that are made without everything from good judgment to perhaps all the evidence being gathered, medical opinions, those kinds of things, and it’s just creating

additional frustration.

We get a lot of complaints in my office, and even here, in our office here, from veterans around the country that are complaining

about that issue.

They are even saying this is a stall tactic by the Department of

Veterans Affairs where they send a case to the Board of Veterans’

Appeals that they haven’t fully worked. They send it forward knowing that it’s going to be remanded, and so they have all this additional time to decide or to delay benefits to veterans.

So those are very real concerns.

Can you address that?

Secretary PRINCIPI. Certainly.

Mr. REYES. I again want you to know that I support reducing the

backlog, but it just seems to me that the combination of new employees with the edict to get a reduction by 50 percent just is not

getting us anywhere.

Secretary PRINCIPI. I understand, Mr. Reyes, and Judge

McMichael our acting under secretary of benefits may want to add

his own comments.

Let me say that, indeed, reducing the backlog has been a very,

very high priority of mine. It’s terribly high. Justice delayed is justice denied. Too many veterans are dying before their claims are

decided.
15

First, we need to put in place performance standards and procedures that will allow us to evaluate these claims fairly and accurately in a timely manner. I think we’re doing that.

I also share your concern about the stress on our employees and

burning them out. They’re trainees. They’ve just come on board,

and we need to ensure that the performance standards that they

have are less stringent than those who are experienced and have

been there 5 and 10 years.

Unfortunately, for whatever reason, our productivity has dropped

rather precipitously.

About 10 years ago, a rating specialist was doing eight to 10

claims a day. In the intervening 10 years, we have spent hundreds

of millions of dollars of taxpayers’ money on information technology, and today many of our rating specialists are doing two or

three claims a day, maybe one a day.

Now, I understand that the complexity of the claims, specifically,

the number of issues to rate have increased, but still, veterans will

not be well served unless we can improve our performance.

We’re putting in steps like triaging and specialization to allow

our people to work smarter rather than just working harder.

I am concerned, especially if there are indications that our people

are becoming frustrated and wanting to leave the VA, that we need

to make some adjustments. I will, in fact, look at those issues and

work with the Under Secretary if necessary to make changes.

Do you want to add anything, Guy?

Judge MCMICHAEL. Well, just two things. We do have inexperienced employees. One of the problems we had in the past was that

we brought on new employees and really asked them to be experts

in everything.

Part of what the Task Force has recommended is that we specialize, so that you can take new employees put them on less difficult

claims, put your more experienced employees on the more difficult

claims, and hence improve productivity. We believe that implementation of the Task Force recommendations will help that.

Secondly, they are gaining experience. Each month they have

more experience and they’re gaining more expertise.

We are concerned about decisions that are not correct. We have

increased the amount of quality review we do. The evidence that

we have so far is that quality is not suffering. We are looking very

closely at that.

Rendering a decision quickly that is not correct doesn’t benefit

the RO. They’re penalized against it in terms of their production

standards if they render decisions that are incorrect.

We think we’ve set in place a number of procedures and review

mechanisms that will ensure that we get good decisions in a timely

manner.

Mr. REYES. Thank you. Mr. Chairman, I know that my time is

about to run out, and just one comment, Mr. Secretary. That

$1,500 deductible is a non-starter. These are veterans that are in

the category, they’re not rich. They’re making, in most cases, $24,000 or a little bit above that, and they have been very vocal.

In fact, a lot of those veterans that you met in El Paso would

come under that category, and they’re very upset about it, and it’s

a non-starter.
16

Mr. Chairman, as you know, Armed Services has another hearing, so I’m going to have to go there, but I appreciate it, and I’ll

have some written questions to submit for the record.

The CHAIRMAN. We’ll submit them.

(See p. 166.)

Mr. REYES. Thank you.

The CHAIRMAN. Thank you very much, Mr. Reyes. Chairman

Buyer?

Mr. BUYER. Thank you. I’m not going to jump into the arena of

non-starters, because I think what you’ve done is you’ve stepped

forward.

One thing about leadership is sometimes you have to be bold,

and when you’re bold in your leadership and you’re at the point

that people want to take shots at you, there’s a realistic problem.

The realistic problem is this committee, working with the Senate,

on the Millennium Health Care Act, it opened up Category 7’s and

then we didn’t fund it because we didn’t anticipate the level of veterans that would be accessing the system.

So it’s wonderful, you know, for the committee. We can sit here

and we can beat you up, but if we’re not funding for the level of

access, then shame on us. I think it’s that simple. So we have created a real a problem for you.

So you’re trying to meet the law under these unrealistic guidelines, and we’re almost changing what the VA system created for,

and so now need to make some very serious decisions of what type

of VA we want.

So I’m not going to jump into that category of a complete nonstarter here, because you’re trying to tackle a difficult issue, and

I don’t know how we come to terms with this.

If, in fact, with Category 7’s, VA wants to provide access to care

for these veterans, VA needs to ID them better, Dr. Murphy, and

you know that, and not only do VA needs to ID them better and

provide access to that health care out there VA need to better identify veterans who have other health insurance and to bill them for

that care.

I’ll continue to work with you, Mr. Secretary, and those in your

departments. It’s almost shameful.

I know that if you can enlighten us any, provide us with an update on any of the 24 recommendations made by Price Waterhouse

in its 2001 report, how many of those have been implemented I

think will be very important to this committee.

I also note that we’ve had a continuing discussion since we conducted a field hearing in Indiana about the IGs, and you made a

request to OMB to beef up your IG staff by over 55 FTEE, yet

OMB must have said no to you.

So I’d like to work with you, since it wasn’t in your budget. I

think this committee would like to, willingly, on a bipartisan basis,

work with you. It’s an issue that Ms. Carson also brought up at the

field hearing that we had, and somehow we have got to work this

out.

Your IG office does great work, good service, and the return on

investment is pretty strong.
17

I’d like you to address my comments on the Category 7, the medical costs recovery, and your request to OMB for additional funding

for your IG staff.

And last, letting you know that we’re going to be holding a hearing here real soon on that so we can get your input.

You asked us to pause. You wanted to look at your information

management systems, and to eliminate the three stovepipes. We’ve

given you the opportunity to work with industry on the outside,

and we need for you to come tell your story.

With that, I will anticipate your response.

Secretary PRINCIPI. First, with regard to the IG, I could not agree

with you more about having an adequately staffed IG, an IG that

has the ability to do complete audits, accounting of every VA organization, medical center, VISN, regional office, on a 3-year cycle,

apart from the investigative arm, the criminal side of the house

that has helped us not only to deter fraud, but to recover when

fraud is found.

But I’m concerned that we do not have adequate staffing in the

IG’s office to, in fact, do the kinds of audits every 3 years that

should be done, and to gain a lot of that information so that we

can look at it systemwide and make the changes necessary to improve the management and the efficiency of our system. I think it’s

terribly important.

With regard to MCCF, I’d like to give you a detailed readout of

all of the recommendations that have been made. Some of them

were completed. Many of them are in progress.

It is something that I’m very serious about and will continue to

work with you.

Mr. BUYER. Could you submit those for the record?

Secretary PRINCIPI. I will submit those for the record.
18

(Subsequently, the Department of Veterans Affairs provided the

following information:)
19
20
21
22

Secretary PRINCIPI. I will be pleased to meet with you and staff

to talk about, along with Dr. Gauss, our new CIO, some of the

changes that we have put in place to build our enterprise architecture, to end stovepipe design, stovepipe development, and to just

improve our entire strategy of IT procurement and management.

We now are building a system that allows us to track every dollar from the time we budget it all the way through to program execution so that we know, every step of the way, how those dollars

are being spent.

Did I miss one?

Indeed, I appreciate your statement, Congressman Buyer. It is a

real challenge.

As I indicated earlier on, when we started open enrollment, 3

percent were Category 7. Now up to 33 percent of our enrollment

base are Category 7 veterans, so we’ve had tremendous growth.

Again, we’re a finitely budgeted health care system. Unlike Medicare, we get an appropriation every year and with the various mandates that the Congress requires of us, whether it be for long-term

care or CBOCs or homeless emergency care, we have to spread

those dollars evenly across, and it is challenging.

I don’t want to see quality diminished, because we’ve worked too

hard to get quality to a level that is recognized in the private sector, and by continuing to allow people to come in with no way to

control that growth, it is causing the service-connected and the

poorer veterans to suffer somewhat because waiting times are getting longer and I think the whole system will suffer.

So the $1,500 deductible was my best way of saying we don’t

have sufficient dollars to allow everyone to come in. There has to

be some cost sharing, and we thought that the ones that would cost

share were the higher-income non-service-connected.

But, I will be pleased to work with the committee on any option

that would allow us to achieve our goals, whatever the committee

determines should be the policy.

The CHAIRMAN. Thank you. Dr. Snyder.

OPENING STATEMENT OF HON. VIC SNYDER

Dr. SNYDER. Thank you, Mr. Chairman, and thank you, as well,

for being here, Mr. Secretary. It’s good to see you again.

Secretary PRINCIPI. Good to see you, sir.

Dr. SNYDER. Just a couple of questions. I’m trying to understand

some of the numbers here, and I think it will take a little time beyond today’s hearing for me to do that, but a couple of statements

from your opening statement here.

Mr. Secretary, you say that the budget ensures more veterans

will receive high quality health care.

I thought that one of the effects—I assume that you’re talking

about your whole program, which includes the $1,500 deductible.

I thought that one of the effects of the $1,500 deductible is that

clearly some veterans will choose to go probably to a private physician, so I mean, where are these more veterans coming from?

I would assume that there will be less veterans served under this

plan than more veterans, or are we implying that there’s now veterans are getting not high quality health care?
23

Secretary PRINCIPI. Well, clearly, we expect, even with the $1,500

deductible, that workload will continue to grow above the 2002

level, so we see an increased number of new veterans coming to us

in 2003. I don’t in any way see any decrease below the 2002 level.

We think we will see a slower growth in new workload, new enrollees.

For example, a significant——

Dr. SNYDER. I’m sorry to interrupt you. My time is limited.

Secretary PRINCIPI. I’m sorry.

Dr. SNYDER. One of the effects is that you do expect that some

of the Category 7’s will choose to go elsewhere, is that not correct?

Secretary PRINCIPI. Yes. Yes, clearly. And I was going to say that

Tricare For Life might be a good example, where a military retiree

who is enrolled in Tricare For Life might choose to utilize his or

her benefits under the Tricare For Life program rather than coming to the VA, so they’re fully covered by Tricare and then they

choose to have an option.

Others may choose to use their insurance, or Medicare, to seek

those benefits.

Clearly, a segment of the Category 7 population would look to

other options for care.

Dr. SNYDER. You made a comment in your oral statement that—

in your written statement—about the—I think you were referring

to the health care budget as having a real and very large increase

of $1.57 billion. Am I quoting you correctly?

Secretary PRINCIPI. Yes.

Dr. SNYDER. Help me with figuring that out. They give us these

little blackberries, you know. It actually has a calculator on it that

I finally figured out how to operate on the plane the other day.

If I take the 2002 total medical program’s number of $22.8 billion

and then do my little long division there, $1.57 is just short of a

7 percent increase over the budget.

Secretary PRINCIPI. Correct.

Dr. SNYDER. Well, maybe I’ll ask Dr. Murphy. What’s the medical

inflation rate now? It’s substantially higher than 7 percent. So

when we talk about something being real and very large, I don’t

see that you’re holding your own.

Secretary PRINCIPI. Yes, I think medical inflation is probably

higher than 7 percent in the private sector, though I’m not sure it’s

comparable in the federal sector.

The vast majority of our employees are federal employees, so we

don’t have the wide variations and fluctuations in salary costs that

you see in the private sector.

While medical inflation is high, but our pharmaceutical procurements, for example, command the best discounts in the country,

our starting point is 24 percent below the average wholesale manufacturer’s price. We’re a large procurer, so we can control our costs,

perhaps better than some in the private sector can.

Dr. SNYDER. I understand all that, but when we’re talking about

real and very large increases, I don’t see that you’re doing much

more than barely holding your own, if that. I mean, is that fair?

Secretary PRINCIPI. I think that’s somewhat fair, but again, our

pay increase is 2.6 percent in the federal sector. The vast majority
24

of our expenses in medical care are payroll expenses, and we hold

those at 2.6 percent. That’s far less than the private sector.

I think we are gaining a little bit, but you’re right—inflation does

take its toll.

Dr. SNYDER. One of the other statements, you say that the budget reflects the largest increase ever proposed for veterans’ discretionary programs. If you took out the $800 million—— Secretary PRINCIPI. Yes.

Dr. SNYDER (continuing). Well, $800,794,000 for the transfer, the

OMB transfer, I assume that was imposed on you all, and if you

took out the $1,500 deductible, is it still accurate to say this reflects the largest increase ever proposed for veterans’ discretionary

programs?

Secretary PRINCIPI. Yes. At $1.57 billion, I don’t believe that

there’s ever been an increase equal to that amount.

So if you take out the $800 million, you take out the $260 million

for the deductible, with the $1.57 billion increase, that is the largest increase ever requested.

Dr. SNYDER. What was the largest increase ever asked?

Secretary PRINCIPI. I think it was about $1.4 billion.

Dr. SNYDER. And then my last question is perhaps more just a

comment.

We had a fairly vigorous discussion here last year about education benefits and the Principi Commission, and as you may recall, there were some fairly lofty statements here that we’re all

going to sit down this next year and work out a way to fund the

very lofty goals of the Principi Commission that basically would

mean a veteran would be able to go to the college of their choosing

that they qualified for, which may be a Harvard and it may be a

2-year technical college somewhere.

We’re going to be fighting, as the chairman said, just to fund the

improvements we made last year. I don’t see us making any more

steps on that road. Do you?

Secretary PRINCIPI. I think you’ve taken a gigantic step with the

passage and the enactment of the legislation this committee initiated.

It doesn’t buy you an education at some of the best schools in

America, limited only by your aspirations and ability, but I think

you’ve done a great deal more than I ever expected.

I think more needs to be done, because a large number of men

and women leaving the active service who paid for the education

benefit still are not using it.

Dr. SNYDER. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Dr. Snyder. I would just note for the

record that it was a 46 percent increase. Obviously, we had more

in our original bill. The Senate would not agree to our higher number, which we pushed very hard for, as part of H.R. 1291, but I

thank you for your comment.

Mr. Evans?

Mr. EVANS. Thank you, Mr. Chairman.

Mr. Secretary, why does VA buy almost 60 percent of its medical

and surgical supplies and equipment using open market purchases,

and is this consistent with the VA’s policy?
25

Secretary PRINCIPI. You are correct, and I intend to make procurement off the FSS mandatory. I applaud your bill, your legislation. We agree on the need for procurement reform, and we are

taking administrative steps to implement those kinds of recommendations; but I agree with you that the FSS should be

mandatory.

Mr. EVANS. Mr. Secretary, is every veteran enrolled in VA medical care obtaining a clinical appointment within 30 days?

Secretary PRINCIPI. I’m sorry, I didn’t hear that?

Mr. EVANS. Mr. Secretary, is every veteran enrolled in VA medical care obtaining a clinical appointment within 30 days?

Dr. MURPHY. Overall, the enrollees are obtaining primary care

appointments in 30 days, in 87 percent of the cases.

Mr. EVANS. What is your advice to the veteran who is waiting

up to a year for treatment who has a service-connected condition?

Secretary PRINCIPI. My advice is to e-mail me or get in touch

with my office, and we’ll get that situation corrected immediately.

No service-connected veteran who is seeking care in the VA

should wait more than 30 days for an appointment. Emergent situations should be seen immediately. In any event, a year is totally

unacceptable. That should not exist, and I apologize for it.

Mr. EVANS. Would you mind if we put your e-mail address in the

Congressional Record?

(Laughter.)

Secretary PRINCIPI. I’ll give it to you privately.

Dr. MURPHY. You may want to put my e-mail address in, not the

Secretary’s.

Mr. EVANS. Thank you, Mr. Chairman.

The CHAIRMAN. Chairman Simpson.

OPENING STATEMENT OF HON. MICHAEL K. SIMPSON

Mr. SIMPSON. Thank you, Mr. Secretary. I appreciate your testimony and your being here today, and I appreciate all that you do

for the veterans.

I do have a couple of observations, and then a few brief

questions.

As some of the members here have suggested today, it is a twoway street with respect to disability claims, because the Department, indeed, is administering a system that is designed by

Congress.

In my view, your claims task force did an exemplary job of finding ways with current law to wring every ounce of productivity and

quality out of the claims system Congress has put the VA in charge

of.

The Congressional Veterans’ Claims Adjudication Commission,

the General Accounting Office, the National Academy of Public Administration, and the Transition Commission, which you’re probably a little familiar with, all have made efforts to unravel the consequences of 50 years of incremental policymaking in the adjudication area.

Despite VA’s implementing recommendations of all the previous

studies and commissions, the problem remains the same.
26

For example, in December of 1993 when Congress was contemplating legislation that created the Veterans’ Claims Adjudication Commission, the pending claims workload was 570,000 claims.

