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Messrs. Chairmen and Members of the Committees:

Thank you for this opportunity to present the views of The American Legion on issues under the jurisdiction of your committees. At the conclusion of The American Legion’s 80th National Convention, over 14,000 delegates adopted 137 legislative mandates for the 106th Congress. These will serve as my marching orders during my year as National Commander.

The American Legion greatly appreciates the critical role of your committees. Although we may disagree on specific issues, we are unanimously in agreement to care for America’s military veterans and their families. Fortunately, both committees have distinguished Members and dedicated professional staff personnel willing to work in a bipartisan manner to address important issues facing the entire veterans’ community.

As the 105th Congress draws to a close, The American Legion is preparing for the legislative challenges for the 106th Congress. There is still plenty of unfinished business that must be addressed by your committees. The American Legion is ready to roll up the sleeves and get back to work! Among the unfinished issues are Medicare subvention, service-connected tobacco-related illnesses, third-party reimbursement, annual discretionary appropriations for the Department of Veterans Affairs, changes in VA’s health care system, and the tremendous claims backlog must be openly debated, consensusly agreed and then legislatively advanced.

Messrs. Chairmen, the movie, ‘Saving Private Ryan,' introduced many Americans, for the first time, to some of the sacrifices of the World War II veterans. Time does not diminish the enormous contributions of all servicemen and women of every generation; from Concord to Bosnia. The movie serves as a good example of the struggles and sacrifices endured for the freedoms all Americans enjoy today. The American Legion believes this country should never turn its back on veterans in their time of greatest need.

The American Legion’s priority interests are the operations of the major administrations of the Department of Veterans Affairs (VA). These are the Veterans Health Administration (VHA); the Veterans Benefits Administration (VBA); the Board of Veterans Appeals (BVA); and the National Cemetery System (NCS). In this presentation, I will offer perspectives and recommendations on specific VA programs. In some cases, I will set forth specific fiscal recommendations for the Fiscal Year (FY) 2000 Department of Veterans Affairs budget.

Medical Care

(including Medical Care Cost Fund (MCCF) Recoveries) $19.5 billion

Major $ 200 million

Minor $ 200 million

State Veterans Home Program $ 100 million

Medical and Prosthetic Research $ 335 million

National Cemetery System $ 105 million

General Operating Expenses $877 million *

*includes additional 150 FTE for VBA Compensation and Pension Service

Messrs. Chairmen, the Veterans Health Administration is important to veterans, to their families and to the nation. Several generations of veterans continue to receive quality medical care through VA health care facilities. To many of these veterans, especially those with severe service-connected disabilities, VA serves as their life-support system. Today about three million veterans rely on VHA to meet their health care needs. The American Legion believes that many more veterans would use VHA, if given the opportunity.

Thanks to the work of these committees and VHA’s progressive leadership, many dramatic changes have occurred within VHA in recent years. Congress has facilitated certain improvements by enacting major legislation to improve efficiency within VHA. A new culture exists within VHA that provides both opportunity and, at the same time, a heightened anxiety among veterans. The American Legion realizes that many changes occurring today within VHA are both difficult, but necessary. Many veterans who use VA’s health care services are unsure of the role of VHA in the 21st Century. The American Legion believes it is extremely important to have a clear vision of where VHA is headed and exactly what VA needs to help adapt to its future strategic role.

For most of VA’s existence, its health care system has been entirely dependent upon Congress for the bulk of its funding through the annual appropriations process. Today, VHA has the authority to bill, collect, and retain third-party reimbursements. With the Balanced Budget Act of 1997 freezing VA health care funding at approximately $17 billion for the period FY 1998-2002, there is a significantly increased incentive to develop new funding sources. The Balanced Budget Act requires VHA to effect clinical savings of two to three percent per year to compensate for a flat-line budget, in addition to absorbing annual medical care inflation. The American Legion is pleased that the Appropriations Committees, in both chambers, have recommended increases of approximately $300 million above the President’s budget request for FY 1999.

Messrs. Chairmen, the question The American Legion places before you is when will the Congress get serious about permanently addressing VHA’s funding requirements? The American Legion has offered various solutions to this matter over the years. We appreciate the limited actions taken in attempting to help resolve these fiscal problems. However, VHA is still falling farther behind in addressing long-term funding concerns. A clear example is the increasing backlogs in prosthetics' orders throughout VHA that now threatens the quality of service that veterans have grown to expect. Additionally, stagnant budgets and increasing emphasis on decentralization among the 22 Veterans Integrated Service Networks (VISN) have not significantly improved the overall level or quality of service.

Today VISN managers are under increasing budgetary pressure. Many believe that in the short-term VHA will survive. However, beginning with the FY 2000 budget or maybe even sooner, VHA must receive necessary funding increases to maintain its current services and consequent quality of care. According to VHA managers and personnel, VHA will continue to consolidate and close certain inpatient programs and services. VHA funded the expansion of Community-Based Outpatient Clinics (CBOCs) from savings generated from the reduction of inpatient programs over the past several years. Thus, the introduction of the principles of managed-care have yielded significant short-term savings. However, due to the increasing costs of health care, the application of managed-care principles, apart from other necessary measures, will not solve VHA’s long-term funding requirements.

Today, major funding challenges facing VHA include, among others, the Y2K problem, developing appropriate billing technology for enrollment and Medicare subvention, treating Hepatitis C patients, providing emergency room treatment to all enrolled and eligible veterans, reducing the prosthetics equipment backlog, controlling escalating pharmacy costs, and meeting the comprehensive needs of homeless veterans.

The American Legion believes VHA is now placed in a budgetary box. At the beginning of its "Journey for Change," VA was tasked by OMB to accomplish its five-year objectives within the boundary of a no growth budget. The American Legion believes the "Journey for Change" is a skillful plan, but it may be too optimistic. By continuing to emphasize the philosophies that govern managed-care organizations -- incentives to downsize, underutilization, rationing and cost savings -- VHA is creating all the elements needed to significantly reduce the level of direct care provided and permanently downsize the VA health care system. Although VHA continues to emulate managed-care medicine, there is one significant difference between VHA and managed-care organizations. Proportionally, there is very little revenue generated from nonappropriated funding sources.

