The department of veterans affairs

HEALTH CARE BUDGET

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

one hundred ninth congress

first session

June 30, 2005

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-16

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Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

richard H. baker, Louisiana Michael H. Michaud, Maine

Henry E. Brown, Jr., South Carolina Stephanie Herseth, South 

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio Shelley Berkley, Nevada

 Tom Udall, New Mexico

JAMES M. LARIVIERE, Staff Director

(II)
CONTENTS

June 30, 2005

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Department of Veterans Affairs Health Care Budget .............

OPENING STATEMENTS

Chairman Buyer ......................................................................... 

Hon. Lane Evans, Ranking Democratic Member ......................

Prepared statement of Mr. Evans .............................................

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

Hon. Michael H. Michaud .........................................................

Hon. Jerry Moran ......................................................................

Hon. Ted Strickland ...................................................................

Hon. Henry Brown, Jr. of South Carolina ................................

Hon. Darlene Hooley ..................................................................

Prepared statement of Ms. Hooley ...........................................

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

Prepared statement of Mr. Miller .............................................

Hon. Silvestre Reyes .................................................................

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

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

Prepared statement of Ms. Berkley ..........................................

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

Prepared statement of Ms. Brown-Waite ..................................

Hon. Tom Udall .........................................................................

Hon. Michael R. Turner .............................................................

Hon. Stephanie Herseth ............................................................

Prepared statement of Ms. Herseth .........................................

Hon. Corrine Brown of Florida .................................................

Prepared statement of Ms. Brown ...........................................

Hon. Michael Bilirakis ...............................................................

Witnesses

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

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

 

(III)
STATEMENTS FOR THE RECORD

Hon. Tom Osborne, 3rd District of Nebraska ..........................

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

POST-HEARING QUESTIONS FOR THE RECORD

VA Response to questions from Hon. Michael Turner .............

Information for the Record

Snapshot of How the Shortfall is Affecting Patient Care, prepared by the Minority Staff ..................................................

Document demonstrating VA Underestimates of Workloads

each year, provided by Hon. Shelly Berkley ........................

“A War of Disabilities -- Iraq’s Hidden Costs Are Coming

 Home” by Mr. Ronald Glasser ...............................................

 

(IV)

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(1)

The Department of Veterans Affairs 

Health Care Budget

Thursday, June 30, 2005

U.S. House of Representatives, 

Committee on Veterans’ Affairs,

Washington, D.C.

 The Committee met, pursuant to notice, at 10:08 a.m., in Room 

334, Cannon House Office Building, Hon. Steve Buyer [Chairman of 

the Committee] presiding.

 Present: Representatives Buyer, Bilirakis, Stearns, Moran, Mr. 

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

Turner, Evans, Filner, Ms. Brown of Florida, Snyder, Michaud, Herseth, Strickland, Hooley, Reyes, Berkley, and Udall.

opening statement of Chairman Buyer

The Chairman. The full Committee hearing of the House Veterans’ 

Affairs Committee Oversight Hearing on VA Budget Modeling and 

Methodologies, June 30, 2005, will come to order.

We’re here this morning to identify fiscal year 2005 funding requirements for the VA health system and to develop the picture for 

2006, 2007, 2007, and beyond.

 In a continuation of last week’s robust discussion with Dr. Perlin, 

we will further examine the process used by VA to forecast health 

care demand among America’s veterans, so that we can ensure both 

today’s veterans and the veterans of the future have a sound health 

care system.

 I want to thank Secretary Jim Nicholson for his leadership over the 

last week, as we have worked through this challenge. We recognize 

that you have inherited a pretty tough problem. It’s clear to me that 

Secretary Nicholson and the Bush administration in your response to 

this are very serious about caring for America’s veterans.

 And, to Under Secretary Perlin, who is in the trenches of the VA’s 

health administration, I offer and extend my gratitude to you for 

stepping up to the plate, and your candor, not only in public, but also 

in private.
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 As Chairman, getting the VA budget right is about the most important thing that I can do. It’s the most important this Committee can 

do. Without a good budget, how can we provide the good health care 

for our nation’s veterans? So we’re going to get it right.

 This entire Committee is committed to working closely with you 

and your staff as we move forward in developing an accurate budget 

for the department, not just here in 2005, in your final quarter, but 

also in 2006 with whatever may be required for a budget amendment 

on 2006 that can be developed with you through the August, maybe 

even into the September time frame, as we finalize the 2006 budget.

 Earlier, I had made some comments, not only at a press conference 

but also in particular at a hearing last week, that in this town, everybody seems to have a number with regard to the VA budget.

 So the American Legion has a number. The Independent Budget 

has a number. VA comes up with a number. OMB comes up with a 

number. Lane Evans has a number. We’ve got a number. Everybody 

seems to have a number.

Mr. Evans. Except ours is right.

The Chairman. What we learned is that you have individuals whom 

you consult, actuaries on contract. We learned that the model that 

you use is a model that is also similarly used by the private sector, 

but we stress the model. And we use bad data. And perhaps the 

assumptions were not right. And they weren’t right. Improper variances give a bad result.

So over the last four or five years, we were pretty fortunate to get it 

pretty close. This year, we’re pretty far off.

 Recognizing that the 2005 budget was crafted using data in 2002, 

we weren’t even in the war in Iraq in 2002. So while we’re looking at 

today, Mr. Secretary, we recognize that we want to work directly with 

you, and we’re going to extend our oversight to make sure we get this 

model correct in 2006 and 2007, and the budgets beyond.

 And if you’re not able to do the risk adjustments, are not able to 

do these changes, we’re going to have to do it. We just want to make 

sure that we get the dollars accurate.

 I know that Chairman Walsh and Chet Edwards, the Ranking 

Member on appropriations, feel the same way.

 I did have to say to Chet last night, Chet Edwards, my good friend, 

I asked him what the power ball was, and he said -- you know, he 

gave me a funny look -- “Why?”

 And I said, “Tell me what the power ball number is.”

 And he said, “I don’t understand.”

 And I said, “Well, if you can be more accurate in guessing what 

the VA budget number would be than the VA, then you should know 

what the power ball number is.”

 So I extended him some congratulations.

 It’s also kind of interesting that when I look at your model, and 
3

the sophistication of your model, and I look at what the Independent 

Budget did, and when I look at what the American Legion did in an 

unsophisticated process, they were more accurate. They were more 

accurate than you. And that’s the reality of where we are.

 I appreciate your coming here today. We’re most interested in 

hearing about these work-around solutions, and we’re also most interested in hearing what you have to say today and any requests you 

may have of us to take action.

The Chairman. I yield now to Mr. Evans.

Opening Statement of Mr. Evans

Mr. Evans. Thank you, Mr. Chairman.

 I also look forward to working with you to develop why we got into 

this situation, what your plans are for addressing this shortfall this 

year and next.

 I also want to hear from the VA as to what it plans to do to prevent 

this from ever happening again.

 I disagree with comments made by the Secretary earlier this week. 

This is certainly a problem, and definitely a crisis.

 I’m angry, and I know many of my colleagues are angry. This is an 

issue of credibility -- the credibility of what you tell us here in Congress and the credibility of the budgetary process involving the VA.

 You blame your budgetary model, but year after year you underestimate in your February budget submissions the number of veterans 

who will seek care. I don’t understand why you are expressing surprise when you’ve underestimated this again.

VA assures us that this is a $1 billion shortfall that is not affecting 

adequate care to our veterans. That’s not correct.

 The Democratic staff have compiled a snapshot of how this shortfall has been affecting patient care, and I ask that it be entered into 

the record, Mr. Chairman.

The Chairman. Without objection.

[The information appears on p. 98]

 Mr. Evans. We are still awaiting answers from your February budgetary hearing, and I’m still waiting for the answers to a simple survey we sent out months ago to gauge the fiscal health of the networks. 

The answers to these questions in the survey have been held by the 

VA, and they won’t release them.

 Yet, Secretary Nicholson, you told us in February that the VA’s 

information was our information. Is doesn’t seem like that’s been 

the case.

 We found out about this shortfall at last week’s hearing. It appears 

you knew about it in April. You claim that you have been “forthcoming,” but this has clearly not been the case.
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 You are doing no one any favors, least of all the VA, by not leveling 

with us. We need honesty and accuracy from the VA so that we can 

get our job done and help you, as well, in your job.

 I think we’ve got a lot of work here to do, Mr. Chairman. I appreciate your holding this hearing, and look forward to working with you.

[The statement of Hon. Lane Evans appears on p. 62]

The Chairman. Thank you, Mr. Evans.

 Would anyone else like to make an opening statement?

 Mr. Filner?

Opening Statement of Mr. Filner

 Mr. Filner. Thank you, Mr. Chairman.

 Thank you, Mr. Secretary, for being here.

 Mr. Chairman, I found your opening comments bordering on the 

irresponsible.

 You said we have to get the budget right. We’ve been trying to do 

that for months, in fact for years. You laughed at us. You laughed 

at the Independent Budget. Now you’re comparing the Independent 

Budget with power ball figures.

 If you look at the record, the Independent Budget has been right 

for years and years and years. It’s a professional analytic job. Those 

of us who have used it have turned out to be right, and you ought to 

admit it, rather than just saying all of a sudden that we ought to get 

it right.

 We’ve been telling you this for months and months. We’ve tried on 

the floor of the House to raise the budget. We have been ruled out of 

order. We’ve tried in Committees to do it. We tried it yesterday in 

the House to do it, and we’ve been ruled out of order each time.

 You talked about the Secretary’s leadership. I cannot believe you 

used that word. We not only were not kept informed of the shortfall 

here. The Secretary has said, and I assume he’s going to say again 

today, “There’s no crisis here, there’s no diminution in quality.”

 We have lists and lists and lists of shortfalls at every single medical center in this nation. We have testimony of veterans who have to 

wait for months and months in line.

 In San Diego where I am, there’s nearly 1,000 veterans waiting 

for their appointment. There’s 231 vacancies. And you’re telling the 

Secretary that’s leadership?

 This Secretary ought to resign because of the way he dealt with 

us in this situation, and how he’s handling this crisis. He is not a 

leader. He is failing the veterans, he’s failing this nation, and I think 

he ought to inform us today of his resignation.

 Thank you, Mr. Chairman.

The Chairman. Mr. Stearns?
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 Mr. Stearns. Yes, Mr. Chairman, thank you. Just allow me to say 

a few words.

I appreciate the Secretary coming up here, and this is the first opportunity I’ve had to talk to him, and I appreciate his honesty and his 

staff, forthright in trying to give us the information we need.

 You know, I guess some of the questions we now have, with the 

Senate passing approval of $1.5 billion yesterday in emergency funding, is that all you need, and can you project in the future what else 

you’ll need?

So I guess getting a firm handle on a number, and how much is contributing to this, the Reservists and the Guardsmen, perhaps even 

discussing with us what the actuarial model that you’re using, does it 

just continue to miss the mark, or does it have to be modified?

 You know, I think many of us follow these hearings, and I know 

that Dr. Perlin on April 12th, who was the under secretary for health, 

he wrote to the Senate VA Committee:

“We do feel confident that the VHA has sufficient resources for the 

remainder of 2005.”

 So those are his quotes in April 2005, April 12th.

 And so then we suddenly hear about this. It makes us a little concerned.

 So I know that you welcome like we do the opportunity to explain.

 Thank you, Mr. Chairman.

The Chairman. Thank you. Mr. Michaud.

Opening Statement of Mr. Michaud

 Mr. Michaud. Thank you, Mr. Chairman.

 Mr. Secretary, I’m very disturbed by VA’s recent disclosure of a 

huge budget shortfall. VA hospitals across the nation are using drastic cost-cutting measures to cover the shortfall.

 I do not agree with you that the VA can continue to provide timely 

highly qualified health care for veterans with this budget.

 I do not agree with you that siphoning off funds from medical equipment and vital maintenance is simply, as you put it, and I quote, “deferring non-critical capital expense for a few months.”

 For example, the VA hospital in Vermont had to shut its three operating rooms this Monday because the heating/ventilation/air conditioning system was broken and has not been repaired because maintenance dollars were transferred to cover the budget shortfall.

 The failure to repair needed equipment is hurting patient care and 

safety. The cost-cutting measures are not just putting off maintenance and buying medical equipment. VA managers across the nation are deliberately delaying the hiring of key clinical staff by at 

least three months just to cover the shortfall.

 Mr. Secretary, veterans are being left behind now under your 
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watch, because the VA is putting them on a waiting list and eliminating services to cover huge budgetary holes.

 These drastic actions are not, as you said, simply part of good government. Your approach to the shortfall is hurting veterans, and it’s 

wrong. A better approach, and the only approach, is to assure funding for veterans’ health care.

 I do not buy the argument putting the blame on poor modeling. 

You’ve known, and this Committee has known, and we’ve stated over 

and over again, the cost of this war has an added cost -- taking care 

of our veterans.

 I do not know, it appears you have not been listening about the cost 

of the war as it relates to the veterans.

 This is not a Democratic issue or a Republican issue. This is an 

issue about taking care of our veterans.

 I’ve been reading articles recently. Members of the other party, 

Senator Larry Craig, and I quote:

“It was frustrating to me and an embarrassment.”

Jim Walsh talks about the Congress needs to provide additional 

resources now because we’re at war.

 The Chair of the House Appropriations Committee, Jerry Lewis 

says, and I quote -- about the administration withholding the information, and I quote:

“It borders on stupidity.”

 It might not be a crisis to you. If this administration thinks Social 

Security is in crisis because it lacks the funding beyond 2052, the 

Veterans Administration lacks funding today, and it might not be a 

crisis to you, but it is for those veterans who need the services today. 

If it’s not a crisis to some of them, it definitely is hurting some of 

them.

 I implore you, Mr. Secretary, and I look forward to your testimony, 

to correct this problem that we currently are facing, and it is a problem.

 And I know, Mr. Secretary, you served as Republican National 

Committee Chairman. This is not a partisan position. It’s okay when 

you were party chair, but this is not a partisan position.

Caring for our veterans who put their lives on the line is extremely 

important, and this Committee and members of both sides of the aisle 

have come together in the past to help our veterans.

 Your predecessor worked with both sides of the aisle on this issue, 

putting veterans first, ahead of politics, and I hope that you will do 

the same. Your record has not shown that, and during the questions, 

I will ask you specific questions, and I’ll expect they’re worded in such 

a manner that you can give a yes or no answer.

 You have, in my opinion, disappointed a lot of members of both 

sides of the aisle. You have a lot of explaining, and I, and I know 

members of both sides, would respect you more if you will be up front 
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with us, honest with us, and do not try to push the blame on modeling. The buck stops, initially, with you, and ultimately, with the 

President of the United States.

 So I look forward to your testimony, Mr. Secretary.

The Chairman. Thank you, Mr. Michaud.

 Mr. Moran, you’re now recognized for an opening statement.

Opening Statement of Mr. Moran

Mr. Moran. Mr. Chairman, thank you very much. I appreciate 

your holding the hearing today.

 Mr. Secretary, thank you for your willingness to appear before our 

Committee today, and I hope we can have a worthwhile discussion.

 Last week in this room it was revealed that the department is failing in funding our veterans’ health care in fiscal year 2005, and since 

then we’ve learned that the budget situation for the coming fiscal 

year is even more difficult, which I think likely will impair the ability 

of the VA to meet the needs of veterans in coming years.

 America’s veterans, as you know and I know you believe this, deserve the very best, and I strongly believe that the VA health care 

system must be available for all veterans and to provide them with 

nothing less than excellent service.

Clearly, inadequate resources threaten to harm the quality of the 

service the VA provides and hinders our ability to meet our commitments to those who honorably served.

 It is imperative that we act to rectify this problem. I think this 

means that initially we need to gain accurate numbers, exactly how 

much funding is needed to meet the current demands, and then we 

must provide the necessary appropriations to meet those demands.

 I call upon my colleagues in the administration to fully fund veterans’ health care. Making up for the shortfall by allaying spending or 

borrowing money only serves to postpone the problem while reducing 

the quality of service.

Immediate action is needed to ensure that the VA fulfills its mission that all veterans receive health care that they have earned, and 

as public servants, we have the responsibility to set aside partisanship to keep this promise.

 As more and more of our troops return home from combat, we must 

make certain that we do what needs to be done to fix this problem 

in the coming years so that the situation does not reoccur, and I’m 

concerned that current forecasting models used to determine demand 

and develop budgets has proven inadequate.

 This process needs to be examined to ensure that Congress and 

the Department have accurate information from which we can make 

sound budget decisions.

 Mr. Secretary, I welcome your testimony on this topic, and I look 
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forward to working with you and your colleagues in the department 

to see that we meet the needs of our nation’s veterans.

 Thank you, sir.

