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Funding the U.S. Department of Veterans Affairs of the Future.

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OCTOBER 3, 2007

SERIAL No. 110-49

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BOB FILNER, California, Chairman


VIC SNYDER, Arkansas
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
HENRY E. BROWN, JR., South Carolina
BRIAN P. BILBRAY, California





Malcom A. Shorter, Staff Director

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



October 3, 2007

Funding the U.S. Department of Veterans Affairs of the Future


Chairman Bob Filner
    Prepared statement of Chairman Filner
Hon. Steve Buyer, Ranking Republican Member, prepared statement of
Hon. Phil Hare
Hon. Cliff Stearns
Hon. Richard H. Baker
Hon. Stephanie Herseth Sandlin
    Prepared statement of Congresswoman Herseth Sandlin
Hon. Ciro D. Rodriguez
Hon. John Boozman
Hon. Harry E. Mitchell, prepared statement of
Hon. Jeff Miller, prepared statement of
Hon. Ginny Brown-Waite, prepared statement of


U.S. Department of Veterans Affairs, W. Paul Kearns III, FACHE, FHFMA, CPA, Chief Financial Officer, Veterans Health Administration
    Prepared statement of Mr. Kearns

Aaron, Henry J., Ph.D., Bruce and Virginia MacLaury Senior Fellow, Brookings Institution
    Prepared statement of Mr. Aaron
Center on Budget and Policy Priorities, Richard Kogan, Senior Fellow
    Prepared statement of Mr. Kogan
Partnership for Veterans Health Care Budget Reform, Joseph A. Violante, National Legislative Director, Disabled American Veterans
    Prepared statement of Mr. Violante


Post Hearing Questions and Responses for the Record:

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to Joseph Violante, National Legislative Director, Disabled American Veterans, letter dated October 18, 2007

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to Henry J. Aaron, Ph.D., Bruce and Virginia MacLaury Senior Fellow, Brookings Institution, letter dated October 18, 2007

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to Richard Kogan, Senior Fellow, Center on Budget and Policy Priorities, letter dated October 18, 2007


Wednesday, October 3, 2007
U. S. House of Representatives,
Committee on Veterans' Affairs,
Washington, DC.

The Committee met, pursuant to notice, at 10:02 a.m., in Room 334, Cannon House Office Building, Hon. Bob Filner [Chairman of the Committee] presiding.

Present:  Representatives Filner, Snyder, Michaud, Herseth Sandlin, Mitchell, Hall, Hare, Rodriguez, Donnelly, McNerney, Space, Walz, Buyer, Stearns, Moran, Baker, Brown of South Carolina, Miller, Boozman, Brown-Waite, Turner, and Bilirakis.


The CHAIRMAN.  Good morning.  This hearing of the Committee on Veterans' Affairs of the House of Representatives is called to order for a very important subject, funding the U.S. Department of Veterans Affairs (VA) for the future, how are we going to meet the incredible demands that are on the VA in terms of our funding mechanisms.  The issue of so-called mandatory funding, assured funding, is on the table. 

I am going to yield to Mr. Hare to make an opening statement or to have his opening statement because he has taken the leadership following his predecessor, former Member Lane Evans, on this issue.

I think there are two main reasons why we should do it.  Number one, it takes the politics out of providing healthcare to our veterans where the Executive and the Legislative Branches, Senate, and the House, Republicans, and Democrats pick numbers and keep accusing each other of not doing enough.  Let us get that out of the process.

And, second, we would not be in the position we are in today, on October 3rd, the third day of the fiscal year, and there is no fiscal year 2008 budget beyond the Continuing Resolution for the VA or any other agency.

I had hoped that we would fund the VA on time.  We owe it to our veterans to do that.  That has not been the case.  With mandatory funding, we would not be in this position.

Mr. Hare, thank you for your leadership.  Thank you for introducing the bill that brings us there.  And I would yield to you for your opening statement.

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


Mr. HARE.  Thank you, Mr. Chairman.  Thank you for your indulgence of being able to make this statement.

