Chairman Michaud, Ranking Member Brown, and distinguished members of the Subcommittee.  Thank you for this opportunity to present the President’s Fiscal Year 2011 Budget and Fiscal Year 2012 Advance Appropriations request for the Veterans Health Administration.  Our budget provides the resources necessary to continue our aggressive pursuit of the President’s two overarching goals for the Department—to transform VA into a 21st Century organization and to ensure that we provide the highest quality health care to our Veterans.

We will remain focused on producing the outcomes Veterans expect and have earned through their service to our country.  To support VA’s efforts, the President’s budget provides $125 billion in 2011—almost $60.3 billion in discretionary resources and nearly $64.7 billion in mandatory funding.  Our discretionary budget request represents an increase of $4.3 billion, or 7.6 percent, over the 2010 enacted level.

Delivering World-Class Medical Care

The Budget provides $51.5 billion for medical care in 2011, an increase of $4 billion, or 8.5 percent, over the 2010 level.  This level will allow us to continue providing timely, high-quality care to all enrolled veterans.  Our total medical care level is comprised of funding for medical services ($37.1 billion), medical support and compliance ($5.3 billion), medical facilities ($5.7 billion), and resources from medical care collections ($3.4 billion).  In addition to reducing the number of homeless Veterans and expanding access to mental health care, our 2011 budget will also achieve numerous other outcomes that improve Veterans’ quality of life, including:

• Providing extended care and rural health services in clinically appropriate settings;
• Expanding the use of home telehealth;
• Enhancing access to health care services by offering enrollment to more Priority Group 8 Veterans and activating new facilities; and,
• Meeting the medical needs of women Veterans.

During 2011, we expect to treat nearly 6.1 million unique patients, a 2.9 percent increase over 2010.  Among this total are over 439,000 Veterans who served in Operation Enduring Freedom and Operation Iraqi Freedom, an increase of almost 57,000 (or 14.8 percent) above the number of Veterans from these two campaigns that we anticipate will come to VA for health care in 2010.

In 2011, the budget provides $2.6 billion to meet the health care needs of Veterans who served in Iraq and Afghanistan.  This is an increase of $597 million (or 30.2 percent) over our medical resource requirements to care for these Veterans in 2010.  This increase also reflects the impact of the recent decision to increase troop size in Afghanistan.  The treatment of this newest generation of Veterans has allowed us to focus on, and improve treatment for, PTSD as well as TBI, including new programs to reach Veterans at the earliest stages of these conditions. 

The FY 2011 Budget also includes funding for new patients resulting from the recent decision to add Parkinson’s disease, ischemic heart disease, and B-cell leukemias to the list of presumptive conditions for Veterans with service in Vietnam. 

Extended Care and Rural Health

VA’s budget for 2011 contains $6.8 billion for long-term care, an increase of 858.8 million (or 14.4 percent) over the 2010 level.  In addition, $1.5 billion is included for non-institutional long-term care, an increase of $276 million (or 22.9 percent) over 2010.  By enhancing Veterans’ access to non-institutional long-term care, VA can provide extended care services to Veterans in a more clinically appropriate setting, closer to where they live, and in the comfort and familiar settings of their homes.

VA’s 2011 budget also includes $250 million to continue strengthening access to health care for 3.2 million enrolled Veterans living in rural and highly rural areas through a variety of avenues.  These include new rural health outreach and delivery initiatives and expanded use of home-based primary care, mental health, and telehealth services.  VA intends to expand use of cutting edge telehealth technology to broaden access to care while at the same time improve the quality of our health care services.

Home Telehealth

Our increasing reliance on non-institutional long-term care includes an  investment in 2011 of $163 million in home telehealth.  Taking greater advantage of the latest technological advancements in health care delivery will allow us to more closely monitor the health status of Veterans and will greatly improve access to care for Veterans in rural and highly rural areas.  Telehealth will place specialized health care professionals in direct contact with patients using modern IT tools.  VA’s home telehealth program cares for 35,000 patients and is the largest of its kind in the world.  A recent study found patients enrolled in home telehealth programs experienced a 25 percent reduction in the average number of days hospitalized and a 19 percent reduction in hospitalizations.  Telehealth and telemedicine improve health care by increasing access, eliminating travel, reducing costs, and producing better patient outcomes.

Expanding Access to Health Care

In 2009, VA opened enrollment to Priority 8 Veterans whose incomes exceed last year’s geographic and VA means-test thresholds by no more than 10 percent.  Our most recent estimate is that 193,000 more Veterans will enroll for care by the end of 2010 due to this policy change.