 Thank you, Mr. Chairman.

The Chairman. I thank the gentleman for his opening statement.

 Mr. Strickland, you’re recognized for an opening statement.

Opening Statement of Mr. Strickland

 Mr. Strickland. Thank you, Mr. Chairman.

 Mr. Secretary, I come from southern Ohio, and down there we have 

a saying about the chickens finally coming home to roost, and I think 

that’s what we’re experiencing here as we consider the shortfall of 

the VA budget.

 The fact is that people are beating up on you, and I guess I can kind 

of understand that, but the ultimate person responsible for what we 

face here is the President of the United States.

 He’s the Commander in Chief. He makes decisions about war and 

peace, sending our soldiers into battle.

 And the fact is that none of us are really surprised at what’s happened here.

 We sent our soldiers to war without body armor. Poor planning. 

Lack of planning.

 It took months and months and months for our soldiers to have access to armored humvees, and I think probably even today there are 

soldiers in Iraq and Afghanistan that are not properly equipped. Just 

absolutely egregious mistakes in planning.

 I’m not surprised about this. Our former Secretary sat right where 

you’re sitting, sir, and told us that he had asked the President for $1 

billion more than the President was willing to include in his budget 

for VA health care. He’s no longer with us.

 Our former Chairman of this Committee, Chris Smith, served 

on this Committee for 24 years, almost a quarter of a century, was 

stripped of his chair’s position and purged from this Committee because he spoke out regarding the inappropriate or inadequate funding for VA health care. We all know that. Everyone of us sitting here 

knows that.

 So why should we be surprised? We’re not surprised.

Management efficiencies were built into the budget. No one said 

how these management efficiencies were going to actually save money, but they were built into the budget as a way to provide fewer 

resources.

 And now the President apparently is going to continue to ask us 

-- it’s not going to happen -- to increase the cost of prescription drugs 

for our veterans, and to impose an annual user fee on our veterans, 

and to create categories of veterans that are excluded from VA health 
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care, even some who may be combat decorated veterans.

 Now we’ve got a shortfall this year. I think it’s going to be take care 

of. Thank God for what the Senate did yesterday. I hope the House 

takes action today.

 But what about next year? Well, we’re being told that next year 

the budget shortfall may be $1.6 billion, but that’s assuming that the 

President is going to get the onerous increases that he wants to place 

on the backs of veterans in terms of user fees, and it’s not going to 

happen.

 This Congress -- my Republican friends are not going to support 

that. You might as well just get that out of the budget request. It’s 

not going to happen.

 This Congress is not going to, during a time of war, increase the 

cost of medicines or -- it’s just not going to happen. And so we’re really talking about next year probably over $2.5 billion in shortfall.

 What we’re asking is just some honest information. That’s all we’re 

asking for.

 And I would just close my remarks, Mr. Secretary, by saying this.

 We hear a lot of talk in this town about morality. We really do. We 

talk about morality in terms of stem cell research and morality in 

terms of abortion and morality in terms of gay marriage.

 I wish we would talk about morality in terms of keeping our promises to the men and women who have fought our wars, served our 

country, sacrificed their bodies, and too many times families have 

actually lost loved ones. That’s a moral issue.

 It’s a moral issue if we choose to give tax breaks to the richest 

people in this country, many like me, who have never served. We 

give tax breaks to them, and we shortchange our veterans. I think 

that’s a moral issue.

 I wish the President would accept responsibility as the commander 

in chief to not only look after our soldiers when they’re on active duty, 

but to also assume responsibility for those once they’ve come home.

 Thank you, Mr. Secretary.

The Chairman. Mr. Brown, you’re recognized for an opening statement.

Opening Statement of Mr. Brown of South Carolina

Mr. Brown of South Carolina. Thank you, Mr. Chairman, and 

thank you, Mr. Secretary, for joining us here today to further explore 

the budget shortfall for the remainder of fiscal year 2005 and additional actuarial and budgetary challenges for future years.

 I think it is fair to say that last week’s testimony provided by Dr. 

Perlin, the under secretary of health at VA, came as a bit of a surprise 

to us on this Committee.

Certainly the extent to which the department has already pro-
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grammed 2006 rollover funds and capital assets funds should be of 

concern to all of us here.

 I hope that, through your appearance here, Mr. Secretary, that you 

can provide us with a more concentrated look at the VA’s current 

year’s funding requirements in hard dollars and provide us some reassurance that a more permanent and reliable dialogue can be established between this Committee and the administration so that we 

might avert a similar situation in the future.

 As I mentioned during last week’s hearing, the numbers that we 

discuss here are important, because there are real consequences in 

all of our districts. The consequences of underestimating the funding 

requirements in my mind is something unacceptable.

 Again, I thank you, Mr. Chairman, for digging deep on this issue, 

and having the courage to address this in a head-on way.

 Mr. Secretary, I look forward to your testimony.

The Chairman. Thank you, Mr. Brown.

 Ms. Hooley, you’re recognized for an opening statement.

Opening Statement of Ms. Hooley

 Ms. Hooley. Thank you, Mr. Chair, and thank you, Mr. Secretary 

for being here.

 As we go into the future, there are some things I hope you would 

do.

 Number one is look at, with whatever model you use, would you 

look at not only the cost of living, but the fact that more veterans are 

coming into the system, health care costs are rising much faster than 

the cost of living, and the services we deliver to veterans are a little 

bit different and more expensive than what we have in a regular hospital, and that’s why we have VA hospitals.

 I have one last request, that you listen to what’s going on at the 

hospitals, which will help you in trying to figure out whether you 

have a shortfall now or not.

 And let me just go over some things that have happened in the 

Portland VA Hospital. That’s the one I know about.

 First of all, Portland has delayed all non-emergency surgery by at 

least six months.

 Recent visitors to the short care stay unit were surprised to see a 

handwritten sign declaring that, “due to budget issues, we can no 

longer supply meals to patients,” and asking patients to bring meals 

from home.

The hospital has reduced staffing and is now short 150 hospital 

staff, including nurses, physicians, and social workers. As a result of 

budget cutting for staff, the VA has cut the number of hospital beds 

available for care of veterans.

For the fiscal year 2005, the facility needed 13 million for medical 
11

and clinical equipment, but received 2 million.

 I believe that any soldier who puts his or her life on the line 

shouldn’t have to worry about getting health care when they return 

from battle.

 How are we supposed to provide adequate health care to these new 

veterans that are coming in every day, when we can’t meet the needs 

of our current veterans?

 I think our returning soldiers deserve better. I think our current 

veterans deserve better. And I’m looking forward to you working to 

correct the VA budget.

 Thank you, Mr. Chair.

[The statement of Hon. Darlene Hooley appears on p. 64]

The Chairman. Thank you, Ms. Hooley.

 Mr. Miller, you’re recognized for an opening statement.

Opening Statement of Mr. Miller

Mr. Miller. I have an opening statement I’d like to enter into the 

record.

The Chairman. Your statement shall be entered into the record with 

no objection.

[The statement of Hon. Jeff Miller appears on p. 68]

The Chairman. Mr. Reyes, you’re recognize for an opening statement.

Opening Statement of Mr. Reyes

Mr. Reyes. Thank you, Mr. Chairman. I also have a full statement. 

If I could enter it into the record -- 

The Chairman. Without objection, you’re written statement will be 

entered in the record.

 Mr. Reyes. Thank you.

 I just wanted to mention, welcome, Mr. Secretary.

In fact, I consider the Secretary a friend, because back in the first 

initial campaign, he represented President Bush very well in debates, 

and I did so, debated him, representing then Vice President Gore, so 

I consider him a friend.

 I respect him as a fellow veteran, because I know that he cares very 

much about the country, and now being Secretary, I know he cares 

about veterans.

 I do hope, Mr. Secretary, that you will do everything that you can to 

communicate to those that make decisions along with you about the 

budget for the Veterans Administration.

 I know, having heard Secretary Principi here tell us that he had in 
12

fact asked for $1.2 billion more than he had been authorized by OMB, 

and last week we heard testimony from Dr. Perlin about the severe 

cutbacks in this year’s budget, it seems to me like we shouldn’t be 

surprised about that, when he doesn’t get the amount of money.

 As our Chairman says, you know, yes, everybody’s got a number. 

You know, there’s an Independent Budget that’s got a number. The 

VA has a number. He’s got a number. Our Ranking Member has got 

a number.

But I think after this fiasco, all veterans around the country have 

the administration’s number.

It’s unconscionable, in my mind, that we find the money for billions 

of dollars to go and build neighborhoods and do all the things that 

we’re doing in places like Iraq and Afghanistan, and we can’t find the 

money to fund our health care for our veterans.

It’s unconscionable that we can go to the deficit and build a budget 

that increases the deficit so it will be within the realm here in Congress of this artificial budget, but we’re unwilling to do that for the 

veterans.

 So it’s not just the Secretary who is at fault here and who is to 

blame. It’s all of us, for allowing this to happen.

 When the Chairman wants to know if anybody can predict the 

power ball, like my good friend and colleague Chet Edwards, I can’t 

predict the power ball, but I can tell you this. Decisions like this, our 

inability to have guts enough to fund veterans’ programs like they 

ought to be puts the veterans behind the eight ball.

 So the hell with the power ball. It’s the eight ball that we ought be 

fighting against, because that’s where we’re putting our veterans.

 Finally, I would like to say that the system doesn’t suffer in this 

process. It’s our veterans that are suffering, our veterans that can’t 

get the health care, our veterans that are getting letters that they’re 

showing me.

 And I was just in the district over the weekend, and had had a 

previously scheduled meeting with veterans, and they showed me the 

letters, and they said, ``It’s getting worse, it’s not getting better.’’

 And as we’re seeing, one of them had been wounded in Iraq nine 

months ago, and had been discharged because of those wounds.

 Those are the people we ought to be caring about. Those are the 

people we ought to be putting first in this line instead of having to 

make up for it in a very embarrassing way like we are now.

 So with that, Mr. Secretary, I don’t know if you ever wondered 

what it’s like to be the meat at a barbecue, but I think you’re about 

to see that.

 So welcome. Thank you, Mr. Chairman.

[The statement of Hon. Silvestre Reyes appears on p. 81]

The Chairman. I thank the gentleman for his opening statement.
13

 Mr. Boozman, you’re recognized for an opening statement.

Opening Statement of Mr. Boozman

 Mr. Boozman. Thank you, Mr. Chairman.

 I want to thank you and Mr. Evans for holding this hearing, and 

certainly it comes at a very critical time.

 We had a hearing last week, or earlier this week, sometime not too 

long ago, about modeling, and I know that it really is very difficult to 

do that.

 I was in Germany not too long ago, and saw a young man that had 

lost both his legs below his waist, and literally, he was coming out of 

anesthesia. He had had that happen to him the night before.

 And he asked me about two things. He wanted to tell a story, but 

apologized because he had slurred speech, from coming out of the 

anesthesia.

 But he wanted to know about his wife and family, and was reassured that he would be in the United States the next day.

 And then the other thing he wanted to know was, would he be able 

to walk again.

 And I could look him in the eye and reassure that, yeah, we’ve got 

the technology, we’ve spent the money, we’re doing the things that 

it takes to literally provide him with the finest care that we could do 

that.

 My uncle died last week. I was at his funeral. He was a World War 

II guy, and had been ill for the last six months, and probably spent 

more in health care dollars in the last six months than he had in his 

entire life.

 So I understand, we’ve got all this stuff going on, and yet we got to 

do a better job than what we’re doing.

 This Committee, everybody here, and I think you can hear it from 

all of us, things might get such that, you can get asked some tough 

questions, but everybody on this Committee truly is committed to the 

veterans. In this Committee, we’re the ones that push things forward 

on both sides.

 We have a great system now, and like I say, we’re committed to 

continuing that.

 To be honest, I think the only thing that we’re missing in this equation is somebody from OMB to explain, but maybe they’re not willing 

to do that. But like I say, at some point, I’d really like to hear from 

them, on what’s happened on their part.

 So again, thank you all very much for having the hearing, and 

thank you all for coming.

 The Chairman. Ms. Berkley, you’re recognized for an opening statement.

 Thank you, Mr. Boozman.
14

Opening Statement of Ms. Berkley

 Ms. Berkley. Thank you, Mr. Chairman, and thank you Mr. Secretary for being here.

 I have a very great relationship with my veterans. I’ve grown to 

love them and I think they really have been terrific to me.

 My World War II vets kind of look at me as a daughter; and my 

Vietnam vets, those that came after, many of them, because people 

returned to Las Vegas because it was such a booming town, I went to 

high school and college with them.

 So I have more than a constituent-Congresswoman relationship with many of my vets. They are truly friends, lifelong friends. 

They’re going to be friends of mine long after I finish my service to 

our country.

 I can barely look at these people now, because I know that we’re 

not doing right by them. You know the needs that I have in Southern 

Nevada.

 I’ve got 80-year-old veterans standing in 110 degrees temperature, 

waiting for a shuttle to pick them up to take them to one of 10 temporary VA facilities so they can get their health care.

 Standing out in 110 degrees for anybody for more than a few minutes is a very difficult thing to do, and yet my veterans, who need 

these health care services so much, do it, and they’re not complaining 

too much, because they have been assured and they’ve been told by 

me and your predecessor that we are in line to get a full VA medical 

center that includes a long-term care facility, which we are in desperate need of, a VA hospital which we are in desperate need of, and an 

outpatient clinic, because, as you know, our outpatient clinic, after 

being in service for five years, was declared structurally unsound and 

the building was condemned.

 We have worked very hard, and the CARES Study, as you know, 

bore out the fact that we needed these facilities desperately for the 

200,000 veterans that live in Nevada, 50,000 of whom get their health 

care needs met, rightly so, by the VA.

 I’ve got 500 veterans from Iraqi Freedom who have already accessed our health care system in Nevada, such as it is.

 I need to get assurances from you during your testimony that we 

are not going to fix this shortfall with a temporary fix and take that 

money out of our capital building fund. We need those facilities, and 

this emergency needs to be taken care of and we need to get our VA

funding on sure footing, and we can’t steal from Peter to pay Paul.

 The other thing I am very concerned with, and I appreciate Ms. 

Hooley talking about her facilities in Portland and the challenges 

there, because all of us are dealing with our veterans on a local level.
15

 If we’re going to provide these services by cutting services to our 

veterans, then that doesn’t work for me, either.

 If we cut federal funding to state homes, I’m going to have 100 veterans out in the street that have no other place to go, because all we 

have right now in southern Nevada is a state home for veterans, and 

there’s a waiting list.

 I can’t have my veterans paying double for their prescription medication. They can barely afford the amount of money we charge them, 

because many of them have multiple needs, multiple ailments, and if 

they’re paying for six or seven prescriptions a month, to double that 

would be the difference between getting their medication and getting 

their food, and I don’t want to be melodramatic, but that’s the reality 

on the ground.

 And providing or instituting a user fee for our veterans to me is 

unconscionable, given their service and the promises that we have 

made.

 So we need to do this, and do this well, and I would invite you and 

the President to come to my district and talk to my veterans, not in a 

staged event where everyone needs a ticket to get in and you have to 

be a great advocate of the Administration or a great fan of the President so they give out the tickets in advance, but to be able to sit and 

talk to my rank and file veterans that use these facilities, that need 

these facilities, that are looking to their government for the help that 

we promised them.

If you spoke with them for five minutes, you would know what their 

needs are, what their concerns are, what their challenges are, and 

then maybe we can adequately fund this VA budget.

 I’m anxious to hear your responses to me.

And what I find most insulting is that if the VA knew about these 

numbers in April, to have kept it from all of us for this long of a time, 

to me doesn’t make any sense.

 We’re all in this together, I think many of the members on both 

sides of the aisle feel that we’ve been had, and for the amount of 

work and time we put into this Committee and into our jobs, to have 

deceptive numbers or wrong numbers, and having the VA know this 

and having us go forward with these wrong numbers, to me makes 

absolutely no sense in the world.

 So I’m anxious to hear your remarks, and I thank you very much 

for being here.

[The statement of Hon. Shelley Berkley appears on p. 69]

The Chairman. Thank you, Ms. Berkley.

 Ms. Brown-Waite, you’re recognized for an opening statement.
16

Opening Statement of Ms. Brown-Waite

 Ms. Brown-Waite. Thank you very much, Mr. Chairman, and I

want to thank you for holding this hearing so that we can get some 

facts, so that we can remedy the situation. That’s what this hearing 

is all about, making sure that we get accurate numbers.

Last Thursday the VA testified that they have used $600 million for 

health care that was intended for infrastructure and maintenance.

 We can’t be in the business of borrowing money so that the buildings dilapidate, so that we don’t have proper maintenance.

 I have the highest number of veterans of any member of Congress. 