This past November, when the VA Claims Task Force issued its

report, the pending workload was 533,000 claims, I suspect in large

part due to the VA having to apply the new duty to assist standards to 244,000 pending claims and to readjudicate 98,000 claims

that had been previously denied under old standards established by

the Court of Appeals for Veterans Claims.

So frankly, I’m hard pressed to believe that staffing, technology,

and other good government initiatives alone are going to solve the

pending workload issue.

I think the time has come when Congress can best serve veterans by taking the advice of the Transition Commission and dispassionately examining some of the policies driving the current

system.

The Signal Group of General Electric Corporation reviewed the

current system and concluded, and I quote, ‘‘It is perfectly designed

to get the results that it gets.’’

With respect to veterans’ employment, our most recent data

shows that seven out of 10 veterans that go to a job services office

seeking employment do not get jobs.

I’m working on a legislative proposal that will focus on incentives, accountability, and results that I hope to share with Ranking

Member Reyes later this week or next week.

In any case, Mr. Secretary, I look forward to working with the

Administration as we jointly endeavor to improve the $180 million

per year Veterans’ Employment and Training Service.

Now, one of the things I want to add, and it’s been mentioned

by Mr. McMichaels and by yourself, that as you set a goal to try

by the year 2003 to process claims within 100 days, some people

have suggested that that’s going to sacrifice quality, and you’ve

mentioned that it’s not.

I want to make sure that you’ve got that on the record, that quality is your number one priority.

Secretary PRINCIPI. Clearly quality is very, very important, and

I think we have mechanisms built in to ensure that people do not

get credit for inaccurate decisions, and our accuracy has never been

higher, at about 88 percent today. That compares to 59 percent in

the year 2000.

We have our star reviewers who objectively look at decisions to

ensure that they’re correct.

We continue to focus on quality, at the same time looking at

what steps we can take to improve our timelineness.

Mr. SIMPSON. What are you doing to work with, as the recommendation of the Cooper Commission suggested, to work with

the VSOs so that they bring forth more fully developed claims, and

will that help reduce the backlog if we can work with the VSOs

and get that done?

Secretary PRINCIPI. I don’t think there’s anything more important than to ensuring that we get a well-grounded, ready to rate

claim and that we don’t have to spend inordinate amounts of time

in developing that claim. To the degree that the service organiza-
27

tions can provide us with a complete claim that’s ready to rate,

that will certainly reduce the time it takes to adjudicate the claim.

Judge McMichael and I mention that frequently to the veterans’ service organizations when we meet with them to try to get them

to let us know what we can to assist them in providing us with

complete claims. I think it’s very, very important.

Mr. SIMPSON. I appreciate that, and anything that we can do to

assist in that effort and work with both the VSOs and yourselves

in assisting in that effort, let us know.

Finally, despite our warnings last year that prompted you to add

78 employees to the VA’s educational service, the average time to

process an original education claim soared from 36 days in 2000 to

50 days in 2001, a 38 percent increase in the time needed for a veteran to get his first education check.

Even worse, the blocked call rate soared to 45 percent in 2001,

an unacceptable level compared with a 3 percent blocked call rate

in other VBA activities.

Do you want to comment on that, and how can that happen when

we have 78 more employees?

Judge MCMICHAEL. Well, part of the problem was that education

calls used to go to all the regional offices. They were then shifted

to go into four of our educational processing centers, and we were

really unequipped at that time to handle it.

I think we’ve gotten a handle on that, and the blocked call rate

and abandoned call rate is going down dramatically.

We did have some problems in transitioning to new IT equipment which caused some problems. We think we now are on track.

The processing days are decreasing, and we think we’ll be able to

reach the targets we have.

Mr. SIMPSON. Thank you. I thank all of you for the work that you

do in helping our veterans, and this committee is here to help you

do your job better, and work with both the veterans and you, so

I appreciate your testimony.

Mr. Chairman, thank you for the time, and I apologize. I have

a video conference with my Senators, and as you well know, while

the Democrats and Republicans are oppositions here, the enemy is

the Senate. (Laughter.)

If I’m not there, they would take credit for everything good that

happened and blame us for everything bad, so I need to be there

for the last few minutes to defend the House.

The CHAIRMAN. Thank you. Mr. Boozman.

Mr. BOOZMAN. As a new member, I’d like to thank y’all for working so hard to get me up to speed, and I really do appreciate it.

I was looking at your testimony, and you talked about the Priority 7’s increasing 30 percent the last 6 years, and it looks like that

trend is going to continue.

Can you tell me why that is?

Secretary PRINCIPI. A combination of factors: better quality, better customer satisfaction, the opening of some 600 outpatient clinics close to the veterans’ homes have made VA the provider of

choice, not just the last resort when you don’t have an insurance

program.

Of course, the pharmacy benefit is one of the most generous in

the country.
28

And then coupled with what’s happened to the economy, and the

HMOs having closed—leaving veterans out there without any

health care coverage, as well as factories having closed around the

country, veterans may have had no health insurance as they’ve

gone to new jobs, even though their income was above the threshold. I think those all are factors.

So there are some positive reasons, but there’re also economic

factors that have led to some veterans not having health care.

Mr. BOOZMAN. In your report, it looks like that trend continues

to 2007, 2010, whatever. Do you see any leveling off in the future?

I mean, it looks to me like it’s kind of like you might have the

situation where maybe people are talking, you know, for all the

things that you mentioned. I mean, will there be a leveling off

where eventually the word gets out and they’re kind of there?

Secretary PRINCIPI. I think at some point it will slow down, but

not for the foreseeable future. I think a lot depends upon what happens in the private sector or with Medicare with regard to a pharmacy benefit.

A very, very significant number of the veterans’ Category 7 come

to us solely for medication—the pharmacy benefit.

Of course, we enroll them in the system for the continuum of

care purposes and provide them with a physical evaluation, but

their sole purpose is to get the benefit of the pharmacy.

So I think it depends on what happens in those other areas that

will influence the use of our pharmacy benefit.

I think because the VA has so improved and because we have

those outpatient clinics close to home, we do not expect to see any

leveling off anytime soon.

Mr. BOOZMAN. Okay. Thank you, sir.

The CHAIRMAN. Mr. Filner.

OPENING STATEMENT OF HON. BOB FILNER

Mr. FILNER. Thank you, Mr. Chairman. Thank you, Mr. Secretary. Good morning. I know it’s one of your favorite days of the

year.

We’re starting a long budget process.

Secretary PRINCIPI. Yes, sir.

Mr. FILNER. And clearly, the budget is a reflection of our priorities, and it’s from the budget that all these terms we talk about,

whether they’re backlogs or waiting times, come from. So we have

to have a clear and honest understanding of the budget so we can

determine how we want to deal with it. An honest accounting of

the numbers is very important.

I read your press release when this budget first came out. ‘‘It’s

the biggest thing in the history of mankind.’’ I was very thrilled

with that. I said at last we have the kind of increases that we need.

I know you to be a straightforward, honest individual who is

really caring about veterans.

So, if I would characterize the budget statement in your press release as smoke and mirrors, it couldn’t have possibly come from

you. It must have come from other people around you. I don’t want

to characterize the Secretary here, who I love so much.
29

What I want for all of us is to have a clear understanding of the

budget and what we have to do for our veterans and work with you

to do that.

Now, as I understand the budget, and Mr. Snyder brought it up

first, almost $800 million is a transfer from OPM. There’s no new

money here. It raises your budget, but your budget also assumes

a $1,500 deductible will go into effect.

When answering Mr. Snyder’s question, I think you answered, if

that doesn’t go through, I deduct $264 million and we still have the

greatest budget in the history of mankind.

Secretary PRINCIPI. Right.

Mr. FILNER. Now, as I read your budget, and correct me if I’m

wrong here, you also attribute to that $1,500 deductible a savings

of about $885 million; is that correct?

Secretary PRINCIPI. Correct.

Mr. FILNER. So a real answer to Dr. Snyder’s question would be

if you deducted the $700 million or $800 million from the OPM and

you deducted now $1.1 billion from the assumption of the savings,

you have lost now almost $2 billion, so it wouldn’t be the greatest

increase in history.

Secretary PRINCIPI. Oh, no. No.

Mr. FILNER. What am I doing wrong here?

Secretary PRINCIPI. No. The real increase is $1.5 billion. I mean,

the fact that if you have a deductible the growth may not be as

large——

Mr. FILNER. You wouldn’t have $885 million that you think you

have, right?

Secretary PRINCIPI. I don’t have it. I don’t have it. If I had that

$800-some-odd million, my real increase would be $2.7 billion, not

$1.57 billion. Am I right? I mean, I have $1.57 billion without including the deductible.

Mr. FILNER. You have expenditure reduction, according to your

budget, expenditure reduction of $885 million. That wouldn’t occur

if that didn’t go into effect, so you have 885 more expenses, right?

Secretary PRINCIPI. Well, it’s not an expenditure reduction.

Mr. FILNER. That’s what it says here.

Secretary PRINCIPI. Cost avoidance perhaps, but it’s not an expense reduction.

Mr. FILNER. I get that from your budget. This proposal will generate an overall net workload expenditure reduction of $885 million, and a revenue increase of $260 million for an overall savings

in the appropriation of $1.1 billion.

Secretary PRINCIPI. That’s the difference between the $2.7 billion

identified earlier. You take out the $1.1 billion, and you come out

with $1.57 billion increased funding for medical care separate and

above the $800 million from the OPM transfer.

The increased resources for medical care are on top of the retirement fund transfer from OPM. That’s on top of that, seriously. I

mean, it’s $1.57 billion that’s new money that’s coming to the VA.

Now, I think either it’s new money or it’s not new money. I believe from the Treasury of the United States, we are——

Mr. FILNER. I think we have to have an understanding, and we

will come to that.
30

You have inflation cost built into your budget for pharmaceuticals and other inflation.

Secretary PRINCIPI. Right.

Mr. FILNER. And it looks pretty low to me. What figures did you

use for that?

Secretary PRINCIPI. For pharmaceuticals?

Mr. FILNER. No, for anything. You have inflation in there, also.

Secretary PRINCIPI. Well, 2.6 percent is for our personnel costs.

Mr. FILNER. Well, that’s something different. You have personnel costs, $370 million, inflation of $396 million.

Secretary PRINCIPI. 3.9 percent for pharmaceuticals.

Mr. FILNER. That’s a pretty low figure. But if you deduct from

your total increase—forget the $1,500 deductible for a second—— Secretary PRINCIPI. Right.

Mr. FILNER (continuing). The OPM and the mandatory sort of increases that have to be there for pay raises, inflation, et cetera, you

come out with almost exactly the figure that you’ve increased the

budget, which means, if I have this correct, there’s not a dime of

new money for better health care. That’s the way I see it.

That’s the way we have to see it, because all you’re doing in your

budget is barely keeping up, and I don’t even think we are, as Dr.

Snyder said, because your figures on inflation are pretty unrealistic, and that’s on top of a shortfall from last year.

The baseline is not even sufficient to meet the needs of our veterans now, so if we have a shortfall of $400 million, or $1.5 billion

by the Independent Budget, and we’re not even keeping up, we are

really shortchanging our system, and this committee had better do

something about it.

I mean, you’re dealing with the President’s request. I think the

President’s request is several billion dollars short, based on these

figures, and the Independent Budget will try to show where that

is.

By the way, it doesn’t even assume that, when you put the retirement money in, in the discretionary accounts, now they’re going

to be competing with the medical health of, you know, of veterans,

and somehow that’s going to, in the future, give us some problems,

I believe.

In any case, I would like to point out—I appreciate the forbearance, Mr. Chairman—that if I’m right, and I’ll take out the $1,500,

because that’s a whole other story that’s going to cause problems

for you in the end, I think, because we may not pass that co-payment requirement.

This committee had better understand that we haven’t added a

dime, and we may be losing better health care for our veterans,

and we better add to this budget, and we better look at this very

carefully.

The CHAIRMAN. Mr. Gutierrez.

OPENING STATEMENT OF HON. LUIS V. GUTIERREZ

Mr. GUTIERREZ. Thank you, Mr. Chairman, and welcome, Mr.

Secretary.

I think that the $1,500, just to reiterate it, I didn’t come with my

Captain America hat here today, so I’m going to reiterate what my

colleague, Mr. Reyes, says.
31

I think the $1,500 is a non-starter and I think you’re going to

hear that. Maybe some other people want to go on the record here,

and I hope the chairman will leave the record open so that members of the Veterans Committee can say today whether they think

that we should charge the veterans an extra $1,500.

I think that’s the Captain America thing to do today at this hearing, because I’m going to go on record and say it’s a non-starter and

I hope other colleagues will say the same thing.

I say that specifically because really it’s not that huge of an increase. What we’re talking about is $1.4 billion, which you stated is the largest increase ever, and $1.57. So, you know, so a 10 percent, 11 percent, maybe a 12 percent increase—I don’t have my calculator here—over the largest.

Given inflation and everything else, it’s really—and given the

needs of the veterans’ community—it’s not really there, and given

the Independent Budget that we’re about to hear from, from a veterans’ organization, it leaves a lot to be desired.

Secondly, I hope we don’t get into this today here in this committee, to throw around the category, the Priority 7 veterans, and kind

of throw them around, because I think we’re being a bit dismissive

about them here.

I think everybody that’s in Afghanistan, including just men and

women who come back, and I hope they all come back without

wounds. But if subsequently, they need the Veterans Affairs Administration, we shouldn’t say, ‘‘Oh, that’s a Category 7.’’ You know, they’re not Category 7, they’re all Category 1 when

they’re out in Afghanistan and the Gulf War or wherever, defending this Nation, and we should treat them all the same and there

shouldn’t be a difference of how we approach them. It’s almost gotten again to be as though a bad word, Category 7. ‘‘Oh, it’s not related to an injury they suffered in time of war and combat.’’ I think

they all should be treated equally.

I think especially at a time when we have our President, Commander-in-Chief of our armed forces, saying ‘‘We need more money

to train them better, we need more money to equip them better, we

need to pay them better,’’ we also need to make sure we’re going

to spend more money so we can take care of them better when they

come back after the service.

I think there’s kind of a, I don’t know, just a disconnect between

preparing our men and women for service and for combat, and then

what we say when they come back.

We’re talking about increasing their salary, but then we want to

take it back on the other end by charging them $1,500 when they

come back if they want to use the VA, by charging them additional

co-payments, which we have increased in my 9 years in Congress,

we continue to increase payments and co-payments on veterans;

and the services, I’m sorry, according to my veterans, are getting

worse.

The one thing I do want you to address is this whole issue in

Chicago with the CARES.

Now, I don’t think, Mr. Secretary, it’s fair to our men and women

to announce Friday, at 2 o’clock, without informing anybody—I got

the press release in the morning. That’s when I found out about

it, in the morning.
32

Now, you gave a little more forbearance to the Senators, which

you sent, for my state, on Thursday.

Now, I’m a member of this committee. I don’t expect any special

prerogatives, but I think in Chicago somebody would have called

and said, ‘‘This is what we’re going to do.’’ But that’s really not the

case, Mr. Secretary.

You know what was worse? You didn’t call any of the stakeholders, which I really don’t like, because I find there’s a new euphemism for veterans. People don’t want to say veterans, so people

now say stakeholders, because it’s easier to talk about stakeholders

than veterans.

You didn’t call the veterans groups, which work in every one of

your hospitals—Paralyzed Veterans, the American Legion, they’re

there, working, and I mean so many different organizations.

So I’m a bit concerned, because Mr. Principi, I’ve been to Hines.

I’ve seen men, I’ve seen women without arms, with a plate of food

in front of them, and nobody to serve them that food.

And when I say, ‘‘What happens to that food?’’ The patients said, ‘‘There’s nobody.’’ The hospital staff said, ‘‘Well, we don’t have

enough personnel. We’ll warm it up.’’ You know, that’s almost a crime, to give a person that doesn’t

have arms a plate of food and say, ‘‘We’re going to warm it up.’’ When they serve me my food, I expect it to be hot, so that I can

eat it, and I expect the veterans to get it not warmed up.

I don’t know if you’ve visited Lakeside, Mr. Secretary. I visited

Lakeside. That place is jam-packed. People are there waiting for

appointments. It’s not like, you know, Lakeside is empty and Hines

is empty. The fact is, people are waiting for services.

And now we’re going to close a hospital, and Northwestern Memorial Hospital has said, Mr. Secretary, ‘‘We’re not sure we’re

going to cooperate. We’re not sure we’re part of this deal.’’ So what

if we lose it for our veterans? That’s what Northwestern Memorial

Hospital has said.

And you know that they issued a press release on Tuesday, because they weren’t happy with it, because they knew you guys were

going to go in on Friday at 2 o’clock and everybody in politics

knows that when you want a very bad news cycle, the day you put

it out is Friday afternoon, so that hopefully, no one will know about

it. That’s a bad time to put it out.

If you’ve got good news and it’s going to improve the veterans’

services, then I suggest you—when I got good news for people in

my community and I’m proud of it, I’ll tell you what I do. I go out

there and call a public hearing and tell everybody, call a public

press conference and tell them, ‘‘Look what I’ve done.’’ That didn’t

happen in this case.