With each passing month, all 22 VISNs are under increasing budgetary pressures. VHA closed approximately 26,000 hospital beds within the past three years. Certain medical centers contracted out, in whole or in part, inpatient operations. The American Legion believes VHA will be forced to continue this trend. All 22 VISNs are responding in different means to the budgetary realities they encounter.

The American Legion must ask to what degree, as a result of downsizing, has VHA’s capacity to provide back-up emergency medical services to the Department of Defense been compromised, and at what cost? In the event of a national emergency, will VHA be able to provide necessary medical support to the Department of Defense? This question must be authoritatively answered before VHA further reduces its hospital bed level and continues on the path to contracting out hospital services.

Messrs. Chairmen, important changes and reforms continue to be required within VHA. The piecemeal reforms of the past few years are only part of the long-term solution to decades of standardization. The American legion is concerned about the long-term future of VA health care. We do not believe the system in place today is the best this country can provide to the men and women who are the protectors of democracy?

Numerous congressional hearings have focused on how to transform VHA to reflect the best practices of private medicine, contain costs, and also retain its unique characteristics. In 1991, The American Legion analyzed the major problems within VHA and devised a plan to transform and improve VA’s current health care system. The result of this exercise is the GI Bill of Health. Many of the recommendations proposed in the GI Bill of Health are shared by other members of the veterans’ community.

Messrs. Chairmen, the basic premise underlying the GI Bill of Health is very simple. Congress has a choice. You can either allow the Veterans Health Administration to just downsize, become smaller and less effective, or you can take unprecedented action and enact legislation to expand its patient base and generate new business and consequent new revenues.

Since The American Legion first introduced the GI Bill of Health, many of its key components are now law. For instance, Public Law (P.L.) 104-262 mandated that VA develop a funding model that assures equity of access to care, and better aligns resources with actual costs on a per veteran basis. The GI Bill of Health also calls for a capitated based reimbursement system to better align resources with VA’s actual cost of care. The Veterans Equitable Resource Allocation (VERA) is the methodology that VA created to comply with the law. Enrollment covered by Congress in P.L. 104-262 (Veterans Eligibility Reform Act of 1996) was also a part of the initial GI Bill of Health proposal because The American Legion recognizes the need for VHA to forecast its potential workload in each network.

The American Legion wants VA to be the best health care provider it can be, but that takes money and effective management. Present reality is that fixed federal appropriations are diminishing VA’s "buying power" as it cannot keep pace with medical cost inflation. Retention of third-party reimbursements and Medicare subvention are an integral thread woven into the original draft of the GI Bill of Health. The Medical Care Cost Fund (MCCF) is a vital part of the answer. VA must be allowed to bill, collect, and retain revenue from all potential sources. VA’s internal difficulties in collecting third-party reimbursements persists. Medical Subvention is still only a legislative proposal. In this light, there are still two important components of the GI Bill of Health that must be enacted.

The first component is to extend VA’s authority to treat veterans’ dependents. The cry of the VA has long been the quotation from Abraham Lincoln, "To care for him who shall have borne the battle, and for his widow, and his orphan." We say that, but then when those spouses and children are sick, we leave them out on the street to fend for themselves. The recent deplorable way the families of sick Gulf War veterans were treated, only serves to exemplify this point. These are family members who sought out VA for care because of the hazards of war, yet they were denied care. As a nation, we care for families while service members are on active duty or when they retire. Even VBA provides some health care benefits to family members, but VHA turns a blind eye to the needs of those disabled veterans whose families may desperately need health care. We leave veterans, who choose to use VA, with no means of providing care for their families. We discriminate against veterans who are married and may have children. The Department of Health and Human Services has realized that our nation's children are too precious to leave uninsured.

Many female veterans feel that if there were more spouses at VA, then health care delivery for them would improve as well. It only makes sense that programs that benefit female veterans would improve if more women had access to VA. VA would have a greater incentive to increase mammography and OB/GYN services. We also know that women would use the VA, not just because they have told The American Legion, but they have also told VA. In a study conducted by the VA medical center in San Francisco, researchers found that "83% of spouses reported that they would choose to receive their medical care at VA if allowed to do so." This research group concluded, "Spouses of male veterans represented a sizable group that could be incorporated into the VA system, especially given their strong desire to do so." These are also the partners VA depends on to care for veterans at home. It is in the vested interest of VA to assure these caregivers are healthy and well supported, if VA intends to shift its focal point of care to outpatient, and keep disabled veterans at home for as long as possible. Spouses also tend to be younger and healthier than their male counterparts, and are usually the health care decision makers in a family. This is the cohort that VA needs to capture, if it is to survive.

Currently, the Veterans Equitable Resource Allocation (VERA) model is capitation in a fishbowl. In the private sector, managed-care works because the organization’s risk adjusts by maintaining a younger, healthier enrollee pool that offsets the cost for the more medically needy patients. Managed-care organizations profit as their risk pool grows. In VA, this profit would be reinvested back into the health care delivery system, since there is no expensive CEO or stockholders to pay.

The American Legion’s VISN Management and VERA Task Force found that, "VERA is ultimately constrained by a fixed budget (annual appropriations), therefore the per veteran rate allocated to each VISN is in effect reduced with each new veteran treated." Over time, the difference between the national reimbursement rates per patient and the actual costs of care, without an increase in appropriations, is therefore reduced. Thus, the VA needs to seek a broader patient case mix, which includes veterans who are willing to pay for services, that could be used to counterbalance the depreciation of the value of VA health care funding. VA needs an influx of new dollars to increase its buying power. Providing care to veterans’ dependents is not only an ethical matter, but would provide a significant financial advantage.

The American Legion believes the VA and Congress must conduct a comprehensive pilot demonstration program of the concepts contained in the GI Bill of Health.