I have over 107,000 veterans. I, like other members in VISN 8, also 

have the highest number of returning servicemen and women coming back from Iraq and Afghanistan. We want to make sure that the 

quality of care is there.

 You know, had we had this information, we could have addressed 

the problem over a month ago when we passed the military quality of 

life and veterans’ affairs appropriations bill -- if we had that information.

 Two years ago, I served on the Budget Committee and was able to 

work with the Chairman to plus up the amount for veterans, specifically with the agreement that it would go to veterans health care.

 I don’t think there’s a member of this Committee who doesn’t want 

to do well by veterans, but if we are given faulty information or if we 

are misled, then we can’t do our job.

 I don’t want one veteran, whether they served in World War II -- I

even have some World War I veterans in my district. Over 50 percent of the 107,000 veterans that I have use the veterans health care 

system.

 I don’t want one veteran deserving health care, whether it’s World 

War I all the way up to Operation Iraqi Freedom, I don’t want them 

to be denied that because we were misled.

 It wasn’t intentional. I’m sure of that Mr. Secretary. You know, 

when you use a model and you just come into a new job, which you 

did, sometimes you rely on the same old same old.

 We can’t do that. We cannot have that ever, ever happen again.

 You know, there are certainly other programs that we can perhaps 

pare down to make sure that the man and women who serve our 

country are well cared for. That’s our job, but we can’t do it if the information that we have is in some way, shape, or form not accurate.

 We want to help you, Mr. Secretary. We want to help you to make 

sure that the VA health care system in our country is one that everybody can be proud of. It takes dollars to do that, and it takes a 

commitment, and I know that the members of this Committee have 

that commitment.

 And I assure you that I look forward to working with you to make 
17

sure that our veterans’ health care is the very, very best in the world, 

and I appreciate your being here today and look forward to your testimony.

 I do have a formal opening statement which I’ll submit.

 Thank you.

The Chairman. You’re written statement will be entered into the 

record.

[The statement of Hon. Ginny Brown-Waite appears on p. 71]

The Chairman. Mr. Udall, you’re recognized for an opening statement.

Opening Statement of Mr. Udall

 Mr. Udall. And I would also ask that my full opening statement be 

put in the record.

 The Chairman. Your written statement will be entered into the record without objection. 

Mr. Udall. Thank you, Mr. Chairman, for holding this crucial hearing today, and thank you, Mr. Secretary, for joining us.

 I’m holding here in my hand a stack of letters sent to the President, the Speaker, the House Appropriations Committee over the 

past year.

 These letters have been signed by many members of this Committee.

 On October 11, 2004, a letter to the President requesting he reevaluate his fiscal year 2005 budget request in light of the large number 

of veterans returning from Iraq and Afghanistan who were in need 

of health care.

 February 17, 2005, letters to the President and the Appropriations 

Committee requesting that they add an additional $1.3 billion to the 

fiscal year 2005 supplemental appropriations bill, to provide health 

care and readjustment assistance for Afghanistan and Iraq veterans.

 March 7, 2005, a letter to Speaker Hastert about the woefully insufficient funding for the VA under the President’s fiscal year 2006 

budget proposal, and asking that the House increase the amount by 

3 billion for veterans’ health care.

 April 27, 2005, a letter to Secretary Nicholson about how the budget cuts for veterans’ health care have hurt New Mexico. The Accommodations Hotel Lodging Program in Albuquerque, New Mexico has 

been forced to limit access to veteran patients further than 150 miles, 

which has adversely affected thousands of veterans.

 The average wait for dental appointments at the dental facility in 

Albuquerque is two years.

 All of these letters were ignored.
18

 If what I have read in the papers is accurate, it is about time the 

Secretary and the administration fully acknowledge what is going on 

here.

 I hope today the House will pass an emergency supplemental appropriations bill for veterans health care. We are here today to figure 

out what events and mistakes leading up to today made this necessary, and what the VA, and this Committee, are going to do to prevent a recurrence in the future.

 I’m particularly concerned that the Committee was not informed of 

the VA’s agreement that there was a shortfall earlier.

 I want answers about the timeline here, and about when exactly 

the VA began reprogramming the money for this purpose, without 

the knowledge of Congress, and if the main problem here is that the 

VA underestimated how many soldiers returning from Iraq it would 

need to care for, what does this say about our planning for that war?

 I very much look forward to hearing Secretary Nicholson’s answers 

to these questions today. There are 183,000 veterans in my state who 

deserve nothing less.

 Thank you, Mr. Chairman.

 The Chairman. Thank you very much for your statement.

 Mr. Turner, you’re recognized for an opening statement.

Opening Statement of Mr. Turner

Mr. Turner. Thank you, Mr. Chairman. I appreciate you holding 

this hearing on our ability to get additional information.

 And, Mr. Secretary, I appreciate your being here, and your service. 

You certainly have an excellent reputation that I know as we proceed 

in this is going to serve you well as we try to resolve it and come to 

solutions and conclusions.

 I got on this Committee because in my community my large veterans’ facility was exhibiting pressures for reductions of service that 

did not make sense. As we heard that the Department of Veterans’ 

Affairs had the funding necessary, we still were hearing of reductions 

in services.

So I sought a seat on this Committee because I wanted to find out 

why this was occurring and what needed to happen.

 I think the comments earlier that suggest that budgetary processes 

may be compared to guessing are unfortunate, because we all know 

that in the issue of budgetary processes, we’re talking about issues of 

professionalism.

 I appreciate Mr. Strickland’s comments that this is not a partisan issue, and I certainly think that, to the extent that this is made 

partisan, we’re not serving our veterans, because again, this is not a 

partisan issue, it is a professional issue.

 A professional issue is, how do you prepare budgets and how do you 
19

seek funds from Congress that provide the Department of Veterans’ 

Affairs what you need?

 When we say it’s not partisan, I think we can say that there is not 

one members of this Committee and there is not one member of Congress that would not vote to give the Department of Veterans’ Affairs 

what they need.

 So the question becomes, then, how do we arrive at what does the 

Department of Veterans’ Affairs need, and the process for us providing that to you.

 And I know that today you’re going to be speaking as to how you’re 

working on that process to fix it to make certain that we can do our 

job and live up to our commitments of making certain you have what 

you need to be able to serve our veterans.

 Thank you.

The Chairman. Thank you, Mr. Turner.

 Ms. Herseth.

Opening Statement for Ms. Herseth

 Ms. Herseth. Mr. Chairman, I apologize for not making this request earlier, but I’d like to submit a written copy of my opening 

statement for the record.

The Chairman. Without objection, it will be entered.

Ms. Herseth. Thank you.

[The statement of Hon. Stephanie Herseth appears on p. 72]

The Chairman. Ms. Brown, you’re recognized for an opening statement.

Opening Statement of Ms. Brown of Florida

Ms. Brown of Florida. Thank you, Mr. Chairman, and thank you 

for holding the meeting today.

 I, for once, can say that I want to be associated with the remarks 

of all of the members’ comments about the veterans’ department and 

the Secretary.

 And to be truthful, if we were in court, they would have to view me 

as a hostile witness, because I feel pissed off.

 My favorite secretary was Jesse Brown, and his motto was “Putting 

veterans first.”

 Now, this town is an ugly rumor town, and one of the rumors going 

around is that the priorities of the Veterans’ Affairs is to make sure 

your picture is up. I know that’s a lie. I know it’s not true. But that’s 

what the rumor has been going on, and that’s why we haven’t been 

focusing on the health care of veterans.

 But let me just say that every member on this Committee knows 
20

that we’re close to $3 billion short for the needs of the veterans, and 

I don’t understand how anyone could feel like, “Oh, $1 billion is 

enough.”

 We have known for a long time that the numbers we were getting, the comments we were getting from the community were just 

all lies.

 We need to have OMB to come in here, because I know the former 

secretary, when they turned in the numbers, it was different, and 

when it got to OMB, they approved whatever they wanted to, and 

that’s what was sent up to the Hill.

 So the real people that need to be in here is OMB. We need to get 

them on the carpet.

 But, Mr. Chairman, after this meeting, I am hoping you and the 

Ranking Member will put forth a motion that this Committee will 

come out here today, and the news will be that we authorize additional $1.5 billion for Veterans’ Affairs for maintenance and for health 

care. That should be the headlines in the news, not whatever the 

Secretary has to say.

 So I want to go on record that I am not happy, I’m not pleased, 

my veterans are not, and the sad thing is, they support you and the 

Republicans. They voted for you, and they don’t understand why you 

don’t support them the same.

The first President of the United States said that no matter how 

great the war, and I question that this is a great war, that the men 

and women will determine whether they’re going to join the military 

as to how we treat the veterans, and they’re getting shabby treatment from this Bush administration and your administration, sir.

 I yield back the balance of my time.

[The statement of Hon. Corrine Brown appears on p. 74 ]

The Chairman. I thank the gentlelady.

 Mr. Bilirakis is recognized for an opening statement.

Opening Statement of Mr. Bilirakis

 Mr. Bilirakis. Thank you, Mr. Chairman, and thank you for this 

hearing.

 I, as others have said, agree with most of what all of our members, 

the comments that they have made.

 I agree with Ms. Hooley, particularly, even though she’s left.

 I agree with Mr. Reyes in terms of the veterans’ suffering as a result of what has taken place here. I do sort of disagree with him, 

though, when he says that the system doesn’t suffer. I think the 

system does suffer.

 You know, we serve on this Committee, I like to think, for the most 

part, because we really believe in our hearts for veterans and care 
21

about veterans, but we have to depend on our staffs, we have to depend on figures that we get from OMB, from the VA administration, 

et cetera, et cetera, and then we have to make our decisions, because 

we can’t pull them out of the sky.

 And when we have, as was already indicated, the former secretary 

telling us, sitting right there and telling us that he needed an additional $1 billion, and that was ignored by OMB, it was ignored by our 

leadership up here, it was ignored by the White House, et cetera, et 

cetera, I mean, that’s the system, and it’s hurting because we don’t 

have the credibility, and the believability that we need in order to do 

our job.

 We were reminded earlier that the Secretary has served as the 

Chairman of the Republican National Committee.

 I think it’s also very important that we be reminded that he served 

in Vietnam with tremendous distinction, very decorated, received the 

Combat Infantryman’s Badge, which is, frankly, in the eyes of many, 

even more significant than the Medal of Honor.

 So that is the man that we have as Secretary of Veterans’ Affairs, 

not just that he served as the Chairman of the Republican National 

Committee.

 I’m the oldest member in many respects of this Committee, but certainly one of the longest serving. I can tell you that from day one.

 We’ve had the same kind of problems. I don’t care who was the 

administration, I don’t care who was in charge of OMB.

 Frankly, every secretary we’ve had -- Mr. Brown, so many others -- 

it came from the heart, but they had to answer to other people, OMB

particularly, and the White House, and the leaderships on both sides 

of the aisle, and that sort of thing.

 I used to sit over there and constantly remind our members at virtually every hearing, certainly in every markup, that the percentage 

increases for every other program that we deal with up here, were 

something like 125 percent. For veterans, it was something in the 50 

percent category, because we are way behind the curve.

Veterans are basically considered almost at the tail end. That’s 

been the way, all along.

We had to handle the Clinton budget, and Mr. Brown, I specifically 

asked him one day, who does he really work for? He’s a good man. I

knew him personally. But I specifically asked him. Why? Because 

we weren’t happy with the President’s budget. 

 But he worked for the administration, and he had to kowtow, so to 

speak. He probably made an awful lot of noise behind closed doors.

It’s a very difficult thing, and I’ll tell you, it’s really a mindset. I 

think it’s a mindset that we have, I don’t think this Committee has 

it, but virtually everybody else has it. We know that the cost of war 

does not end with the end of the war.

 So our leadership, in the majority, I mean, the battles that I’ve had 
22

with those people over the years, but I would say that I also had as 

many battles when Sonny Montgomery, who was the most beloved 

man who ever served, probably, in the House of Representatives. He 

received all of the awards, sat right there, and I used to battle him on 

concurrent receipt. I used to battle with him regarding not enough 

funding for health care for veterans, et cetera, et cetera.

 So it’s a mindset, my friends. And we sit here, and, you know, the 

partisanship that takes place and the demagoguery that takes place 

doesn’t help matters any.

You might be right when it comes to the unified budget, or the need 

for more money, but when it’s done in such a way that it’s demagoguery and that it’s politics. There are people on this Committee who 

refused to sign my discharge petition on concurrent receipt there in 

the House. But when it came to a Democratic discharge petition, oh, 

my God, these Republicans were horrible that they refused to sign it. 

That’s politics. Okay? That’s politics.

 If we put that aside and decide to sit around the table and work 

together, and given the clout that we have, and hopefully with the 

Secretary supporting us and we supporting him with OMB and with 

the administration, I think we can do a much better job.

 Will it ever be perfect? Of course not. This is not a perfect science, 

obviously.

 Ms. Brown of Florida. Would the speaker yield?

 Mr. Bilirakis. Well, my time is up. I just basically would finish. 

Maybe the Chairman -- 

 Ms. Brown of Florida. I feel very strongly that I need to respond to 

what you said about Secretary Jesse Brown.

 Mr. Bilirakis. I didn’t say anything bad about Secretary Jesse 

Brown.

Ms. Brown of Florida. I just want to be clear that we are all on the 

record that I understood very clearly that he had problems with the 

Clinton Administration -- 

 Mr. Bilirakis. Yes.

Ms. Brown of Florida. -- and he would come here, and he would 

stand up to them. That’s the point I’m making.

 Mr. Bilirakis. Amen. Amen to that.

 Ms. Brown of Florida. Regardless of who the administration was, 

he was a man that would stand up to the administration.

 Mr. Bilirakis. And I would suggest that Secretary Principi had 

problems with them, I would suggest that this Secretary, he hasn’t 

had that much of an opportunity to do so yet, because he’s relatively 

new, is going to have problems.

 I just hope that we have learned a lesson from what’s taking place, 

because for the first time, we have had an acknowledgement on the 

part of all of these people -- I don’t know, maybe even OMB, for crying 

out loud -- certainly from the White House, from the administration, 
23

from our leadership and whatnot, that there is a true shortage in 

terms of this $1 billion or maybe more, for the first time.

 So hopefully, we’ve all learned a lesson, and we’ll work together.

 Thanks.

Ms. Berkley. Mr. Chairman, may I request that my prepared remarks be submitted for the record?

 The Chairman. Yes, Ms. Berkley, your written statement without 

objection shall be entered into the record. So ordered.

[The written statement of Hon. Shelley Berkley appears on p. 69]

The Chairman. Also, I have a request from Mr. Tom Osborne of Nebraska, not a member of the Committee, that a statement be submitted as part of the record of this hearing.

 I ask for unanimous consent. Without objection, it shall be ordered 

and his statement shall be entered into the record.

[The statement of Hon. Tom Osborne appears on p. 83]

 The Chairman. Ms. Hooley.

Ms. Hooley. I would also ask that my statement be entered into 

the record.

The Chairman. All members may submit a written statement and it 

will be entered into the record.

 Hearing no objection, we’ll give you three days to enter that statement into the record.

[The written statement of Hon. Darlene Hooley appears on p. 64]

The Chairman. Mr. Secretary, I want to thank you for coming.

 At about 9:45, I was on the phone and had a painful discussion, no 

differently than other members that are in this room, no differently 

than what you have had to do, and it was to speak to a father whose 

son was on the helicopter that was shot down in Afghanistan.

 Those of us that experience that conversation with a loved one, it’s 

not easy. They are looking for reassurances. He just wants to know 

what happened, “When can I get my son back?”

He wants to fulfill his son’s last request, and it’s, “Dad, if I don’t 

come home, bury me in Arlington.”

 So members here can rightfully be upset.

 No differently than you in taking the helm of this position that you 

have. I sincerely believe that, interwoven into the fabric of our common bond of all of us as Americans is our love, our respect, our admiration, and our care for the men and women who wear the uniform 

and the loved ones they leave behind.

 You’re a West Point grad, grew up on a farm, seven children, combat veteran, retired colonel, knighted by the Pope for raising human 

dignity in the world.

 The statement that people don’t care how much you know until 
24

they know how much you care, I know your heart. Now we want to 

hear your statement about how how you’re going to use your intellect 

to solve the problem.

 Mr. Secretary, you’re recognized.

STATEMENT OF THE HONORABLE R. JAMES NICHOLSON,

 SECRETARY, DEPARTMENT OF VETERANS’ AFFAIRS; 

 ACCOMPANIED BY JONATHAN B. PERLIN, M.D., PH.D.,

 MSHA, FACP, UNDER SECRETARY FOR HEALTH, DEPART-

 MENT OF VETERANS’ AFFAIRS, AND TIM McCLAIN, GENER-

 AL COUNSEL, DEPARTMENT OF VETERANS’ AFFAIRS

STATEMENT R. JAMES NICHOLSON

Secretary Nicholson. Thank you, Mr. Chairman, and good morning, members of the Committee.