Lastly, I’m really worried, because I know you have good motives, and honest motives in doing this stuff, but if you look at the

educational benefits, I mean, we all know what happened. We had

good intentions, right? But you weren’t equipped when you made

the changes.

How do we know that, given the good intentions, that when we

close down, as you wish to do with Lakeside Hospital, we’re not

going to have the same detrimental effect that we had with educational services when you switched them.
33

I mean, I think we should be very, very careful here in how it

is we treat our veterans.

And lastly, we hope that someone will show up. The Illinois congressional delegation is going meet this Saturday at 1 o’clock, and

we’ve called on the VA Administration to send a representative and

we hope the representative will come, because our VA organizations are all coming down to testify, to talk about how they feel

about Lakeside.

Secretary PRINCIPI. Can I respond?

Mr. Guttierez, I apologize if you didn’t get the word on Thursday.

There’s no excuse for that. The word was that all the members of

the delegation were to receive the information the afternoon of the

day before.

Now, I agree with you about Category 7’s, and, Category 7 versus

Category 1 through 6. There are no easy decisions.

I believe the Congress established seven different categories.

They’ve asked me to make an enrollment decision every year based

upon the resources available for Category 7’s, and I think that’s

why the focus is on Category 7’s.

But you’re right. Many of the Category 7’s scaled the walls of

Normandy and, to the degree we can provide them with health

care, I think we should; but we know what the growth has been,

and how do we grapple with that growth?

With regard to Lakeside, I know that’s a difficult decision, and

I believe it was the right decision. I know it’s difficult.

I want to stress that there is going to be an outpatient clinic on

that site. It’s only the inpatient tower, the inpatient beds that are

going to be consolidated.

I think we need to do that because that’s where health care has

gone, in consolidated inpatient services and moving more into outpatient care, primary care with outpatient clinics around the country. We’ve tried to accomplish that.

I’m disappointed by Northwestern’s attitude. We have a great affiliation with the University of Illinois at Westside, and Northwestern has been invited to participate, just like Harvard and Boston

College do up in the Boston area if they choose to do so.

If they choose not to affiliate with us, then we will have a topnotch affiliation with the University of Illinois.

But we’ve made an outreach to them. We’ve invited them. We’ve

implored them to join us in that affiliation, but they’ve taken this

as it’s a reduction in revenues to the university.

We’re in the business of health care treatment. Education helps

us to get there. They’re an important partner.

But our primary mission is treatment, not medical education,

and to the degree that they work with us and we both benefit from

it, I think that’s the ideal world.

But I cannot be held captive because a medical school doesn’t

want us to change, because it somehow impacts on revenue to the

university.

We’re in the business of treating patients, and we can treat more

patients with outpatient clinics and by consolidating beds. Remember, we have three other hospitals in Chicago. Many of the private

sector hospitals have closed down, but we somehow are being held

back to the mid-20th century.
34

And I believe that the stakeholders were involved in this, Mr.

Gutierrez. We involved the stakeholders.

Mr. GUTIERREZ. Let me just suggest, Mr. Secretary, that someone

should come and explain to the stakeholders, because there are, in

all fairness, there are 435 of us, and only one of you; so probably

we’ll talk to the stakeholders more than you, just by our sheer

numbers.

So someone should come and explain to them and call them together, and say, ‘‘We’re making this decision,’’ get everybody together and say, ‘‘Here’s how we’re doing it.’’

Secretary PRINCIPI. Sure. We’ll have someone there to represent

the VA.

The CHAIRMAN. The gentleman from Texas, Mr. Rodriguez.

OPENING STATEMENT OF HON. CIRO D. RODRIGUEZ

Mr. RODRIGUEZ. Thank you very much, Mr. Secretary. I also

want to thank you for coming to San Antonio. I know you have a

great deal of respect from both sides of the aisle, and we all recognize that you’re sincere, and we understand the dilemma that you

find yourself in.

I do want to just indicate—and I know you made a distinction

between the largest budget requested and the largest budget you’ve

obtained.

My understanding is that both sides—Democrats and Republicans—have not been providing adequate resources for the VA. I’ve

been up here 6 years, and it’s been like pulling teeth.

Basically, what you’ve just laid out, the additional $3 billion in

discretionary spending is what is needed in real money, because

what I figured—and I don’t know if you guys get sent to the fuzzy

math school—is that the increase is less than a billion. And follow

me if you can.

My understanding is that the proposed $1,500 Priority 7 deductible amounts to is actually $1.1 billion. Another $400 million is attributed to higher co-payments for prescriptions. Then, $600 million is based on ‘‘cost savings’’ or cuts. To me, that adds up to $2.1

billion with a billion leftover.

Is that correct?

We have to go back and check it out.

Secretary PRINCIPI. We’ll be happy to look at what goes into the

base and what——

Mr. RODRIGUEZ. If that’s the case.

Secretary PRINCIPI. Okay. I’m sorry.

Mr. RODRIGUEZ. If that’s the case, it’s actually the same amount

that this administration proposed last year.

Last year we had an extra $1.4 billion, which was less than the

previous 2 years, which was, I think, $1.5 billion or $1.7 billion. So

if this year $1.7 billion more is provided, it brings it up to par—

if it’s real money.

What I see is a need for us to work on is appropriating about $3

billion more in real dollars to make some things happen at the VA.

Because our veterans are getting older, and they’re going to need

us more. I’m not going to play around with the numbers, because

I think we really need to come back to that.
35

I do want to get to one other issue that is real critical in my back

yard. As far as I know, and you can tell me otherwise, I, Congressman Ortiz, Congressman Hinojosa, Bonilla, Congressman Lamar

Smith, represent one of the largest number of veterans in the country, in one of the largest regions in the country, and there’s a real

need for a national VA cemetery.

I was wondering what the justification was for two additional

veterans cemeteries, with one in Pittsburgh, what is the criteria?

Secretary PRINCIPI. It’s based on the number of veterans and the

fact that there’s no national cemetery within 75 miles. We have a

75-mile radius that we use for planning purposes.

Mr. RODRIGUEZ. I have 240 miles. Can we talk? I mean, I have

veterans, I got a county with 600,000 people, that’s 200 miles away

from San Antonio. There is another county, Nueces, with 300,000

or 400,000 residents, 150 miles from San Antonio.

There is also Cameron County with 300,000 people. That’s a little farther from San Antonio, farther south.

I don’t represent all those areas. Ortiz has both Cameron and

Nueces. Hinojosa has a lot of the area, I have the rest.

So I wanted to ask you the rationale for that, and you’re already

moving on that, is that correct?

Secretary PRINCIPI. I’ll look at that, yes, sir.

Mr. RODRIGUEZ. Can I talk to you seriously about it? Because we

really need to talk.

I just assume Miami has a lot of veterans down there, because

veterans are retiring down there, and therefore, I didn’t ask you

about that. However, I am concerned about an area that’s losing

population, like Pittsburgh, in terms of the number of veterans will

put my number against anyone else’s.

Secretary PRINCIPI. I would be pleased to talk with you about it.

Mr. RODRIGUEZ. Yes, and then we can sit down and see what we

can do for those people.

And once again, I’m addressing the needs of not just my constituents. There are a lot of veterans down there in those other congressional seats that adjoin my district and are part of the same VA

region.

Secretary PRINCIPI. Yes, sir.

Mr. RODRIGUEZ. Once again, we thank you for your sincerity. I

know you’re sincere about wanting to do the right thing.

Mr. Chairman, I hope that we can really come to terms with this,

because I really feel that that $3 billion needs to be in real dollars,

because that $1,500 deductible is not realistic for some of those

people. I already had a meeting on Sunday with a VFW chapter in

my district. I can assure you that they’re going to start raising all

kinds of hell. They already know about it.

The CHAIRMAN. My understanding is Mrs. Carson has to leave.

Mr. Lynch, if you wouldn’t mind, I’ll yield.

Mr. RODRIGUEZ. And one other thing, Mr. Chairman. I apologize

one more time.

The CHAIRMAN. Sure.

Mr. RODRIGUEZ. This hearing was scheduled at the same time as

the Armed Services Committee hearing. I don’t know how we can

work that out.
36

The CHAIRMAN. Ours is scheduled first, I’ll say for the record.

Mrs. Carson.

OPENING STATEMENT OF HON. JULIA CARSON

Ms. CARSON. Thank you very much to my colleague for yielding,

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

much, Mr. Secretary for being here.

I’m certainly a very ardent fan and appreciate and respect so

much your great job, and for you being in my district, I have to add

that, since everybody else is bragging about you being in their district, as well.

A very quick question. Mr. Chairman, I’d like to submit a statement for the record.

Mr. Secretary, Mr. Reyes raised the issue of funding for the VA

inspector general. From my first day on the oversight subcommittee, I recognized the cost effectiveness of the VAIG. They save VA

$86 for every dollar that IG spends, so I’m glad Mr. Reyes joined

me.

By adding an additional 39 people to the IG office beyond the increase proposed by VA, the IG will be able to review issues like

credit card fraud and other problems.

It still takes 110 FTEs to get a 3-year cycle for management assessment. The VAIG is small and the VA is large.

And I guess that’s all I have to say about that. Thank you very

much.

The CHAIRMAN. Thank you, Mr. Lynch, for your courtesy, and I

yield to Mr. Lynch.

Secretary PRINCIPI. I agree with you, Congresswoman, and we’ve

increased the IG 15 percent or 56 FTE since I arrived. I’m concerned that we don’t have the staffing for a 3-year audit cycle. We

need to work through that.

But they certainly have helped us improve our management and

our efficiency, clearly.

OPENING STATEMENT OF HON. STEPHEN F. LYNCH

Mr. LYNCH. Thank you, Mr. Chairman. Mr. Secretary, I’ll just

say that I just finished my third tour of my VA facilities in my district since being appointed to this committee, and actually being

elected to Congress, and I’m encouraged to say that I have yet to

hear a complaint about the quality of care.

Whether it’s the VA hospital or West Roxbury facility or Jamaica

Plain or the shelter for homeless veterans on Court Street in Boston, not far from where I live the quality of care is applauded by

the veterans, and they have nothing but the most wonderful remarks about the nurses and doctors and staff in our VA hospitals.

The complaint that I hear is about access. Access can mean—and

I won’t go into it in detail, because it’s much too parochial and I

want to avoid that.

But access can mean the 18-bed psychiatric facility in Jamaica

Plains that is being moved some 30 miles south, and then it’s going

to be moved back after 4 years or 5 years, back into Boston, the

upset that causes, that break in access for a lot of my veterans, and

we have to figure out a way to do that. I won’t take up the time

of the committee on that.
37

There’s also another kind of access, and that is the matter of

claims.

Now, I know we have about a half a million outstanding claims.

I notice that in Boston, we have about 5,000 claims outstanding,

and the number is rising.

I noticed down in Florida, where a lot of my constituents are retiring to, the number is about 30,000.

Do we at all prioritize between the type of claims? Just in my

visit yesterday, I had complaints from veterans who were just recently leaving the service or just about to leave the service, active

duty.

I also had some heartbreaking reports from the veterans’ homeless shelter in Boston. We have people who are just basically waiting to die and they’ve got outstanding claims.

Do we prioritize? Do we look at the situation of a veteran, and

say, ‘‘Okay, well, we’ll move them to the top of the list?’’ Is there

any of that going on?

Secretary PRINCIPI. We do have triage, but let me ask Judge

McMichael, who runs the Benefits Administration, to perhaps give

you some detail on that.

Mr. LYNCH. Thank you, Mr. Secretary.

Judge MCMICHAEL. Of course, one of the items, particularly for

older veterans, has been the establishment of the Tiger Team,

which is particularly looking at claims of older veterans, and that

was an initiative of the Secretary, and we’re handling large numbers of those through the Tiger Team.

The Tiger Team was established in Cleveland. We also have a

number of Resource Centers. Some of our best people have been assigned to that, and they are looking at claims of veterans 70 and

older throughout the country. Those claims have yet to be decided,

and they’re establishing priority on that.

We have entered into a Memorandum of Understanding with the

National Archives and Records Administration (NARA) to aid in

improving the timeliness of obtaining military records. Eliminating

the delay will provide us the opportunity to address pending claims

more rapidly. This is one avenue that we are pursuing.

Another thing is triaging. That is, looking at the claims as they

come in and assigning some kind of importance to them.

You have a widow’s claim come in, you have claims that somebody has serious medical problems, those are being examined and

being assigned so that they could be dealt with quickly. Those

claims needing the attention the most get it the quickest. This is

the approach recommended by the Task Force, and one that we are

implementing in all of our regional offices now.

Mr. LYNCH. Okay. I’m just fearful. I see us getting to that point,

where going to get a huge wave of these type of claims, and it’s not

going to be something that we’re going to be able to address in an

orderly fashion, unless we set up a system to receive those claims

now.

Secretary PRINCIPI. That’s what we’re trying to do.

Judge MCMICHAEL. That’s the whole idea behind triaging of the

claims, yes.

Mr. LYNCH. All right. Thank you, Mr. Secretary. Thank you.

Mr. FILNER. Mr. Lynch, would you yield to me?
38

Mr. LYNCH. Yes.

Mr. FILNER. I didn’t know if you were finished. I don’t want to

interrupt.

Mr. LYNCH. No, go right ahead.

Mr. FILNER. As I listened to the testimony and the answers to

my colleagues, I’ve come to the following conclusion.

I think, Mr. Secretary, the trumpeting of this big increase when,

if you look at the figures that have been brought out here, is not

really an increase in real terms, and if the $1,500 doesn’t go

through, forget what the baseline is now, you’re going to need $1.1

billion more to make up for that, you’ve made it more difficult for

us to convince our colleagues that we need more money here.

That is, if they think you’ve got the biggest raise in history, and

we want—and I know you do, too, sir, we’re not questioning that—

we want to treat our veterans better, we’re going to have problems,

because of that publicity.

They’ll say, ‘‘Hey, you already got the biggest increase in history,

you don’t need more.’’

So I think we have to be, you know, restrained here and honest,

and work together, to get some more money for you, because we’re

going to have to convince our colleagues.

Our chairman fights very hard in the Appropriations Committee

and, the leadership, and we’ve got to give him all the ammunition

that we can.

Thank you.

The CHAIRMAN. Thank you, Mr. Lynch. The chair recognizes Mr.

Hill, the gentleman from Indiana.

OPENING STATEMENT OF HON. BARON P. HILL

Mr. HILL. Thank you, Mr. Chairman. Thank you, Mr. Secretary,

for coming and agonizing over us once again.

I’m going to pick up on the claims, the rating claims. The chart

here that I’m looking at, in February of last year, in the Indianapolis area, there were 752 rating claims pending over 180 days. February 1, 2002, there’s 2,360.

In Louisville, February 2001, there were 2,190 rating claims

pending over 100 days. Today there’s 5,962.

Now, in your testimony you talked a great deal about the Tiger

Team and you have an ambitious goal of reaching 100 days to process compensation and pension claims by the summer of 2003.

That seems to be, to me, unrealistic, but I’ll let you defend it and

explain to me specifically, and this committee, why you feel like

you can attain that goal.

Secretary PRINCIPI. Well, first, we’ve hired 1,100 new people this

past year. We will hire another 125 this coming year.

It is my hope that very shortly they will all be adequately

trained and capable of meeting the performance standards we expect of them.

We have put in place new mechanisms, new procedures upon

which to expedite the processing of claims. As Judge McMichael indicated, we’ve begun triaging, so as these claims come in, they’re

placed under control almost immediately and claims that are ready

to rate can be rated.
39

We now have specialists who can work on specific types of

claims, whether it be diabetes or whatever, pension claims.

I think veterans will see increased productivity from the totality

of the steps we’ve taken, including the important one of hiring new

people and getting them trained quickly, along with our performance standards and our production goals. All our workers are now

focused. They now know what needs to be done.

I’m optimistic. I know it’s a sobering fact in the sense that we

have a long way to go, but I believe we need to stay the course and

we can work toward that goal.

If we have to make adjustments along the line, I’ll be the first

to make the adjustments. If we need more people, I’ll be the first

to go to the President and say, ‘‘I need more people to get the

claims backlog down.’’ But at the same time, you’re correct. We’ve had 60,000 diabetes

claims when we expected 30,000 the first year. We’ve had other

areas where we received more claims than we expected, Gulf War

for instance. We’ve had an increase in claims in that area.

So I’m not ready to say we need to change the goals from 100

days. We’ll watch it carefully, and we will make adjustments as we

go along.

Mr. HILL. I wish you well. I hope that you can get the job done

here. It is a serious problem that needs to be taken care of, and

people are suffering because of these pending claims, so I wish you

well.

But I hope this committee will monitor this very closely in the

next 18 months, and if there does need to be adjustments between

now and that stated goal, then we ought to come back and make

those adjustments and see what the committee can do to help you.

Another question. Under the new Employment Grants Program,

you have proposed to transfer three grant programs to VA—the

Disabled Veterans Outreach Program, the Local Veterans Employment Representative, and the Homeless Veterans Reintegration

Program.