Messrs. Chairmen, I want to commend your efforts on behalf of Gulf War veterans. You have made clear, both by your public words and deeds, that veterans disabled by their Gulf War service are of great concern to you. Several of the significant contributions in the fight to improve the government’s Gulf War programs were the recently released Senate Investigative Unit (SIU) Report on Gulf War Illnesses, and the series of hearings held by the House Veterans Affairs Committee. The SIU report is the most comprehensive and accurate investigation conducted to date on Gulf War Illnesses, and it could generate vast improvements in the government’s approach to this important issue.

Your most lasting contribution to this issue, however, can be the Gulf War Illnesses legislation currently before the 105th Congress. The Senate bill under consideration, S. 2358, the "Persian Gulf War Veterans Act of 1998," is supported by The American Legion. The bill would clearly address some of the government’s most serious shortcomings in its approach to Gulf War veterans’ health. The House of Representatives has also passed its own bill, H.R. 3980, the "Persian Gulf Veterans Health Care and Research Act of 1998." H.R. 3980 takes a different, but complimentary, approach to Gulf War Illnesses than the Senate bill. H.R. 3980 is also supported by The American Legion.

The American Legion is convinced that the best course for Congress on Gulf War Illnesses legislation is to craft a conference bill that contains the provisions found in the aforementioned bills. All the provisions must be considered, but the two most important are discussed below.

H.R. 3980 - Section 2: Health Care for Veterans of War

Combat in World War II predicted that in the 15 years after the war a veteran would experience a 2.85-fold increase in physical decline or death. There was no evidence that the effect of combat was more pronounced among men of different ranks, theaters of engagement, or levels of self-worth before the war. The post-war experience of Vietnam veterans appears to be similar, in that their post-war health was poorer than their peers who did not deploy to Vietnam. The health consequences of the Gulf War appear to be no different from these earlier wars. These wars were fought during different periods, against different foes, and with different weapons. Yet all shared something in common: combat and environmental exposures found in war theaters.

The Health Consequences of the Gulf War

Thousands of Gulf War veterans are ill. The population of deployed Gulf War veterans is significantly more ill than the non-deployed Gulf War era. They appear to use the health care system more frequently for a broad range of problems, from asthma to "ill defined conditions." Some of these represent identifiable diseases commonly treated in primary care settings. Some veterans are commonly seen, but not treated well, by primary care physicians who have little training in veterans health.

Patients in primary care settings often seek help from their physicians for symptoms that are not easily explained, including back pain and fatigue. Primary care physicians have long spent much of their time addressing non-specific symptoms and screening out diseases. With VA moving towards a primary care model, it should be better suited to treat veterans of future wars more appropriately than it has treated Gulf War veterans. It will not accomplish anything, however, unless future veterans have ready access to VA health care. H.R. 3980, Section 2: Health Care for Veterans of War, would provide that access.

The American Legion has long held the view that the most pressing issue facing sick Gulf War veterans was the development of effective medical treatments for their illnesses. There have been obstacles in the way, the most apparent being the failure to recognize that Medically Unexplained Symptom Syndromes may be a natural consequence of participating in a war. Another was that Gulf War veterans were only gradually given access to health care, when the medical literature is clear that the sooner interventions occur the more likely a sick patient will get better. H.R. 3980, Section 2, overcomes these obstacles by providing health care for future war veterans. A National Center on War-Related Illnesses, if created, will eventually enable VA to effectively treat these illnesses.

This provision will allow VA to address the next "Gulf War Syndrome" competently. It applies the lessons learned from our recent, and distant, past. It implements policies before they are needed by veterans. This will enable sick veterans to return from future wars and be given every chance to recover their health.

S. 2358 - Section 101: Presumption of Service Connection for Illnesses Associated with Service in the Persian Gulf During the Persian Gulf War

This provision must pass, because it is the only fair recourse for veterans with undiagnosed illnesses. Nine out of ten Gulf War veterans who file a disability claim for undiagnosed conditions are denied service connection and compensation from VA. This has occurred in spite of the fact that VA adjudicated most Persian Gulf undiagnosed illness claims twice, and overhauled the undiagnosed illness claims process. VA is failing to compensate disabled veterans with undiagnosed illnesses because its regulations implementing Public Law 103-446, the "Veterans Benefits Improvements Act of 1994," were written too narrowly. VA has so far refused to revise these inadequate regulations and thereby compensate disabled combat veterans. Their only recourse is the passage of this provision.

The American Legion is prepared to solidly support your continued efforts on behalf of Gulf War veterans. We appreciate your consideration of our recommendations, and we look forward to the passage of a comprehensive Gulf War Illnesses bill.

Messrs. Chairmen, for many years funding for VA medical and prosthetic research has been subject to uncertain appropriations. Congress is an advocate of a strong funding base for these activities, oftentimes increasing the Administration’s inadequate funding request. The research budget for FY 1999 represents the first significant increase in research funding in several years. The major aim now is to stabilize the current funding level and adjust for inflation and new research mandates.

The FY 1999 research funding level will provide for a total of 65 new research initiatives and 161 new full-time employees as part of the Administration’s Research Fund for America. Included in the FY 1999 funding level are 34 new projects for Health Services Research, 21 new Rehabilitation Research projects, 4 Cooperative Studies projects, 2 new field programs in Quality Health Care Initiatives, 2 new Epidemiology Centers, and 2 new Rehabilitation Research Centers for Vision and Hearing Impairments, and Acute Brain Injury or Spinal Cord Research.

Even though a funding increase for FY 1999 was supported by the Administration, and the House and Senate Appropriations Committees endorsed an increase above the Administration request, the expected funding level of $310 million does not provide the same buying power that VA research reached in the mid-1980s. VA medical and prosthetic research must receive additional funding to support physician and career development programs and to support the recently initiated Quality Enhancement Research Initiative (QUERI).