In 2011, VA will further expand health care eligibility for Priority 8 Veterans to those whose incomes exceed the geographic and VA means-test thresholds by no more than 15 percent compared to the levels in effect prior to expanding enrollment in 2009.  This additional expansion of eligibility for care will result in an estimated 99,000 more enrollees in 2011 alone, bringing the total number of new enrollees from 2009 to the end of 2011 to 292,000.

Meeting the Medical Needs of Women Veterans

The 2011 budget provides $217.6 million to meet the gender-specific health care needs of women Veterans, an increase of $18.6 million (or 9.4 percent) over the 2010 level.  The delivery of enhanced primary care for women Veterans remains one of the Department’s top priorities.  The number of women Veterans is growing rapidly and women are increasingly reliant upon VA for their health care.

Our investment in health care for women Veterans will lead to higher quality of care, increased coordination of care, enhanced privacy and dignity, and a greater sense of security among our women patients.  We will accomplish this through expanding health care services provided in our Vet Centers, increasing training for our health care providers to advance their knowledge and understanding of women’s health issues, and implementing a peer call center and social networking site for women combat Veterans.  This call center will be open 24 hours a day, 7 days a week.

VA’s 2011 health care budget also focuses on two concerns that are of critical importance to our Veterans—easier access to benefits and services, and ending the downward spiral that results in Veterans’ homelessness. 

This budget provides the resources required to enhance access in our health care system.  We will expand access to health care through the activations of new or improved facilities, by expanding health care eligibility to more Veterans, and by making greater investments in telehealth.  We are also requesting a substantial investment for our homelessness programs as part of our plan to ultimately eliminate Veterans’ homelessness through an aggressive approach that includes housing, education, jobs, and health care.

VA will be successful in resolving these concerns by maintaining a clear focus on developing innovative business processes and delivery systems that will not only serve Veterans and their families for many years to come, but will also dramatically improve the efficiency of our operations by better controlling long-term costs.  By making appropriate investments today, we can ensure higher value and better outcomes for our Veterans.  The 2011 budget also supports many key investments in VA’s six high priority performance goals. I will address several of these goals related to health care now.

Eliminating Veteran Homelessness

Our nation’s Veterans experience higher than average rates of homelessness, depression, substance abuse, and suicides; many also suffer from joblessness.  On any given night, there are about 131,000 Veterans who live on the streets, representing every war and generation, including those who served in Iraq and Afghanistan.  VA's major homeless-specific programs constitute the largest integrated network of homeless treatment and assistance services in the country.  These programs provide a continuum of care for homeless Veterans, providing treatment, rehabilitation, and supportive services that assist homeless Veterans in addressing health, mental health and psychosocial issues.  VA also offers a full range of support necessary to end the cycle of homelessness by providing education, jobs, and health care, in addition to safe housing.  We will increase the number and variety of housing options available to homeless Veterans and those at risk of homelessness with permanent, transitional, contracted, community-operated, HUD-VASH provided, and VA-operated housing.

Homelessness is primarily a health care issue, heavily burdened with depression and substance abuse.  VA’s budget includes $4.2 billion in 2011 to prevent and reduce homelessness among Veterans—over $3.4 billion for core medical services and $799 million for specific homeless programs and expanded medical programs.  Our budget includes an additional investment of $294 million in programs and new initiatives to reduce the cycle of homelessness, which is almost 55 percent higher than the resources provided for homelessness programs in 2010.

VA’s health care costs for homeless Veterans can drop in the future as the Department emphasizes education, jobs, and prevention and treatment programs that can result in greater residential stability, gainful employment, and improved health status.

Improving Mental Health Care

The 2011 budget continues the Department’s keen focus on improving the quality, access, and value of mental health care provided to Veterans.  VA’s budget provides over $5.2 billion for mental health, an increase of $410 million, or 8.5 percent, over the 2010 enacted level.  We will expand inpatient, residential, and outpatient mental health programs with an emphasis on integrating mental health services with primary and specialty care.

Post-traumatic stress disorder (PTSD) is the mental health condition most commonly associated with combat, and treating Veterans who suffer from this debilitating disorder is central to VA’s mission.  Screening for PTSD is the first and most essential step.  It is crucial that VA be proactive in identifying PTSD and intervening early in order to prevent chronic problems that could lead to more complex disorders and functional problems.

VA will also expand its screening program for other mental health conditions, most notably traumatic brain injury (TBI), depression, and substance use disorders.  We will enhance our suicide prevention advertising campaign to raise awareness among Veterans and their families of the services available to them.