I am extremely pleased that the Committee is examining future funding of the VA and that so much discussion is focused on mandatory funding. 

With our continued presence in Iraq and Afghanistan, it has become obvious that a new generation of brave men and women are coming home and will require substantial healthcare through the VA for generations to come.

I am proud to have introduced H.R. 2514, the "Assured Funding for Veterans Healthcare Act," which currently has 87 cosponsors.  This is a legislative priority that I inherited from my good friend, predecessor, and former Ranking Member of this Committee, Congressman Lane Evans.

Simply put, this bill would require that funding for veterans' healthcare become mandatory rather than subjected to the discretionary appropriations battle every year.  With Congress being on average 105 days late in completing the funding bills, the Veterans Health Administration (VHA) is often stuck in a holding pattern, unable to plan, unable to provide care because it does not know how much money it will have to spend.

This must stop.  I do not believe there is a more pressing issue this Committee should focus on than assured funding for veterans' healthcare.

Need I remind all of us that the VA actually ran out of money the last two years suffering shortfalls of $1 billion in 2005 and $2 billion in 2006. 

Due to the passage of the "Veterans Healthcare Eligibility Reform Act of 1996," the VA enrolled patient population surged from 2.9 million in 1996 to 7.7 million in 2005, a 172 percent increase.

However, appropriated funding for VA medical care has barely increased over 50 percent from $16.6 billion in 1990 to $34 billion in 2007.  The VA has received on average only a five percent increase in appropriations over the last eight years.

However, VA's Under Secretary for Health testified that the VA requires at a minimum approximately a 14 percent increase annually just to maintain current services.

I am proud that this Congress passed a fiscal year 2008 budget that includes the largest increase in veterans' healthcare funding in the 77-year history of the VA.  However, we cannot rely on future Congresses to be as smart, which is why we need assured funding. 

We must all remember that while we are talking about dollars and cents, we are talking about people.  These are more than just numbers.  Funding shortfalls have real life or death consequences.  They can take away our ability to provide an injured soldier with a prosthetic leg or treat a Marine suffering from traumatic brain injury (TBI), people who have honorably and courageously fought for our freedom.

As Mr. Violante will mention in his written testimony, the demands being placed upon the VHA by the soldiers returning from Operation Iraqi Freedom/Operation Enduring Freedom (OIF/OEF) are, and will continue to be, enormous.  We must ensure that our troops receive the care they deserve and that this care will not be subject to an uncertain, unstable, and commonly delayed appropriations process.

Soldiers returning today are wounded in ways never seen before.  TBI, polytrauma, post traumatic stress disorder (PTSD), amputees are no longer exceptions but the reality.  Life-saving research, long-term care and planning and prosthetics development will be key components of the VA of the future and these goals and the demands of the VHA simply cannot be met by discretionary funding.

Mandatory funding, as proposed in H.R. 2514, will give the VHA the funds and, more importantly, the ability to better manage its assets and ensure adequate staffing.  It will provide assured care for our veterans, not just as much care as we can afford in a fiscal year. 

Allowing the VHA to know its budget, plan for the future, and spread costs out over numerous years will increase the efficiency and effectiveness of the VHA.

Critics question whether or not we can afford assured funding.  I ask them, can we afford not to?  Let me make something very clear.  When it comes to the brave men and women who risked their lives for our Nation, we should spare no expense.

The operation under which the VA has created a highly efficient, high-quality, state-of-the-art healthcare system would not be changed under my bill.  Eligibility requirements, enrollment management, budgetary oversight, and a benefits package would remain as enacted by Public Law 104-262.

Mandatory funding would assure the funding of those enrolled, create a mechanism to pay for the increased use of the system, guarantee care, and eliminate budgetary shortfalls in the VHA that leave veterans waiting for care. 

Never before has there been a more critical moment for Congress to act.  I urge this Committee to pass the "Assured Funding for Veterans Healthcare Act," and I want to commend the Chairman of this Committee for his support on this bill. 