What will happen to the federal personnel associated with these

programs and what will happen to the State and local personnel

associated with those programs?

Secretary PRINCIPI. The federal personnel will come over to VA.

They will be transitioned to VA.

We’re in the process of preparing legislation to move the entire

program over to the VA. We would like to see some changes made

in how the program is administered. We believe that it’s important

that there be performance goals, that it be outcomes based.

I think notwithstanding the fact that we’ve got good people, we’re

working under a model that is no longer workable in the information age. As a result, we see an unemployment rate of 9.6 percent

for recently separated veterans between the ages of 20 and 24.

We have 17 States wherein fewer than 10 percent of the veterans

who go to the employment offices were placed in permanent, suitable employment. We have over half a million veterans who have

been unemployed for more than 15 weeks.

I think we could do better than that, and I believe that with increased emphasis and looking at some new ways to do that work,

we can get it done. But I plan to bring everyone over to the VA.
40

Mr. HILL. Including State and local?

Secretary PRINCIPI. I don’t think the State and local would come

over.

Judge MCMICHAEL. They’re the ones that receive the grant

money, and assuming that the State complies with the requirements we lay out, they presumably would be eligible to continue receiving that funding.

Mr. HILL. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. Mr. Miller.

OPENING STATEMENT OF HON. JEFF MILLER

Mr. MILLER. Thank you, Mr. Chairman.

Mr. Secretary, thank you for your testimony, it’s good to see you

again, and your work on behalf of our Nation’s veterans, and Colonel Higgins it’s going to be a pleasure to be working with you

again.

I would say that again, it sounds like the Secretary has been in

everybody’s district but mine, so I look forward to the possibility

of your visit to the First Congressional District of Florida.

This committee, under the leadership of the chairman and the

chairman of the Armed Services Committee, Chairman Stump, has

grown increasingly interested in the prospect of joint health care

ventures and facilities sharing between DOD and VA, and I guess

these two committees are planning to hold hearings on this topic

in the coming months.

Additionally, I know that many of the health system planners

and health care networks have identified these partnerships as

possibly the best way to achieve long-term solutions to our growing

health care service problems.

I just would like to ask if you could speak to the issue a bit more,

and give us some concrete ideas on how and when you plan to seriously evaluate expanding this opportunity.

Secretary PRINCIPI. Well, sir, we have been working extremely

hard with DOD to break down the barriers between DOD and VA

on the delivery of health care.

I really do believe that we are making progress. Our executive

council, made up of high-ranking officials from VA and DOD, have

met. We have identified areas of cooperation in procurement, pharmaceuticals. We’ve made good progress in that regard.

I think over $1 billion worth of pharmaceuticals that DOD uses

are now purchased by the VA. We’re looking at equipment and

medical/surgical supplies. There’s some real progress there.

We have identified areas where we can work together in information technology, the computerized patient record, and more and

more sharing at the local level with DOD and VA facilities, at hospitals around the country.

So there is a renewed emphasis on this. There are still a lot of,

you know, walls that separate us, if you will. You know, change

comes about slowly, but I think there’s a high level of leadership

interest in making the changes, so I’m cautiously optimistic.

Mr. MILLER. Thank you.

The CHAIRMAN. Thank you very much. Ms. Berkley.
41

OPENING STATEMENT OF HON. SHELLEY BERKLEY

Ms. BERKLEY. Thank you very much, Mr. Chairman, and it’s a

pleasure to see you again, Mr. Principi. I’m very delighted that you

also came into my congressional district and visited. (Laughter.)

As you know, I enjoy a very close relationship with my veterans,

and they are extremely active on issues that impact the veterans

community.

I’ve spoken many times, as a member of this committee, about

the needs of the veterans in my district. As you know, I have approximately 260,000 veterans who are eligible for VA care and

benefits.

Their needs are many, and unfortunately, it seems that our resources are still too few and to small to service the number of veterans in my district.

One of our major issues that I first spoke of 3 years ago when

I was first elected is the waiting times at my VA clinic, which you

visited. the waiting times have, in fact, decreased, but unfortunately, not by much.

As of July 2000, wait times for new patient appointments still

ranged from 47 to 85 days. I’m still having trouble providing specialty services to veterans in a timely manner and many of my VA

patients still have to travel to California for specialty surgeries.

You know what a hardship it is, not only on the veterans but the

veterans’ families, when their loved ones have to go several hundred miles away for care.

There’s a serious staff shortage at the VA clinic in southern Nevada, with doctors being much in demand and the least available,

and I’m not sure that this budget provides for the hiring of more

staff, particularly the nurses.

32,000 veterans are treated by the VA in the southern Nevada

health care system. For these 32,000 veterans in my health care

system, in our health care system, there are approximately 600

full-time employees on staff. That’s approximately one staff member for every 53 veterans that need treatment.

The number of staff is simply not adequate and I’m worried, with

this budget, that it’s not going to increase.

More facilities are needed for the veterans in southern Nevada.

The greatest need, of course, is for long-term facilities and hospitals. Currently, we contract out for long-term care for 26 of our

veterans.

Long-term care facilities in general are very rare in southern Nevada. Eighty-three percent of our long-term care facilities are bankrupt, anyway, so it’s extremely difficult contracting out for this

many veterans, and this number is only going to increase, because

all those veterans that are leaving Pittsburgh are moving to Vegas,

and that’s the truth.

I’m a little perplexed by Mr. Miller’s comments regarding the

movement on the part of the Veterans’ Administration to consolidate hospital services with the Department of Defense. Veterans in

southern Nevada currently share hospital space, as you know, with

the Mike O’Callaghan Federal Hospital.

Now, veterans account for 60 percent of the inpatient beds in the

hospital and have a very large outpatient presence there.
42

I was under the impression that we were working very hard to

get a VA hospital of our own so that we didn’t have to share facilities with the Nellis Air Force Base personnel, and the preponderance of the most complicated acute care cases in the Mike

O’Callaghan Hospital, which is right outside Nellis Air Force Base,

the most complicated cases handled are cases of our veterans.

There’s no doubt to me that we need a VA clinic, a VA hospital,

in Las Vegas to service those 260,000 potential patients.

When it’s your turn to comment, I’d really like to hear your

thoughts on that, because I’m a little confused with what your answer was to Mr. Miller and what you and I have talked about.

And the last thing, the final thing that I would like to comment

on is, as you know, there’s a large homeless veterans population in

my district. Twenty-seven percent of the people that are homeless

in Las Vegas are veterans.

Last December I very proudly joined with members of this committee when President Bush signed into law the Homeless Veterans Comprehensive Assistance Act.

This legislation is a tremendous step forward for homeless vets,

but the President’s budget, as I see it, leaves little room for this

program’s expansions, and I would appreciate it if you shared with

me how the proposed budget is going to accommodate the implementation of this new law so I could actually help and deliver to

my homeless veterans, and also to my veterans that need a hospital so desperately.

Secretary PRINCIPI. Having visited the outpatient clinic in Las

Vegas, I was not surprised, but I was awed, by the large number

of veterans who were there. It was just incredible how crowded the

clinic was and how many veterans were seeking their care at the

outpatient clinic.

It’s a beautiful outpatient clinic that I assume will probably need

to be expanded to meet the growing workload in Las Vegas and

Nevada.

As regards the hospital, we need to look seriously at the potential of expanding the hospital. I don’t know if we’re going to have

the resources to build a new VA medical center in Las Vegas, if

that’s what you feel needs to be done.

Ms. BERKLEY. That’s what Mr. Norby and I have been talking

about. Unless he’s been blowing smoke in my direction for the last

2 years, it was my understanding that that was our next project.

Secretary PRINCIPI. A new hospital in Las Vegas was the next

project?

I’m not aware of any plan for a new VA hospital in Las Vegas.

But if need be, we can look at expanding our presence at the joint

VA-Air Force hospital in Las Vegas, to expand capacity, expand the

number of beds, and to expand the outpatient capability.

There may be, in the future, a requirement for a new VA medical

center, and I think that analysis will come about through the

CARES process as we look at the entire infrastructure around the

Nation and make determinations of what hospitals should be

closed, what new hospitals should be opened, where they should be,

and things of that nature.

I agree with you that there’s a tremendous workload in Las

Vegas. It’s growing by the day. It needs to be addressed.
43

I would hope that the $142 million supplemental in 2002 that

will be forthcoming shortly and the increase, depending upon how

you calculate it—we’ve heard different ways to do that today—will

allow for continued, some continued growth in Las Vegas to meet

the burgeoning demand.

Ms. BERKLEY. The homeless?

Secretary PRINCIPI. The homeless. This year, we are proposing a

10 percent increase in our budget for homeless initiatives.

Again, I think we’re doing a tremendous amount in the area of

homelessness with our grant and per diem program. I believe last

year I awarded $60 million in grants for transitional housing and

other similar type programs.

Of course, addressing the underlying behavioral issues dealing

with homelessness, PTSD, alcohol and drug abuse, chronic mental

illness, are key areas.

But indeed, we have a 10 percent increase in the budget for

homeless initiatives and will continue to expand upon the grant

and per diem program.

So I think we’re doing an awful lot. The programs are getting

good resources. I think it’s outcomes that we need to look at to ensure that the dollars we’re spending and the programs are in fact

yielding good results.

Ms. BERKLEY. And what about my nurses? Where are they coming from?

Secretary PRINCIPI. There’s a tremendous nursing shortage in

Nevada, Congresswoman Berkley.

We all know that there’s a tremendous shortage, and we’re doing

everything we can to recruit nurses and to retain them in the VA

health care system, to give them competitive salaries with the private sector.

But your city has a terrible crisis in nursing, and of course we

feel that, just like all the private hospitals in Las Vegas feel it, as

well.

Ms. BERKLEY. Thank you, Mr. Chairman. I’ve just been handed

a breakdown of the budget, and it shows that money for the homeless veterans will decrease in fiscal year 2003, from $18,250,000

down to $17,500,000. Is that in contradiction to what——

Secretary PRINCIPI. I have in front of me an estimate that we

will increase the number of patients treated from 39,000 to 43,000

in 2003. That’s up from 35,000 in 2001, so we’ve grown about 7,000

new veterans that we’re treating in the homeless program. Those

are the figures I have.

Dr. MURPHY. And the budget goes to 39 million.

Secretary PRINCIPI. I’ll provide you the budget figure, for the

record.

Ms. BERKLEY. Okay, because the information I’ve received, with

all due respect, is that the Homeless Veterans Reintegration Program is extremely popular with widespread support from the veterans community, but the Administration has proposed transferring

this program to the VA and consolidating it with two other State

employment grant programs that are constantly criticized as being

ineffective. I’m not sure that’s a really great idea.

And again, I’m dealing with a huge homeless population of veterans and requests on a daily basis for some request.
44

Dr. MURPHY. The homeless veterans program budget will increase by 10 percent this year. We’re dedicated to making sure that

we follow through on our commitment to improve our homeless veterans programs. In fact, this committee supported passage of Public Law 107–95.

We have challenges in our homeless programs, but we will work

very hard to make sure that we have a plan in place that will address this issue and we will work towards implementation of Public

Law 107–95.

Ms. BERKLEY. Would you share that, then, when you are able?

Would you share that with me? Because I feel very strongly that

I have a tremendous responsibility to help the veterans that not

only live in my district, but live throughout this great nation, and

I wan to be able to deliver on my promises to them, as well.

Mr. Chairman, before Mr. Udall left, he gave me a question and

asked if I could give it. What is the proper procedure for that?

The CHAIRMAN. What we’re going to do, several of us have additional questions that, for want of time, we’re going to submit for

the record, normally within 2 weeks or 3 weeks.

Ms. BERKLEY. May I submit this on his behalf?

The CHAIRMAN. Yes, without a doubt, and Mr. Secretary all

members will submit some remaining questions that we all have,

and we hope that you’ll get back for responses expeditiously.

(See p. 166.)

Ms. BERKLEY. Thank you very much.

The CHAIRMAN. I’ll just say for the record that I, too, was concerned with the Department of Labor’s slight decrease of the

Homeless Veterans Reintegration Program. We specifically increased that in our authorization, believing it to be another one of

those programs that work well.

Money is policy, money means more people will be spared pain

and hopefully will find gainful employment instead of homelessness.

So I share the gentlelady’s concerns.

Let me just, in closing say to you, Mr. Secretary, you’ve been

very gracious with your time, 21⁄2 hours on the hot seat, and we

thank you for that, not unexpectedly, though. You’re always gracious with your time.

I just want to again ask that you provide us with that plan for

the implementation of the Millennium Health Care Act.

Secretary PRINCIPI. Sure will.

The CHAIRMAN. Just a quick, cursory look at the numbers. If you

went from 1999 to 2001, there’s been a net decrease of nursing

home beds, from 33,204 to 31,941. You’re right, the States have

seen an increase of about 1,200, but the VA itself and the community based beds are down 1,000 and 500 respectively.

So the trend line is discouraging, and, even if you feel the money

isn’t there, that’s part of what our job is, based on a needs-based

analysis, finding the money, and if we can’t do it, if we fail, we fail,

but certainly, if we had that data on a plan, that would be helpful

for us to implement that bill.

Secretary PRINCIPI. You’ll have the plan, Mr. Chairman.

The CHAIRMAN. Again, I want to thank you so much and your

very distinguished staff.
45

I’d like to welcome our second witness, who is Mr. Fred Juarbe,

Assistant Secretary for Veterans’ Employment and Training, Department of Labor.

Mr. Juarbe has appeared before this committee on many occasions in the past, having served as Director of the VFW’s National

Veterans Service for more than 20 years.

This is your first appearance as the Assistant Secretary for

VETS, and I want to thank you and congratulate you for being

here today.

Most of your career has been dedicated to helping veterans in

some manner. I understand that one of the highlights of your job

was the important role you played when Congress created this position back in 1980.

Mr. Juarbe is an Army veteran who served as a medical corpsman with the 82nd Airborne Division. He worked for most of his

career for the Veterans of Foreign Wars, beginning in 1971, in New

Mexico, as a service officer and ending as director of the National

Veterans Service.

Thank you for being here, and I look forward to your testimony.

STATEMENT OF HON. FREDERICO JUARBE, JR., ASSISTANT

SECRETARY FOR VETERANS’ TRAINING AND EMPLOYMENT,

U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY CHARLES

S. CICCOLELLA, DEPUTY ASSISTANT SECRETARY, VETERANS’ TRAINING AND EMPLOYMENT SERVICE, U.S. DEPARTMENT OF LABOR

Mr. JUARBE. Thank you very much, Mr. Chairman, good afternoon, and members of the committee.

I ask that my written statement be submitted for the record.

Thank you.

Joining the panel today is Deputy Assistant Secretary Chick

Ciccolella.

I have been asked to talk about this part of the proposed 2003

budget for the Department of Veterans Affairs containing grant

programs currently administered by the Labor Department’s Veterans’ Employment and Training Service.

I have to admit, Mr. Chairman, that while I have long anticipated the opportunity of testifying before this committee in my

present office, I never expected that it would be concerning the

budget of another department, but given the purpose of my being

here, I welcome the opportunity.

As we confront a world profoundly changed by the events of September 11, all Americans are looking at the men and women of our

armed forces with a renewed sense of respect and pride.

Someday, many of these men and women will exchange their

uniforms for civilian attire. Many of them will be looking to the

government for training, job search, and employment assistance, to

help them successfully transition into the civilian economy.

At the Department of Labor, veterans are among our most important constituencies. While my confirmation as assistant secretary was delayed by the tragic events of this past September, the

entire VETS staff has been busy at work in administering those

programs designed to put America’s veterans to work.
46

They have also been carrying out a vigorous campaign of informing and Reserve members and employers of their rights and duties.

To date, we have seen over 70,000 of these men and women answering the call to duty both on the home front and in far off

places as we fight the war on terrorism.

Veterans seeking employment, especially those with service-connected disabilities, deserve the best and most up-to-date services

that we can devise.

Secretary of Labor Elaine Chao and Secretary Principi are working together to carry out the President’s commitment to improve

employment opportunities for veterans. In fact, we’re looking to improve the quality and delivery of employment and training programs in the President’s fiscal year 2003 budget.

If approved by Congress, we will transfer the Disabled Veterans

Outreach Program, the Local Veterans Employment Representatives, and the Homeless Veterans Reintegration Project Grants

from the Department of Labor to the Department of Veterans

Affairs.

This proposed transfer is part of the President’s overall strategy

to increase the effectiveness and accountability of government programs. It will also reduce duplication of effort and strengthen services to veterans by placing them in an agency solely devoted to the

needs of veterans.

We have been working diligently with VA to draft legislation and

to coordinate our transition strategy, which includes, as Secretary

Principi indicated earlier, transferring 199 VETS employees to the

VA.

I fully understand that we owe you, the Congress, as well as the

States, veterans’ service organizations, the Homeless Veterans Coalition, and most importantly, we owe America’s veterans answers

to the many complex questions.

There is, however, a general consensus on the need to provide

services that better meet the employment and training needs of

veterans in the 21st century.