 I appreciate the opportunity to be here and to discuss budget forecasting and the finances of the Veterans Health Administration.

 Accompanying me this morning is our under secretary for health, 

Dr. John Perlin, and our general counsel and chief management officer, Mr. Tim McClain.

 Mr. Chairman, we appreciate the support of both the Congress and 

the administration to identify the resources necessary to restore capital funds and enhance VA’s ability to deliver care to our veterans in 

2005.

 By way of summarizing this week’s hearings, I think it’s important 

to review how VA’s health care resource needs are projected.

 Before eligibility reform, VHA budgets were based on historical expenditures, adjusted for inflation, and then increased based on proposed new initiatives.

 As the VHA became an integrated health system, VA adopted the 

tools of the private sector and moved to using actuarial modeling to 

dynamically formulate a health care budget.

 Actuarial modeling allows VA to project resource needs based on 

veteran population trends, based on changing health care technologies and utilization patterns, and the costs of goods and services.

 Actuarial modeling is a well-tested private sector tool that the VA

applies to our 21st century health care system.

 Over the past six years, we have integrated the VHA enrollee 

health care demand model projections into our health care financial 

and management processes.

in March 2005, March of this year, the demand and resource trend 

line moved upward. My letter of April 5, 2005 to the Chairman of the 

Senate Subcommittee on Military Construction and Veterans’ Affairs 

said:

“Whenever trends indicate the need for refocusing priorities, VA’s 
25

leaders ensure prudent use of reserve funding for these purposes. 

This is just simply part of good management.”

 End of quote.

 On April 19th, VA staff met with the Ranking Member and members of the minority and majority staff of the House Appropriations 

Subcommittee to discuss the veterans equitable resource allocation, 

or VERA, model. During this meeting, there were protracted discussions of the health system’s financial status for 2005, including the 

reallocation of capital funds for direct patient care.

 During that same week, I met with the director of OMB to update 

him on the current status and to alert him to potential issues for fiscal year 2006, as well.

 The model on which the 2005 budget was formulated relied on data 

from the year 2002, before the beginning of Operation Iraqi Freedom, 

and as we all know, the world has changed and much has occurred 

since then.

During fiscal year 2005, our 2005 budget assumed that 23,553 VA 

patients would be veterans of our global war on terror. That number 

is now estimated to be 103,000. Fortunately, many of those are just 

seeking routine health care services and dentistry.

 However, it’s important to point I think also that the majority of 

the new VA health care users in 2005 are older veterans from previous eras, and we are caring well for all of them under this budget, as 

well.

In May, we performed an actuarial model update for fiscal year 

2006, with more current and accurate data from 2004 further indicating to us the significant increase in patient demand that we could 

expect for fiscal year 2006.

In the first week of June, the VA staff met with VA and DOD 

branch staff at OMB for a mid-year management review and to discuss the implications of the fiscal year 2005 management decisions 

on the 2006 budget.

 Similarly, VA staff met on June 3rd with majority staff members 

of the House and Senate Veterans’ Affairs Committees to discuss the 

implications of the reallocation and use of funds projected for carryover into the base for fiscal year 2006.

 On June 23rd, the under secretary for health offered testimony to 

this Committee on the actuarial model and its limitations, and identified a 2005 workload growth rate of 5.2 percent compared with a 

forecasted growth rate of 2.3 percent. That is a delta, or difference, of 

126 percent.

 We have been forthcoming with information regarding both the 

status of our budget and the responsible management decisions that 

we have made as 2005 has unfolded. However, I think the difficulties of projecting health care utilization in the out years are now self 

evident to everyone.
26

 While the VHA enrollee health care demand model is a valuable 

budgeting and planning tool for projecting VA’s resource requirements, projecting health care trends and utilization for a huge health 

care system such as the VA, it is inherently complex.

It is significantly more challenging in the context of the federal 

budgeting timeline, the phasing that’s needed, which requires projections not for the next year or even the next open season, as in the private sector, but for two-and-a-half or three-and-a-half years hence.

 As I explained in testimony on Tuesday before the House Appropriations Committee and the Senate Veterans’ Affairs Committee, we do 

have a plan to manage within existing resources without putting at 

risk our ability to provide high quality care for our nation’s veterans, 

which is our mission and our goal.

 However, based on my consultations over the past few days, it is 

clear that many Members of Congress and veterans groups continue 

to have concerns.

 Because it is important to this administration that our veterans 

have full confidence that the VA will have the resources it needs to 

meet our obligations, we now believe that it is appropriate to request 

additional resources for fiscal year 2005.

 Thus, later this afternoon, the administration will be submitting 

an fiscal year 2005 supplemental request in the amount of $975 million for VA medical care to address the higher than estimated number of patients seeking health care services.

 The administration is also currently reviewing how this supplemental request impacts fiscal year 2006 needs and will be proposing 

an fiscal year 2006 budget amendment in the very near future.

 With both of these actions, the administration will ensure that veterans continue to receive the highest quality care at VA facilities.

 Mr. Chairman, again, we appreciate this opportunity for continuing dialogue to assure resources for direct patient care in 2005, and 

to address the additional resources necessary to restore capital and 

reserve funds in support of timely, high-quality care for veterans.

 We also appreciate the opportunity to discuss our budget modeling 

and projections with you.

 Thank you, Mr. Chairman.

[The statement of Hon. R. James Nicholson appears on p. 84]

The Chairman. Thank you, Mr. Secretary.

 I want to thank you for your supplemental request.

 The 975 million, if you would please give me a breakout?

 If you would also then tell me, as we go into the last quarter, what 

monies of that do you think will be carried over into 2006? I’m asking 

you to project.

 If you could do that for me, right now.

Secretary Nicholson. Yes, sir.
27

 I’ll give you these categorically, the way that we are slotting them, 

and then be happy to submit this -- 

The Chairman. All right.

Secretary Nicholson. -- in written detail.

 For the increase in OEF workload and expense, in forecasting that 

impact upon the rest of this fiscal year, in the 103,000 veterans, including the Guard and Reserve soldiers that we’re treating and will 

be, we’re projecting $273 million.

For increases in CHAMPVA, which is the health care benefit for 

dependents of the 100 percent service connected veterans, we’re projecting $39 million.

 For VA long-term care, which is the nursing home -- and the daily 

average consensus is what we used to measure that -- we’re projecting $226 million.

 For fee-basis care, to reduce the waiting lists -- this is where in a 

facility, if the waiting list is getting unacceptably long, we are authorized to contract out and have people go out on the local economy to 

see doctors and medical facilities -- for that, for the rest of this year, 

we’re projecting $58 million.

 Increase in energy costs. Again when this budget was put together 

using 2002 baseline data, and looked at again with actuals of 2003, 

we did not anticipate the amount of increase in fuel and utility costs 

that would be experienced by the country and of course by the VA, 

and so that amount is $95 million.

 And we are experiencing a greater than expected workload in our 

Priorities 1 through 6 veterans, the service connected disability veterans, and thus asking for $200 million for that category.

 And for an increased utilization of services for veterans overall, including the need for the purchase of more emergency medical equipment and supplies, $84 million, Mr. Chairman.

 And that is $975 million.

 The Chairman. All right. Mr. Secretary, you have made an official 

supplemental request to the United States Congress in the amount 

of $975 million. I’d like for Mr. Brown, if you would come forward 

and take the chair. I don’t have much time. As Chairman of this full 

Committee, I have some work to do.

Mr. Brown of South Carolina. [presiding] Thank you, Mr. Chairman.

 Thank you, Mr. Secretary, and I’ll entertain questions from the 

membership.

 Mr. Evans, do you have a question?

 Mr. Evans. Mr. Secretary your predecessor, Secretary Principi, told 

us how much money he had requested for a budget and what had actually been provided to him.

 What was the difference between what the VA requested and what 

you obtained from OMB for the fiscal year 2006 budget?
28

Secretary Nicholson. Does your question relate to the numbers 

that I just stated?

 Mr. Evans. The difference.

 Mr. Brown of South Carolina. I think he’s talking about the 2006, 

Mr. Secretary.

 Let counsel restate the question.

 Mr. Tucker. Secretary Nicholson, the question is, your predecessor, Secretary Principi, forthrightly told this Committee how much 

more he had requested for his budget than what he had actually been 

provided.

 What was the difference between what the VA requested and what 

you obtained from OMB for your fiscal year 2006 budget request?

Secretary Nicholson. I don’t know exactly that number, Mr. Evans, because when I got into this process in February, that number 

was established and I was not part of the discussions leading up to 

that, and I’ve not known that number.

 Mr. Evans. How many clinics have you closed or not staffed or delayed the opening of in this process?

Secretary Nicholson. I’m going to ask Dr. Perlin to answer that 

question. I think the answer is that we have not closed any clinics 

except I think we may have consolidated two clinics in one area.

 But I’m going to ask Dr. Perlin to answer that.

 Dr. Perlin. Sir, I’d have to get back to you on the record for any 

clinic shifts, but I think the important point is that we’ve gone from 

200 to 874 community based outpatient clinics, and we have been 

continuing to open clinics.

 Mr. Evans. How are you going to address the situation faced by 

veterans in VISN 16 where, as of the end of April, no appointments 

will be scheduled for non-service connected veterans, and how could 

you say that this is not directly related to the $1 billion shortfall you 

currently face?

Secretary Nicholson. I’ll ask Dr. Perlin to respond, sir.

 Dr. Perlin. Sir, I believe your question was about VISN 16 and the 

clinic, or hospital?

 Mr. Tucker. If I could, yes, it’s the medical centers in VISN 16.

 There is a letter that was entered into the record by the American 

Legion in last week’s hearing detailing that all medical centers in 

that VISN are not accepting new appointments for non-service connected veterans, dated April 29th this year.

 Dr. Perlin. I’d heard of a particular hospital in VISN 16 that had 

inappropriately authored a letter that delayed new patients to the 

clinic or to the facility.

 Mr. Tucker. Dr. Perlin, that letter says it applies to all VISN 16, 

not just the Alexandria Medical Center.

Dr. Perlin. I will have to look into this. I’m not aware of a letter 

that has been sent to patients along those lines.
29

 Mr. Evans. Thank you, Mr. Chairman.

 Mr. Brown of South Carolina. Mr. Bilirakis.

 Mr. Bilirakis. Thank you, Mr. Chairman.

 Mr. Secretary, when did we hold the hearing when they had the 

actuary here? It was last week, I believe, the 23rd.

 Now the data that was used for 2005 projections was 2002 data. I

mean, come on. Is that the best that we can do?

 And the actuary sitting at the end there, when I kind of raised this 

question to her, I understood her to say that, “Well, we used the most 

current data.” 

 Does that mean that 2002 is the most current data? I mean, since 

2002, as you have already said, we hadn’t invaded Iraq yet, we didn’t 

have those situations present.

 We have supplementals up here. Many people don’t like supplementals. But basically it’s, so to speak, a correction on shortfalls in 

appropriations that took place previously, and so, you know, it’s an 

admitted -- admitted on our part.

 Doesn’t the VA take into consideration these types of changes and 

change their data and that sort of thing?

Secretary Nicholson. I think that’s a very important question, and 

frankly, I think that that, you know, may lead to what could be one 

of the most hopeful and helpful parts of having a hearing like this, 

would be for the VA to be able to come up with a better, more accurate 

system to project its needs, its business.

It’s even, in some ways, more difficult than that, because the model, the model that is used does not take into account long-term care, 

it doesn’t take into account dentistry, and it doesn’t take into account 

prosthetics.

Mr. Bilirakis. Does it take into account older veterans who are -- 

with related service connected conditions? You mentioned older veterans.

Secretary Nicholson. Yes.

Mr. Bilirakis. It does take that into account?

Secretary Nicholson. It is a pretty sophisticated model.

 It has 55 variables of services that it encompasses, and as our testimony has been, and as you all know that have been on this Committee for a while, it has worked quite well and been pretty accurate up 

until recent times.

 But as we also know, when 2002 is the predicate for 2005, you 

know, the global war on terrorism had begun, but it had not begun 

even in Iraq.

 So, I mean -- 

Mr. Bilirakis. Well, all right -- 

Secretary Nicholson. -- the difficulty, because we’re now working, 

right now we’re working on 2007.

 Mr. Bilirakis. And for 2007 we’re dealing with 2004 data?
30

Secretary Nicholson. 2004 data. Yes, sir.

 Mr. Bilirakis. Come on. You’re a West Point graduate. Is that 

right? I mean, can’t we do better than that? We have computers 

today.

 I don’t know what’s going to -- and we’re also -- this is related to using DOD data. As I understand it, the data is not very user friendly 

because it’s very dated. It’s not aggregated by unit or particularly by 

geographical location.

 So how in the world can we forecast when these young men and 

women come back here from Iraq and Afghanistan, if we’re using 

very dated data, as far as the VA -- as far as DOD and the VA are 

concerned.

 You know, we talk about models and we talk about numbers and 

power balls and things of that nature. I know it’s a big system. I

know this is big government and it’s a big system and it’s a big health 

system and things of that nature.

 But we have computers, for crying out loud. We can do better than 

that. Can’t we do better than that?

I mean, are you satisfied that you’re going to be using three-yearold data for 2007 and three-year-old data for 2008? Are you going to 

look into making changes?

Secretary Nicholson. I’m not at all satisfied. I’m uneasy about having that at work on our submittal for the 2007 budget that will eventually come to you, and then, you know, sitting there in 2007 and 

seeing what the world, you know, is going to be like and what the 

demand is going to be like and what the return element for coming 

from -- 

 Mr. Bilirakis. Can’t we plug in more current data? That’s the whole 

question. I mean -- 

Secretary Nicholson. One of the things I think I’m learning from 

this, Mr. Bilirakis, is that, I mean, we do monitor actuals on a monthly basis. We have a monthly performance review.

 What the VA needs to do I believe is to come here to you on a far 

more frequent and scheduled basis, so that you know what we know 

when we know it.

I mean, we, through the first six months of this fiscal year that 

we’re in, 2005, we were on that plan that was projected based on that 

2002 data, we were on it and we were operating pretty close.

 Then it began to deviate up, and that’s when -- but overall, if you 

take a look at this, this is a $30 billion business projected, its needs 

based on the data of three years ago, and it came within 3 percent 

with a war having broken out in between times.

 So in many contexts, that would not be -- that would be pretty 

good.

 We took that data and made a decision with the reserves that we 

had on hand, and to reallocate resources to get through the end of 
31

the fiscal year, and we divulged that in many different ways, as my 

testimony has been.

 Now, you can disagree with that judgment, and obviously you do, 

most of you do, and we accept that, and that’s why you’re now seeing 

this request for a supplemental in lieu of that.

 Mr. Bilirakis. My time is up.

 Do you disagree with that judgment?

Secretary Nicholson. No, sir.

Mr. Bilirakis. You don’t disagree with it?

Secretary Nicholson. I’m in total concurrence.

 Mr. Bilirakis. Well, I -- all right.

 Thank you, Mr. Chairman.

 Mr. Brown of South Carolina. Thank you, Mr. Bilirakis.

 I now recognize the gentleman from California, Mr. Bilirakis -- Mr. 

Filner.

 Mr. Brown of South Carolina. Hey, I’m on the wrong side of the 

aisle, you know, just -- but excuse me, Mr. Filner.

 Mr. Filner. Thank you, Mr. Chairman.

 I was somewhat struck by some of my colleagues on the other 

side.

 Ms. Brown-Waite, you said “if we had this information,” or “we 

weren’t misled.” We had this information. We all had this information.

 Mr. Turner said there’s not one member who would vote against 

giving the veterans what they needed.

I had a motion on the floor to put in the budget exactly what is 

missing, and you voted against it. In fact, every member on your side 

voted against it.

 So let’s have some reality here.

 You had a budget that the President gave you. It was inadequate, 

but you went with it, and now you’ve been found out.

 Mr. Secretary, in some respects, this is a phony hearing. We’re 

looking at modeling, and these words -- trend lines, projections, 55 

variables -- it’s like you’re wrong because, you know, the model ate 

your homework. It reminds me of students of mine, who used to come 

to school, “Sorry, I didn’t do it. It’s not my fault.”

 And talking about all this modeling, “it’s the model’s fault,” allows 

you and this President and this Congress to avoid responsibility and 

accountability for what you’ve done.

 We’re talking about people here. We’re talking about veterans who 

have served this nation. And you’re talking about trend lines and 

projections, and you’re “uneasy.”