Thank you, Mr. Chairman, for giving me the opportunity to do my opening statement.  Thank you.

The CHAIRMAN.  Thank you, Mr. Hare.  And without objection, my opening statement and all other Members of the Committee will be included in the record.

Mr. Buyer, you are recognized.

Mr. BUYER.  I ask that my opening statement be submitted for the record and yield back.

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

The CHAIRMAN.  I thank the Ranking Member.

Mr. STEARNS.  Mr. Chairman, as I understand, we can have opening statements?

The CHAIRMAN.  I was not planning on that, but if you would like to.

Mr. STEARNS.  Oh, sure.  I would not mind if that is possible.

The CHAIRMAN.  All right.  Mr. Stearns?

Mr. STEARNS.  Thank you, Mr. Chairman.

The CHAIRMAN.  You are so convincing.


Mr. STEARNS.  So convincing.  Obviously this is an important hearing.  This issue is not new.  It was brought in previous Congresses and it has support obviously in some Members of Congress.

We know that doing this will be a big change for us as a Veterans' Affairs Committee itself.  There is many that will argue that leaving the VA funding to the annual appropriation process results in this uncertainty and shortfall of funds and, therefore, as the gentleman indicated, the changing of the funding would be a mandatory funding to ensure that the access and quality of VA programs are assured.  I think we all want that.

But I do have some concerns with this proposal.  The underlying goal and ideal I support and I think it is something, as I mentioned, we can all agree upon.  I certainly consider the healthcare services for this dedicated population of Americans one of the most essential debts owed by this Nation.  We should and will ensure that all veterans who are in need of healthcare are taken care of.

But people will complain about the current system.  It is not perfect.  Well, obviously it is not perfect, but it is improving. 

Following the budget shortfalls in fiscal year 2005 and 2006, Congress simply passed supplemental funding to cover those affected areas.  In addition, the VA has implemented a new budget model that incorporates a risk-adjusted formula anticipating the changing healthcare needs as our veterans age.

I am pleased that in our work here in Congress, we have increased the VA budget appropriations by an average of eight percent each year from the year 2000 to 2006.

What I am concerned about the proposed solution, while well-intended, might have the opposite unintended effects.  As long as Congress has the opportunity to hear from veterans every year, every year, we have hearings on the budget, review circumstances, and consider these needs, then appropriate as needed based on this annual consideration.  We have great flexibility, my colleagues.

If we implement a formula to allow for mandatory funding as we are considering today, we lose that ability to periodically evaluate the needs that each one of us has in our district.  In a given year, Congress might wish to provide more for veterans than a static formula might allow.

And here is a very important point.  Being a new mandatory entitlement program, VA funding would become subject to PAYGO rules.  Moving the VA funding to a mandatory entitlement would make it compete against other entitlement programs such as Medicare, Medicaid, Social Security.  PAYGO rules would mandate that any increase in funds that we consider for the VA fine, offsetting costs in one of these other programs or offset by increasing taxes.

Therefore, I think, Mr. Chairman, it is important to have this hearing.  I think we should look at this seriously.  It is a complex issue.  But I look forward to our panel of witnesses today and the impact and assured funding that is necessary so that all the veterans can benefit.

And I thank you for your—

The CHAIRMAN.  Thank you, Mr. Stearns.

Mr. Rodriguez, any opening statement?

Mr. RODRIGUEZ.  No, thank you.  I will reserve my time.

The CHAIRMAN.  Mr. Brown?

Dr. Snyder?

Mr. SNYDER.  No, thank you.

The CHAIRMAN.  Okay.  Mr. Baker?


Mr. BAKER.  Mr. Chairman, I appreciate the expedited proceedings.  I just want to be very brief and make a couple of comments.

I think how we best meet veterans' needs going forward is certainly an appropriate subject of discussion.  Whatever resolution we reach is, I am sure, the best considered interest by this Committee as we all hope.

More troops are coming home every day and we all want all of them home as quickly as possible.  And the only certainty in this business is the need for veterans' services will continue to escalate, not deteriorate.