I am confident, Mr. Chairman, that with the collective good will

and genuine commitment to doing the right thing, that we together

will produce the very best hospital system to meet that goal.

The trust placed upon us to administer the vital programs enacted by Congress to help veterans successfully transition from

military service to civilian life is a stewardship responsibility we

take very seriously.

We will keep faith with that trust, and ensure that this transition be a seamless one. No veteran will encounter a gap in service

while these changes take place. We cannot afford to allow any veteran to be left behind.

I look forward to working with this committee and our other

partners as we move forward to ensuring that all America’s veterans get the best employment and training services, which they

have so justly earned.

Thank you, Mr. Chairman. I will try to answer any questions you

may have.

[The prepared statement of Mr. Juarbe appears on p. 79.]

The CHAIRMAN. Mr. Juarbe, thank you very much for your

testimony.
47

I just would note, in reading the testimonies, the American Legion last night, or in their testimony they presented, Director

Fischl points out that the American Legion adamantly opposes the

President’s new initiative to transfer VETS from the Department

of Labor to the VA, and part of his rationale is that the American

Legion believes that many of VETS problems stem from persistent

inadequate federal funding, failure to be staffed at federally mandated levels, and inconsistent national leadership.

One, how do we respond to their opposition, and two, why

wouldn’t these same issues crop up once the transfer has been

made, especially since, as we see even from today’s hearing, we’re

talking about a budget that’s a good faith effort on the part off the

Secretary, but still, you know is a floor rather than a ceiling, and

it’s building, you know, something we’re going to build up from,

hopefully, going forward.

If you could respond to their criticism?

Mr. JUARBE. Mr. Chairman, if I may start with the last part of

that criticism, this is new leadership. It’s a new administration,

and I am confident that, given the well-demonstrated record that

Secretary Principi has of providing advocacy and services to veterans, that we will receive the support necessary.

When I signed on board with this administration to serve President Bush, it was in the firm belief that he was calling me not to

manage a program, or to administer or to maintain it, but to lead.

We’re there to lead, to provide the leadership that is needed to

meet the needs of veterans today.

So far as the funding level, we firmly believe that the levels that

we have maintained is the level of services that are required to deliver the services that are needed.

As we go through the transition period, we are hoping to be able

to maximize the, or build the capacity to deliver better services.

That is precisely, Mr. Chairman, what is intended by placing the

Veterans Employment and Training Service within the Department

of Veterans Affairs, by being able to work with other programs that

are there, and once seeing this continuum of services to veterans,

we should be able to maximize that capacity and give it a more

clear focus in delivering those services.

The CHAIRMAN. Mr. Juarbe, could you tell us who would qualify

for these competitive grants? What does that situation look like?

Who are the recipients of those grants going to be?

Mr. JUARBE. Mr. Chairman, that’s a detail, since it is the initial

proposal at this time, and those are details that have yet to be

worked out, and we are working to introduce the legislation, and

as we work together with your committee, and with the veterans

community, and all of the others who have an interest in this, we

will be able to define then how the grants will be competed and

who will be the ones that receive it.

The CHAIRMAN. If you could tell us, what would happen, in your

view, to the State employees who are now delivering these services,

if we went to a competitive grant program?

Mr. JUARBE. Well, the intent is not to put veterans out of work,

and especially disabled veterans, and I think it’s important that we

will, as we make the decision, as we determine the design of this

competitive grant, that we take into account the pool of talent that
48

is out there that had been delivering effective services, and that

that talent be utilized.

The CHAIRMAN. Mr. Juarbe, thank you very much. Mr. Filner.

Mr. FILNER. Thank you, Mr. Chairman.

As I look deeper into the budget, as you’ve given us an opportunity to do, I used the term ‘‘smoke and mirrors’’ earlier, and I

think we have another example here, Mr. Chairman, and I’m glad

most of the VA people are still here.

They have made it more difficult for us. Let me explain what I

mean, and correct me if I’m wrong, sir.

There is going to be a legislative proposal, of which we have no

details, which will move almost 200 FTE from the Department of

Labor to the VA with a funding level of $197 million. Is that

correct?

Mr. JUARBE. That is correct.

Mr. FILNER. So that is part of the VA budget, right? I assume

it was built into the VA budget. Right?

Mr. JUARBE. As it stands right now, it’s part of the Labor budget.

We’ve submitted it as a request for the Labor budget, because until

Congress acts on it and authorizes it——

Mr. FILNER. It’s not in the VA budget as an assumption, the 199

FTE?

Mr. JUARBE. It may be in there as an assumption, but——

Mr. FILNER. Exactly. Mr. Chairman, they put in the budget an

assumption about the deductibles, and now they have an assumption, where we have no legislative details and which we haven’t

passed, of another .2 billion and another 200 FTE.

So without any new money and without any new positions in reality for veterans, they have built up their budget to make it look

like it’s higher. It’s the same as the trading of the OPM for the retirees. Now they have the transfer from the Labor Department.

It isn’t new money, it’s no new positions, but the budget is higher, so it’s the highest budget increase in history.

You are playing games—I’m talking not to you, sir, but to the

folks in the first row—that are going to give us and the veterans

very great difficulties. It looks like with the transfer of 199, you’re

going to have 51 FTE to do a lot of work. Do you think you can

do your programs with 51 FTEs?

Mr. JUARBE. Mr. Filner, the intent is to transfer the staff that

administers the grants, which is the 199 FTE, over to the Department of Veterans Affairs.

The 51 that will remain at the Department of Labor are those

that have responsibilities for compliance programs such as USARA

and Veterans Preference, and that staff that is there will be solely

dedicated to carrying out that mission as opposed to now where

they have numerous other missions, and so we expect that action

to be an improvement within the Department of Labor in the compliance enforcement area.

Mr. FILNER. We’ll have to determine that. When do you think

we’re going to get the legislative proposal?

Mr. JUARBE. I believe Secretary Principi indicated that that

should be coming soon. We’re attempting to put together the legislation, working very closely with the Department of Veterans Af-
49

fairs, and I’m expecting that it should be introduced by the end of

this month if not shortly after this.

Mr. FILNER. I think again—I don’t know how our colleagues feel,

Mr. Chairman—that’s another problematical issue which was included in assumptions by the VA, and I didn’t even know about

this until last week.

Looking at your budget. Again, we have added another 200 million, another 200 FTE, which is just a transfer and not an increase,

and I’ll probably find more assumptions built in as I read the

budget.

But I’m really disturbed, frankly, at the way the VA budget is

presented to us, with all these assumptions which were not made

very clear, although I guess if you know how to read a budget, it

would be clearer.

We’re not adding one new dime, but the budget goes up. I think

that’s a misstatement of the facts that is going to cause trouble for

our veterans, and I’m increasingly disturbed by it.

Thank you, Mr. Chairman.

Mr. JUARBE. Mr. Chairman, if I may respond to that?

Mr. Filner, I understand your concern, but the intent here is not

to just transfer personnel from one department to another, but to

place them where they can deliver the most effective services.

Mr. FILNER. I understand that, but the budget makes that assumption, and they use that money to claim that they got the biggest increase in history of mankind, and they have transferred a

good part of that from other agencies.

I’m not questioning the intent and I’m not questioning the fact

that the proposal may have some good points. I don’t know that,

although my prejudice is against what you recommended, just on

the first reading.

But what I’m upset about is the way the budget was constructed,

not the intent. The intent of all these folks is always good.

But to hide the fact, frankly, that our Nation’s budget priorities

are all screwed up because of what is going on, not at the VA or

in your department, but what the President has to do, we’re cutting

veterans, we’re cutting housing, we’re cutting education, we’re cutting health care, and we’re cutting environmental protection, all in

the name of homeland security, and VA is covering it up, basically.

You’re trying to put the best light on the fact that the President’s

budget hurts millions of people in this Nation, and here we have

a big example.

And your own position is going to be eliminated. Is that right?

Mr. JUARBE. No, as the Secretary said, I will transfer over to the

Department of Veterans Affairs, still in charge of the——

Mr. FILNER. But your Labor position is eliminated, and you’re

transferred over?

Mr. JUARBE. Well, that’s a decision that’s yet to be made. I would

be going over to the Department of Veterans Affairs as an assistant

secretary. Secretary Chao would make the determination as to the

role.

The CHAIRMAN. Just one final comment, if I could. It’s my understanding that currently the placement rate is about 3 out of every

10 veterans get placed—— Mr. JUARBE. Yes.
50

The CHAIRMAN (continuing). So obviously there is a great need

for boosting that performance, and if my understanding is correct,

the sense is that if a new home were found in a competitive grant

program, we’re more likely to get a better outcome, a performance

that is higher than 3 out of 10 for our veterans. Is that—— Mr. JUARBE. That is certainly our intent, Mr. Chairman.

The CHAIRMAN. We will follow this very closely.

Our subcommittee has already, as you know, worked at least 1

year on this, to try to find the best way to deliver service, taking

into consideration all the objections and everything else out there. The $197 million that is recommended, is that pretty much a

straight line from last year?

Mr. JUARBE. That is level funding, yes.

The CHAIRMAN. Okay. Thank you, unless you have anything to

add?

Mr. CICCOLELLA. No, no, no. That’s all right.

The CHAIRMAN. Thank you very much.

Mr. JUARBE. Thank you, Mr. Chairman.

The CHAIRMAN. I’d like to invite our third panel to the witness

table. It consists of four veterans’ service organizations who have

prepared the Independent Budget:

Richard Fuller from the Paralyzed Veterans of America; Rick

Surratt from Disabled American Veterans; Dennis Cullinan from

the VFW; and Rick Jones from AMVETS.

Thank you for your patience. We very much appreciate the job

you have done consistently on the Independent Budget. It provides,

I think, a very good blueprint for the committee and for members

on both sides of the aisle, and it is taken very seriously, as you

know, by all of us. So I do thank you for that.

If you would begin.

STATEMENT OF BOB JONES, EXECUTIVE DIRECTOR, AMVETS

Mr. JONES. Mr. Chairman, first and foremost, let me thank you

and Mr. Evans for your assistance in distributing the Independent

Budget and your recommendations to your colleagues that they

read this valuable document.

Sir, I would request that my written statement be entered into

the record.

The CHAIRMAN. Without objection.

Mr. JONES. Sir, this is the 16th annual budget presented by our

coalition, and we’re very proud that more than 40 veterans, military, and medical service organizations have endorsed these recommendations.

Our recommendations provide rational, rigorous, and sound review of the budget required to support the vital programs for our

Nation’s veterans.

Mr. Chairman, I would also like to thank you and the members

of the committee for your comments to oppose the $1,500 deductible proposed by this administration. However, as pointed out by

Mr. Buyer, I firmly believe that VA should not be strangled by unfunded mandates. Without adequate funding, health care services

in the future could possibly be rationed.

Much has been said about the budget submitted by this administration, and we’re very grateful that the President made comments
51

in the State of the Union to support an increase in veterans’ health

care.

However, after all our discussions related to the budget, we in

the Independent Budget believe this administration’s budget falls approximately $1.75 billion below than what we as a group believe

is needed for veterans’ health care.

Another point that I would like to make that I believe deserves

comment is the transfer of the Veterans’ Employment and Training

Service to VA.

VA clearly has its own challenges in health care, waiting lists,

backlogs and claims processing. VA is ill-prepared to accept a program which is so naturally suited to the Department of Labor.

DOL has the department knowledge regarding the job market, it

knows where the jobs are and the skills required to fill them. Shifting VETS from one department to another is not a magic bullet

and it will not, in my opinion, serve veterans better.

Now is not the time to transfer the veterans programs. Adequate

resourcing, new vision, accountability, closer cooperation and coordination with VA, and improvement in management of VETS is

essential.

The program is sick, but an ill-defined traumatic amputation of

this program from Labor is not the answer. Improved service

delivery is a must, as are adequate and enforced performance

standards.

Mr. Chairman, I would like to yield the rest of my time to my

colleagues here so that they can get into the grist of the Independent Budget, sir, without objection.

[The prepared statement of Bob Jones appears on p. 81.]

STATEMENT OF RICHARD FULLER, NATIONAL LEGISLATIVE

DIRECTOR, PARALYZED VETERANS OF AMERICA

Mr. FULLER. Good morning, Mr. Chairman, Mr. Filner.

I’m Richard Fuller. I’m PVA National Legislative Director. I’m

sitting in today for our Deputy Executive Director, John Bollinger.

As we have for the past 16 years, PVA is pleased to once again

be responsible for the health care recommendations and analysis of

VA health care, and I shall address these in my testimony today.

For fiscal year 2003, the Independent Budget recommends a medical care appropriation of $24.468 billion, an increase of $3.1

billion over fiscal year 2002. This proposed increase does not assume any new initiatives or any new workload increases.

Over the past 5 years, the VA has served a constantly growing

number of veterans with appropriations that have steadily declined

in purchasing power. The fiscal year 2001 health care appropriation was $564 million

short of the amount recommended by the Independent Budget and

the fiscal year 2002 budget falls $1.5 billion short. Already, a few

months into fiscal year 2002, the Administration has reported a

shortfall of close to $500 million and is seeking supplementary

funding now as we speak, a step which we fully support.

Nationally, we are witnessing an explosion in health care costs,

especially in pharmaceutical costs. The VA has not been immune

to this national trend, even though, as the Secretary said, the VA

does receive discounts.
52

According to a report from the Department of Health and Human

Services national health care spending increased 6.9 percent in the

year 2000. The fastest-growing segment of health care spending is

prescription drugs, which increased 17.3 percent in 2000.

This represents the sixth consecutive year of double-digit increases for pharmaceuticals. Spending on drugs has doubled between 1995 and 2000, and has tripled between 1990 and 2000. VA

health care budgets have not kept pace.

The real effect of inadequate health care appropriations is felt by

sick and disabled veterans every day. Inadequate appropriations

force the VA to ration care by lengthening waiting times and delaying services.

As has been discussed earlier, when you subtract all the window

dressing from the Administration’s budget, it amounts to approximately only a $1.4 billion increase in health care over fiscal year

2002. Although veterans appreciate any increase, we are also cognizant of the fact that this amount does not meet the needs of the

VA in the coming fiscal year and does not provide the resources

necessary to ameliorate the effects of recent inadequate appropriations.

Unless additional resources are provided, the current situation,

as it is, will continue into the foreseeable future, and sick and disabled veterans again will be shortchanged.

Again, this year, we have not included collections as part of our

recommendations for appropriated dollars. We have subtracted

from all the Administration’s requests amounts attributed to the

legislative proposal put forth by the Administration, that would include accrual costs for pension and post-retirement benefits for federal retirees for medical care. This figure obviously inflates the Administration’s budget by $793 million in fiscal year 2002.

As we state in the Independent Budget, we recognize that nonappropriated funding may be available to expand VHA operations

and ultimately improve care for veterans, but we are strongly committed to the principle that the cost of VA health care is a federal

responsibility that must be met in full by Congress and the Administration through adequate appropriations.

VA must not be forced to rely on subsidies from veterans or their

insurers to cover the costs of caring for veterans. Veterans must

not be held hostage through collection estimates that very well may

be far-fetched or issued solely to cover budgetary holes left by inadequate appropriations.

The Independent Budget is also opposed to the Administration’s

proposal to begin charging a $1,500 deductible for health care for

Category 7 veterans.

The only reason for the imposition of a deductible requirement

is to discourage currently eligible veterans from seeking VA health

care.

Last year the Administration announced that it would continue

enrolling Category 7 veterans. It said that it would find the resources to cover the costs of these health care services.

Instead of providing the additional resources, it has proposed to

have veterans pay for this care out of their own pockets, or to, in

effect, disenroll themselves.
53

The VA estimates that a deductible will deter 121,000 veterans

from seeking health care. Requiring a $1,500 deductible could adversely affect lower-income veterans, veterans whose insurance will

not pay the deductible, and who want and need to go to the VA,

particularly to obtain certain specialized services.

We are very concerned that the Administration has failed to provide funding for the VA to meet its critical fourth mission, that is,

to serve as backup to the Department of Defense in time of war or

national emergency. We fully support Secretary’s request last year

for an additional $250 million, which we did not see in the fiscal

2003 request, but we would like to have that looked at very carefully by the committee.

Mr. Chairman, although VA medical and prosthetics research

has not suffered the same budget pressures that have beset VA

health care, it is still suffering from an uncertain budget cycle.

Research, which is essential to the VA’s continuing partnership

with medical schools and universities, requires a long-term commitment and stable, reliable funding. The Independent Budget recommends an appropriation of $460 million, which is an increase of

$89 million over fiscal year 2002.

In closing, Mr. Chairman, we recognize that this committee does

not appropriate dollars, but you do authorize them, and you serve

as a resource and as advocates to the budget committee and the appropriators as they fashion budgetary policy.

The authorization process must recognize the real resource requirements of the VA. We look to you and the committee and to

your expertise in veterans’ issues, as we always have in the past,

for your help, to help us carry this message forward to your colleagues and to the public.

That completes my remarks, and I’ll turn it over to my colleague

from the DAV, Mr. Surratt.

