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Messrs. Chairmen and Members of the Subcommittees:

I am pleased to have the opportunity to present the views of the Disabled American Veterans (DAV) on health care sharing by the Department of Defense (DoD) and the Department of Veterans Affairs (VA). As an organization of more than one million service-connected disabled veterans, the DAV is especially concerned about maintaining an effective VA health care system to meet the unique medical care needs of our Nation’s veterans.

The preservation of the integrity of the VA health care system as a separate entity is of utmost importance to the DAV and our members. Our Nation’s disabled veterans deserve a system solely dedicated to addressing their health care needs. The quality of VA care is equivalent to, or better than, care in any private or public health care system. VA is well known for it’s specialized services¾ in prosthetics, blind rehabilitation, spinal cord injury care, traumatic brain injury, and post traumatic stress disorder.

We are pleased the Subcommittees are interested in improving coordination between DoD and VA to improve access for beneficiaries of both systems. DAV continues to support the sensible expansion of VA/DoD sharing agreements. We agree that DoD and VA must commit their respective departments to exploring new avenues for significantly improving health resources sharing and to building organizational cultures supportive of health resources sharing. We do not, however, believe that ongoing joint activities demonstrate that sharing should be extended to include a unified budget and management system. Complementary business systems can enhance services to beneficiaries of both systems, but this does not imply integration of the systems. The DAV is adamantly opposed to a merger of the two systems or any other proposal that would erode the integrity of the VA health care system as a separate entity. Veterans deserve a federal Department whose focus is solely upon providing them compassionate service earned through their special sacrifices on behalf of our Nation.

The DAV recognizes the advantages of VA/DoD sharing in the areas of purchasing pharmaceuticals, medical equipment, supplies, and certain support services as well as the need for improved information exchange between the two systems. We do not, however, believe that there are any savings to be gained by forcing patients to choose one system or the other, as recently proposed by the Administration. Nor do we see any need for a national initiative to force increased cross-system patient care. Many local arrangements work to improve access and convenience of veterans and DoD beneficiaries.

The DAV believes that, where local situations favor sharing, it should be encouraged, but a mandatory national approach is likely to work to the detriment of beneficiaries.

The Subcommittee on Health of the House Veterans’ Affairs Committee expressed its disappointment with VA and DoD for taking little advantage of opportunities to engage in collaborative joint ventures despite the statutory authority to do so. We agree that both agencies could improve their efforts with respect to sharing in an attempt to use Federal resources most efficiently and effectively. However, we have serious concerns about proposed fully integrated demonstration projects that call for unified staff, budget, and management systems or a new unified hybrid Federal health care facility.

We appreciate the Subcommittees’ interest in improving coordination between VA and DoD to improve access to health care for beneficiaries of both systems while achieving efficiencies for the taxpayer. Clearly, to accomplish this goal, we must address and eliminate identified cultural and organizational barriers that have limited VA and DoD facilities from developing or maintaining successful sharing agreements.

Initially, we believe the key to fostering a long-term commitment by the departments to build a more collaborative relationship lies in VA’s Under Secretary for Health and DoD’s Assistant Secretary for Health Affairs’ willingness to make sharing a priority. Secondly, the respective Secretaries of each agency must address, one by one, the underlying fundamental institutional barriers to sharing that each of the systems has identified. We look forward to the recommendations of the VA/DoD Executive and Health Benefits Council, set up to review current policies, regulations, management and billing procedures, and information technology systems. We are also eagerly awaiting the recommendations from the President’s Task Force To Improve Health Care Delivery For Our Nation’s Veterans. Hopefully, both of these groups will provide valuable insight on currently perceived problems associated with inter-department cooperation and sharing, along with sound proposals to address these problems.