 You should be outraged. You should be out in every hospital in this 

country to say, “I’m sorry, we made a mistake, and we’re not serving 

you right, and we’re going to correct it.”

 But you come here and say, “I’m uneasy.” “Oh, the model is wrong. 
32

It didn’t have the fact that we went to war in Iraq.” Hello? Everybody knows we went to war in Iraq.

 The model is not the problem. You are the problem. The President 

is the problem. And we’re not serving our veterans. That’s what’s 

going on.

 You say we didn’t have the information. We had the information. 

I’ve used this Independent Budget as my Bible for many years, and it 

has been right on every single time. 

 I hope you look at it, because this budget has been right, and you 

ought to use it instead of your model, which you outlined just about 

two minutes ago, Mr. Secretary, how it didn’t have long-term care, it 

didn’t have this, didn’t have that. Why are you using it? This is not 

real.

 You are talking about models. We’re talking about people who 

aren’t getting served. There’s a thousand people in my district on a 

waiting list. They can’t get dental care for two years, and more. We 

have lists and lists of the problems.

 The system is in crisis, and you ought to be emotional about it. But 

you sit here and you talk about being “uneasy.”

I asked you when you first came to this Committee, what was the 

figure that your department submitted to the OMB.

 By the way, that’s the real problem, as we heard before. This administration, this OMB is trying to balance the budget on the backs of 

the veterans. They don’t care what your models are. They’re giving 

you a figure based on what they want to do with other departments. 

They don’t care about your model. Why should we?

 We should be talking about the veterans, and this administration 

wants to balance the budget on the backs of the veterans.

 But I asked you what did your department submit versus what 

OMB gave you, and you said to me, and I just broke out laughing, 

“I don’t know.” There were 10 people by your side. You could have 

asked any one of them. They all knew.

 Four months later, you’re back here. You gave the same exact answer: “I don’t know.”

 With this problem, wouldn’t you want to know? Wouldn’t you want 

to go back and ask? You’re sitting there and you’re telling us you 

don’t know.

 I have seen a lot of irresponsibility and refusal to accept responsibility, and a lack of accountability, and a lack of passion since I came 

to Congress, but you beat the cake. I mean, you set the standard.

 I have never seen someone as laid back with a $3 billion problem, 

with our veterans not getting appointments, as you are today.

 Again, I think you should resign. What do you think? Do you think 

you ought to resign?

Secretary Nicholson. No, sir.

 Mr. Filner. Tell me, why should you stay in office? What are you 
33

doing about what’s going on? You read us a list of things, you’re going 

to put $26 million here and $32 million here. I want you to go to the 

veterans and say, “I am going to change things to make sure you get 

the treatment you need.”

 Have you been out of Washington to see one veteran since this 

came about? 

Secretary Nicholson. Mr. Filner, I was in your state this weekend, 

meeting with homeless veterans -- 

 Mr. Filner. And did you tell them you were going to give them more 

support?

Secretary Nicholson. -- homeless veterans’ advocates. I was at the 

L.A. -- 

 Mr. Filner. And what did you tell them?

Secretary Nicholson. -- Hospital talking to veterans and talking 

to -- 

Mr. Filner. What did you tell them? Did you tell them the model 

was wrong?

Secretary Nicholson. No, I -- 

 Mr. Filner. “I’m sorry, I can’t serve you, the model is wrong?”

 Mr. Turner. Mr. Chairman, the Secretary should be permitted to 

answer the questions in regular order, Mr. Chairman.

 Mr. Brown of South Carolina. Mr. Filner’s time has expired, but 

Mr. Secretary, if you would care to continue to respond with the visit 

you had in California, it would be certainly in order.

Secretary Nicholson. I visit hospitals all over the country, and as 

I said, I was in California this past weekend visiting facilities there 

and meeting with homeless veterans, homeless advocates, because 

we have, as you know, a considerable homeless veterans problem in 

L.A., also, which concerns me a great deal.

 Mr. Filner. So did you raise the money for that? Did you increase 

the money in the budget for -- 

 Mr. Turner. Regular order, Mr. Chairman.

 Mr. Brown of South Carolina. Mr. Filner, I’m sorry, your time has 

expired. I’ll just allow the gentleman a chance to your questions, and 

no further questions from you, please.

Secretary Nicholson. Actually, yes. What I’m trying to do is to 

put the pieces together between us, the VA, the public sector and 

the private sector, as we’ve done in Chicago for a 231-bed homeless 

veterans facility using VA loan guarantees, HUD Section 8 rental 

assistance allowances, and Catholic Charities in the Archdiocese of 

Chicago came in.

 We’re trying to replicate that in other areas, including in California, where the need is probably the worst. And I met with elected 

officials in Santa Monica to discuss that, as well.

 But at the hospital, I took an extensive tour. I talked to patients, 

as I do everywhere I go, and some of them, knowing that I’m in the 
34

building, make their way to me to tell me how grateful they are and 

what good care they believe that they are getting from the VA.

Certainly there may be exceptions here and there, but I am proud 

and will stand behind the excellent delivery of health care services 

that the VA is providing to our veterans at the 157 hospitals and the 

over 850 clinics that we have throughout this country.

 Does that mean that we don’t need more resources? Heck no. We’ve 

just established that, and are working toward that with your help.

 But I’d like also if I could to ask you a question, Mr. Filner. If you 

can tell me what the VA is going to need in 2007, based on what the 

actual situation is going to be in 2007, or if anybody else can, we 

sincerely will appreciate that input, because that is what we’re doing right now, in addition to this work, is we’re formulating the 2007 

budget.

 Mr. Filner. You know, your own department has testified that the 

health care cost inflation is 13 or 14 percent per year. You told us 

that. So I’d start right there, 13-14 percent increase.

 We know how many more people are coming back from Iraq. You 

step it up from there.

 And then I’d sit down with the guys who made the Independent 

Budget, because they’re right every time, and get the number from 

them, and they’ll provide you with the expertise that you need.

 Mr. Brown of South Carolina. Thank you, Mr. Filner.

 Mr. Secretary, when did you assume responsibility for this job?

Secretary Nicholson. February 1st, Mr. Chairman.

 Mr. Brown of South Carolina. Of what year?

Secretary Nicholson. Of 2005.

 Mr. Brown of South Carolina. So you really inherited this budget?

Secretary Nicholson. Yes, sir.

 Mr. Brown of South Carolina. Okay, thank you.

 I recognize the gentleman from Florida, Mr. Stearns.

 Mr. Stearns. Thank you, Mr. Chairman.

 And let me just say in some of the questions posed by Mr. Filner 

about the Independent Budget he raised and had in his hand, I’ve 

had the opportunity to serve in the minority, and when Sonny Montgomery was Chairman, and I never recollect the Democrats or Chairman Sonny Montgomery using the Independent Budget as a guide.

 So this Committee really makes its decisions on the best information, and you’re the one to help us provide that.

 Now, in your opening statement, you did admit that some VA services are not modeled, and you mentioned there readjustment counseling, dental services, the foreign medical program, CHAMPVA, and 

others.

 And I guess the question I have, do you propose to have those modeled based upon this? Because yesterday, in the staff briefing, my 
35

staff told me that the average cost of a dental exam for a returning 

reservist is $3,100.

 Now, this seems high, and I guess maybe two questions are, dealing with the reservist and his dental bill of $3,100, what are the factors, and how can we plan better to handle that; and then a question 

is whether you’re going to model on other areas that you mentioned 

in your opening statement.

Secretary Nicholson. Again, those are very good questions, and we 

are -- we’re dealing with that.

 The dentistry for the returnees is a new element, and I have confirmed that number, because that number seemed high to me, as 

well, on a per capita basis, but it’s not of course just examinations. 

It’s for dental work, and many are in need because of deferred care 

and so forth, of a great amount of work on their dentistry, and we’re 

providing that to them.

 So that is an accurate number, that $31,00 per dental patient.

 One of the things that we do in trying to project is to do what they 

used to do in total, as I testified, is to go back and see what the actuals 

were, to try to develop the trends and then apply an increased cost 

factor to that growth projection, and that’s essentially what we do 

with those things that are not modeled.

 We are searching the market to see if there are any other modelers 

out there in these kinds of service areas that we provide, and we have 

not yet found any.

 Mr. Stearns. All right. Maybe one other concern I have is why are 

quarterly reviews not conducted?

 Secretary Nicholson. Why are they not?

 I will ask Dr. Perlin to give you a detailed answer on that, but we 

internally, sir, we do monthly reviews, and what I’ve said earlier in 

reflecting on our experiences here is that I think that we, the VA, 

need to come here to at least leadership, or whoever leadership delegates, to have more frequent scheduled communication on exactly 

what is happening with our patient trend line and our costs to that 

you all know exactly what we know when we know it.

 Do you have anything to add to that, doctor?

 Mr. Stearns. Dr. Perlin. Let me just add, as I understand it, a midyear budget review has really showed you the difficulty here, and so 

the question is, you know, why don’t you just move to quarterly reviews so that you detect this in a quarter, rather than a midyear, and 

that’s really what I’m trying to get at.

 Dr. Perlin. Thank you, Mr. Stearns, for that question.

 In fact, we do track, as the Secretary indicated, absolutely monthly. 

The mid-year review presented an opportunity to come to some summary interpretation and it was simply coincidental with the escalation of use of what would have been capital funds and the need to address the difference in utilization, the number of patients compared 
36

to what had been projected.

 So in fact, the timing was coincidental, but those data were apparent during the monthly review. Mid-year simply summarized.

 Mr. Stearns. Thank you, Mr. Chairman.

 Mr. Bilirakis. Would the gentleman yield for a moment?

 Mr. Stearns. Glad to yield.

 Mr. Bilirakis. Dr. Perlin, do you review the the Independent Budget submitted by the veterans?

 Dr. Perlin. Yes, sir, I do -- 

 Mr. Bilirakis. You do?

 Dr. Perlin. -- review the Independent Budget.

 Mr. Bilirakis. Do you find fault with a lot of the projections and 

whatnot?

 Dr. Perlin. I think the Independent Budget -- and there was testimony last week on that -- uses a different approach. It builds on a 

historical base. It makes -- 

 Mr. Bilirakis. Yes, and that’s bad?

 Dr. Perlin. That’s not necessarily bad.

 We don’t believe it’s as accurate, the ability to project different 

needs of service, and the needs or the services that would be required, 

given different policies, or what the actuarial approach applies.

 When we used to do historical based budgeting, it’s my understanding, and this is before my time, that the error was 11.2 percent the 

last time that was applied.

 Mr. Bilirakis. Well, all right. Thank you, Mr. Chairman.

 Mr. Brown of South Carolina. Thank you.

 Dr. Perlin, we certainly would welcome the quarterly review, if you 

would meet with the Committee, and come in and let’s take a look at 

those figures.

 I now recognize the gentlelady from Florida, Ms. Brown.

 Ms. Brown of Florida. Thank you.

 First of all, let me just say I’ve been on this Committee since 1992, 

and the Republicans, Mr. Stearns, have been in charge of this Committee for over 10 years, and so at some point, you’re going to take 

some responsibility for what goes on in this Committee.

 Now, 81 percent of the American people said that the Congress 

is not in tune with what they think is important. Now, clearly they 

know that taking care of veterans is important.

 Now, you have just given us this list of your requests. The Senate 

passed $1.5 billion. I’m looking at this, trying to find out where’s the 

main portion? Now, if we adopted -- if you had requested 1.5, the 

Senate did 1.5, we wouldn’t have a conference. We could pass a bill 

before we left here tonight on the way to the President, and it’s a winwin for everybody -- everybody meaning the veterans.

 Why is that we’re going to have to go to conference when the Senate 

passed $1.5 billion, and you know that’s what’s needed?
37

 Why you didn’t come up here with the same request -- no conference, we pick up the Senate, when he sends it over, we pick it up, 

we pass it, it’s on the way to the President’s desk, then he’s taking 

pictures and taking credit?

 But the main thing is, the veterans will be getting the services they 

need right up front.

 And let me tell you something. Clearly, money is not an issue, 

because there’s plenty of money up here. The problem is priority -

- whether or not the veterans are the priority or whether the tax cut 

is the priority.

Certainly we spend $1 billion a week in Iraq, $4 billion a month, 

but those soldiers today are veterans tomorrow, and we need to have 

the will to say that once they come home, “we’re going to take care of 

you.”

 Now, explain to me why you didn’t ask for $1.5 billion.

Secretary Nicholson. For us, veterans are clearly the priority. 

That’s why we’re here.

 That’s why I went to Iraq to meet with our forces there and went to 

Lanstuhl, Germany to visit not only the people providing that transitional medical care to them, but to the patients there and our veterans there; and that’s why I go regularly to Walter Reed and Bethesda 

and Fran O’Brien’s on Friday nights, to visit with them, because they 

are coming into our system, they are -- they are me. They’re veterans. That’s -- nobody cares more about veterans.

 Ms. Brown of Florida. Sir, let me just say, everybody on this Committee cares about veterans.

Let me tell you, I had a veteran to come into my office that had been 

home from Iraq for over 12 months, and had not received the proper 

service. He came to me with tears in his eyes, with his beret, and 

wanted me to have it to note that he was in distress. So we all have 

these stories.

 And it’s not what we say. We all say the right thing. It’s how we 

vote. It’s how we spend our money. That’s the bottom line. It’s not 

what we say. We talk a great talk, but we need to walk the walk.

 So I want to know why is it, and I want an answer on this, that we 

did not -- because this is bull. This is going to take weeks. Conference, setting up a time, appointing the conferees.

We could finish this tonight and have it on the President’s desk 

tomorrow -- 1.5 billion. Then there’s no conference. The President 

gets the credit. But the veterans, they are the ones that will get the 

service right away. And we as members of Congress will do our jobs, 

and the American people will be able to separate some of us and feel 

like, “Well, they do have some of our priorities.”

 But as we speak today, 81 percent of them think we’re not doing 

their work -- we don’t have their priorities. What we do up here is 

not what they want.
38

 But they want us to take care of the veterans, and we could do this 

just like that, if we had the will and cut out the bull.

 Mr. Secretary, please answer my question.

Secretary Nicholson. Madam, Congresswoman, I -- you know, what 

we -- what we’ve requested here, and will come up in the supplemental request from OMB today, is what we need immediately to restore 

those items that we have already testified about that we were making 

diversions of because of our needs because of the increased growth.

 I don’t -- I don’t believe that I can testify to you why the Senate did 

what it did. I know this.

 Ms. Brown of Florida. Did you go over there and testify before the 

Senate and discuss the needs? Did you go over -- 

Secretary Nicholson. I have testified, yes, ma’am. I’ve testified.

 Ms. Brown of Florida. Okay. They didn’t take your recommendations as a body?

Secretary Nicholson. We testified very similarly for this amount 

that we were experiencing for the rest of 2005 in the Senate, yes.

 But I just wanted to add that the bill the Senate has has that for 

2005 and 2006.

 Ms. Brown of Florida. Well, good for the other body.

 My understanding is, this is just 2005. It’s just 2005.

Secretary Nicholson. This is just 2005, yes.

 Ms. Brown of Florida. No, sir, the Senate is just 2005.

Secretary Nicholson. I don’t think so.

 Mr. Brown of South Carolina. I think the Senate really, when they 

introduced the billion-and-a-half, Mr. Secretary -- you can correct me 

if I’m wrong -- they didn’t have the exact numbers from you when 

they passed the bill last night, and so they said whatever is not spent 

in this year would be carried forward to 2006, because you do have a 

2006 problem that you haven’t addressed yet, and we’ll address that 

on a separate legislation.

Secretary Nicholson. That’s correct. Yes, sir.

 Ms. Brown of Florida. Mr. Chairman?

 Mr. Brown of South Carolina. Yes, ma’am.

 Ms. Brown of Florida. But the question, and I know that the Chairman of this Committee is out working to probably come up with a 

proposal, but the point that I just made -- 

 Mr. Brown of South Carolina. You made a good point.

 Ms. Brown of Florida. -- the point is that if we have to have a 

conference -- 

 Mr. Brown of South Carolina. I understand.

 Ms. Brown of Florida. -- and all of that, this is going to take days.

 Mr. Brown of South Carolina. I understand.

 Ms. Brown of Florida. But we can send a message to the American 

people -- 

Mr. Miller. Mr. Chairman, regular order.
39

 Mr. Brown of South Carolina. She’s got a right -- 

 Ms. Brown of Florida. Excuse me.

 Mr. Brown of South Carolina. Okay. But -- 

 Ms. Brown of Florida. Let’s don’t be rude.

 Mr. Brown of South Carolina. Let me just ask, if I might, that you 

raise a good point, and I’m not sure what the logistics will be. I know 

they need immediate help, but I’m not so sure today has got to be the 

answer, but we are, at least we’re working on the problem.