MEDICAL CONSTRUCTION AND INFRASTRUCTURE SUPPORT

The American Legion supports a well-planned approach to meet the infrastructure requirements of VHA. In an era of integrated delivery systems emphasizing outpatient and preventive care models and the development of community based clinics, virtual services and telemedicine services, expenditures on replacement facilities and large scale projects have declined. Nevertheless, this does not undermine the necessity for an active construction program consistent with the current paradigm of delivery. The American Legion has often stated that the capital plant of the VA system is a multi-billion dollar investment that must not be allowed to deteriorate. VA has faced past challenges in trying to practice modern medicine on sick and disabled veterans in less than optimum conditions. Facilities exist that were not built for the volume or extent of current outpatient activity. In addition, through the years, physical plants have been allowed to deteriorate even as the system has been built up. Thus, VHA facilities range from the state-of-the-art to those pre-dating WW II. It is false economy not to address VHA's physical plant needs promptly, as it only costs more in the long run to come to grips with essential construction, maintenance and repair projects. The fact that VHA is de-emphasizing hospital care does not negate the need to continue to maintain the physical structure of VHA.

Major Construction

The President's FY 1999 budget request was $ 97 million for the Major Construction program. This request would fund a clinical consolidation /seismic project at VAMC Long Beach, California, a seismic corrections project at VAMC San Juan, PR, and columbarium projects at Ft. Rosecrans (California) and the Florida National Cemeteries. Additional funds are requested to remove asbestos from VA-owned buildings and to support advanced planning and design activities.

VA is requesting authorization of $13 million for a parking garage at VAMC Denver, Colorado. No additional funding is required as this project would be funded from unobligated balances currently available from the Parking Revolving Fund.

The Senate and House funding recommendations for major construction in FY 1999 were $142 million and $143 million, respectively. These funding levels recognize a number of necessary projects that were not supported in the President's budget. The American Legion commends the congressional effort to move forward with these projects. The American Legion urges Congress to sufficiently fund VA’s construction program to allow it to carry out a program of modernization or replacement of aging facilities, which includes a rational system of setting construction priorities, to ensure the continued provision of quality health care to our nation’s veterans. In addition, VISNs must receive the necessary funding to carry out VA's transition from hospital based care to enhanced primary care and increase access to a modern VA health care system.

Necessary major construction projects that are not likely to be funded in FY 1999 include seismic corrections at VAMC Palo Alto, CA; outpatient clinic additions at VAMCs Washington, DC, and Tucson, AZ; mental health improvements at VAMC Dallas, TX; ward renovations at VAMC Lebanon, PA; and several satellite outpatient clinics. In addition, there are important major construction projects included within VHA’s overall major medical construction priority list. Some of these projects include: VAMC Milwaukee, WI -- Ambulatory Care Addition; Hines, IL -- Outpatient clinic improvements; Atlanta, GA -- Modernize patient wards; West Haven, CT -- medical/surgical/neurology ward renovations; Mufreesboro, TN -- Psychiatric patient privacy modernization; Portland, OR -- Vancouver campus improvements; Buffalo, NY -- Infrastructure improvements; and Fargo, ND -- Infrastructure improvements. Combined these projects total approximately $225 million.

Minor Construction

A total of $141 million was requested in the President's budget request for the Minor Construction program. This request includes $123 million for VHA projects. Of this amount, $68.9 million is targeted for the outpatient care and support category, and $32.5 million is for inpatient care and support. This is intended to allow VA to continue its commitment to provide primary and preventive care as well as improve aspects of its patient environment. A total of $14 million is included for the National Cemetery System; $2.4 million is for the Veterans Benefits Administration and $1.6 million is for Staff Office and Emergency projects.

The Administration's request for minor construction initiatives represents a decrease of $34 million in current funding without any logical justification for the reduction. The American Legion recommended a minor construction funding level of $200 million for FY 1999. A recent Price Waterhouse study indicates that VA is not adequately keeping pace with its facility maintenance program.

VHA faces critical decisions regarding the management of its physical plant inventory. Hospitals account for over 40 percent of U.S. health care expenditures. Given the mandate to operate within a straight line budget, coupled with an emphasis on changing the modes of health care delivery , the use and capacity needs of the traditional hospital system are under scrutiny. VISNs, as they face an inevitable budget pinch, will be forced to look at the overhead costs of their medical care facilities. Examples of this include the Chicago area where the current hospital system is under review, and the Long Beach project that will consolidate services so that an old, costly building can be razed. Attempts to sell "excess" capacity, to use the existing space in new entrepreneurial ways, or reduce existing facilities in the form of mission changes, must be carefully examined on a case by case basis.

Management of VHA's construction program may be more challenging as a result of a Reduction in Force at the Office of Facilities Management. Again, faced with competing needs and limited resources, VHA made the decision to substantially reduce an already downsized OFM because of other, higher priorities. Arguably, aspects of OFM activity can be managed in the field. However, there has been a clear loss of expertise and experience at headquarters and their ability to meet their mission as well as the ability of the field to absorb new responsibility warrants close monitoring.

State Veterans Homes are relied upon to absorb a greater share of the needs of the aging veteran population. More and more VA facilities are closing or downsizing long-term care beds and using community-based programs to meet existing requirements. Using this approach, VHA is still not adequately meeting the long-term care needs of the veterans’ community.

During the past three years, VA "Category One" state home grant requests, in which states commit 35 percent matching funds, have grown from 40 projects and $170 million to 62 projects and nearly $200 million. The total for all projects, including "Category One" projects, increased to approximately $280 million. During this period, VA resources were only able to fund about one-half of the proposed projects.

For FY 1999, the Administration proposed state home grants funding of $37 million. The Senate Appropriations Committee recommended $90 million and the House Appropriations Committee recommended $101 million for state home grants funding for FY 1999. Whatever the final outcome of the conference committee report for FY 1999, there will continue to be a large unfunded projects list carried over to FY 2000.

The $92 million projected for the National Cemetery System (NCS) in FY 1999 will not fully meet existing and planned requirements. According to NCS officials, the projected funding level for FY 1999 is approximately $3 million short of existing requirements.

The NCS has experienced substantial new growth over the past several years, with two new cemeteries opened since 1992 and two new cemeteries (Chicago, IL; Dallas, TX) expected to be opened in FY 1999. Additionally, two new national cemeteries (Albany, NY; Cleveland, OH) are projected to open in FY 2000.

