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Hearing Transcript on The Long-Term Costs of the Current Conflicts.

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THE LONG-TERM COSTS OF THE CURRENT CONFLICT

 



 HEARING

BEFORE  THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION


OCTOBER 17, 2007


SERIAL No. 110-54


Printed for the use of the Committee on Veterans' Affairs

 

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COMMITTEE ON VETERANS' AFFAIRS

BOB FILNER, California, Chairman

 

CORRINE BROWN, Florida
VIC SNYDER, Arkansas
MICHAEL H. MICHAUD, Maine
STEPHANIE HERSETH SANDLIN, South Dakota
HARRY E. MITCHELL, Arizona
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
SHELLEY BERKLEY, Nevada
JOHN T. SALAZAR, Colorado
CIRO D. RODRIGUEZ, Texas
JOE DONNELLY, Indiana
JERRY MCNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
CLIFF STEARNS, Florida
JERRY MORAN, Kansas
RICHARD H. BAKER, Louisiana
HENRY E. BROWN, JR., South Carolina
JEFF MILLER, Florida
JOHN BOOZMAN, Arkansas
GINNY BROWN-WAITE, Florida
MICHAEL R. TURNER, Ohio
BRIAN P. BILBRAY, California
DOUG LAMBORN, Colorado
GUS M. BILIRAKIS, Florida
VERN BUCHANAN, Florida

 

 

 

 

Malcom A. Shorter, Staff Director


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

 

       

C O N T E N T S
October 17, 2007


The Long-Term Costs of the Current Conflict

OPENING STATEMENTS

Chairman Bob Filner
    Prepared statement of Chairman Filner
Hon. Steve Buyer, Ranking Republican Member
    Prepared statement of Congressman Buyer
Hon. Stephanie Herseth Sandlin, prepared statement of
Hon. Harry E. Mitchell, prepared statement of
Hon. Ginny Brown-Waite, prepared statement of


WITNESSES

Congressional Research Service, Library of Congress, Amy Belasco, Specialist in U.S. Defense Policy and Budget
    Prepared statement of Ms. Belasco
Congressional Budget Office, Matthew S. Goldberg, Ph.D., Deputy Assistant Director for National Security
    Prepared statement of Dr. Goldberg
U.S. Department of Veterans Affairs:
Hon. Michael J. Kussman, M.D., MS, MACP, Under Secretary for Health, Veterans Health Administration
    Prepared statement of Dr. Kussman
Hon. Daniel L. Cooper, VADM (Ret.), Under Secretary for Benefits, Veterans Benefits Administration
    Prepared statement of Admiral Cooper


MATERIAL SUBMITTED FOR THE RECORD

Post Hearing Questions and Responses for the Record:

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to Daniel P. Mulhollan, Director, Congressional Research Service, Library of Congress, letter dated November 27, 2007, and Memorandum response from Amy Belasco, Specialist in U.S. Defense Policy and Budget, Congressional Research Service, Library of Congress

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to J. Michael Gilmore, Assistant Director for National Security, Congressional Budget Office, letter dated November 27, 2007

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to Hon. Gordon H. Mansfield, Acting Secretary, U.S. Department of Veterans Affairs, letter dated November 27, 2007, also transmitting questions from the Hon. Michael H. Michaud


THE LONG-TERM COSTS OF THE CURRENT CONFLICT


Wednesday, October 17, 2007
U. S. House of Representatives,
Committee on Veterans' Affairs,
Washington, DC.

The Committee met, pursuant to notice, at 10:03 a.m., in Room 334,

Cannon

House

Office

Building , Hon. Bob Filner [Chairman of the Committee] presiding.

Present:  Representatives Filner, Brown of Florida, Michaud, Herseth Sandlin, Mitchell, Hall, Hare, Rodriguez, Donnelly, McNerney, Space, Walz, Buyer, Moran, Brown of South Carolina, Boozman, Brown-Waite, Lamborn, and Buchanan.

OPENING STATEMENT OF CHAIRMAN FILNER

Mr. CHAIRMAN.  Good morning.  This meeting of the House Committee on Veterans' Affairs is called to order.

We thank the witnesses for being here to help us understand the long-term costs of the current conflict.

In my view, just as we were unprepared for the aftermath of the war in a military sense in , we have gone into the war unprepared to deal with the consequences for our veterans, their physical and mental health, their employment, their education, their reintegration into civilian life.

Over a million and a half servicemembers have now been deployed in and .  We know the death and injury rate not only to Americans but to Iraqis and those numbers are increasing every day.

Half of those deployed, and that is over 800,000 as I understand the testimony, have already been separated and are veterans.  One-third of them have, in fact, sought U.S. Department of Veterans Affairs (VA) medical care or made benefit claims since the war began.

So not only do we have the increasing needs of an aging veterans' population stretching back to World War II, but heavily dominated presently by era veterans and their needs, we have the needs of our new veterans.  It is up to us to deal with both.  That is our obligation as a Nation.  That is our obligation here in Congress. 

And as we try to struggle still with the older veterans, we have to have a commitment that although the country is divided over the war in Iraq, we have a difference of opinion, we are united in saying that every young person that comes back from that war is going to get all the care and attention that we can give as a Nation.

So whether it is traumatic brain injury (TBI), whether it is post traumatic stress disorder (PTSD), we must deal with these issues and we know what happens if we do not get this right.  We look at our veterans who were not treated with honor and respect, who did not get their healthcare in a timely fashion.  It has been estimated that about half of the homeless on the street tonight, 200,000, are vets.

I think it is a tragedy and unacceptable to us as a Nation that many veterans have now died by suicide than were killed in the original war.  That means we did something wrong as a Nation and we have got to do it right with these young men and women coming back while we still struggle getting it right for our older veterans.

We know about the backlog in claims.  We know the frustration of having to deal with those claims whether it is monetary and losing a house or it is the psychological problems of fighting a bureaucracy for so many years.