[The prepared statement of Paralyzed Veterans of America appears on p. 90.]

STATEMENT OF RICK SURRATT, DEPUTY NATIONAL

LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS

Mr. SURRATT. I am Rick Surratt from DAV. I will focus on the

benefit programs, the DAV’s primary area of responsibility in the

Independent Budget.

Other than permanent authority for income matching between

agencies for pension purposes, the President’s budget includes only

one legislative proposal for the benefit program, and that is for an

annual compensation COLA.

In addition to recommending a COLA to keep compensation in

line with the increase in the cost of living, the IB makes a number

of recommendations to improve the benefit programs.

Last year, you enacted several of the things the IB recommended, and we appreciate that. In this year’s IB, we have identified other areas where the benefits need changes to make them

better or more adequately serve veterans. I won’t cover those IB

recommendations here, but we hope you will give them careful consideration.
54

Of course the President’s budget includes no funding to cover the

cost of these improvements, and this is an issue, of course, for the

committee.

No matter how carefully the benefit programs are crafted, they

lose effectiveness if they’re not administered well.

If claims are not decided correctly and benefits are not delivered

timely, veterans suffer, especially veterans seeking compensation to

make up for the economic losses caused by service-connected disabilities and impoverished totally disabled veterans seeking pension.

VA has struggled unsuccessfully for years to overcome serious

deficiencies in its processing of compensation and pension claims.

There’s no longer any question about the magnitude of the problem. The question is whether VA has the will and the resolve to

take the necessary steps to correct the problem.

In the context of the budget, there’s a question whether VA must

have additional resources to enable it to gain control over its quality problems and its enormous volume of claims.

The IB has recommended to the VA that it concentrate its focus

first on solving the root causes of the claims processing problems.

We have identified those root causes as inadequately trained adjudicators, a lack of accountability for proper actions and legally

correct claims decisions, and management weaknesses.

The IB observes that VA’s repeated failures to successfully overcome its claims processing problems stem from its failure to tackle

the toughest problems—that is, the root causes—and to stay the

course until those problems are resolved.

The VA must also resist its self-defeating tendency to rush decision making to reduce its claims backlog, only to rework a substantial portion of the cases because of errors, and add to the volume

of work, and ultimately the backlog.

While the IB agrees with the argument that VA must get more

serious about implementing meaningful reforms and follow through

until those reforms are fully achieved, we do not agree with the

convenient suggestion that VA needs no increase in staffing to accomplish this.

To take the necessary steps to properly train its workforce and

increase quality without reducing the number of employees working on pending claims, VA still needs to increase staffing in its

claims processing system.

The VA cannot succeed without properly training those who decide claims and without enforcing quality standards. With a large

volume of pending claims, VA must at the same time maintain full

claims processing capacity.

The IB therefore recommends 350 additional FTE be authorized

for VA’s compensation and pension service. The President’s budget,

as you know, seeks only 96 additional employees for C&P.

Even with the very best administrative process, mistakes are inevitable in a mass adjudication system like VA’s. That is why an

effective judicial review process is essential to ensure that veterans

receive the benefits to which they’re entitled.

The IB has made three recommendations to improve judicial review in veteran benefits matters, and we hope the committee will

take action on these recommendations this year.
55

Mr. Chairman, that concludes my statement. Thank you for allowing us to come before you today to offer our views on the fiscal

year 2003 budget.

[The prepared statement of Mr. Surratt appears on p. 97.]

STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL

LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF

THE UNITED STATES

Mr. CULLINAN. Good afternoon, Mr. Chairman, distinguished

members of the committee. I’m Dennis Cullinan. I’m the legislative

director for the Veterans of Foreign Wars.

On behalf of the 2.7 million men and women of the VFW and our

Ladies Auxiliary, I would like to thank you for the opportunity to

participate in today’s hearing.

The VFW’s primary contribution as a member of the Independent

Budget is analysis of the VA construction programs. Therefore, as

in years past, I will confine my remarks to that particular area.

As this committee is well aware, VA must contend with an immense, aged infrastructure that is in need of urgent funding. In

this regard, we applaud the introduction and passage in the House

of your bill, Mr. Chairman, H.R. 811, the Veterans Hospital Emergency Repair Act. I assure you we will continue to work to achieve

expeditious action in the Senate.

Unfortunately, the Administration is only requesting $194 million for major construction, up only $11 million over FY 2002, while

funding for minor construction remains nearly flat-lined at $211

million.

An $11 million increase is hardly sufficient to sustain and improve roughly 1,300 care facilities, including 163 hospitals, 800 ambulatory care and community-based outpatient clinics, 206 counseling programs, 135 nursing homes, and 43 domiciliary facilities.

VA’s capital asset value is in a constant state of deterioration.

For nearly 5 years, we have cited an independent study conducted

by Price Waterhouse that concluded VA should be investing an

amount equal from 2 to 4 percent of the value of its facilities to

maintain them and then another 2 to 4 percent to improve them.

VA should be investing roughly $700 million annually just on upkeep.

VA’s construction budgets since the 1998 study was published

show, however, that VA has received only about $291 million a

year for both major and minor construction. Including this year’s

funding proposal, the 5-year average is a mere $314 million.

These figures represent less than half the recommended investment and have forced VA to delay high-priority projects and other

renovations to meet patient safety standards.

We note that CARES remains behind schedule while needed construction is being held hostage.

The Independent Budget recommends that VA immediately identify all facilities that will be definitely retained and move forward

on already approved and/or urgently needed construction projects

with an eye towards improving patient safety and environment.

As always, stakeholders need to be included and consulted in

every step of the process.
56

One startling example of failing to take appropriate action with

respect to safety is that 1 year after experiencing a 6.8 magnitude

earthquake, the American Lake VA Medical Center in Washington

has yet to receive a dime for structural repairs to its maim hospital

and nursing home.

In order for VA to properly operate, maintain, and improve its

facilities, the Independent Budget recommends a minimum of $800

million for major and minor construction projects for fiscal year

2003.

For major construction, we recommend that Congress appropriate $400 million, $217 million higher than FY 2002.

We also recommend $400 million for VA’s minor construction account. This represents an increase of $190 million to support construction projects for inpatient and outpatient care, infrastructure

and physical plant improvements, research infrastructure upgrades, and an historic preservation grant program to protect VA’s

most important historic buildings.

In order for VA to more effectively carry out these projects, we

recommend raising the ceiling on minor construction projects from

the current level of $4 million per project to $16 million per project.

Mr. Chairman, this concludes my statement. Thank you.

[The prepared statement of Mr. Cullinan appears on p. 102.]

STATEMENT OF RICHARD JONES, NATIONAL LEGISLATIVE

DIRECTOR, AMVETS

Mr. JONES. Mr. Chairman, Mr. Filner, on behalf of Commander

Joseph Lipowski, AMVETS is honored to join these veterans’ service organizations in providing you our estimate for a responsible

VA budget for fiscal year 2003.

AMVETS’ primary focus is on funding the National Cemetery

Administration in the new year.

Before beginning on the budget, I would like to commend the

chairman and the members of this full committee for your strong

leadership on veterans issues, and legislative achievements in the

first session of this Congress.

AMVETS and the members of the Independent Budget are truly

grateful to you all.

Members of the Independent Budget would also like to acknowledge the commitment of the NCA staff. In particular, we applaud

their extraordinary efforts on behalf of the veterans and their families of the World Trade Center, the Pentagon, and in Pennsylvania.

Since its establishment, the National Cemetery Administration

has provided the highest standards of service to veterans and eligible family members. Their work oversees 120 national cemeteries

located in 39 States, the District of Columbia, and Puerto Rico.

With recent openings of four new national cemeteries within the

last 2 years, in Chicago, Albany, Cleveland, and Dallas and fasttrack operations at Fort Sill and Atlanta, Georgia, the National

Cemetery Administration maintains more than 2.5 million

gravesites on nearly 14,000 acres of cemetery land. With adequate

funding for design and construction, development of national cemeteries will continue for future facilities in Miami, Pittsburgh, Detroit, and Sacramento.
57

Currently, and NCA provides more than 83,000 burials annually,

an 8 percent jump over last year. To ensure that the burial needs

of veterans and eligible family members are met, the Independent

Budget veterans’ service organizations believe the budget must be

increased to provide for new staff and equipment improvements.

To meet this commitment to maintain NCA facilities as national

shrines, the Independent Budget veterans’ service organizations

recommend $138 million for the NCA fiscal year 2003. This would

lead to an additional 65 full-time employee equivalents.

This level of funding will provide the additional full-time employees and supplies and equipment to maintain the grounds and continue program operations.

For funding the State Cemetery Grants Program, the members

of the Independent Budget recommend $32 million for the new fiscal year.

As you know, the State Cemetery Grants Program works in complement with the NCA to establish gravesites for veterans in those

areas where NCA cannot fully respond to the burial needs of

veterans.

Enactment of the Veterans Programs Enhancement Act of 1998

increased the activity and attractiveness of this program. Through

the State Grants Program, NCA can provide up to 100 percent of

the planning, design, construction of approved new cemeteries.

At the start of the current year, there were 10 new cemeteries

under design and 11 new cemeteries in planning. There were also

scheduled fast-track openings in central Indiana, Northern Wisconsin, Arkansas, Massachusetts, Maine, and Montana.

The Independent Budget veterans’ service organizations also request review of a series of burial benefits that have seriously eroded in value over the years. These benefits were never intended, of

course, to cover the full cost of burial, but now they pay only a fraction of what they covered when they were initiated in 1973.

To properly support burial in State facilities, members of the

Independent Budget support increasing the plot allowance to $670

from the current level of $300. Prior to last year, this benefit had

not been adjusted for over a decade. Increasing the burial benefit

to $670 would make the amount proportionately equal to the benefit that was paid in 1973.

In addition, we believe the plot allowance should be extended to

all veterans eligible for burial in a national cemetery, not solely to

those who served in wartime.

The Independent Budget veterans’ service organizations recommend an increase in the service-connected benefits from $2,000

to $3,000. Prior to action in the last Congress increasing the

amount by $500, the benefit had been untouched since 1988.

The Independent Budget veterans’ service organizations also recommend increasing the non-service-connected benefit from $300 to

$1,135 This would bring that benefit back to its original 22 percent

coverage of funeral costs. This benefit was last adjusted in 1978,

and today covers only 6 percent of burial expenses.

We also recommend changing current law to provide a headstone

to mark the grave of all honorably discharged veterans upon request of the family.
58

The current code allows a headstone only for unmarked graves.

This causes unnecessary confusion and unsettling aggravation to

the families who see VA headstones at nearby marked sites and

cannot understand why their loved one cannot likewise be distinguished.

Providing a headstone is a small price to pay for commemorating

the service of a veteran to this Nation.

We also recommend that Congress enact legislation to index

these burial benefits for inflation, to avoid future erosion.

Finally, we would note that the National Cemetery Administration’s greatest challenge is yet ahead. We face a dramatic upward

increase in the interment rate until 2010.

Members of the Independent Budget recommend that the National Cemetery Administration continue to provide you with information on plans for the future and establish a strategic plan for

the next 5 years.

We must plan for a truly national system, and it must have congressional and administrative budgetary support, and in this regard, we call on Congress to make funds available for planning and

fast-track construction of needed national cemeteries.

Mr. Chairman, this concludes my statement. I thank you again

for the privilege to present our views, and would be pleased to answer any questions.

[The prepared statement of Richard Jones appears on p. 85.]

The CHAIRMAN. Mr. Jones, thank you very much, and thank you

all for your very detailed testimony, and especially for producing an

Independent Budget.

You know, Justice Scalia has often said justices should be read

and not heard.

You’re both read and heard, and I think the fact that you break

out in such detail the needs, and do it in such a professional way,

is of enormous help to this committee as we try to come up with

a budget ourselves for this recommendation to the Budget Committee.

And you’re right, Mr. Surratt, that many of those recommendations that were made last year were taken very seriously by this

committee and we made sure they found a home in various bills,

as we moved them through to the White House.

So it’s extremely important now that you continue doing it, and

every idea that you recommended we will take very seriously.

Regrettably, there’s a vote on the floor, as you could surmise. I

don’t want to keep you any more. You’ve been here all morning and

now into the afternoon.

We will have some questions to submit to you if that’s okay with

you, and obviously this is a dialogue and a two-way street that will

continue.

[Recess.]

The CHAIRMAN. We’ll resume this hearing, and I want to again

apologize to our witnesses for these delays. They’re unavoidable,

but they still make it very difficult for you, so I do apologize.

Our final panel consists of Jim Fischl from the American Legion

and Richard Weidman of the Vietnam Veterans of America.

Gentlemen, without objection, your entire statement will be

made a part of the record, and we look forward to your testimony.
59

STATEMENT OF JAMES FISCHL, DIRECTOR, NATIONAL VETERANS AFFAIRS AND REHABILITATION COMMISSION, THE

AMERICAN LEGION

Mr. FISCHL. Mr. Chairman and distinguished members of the

Veterans’ Affairs Committee, thank you for the opportunity to appear before you today to express the views of the American Legion

concerning the President’s VA budget request for FY 2003.

Mr. Chairman, the American Legion is very appreciative of the

work that you and your committee have done in support of the

many bills that have recently been enacted during the 107th Congress—the Veterans Education and Benefits Expansion Act, the

Homeless Veterans Comprehensive Assistance Act, and the Veterans’ Survivors Benefits Improvements Act.

These bills have had a major impact on our Nation’s veterans,

but securing passage of a bill is sometimes only the beginning, and

we also extend our thanks for the follow-up actions and oversight

efforts that you have taken to ensure that the intent of these bills

is fully implemented.

We all remember where we were on 9–11. Many of us were in

this very room. The American Legion National Commander, Richard J. Santos, was preparing to present testimony before a joint

session of the Veterans’ Affairs Committees.

This presentation was not to be, however. America was being

suddenly and brutally attacked, and before the testimony was to

begin, a decision was made to evacuate the Capitol.

Although the national commander did not testify, he did submit

his written testimony to both committees. In that testimony, the

American Legion outlined its fiscal year 2003 budget recommendations for VA.

The American Legion greatly appreciates the actions of all Members of Congress regarding the $1.3 billion increase in VA medical

care funding for fiscal year 2002.

However, even with that increase, veterans health care funding

continues to be inadequate. This becomes a very important issue

since the 2002 budget is the foundation on which the fiscal year

2003 budget is based.

Because of the dramatic rise in the Priority 7 veteran use of VA

health care, and to keep enrollment open to Priority 7 veterans,

Secretary Principi asked for a supplemental of $142 million in the

fiscal year 2002 appropriations. We applaud this effort to allow Priority 7 veterans to continue to enroll.

The American Legion, however, believes that the additional request will not cover the anticipated shortfall. The American Legion

recommends increasing the proposed supplemental to $300 million,

reflecting our original fiscal year 2002 funding level for VA medical

care.

Focusing ahead to fiscal year 2003, the American Legion takes

exception to the proposed budget being portrayed as an 8.3 percent

increase in health care, and I think that has been brought out very,

very well today. There is no 8.3 percent increase.

The President’s budget also relies heavily on the first and third

party collections, and the newly proposed $1,500 deductible for Priority 7 veterans.
60

It’s no secret the VA’s track record concerning collections has been less than stellar, and the $1,500 deductible, of course, has not

even been approved.

Mr. Chairman, we appreciate your voice added to the rising oppo- sition to the proposed $1,500 deductible and your support of Medicare subvention.

While we understand that today’s fiscal realities require VHA to

seek other revenue streams to support the growing demand for

service, the American Legion strongly recommends Medicare subvention as a more appropriate remedy.

Medicare subvention will result in more accessible, quality

health care for all Medicare-eligible veterans. Medicare is an entitlement that veterans have earned. The advocate community is

strongly united on this issue. Medicare subvention must and will

work.

The American Legion recommends VHA medical care receive $23.1 billion in fiscal year 2003 and that al third-party reimbursement, to include Medicare, be considered as a supplement, rather

than an offset.

As for medical construction and infrastructure support, the

CARES program has limited construction projects throughout VHA.

Many much-needed construction projects that would maintain and

update VHA’s infrastructure are being put on the back burner

while CARES awaits full implementation.

The American Legion feels that the CARES process does not

allow for local VA managers to impalement the facility improvement projects that they know are necessary to maintain a functional service delivery system.

The American Legion has testified that VA’s major and minor

construction appropriation must include all infrastructure priorities. Unfortunately, VA has not received appropriate funding.

The VA has identified over 70 buildings in need of seismic correction. Many other modifications also need to be done to ensure the

safety of our veterans. Too many facilities in disrepair. No veteran

should be placed in harm’s way while being hospitalized.

The President’s budget request for only $194 million in major

construction severely inhibits VHA’s ability to properly care for

America’s veterans.

Also among the many issues not considered by CARES is homeland security. VA facilities may well be suited for such things as

warehousing emergency supplies or even housing troops.

Times have certainly changed since September 11, and we must

factor these considerations into our decision process.

The American Legion recommends $310 million for major construction in fiscal year 2003.