 And thank you, Ms. Brown.

 Ms. Brown of Florida. Yes, sir.

 Mr. Brown of South Carolina. You made a good point.

 Ms. Brown of Florida. And I would appreciate, I would appreciate 

that we take that into consideration, and if it’s because I’m a Democrat, then let it be your amendment. It doesn’t have to be mine. My 

name doesn’t have to be on it -- 

 Mr. Miller. Mr. Chairman, regular order.

 Ms. Brown of Florida. -- Mr. Miller.

 Mr. Brown of South Carolina. Okay. Thank you very much. Thank 

you, Ms. Brown.

 Mr. Miller, I recognize you -- 

 Mr. Miller. I thank the Chairman for recognizing me, and I did 

have some questions for the Secretary, but I would like to address 

the prior speaker.

 Since you’ve been here since 1992, you should understand how 

regular order works. You should also understand that when we pass 

an interior appropriations bill in May and the Senate puts it on their 

interior appropriation bill, we have to conference, and that’s the way 

it works.

 They attached it to their Interior -- 

Ms. Brown of Florida. One darn thing, sir. I don’t have to understand anything, and let me tell you something. We’re not talking 

about Interior Appropriations. We’re talking about VA emergency.

 Mr. Miller. Mr. Chairman?

 Mr. Brown of South Carolina. Regular order.

 Ms. Brown of Florida. You’ve got me mixed up with somebody 

else.

 Mr. Brown of South Carolina. Ms. Brown, I’m sorry.

 Mr. Miller, if you will proceed with your questions to the Secretary.

 Mr. Miller. Thank you.

 Mr. Chairman -- 

 Mr. Brown of South Carolina. Mr. Miller?

 Mr. Miller. -- we just had a 10-minute dissertation from the gentlelady from Jacksonville on the fact that -- 

 Ms. Brown of Florida. Jacksonville, Florida.

 Mr. Brown of South Carolina. I’m sorry, Ms. Brown, your time is 
40

up.

 Okay, Mr. Miller.

 Mr. Miller. Mr. Chairman -- 

 Mr. Brown of South Carolina. Yes, Mr. Miller.

 Mr. Miller. -- we just had a 10-minute dissertation from the gentlelady from Jacksonville, a member of my delegation, expressing to 

everybody how we could solve this problem today and that the Secretary, if he had brought the appropriate number, we would not have 

to go to conference.

 The fact of the matter is a member who has been here, by her own 

admission, since 1992 should know that we would have to go to conference anyway.

 And I, you know, I beg to differ. The lady is absolutely incorrect. 

And, you know, for her to say that I’m being rude to her is an egregious statement on her part.

 Mr. Brown of South Carolina. Mr. Miller -- 

 Mr. Miller. But I would -- excuse me. You’ve allowed the Democrats to pontificate for the last 45 -- hour, one hour.

 Mr. Brown of South Carolina. I was going to ask you a question, 

if I might -- 

 Mr. Miller. Yes, sir.

Mr. Brown of South Carolina. -- just a procedural question.

Mr. Miller. As long as it doesn’t come out of my time.

Mr. Brown of South Carolina. Okay.

 The billion-and-a-half was attached to the interior appropriations, 

did you say?

Mr. Miller. Yes, sir.

 Mr. Brown of South Carolina. And we had already passed our version?

Mr. Miller. Ours was passed in May.

 Mr. Brown of South Carolina. So you are absolutely correct.

Mr. Miller. Yes, sir.

Mr. Brown of South Carolina. Okay. You may proceed.

Mr. Miller. Thank you.

 The Senate last night passed theirs on an appropriations bill.

 Mr. Brown of South Carolina. Thank you for that clarification.

 Mr. Miller. You know, I just don’t understand, you know. We 

sit here and we all are saying we are aggravated about this issue. 

There’s not a person in here who is not.

 And we are listening to people just go on and on and on, people calling for people’s resignation for the sole purpose of headlines. But if 

that’s the case, let me see if I can make one.

 If my colleague, good friend from California, is so disturbed with 

what’s going on, if he would offer his resignation from his congressional seat, I would be glad to write him a letter of recommendation 

to go to work within the budget department of the Veterans’ Affairs 
41

Administration.

 Mr. Filner. Would the gentleman yield?

 Mr. Miller. I will not yield.

 And I think that it’s important that we focus on the -- 

Mr. Filner. Mr. Chairman, the gentleman addressed me personally.

Mr. Miller. -- the issue is that we’re trying to -- 

 Mr. Filner. The gentleman should learn not to address the other 

members personally if he doesn’t want to be interrupted.

 Mr. Miller. -- we are trying to solve a problem here.

 Mr. Brown of South Carolina. Regular order, and let’s get back to 

the subject at hand -- 

 Mr. Miller. And -- 

 Mr. Brown of South Carolina. -- and I’m sorry -- 

 Mr. Miller. -- and -- 

 Mr. Brown of South Carolina. -- Mr. Filner.

 Mr. Miller. -- and I will submit my questions for the record, but, 

you know, this -- the actions of some of the members of the other side, 

I just don’t understand. They’re not trying to fix the problem.

And I’m not directing it to anybody. If the shoe fits, wear it.

 Mr. Filner. If the gentleman would yield, I would explain to him 

what we’re doing.

Mr. Miller. I yield back my time.

 Mr. Filner. I’d be happy to explain it to you.

 Mr. Brown of South Carolina. Mr. Filner, if you might -- Mr. Miller, do you have a question to the Secretary?

 Mr. Miller. I said I would submit them for the record.

 Mr. Brown of South Carolina. Very good. Okay. Without opposition.

[The information appears on p. 94]

 Mr. Brown of South Carolina. Dr. Snyder.

 Dr. Snyder. Thank you, Mr. Chairman.

 Mr. Secretary, I was unable to be here the last time you were here. 

I’m one of those members that’s on the Armed Services Committee, 

too, and it’s good to see you. I appreciate you taking this job.

 Is it your testimony today that this actuarial model that’s used, 

this formula, the number comes out and that becomes the number 

that is submitted in the President’s budget?

Secretary Nicholson. Yes, sir, that’s the basis of the development 

of the number.

 As I said, there are a few of the variables in the services that we 

provide that are not modeled, so we have to do a subjective projection 

of those, as well, but that’s the basis.

 Dr. Snyder. You’ve heard multiple discussions about Secretary 

Principi. The question to him a year ago, when he was asked what 
42

number he had submitted to OMB, and he said he had submitted a 

number of $1.2 billion more.

 Is that because he looked at what came out of the model and decided it was inadequate and upped it by $1.2 billion, or is it because the 

model generated a budget number and OMB said no, we’re not going 

to go with the model, we’re going to cut it by $1.2 billion?

Secretary Nicholson. Congressman, I don’t know the answer, I

wasn’t here. But let me see if one of my colleagues can help me.

 Dr. Perlin. I believe the construction of the budget is in three pieces.

The actuarial model is the first piece for those services that are 

modeled. As the Secretary testified, there are non-modeled items, 

including CHAMPVA, the program for beneficiaries; dentistry; prosthetics; state veteran home per diem. And each year, as you know, 

the department comes forward with policies, as well.

 And that is the construct of the budget, in large terms.

 Dr. Snyder. One of the issues that came about, Mr. Secretary -- and 

I know you know the history, you’re a very smart guy -- when Secretary Principi announced here in answer to a question of Mr. Evans a 

year ago that he had submitted a budget request $1.2 billion more, 

that generated a series of events that ultimately resulted in former 

Chairman Smith being removed, not only from his Chairmanship, 

but from the Committee.

 I think that sent a very strong message to the Republican caucus 

about being a team player.

 My question for you is, have you sensed, since you’ve been on the 

job since February, that there have been any concerns expressed by 

any of your staff members that even though they thought that the 

budget numbers might not be adequate, that the model might not 

work because we are at war, that they had any fears that they could 

not step forward and express their views openly about what the true 

budget number should be?

Secretary Nicholson. Well, we’ve had a considerable amount of 

discussion about the budget, but it’s been particularly focused on the 

2006 budget, because -- 

Dr. Snyder. My question is -- 

Secretary Nicholson. -- we were in 2005 budget year, of course, 

when -- 

 Dr. Snyder. My question is, have you sensed any apprehension 

about, with anyone on your staff, about what the ramifications might 

be if someone were to publicly acknowledge that the budget numbers 

or the model may not be adequately reflecting what’s going on in the 

world?

Secretary Nicholson. Yes, sir.

 We’ve had -- we’ve had discussions about growth, and increased 

demand and what -- and why and what it means and what it will 
43

mean to our numbers and our projections, because we, as I testified, 

the increase in this year that we’re in is over 126 percent from what 

was forecasted, and it’s about -- about 40 percent of that total number of patients, which is about 250,000, about 40 percent of those are 

returnees from the combat theater.

Dr. Snyder. I understand that.

Secretary Nicholson. But thus, almost two-thirds of them are not.

 And I think the reason this is happening, and this is part of what 

we sit there and discuss and try to understand is why is this happening, because it’s a delta that’s taken off, and I think it’s -- I think it’s 

because of the quality of the care that veterans are getting in those 

facilities, and that word is continuing to go out there.

Dr. Snyder. Mr. Secretary, when you testified here February 16, 

2005, Ms. Berkley, Shelley Berkley from Nevada made the following 

statement, and she did not present this to you as a question, but she 

made a statement, and then the Chairman moved on.

 She said, quote:

“The President’s budget provides $762 million less than CBO says 

is needed to maintain current services for veterans’ health care.”

 She went on to say:

“And I hope you will take a good look at the proposed budget” -- 

 Mr. Turner. Mr. Chairman, I thought we were not allowed to -

- there’s a sign on the door that says we should not be using cell 

phones. I would think that the respect for the rest of this Committee 

and certainly the Secretary would encourage Mr. Filner to at least 

get off the phone.

 I apologize.

 Mr. Brown of South Carolina. That’s a good point. Thank you.

 Mr. Turner. Mr. Filner, I do believe the sign is for the entire room, 

not just crouching behind someone else’s chair. The sign says that 

it’s disruptive of the Committee, and clearly you don’t consider that 

you need to comply with the rules of the room.

 Mr. Brown of South Carolina. Mr. Filner.

 Mr. Filner. Mr. Chairman?

 Mr. Brown of South Carolina. Mr. Filner, I’ll have to ask you to 

either take your cell phone off or leave the room.

Mr. Turner. Thank you, Mr. Chairman.

 Dr. Snyder. You’re doing well today, Mr. Chairman. You got a tough 

job for a stand-in.

[Laughter.]

 Dr. Snyder. We’re with you.

 Mr. Brown of South Carolina. Well, I thank you for your testimony. 

Looks like your time has expired. Had you concluded your question?

 Dr. Snyder. No, I had not, and I would ask your indulgence, if I

might here.
44

 Mr. Brown of South Carolina. How much time do you need?

 Dr. Snyder. I did not give an opening statement, hoping we might 

be able to go around more than once. Obviously, that was misguided.

 I wanted to continue with Ms. Berkley’s quote from February 16th, 

and she says, quote:

“And I hope you will take a good look at the proposed budget and 

help the President see that some of these cuts do a tremendous disservice to our veterans and do damage.”

 Now, that’s the end of Ms. Berkley’s quote.

So she did not have a model in her office, but she did do her homework, and something told her -- I think it was the CBO request -- that 

this budget wasn’t going to work.

 My question is, on hearing testimony, and she did not ask for a response from you that day, what did you and your staff do in response 

to her comment that the budget was not going to work out, it was to 

be close to $800 million short, which is very close to this number that 

you submitted today? How did you respond to her comment?

Secretary Nicholson. Well, we took that on board, as we do virtually everything that we hear.

 We recognize and appreciate the oversight responsibility and we 

know that you all are sincere in your concern about veterans, and 

just as we are.

 And so we’ve discussed that.

One of the things that we specifically discussed about Congresswoman Berkley’s discussion and so forth was in our construction accounts, because we know of her concern about that, and whether this 

was going to affect our CARES projections, and where we were on all 

that.

 And we have that amount in the budget, under our planned -- in 

adjustments we were planning to make through the end of the year. 

It was not going to affect CARES or the capital construction plans for 

the new VA hospital.

Dr. Snyder. Ms. Berkley’s specific comment during that question 

was that 3,000 nursing jobs would be cut throughout the country and 

that was her concern.

 Thank you, Mr. Secretary. Thank you, Mr. Chairman.

Mr. Brown of South Carolina. Thank you, Dr. Snyder.

 The chair recognizes Mr. Boozman.

 Mr. Boozman. Thank you, Mr. Chairman.

 I would like to respond to my good friend, Mr. Filner, who is a good 

friend. I mean that sincerely.

 He made a comment earlier, that nobody was at the modeling hearing that we had on this side.

 I was at that hearing, and in fact, I chaired the second panel, and 

myself and Mr. Michaud were the only ones here for the second panel. 
45

You were not here.

 During the second panel, and I think Mr. Michaud would agree 

with me, we had a great discussion, it was very, very good. But what 

we got was testimony about the difference in the VA model versus the 

regular model, so it was a good hearing.

 So again, we shouldn’t -- and you can -- 

Mr. Filner. I stand corrected. I appreciate that. Thank you.

 Mr. Boozman. I do want to thank you, Mr. Nicholson.

 I understand your work as a veteran, your credentials, and stuff 

like that are impeccable. Okay? I also know that you’re close to the 

President, and I think that your very appointment really does speak 

highly of the President’s interest in veterans.

 Now, one thing that I’d like to raise a question about that I am 

concerned with.

 Do we have a policy now that people that are enrolled, people that 

are within the system that haven’t been around in a couple of years, 

non-service connected that haven’t been around in two years, are 

they being treated as new patients to the system in the sense of being 

told that they’re going to have to wait 18 months?

Secretary Nicholson. Congressman, anyone enrolled in the system 

stays enrolled, and no one is disenrolled and no one under this -- this 

plan that we had, this workaround through the end of the year, was 

going to be disenrolled or denied service from the way that we’ve been 

providing it. No, sir.

Mr. Boozman. Again, I had heard that maybe there was a plan that 

those that had not been in the system for a while -- if that were true, 

you would be in a situation where you’re really hurting the people 

that weren’t in the system, that you least needed to access the system 

that much, but veterans were counting on VA health care, and that 

felt like they were part of the system, hadn’t been there in a while 

because they didn’t need it.

 I mean, I’ve been blessed. I haven’t been to the doctor in three 

years, probably.

 So, again, I would hope that with the increased funding that we’re 

going to give, by some mechanism, it turns out -- and I think we’re 

all committed to doing that -- that we get this straight, I would hope 

that those that are enrolled, the two-year deal, I hope that there’s no 

hint of that at all.

Secretary Nicholson. Just because I want to make sure that what 

I stated was accurate, I’m going to ask Dr. Perlin to just elaborate on 

it a bit.

 Dr. Perlin. Thank you, sir, and thank you for that question.

 It is absolutely as Secretary Nicholson said, that no one is disenrolled. No one is disenrolled from care.

 But if people do not come for care for two, three, for over two -- 

three, five, ten years -- they do drop off of the list.
46

 So I would ask for your help in notifying veterans if they continue 

to want to seek services, to make sure that they come by at least once 

every two years.

 Mr. Boozman. Again, I would argue that there’s a difference in ten 

years and two years, and I would argue that we really need to look at 

that, and I think two years is probably too short.

Dr. Perlin. We can address what the duration is.

Mr. Boozman. Thank you.

Mr. Brown of South Carolina. Are you through? Okay.

 Mr. Michaud.

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

 Mr. Secretary, now I have a number of questions, and I would appreciate if you confine your response to a yes or no, or a simple one 

sentence answer, because they’re asked in a way that you could do 

that, and I apologize if I have to interrupt you if you tend to go on, 

because I have several questions I’d like to ask.

 Mr. Secretary, we need accurate information from you to ensure 

that veterans get access to timely high-quality health care.

 Your predecessor told us, as you heard several times today, that he 

had requested more money for veterans’ health care than he got from 

OMB for his budget.

 Yes or no: will you tell us the amount you have requested from 

OMB for veterans’ health care for fiscal year 2007? You will let the 

Committee know what you’ve requested, yes or no? 

Secretary Nicholson. Yes, sir.

Mr. Michaud. Yes or no: will you tell us whether you have asked 

OMB to resubmit the fiscal year 2006 budget to better reflect the increased demand for care?

Secretary Nicholson. Yes, sir. I testified on that, that that’s coming up here soon.

 Mr. Michaud. Mr. Secretary, I’m very concerned about reports that 

the VA mental health care services, including treatment for substance 

abuse, may not have been adequately funded to meet the needs of our 

veterans.