So how are we going to deal with this?  How are we going to meet the demands of our older veterans and our new veterans? 

There have been a variety of estimates about the cost.  I have seen costs as high as $60 billion a year for the next decade for our new veterans.  I mean, that is 60 percent of our total budget now.  How are we going to do that if that is true?

The Congressional Budget Office (CBO), I think, estimates a lot less, but we should figure out what that number is.  The Department of Veterans Affairs must, even though it is a little late, even though we have had some success, but we are still straining to the breaking point with these new demands.

Walter Reed was not a VA hospital, but it showed that we were not taking care of the veterans the way the American people thought we should and that we must do.  And we have heard similar horror stories at VA installations around the country.

So we have to take this very seriously.  We have to prepare in a way that has not been done.  And we want to thank both the Congressional Research Service (CRS) and the CBO for being here this morning to help us understand that, to give us the background for the discussion, and we look forward to Dr. Kussman and Admiral Cooper's testimony to give us the VA perspective.

We have to know the truth here.  And I will say now to the VA panel, we need to know what you need, not that everything is all right.  We always hear everything is fine, we do not need help and, yet, horror stories come to our attention every single day.

So we look forward to a frank hearing.  We look forward to giving us the understanding because every Member of this Committee and every Member of this Congress wants to do this job right and we need your help to do it.

Mr. Buyer, you are recognized for an opening statement.

[The statement of Chairman Filner appears in the Appendix.]

OPENING STATEMENT OF HON. STEVE BUYER, RANKING REPUBLICAN MEMBER

Mr. BUYER.  The British philosopher and political theorist John Stuart Mill once wrote, "War is an ugly thing, not the ugliest of things.  The decayed and degraded state of moral and patriotic feelings which thinks that nothing is worth war is much worse.  A man who has nothing for which he is willing to fight, nothing he cares about more than his own personal safety is a miserable creature who has no chance of being free unless made and kept so by the exertions of better men than himself."

We are here today to discuss the cost of taking care of those better men and women.  In the current environment, some become lost in the heated political rhetoric and complexities of the war in and thereby emotionally using veterans' issues to pull people into the trap of just simply feeling sorry for the men and women who fight.  For many, this is easier than understanding their military duties and the realities of soldiers' lives after they return home.

To my colleagues I would say our men and women in uniform who fight are not victims of the current conflict.  Each and every one of them is a volunteer who swore and took an oath to defend this country.  As one officer stated recently, "I am a warrior, it is my job to fight."  This is the statement of a hero, not a victim.

As we look to take care of our returning military personnel, we need to admire and respect them for who they are and what they have done, not view them through a prism as though they are a victim class who require the Nation's pity.

Our duty here today is to explore the cost and the options for taking care of these heroes.  At the end of the day, that is the primary bipartisan mission of this Committee.  It has always been so. 

In 2005, during my Chairmanship, we discovered a significant budget shortfall at the VA and rapidly moved to eliminate that shortfall.  As the Chairman said, things were not included in those budgets that should have been and we had some very stale data and inputs.

Today, however, the funding in the VA MilCon Appropriations Bill is being held up for what I believe to be partisan purposes and to use that bill as leverage to pass other Appropriations bills or to put more pork in the legislation.

We are now 16 days past the new fiscal year.  I would urge the Chairman and my colleagues to rapidly move to encourage our leaders to move the VA MilCon Appropriations Bill in an expeditious manner so that our veterans can get the funding they need for fiscal year 2008.

The Republicans have now appointed conferees and Democrats should do the same.

Today we have a new challenge before us.  The current compensation disability system needs to be reformed.  This is the message we have heard from our veterans and confirmed by the findings of the Dole-Shalala Commission and the Disability Commission.  These reforms cannot wait.

Yesterday, the White House officially submitted their recommendations to Congress and it is our turn to act. The House and Senate Armed Services Committees are prepared to act and have said that they will take many parts of these recommendations to be incorporated in the Wounded Warrior provisions of the bill that is presently in conference.

In CQ Today, it states, and I would appreciate for the Chairman to clarify, that you intend not to take up these measures from the commissions this year, but to delay and to take it up in a single bill next year.  The first I heard anything like that was in today's CQ.  So I am anxious to hear your response.

In war, passivism and defeatism have never been 's values.  Neither should we give in to defeat and sit passively by in the face of the challenge before us.

Mr. Chairman, I urge you and all my colleagues to move ahead with reforming the compensation and disability systems this year and not wait until next year.  The "better men and women among us" deserve no less.

I yield back.

[The statement of Mr. Buyer appears in the Appendix.]

Mr. CHAIRMAN.  Let us get started on our first panel.  I welcome Amy Belasco from the Congressional Research Service.  Amy is a Defense Budget and Policy Expert with 25 years of Legislative and Executive Branch experience.  And after Amy, we will hear from Matthew Goldberg from the Congressional Budget Office.  Matthew is the Deputy Assistant Director for the National Security Division and has been a Defense Analyst since 1980.

We welcome you both.  Your experience, I hope, will help us, and we look forward to your opening remarks.

STATEMENTS OF AMY BELASCO, SPECIALIST IN DEFENSE POLICY AND BUDGET, CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS; AND MATTHEW S. GOLDBERG, PH.D.,  DEPUTY ASSISTANT DIRECTOR FOR NATIONAL SECURITY, CONGRESSIONAL BUDGET OFFICE

STATEMENT OF AMY BELASCO

Ms. BELASCO.  Chairman Filner, Mr. Buyer, and other Members of the Committee, my name is Amy Belasco and I appreciate your asking CRS to testify about the important issue the Committee is considering, the long-term cost of the current conflicts in Iraq and Afghanistan.

I would like to provide some context for the discussion by making several points.  About 60 percent of the 1.6 million individuals who have been deployed to the Afghan and theaters of operation are in their first tour. 