The NCS has added new acreage and substantial new gravesites over the past several years. New interments annually add thousands of gravesites that must be cared for in perpetuity, and the NCS has not been adequately funded for current workload increases. Also, annual maintenance requirements and the appearance of the 115 national cemeteries must be appropriately maintained.

Simply providing annual pay raises and keeping pace with annual inflation requires new funding of approximately $3 million per year.

The American Legion’s position on the National Cemetery System is that it is the responsibility of the federal government to ensure that veterans and their eligible dependents have reasonable access to burial. In this regard, VA must continue to develop viable strategic plans so that all veterans have a realistic option to be buried in a national cemetery. It is inconceivable that the federal government continues to resist providing the necessary funds so that existing cemeteries can be maintained in the proper manner, and that veterans will have reasonable access to burial in a national cemetery.

Messrs. Chairmen, there are a number of issues of concern with respect to veterans benefits and the operations of VBA which we would like to discuss.

Compensation and Pension Claims

VBA administers the payment of over $19 billion in statutory benefits and services to disabled veterans, their dependents, and survivors through the compensation, pension, education, vocational rehabilitation, insurance, loan guaranty, and burial programs. If these mandated benefits and services are to achieve the purposes which Congress intended, it is essential that VBA handle all in a correct and timely manner. To carry out their mission, VBA must have adequate personnel and computer resources, a sound and effective business plan, and competent management. Most of all, VBA must have strong leadership to successfully carry out its ambitious plans to improve the level and quality of service to veterans. Congress also has the responsibility of providing continued oversight through the Veterans Affairs Committees.

Messrs. Chairmen, planning for VA’s FY 2000 budget request is already well underway. The American Legion believes that without increased budgetary support, VBA’s efforts to change the current system and provide improved service to veterans and their families will be wasted. In particular, we believe there is a demonstrated need for additional staffing in the regional offices. Time and time again, staffing has been cut. As a result of the loss of experienced adjudication personnel and the consolidation of the adjudication and veterans services divisions, a substantial part of the workforce is now made up of inexperienced trainees. It is now to the point where there are far too few workers to properly handle the current workload, let alone, the increased workload projected for next year. Congress should not let this situation continue.

We recommend an increase of $6.6 million in VBA--GOE appropriations for FY 2000 in order to provide an 150 additional FTE in the Compensation and Pension Service. Additionally, Congress must fully fund any cost-of-living increase for all VBA employees, and provide adequate funding for all other additional costs. The American Legion recommends VBA--GOE funding in the amount of $877 million for FY 2000.

The American Legion continues to be supportive of VBA’s service improvement plans and initiatives. These envision evolutionary, as well as revolutionary, changes in the way claims are processed and adjudicated. The emphasis and focus will be on improvements in customer service, with expanded user and stakeholder access to the system, better information, realignment of field activities, continued implementation of Business Process Reengineering (BPR), along with more clearly identified resource needs including staffing and information technology. VBA’s report, "Roadmap to Excellence" released earlier this year, clearly sets forth a vision of change for the future. It reflects not only VBA’s new strategic planning approach, but acknowledgment of the need to adapt to constrained future operating budgets and an increasingly demanding legal and technological environment.

As part of their effort to better assess and evaluate the impact of these wide-ranging changes on customer satisfaction, VBA is conducting periodic stakeholder surveys. This will help to determine where further improvements or refinements may be necessary. The initial surveys indicate a clear lack of customer satisfaction with many regional office decisions, confusing correspondence, lack of information, and delays. Claimant’s dissatisfaction with the quality of regional office service and decision making continues to be reflected in a substantial number of Notices of Disagreement (NOD) filed each year. In FY 1997, there were over 74,700 NODs. In FY 1998, there are expected over 66,600 NODs.

These same problems were highlighted in the findings and recommendations of the reports of the Veterans Claims Adjudication Commission and the National Academy of Public Administration.

In addition to surveying its external stakeholders, VBA last year conducted a survey of 8,860 employees. Some of the reported findings are quite disturbing. They highlight a strong undercurrent of worker dissatisfaction with and a lack of confidence in the leadership and management being provided as well as concern about the lack of training and career development. Of those surveyed; only thirty-one percent felt that employees were rewarded for providing high quality products and service to customers; forty-five percent agreed that employees receive the training they need to perform their jobs; forty-one percent felt they received training and guidance in providing high quality customer service; forty-three percent believed that managers demonstrate that quality is important in their day-to-day activities; only thirty percent agreed that the amount of work was reasonable, allowing employees to provide high quality products and services. Significantly, only twenty-four percent felt that red tape and unnecessary rules and regulations do not interfere with the completion of work in a timely manner; forty-five percent agreed that a spirit of cooperation and teamwork exists; twenty-seven percent believed that quality assurance systems focus on prevention of problems rather than on the correction of problems; and twenty-nine percent felt that there is trust between employees and their supervisors and team leaders. It is unclear if initiatives described in the "Roadmap to Excellence" plan will effectively address these issues. The American Legion urges these committees to closely monitor VBA’s follow-up on the organizational and management problems underlying these rather negative survey responses.

Messrs. Chairmen, VBA has publicly acknowledged that there are serious core problems in its claims adjudication procedures as well as deficiencies in its employee training program which it intends to address. We commend the Under Secretary for Benefits and his staff for their candidness and commitment to improving the system.

It is clear that VBA must implement quality improvement changes. However, the problem both for VBA management and workers is that claims adjudication is a very complex and dynamic process. It is not like a production line which can be shut down, changes quickly made, and then restarted. At any moment, there are tens of thousands of cases at various stages of development. For years, the overriding priority for VBA has been increased production in order to try and cope with the rising tide of incoming claims which now numbers about 437,000 and more than 50,000 remanded appeals. The day-to-day priority of regional office managers, adjudicators, and support personnel continues to be production rather than "doing it right the first time!"

The system still lacks management accountability for the quality of work performed which contributes to the recycling of cases through the regional offices to the Board of Veterans Appeals and back. VBA has also yet to implement a work measurement system to provide accurate and reliable data on how long it really takes to process a claim from start to finish, or the amount and location of personnel and other resources needed.