 Yes or no: do the current estimates for 2005 shortfall account for 

the total unmet mental health care needs or increased needs of Operation Iraqi Freedom or Enduring Freedom veterans? Do the current 

estimates account for that? Yes or no?

Secretary Nicholson. I can’t answer that yes or no, I don’t think, 

Congressman.

 The answer is that it’s a high priority. We have -- those needs are 

growing and we have requested an additional $100 million for that 

in our 2006 submittal.

 Mr. Michaud. In February at the hearing on the budget, I alerted 

you then that I heard that VISNs were experiencing budget shortfalls. While you claimed to not have known that the VISNs were 
47

already trying to cover the shortfalls, you should have been aware of 

our keen interest in the possibility of a budget shortfall.

And despite my concerns then, I never was notified by you that the 

VA was exhausting at least $1 billion to cover shortfalls and had been 

operating with shortfalls since at least January.

 You have still not even answered our post-hearing questions from 

February, and I don’t know if they’re just mine or the entire Committee. It relates back to my opening statement that Mr. Bilirakis 

mentioned, dealing with your former position as Republican national chair, but when I read your testimony, you state in there, and I

quote:

“The VA staff had had a very candid dialogue” on the shortfall of its 

impact for next year’s budget, but only with the majority staff.

 It makes me question whether or not you are approaching the challenges facing our veterans in a bipartisan manner. Your predecessor 

-- unlike your predecessor, who worked with both sides of the aisle.

 My question for a yes or no answer is: will you from now on include 

members and staff of both sides of the aisle, especially members from 

this Committee, for that very candid dialogue about the budget?

Secretary Nicholson. Yes, sir.

 This is not a -- this is not a partisan job, and I don’t see -- I don’t 

even have time to think about -- 

 Mr. Michaud. I’ll answer that after I have my other two questions.

 At the February hearing, you said your information is our information. Yes or no: will you share in a bipartisan manner with this 

Committee the demand model for mental health and substance abuse 

service? Will you share that?

Secretary Nicholson. Yes, sir.

 Mr. Michaud. And I can appreciate your saying that you want to 

act in a bipartisan manner, and I agree with you, because the men 

and women who serve in the military, they serve for our country, not 

for one political party or another.

 And the reason why I question that is because, when I read your 

statement, when your actions, you work with the majority party. 

You have not informed, like your predecessor in the past, to inform 

both chairs and Ranking Members along with majority and minority 

staff.

 And it’s written in your testimony today, and I would encourage 

you to work in a bipartisan manner.

I’m not looking to point fingers at you. I’m looking to make sure 

that we have the adequate information, and the only way we’re going 

to be able to get that adequate information is if we have access to the 

information in a bipartisan manner.

 So I appreciate that, Mr. Secretary, and look forward to working 

with you to solve this problem.

Secretary Nicholson. May I respond with one other point, Mr. 
48

Chairman, to just try to add emphasis to my statement that I don’t 

consider this a partisan job at all. My job is about taking care of veterans.

 But in March, on March 24th, I sent a letter to the Chairman of the 

Appropriations Committee, Military Quality of Life and Veterans’ Affairs, announcing my intention then of this transfer of money to the 

medical services division, and I sent a copy of that letter to Congressman Edwards, and we have had significant communication from my 

office with Ranking Member Evans here.

 But if we -- and it sounds like we do, because perceptions are important -- need to be communicating more, we will do that. I have no 

difficulty with that.

Mr. Michaud. I want to thank you, Mr. Secretary, and as I stated, 

my questions are a reflection of this Committee, not the Appropriations Committee, and probably we’re so used to working with the former secretary of the VA, Secretary Principi, in a bipartisan manner, 

and I just don’t see that with you thus far, and I’m going by your 

statement as it relates to this Committee on Page 8, where you talk 

about meeting with staff on June 3rd, the majority staff, not the minority staff or the Ranking Member or chair.

 So I appreciate that, Mr. Secretary, and will look forward to working with you in a bipartisan manner to make sure that we do provide 

adequate health care for our veterans.

 Thank you.

 Mr. Brown of South Carolina. Thank you, Mr. Michaud.

 Mr. Secretary, if I might, we have other folks that want to ask 

questions, too, not to cut you off on this.

 But I would recommend that the same information that you share 

with appropriations, if you would share with the authorizers, we certainly would appreciate that.

 And I know it might sound like this Committee has gotten to be very 

partisan, but I’m telling you, we’ve always operated in a non-partisan 

spirit. We believe that the veterans is a non-partisan issue.

 I certainly commend you for your service, as short a time as it might 

be. You know, the whole blame looks like it’s focused on you, and we 

understand that you just arrived back in February and you’re not 

responsible for all the sins of the past, and we certainly look forward 

to continuing to work with you in the future.

 With that, Mr. Bradley, do you have a question?

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

 I would ask for a little bit of extra indulgence, because I also, like 

Doc Snyder, did not submit an opening statement.

Mr. Secretary, first of all, thank you for your service to our country. 

Certainly you’ve honored the uniform.

And we also thank you for your service in the last five months. 

This has probably been a very difficult time, jumping from the frying 
49

pan into the fire, and certainly you’ve seen that this morning.

 I think all of in this room, and a number of people have left, would 

admit that, as you have accurately, that we have a huge funding 

problem.

 One thing that probably hasn’t been noted enough is, and I hear 

this all the time, the VA service, bar none, is the best in the country 

in terms of medical quality of care, and as we try to deal with the 

funding issues, that all of us have responsibility for, in a bipartisan 

way, let’s also not forget that the quality of care is excellent, and not 

only is that a tribute to your staff and your predecessor’s, but the 

hard work that all of the people throughout our country do in serving 

our nation’s veterans.

 I would second the comments of a number of people, in particular 

Congresswoman Brown-Waite. I also serve on the Budget Committee, and I worked with Chairman Nussle this year to submit, between 

the efforts of the two of us, about a $900 million increase to this year’s 

budget, and projected out over the next several years, well over $1 

billion in the budget.

 I was pleased that Chairman Walsh, his mark included $1 billion 

more than the President’s request, and I felt, and I think a lot of 

people felt, because the vote on that was fairly bipartisan, that the 

situation in regard to the veterans returning from Iraq and Afghanistan was well accounted for, and then unfortunately, the modeling errors, the shortfall have hit us, and we have to solve this problem, and 

hopefully with a supplemental budget today we will address that, at 

least to begin with.

 So here are my questions, and if I have gone over my time a little 

bit, I ask your indulgence.

$975 million. Does that do the job for this budget year, and it is 

-- are you certain of that?

Secretary Nicholson. Yes, sir. This will -- this will do the job and 

get us through the rest of this fiscal year. Yes.

Mr. Bradley. Have you, because the Independent Budget writers 

-- and I have my notebook of the testimony that they submitted in 

February -- have you worked with the authors of the Independent 

Budget on this $975 million proposal so that we can have faith that 

outside interests have sort of looked over your shoulder to say, ``You 

know what, this is an accurate number that will solve the problem,’’ 

and, you know, give us greater faith that that’s the case?

Secretary Nicholson. Not specifically with these numbers. We 

have continuing discussions with the VSOs about budget, and they 

don’t hesitate to express themselves to us about that.

But I cannot say that, as to these specific categories, that, you know 

I’ve listed, that we’ve had that kind of detailed discussion, no, sir.

Mr. Bradley. And my last question is more one for the future, and 

as we look to the future, how we can more accurately predict the 
50

needs.

 And I go back to the former Chairman of the Committee, Chris 

Smith’s bill, which nobody has brought up here today, which called 

for an independent panel to submit to OMB recommendations based 

on the VA’s recommendations of service, and then that would be incorporated, as I understand it, into the OMB budget submittal, and 

it would be a more transparent process and a process that hopefully 

would not have the influence of trying to arbitrarily fit a budget into 

tight budget parameters, which we all know exist today, but would be 

a budget submittal, transparent, that would more accurately reflect 

the actual needs of veterans as opposed to the needs of a political 

process for the budget.

 Is it time, Mr. Secretary, for a format similar to Chris Smith’s bill, 

to say nothing of veterans’ health care being mandatory spending?

Secretary Nicholson. I don’t think that I can answer that right 

now, Mr. Bradley.

 I’m not familiar enough with how that panel would work and what 

would be the juxtaposition of that with the, you know, the constitutional process and the legislative process.

 I will say I’d be interested in taking a look at it. I don’t know much 

about it.

 Mr. Bradley. Well, and I would just leave you with this thought 

-- thank you, Mr. Chairman, for your indulgence -- that first of all, 

I think we all should appreciate the clarity of the answers that you 

gave to my colleague from Maine, whose district adjoins mine, that 

you’re going to work with us on a quarterly basis to make sure that 

the information that we have is up to date, that you’ll work with us 

in a bipartisan fashion, and that the information that you have will 

be our information.

 And as part of that, I think it would be appropriate as we continue 

with these discussions of how to resolve the 2006, the 2007, and beyond budgets, that you also look at Mr. Smith’s proposal.

 I think it was a very interesting proposal, somewhat modulated 

back from mandatory spending, but one that would hopefully remove 

some of the political process out of veterans’ health care spending and 

something that certainly might be something that would be a model 

for how to proceed.

 Mr. Brown of South Carolina. Let me just say thank you, Mr. 

Bradley, for your leadership on this Committee, and in particular on 

the Budget Committee, you and Ms. Brown-Waite, and that was a 

good amendment you were able to incorporate.

 The gentlelady from South Dakota, Ms. Herseth.

 Ms. Herseth. Thank you, Mr. Chairman.

 Mr. Secretary, I’d like to reiterate Mr. Bradley’s comments as well 

as others on the Committee in thanking you for your very distinguished military service -- your record speaks for itself -- as well as 
51

your service as Secretary over the last number of months, and your 

work to address these challenges we’re identifying today.

Just a couple of questions, some followups, but one I’d like to start 

out with, just in terms of accessibility of various information.

 Because of the concerns that many of us have had about the potential budget and funding shortfalls, Mr. Evans sent a survey to the 

VISNs about the budget, and its’ our understanding that the surveys 

have been completed by the field, but they’re stuck in Central Office.

 Would you please make a priority the return of the survey information to us as the field reported?

Secretary Nicholson. Yes. That is sitting on my desk, and I have 

looked at it, and I need to review that. But I would anticipate being 

able to get that to him soon.

 Ms. Herseth. That would be helpful.

 I know you’ve heard some anecdotal evidence here from various 

members of the Committee about what’s happening in their districts 

at various facilities, so it would be nice to see what trends and patterns might be out there to better address their concerns and their 

service to the veterans.

 We’ve talked in last week’s hearing about some of the shortfalls of 

the modeling. Have there been discussions either back when we were 

preparing the 2005 request or as we have done so now for 2006 and 

as the VA is preparing to do for 2007, as it relates to, you know, the 

28-to-30 percent of the shortfall that’s based on OIF and OEF?

Have you talked specifically about not only the projected mental 

health care needs but the fact that because of the quality of the emergency care in the field, that thankfully we have a higher rate of survivorship among the soldiers, has that been part of the modifications 

that may be integrated into the modeling?

Secretary Nicholson. Yes, it has.

 Again, the war is a new phenomenon to the model, and certainly 

for 2007, which is what we’re really in the middle of right now, it’s a 

very germane category, and we’re trying to understand that as best 

we can, and we certainly are aware of that phenomenon that you’ve 

cited, which is we have relatively more casualties than fatalities, and 

that most of those will eventually take off their uniform and become 

veterans and be in our system. Yes, ma’am.

 Ms. Herseth. And then let me move to what you’ve provided in the 

breakdown, and go to the next very large number of the $975 million, 

because I have a particular interest, even outside of the work on this 

Committee, on the costs associated with long-term care, and longterm care costs being a ticking time bomb in our entire health care 

system in this country.

So specifically, and we’re talking about the VA system, can you 

describe, either you, Mr. Secretary, or Dr. Perlin, a little bit more 

about these two segments here on VA long-term care, why it is that 
52

the modeling is so underestimating the cost of the long-term care for 

the veterans?

Secretary Nicholson. I’ll ask Dr. Perlin to respond to that.

 Ms. Herseth. Okay.

 Dr. Perlin. Thank you very much for the question.

 There was a technical error in preparation of the 2006 budget on 

long-term care.

 Historically, there has not been actuarial data to model long-term 

care.

 We now contract with Duke University, and they’re developing 

more reliable estimates to develop actuarial modeling, and just as 

previous discussion suggested, things that aren’t modeled should be 

modeled to improve accuracy, long-term care will be incorporated 

into our modeling and budget projection.

 So in short, the two elements are, one we’re going to actuarial projection, and two, there was a technical error that underestimated the 

resource need, and that’s being rectified with this.

 Ms. Herseth. I appreciate the response.

 And if you might be willing to share with the Committee the results of your ongoing discussions and work with Duke University, so 

that we’re better informed as to what the actuarial modeling will be 

that they’re doing, that might actually help us in some of the other 

work that we’re doing on other health care related issues in Medicaid 

spending and elsewhere to deal with long-term care costs. We would 

appreciate that.

 Thank you, and I’ll yield back.

 The Chairman. Thank you, Ms. Herseth.

Mr. Strickland, you’re recognized for five minutes.

 Mr. Strickland. Mr. Secretary, I also want to join others who have 

thanked you for your service to our country.

 As I said in my opening statement, I did not wear the uniform. I

know our Chairman has, and does, and others have.

 And so I hope that nothing that we say here that could be viewed 

as critical of the VA or the administration of the VA would in any way 

reflect upon our admiration for the service that you and others have 

provided to the country.

 Dr. Snyder’s questioning sort of intrigued me a little earlier, when 

he was talking about the modeling, and can you say to me, or perhaps 

you weren’t here at the time, Dr. Perlin, can you say to us as a Committee that the recommendations that have come to this Committee 

from the administration have been at least as robust as that suggested by the modeling, or even more robust?

Can you tell us that?

 Dr. Perlin. Yes, the model is incorporated.

 As I mentioned earlier, the three elements of the budget are the 

model items, the non-model items, including CHAMPVA, prosthet-
53

ics, long-term care, state home per diems, and then policies on top of 

that.

 Mr. Strickland. The reason I ask the question is that, you know, it 

seems that much of the blame for the condition that we find ourselves 

in now is being attributed to faulty modeling, and so the question that 

I would ask is, have we received, as a Committee, budget requests 

that are at least as robust as would be suggested by the modeling?

Secretary Nicholson. I’m going to respond, Congressman, and then 

invite either of my colleagues to comment.

 I was not here during that formulation.

 Mr. Strickland. I know you weren’t, Mr. Secretary, and I appreciate that.

Secretary Nicholson. But I feel comfortable in saying that the 

answer is yes, because what has happened is that we’ve had a real 

growth spurt, and while it has put more load on the VA system, and 

it perforce is costing more money to us, it’s also -- and this is a very 

positive aspect of this whole discussion that we’re having, I think -- is 

that people are coming to our facilities in ever greater numbers, and 

they’re coming because -- 

 Mr. Strickland. I understand.

Secretary Nicholson. -- we’re doing a good job.

 Mr. Strickland. I understand that.

 But what I don’t understand is that Secretary Principi sat there 

and he told this Committee that he had requested I think $1.3 billion 

more than came to this Committee from the President’s budget.

 Now, was Secretary Principi just simply pulling a number out of 

the air, or was the Secretary’s request to the President in line with 

what the modeling suggested was needed, and did OMB or others 

decide that was just more money than they were willing to spend?

 That’s the question, and I think it gets to something very basic here 

as we’re trying to sort through this.

 Dr. Perlin, could you answer that?

 Dr. Perlin. In my involvement with this, the model data are used 

in their entirety.

 Mr. Strickland. I’m sorry, sir?

 Dr. Perlin. In my experience with this, the model is taken, and as I

indicated, there are three elements of the budget going together.

 Mr. Strickland. If I can just understand, what I think I’m hearing 

here is not a clear answer.

 What I’m hearing is that the administration may be looking at the 

model or the modeling process as an excuse for what we find here 

today when other factors were considered, at least two other factors, 

rather than simply the modeling projections.

 So maybe we should be, rather than just scrutinizing the effects of 

the modeling on our current situation, maybe we should look at the 

other factors, as well.
54

 One more question, quickly, because my time is almost up.

 Mr. Secretary, for the last two budget periods at least, the President has sent a budget where he’s listed management efficiencies as 

a way to save money. He’s also asked for an annual user fee to be 

imposed upon veterans as a way to get more resources, an increase in 

cost of prescription drugs, and the exclusion of hundreds of thousands 

of Priority 8 veterans.