To date, Congress has provided about $615 billion to the Department of Defense (DoD), the State Department, and the Department of Veterans Affairs for the cost of the conflicts in and and enhanced security at defense bases.

Future costs will depend on the number of troops deployed, how long they stay, the intensity of conflict, and other factors. 

Thus far, DoD has spent about $300 million for the treatment of the two signature illness of these conflicts, post traumatic stress disorder, PTSD, and traumatic brain injury.

And, finally, predicting future costs is difficult partly because of unexplained discrepancies in DoD information.

So, first, before turning to costs, I would like to give a profile of the 1.6 million individual servicemembers who have been deployed to and in the six years of operation since 9/11. 

The typical deployed servicemember has been a young, white male, first term enlisted personnel, a profile similar to the active-duty force.  Some 60 percent have been between the ages of 17 and 30 and are in their first tour.

Because of frequent turnover, how often individual servicemembers have been deployed may be a better way to measure stress on the force than how often a unit is deployed.  About 90 percent of those deployed thus far have been in their first or second tour of duty.  The remaining personnel have been deployed three or more times including some like Air Force pilots for brief periods.

Now turning to costs.  CRS developed estimates of war cost because DoD's estimates have been incomplete and do not include the breakdown by operation of all the funds received to date.

Concerned about the accuracy of its war cost reporting, DoD has asked a private accounting firm to conduct an audit.

CRS estimates that Congress has provided a total of about $615 billion to date as of the fiscal year 2008 Continuing Resolution for , , and other counter-terror operations and enhanced security at bases generally referred to by the Bush Administration as the Global War on Terror (GWOT).

DoD has received over 90 percent of the funds.  The $615 billion includes $573 billion for DoD, $41 billion for the State Department's, foreign aid and reconstruction programs and for building and operating new embassies, and $1.6 billion for VA medical care for veterans of these conflicts.

On a monthly basis, CRS estimates that DoD is spending about $11.7 billion for all three GWOT, Global War on Terror, operations, well above the $8.8 billion in fiscal year 2006 and the $7.7 billion in fiscal year 2005.

These increases reflect both higher spending for new weapon systems and higher operating costs, though explanations for the increases are fairly limited.

CRS estimates that Congress has provided about $455 billion just for with average monthly spending running about $9.7 billion a year, well above previous years.  Only a small amount of the increase in fiscal year 2007 reflects the surge or increase in troop levels in this year.  For , CRS estimates about $127 billion with monthly obligations running about $1.7 billion, again higher than previous years.

One way to put and war costs into perspective is to compare them to those of previous wars. Based on estimates by CRS Specialist Stephen Daggett of military costs in inflation adjusted dollars, the cost of all three GWOT operations after six years equals about 90 percent of the cost of the 12-year Vietnam War and about double the cost of the Korean War.  Looking only at , the cost thus far is 65 percent of the cost of and 50 percent more than the cost of the Korean War.

Just briefly, the Administration has requested $152.4 billion for war costs in fiscal year 2008.  This total does not include $42.3 billion for defense and possibly additional State AID funds that Secretary of Defense Gates announced in late September would be requested shortly.  If these additional funds are requested, the fiscal year 2008 total would reach $194.7 billion or more.

Estimating future war costs.  Future costs, as I mentioned, will depend on how long the wars last, the number of troops, the intensity of conflict, facing strategies, the items that DoD and Congress consider to be war related, and the scope of post war costs.

CBO recently estimated the ten-year costs of several draw-down scenarios.  If current troop levels fall to 30,000 troops by 2010, CBO estimates suggest that war costs would total $1.1 trillion to $1.2 trillion by 2017.  If troop levels fell more gradually to 75,000, costs would reach a total of $1.5 trillion to $1.6 trillion after ten years.

Looking at annual costs just to get some sense of what you are talking about once the steady status is reached, CBO estimates suggest that 30,000 troops would cost about $22 billion, 55,000 troops about $33 billion, and 75,000 troops about $61 billion.

Now I would like to turn briefly to DoD spending and experience with post traumatic stress disorder and traumatic brain injuries.  Estimating the cost of these two signature medical problems may be difficult.  But looking at DoD's initial costs may give a window into what to expect into the future.

Based on DoD data, about 60,000 troops or about four percent of all servicemembers deployed have been diagnosed with either PTSD or TBI including some with both conditions.  Treating those patients has cost $291 million over the past five years and annual costs per patient have averaged about $1,850 for PTSD and $5,500 for TBI.

In the fiscal year 2007 Supplemental, Congress provided DoD with $600 million for treatment of these conditions over two years and also permitted the Secretary of Defense to transfer any funds in excess of requirements to the VA for the same purposes.  It is not clear whether DoD will need all of these funds.

Finally, I would just like to talk briefly about problems in identifying deployed troop levels which raise some oversight questions.  Predicting future cost depends on accurate information about current costs and the factors that drive costs.  Yet, even in the sixth year of operations, figures for troop levels in the and Afghan theater of operations range from 160,000 for those personnel in country to 320,000 for all those dedicated to the two operations.

DoD has not publicly explained the differences between these numbers.  When Congress lacks a clear picture of something as basic as deployed troop levels either in the past or today, predication of future cost becomes problematic whether estimating the cost of PTSD or TBI or assessing weapons replacement costs.

Thank you for inviting CRS to testify.  I am happy to answer questions.

[The statement of Ms. Belasco appears in the Appendix.]

STATEMENT OF MATTHEW S. GOLDBERG, PH.D,

Dr. GOLDBERG.  Good morning, Chairman Filner, Congressman Buyer, and other distinguished Members of the Committee.  I appreciate the invitation to represent Congressional Budget Office and talk to you today about some of the challenges our Nation faces in caring for veterans returning from Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF).