More than one-fifth of the Veterans seen last year had a mental health diagnosis.  In order to address this challenge, VA has significantly invested in our mental health workforce, hiring more than 6,000 new workers since 2005. 

In October 2009, VA and DoD held a mental health summit with mental health experts from both departments, and representatives from Congress and more than 57 non-government organizations.  We convened the summit to discuss an innovative, wide-ranging public health model for enhancing mental health for returning service members, Veterans, and their families.  VA will use the results to devise new innovative strategies for improving the health and quality of life for Veterans suffering from mental health problems. 

Advance Appropriations for Medical Care in 2012

VA is requesting advance appropriations in 2012 of $50.6 billion for the three medical care appropriations to support the health care needs of 6.2 million patients.  The total is comprised of $39.6 billion for Medical Services, $5.5 billion for Medical Support and Compliance, and $5.4 billion for Medical Facilities.  In addition, $3.7 billion is estimated in medical care collections, resulting in a total resource level of $54.3 billion.  It does not include additional resources for any new initiatives that would begin in 2012. 

Our 2012 advance appropriations request is based largely on our actuarial model using 2008 data as the base year.  The request continues funding for programs that we will continue in 2012 but which are not accounted for in the actuarial model.  These initiatives address homelessness and expanded access to non-institutional long-term care and rural health care services through telehealth.  In addition, the 2012 advance appropriations request includes resources for several programs not captured by the actuarial model, including long-term care, the Civilian Health and Medical Program of the Department of Veterans Affairs, Vet Centers, and the state home per diem program.  Overall, the 2012 requested level, based on the information available at this point in time, is sufficient to enable us to provide timely and high-quality care for the estimated patient population.   We will continue to monitor cost and workload data throughout the year and, if needed, we will revise our request during the normal 2012 budget cycle.

After a cumulative increase of 26.4 percent in the medical care budget since 2009, we will be working to reduce the rate of increase in the cost of the provision of health care by focusing on areas such as better leveraging acquisitions and contracting, enhancing use of referral agreements, strengthening DoD/VA joint ventures, and expanding applications of medical technology (e.g. telehome health).

Investments in Medical Research

VA’s budget request for 2011 includes $590 million for medical and prosthetic research, an increase of $9 million over the 2010 level.  These research funds will help VA sustain its long track record of success in conducting research projects that lead to clinically useful interventions that improve the health and quality of life for Veterans as well as the general population.

This budget contains funds to continue our aggressive research program aimed at improving the lives of Veterans returning from service in Iraq and Afghanistan.  This focuses on prevention, treatment, and rehabilitation research, including TBI and polytrauma, burn injury research, pain research, and post-deployment mental health research.

Capital Infrastructure

VA must provide timely, high-quality health care in medical infrastructure which is, on average, over 60 years old.  In the 2011 budget, we are requesting $1.6 billion to invest in our major and minor construction programs to accomplish projects that are crucial to right sizing and modernizing VA’s health care infrastructure, providing greater access to benefits and services for more Veterans, closer to where they live, and adequately addressing patient safety and other critical facility deficiencies.

Major Construction

The 2011 budget request for VA major construction is $1.151 billion.  This includes funding for five medical facility projects in New Orleans, Louisiana; Denver, Colorado; Palo Alto and Alameda, California; and Omaha, Nebraska. 

VA’s major construction request also includes $24 million for resident engineers that support medical facility projects.  This represents a new source of funding for the resident engineer program, which was previously funded under General Operating Expenses. 

Minor Construction

The $467.7 million request for 2011 for minor construction is an integral component of our overall capital program.  In support of the medical care and medical research programs, minor construction funds permit VA to realign critical services; make seismic corrections; improve patient safety; enhance access to health care; increase capacity for dental care; enhance patient privacy; improve treatment of special emphasis programs; and expand our research capability.  Further, minor construction resources will be used to comply with energy efficiency and sustainability design requirements. 

Summary

Our job at VA is to serve Veterans by increasing their access to VA benefits and services, to provide them the highest quality of health care available, and to control costs to the best of our ability.  Doing so will make VA a model of good governance.  The resources provided in the 2011 President’s budget will permit us to fulfill our obligation to those who have bravely served our country.

The 298,000 employees of VA are committed to providing the quality of service needed to serve our Veterans and their families.  They are our most valuable resource.  VA is fortunate to have public servants that are not only creative thinkers, but also able to put good ideas into practice.  With such a workforce, and the continuing support of Congress, I am confident we can achieve our shared goal of accessible, high-quality and timely care and benefits for Veterans.