 My understanding is that you’re assuming these cost savings in 

your future budget projections. That’s just not going to happen. This 

Congress is not going to go along with the President’s desire to do 

these -- you know, to impose these costs. So how do you factor that 

into the model?

 I mean, the Congress has said on at least two budget periods that 

they’re not going to do this, and we keep getting that from the administration.

 Do you expect that that is likely to be dropped from future budget 

considerations, or are we going to -- I think it’s sort of playing a game, 

because it’s not going to happen. It’s very clear that the Congress is 

not going to tolerate it.

Secretary Nicholson. I couldn’t speculate further out, Congressman, but I think for the 2006 budget, where they were in there as 

requested, they will not be approved. They did anticipate revenue, so 

that revenue will need to be replaced because they will not be enacted 

for 2006.

 Mr. Strickland. Thank you.

Secretary Nicholson. Mr. Chairman?

The Chairman. Yes, Mr. Secretary.

Secretary Nicholson. I would request, if I could, a recess of just a 

couple of minutes. I need to walk down the hall.

 The Chairman. I understand. The Committee will stand in recess 

for five minutes.

[Recess.]

The Chairman. The chair recognizes Ms. Hooley for five minutes.

 Ms. Hooley. Thank you, Mr. Chair.

 I also want to thank the Secretary for appearing here today and for 

your service. We do appreciate that.

 I have some comments and some questions.

 I think you’ve told us that patient care was not being affected by 

the shortfall this year, but we’ve seen recent reports that detail that, 

in fact, patient care has been affected.

 And again I’ll use the example of Portland VA Hospital, which now 

is delaying all non-emergency surgery by six months; it’s eliminating 

beds because it’s short 150 staff; they needed 13 million in equipment 

and got 2 million.

 How do you explain this contradiction?
55

Secretary Nicholson. I’ll ask Dr. Perlin to respond.

 Ms. Hooley. Thank you.

 Dr. Perlin. Thank you, Congresswoman, for that question.

 I’m aware of some of the challenges that have occurred at Portland. 

There has been a turnover of senior management in the network.

 And I, in fact, working with Max Lewis, who in fact I’m sparing 

from our Central Office here, to make sure that the services are delivered more timely, more effectively, more reliably.

 Ms. Hooley. Thank you very much.

 And again, the people that are in the system and are being taken 

care of think they get a great treatment. It is the waiting lists and 

elimination of beds, and that waiting list keeps getting longer and 

longer.

 Mr. Secretary, I just have a question, because I don’t understand 

this.

 If you knew about the shortfall in April, why did it take you two 

months to let us know?

Secretary Nicholson. Well, as I’ve testified, Congresswoman, I -- 

I, actually in March -- March -- sent a letter to the Chairman of the 

Appropriations Committee, and I sent, April 5th sent a letter to the 

Chairman of the -- of the Appropriations Committee in the Senate 

indicating that the trends were up and that we were looking at reallocating resources to cover this.

Dr. Perlin testified in the Senate on April 7th, responded with a 

post-hearing letter on April 12th, acknowledging that we were making shifts for operational needs in health care delivery.

 April 19th, we briefed here on this. April 21st, I met with the director of the OMB on this subject.

 Ms. Hooley. Mr. Secretary, can we get those letters? Because at 

least I didn’t receive the letter and didn’t know about it.

 So I don’t know about the rest of the Committee members, but if we 

could get that letter, I’d really appreciate it.

 You know, the talk about modeling, I have a little experience in 

that, not much, but I know it depends -- a model depends on what 

information goes into the model.

 And when I got this list, I was actually sort of blown away by the 

fact that the 2005 -- and again, I know you’ve only been here a short 

time. I know how hard it is to take over in a new spot in the middle 

of a budget season.

 But to not forecast the impact of extending -- extended continuing 

operations in Iraq and Afghanistan, both for 2005 and 2006, I mean, 

that just sort of blows me away.

 I mean, this is -- the war is the elephant sitting in the middle of the 

room. How could we not have put that into our model?

 Anyone that wants to answer. I’m just -- 

Secretary Nicholson. Well, I’ll take another crack at it.
56

 Ms. Hooley. Okay.

Secretary Nicholson. Because again, this lag time in developing 

budgets in this system -- as I said we’re working on 2007 now and 

we’re modeling 2004 data.

 So when we were doing 2005, we were modeling 2002. There was 

no Operation Iraqi Freedom.

 Ms. Hooley. You may have been -- 

Secretary Nicholson. But we monitor, we monitor as we’re into 

the year. I mean, we’re not just sitting there thinking that this, you 

know, this is somehow all going to magically work. This is monitored.

And through the first six months of this year, it was operating, it 

operating right on the plan, and it wasn’t -- I mean, you could see, you 

know, some trends that we were looking at in our monthly reviews, 

but it was basically in the framework.

 Ms. Hooley. Right. But we knew how many people were over there 

and when they were coming back. I’m just surprised it wasn’t in 

there.

 I have one quick last question, because I know my time is running 

out.

 This is a followup to Ms. Brown’s question, from Florida.

 We were told last year that we were $1.3 billion short. I offered an 

amendment, several people have offered amendments to backfill that 

$1.3 billion. The Senate asked for a $1.5 billion. You’ve come to us 

with $975 million.

 I’m -- why didn’t you ask for the $1.5 billion? I’m really concerned 

that what you asked for is so tight and then if there’s any slippage or 

any shortfall, you’ll be back again.

 I mean, why didn’t you ask for the $1.5 billion? Is there a reason?

Secretary Nicholson. Well, we asked for what we’ve calculated 

that we’re going to need to get through the end of fiscal 2005, which 

is another 90 days.

 As to 2006, which starts, as you know, on October 1st, we are asking for a million six, approximately a million six -- billion -- in addition to or on top of the netting out of those legislative proposals that 

we’ve asked for and that, as we’ve discussed, will probably not be 

approved.

 If they’re not approved, that’s another $1.1 billion that we will 

need.

 Ms. Hooley. But again, you can always carry over that money.

 I guess my concern is, when we knew last year that we were $1.3 

billion short -- 

Secretary Nicholson. For 2005?

Ms. Hooley. We knew that we were short that amount of money, 

at least according to the former Secretary.

 I’m through with my questions. Thank you, Mr. Chair.
57

 The Chairman. Thank you, Ms. Hooley.

Ms. Berkley, you’re now recognized for five minutes.

 Ms. Berkley. Thank you, Mr. Chairman.

 I think I could say without fear of contradiction that this hearing 

has not been the high point of my congressional career.

 When Mr. Snyder mentioned that in February when I gave my 

opening statement we calculated that there was an $800 million 

shortfall, I can assure you that I am not a financial genius, I don’t 

have a modeling background, my staff is young and doesn’t have a 

background in budgets, but we were able to look at the submission, 

we were able to look at the needs and look at what was going to be 

cut in anticipation of the budget request, and come up with a number 

that turns out to be pretty accurate.

And if we could figure that out, it would seem to me, with all of the 

expertise and knowledge in your department, that you could have 

taken a good look at that and realized that we had a serious shortfall 

far sooner than you acknowledged.

 I’ve got a piece of paper here that I’d like to submit for the record 

that demonstrates that the VA underestimates health care workloads 

every year, and it shows here what the VA submission is, and then 

the bar next to it has the actual figures.

 And in 2002, 2003, 2004, and 2005, the submission is always far 

below the actual.

So I would figure, after this happens time and time again, that we 

would figure out how to do this better, and we need to do this.

 I hope you take a look at this, and I would like to submit it for the 

record.

[The information appears on p. 101]

Ms. Berkley. I’d also like to submit, and I hope that you read this 

too, it’s: “A War of Disabilities - Iraq’s hidden costs are coming home,” 

by Ronald Glasser, and it talks about what to expect when our soldiers come back and they are veterans, and what they are going to 

need from their government, both in health care and medical and 

mental health care. That’s something we need to take into consideration.

[The information appears on p. 102]

 Ms. Berkley. The information is there. I am sure the VA has it, 

and we need to take it into account when you come before us with 

requests for funding for our veterans.

 I have many interests when it comes to veterans. I concentrate on 

what’s important to my district, because that’s my job and I’m the 

only person here that would forward the interests of the veterans in 

southern Nevada.

 I know on Tuesday, in front of the Senate Committee, you responded to Senator Ensign from Nevada’s question discussing plans for a 

veterans’ medical complex in Vegas and the funding for the construc-
58

tion of this facility, which is in the 2006 budget, and you assured him 

that it will not be affected by the department’s shortfall.

Can you give me that assurance on the record here today, so we 

have it in both Committees, on both sides of the aisle, and in both 

houses?

Secretary Nicholson. Yes, ma’am. For the 2005, the cycle that 

we’re still in, we have architecture and planning in there, $60 million, and as you know, that’s underway, and that is not in jeopardy, 

and for 2006, there’s $200 million.

 Ms. Berkley. $199 million.

Secretary Nicholson. And hoping to be able to start construction 

by probably late, late in that fiscal year, and get that project done.

 Ms. Berkley. I thank you for that.

 And with all due respect, and I know your background and it’s truly 

exemplary and extraordinary, I think you need to know more about 

the department that you are heading when you come back and testify 

again to this Committee, and I say that with all due respect.

 Thank you.

 The Chairman. Thank you, Ms. Berkley.

 Mr. Secretary, one thing that we haven’t discussed here today, it’s 

the accounts receivables. We will have a follow-on, we will continue 

our oversight with regard to the methodology of the health modeling.

I know that on June 10th there was a briefing for the majority and 

minority staff whereby we were informed that the accounts receivable as of that date were in excess of 600 million.

Can you tell me what the number is today, and how the accounts 

receivable were taken into consideration with regard to the request 

that you had made to me earlier in this hearing?

Secretary Nicholson. I’m going to call on staff for the specific numbers, Mr. Chairman, and proceed with an overview.

 There’s a real emphasis on increasing our collections. I think that 

it’s also worth noting that the department has done a pretty exemplary job in recent years in going from collecting very little to now 

collecting in excess of $2 billion, I think.

There are difficulties in this, systemic difficulties which we’re also 

working on, particularly on the IT side of our endeavor, because the 

hospitals have dissimilar back office procedures.

 Each of these hospitals, it seems like, has sort of grown up on its 

own, and they’re not as standardized as they need to be, and that is 

a goal of mine, is to enhance that so that the IT part that’s needed to 

refine this system of collections can be put in place, but I don’t want 

to minimize the difficulty and challenge of that because of the dissimilar systems that seems to be in each of these hospitals.

 Having said that, let me call on Dr. Perlin to try to respond to you 

specifically.
59

 Dr. Perlin. Thank you, Mr. Secretary.

 Mr. Chairman, just as the Secretary said, this year the total collections are approaching almost $2 billion. The goal is 1.879. This 

reflects double digit growth for each of the past years. In fact, it’s up 

200 percent since fiscal year 2001 when it was really less than $600 

million.

But our ability to collect is improving. We’ll benefit from the information systems.

 I need to get back to you with the exact number on the accounts 

receivable that is outstanding, I believe. Mark Loper, our chief business officer, would have that at hand.

 The Chairman. Would you concur that the number that was briefed 

to minority and majority staff, that it’s in excess of 600 million, is still 

accurate, and the number could even be larger?

 Dr. Perlin. I’d have to get back to you. I would be remiss in speculating, in terms of not knowing exactly what debt is truly collectible 

and what debt is not good debt.

 The Chairman. All right. I’m not interested in quibbling with you, 

Mr. Secretary, nor your staff.

 We recognize that, you know, when we say with regard to the uncollected third party debt, ranges between 1 billion and 3 billion are 

a pretty wide variance. And we don’t even know what the total universe is to be collected.

 So Dr. Perlin, and Mr. Secretary, and the general counsel, the three 

of you, we are trying to be helpful to you.

 So in cooperation with the appropriations staff, you know, we did 

the pilot out in Ohio, and now this Committee recently just passed a 

second pilot, competitive pilot for you to improve this.

 Mr. Secretary, when you mention the IT, we want, and as a matter 

of fact are sending you dollars to the business office so that you can 

do the redesign of the business processes on collection.

 Obviously, in your modeling, you also do your accounts receivables, 

and if we’re going to move into this era of the 7s and 8s and caring 

for the veterans for non-disabled illnesses and injuries, we have to be 

able to collect those monies, because Congress said that we will open 

up the system based on the need and the means.

 And so in your modeling, if you’re saying, ``Well, we think that 

we’re going to be collecting this money,’’ and now we’ve got 600 million or more that’s not even being collected -- wow! I mean, we have 

problems in there business process systems which have to be corrected.

 So with regard to this legislation on the second pilot, to the general 

counsel, to please proceed at all due speed would be my request of 

you, and Mr. Secretary, if you have any follow-on that you would like 

to make on accounts receivables, I would ask your comments.

Secretary Nicholson. We’ll get back to you as quickly as possible 
60

on the specific answer to that 600 million.

 The Chairman. All right. If you’re able to do that in the next several 

hours, please contact my staff so I can be in touch with the Appropriations Committee.

 Mr. Secretary, I apologize that I had to leave the room. I took 

your request of a supplemental appropriation, and notified the leadership.

 I’ve spoken with Chairman Walsh. They are drafting the legislation. I am most hopeful that sometime before we break on this July 

recess that Congress will act upon your request.

Secretary Nicholson. Thank you, Mr. Chairman.

 The Chairman. And we will do that. I appreciate you coming before 

the Committee. I appreciate, Dr. Perlin, your candor in response to 

this last week and the work that you’ve done with this in the meantime.

 And Mr. Secretary, you also were picking up the same evidence 

that every member of this Committee was with regard to our own VA

hospitals and our veterans.

 I know you proposed workaround solutions. You were trying to 

see if you could do it within your budget. I respect you for your leadership to come before this Committee and to make this request for 

a supplemental appropriation, and we will be acting on it hopefully 

today.

Mr. Michaud. Mr. Chairman?

The Chairman. Yes?

 Mr. Michaud. If I understand you correctly, we’re going to request 

the amount that’s on this sheet?

 The Chairman. The 975 million, yes. The only thing that may 

change is, I need to talk about this accounts receivable question.

 Mr. Michaud. Okay. My second question, Mr. Chairman, looking at 

the sheet the department passed out, it looks like they cut off something over here when they Xeroxed this off, and I’m just wondering, 

since the department requested additional funding for 2006, if that is 

the case, can we -- 

 The Chairman. I asked for that to be copied, and they had notes 

written on the side. I said, “I don’t want your notes, just give me 

what you can right now.”

 Mr. Michaud. Okay. Since they have requested for 2006, can we 

get categories similar to this from what the additional -- 

 The Chairman. They have not, as far as I know. We are going to 

work with the administration with regard to an 2006 budget amendment, so what was done today will be the supplemental on 2005.

 Mr. Michaud. Yes, what’s done for today, but my -- 

 The Chairman. Today a supplemental appropriation, I’m hopeful, 

will be done for fiscal year 2005 in the amount of 975 million.

 We will continue to work with the administration with regard to a 
61

budget amendment which they will submit to us, that could occur in 

July or in September, and that’s why this Committee will continue its 

further oversight with regard to this modeling and methodology on 

how we get this right.

 We’re going to get it right.

 Mr. Michaud. But my question is, they had mentioned that it appears that in 2006 they’re going to be short $1.6 billion.

 Under that assumption, they must know where that shortfall is 

going to be.

 And I guess my question to you is, could we have them -- and it 

might change -- could we have them provide us where their assumption currently is?

 The Chairman. We’re going to continue that dialogue, Mr. Michaud, 

and I’ll assure you you’ll be a part of that process.

 Ms. Herseth?

 Ms. Herseth. Mr. Chairman, thank you.

Just a quick followup before we adjourn, to Dr. Perlin, based on 

some questioning I was -- 

 The Chairman. Without objection.

Ms. Herseth. -- on long-term care.

The Chairman. One question.

 Ms. Herseth. You had mentioned that the projections were off for 

long-term care because of a technical error, and so if you might, in 

addition to what I requested about what you’re working on with Duke 

University, if you could provide the Committee and staff with a copy 

of the long-term care projections for 2006 and for 2005, given that’s 

what we were talking about earlier, given that that’s a substantial 

part of the shortfall, that would be appreciated.

 Thank you.

 The Chairman. I just want to make sure.

 You concur with the actions of the Committee here for us to focus 

on the redesign of the business processes to capture the total universe on these collections and to move at due speed, correct?

Secretary Nicholson. Oh, yes, sir. Indeed, we welcome your support.

 The Chairman. All right. Very good.

[The statement of Hon. Luis V. Gutierrez appears on p. 81]

 The Chairman. This hearing is concluded.

[Whereupon, at 1:10 p.m., the Committee was adjourned.]

 
(62)

APPENDIX
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