The minor construction budget did not fare any better. With the

added costs of the CARES program recommendations and the nearly $42 million request for minor upgrades in the research facilities,

it is essential that minor construction funding be increased considerably from that of past fiscal years. It would be foolish to reduce

this investment.

The President’s budget request for $211 million falls short of

VHA’s minor construction needs. The American Legion recommends $219 million for minor construction in fiscal year 2003.
61

The Veterans’ Employment and Training Programs. The President’s budget request for fiscal year 2003, which, as stated, con- tains a proposal that add $197 million to the VA budget for a new

competitive grant program that replaces that currently administered by DOL, this is something that the American Legion adamantly opposes, and we feel that it should remain with DOL.

We expressed opposition to a similar recommendation proposed

by the Congressional Commission on Service Members and Veterans Transition Assistance in 1999.

The American Legion strongly suggests that this committee hold

further oversight hearings before such an initiative would be allowed to prevail. DOL has the expertise and the resources in place

for effective job placement and training. Moving this function to VA

is simply not a good idea.

Benefit programs. The 2003 proposal outlines various internal

changes VBA is making and intends to make to improve the level

and quality of service it provides. We’re closely watching the implementation of the VA Task Force.

Our major concerns here are that the Task Force has made many

recommendations, and one of the big recommendations they made

concerned accountability.

We agree with that; we feel that the VA should be accountable,

but what we see is they are moving resources to offices that can

better handle and better process the claims.

Our question simply would be, what about the offices that can’t

get the job done? Are they to be held accountable? And it doesn’t

appear like they are.

A lot of the specialization seems to be moving in that direction,

and that concerns us a great deal.

Also, we’re concerned that the number of employees that they

have may not be adequate, the Secretary has indicated that if that

turns out to be the case, that he would be the first one to recommend additional people.

We feel that it would be kind of late. It takes time to train these

people, and that should be done before. Now is the time to decide

if you need more people, not after the backlog goes up an additional

100,000.

We’re also concerned about compliance with the intent of the

VCAA.

This legislation was intended to bring veterans into the light, to

tell them what was required to successfully prosecute their claims.

Well, now we’re concerned about claimants receiving only

boilerplate notices rather than useful information on the progress

of their claim.

The intent of VCAA, again, was to explain to claimants why actions were taken, and if a claim were disallowed, what it would

take to grant the benefit.

And also the Board of Veterans’ Appeals, it’s similar there.

They’re reducing their number of employees, and we feel with all

the changes that the VBA is going through, their requirement to

develop cases that would have ordinarily been remanded, that they

should be adding rather than subtracting people from their rolls.

The American Legion recommends a total of $1.3 billion in VBAGOE funds.
62

Mr. Chairman, distinguished members of this panel, that concludes my remarks. I would be happy later to answer any questions

that you might have.

[The prepared statement of Mr. Fischl appears on p. 104.]

The CHAIRMAN. Thank you very much, Mr. Fischl. Mr. Weidman.

STATEMENT OF RICHARD WEIDMAN, DIRECTOR OF

GOVERNMENT RELATIONS, VIETNAM VETERANS OF AMERICA

Mr. WEIDMAN. Mr. Chairman, thank you very much, and we appreciate, at Vietnam Veterans of America, the opportunity to

present our views here today on the President’s proposed budget.

To cut to the chase on the numbers, we believe that the President had it correct in his news release that $2.7 billion is needed

just to maintain services at the Veterans’ Health Administration.

Unfortunately, fuzzy math was involved about how you get to $2.7

billion.

What we need is not 1.414 hard appropriated dollars, but 2.7

hard appropriated dollars in order to just maintain where we are

today.

In addition to that, VVA has approached this committee several

times over the last several years about the diminishment of capacity, and must respectfully disagree with the Secretary that he is

not getting the straight scoop from his people in the field. We are

out of compliance in almost all of the specialized services when

compared to the level of effort in 1996.

That is certainly true for neuropsychiatric care and seriously and

chronically mentally ill, PTSD, and substance abuse, as well as

prosthetics, which will start to show up again this year, and each

of the offices of Members of Congress undoubtedly will hear from

their constituents in that regard. Therefore, what we propose is, over and above that $25.5 billion, is an average of $1 billion a year for 3 years to restore that capacity and come back into compliance with the law—half a billion the

first year, in other words $500 million for fiscal year 2003; $1 billion on top of inflationary increases for fiscal year 2004; and $1.5

billion for the third year.

In addition to that, we would point out a couple of things.

One is that we do endorse heartily the Independent Budget and

are grateful to our colleagues in those four veterans organizations

for their extraordinary work in providing a line-by-line base for virtually of the programs that reposit in the various elements of the

Federal Government for veterans.

In regard to the $1,500 for non-service-connected benefits, conceptually we do not oppose that. Frankly, we believe that the VA

is for he or she who had gone into battle.

However, the cutoff of $24,500, that anybody who makes more

than that, who is single, in Washington, DC or Passaic, New Jersey

or San Diego, California or Chicago, Illinois, it’s preposterous to

refer to them as a higher-income vet.

In the briefing last week, we objected to them continuing to use

that term. No one in this room would try to live in Washington on

$24,500.

Unless we change that law and pull it up to the threshold for

Category 7, to $38,000, $39,000, and index it for inflation there-
63

after, for a single person, and $45,000 a year for a family of four,

then we would oppose this provision, certainly as it lays at this

moment.

Mr. Fischl was correct when he pointed out that September 11

changed everything, when people started to look around for who

had the organizational capability and the expertise when it came

to post-traumatic stress disorder with literally tens of thousands of

people across the country, not just in the New York City Metropolitan Area, affected as a result of those events and of seeing the horror on TV from one’s little child and grandchild to people our age

who thought they were pretty seasoned to violence.

Therefore, we are specifically asking that the committee recommend the first increase in over a decade to the VA vet centers

of $17 million and an additional FTE, 250 FTE be allocated to put

a family counselor in each one of the 206 vet centers across the

country, an additional 44 FTE to strengthen some of the vet centers who are operating with too thin a staff. There is no more cost

effective program within the VA.

In that same regard, the National Center for Post-traumatic

Stress Disorder, which is actually housed at Palo Alto and Stanford, Boston and Harvard, Yale and West Haven VA, and Dartmouth and White River Junction, Vermont, we urge the committee

to move to make that a permanent center by statute and to provide

line item budget of $20 million for fiscal year 2003 that goes directly to the National Center for Post-traumatic Stress Disorder

and work with your colleagues to ensure that this extraordinary,

worldwide valued center is, in fact, utilized more.

In regard to research for vets, we ask that you put into the committee language and request of our friends at Budget and Appropriations that all research done by VA be pinned back to the clinical needs of veterans.

A quick example. If you’re doing a study on schizophrenia, and

there were over 150 of them underway last year, to not take a complete military history and find out if anyone was ever exposed to

combat or other hazardous conditions in the military is not only irresponsible for someone to do that with Veterans’ Administration

dollars, it is also bad science, because you know that there’s a covariable out there that may, in fact, have a significant impact on

your research, and you’re not taking it.

The GI bill, I want to thank everyone on this committee, particularly, Mr. Chairman, you and Mr. Evans, for all of your work on

the GI bill, but would point out that we need a raise for the State

approving authorities to at least $18 million to be able to make

sure that we don’t hear about problems later on.

Accountability has been brought up a good deal here today, and

there are some steps that the Secretary and the deputy secretary

are taking to improve tracking systems of dollars and of measuring

performance and demanding that people put it in measurable

terms.

We believe very strongly that there is no accountability on the

senior civil servants within this system, the 14s and 15s, and the

Senior Executive Service.

There’s one gentleman, as I’ve mentioned before, before this committee, who did such a bad job in one VISN he was removed, put
64

in another; did such a bad job on that VISN that that’s why we

have 21, not 22 VISNs. He crashed and burned that one, and has

got bonuses every year and a new SUV, and has lost not a dime,

and now is director of a VA medical center.

This is preposterous. The military would not put up with this,

the civilian sector would not put up with this, and our veterans in

America should not have to put up with this.

Mr. Chairman, I’m over time. If I may just make a couple of comments about the Veterans’ Employment and Training Service.

VVA has testified before this committee numerous time that we

are deeply committed to holistic treatment of vets. It must begin

with taking a complete military history at the beginning.

If we get it right there, in the preliminary diagnosis and treatment, and it’s down in their record, then we step forward to the

claim.

If VBA Compensation and Pension Service lays out the standards

for filing a claim, if it’s done correctly, and there are methodologies

that our service officers have adapted and those in other, where

you quote the law, cite the evidence, quote the law, cite the evidence, if the treatment is correct at VA, and the diagnosis is correct, and you prepare the claim, a claim like that takes more than

half an hour to adjudicate, if you get it right the first time.

We’re not getting it right the first time. We’re churning people

both through the hospitals and through the VBA.

Why do I mention that in terms of a holistic view? For veterans

of working age, the flashpoint, the nexus of the readjustment process is the ability to obtain and sustain meaningful employment.

The Veterans’ Employment and Training Service is not doing it

for us today. I think many of us understand that. It is not necessarily true that the VA could do a better job. Our key point that

we have shared and is reflected in that written testimony is wherever it’s housed, it must be put on a performance basis with cash

American to follow good performance, and that kind of a basis, because otherwise it’s going to be left out.

Even then, it may remain to be seen whether or not the system,

whether it’s set up through the State development agencies contact

being the major contact, whether or not they’re going to be able to

meet the needs of the rest of us.

We spend billions on rehabilitation of veterans and chump

change on trying to make sure that they don’t backslide. We have

to spend more to help people obtain and sustain employment.

I look forward to working with the committee on both sides of the

aisle to come up with a construct that will start to do that.

Thank you very much, Mr. Chairman.

[The prepared statement of Mr. Weidman appears on p. 114.]

The CHAIRMAN. Thank you very much, Mr. Weidman. I appreciate both of your testimonies. It provides us guidance and you

being here today certainly helps to amplify the message.

I think, Mr. Weidman, your point about the draconian, the Darwinian class warfare, I was well taken, because I, too, felt that the

$24,500 threshold uniformly applied across the country is an absurdity, and when we tried to at least provide the HUD index for

different locality cost of living, we ran into a buzzsaw over on the

Senate side resulting in a co-payment reduction as our end game
65

for trying to help these near poor, and what I would argue some

places in New Jersey or other metropolitan areas are truly poor,

but are just not so classified. So I think your point was very well

taken there.

Your testimonies, I think, give us guidance, give us amplification

of what we need to be doing and looking at.

So I really don’t have any questions, but I do want to thank you

for your testimony, and yield to my good friend, Mr. Evans.

I would just note for the record that we do have a bill that we’ve

introduced today—and Mr. Simpson and I’m sure others will join,

I know Mr. Evans is a principal co-sponsor—to raise from $14 million to $18 million the authorization for the State approving agencies, a point that you made earlier.

Mr. WEIDMAN. Thank you, sir.

The CHAIRMAN. Mr. Evans.

Mr. EVANS. Mr. Chairman, I appreciate the hearing today, and

I would ask unanimous consent to allow the members to have

ample time to submit written questions and for the witnesses to

put into the record such comments that they would like to make.

The CHAIRMAN. Without objection.

(See p. 166.)

Mr. EVANS. Thank you.

The CHAIRMAN. Mr. Filner.

Mr. FILNER. Thank you, Mr. Chairman. I want to thank both

panelists for their testimony and guidance, as the chairman said,

and I echo his thanks and his appreciation. The testimony will

guide us in this appropriations process as we move along.

As I said earlier, I think the way the President’s budget was constructed is going to be misleading to our colleagues, and will make

it more difficult for us to fight for the things that both panels have

advocated.

I would ask that all the groups get together what I’ll call a truth

sheet on the Administration’s budget—that is, a very simple sheet.

I think probably all of you would agree on how the budget distorts things with the transfers, with the inflationary costs, with the

assumptions of legislative action that have all distorted the true

budget

I think if you all put out a sheet for our colleagues that showed

that, it would make it easier for us when the crunch comes in the

appropriations process and they look at that budget and say, hey,

you keep asking for more, you got $800 million here, you got $200

million here, which is just a transfer, you got $300 million here,

which assumes something else, and it turns out that I don’t think

the real budget keeps up with inflation, as some other people point

out, and doesn’t allow us to move forward, and we haven’t made

up for the shortfall this year and several years before.

If you could get out a sheet like that, simply to show where the

budget is and why the distortions took place, it would help us make

a case when the crunch comes that we have to significantly raise

funding for our veterans.

I hope you all can do that. There are some differences in the way

you present your requests, but I think you can all agree on where

that budget is not accurate, and I hope you can all do that.
66

Mr. WEIDMAN. We’ll certainly work with the other organizations,

and from VVA’s point of view, we do intend to do that, plus point

out to all the members that every single medical facility, VA medical facility in the country, as we speak, is in a layoff by attrition

mode. They are reducing staff right now by not filling positions,

and I don’t think people realize that we need $750 million right

now just to stop the layoffs in their district.

Mr. FILNER. Those are points we got to make, and I know the

chairman will, and all of us on this committee, will be fighting very

hard.

You might want to, you know, use your grassroots organizations

to visit folks and talk to people. That education has got to take

place in the districts, so when we get to the votes, there can’t be

any false information that wasn’t dealt with.

I think we have 3 months or 4 months, and we got to use that,

I think, to educate our colleagues. Most of us have got some understanding on the budget, but our colleagues don’t, and they’re the

ones that will determine the outcome, no matter how hard we fight.

So if you can get to them in their districts over the next few

months, it will help immeasurably and we can do what we have to

do for our veterans.

Mr. Chairman, I thank you again for putting this together, and

I think we have to fight pretty hard in a bipartisan way to come

to an agreement on an appropriate budget that we’re going to fight

for.

Thank you, sir.

The CHAIRMAN. Thank you very much. Do either of you gentleman want to add anything?

Mr. WEIDMAN. Someone asked us if—Jim and I wanted to know,

and asked your staff, Mr. Chairman, if you always save the best

for last. They informed us that they always save the last for last.

(Laughter.)

Last, but not least. I do want to thank you for your testimony.

You know, we were thinking one of these days we’ll shift it so

the Secretary goes after the other panels—I mean, we’ve done that

on other committees that I serve on as a way of getting some of

the upfront information that really becomes helpful to all the members who may not have had time to ask the Secretary or the assistant secretary. So we’ll look forward to doing that in the future.

But again, the importance is really on the written submissions,

not to take anything away from your oral presentations, which

were excellent, but normally I’ll go back, like I did last night, and

read through every one of them. I’m sure the other members will

do likewise, study it, look for areas where we may be deficient as

we make our recommendations to the budget committee and then

throughout this entire process as we go forward.

So thank you. My door is always open, as you know. If there’s

some concern, give me a call, Pat or any of us. I know Lane feels

the same way.

So I’d like to thank you again, and the committee is adjourned.

[Whereupon, at 2 p.m., the committee was adjourned.]
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A P P E N D I X

PREPARED STATEMENT OF CHAIRMAN SMITH

Good morning. I want to thank all of our witnesses for agreeing to testify today.

I also want to extend a special welcome to the newest members of the Committee

on Veterans’ Affairs: Jeff Miller of Florida and John Boozman of Arkansas on the

majority side; Stephen Lynch of Massachusetts and Susan Davis of California on the

minority side. This Committee has a long history of addressing veterans issues in

a bipartisan manner, and I believe We must continue that tradition if we are to be

effective in the future.

The Administration’s budget proposal for the Department of Veterans Affairs represents the largest increase in spending ever proposed in terms of total dollars, $6

billion over last year for a total of $58 billion. In the most critical area, veterans’

health care, the Administration is requesting $22.7 in direct appropriations, in addition to $1.4 billion that is expected to be available through collecting co-payments

and third Party insurance payments: an increase of $1.4 billion in appropriated dollars, also a record in terms of total dollars. We all recognize and commend the efforts of the Secretary in fighting for this increase and his commitment to providing

the best possible care for our nation’s veterans.

Yet despite these large increases, the Administration itself acknowledges that

their proposal does not contain enough appropriated dollars to provide care for all

of the veterans who are expected to seek care from the VA next year. According to

the VA’s calculations, an additional $1.1 billion would be needed.

To cover this shortfall, the Administration is proposing a new $1,500 ‘‘deductible’’

that would be applied to Category 7 veterans in order to increase collections and

decrease the number of veterans seeking health care through the VA. In fact, the

VA has indicated that one result of this proposal will be that 121,000 veterans will

leave the VA health Care system. At a time when health care costs continue to rise,

and our veterans population Continues to age, Congress should not endorse a policy

designed to discourage veterans from obtaining health care from the VA. With all

due respect Mr. Secretary, this proposal is a non-starter and I will oppose it.

Ironically, last month the President signed legislation, H.R. 3447, now P.L.

107.135, which contains a provision requiring the VA to lower co-payments for nearpoor veterans who live in high-cost areas of the country. Thus, I question whether

this new $1,500 deductible proposal fits the policy we so recently enacted into law.