I will be talking about the number of troops who have served in those operations, the numbers who have been injured, and some measures of the severity of their injury.  I will also talk about the extent to which those veterans have sought care from the VA and the types of care they have received. 

And, finally, I will talk about the CBO's projections of the resources that VA may require over the next ten years to continue providing medical care and some of the other major benefits that key off of deployments to those two theaters, disability compensation for disabled servicemembers and also Dependency and Indemnity Compensation (DIC) benefits paid to survivors of servicemembers.

The U.S. Military has been engaged in OEF since 2001 and OIF since 2003.  As was said earlier, over a million active-duty military personnel have been to one or the other operation and over 400,000 Reservists as well.

The casualty rates, we have had 3,800 troops who have died in OIF and 400 who have died in OEF and a total of almost 30,000 who have been wounded in one or the other operation.

Now, the good news, if there is any, is that with advances in body armor as well as battlefield medicine and some remarkable advances in air medical evacuation, the survival rates are better in this conflict than they were, for example, in .  The survival rate among troops wounded was 86 percent during and it is over 90 percent in OIF and OEF.

The downside of that is we have a lot of troops, as is well known, who survive who might otherwise have been fatal injuries to the chest and abdomen due to body armor, but they suffer injuries to the limbs often resulting in amputation.

As far as the amputations, DoD keeps what I believe is a pretty complete census.  There have been about 800 amputations from the two operations combined as of the beginning of this year.  The amputation rate is 3.3 percent among all wounded troops.

Regarding the other two injuries that get a lot of attention, the so-called signature injuries, traumatic brain injuries and post traumatic stress disorder, let me say a little bit about each of those.

Traumatic brain injuries are difficult to tally because some of them go undiagnosed, but the number that have been diagnosed by DoD is about 2,700, 2,700 traumatic brain injuries or TBIs.  That is about eight percent of all wounded troops. 

An important distinction among the TBIs is that neurologists classify them as either mild, moderate, or severe.  And about two-thirds of the diagnoses have been for mild TBIs.  According to the medical evidence that we have examined, most mild TBIs result in natural recovery.  The patient will recover in a matter of weeks or months even if untreated and particularly if treated, although there is a small fraction of patients with mild TBIs who will have long-run persistent symptoms.

One of the problems with TBIs is that because the helmets are so good, you can sustain a concussion and not know about it.  One of the advances that is currently being practiced is whenever any soldier is evacuated to Landstuhl in for any reason, they are screened for TBI.

Post traumatic stress disorder, PTSD, is also difficult to diagnose.  Based on data from the VA, it appears that the veterans and the Reservists who have sought care at the VA, which is about a third of all those who have come home, a third of them who have come home and sought care from the VA, and among those, 37 percent have had some kind of mental health diagnosis and 17 percent have had some kind of diagnosis for PTSD.

I qualify that a little because the diagnosis for PTSD, the 17 percent is a preliminary number.  Some of those individuals, it is later determined they are rule-outs.  They had a visit with a psychiatrist who determined they did not have PTSD.

So we really do not know with great precision what the PTSD rate is.  Perhaps in the second panel, they will have some better numbers.  But the number I am using is about 17 percent of those who have come back and been seen at VA.

As far as the utilization and costs, the natural question is, how much of the resources and how much of the workload at the VA is being accounted for by the veterans and the Reservists who are getting care, particularly under the two-year special eligibility that applies for troops returning from the combat theater.

Well, of the about 700,000 returning servicemembers who are eligible for VA care, as I mentioned, a third of them have actually presented and demanded care at the VA.  The VA keeps an account of how much of their budget goes toward treating those OIF and OEF veterans.

In 2007, the number that the VA used was $573 million to treat that particular group of veterans in 2007.  In the 2008 budget request, the number they were using was $750 million, three-quarters of a billion.  That includes dental care, readjustment counseling, mental health initiative, and any other care that those veterans will require at the VA.

The 230,000 patients, veterans of those two operations who have been seen at the VA have constituted about three percent of the total veterans' workload at the VA.  So, in other words, as severe as the problems are, the numbers of veterans who have come back and sought care at the VA have not, from the numbers I have looked at, overwhelmed the system numerically.

And in addition, the average cost of care for the OIF or OEF veterans has been about $2,600 per veteran per year as opposed to the average for all veterans who have been seen of nearly $6,000 per year.  And that is partly a reflection of the fact that the veterans who come back, many of whom are severely injured, most of whom are not severely injured and are younger than the and Korean era veterans that were mentioned earlier who were at a stage in their life where they are more expensive to treat.

What CBO has done, if I can turn to our projections of future costs, is we have taken two scenarios.  Of course the costs will be keyed off of how many troops are wounded in action, come back home, seek care in the VA.  So we have some models that do the arithmetic there.

But you need a scenario for how long the conflict will last, how many troops are exposed, and that will determine our forecast of how many troops will be injured and in turn the cost of care for them.

So we have two scenarios.  I believe they are the same two that Ms. Belasco mentioned earlier.  We have one scenario where the troop levels would decline.  Current levels of about 210,000 decline to 30,000 by 2010 and remain at that level through 2017, which is our ten-year projection window.  However, the second scenario in which the withdrawal is more gradual, so 75,000 were there in 2013 and remain at that level through 2017.

We are not saying that either of those are what will actually happen.  No one knows, but we are trying to bracket some high and low cases.

In the first case, actually in the lower case, we are projecting that VA's cost to treat the veterans returning from OEF and OIF would be about $7 billion over that ten-year window, 2008 through 2017.  And in the higher case where troop levels remain higher for longer, we are projecting it would take about $9 billion to treat those same veterans.  So the range is $7 to $9 billion.

In addition, we looked at some of the other benefits that might change in a significant way based on the number of troops who remain in those two theaters.  The two we looked at specifically where the numbers are the largest are disability compensation and survivors' benefits and those could add another $3 to $4 billion to those totals.