VA and DoD Secretaries should be responsible for monitoring and evaluating each of their respective co-located facilities that have potential for sharing and reward facility directors that successfully negotiate sharing agreements. In regional areas where VA and DoD facilities are co-located, local managers should be strongly encouraged to develop joint working groups to explore possible sharing opportunities. Recommendations for overcoming cultural and institutional barriers should be submitted to facility directors for consideration. Strategic goals to initiate improved cooperation between the agencies should be developed. A "best practices" model could also be developed to give other facilities with sharing potential the advantage of positive outcomes relating to joint ventures. Both agencies should jointly develop strategic goals to accomplish compatible health information technology systems so that men and women separating from the military experience a seamless transition from active duty soldier to veteran. Oversight from the top down should continue throughout this initiative to ensure that meaningful action is being taken to overcome obstacles.

Clearly, scarce Federal health resources provided through tax dollars should be used effectively and efficiently in order to enhance access to high quality health care services for active servicemembers, veterans, retirees, and family members of active duty or retired servicemembers, as provided by law. Certainly we have a compelling moral duty to honor our pledges to them, and a responsibility to see that resources are used wisely to achieve this goal. We believe one key initiative is Medicare Subvention for VA Priority Group 7 users. Medicare-eligible veterans have been unfairly denied the choice of using their Medicare coverage to pay for VA care. We believe VA participation in this initiative will benefit veterans, taxpayers, and ultimately VA, as long as Medicare subvention dollars are a supplement to an adequate VA appropriation. Funds expected from Medicare are especially important to the financial health of the veterans’ health care system.

Medicare-eligible veterans have earned the right to use VA health care services. We strongly urge Congress to pass legislation that permits Priority Group 7 Medicare-eligible veterans the option of choosing VA health care and using their Medicare coverage. Citizens purchase Medicare coverage through payroll deductions and should have the right to use those benefits to receive care from the provider of their choice. Medicare subvention would give veterans who currently cannot use their Medicare coverage at VA facilities, but who need specialized care, the option of choosing the VA system and using their Medicare coverage. Additionally, VA believes it can deliver care to Medicare beneficiaries at a discounted rate, which would save money for the Medicare Trust Fund and stretch taxpayer dollars. VA health care costs less, at least 25% less, than private-sector providers billing at Medicare rates. The savings could be realized by reduced cost to patients, through low or no copayments, or passed on to taxpayers by setting subvention rates discounted from standard Centers for Medicare & Medicaid Services (CMS) rates, or by a combination.

The annual potential closure of enrollment for new Priority Group 7 veterans demonstrates that appropriations barely cover Priority Groups 1-6. Medicare Subvention would obviate the need to deny access to Priority Group 7 users. No veteran should be denied access to the veterans’ health care system. Veterans, even veterans like those in Priority Group 7, who are not poor, have the right to take advantage of VA health care. However, service-connected and poor veterans should not have to subsidize care for veterans who have public insurance coverage. Medicare subvention would allow Medicare-eligible Priority Group 7 veterans to become a source of funding rather than a drain on an already over-extended system. Additionally, a large number of Priority Group 7 veterans bring diversity to the case mix and lower average costs. Finally, this group comprises a body of users that could be directed to other Medicare providers outside the VA system in case VA is needed to fulfill its fourth mission as backup to the Department of Defense in time of war or domestic emergency.

While we support Medicare subvention, we would want Congress to ensure that service-connected disabled veterans would not be displaced or forced to wait even longer for necessary health care and that revenue generated from Medicare subvention will not be used to offset Federal appropriations. It does not make any sense to replace appropriated funds with Medicare funds. There is no benefit to VA, Medicare, or taxpayers if VA appropriations are offset by Medicare revenues.

The cost of care for this growing population of enrolled Priority Group 7 veterans exceeds medical care collection fund (MCCF) from these patients and their secondary insurers. The DAV, along with the Independent Budget (IB) group, has consistently opposed the offset of MCCF collections. We believe that it is the responsibility of the Federal government to fund the cost of veterans’ care; therefore, we do not include any cost projections for MCCF in the IB budget development. VA’s historical inability to meets its collection goals has eroded our confidence in VA estimates. We have urged the Administration and Congress to drop this budget gimmick and address the veterans’ medical care appropriations in a straightforward manner by providing a realistic budget fully funded by appropriations. We strongly believe monies collected through MCCF should be a supplement to, not a substitute for, appropriations. However, third-party collections from Medicare-eligible Priority Group 7 veterans do not cover the cost of their care, and since appropriations are not sufficient, these funds are redirected away from service-connected and poor veterans to subsidize the Medicare trust fund.