The system is slow to change, but VBA officials are now acknowledging that faster action and more cases handled is not necessarily better service. Relying on fast action as a benchmark oftentimes generates additional workload in the form of unnecessary letters and phone calls from the claimant, hearing requests, and thousands of new NODs, and contributes to a combined overturn rate by the Board of Veterans Appeals of fifty-nine percent. This wastes everyone’s time and squanders VA’s critically short resources. ‘Getting it right the first time’ would significantly improve the efficiently of staff resources.

Veterans seeking benefits from VA are entitled to a decision on their claim that is fair, proper, and timely. The task of reforming a benefit administration system which has operated without judicial accountability up until 1988 is proving to be a formidable challenge.

The recent report on the Systematic Technical Accuracy Review (STAR) program found a thirty-six percent adjudication error rate and highlights the factors which contribute directly to continued poor quality work. The report confirms the need for near-term and long-term remedial actions and quality improvement plans by VBA management. This includes an ability to identify the resources necessary to handle the amount of work coming into the system now and in the future in an accurate and timely manner, to provide sufficient staff training, and to develop and implement appropriate information technology projects and programs.

Messrs. Chairmen, The American Legion has also been concerned by a lack of progress and associated problems in VBA’s long-term plans for the modernization of its computer and information technology systems. Within the last several years, reports by the Government Accounting Office (GAO) and others have been highly critical of their efforts. One of the key components in their modernization plan is the development of the VETSNET project. VETSNET is basically intended to replace the existing antiquated benefits delivery network with new hardware and software to support more rapid, accurate management decisions and claims processing. The goal is to provide better service and make more effective use of VBA resources. The American Legion has supported this goal. VBA has implemented a number of related system improvements to date. However, VBA’s ability to successfully implement the VETSNET program remains open to serious question, according to the findings, conclusions, and recommendations of the June 10, 1998, "Risk Analysis Report" -- prepared for VBA by SRA International, Inc.. The report provides a frank assessment of strengths as well as those weaknesses and risks which place this initiative in serious jeopardy. We believe Congress must closely monitor VBA’s response to these challenges in order ensure that VBA’s resources are not wasted and that veterans are well served.

Filipino Veterans Equity Act of 1996

The American Legion supports legislation to amend section 107, of title 38, United States Code. The recommneded revision would recognize Filipino WWII veterans as members of the active military service in the U.S. armed forces. Consequently, it would grant full benefits for such service, and provide appropriate funding, as required. Additionally, The American Legion requests similar legislation for Filipino WWII veterans who subsequently became naturalized United States citizens.

The American Legion urges Congress to enact legislation to grant the Filipino WWII veterans the benefits they earned and the justice they seek. It is wrong that these individuals, who helped to defend American interests in the western Pacific, are unable to obtain proper recognition and their legitimate benefits. History demands equal justice for these brave men.

Dependency and Indemnity Compensation (DIC)

Congress has at last removed the bar to reinstatement to DIC benefits for remarried spouses of veterans who died on active duty or as a result of a service-connected disability following the termination of the remarriage. This restriction was imposed by the Omnibus Budget Reconciliation Act of 1990 (OBRA 90) purely as a budget saving measure. This action will help eliminate many of the hardships and financial insecurity faced by this group of surviving spouses. It will also remove the disincentive by those surviving spouses currently in receipt of DIC who may wish to remarry, since they can return to the DIC roll if the remarriage terminates by reason of death or divorce. This may also result in some small reduction in actual benefit costs.

The American Legion is pleased that entitlement to this benefit has been restored. However, we are keenly disappointed that Congress felt this could only be achieved by taking away the entitlement to service-connected disability of those veterans suffering from illnesses or death related to their use of tobacco during military service.

Some DIC surviving spouses must face another type of financial problem. If they are without dependents and are a patient in a Medicaid covered nursing home, they are required to utilize all funds received from VA towards the cost of their nursing home care. This may leave them without or with very limited funds for personal needs and wants. In contrast, surviving spouses with no dependents who are in the same nursing home who are in receipt of VA death pension benefits are entitled to receive $90 monthly in pension benefits for personal wants and needs. No part of this $90 can be used to reduce the amount of Medicaid paid to the nursing home facility. The American Legion believes that DIC surviving spouses with no dependents in Medicaid covered nursing homes should be similarly allowed to receive and retain $90 of their DIC benefits on a monthly basis.

Tobacco-Related Claims

The fact that Congress chose to take away veterans’ rights and VA’s estimated budgetary savings to pay for the highway and transportation programs is deeply disturbing. Most Members of Congress were willing to put politics over principle in enacting this popular legislation. Such action, in the view of The American Legion, represents a fundamental breach of faith with America’s veterans. It represented a disavowal of any responsibility for the consequences of the federal government’s historic policy of promoting tobacco use by members of the nation’s armed forces. As a result, sick veterans have been told that they forfeited their rights to VA disability compensation and VA medical care, and their survivors to service-connected death benefits (DIC), because of their use of tobacco products in service. We believe this is a grave injustice.

In 1993, the General Counsel of the VA issued a precedential opinion which determined that the claim of service-connection for a tobacco-related disability or death was permissible under the law. In 1997, the VA General Counsel issued a second opinion setting forth the evidentiary criteria and procedures for adjudicating such claims. These parameters were consistent with the stringent legal and medical standards which apply to any other claim for service-connected disability. However, shortly afterward, VA released what we believe are vastly overstated estimates of VA benefit costs and workload associated with tobacco-related illness claims -- $ 15 billion over five years and 600,000 to 2 million claims. We continue to question the accuracy of these estimates based on the relatively small number of tobacco-related claims received in the period 1993 to June 9, 1998, and their disposition. Of the 9,393 adjudicated before June 10, 1998, a total of 315 compensation claims and 121 DIC claims were granted. Of the 9,393 cases 5,256 were denied (3,953 compensation claims and 1,303 DIC claims). Total pending cases are 3,701 (2,986 compensation claims and 715 DIC claims). Of the 49 tobacco claims received since June 9, 1998, seven compensation claims and one DIC claim were denied. Another 41 claims received after June 9, 1998, are pending (35 compensation claims and six DIC claims.