So what we are talking about in total for the major programs that VA runs, we are talking between $10 and $13 billion in total over the ten-year period that we looked at.

That concludes my remarks and I would be happy to take your questions.  Thank you.

[The statement of Dr. Goldberg appears in the Appendix.]

Mr. CHAIRMAN.  Thanks to both of you. 

I will recognize Ms. Brown for questions.

Ms. BROWN OF FLORIDA.  Thank you, Mr. Chairman, for holding this hearing.

It is important for us to continue to remember the warriors when debating this war.  I have opposed this war from the beginning and will continue to oppose it until every last American soldier is taken out of harm's way.  However, I have supported each and every funding bill that would make the job of these men and women easier and safer.

The military is doing the job they were sent to do.  There was a flaw in the mission from the beginning and the flaw lies with us.

I just want, as always, to remind us of the words of the first President of the , George Washington.  These words are worth repeating at this time: "The willingness with which our young people are likely to serve in any war, no matter how justified shall be directly proportional as to how they perceive the veterans of earlier wars are treated and appreciated by their country."

And so, I go to my question.  I am very interested, Ms. Belasco, in how you were able to pull out the VA funding numbers for Iraq and Afghanistan and the Global War on Terror since Congress and the VA do not make a difference when passing the funding bills.  Can you please explain that a little bit?

Ms. BELASCO.  Yes.  I believe that actually CBO and I, and CRS, are using the same numbers.  There are, in fact, figures within the VA's budget justification material where they separate out the funding for OIF and OEF vets.  So those are the figures that I use.

Ms. BROWN OF FLORIDA.  The VA had a budget shortfall of $1.5 billion a few years ago because the formula they used did not take into account the war and the veterans returning from it.  Do you see the VA and the Bush Administration continuing to underestimate the effects of the war on their service, the returning vets, the cost?

Ms. BELASCO.  I cannot really address that question because I am a defense budget person, not VA.  CBO might have a better take on that.

Dr. GOLDBERG.  I have some visibility into the process that VA uses to build the budget request.  I do not have perfect visibility.  But they have shared some of their modeling with me. 

And the best answer I can say is I know they are very cognizant of this issue.  I know they have been improving the models every year for the three or four years that I have been following them.  So I cannot guarantee you that they have got it right this time, but I think they will probably be closer now than they were when we had the problems two years ago.

Ms. BROWN OF FLORIDA.  Well, tell me, do the VA or the Secretary have the last word or does the Office of Management and Budget (OMB) have the last word on the budget that actually comes out and comes to Congress?

Dr. GOLDBERG.  My understanding is that OMB has the last word.

Ms. BROWN OF FLORIDA.  That is the problem.

What do you believe are some of the greatest misconceptions that the general public have regarding the costs that we have incurred in this war and the future costs that VA may be forced to meet?  For example, we talk about the coalition of the willing.  How much does the American people pay of the cost of this war or do other countries actually make any major contributions?  I am talking to Ms. Belasco.

Ms. BELASCO.  I do not have those figures at the top of my head, but the overwhelming share of the costs are costs because we have almost all of the troops.  I believe there are maybe 10,000 from other countries.  I could look it up and get back to you, but, you know, it is really very small.

Ms. BROWN OF FLORIDA.  Well, when some of the other countries actually send soldiers, do we pay that cost?

Ms. BELASCO.  No.  I mean, you know, when the British have had about 5,000 troops, I mean, they pay those costs.  The only costs of other Nations that we pay is there is a category called coalition support. 

So that, for example, we pay, if I remember correctly, about a billion dollars to a year and that covers some of the costs of their troops and we pay it because they are helping us with counter-terror operations on the border.  So I mean, coalition costs in those cases, and it is mostly and , those are costs where we do, in fact, pay the cost of other soldiers.

Ms. BROWN OF FLORIDA.  I understand.  We are the coalition of the willing.

I yield back my time.

Mr. CHAIRMAN.  Thank you, Ms. Brown.

Mr. Brown?

Mr. BROWN OF S

OUTH CAROLINA.   Thank you, Mr. Chairman.

I was just curious, Dr. Goldberg, I guess.  You mentioned that of the injured warriors coming back, three percent or a little over three percent actually have some form of amputation.  Is that the number?

Dr. GOLDBERG.  I will check the number for you, sir.  I believe the number was three percent.  Three percent, yes, sir.

Mr. BROWN OF S

OUTH CAROLINA.   Okay.  And that has been a fairly constant percentage, I guess?

Dr. GOLDBERG.  It has been constant.

Mr. BROWN OF S

OUTH CAROLINA.   So you can use that projected, I guess, through the next ten years or whatever that timeline?

Dr. GOLDBERG.  That is precisely what I do.

Mr. BROWN OF S

OUTH CAROLINA.   Okay.  That is how you came up with those numbers.

Okay.  And where do we get the 30,000?

Dr. GOLDBERG.  I am sorry.  Could you repeat that?

Mr. BROWN OF S

OUTH CAROLINA.   We have an estimated force of some 30,000 that will be needed through that last cycle.  Is that—

Dr. GOLDBERG.  We have two cases that run through 2017.  In one case, in the lower case, the force levels will bottom out at 30,000.  In the higher case, they bottom out at 75,000.  And so the numbers of amputations and casualties in general would be proportional to those force levels.

Mr. BROWN OF S

OUTH CAROLINA.   Okay.  All right.  Thank you very much.

And thank you, too, Ms. Belasco.

Mr. CHAIRMAN.  Thank you, Mr. Brown.

The Chairman of our Health Subcommittee, Mr. Michaud.

Mr. MICHAUD.  Thank you very much, Mr. Chairman, for having this hearing.

And I want to thank both the panelists for your excellent testimony and for your estimates.