The assumption that subvention dollars should necessarily be offset by VA appropriation reductions is invalid because it is based on the incorrect belief that current appropriations are sufficient to provide services to service-connected, poor, and Priority Group 7 Medicare-eligible veterans. While VHA sets standards for quality and efficiency, veterans’ access to health care is constrained. Consistently inadequate appropriations have forced VA to ration care by lengthening waiting times. Last year appropriations were barley sufficient to cover the cost of care for Priority Groups 1-6. Appropriations over the last several years have been insufficient to provide services to service-connected, poor, and Priority Group 7 Medicare eligible-veterans. By VA estimates, there are approximately one million Priority Group 7 users with 50-65 percent of those Medicare eligible. Only 15 percent of Priority Group 7 Medicare-eligible users have billable Medigap insurance, leaving 85 percent where VA receives no insurance reimbursement. The average collections from Medigap insurance for Priority Group 7 Medicare-eligible veterans is estimated at only 12-13 percent of the possible total billable portion. Obviously, VA spends a significant amount of resources on providing health care services for Priority Group 7 Medicare-eligible veterans with little reimbursement. We strongly believe their health care costs should be covered by Medicare funds.

The director of CMS has stated that veterans’ care should be covered by VA appropriations and that subvention would represent a double payment by the government. This is a spurious argument; actually, the current situation represents "reverse subvention" with VA appropriations used to pay for care that has already been funded by contributions to the Medicare Trust Fund.

In closing, we ask the Subcommittees to consider the issue of entitlement to VA health care for core Priority groups 1-6. It is difficult to believe that health care for veterans, especially those veterans with combat or service-connected disabilities, is not an entitlement. Veterans’ health care is strictly discretionary, and the level of VA health care funding is judged in light of parochial congressional concerns or pork-barrel politics. This is no way to honor America’s obligation to the defenders of her freedoms.

Unfortunately, priority health care for our Nation’s service-connected disabled veterans has been eroded over the years due to insufficient health care funding. This has resulted in long delays in receiving health care, as well as unfunded mandates, which only heighten the expectations of veterans, but fail to allow VA to perform the mandated services.

The issue of entitlement is important to sharing agreements between VA and DoD because it would ensure that VA has adequate funding to pay for its beneficiaries’ care and the necessary staff, supplies, and equipment to provide that care. It would also provide needed stability in VA’s planning for the future. With so much uncertainty in the VA medical care budget due to funding shortfalls, it is questionable if VA would be able to make solid commitments when entering into joint ventures with DoD. Service-connected veterans and veterans for whom VA is mandated by law to provide care, the core Priority groups 1-6 should not have to fight year after year for access to timely health care. Likewise, VISN directors should not be forced to choose between meeting their fiscal responsibilities and providing sick and disabled veterans with the care they need. Each year, because of the uncertainty of the budget, local managers are required to make difficult decisions that impact directly on patient care and the availability and timeliness of services.

The enactment of TRICARE for Life set a precedent for entitlement to health care for military longevity retirees. We believe Congress did the right thing by enacting this legislation. Military retirees dedicated their careers to military service in defense of our nation and are deserving of this benefit. We ask, are veterans who became sick or disabled as a result of military service or other specially identified veterans in the core priority groups any less deserving of a similar health care entitlement?

We strongly believe veterans’ medical care funding for the core Priority Groups 1-6 should be an entitlement, rather than subject to annual appropriations. By making VA health care an entitlement, those veterans who choose VA health care would be ensured that annual spending levels would be sufficient to provide for their health care needs.

We thank the Subcommittees for holding this hearing today and providing DAV the opportunity to express our views on VA/DoD health care sharing.

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