VA and the administration were successful in focusing attention on budget dollars, ignoring the fact that at least from the time of World War One through the late 1980’s, the Department of Defense (DOD) essentially promoted the use of tobacco by members of the Armed Forces. DOD continues to be the major distributor of tobacco products in the world through commissaries, post exchanges, ship stores, and other outlets. DOD has only recently established physical fitness policies to discourage tobacco use by active duty personnel and reservists. Many veterans whose use of tobacco started in service and continued after discharge or retirement were not fully informed or aware of the long-term potential health risks of nicotine addiction and tobacco use.

Recent revelations during ongoing litigation against the tobacco industry have shown that these companies have withheld scientific information about the dangers of nicotine addiction and lied to the public, the Courts, and the Congress. The federal government has profited immensely from a decades long pro-tobacco relationship and abetted the tobacco companies’ efforts to remain immune from liability. Veterans who now become ill or die from a tobacco-related illness are being unfairly penalized for the sake of politics and budgetary expediency. The American Legion is committed to righting the injustice which has been done to them and their families and survivors. We hope that upon further consideration and reflection, Congress will recognize its responsibility and restore this most valuable right and the funds necessary to pay compensation, DIC, and medical care costs.

As with other types of health hazards, the federal government has a responsibility to pursue a comprehensive settlement with the tobacco companies which will address the issue of VA’s long-term costs for disability compensation and medical care. We can envision a mechanism under which funds from such a settlement would be made available on an ongoing basis to VA to cover the added costs of medical care and compensation for disability and death related to in-service tobacco use. Alternatively, there could be a separate veterans’ compensation program established and administered by another Federal agency, similar to the Radiation Compensation Act program under the Department of Justice.

BOARD OF VETERANS APPEALS (BVA)

Over the last several years, Congress authorized an increase in the number of Board members, additional staffing, and increased salaries as part of a concerted effort to reduce the amount of time a veteran has to wait for a decision on his or her appeal. The American Legion supported these initiatives. This has, in fact, enabled the Board to dramatically reduce the backlog of cases physically at the Board and its response time from 334 days in 1997 to less than 264 days currently. This good news is offset, unfortunately, by the fact that it is still taking the regional offices almost three years to develop an appeal and send it to the BVA.

The American Legion remains concerned by the recycling of cases through the claims adjudication and appeals process. When a case is certified by the regional office and sent to the Board, it is supposed to be ready for a final decision, i.e., either allow or deny the claim. However, over forty-five percent must be remanded by the Board back to the regional office for additional development and readjudciation. After all this waiting, thousand of appellants, essentially find themselves back were they were in 1995 or 1996. Such delays are common and impose severe personal and financial hardship on many veterans and their families. It is, therefore, little wonder that veterans are disappointed, disillusioned, frustrated, and angry with VA, and the current adjudication process. Of equal concern is the waste of government resources resulting in incomplete development and poor quality decisionmaking.

Despite the Board’s ongoing efforts to improve its quality assurance program, fundamental quality problems persist. Only about twelve percent of its decisions are appealed to the Court of Veterans Appeals and of those, the Court has granted the benefit in only a handful of cases. The Board should draw no comfort from these statistics, given the upward rather than downward trend of the Court’s remand rate. In 1996 it was sixty-six percent and in 1997, it was sixty-seven percent. Moreover, the precedents established in this stream of precedent setting remands continue to have a profound affect on the workload and resource needs of the BVA and the regional offices. It highlights the fact that VBA and BVA management policies and priorities have not been fully responsive to the demands of judicial review. We believe it may be too early to see the results of a recent Customer Satisfaction quality improvement and quality assurance initiative in the propriety of the Board’s decisions.

VETERANS EDUCATION BENEFITS

The American Legion firmly believes that, outside of combat, the transition from the military lifestyle into the civilian workforce can be among the most difficult challenges veterans will face during their lifetime. However, recently separated veterans are most likely to need assistance in making decisions about employment and education, because most military occupational skills are not directly transferable to the civilian workplace. The Montgomery GI Bill (MGIB) was enacted in 1987 to assist veterans in making this transition. It is also used by the armed forces as an important recruitment and retention incentive.

However, in recent years, we have become deeply concerned by the increasing disparity between benefit levels and the actual cost of higher education. In contrast to the GI Bill program that ended with the Vietnam Era (the payment to veterans with no financial contribution required covered between 90 to 100 percent of college costs), MGIB payments of $480 per month cover only a little more than half the cost of college. In addition MGIB participants must make a $1,200 generally non-refundable contribution while on active duty. Clearly, MGIB education benefits make military service with its experiences and hazards less attractive to young Americans. This along with the continued downsizing of the active duty, reserves, and National Guard, make many seriously question the value of military service, especially since so many other opportunities now exist with similar benefits with relatively little or no personal sacrifice.

Messrs. Chairmen, for years, The American Legion has appeared before your committees advocating increased benefits for MGIB participants as well as other program improvements. The response was always that budget constraints prevented these long-overdue changes. When the President released his FY 1999 budget request for VA, we were momentarily pleased that it included a proposed a twenty-percent increase in MGIB benefits. However, The American Legion was frankly shocked and outraged that this much needed increase was to be financed by taking away the rights and benefits from veterans who developed a tobacco-related disease traceable to their use of tobacco products during military service. The American Legion could not support penalizing one group of veterans to grant additional benefits for another group of equally deserving veterans. For this reason, we vigorously opposed the transportation legislation which essentially accomplished the President’s budget initiative of using most of the $15 billion in so-called budget savings resulting from a bar to future tobacco-related disability claims for non-VA purposes. We believe this sets a dangerous precedent for future budgetary decisions on cost-of-living adjustments in this and other veterans’ benefit programs.