PTSD and TBI are frequently called the signature wounds of this war.  Capturing all the treatment costs associated with these conditions, I think, can be very difficult.  For instance, substance abuse or depression, that is related.

When the cost of treatment was calculated, were these costs included in the calculation as well?

Dr. GOLDBERG.  I have to tell you that on my side, we did not calibrate those costs as precisely as I would like to capture everything that you are asking for.  What we did is took a coarser look based on the total number of casualties and the number of those folks who would return to the U.S., separate from the military, and end up in the VA.

But at this point, we are trying to refine our modeling to bring in more precise estimates of the cost of PTSD and TBI in particular and we are not quite there yet.  So the numbers are a bit approximate.

Mr. MICHAUD.  And do you have the estimates for the cost of treating severe TBI or PTSD over the lifetime of a veteran from OEF or OIF?

Dr. GOLDBERG.  I do not have those.

Mr. MICHAUD.  Is that something that you can pull out or—

Dr. GOLDBERG.  I can take that question for the record and coordinate with the VA and if you would like, I will try to provide that.

[The following was subsequently received from Dr. Goldberg:]

Question:  What assumptions did CBO make in projecting the number of veterans who would require VA healthcare, particularly those with traumatic brain injuries (TBIs)? How much does it cost to treat veterans with TBIs?

Answer:  CBO projects future VA medical costs in a “top-down” rather than a “bottom-up” fashion. A “bottom-up” analysis would consider every medical condition that could possibly afflict an OIF/OEF veteran, project the number of veterans likely to develop that condition, and multiply that number of veterans by the year-to-year costs of treating a representative patient having that condition. The bottom-up approach is impractical because there are (depending on the specificity with which diseases are classified) thousands of conceivable medical conditions, some very rare and difficult to forecast, and others with widely-varying treatment paths (and corresponding costs) depending on the individual patient. Also, a bottom-up approach might not capture the fixed and overhead costs of running the VA medical system that are unrelated to the treatment of specific diseases.

By contrast, CBO’s “top-down” approach starts with VA’s costs to treat OIF/OEF veterans in the base year of the analysis, 2007. CBO then grows that base-year cost to reflect two factors:  medical inflation and the growing cumulative number of veterans who have returned wounded from OIF/OEF. Regarding inflation, CBO applies projections of per-capita growth in national health expenditures developed by the Center for Medicare and Medicaid Services (CMS). CBO projects the number of wounded troops under the assumption that historical casualty rates (per deployed servicemember per year) for operations in Iraq and Afghanistan over the 2003–2006 period will continue into the future. Applying those casualty rates to CBO’s two illustrative scenarios for the force levels in theater yields a projected stream of annual casualties. CBO recognizes that the wounded are not the only OIF/OEF veterans who use VA medical care, but CBO uses the number of wounded as an index of the overall number of medical problems attributable to the two combat operations.

The top-down approach does not require projections of the numbers of veterans likely to develop specific conditions (like TBI), nor the pattern of treatment costs for those specific conditions. However, the approach does implicitly assume that the mix of medical conditions remains roughly constant through time. For example, data from the Defense and Veterans Brain Injury Center imply that about 8 percent of troops wounded during OIF/OEF have been diagnosed with a TBI, of which over two-thirds were classified as mild. CBO’s estimates implicitly carry that percentage forward into the future, as well as assuming that the cost to treat that condition will inflate at the same rate as other medical conditions (i.e., at the CMS rate). Those assumptions seem reasonable except, perhaps, in the event that veterans with specific conditions (like TBI) experience delayed onset and will eventually present to the VA at rates exceeding the historical averages.

Mr. MICHAUD.  Okay.  Thank you.

Mr. Goldberg, your colleague earlier in the year, Allison, is it Percy—

Dr. GOLDBERG.  Allison Percy.

Mr. MICHAUD.  —Percy testified in February before the Appropriations Subcommittee and the CBO's estimate was that then over a ten-year period, VA's cost for medical care related to Iraq and Afghanistan could be between $5 and $7 billion depending on U.S. troop strength in the region.  That was this past February. 

Your estimates today said that could be anywhere from $7 to $9 billion.  What factors causes that increase?  What was the different scenario?

Dr. GOLDBERG.  Well, we are seeing troop levels being sustained a bit longer in the scenarios and that in turn drives the cost.  So longer details in the presence in turn drive higher costs, more years.

Mr. MICHAUD.  And not much has changed since February, though, because the surge was already—

Dr. GOLDBERG.  The surge is pretty much winding down.  We are starting off with the 210,000 troops that are currently in theater and we have them going out for 12 months.  So basically February to February and then you start to draw down from there and it does bump out the cost a bit.  That is the main difference.

[The following was subsequently received from Dr. Goldberg:]

Question:  Why have the 10-year projected medical, disability and survivors’ costs to the VA associated with OIF/OEF veterans increased from the $6 to $8 billion as detailed in CBO’s “Estimated Costs of U.S. Operations in Iraq Under Two Specified Scenarios” (July 2006) testimony to the current estimate of between $9.7 and almost $13 billion?

Answer:  Two factors have been instrumental to the upward revision in costs. First and most importantly, the original projections assumed significantly lower troop levels deployed in and around Iraq than the most recent ones. The former assumed that either all troops would be withdrawn from the Iraqi theater of operations by the end of calendar year 2009, or that troop levels would decline to 40,000 by the end of calendar year 2010 and would remain at that lower level through 2016. The latter projections assume a surge in troop levels for 2007 and part of 2008 with declines thereafter. However, troop levels are assumed to bottom-out at 30,000 in 2010 and remain at that level thereafter, or alternatively to decline to 75,000 by 2013 and stay at that level.

Second, VA treated significantly larger numbers of OIF/OEF veterans (and at higher cost) in 2006 than it had in 2005 and than it had anticipated for 2006. Because CBO uses VA’s spending as its base for its projections, CBO’s projections correspondingly increased.