It seems to me that the answer is not to turn away veterans and their families,

but to provide sufficient resources to the VA in order to meet their needs. Last year,

working in a bipartisan manner, the Committee was able to increase health care

funding significantly—although not by as much as I or others, including the members of the Independent Budget who will testify later, would have preferred. We succeeded last year by presenting a serious, detailed, and bipartisan estimate of the

legitimate needs of the VA health care system. We should do the same this year.

Rather than seek a solution that turns away veterans, we must work together to

build a budget proposal based upon the principle: ‘leave no veterans behind.’

Let me point out that by keeping veterans inside the VA health care system, we

will be investing health care funds in a system that clearly has one of the world’s

most advanced patient safety programs; one in which the cost of the care may well

be 25 to 30 percent less costly than comparable care in the private sector. Judging

by the rising enrollments, it also appears that veterans are voting for their favorite

health care provider by seeking VA care in record numbers.

In fact, despite their funding limitations, the VA provides excellent health care

for almost 5 million veterans and their families. As a Member of the Committee on

Veterans’ Affairs for over 20 years, I have had the privilege of meeting with thousands of the more than 220,000 VA employees and they are indeed a unique national resource. Unlike other health care systems, most of the employees in the V
68

A choose to work there out of a commitment to serving our nation and its veterans;

many of them are veterans themselves.

Our goal, therefore, must be to put federal health care dollars where veterans are

receiving their care. VA already has the authority to collect payments from veterans

and third party insurers and they must continue in their efforts to do a better job

at that. The Secretary has indicated his’ desire to do just that. At the same time,

we may need to examine current laws and policies that prevent VA from collecting

for the cost of care if enrolled veterans are members of an HMO or are covered by

Medicare. We need to see if there are ways to offset some of the cost of their care

through innovative approaches to these obstacles. The health care provider actually

providing the care should be the one getting the money.

We must also take action to ensure that VA’s hospitals, outpatient clinics, research centers and other facilities are properly maintained. Last year, our Committee reported out H.R. 811, that the House later approved, to provide $550 million

in emergency funding to repair, retrofit and rehabilitate crumbling VA health care

facilities. While I am pleased to see an increase in the Administration’s major medical facility construction request, I continue to be concerned that we are failing to

properly maintain the aging infrastructure of the VA health care system. I would

continue to urge our colleagues in the other body to move this legislation and would

hope to have the Administration’s support for this effort.

Last year was indeed a productive year for this Committee. Working together

with the leadership of our Subcommittee Chairmen, Mr. Moran, Mr. Simpson and

Mr. Buyer, our Vice Chairman, Mr. Bilirakis, as well as our colleagues on the other

side, including Mr. Evans the Ranking Minority Member, we were able to see five

significant new bills signed into law. This year, we must and we will aggressively

seek to have these new laws swiftly and faithfully implemented with full funding

from Congress.

Of particular urgency are the provisions of H.R. 2716, now P.L. 107–95, the

Homeless Veterans Comprehensive Assistance Act of 2001. Every night there are

more than 250,000 homeless veterans sleeping on the streets—this is equivalent to

17 infantry divisions, more than the entire United States Marine Corps. It is absolutely imperative that the V A move rapidly to open the 10 new domicillaries authorized by our legislation, establish the new technical assistance grant programs

and work with HUD to implement the new Section 8 low-income housing voucher

program. We don’t have a minute to spare and, again, we have an obligation to

‘‘leave no veteran behind.’’

We also approved legislation, H.R. 1291, now P.L. 107–103, the Veterans Education and Benefits Expansion Act of 2001, providing an historic increase for the

Montgomery GI Bill program and we must ensure that it too is fully funded. Finally, as I mentioned before, we also approved H.R. 3447, now P.L. 107–135, the

Department of Veterans Affairs Health Care Programs Enhancement Act of 2001,

which, in addition to lowering out-of-pocket hospitalization costs for lower income

veterans, requires the VA to establish new programs providing chiropractic care and

service dogs for severely disabled veterans. This new law also creates new incentives

and recruitment programs to attract and retain nurses within the VA. I look forward to the testimony on whether the budget proposal accommodates all of these

new and expanded programs.

Another important issue presented to the Congress by this budget concerns the

administration of employment assistance to job-seeking veterans. The GAO and numerous others who have examined the Veterans’ Employment and Training Service

(VETS) agree that it is an agency mired in mismanagement, as evidenced by their

lack of vision, accountability, and results. The Administration has proposed that it

be transferred from the Department of Labor and that the funding be made available for competitive grants. Whether the Congress is ultimately persuaded that this

is the appropriate step, it is my belief that on this issue as well, Congress cannot

simply do nothing. I am pleased that our Subcommittee on Benefits Chairman Mike

Simpson and Ranking Member Silvestre Reyes have already held a hearing on the

need for reform of this program, and that they have pledged to look very carefully

at what needs to be done to deliver effective job-finding assistance to veterans. They

need and deserve the support of all of us in their quest.

Mr. Secretary, I want to commend you for your stewardship of the Department

during the past year. You have been honest and approachable. More importantly,

you have seized the helm and laid a very clear course for the Department. I urge

my colleagues to pay careful attention to the Secretary’s statement and look forward

to working with you to ensure that we reach our goal of ‘‘leaving no veteran behind.’’
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PREPARED STATEMENT OF HON. JERRY MORAN, CHAIRMAN,

SUBCOMMITTEE ON HEALTH

PRESIDENT’S FY 2003 BUDGET FOR VETERANS’ HEALTH CARE

I commend the Secretary for his leadership on gaining the President’s support in

putting forth this budget for $58 billion. This is a great starting point for our debate

on the needs of veterans next year.

There are some troubling aspects to the budget that I want to highlight:

• $1500 deductible for veterans with higher incomes is unacceptable.

• I agree with Chairman Smith that this deductible policy, on top of all the existing co-payments (outpatient, inpatient, pharmacy, long term care), will

drive veterans away from VA care, not draw them to it.

• This is a totally different direction from policy Congress just enacted in Public

Law 107–135, providing a significant reduction in hospital co-payments for

near-poor veterans in urban areas.

• I want to work with the Secretary and Chairman to find ways of accommodating veterans’ needs while keeping VA viable. Difficult challenge for VA and

the Committee, but pledge to continue working toward mutual goals of good

stewardship of VA and responsible policy.

Major medical facility construction programs are still focused completely on

CARES, rather than addressing problems that are well known and justified. VA

needs to continue repairing and doing upkeep on existing and aging VA facilities

such as those in Wichita, Leavenworth and Topeka, Kansas, and many others

around the nation. I am very concerned about the need to do good upkeep so that

these facilities can continue functioning, even while CARES proceeds.

I appreciate Secretary Principi’s commitment to VA’s biomedical research program. I look forward to gaining this level of support through appropriators. Biomedical research has been an important component in post-Gulf War inquiries. My

subcommittee is conducting close monitoring of the armed forces deployment in Afghanistan to ensure that our soldiers are safe and that we might avoid the chaos

and the illnesses that afflicted Persian Gulf War veterans.

Again, I want to commend the Secretary for good work on his first ‘‘real’’ Bush

Administration Budget. I look forward to working with the Secretary and his staff

in VHA to improve care for the nation’s veterans.

PREPARED STATEMENT OF HON. SILVESTRE REYES

Secretary Principi, welcome. It is always good to see you, and I would again like

to thank you for coming out to EI Paso last year and speaking at my annual Town

Hall meeting. I am pleased that the Administration’s Budget for the Department

of Veterans Affairs (VA) calls for increased staffing to bring performance assessment

and accountability to individual employees involved in claims processing. While I

am concerned that the requested staffing increase may be insufficient to accomplish

the task, I am also concerned that the large number of employees currently in training status may preclude additional hiring until more of the current trainees are

more experienced.

Judging by offices which have consistently high rates of reversal and remand from

the Board of Veterans’ Appeals, it appears that employees at some regional offices

are consistently making erroneous decisions. Under VA’s duty-to-assist role, claims

should not be decided without obtaining critical medical evidence, service medical

records, adequate medical examinations and necessary opinions concerning the relationship of a claimed disability to service. I am hopeful that this initiative to increase the number of reviewed claims will enable the VA to take corrective action

where such patterns are identified.

As you know, I am very concerned about the backlog of veterans’ claims, which

has increased by over 50,000 since the start of this fiscal year. While I applaud your

desire to improve the timeliness of claims processing, I am very concerned that the

backlog is continuing to grow and hope that you will be able to provide me with

a detailed description of the reasons for the increase in pending claims since the

start of this fiscal year. Reduction of the backlog must not be accomplished at the

expenses of long-term goals to improve quality.

Setting mandatory ‘‘productivity’’ goals for individual offices while many employees are still in training status may result in short-term gains with long-term costs.

I am particularly concerned that proposed efforts to reduce the backlog by 50 percent over the next 18 months is resulting in productivity goals which can not be

met without sacrificing adequate development of claims and quality decisions. Mr.
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Secretary, I am concerned that the goal of claim resolution in 100 days by the end

of fiscal year 2003 is no longer realistic. During your visit to EI Paso, you conveyed

the message to veterans in my district that the claims backlog was your top priority

and that you would seek adequate and appropriate solutions to this problem. I intend to work closely with you toward accomplishing this goal with realistic solutions, and would appreciate your input in this matter. Thousands of veterans have

been given an opportunity to qualify for compensation benefits as a result of recent

legislative and regulatory changes. When a goal becomes unrealistic and unattainable, employees are likely to become discouraged and frustrated rather than motivated. I believe that the VA’s goals need to be revised, with perhaps more distinct

measurements taking into account the number of issues in a claim to assure that

new VA employees are given an adequate opportunity to acquire necessary skills before expecting a substantial increase in their productivity.

Mr. Secretary, no Member of Congress would like to see the backlog reduced more

than I. Nonetheless, if timeliness is evaluated as a goal in itself, rather than as one

element needed to produce a quality work product, we will be no closer to a solution.

In particular, I note that several of VBA’s resource centers, which are assisting in

rating ‘‘fully developed claims’’, are offices which have traditionally had a very high

remand and reversal rates. Having an office serve as a resource under these circumstances, suggests that quantity is being put before quality. Before an office is

designated to assist other offices in rating claims, better assurance needs to be provided that the resource office has the ability to consistently issue correct ratings.

A more deliberate, well-developed correct initial decision is vastly superior to a fast,

wrong one.

In this regard Mr. Secretary, I am also questioning the speed at which the Administration is approaching its stated objective of restructuring the way the federal government provides employment and training services to veterans. These services are

currently provided to veterans by the Department of labor through its Veterans’ Employment and Training Service (VETS). The budget submission has proposed two

major changes—to transfer responsibilities and funding for veterans’ employment

services and the Homeless Veterans Reintegration Program (HVRP) to VA—and to

increase accountability for those various services through a ‘‘competitive grants program.’’ Without any details as to how this can realistically be accomplished and become

operational by October 1, 2001, I fear that we would be buying a pig in a poke. To

date, we have seen no hard evidence that the VA is equipped to administer employment services that will produce superior results to those currently produced at

VETS. For this reason, I am not sure it is prudent at this time to dismantle the

current infrastructures in place to help our job-ready veterans find employment or

those to help our homeless veterans regain their independence. Moreover, the term

‘‘competitive grants’’ is not defined by the budget submission. I am wondering what

all this really means—who would be able to compete for money to provide these

vital services to our veterans? What qualifications would they have? How would the

grants be administered? How would these programs fit into the VA’s organizational

structure? Would these grants become a cash cow, for some private industry without

any of the safeguards accorded government employment?

I have some questions concerning the Minimum Income for Widows Program. You

are at least the fourth Secretary to wrestle with the mandate to move this program

from the Department of Defense to the Department of Veterans Affairs by July 1st

of 1997. According to the budget submission, this transfer has still not occurred and

discussions as to how to most efficiently handle these accounts are still on-going.

Given the declining number of widows eligible to receive this benefit, would it be

more effective to enact legislation restoring responsibility to the Department of Defense where it has apparently remained?

I also have some very serious reservations concerning the proposal to eliminate

the vendee loan program. The Department has proposed legislation to eliminate this

program in the last several Congresses. Despite Congress’ refusal to enact such legislation, the Administration now proposes to eliminate the program, without specific

Congressional authorization. Although the program theoretically extends the government’s liability for some time, available data suggests that VA realizes a greater

return on investment from vendee loans than from cash sales. Where VA is able to

realize a greater return, the original liability of the veteran whose home has been

foreclosed on is lessened. With the great need for funding of VA programs, I am opposed to eliminating a program that appears to be improving VA’s ability to obtain

a return on its investment.

Finally, although I share our Ranking Member’s concern at the inadequacy of the

health care request, given the many veterans who are waiting months for appointments. I do want to commend you for the increase in the funding for State Home
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grants. We have a great need in Texas and particularly in EI Paso for a state veterans’ home. I hope that this additional funding will help to address that need.

I am sure that you have fought hard to obtain the funding needed to provide benefits to our Nation’s veterans. In some areas, additional funding will be needed to

fulfill our commitment to our Nation’s veterans. I stand ready to assist you in seeking that funding from the appropriate Congressional Committees.

PREPARED STATEMENT OF HON. STEVE BUYER

Thank you, Chairman Smith, for holding this important hearing to review the VA

budget of the Department of Veterans Affairs for fiscal year 2003.

Thank you, Mr. Secretary, for your leadership and your proactive stance on several issues that are of particular importance to me—medical claims recovery and

improving management information systems.

This budget reflects your commitment to ensuring that our nation’s veterans receive the benefits they deserve. The fifty eight billion dollar request for veterans

benefits and services represents an increase of 6.1 billion dollars over last year’s

level of funding and provides the largest increase ever proposed.

This budget also breaks new ground because it includes a one hundred and ninety

seven million grant to administer the Disabled Veterans Outreach Program (DVOP)

and the Local Veterans Employment Representatives grants that are currently administered by the Department of Labor. I look forward to hearing more about this

initiative.

Last September my Subcommittee held a follow-up hearing to evaluate the

progress that is being made in third-party payment collections by the VA’s Medical

Care Collections Fund (MCCF). What we heard wasn’t very promising.

This year’s budget requests twenty five billion dollars for health care, including

$1.5 billion in collections. However, I must express my grave reservations about relying on third-party payer collections because except for one year between 1995–

2001, the VA has not met its projected goal. Therefore, I hope the Secretary will

provide us with an update on what, if any, of the 24 recommendations made by

Price Waterhouse in its 2001 report have been implemented.

Let’s keep in mind that the fiscal year 2001 increase in collections was largely

the result of VA’s implementation of ‘‘reasonable charges’’ billing. Nonetheless, longstanding problems continue to persist. VA takes 14 times longer to bill, on average

than the private sector. VA’s collections information systems continue to be weak.

The Veterans Health Administration Revenue Cycle Improvement Plan in September of 2001 stated that the collections system lacked ‘‘standardization of policy, technology, data capture, measurement, and training and education.’’ While I might

sound skeptical, I’m not convinced that VA will actually capture the entire $1.5 billion and that we may need to pass some type of supplemental funding to avoid a

shortfall.

The VA assured members of the Committee that it would initiate four pilot

projects to outsource its MCCF collections. However, upon careful review of the

‘‘much anticipated’’ pilot projects, we find that only one of them outsourcing collections. I’m not sure this will provide us with the type of outcome data we need—

outsourcing looms as a strong antidote to what ails the MCCF system.

Last September I held a field hearing in Indianapolis to examine the delivery of

benefits to Indiana veterans. During our hearing we learned that appeals, on average, take up to 597.4 days. Mr. Secretary, I am pleased that reducing the backlog

of claims is a top priority with you. We must eliminate this backlog, which is currently a staggering 600,000 claims.

In that regard, your VA Claims Processing Task Force made several recommendations, including ‘‘the Tiger Team’’ initiative that was specifically given the job of expediting the processing of older compensation and benefit claims for veterans over

70 years of age that have been languishing for a year or longer.

Over the past five years the VA has received approximately one billion a year for

its information technology projects. I intend to hold a fifth oversight hearing in the

Spring to ascertain where we are in our move towards ‘‘one VA.’’

After September 11, we all recognize the importance of having our medical personnel fully able to diagnose and treat incidents where biological, chemical, or radiological agents were used. I am hopeful that the ‘‘seed’’ money necessary to implement my legislation, H. R. 3254, the ‘‘Medical Education for National Defense Act

of the 21st Century,’’ is made available since the VA has the infrastructure to make

the USUHS curriculum available to medical schools.

Again, I look forward to hearing from our distinguished panel about their vision

for nation’s veterans.
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PREHEARING WRITTEN COMMITTEE QUESTIONS AND THEIR RESPONSES

CHAIRMAN SMITH TO DEPARTMENT OF VETERANS AFFAIRS
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WRITTEN COMMITTEE QUESTIONS AND THEIR RESPONSES

CONGRESSMAN REYES TO DEPARTMENT OF VETERANS AFFAIRS
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CONGRESSMAN EVANS TO THE INDEPENDENT BUDGET
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CONGRESSMAN EVANS TO THE AMERICAN LEGION
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