The American Legion proposes:

• Comparable benefits for honorably discharged veterans and serving members of the armed forces, reserves and National Guard.
• Health care, child care, and all other benefits granted to individuals eligible for National Service Plan benefits should be available to veterans and serving members of the armed forces, reserves, and National Guard.
• Annual cost-of-living adjustment (COLA) in education assistance benefits.
• Tax exemptions for MGIB payments to veterans.
• Continuing the requirement for out-of-pocket contributions before service-members are eligible for the program.
• Expanding the time that service members can make monthly contributions toward educational benefits from the current one year to four years.
• Using education assistance benefits to pay for education debts incurred before an individual entered service.
• Maintaining the current 1:12 contribution--payback ratio.
• Provide that if, after ten years, a veteran decides not to access the MGIB fund, he or she would be able to receive the amount contributed into the fund, with no accrued interest.

Messrs. Chairmen, the Veterans Transition Service Commission will soon be releasing its findings and recommendations. We are hopeful their report will address the special educational needs of veterans as well individuals still on active duty, in the reserves, and National Guard.

We strongly believe Congress has a responsibility to maintain an up-to-date, viable, and attractive GI Bill as an integral part of the armed forces recruiting and retention programs and to promote higher education for America’s military veterans. Since World War II, the GI Bill has proven to be a wise investment by the federal government in the nation’s future.

VETERANS EMPLOYMENT AND TRAINING PROGRAMS

Messrs. Chairmen, as you and the Members of these committees know, the world of work is changing very quickly, and so is the way we look for jobs. The current Federal labor exchange was created during the depths of a world-wide depression to quickly address the national problem of overwhelming unemployment. With enactment of Chapter 41 of Title 38, United States Code, veterans were given the right to priority of service in all state Job Service offices. What that means is that veterans, and particularly those with service-connected disabilities, are to receive employment services at levels that exceed those of non-veterans.

In 1994 the Department of Labor (DOL) launched the One-Stop Career Center initiative. The purpose of that initiative was to unify the patchwork of categorical work force development programs into a single, coordinated system.

Under the One-Stop system, states receive block grants from DOL to set up pilot One-Stop programs that are tailored to the employment needs of each state’s residents. As a result, One-Stop Career Centers vary considerably from state to state. According to one DOL official, 33 states have been awarded grants to implement their own programs. According to that same source, when the One-Stop Career Centers in those 33 states become fully operational, they will have the capacity to serve up to 80 percent of the nation’s civilian labor force.

Because One-Stop Career Centers are so new, The American Legion has not formed an opinion about whether or not they are meeting the employment needs of their veteran clients. The Legion is, however, concerned that the mechanisms for identifying veterans vary greatly from state to state. Because they are not identified at intake, their employment assistance needs may not be adequately evaluated and their eligibility for programs such as vocational rehabilitation, unemployment rights or job training may not be properly identified and acted upon.

The American Legion strongly opposes federal funding for any employment service provider that does not furnish maximum priority of service to veterans. The American Legion also believes that Congress must require the One-Stop Career Centers to work with VETS to ensure that they meet or exceed the services for veterans that are set forth in Chapters 41, 42 and 43 of Title 38, United States Code.

The American Legion is both optimistic and concerned about current trends within the programs and services operated by VA. The American Legion recognizes the complexities of budgetary laws and the constraints on providing appropriation increases with balanced budgetary offsets. There could be no better use of a federal budget surplus than to restore fiscal health to the Department of Veterans Affairs.

VHA has made major strides in reforming its system of health care delivery over the past few years. Congress demanded that VA take responsibility in assuring that its resources are utilized in an efficient and expedient manner. According to all indications, that is occurring. However, VHA is now coming to the realization that there are no further significant savings to be realized from the recent VISN reorganization. Any further savings can only be obtained by damaging the quality of existing programs and services. Even though many predict that a declining veterans population will result in less demand and cost to the system, that forecast is not yet proven to be correct. For the foreseeable future, VA must continue to provide a full array of medical programs and services, especially with regard to long-term care. In the twenty-first century, a meaningful VA and private sector partnership is required.

The American Legion proposes that the 106th Congress make further reform and improvement of VA’s health care and benefit delivery system a highest priority. The veterans’ community expects the federal government to live up to its promises and obligations to the nation’s defenders. A demonstration program of the concepts contained in the GI Bill of Health is a good place to begin. The American Legion believes and VA acknowledges that new revenue streams are necessary to make up the annual shortfall in VA health care funding. Instead of simply asking for new appropriations, The American Legion asks Congress to provide VA the proper mechanisms and incentives to better help itself.

VBA must focus greater attention on the quality of its operations and less on increased production. The American Legion fully supports the objectives of the "Roadmap to Excellence" as a means to restore veterans’ confidence in the ability of VBA to provide quality service.

The American Legion urges the Congress to use a common-sense approach in considering the injustice inflicted upon veterans regarding the decision to repeal the right to seek tobacco-related compensation claims and subsequent access to priority medical care. The American Legion believes the 1997 VA General Counsel opinion setting forth the evidentiary criteria and procedures for adjudicating tobacco-claims is fair and must be reaffirmed.

Messrs. Chairmen and Members of these Committees, The American Legion urges Congress to develop a GI Bill of Rights for the 21st Century. This covenant should focus on health care, compensation and benefit claims, the home loan guaranty program, Small Business Administration loans, education benefits, transition assistance programs, burial benefits, and other equally important matters. For past generations of veterans, as well as for current and future members of the Armed Forces, the Congress could make no greater investment in America than to enact an equivalent version of a GI Bill of Rights for the 21st Century.

To effectively carry out its mission, the Department of Veterans Affairs must have adequate, committed and well-trained personnel, sufficient resources, a sound and effective business plan, and competent management. Ultimately, the Congress must ensure that the programs authorized by law are meeting the diverse needs of veterans, their dependents and survivors.

Messrs. Chairmen and Members of these Committees, let us work together to affirm our commitment to all veterans. Together we can correct the problems that veterans, their dependents and survivors encounter on a daily basis. The time to courageously begin that process is now.

Messrs. Chairmen, that concludes my statement.

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