Mr. MICHAUD.  Okay.  Ms. Belasco, in your written statement, you wrote, and I quote, "That Congress lacks a clear picture of the number of or allocation of all military personnel dedicated to Iraq and Afghanistan either in the past or today makes prediction of future cost, whether future operational or medical cost, problematic.  For example, troop location may be important engaging the likelihood that servicemembers face intensive combat and, hence, have a higher risk of developing PTSD or TBI."

Are there any types of data that you would like to see the Department of Defense and the VA for that matter compile so that you can look at this in a more comprehensive manner?

Ms. BELASCO.  Yes, I think so.  And I think the very discussion we have had this morning gives some sense of this because, you know, Matt was saying, well, CBO estimates starts from a level of 210,000 which is different, of course, from 320,000 and different from 160,000.

Now, I can piece together where some of those other people are from other data sources, but I think it would be very useful for Congress, you know, it could be very useful in terms of knowing the population you are dealing with if Congress had figures from the Defense Department that explained what the numbers are.

And, for example, in the 320,000 figure that they use in their budget justification material for fiscal 2007 and fiscal 2008 war costs, they only break them down between 140,000 in and 20,000 in .  And it is not even clear whether the 320,000 includes the 20,000 or so surge.  I think it does, but I am not sure.

Now, you know, where are the rest of those 160,000 people?  Well, as near as I can tell from some other data sources, some of them are in neighboring countries, a fair number of them are in Kuwait as you would expect because a lot of people come through Kuwait en route to Iraq, some of them in Qatar, some of them are in the neighboring countries, some of them are activated Reservists serving at home, and there are about 30,000 from one database I have where they do not know where they are.

It seems to me that it would be appropriate for the Defense Department to resolve these discrepancies so that, you know, it would help in a lot of ways.  I mean, I could give you four different sources for troop levels, all of them Defense Department sources.  And I think resolving this would be very good.  And, you know, after six years, you have to ask yourself why do we not know the answers to these questions.

Mr. MICHAUD.  Thank you very much.  Appreciate it.

Mr. CHAIRMAN.  Thank you for that chilling question.

Ms. Brown-Waite?

Ms. BROWN-WAITE.  I just have a follow-up question.  If you do not know, if you are not sure the DoD figures included the surge, did you ask that question?

Ms. BELASCO.  Yes, I did.  And they were not sure either.

Ms. BROWN-WAITE.  So DoD was not sure if those figures included those troops in the surge as of the time period that you did your study; is that correct?

Ms. BELASCO.  Well, I asked that question obviously of only one office within the Pentagon.  You know, the Pentagon is a very large place obviously.  They thought that the 20,000 was in there. 

You have to sort of cast your mind back to the timing.  The justification material is prepared in January and presented in February.  And the President announced the surge in January.  So there may be some uncertainty whether the numbers were adjusted for that. 

But within their justification, they said there were 140,000 troops in .  Well, you know, if you consider the surge, it would have been more like 160,000.  So, like I said, you know, they were not too sure themselves.

Ms. BROWN-WAITE.  But you did ask that question?

Ms. BELASCO.  Oh, yes.

Ms. BROWN-WAITE.  I appreciate that.  Thank you.

Dr. Goldberg, in your opinion, what has led to the higher projected cost for this conflict compared with previous conflicts?  Is it TBI?  Is it PTSD?  Is it the loss of limbs?  What would you say is the major cost driver here?

Dr. GOLDBERG.  I think part of it is just the fact that the VA has been so open and made the space for everybody coming back.  I know there have been a lot of complaints about veterans trying to get ratings for disability payments.  But this is a different issue.  You do not have to have a disability rating to come back and get seen in the VA.  And the VA has been—

Ms. BROWN-WAITE.  Because you get that care for two years after you serve.

Dr. GOLDBERG.  Two years.  And, of course, there is legislation that would extend that to five.

With your indulgence, if I could go back to the question you asked Amy—

Ms. BROWN-WAITE.  Absolutely.

Dr. GOLDBERG.  —we got numbers from the Joint Chiefs and the numbers we are looking at are 210,000 troops including the surge which is 30 to 40,000 higher than the pre-surge number.  So we have one source we use that we think is reliable.  I know there are multiple sources in the Department.  It depends how you ask the question.

For example, there are Air Force troops who will do a mission in theater and then return to another base.  For some purposes, you say, yes, they have been in theater, but they have not actually been stationed on the ground.  So it is not necessarily that the people in the Pentagon do not know what they are doing.  It depends what question you are trying to answer.

We tend to look at troops on the ground and we have gotten a reliable set of data from the Joint Chiefs.  Pretty much month by month, we talk to them and we have seen that the surge is numbered at 30,000 troops.  Not all of that is Army and Marines as you might expect because now they have a lot of Air Force personnel and Navy are doing what they call in lieu of missions.  They are taking the missions that might ordinarily be handled by the Army because the Army is so stretched.

Ms. BROWN-WAITE.  Thank you very much for that clarification.

Yes, a further clarification.

Ms. BELASCO.  I was just going to say, you know, there are a lot of different ways to look at these numbers.  I asked the Defense Department, one of their data collectors to put together the number for something called average strength, which in terms of cost is probably the best number because, after all, what average strength does is it counts everybody over a period, everybody as one person year just like full-time equivalents.  And, for example, for 2007, the figure is likely to end up being around 255,000 roughly which, again, you know, it is 40,000 larger. 

Again, I have asked people in the Defense Department to resolve the discrepancy and we are working on it.  But, you know, I find average strength to be a very good measure.  It does not measure those in country, but it does capture people in terms of person years.

Ms. BROWN-WAITE.  With troops coming and going, that has to be a very fluid figure.

Ms. BELASCO.  Right.  But the thing is the average strength figure, in fact, captures that because the way it is calculated is for every month, it looks at how many people are there for that month so that it captures all the comings and goings.  And, in fact, part of the difference between the figures may be that there are a lot of people on temporary duty.

Ms. BROWN-WAITE.  So the average strength per month is what you were looking at and it would not include those on temporary duty?

Ms. BELASCO.  It would.

Ms. BROWN-WAITE.  It would?  And those, for example, that Dr. Goldberg pointed out who may be Air Force who were really just flying over and/or there for a day?

Ms. BELASCO.  No.  But it would include the Air Force people as only one day.

Ms. BROWN-WAITE.  Okay.

Ms. BELASCO.  And, actually, the average I mentioned is an average for the year for 2007, an estimated average of all the months for the year.

Ms. BROWN-WAITE.  Thank you.  Thank you very much.  My time is up.

Mr. CHAIRMAN.  Thank you.

The Chairman of our Oversight Investigations Subcommittee, Mr. Mitchell.  You pass.

Mr. Walz?  Mr. Walz, you are recognized.

Mr. WALZ.  Thank you, Mr. Chairman.

And thank you to both of you for coming.  This issue of trying to get the data and trying to put a matrix to this is critically important, so we appreciate the work that you have done.  And I understand that it is so difficult.

I would like to also mention the Ranking Member has always been so kind.  He gave me a really good history lesson once on a 1946 testimony on the Merchant Marines.  So I think in response to the Ranking Member's testimony, I think it should be interesting to point out that although this entire body is disappointed that we have not passed the MilCon VA Appropriations, it has not passed on time in ten years.  And, in fact, in the two years under the Ranking Member's Chairmanship, it did not pass on time and we passed a continuing resolution. 

So no one cares more about this than this group here, but this idea that we are going to inject some of that into this is a bit disarming to me and I think that setting that straight, it is nothing to be proud of that we have been late 12 of the last 13 years.  But that is the fact on this. 

And we simply, and the question I have to you is, for the last three years, the President has had to come back, Mr. Goldberg, and ask for this.  Now, this is the CEO President, the one that is supposed to put the best practice and the matrix to this.  You just testified to us here that 3.3 percent of the VA's budget is caring for, the health budget is caring for OEF and OIF veterans.  Okay.

How do you explain then if it was not an overwhelmingly unexpected number that came here that this Administration so poorly projected and the VA so poorly projected the needs if there was not, by your account is what it seems like you are telling me, not an unexpected surge here in terms of cost?  Can you explain that to me?

Dr. GOLDBERG.  Well, my understanding is this, Mr. Walz, that a big reason that the VA has had budget problems in the last two, three years is not so much the inability to plan for the veterans returning from Iraq and Afghanistan.  It is much more so the difficulty in projecting the veterans from previous conflicts who are aging and many of whom are having problems maintaining their civilian healthcare, the healthcare provided by employers, and are turning to the VA because the VA is attractive to them, the co-payments are less. 

And so it is not so much the younger veterans coming back.  It is a lot of the older veterans who are reaching that stage where they need help and they are turning to the VA.

Mr. WALZ.  With that being the case and some independent budget projections like the "Independent Budget" by the veterans service organizations (VSOs), the DAV and so forth, they were able to much more accurately predict the need than the VA.

Now, my question to you is, I guess, what matrix are they using?  At what point does CBO have a responsibility to talk as they just answered to Ms. Brown on this?  When does CBO have a responsibility to tell the VA Secretary your projections are not realistic and you are going to be going back to Congress and ask for more money?  Do you have a responsibility in that?

Dr. GOLDBERG.  Well, the closest responsibility that we have is when there is legislation, for example, the MilCon VA Appropriation, that we do an assessment of that legislation, an independent assessment of how much it would cost, whether there are mandates on the private sector, et cetera. 

It is not really within our charter to go back to the VA and critique their budgeting process.  I do not really have the authority to do that.  That would be more of a U.S. Government Accountability Office (GAO) type of engagement.

Mr. WALZ.  Okay.  And I am noticing, and I am going back to that question again, does CBO have any, I guess as you are looking at this and you are seeing the cost, maybe this is a GAO question again, this year's appropriation that we will get passed and hopefully sooner than later, are we getting closer to the total needs based on what your analysis is?

Dr. GOLDBERG.  I would have to take that for the record and take a closer look.

[The following was subsequently received from Dr. Goldberg:]

Question:  Is there adequate funding for VA medical care in the VA-Military Construction appropriation bills that have been passed by the House and Senate for fiscal year 2008?

Answer:  CBO cannot evaluate the adequacy of funding without being given a standard for defining “adequate.” One possible perspective is to compare the proposed funding level for 2008 to the enacted level for 2007 increased by healthcare inflation. VA’s 2008 Budget Submission projects an increase in outlays for medical care of OIF/OEF veterans from $573 million in fiscal year 2007 to $752 million in fiscal year 2008 (31 percent). Given that VA expects an increase in the number of OIF/OEF patients from 209,000 to 263,000 (26 percent), their requested funding would allow an increase in annual cost per patient from $2,735 to $2,860, or 4.4 percent. In January 2007, the Centers for Medicare and Medicaid Services (CMS) issued a projection of a 6.6 percent increase in national per-capita healthcare expenditures.[1] If that projection is correct and if it applies to VA medical care, a full allowance for both inflation and increases in the number of OIF/OEF patients would require dedicated funding of $768 million in 2008 (as opposed to the $752 million contained in VA’s Budget Submission).
__________

[1]      As noted in House Report 110-186 to accompany the Military Construction, Veterans Affairs, and Related Agencies Appropriation Bill, 2008, p. 43.

Mr. WALZ.  All right.  Very good.  Well, thank you.

And I yield back.

Mr. CHAIRMAN.  Thank you, Mr. Walz.

Mr. Boozman?

Mr. BOOZMAN.&nbs