There is a bit of irony in this discussion, however, in that this Committee has done its work.  We passed out a very good bill.  In fact, the House floor passed our measure on June 15th by a 409 to two vote.  And this is really the notable achievement.  The Senate, the Senate has actually passed something.  And they passed a MilCon Appropriations bill 92 to one back in September.

Another notable bit.  This is one of the few subjects in which I have not heard the White House use the veto word.  The President would actually sign this bill.  So we have the House and Senate historically acting.  We have the White House not threatening a veto. 

The Senate has appointed conferees and, yet, in our search to find a sense of urgency to assist troops in future years, the House has yet to appoint the conferees on this critically important matter.  While we are all debating the right strategy in the Iraq War, this is one that is sitting right there teed up ready to go.

And, Mr. Chairman, I would hope the Committee would call on the leadership for whatever reason to insist on the appointment of conferees.  Let us get this work done.  Let us at least get this one bill done because of its vital importance to our vets.

And with that, I yield back and thanks for the courtesy of the statement.

Mr. BROWN OF SOUTH CAROLINA.  Mr. Chairman, if I might add on that same subject, I believe the numbers that make $37 billion a day we deprive in our veterans every day the President does not sign that bill.

Mr. BAKER.  The gentleman is correct.  And it is also the highest amount of assistance ever appropriated by the Congress for veterans' assistance in the VA history.  So this is a big deal.

Thank you.

The CHAIRMAN.  Thank you, Mr. Baker. 

In fact, I have done what you suggested to our leadership, urged that to happen.  And as I said in my opening remarks, I had hoped we would do that.  I would agree with you.

Mr. BAKER.  However we can bring focus to bear from our side, Mr. Chairman, I want to be of help.

The CHAIRMAN.  Thank you.

Mr. Space, any opening remarks?

Mr. SPACE.  No.

The CHAIRMAN.  Mr. Bilirakis?


The CHAIRMAN.  Thank you for growing some hair before you returned here.  It was not a pretty sight before.

Mr. Violante, thank you for being here.  I know it is unusual not to be surrounded by your comrades.  I hope you can handle this one alone.  You are speaking not only, of course, for the Disabled American Veterans for which you serve as National Legislative Director, but on behalf of the Partnership for Veterans Health Care Budget Reform. 

And because you represent that coalition, you will have ten minutes to present your views.  And your written statement will be made a part of the record.  Thank you for being here and thank you for your leadership on this.


Mr. VIOLANTE.  Thank you, Mr. Chairman and Members of the Committee.  Thank you for this opportunity to testify on the future of veterans' healthcare funding.

I am testifying on behalf of the Partnership, as you said, for Veterans Health Care Budget Reform made up of nine national veteran service organizations (VSOs).

First, I would like to begin by thanking you, Mr. Chairman, and all the Members of this Committee for holding this hearing. 

Fourteen years ago, the original Partnership for Health Care Reform urged Congress to address and reform the basic discretionary appropriations system for funding VA healthcare. 

Today we remain unified in this position.  We all agree that the VA healthcare system must be protected for millions of veterans who depend on it now as their only healthcare resources and will do so for many decades.

As we have done several times already this year, the Partnership would like to acknowledge and applaud the support of this Committee and the Members of the House who have voted to increase VA healthcare funding in recent years and, in particular, for this year's prospective increase of $6 billion.

But as has been noted, the new fiscal year, fiscal year 2008, has already begun and we have no appropriation for VA.  We are now in the third day of VA's functioning under a Continuing Resolution, a situation that has endured for 17 of the past 19 years.

Over the past five years, VA's appropriation has been late by an average of 105 days or three and a half months.  How late will it be this year?

Mr. Chairman, a lack of an appropriation means that none of the prospective increase for VA healthcare that you and your colleagues supported for fiscal year 2008 is actually helping veterans today.  None of VA's directors or department heads can use the prospective increase in funding to improve the delivery of healthcare to veterans today.  No new equipment can be procured.  No new personnel can be hired.  No services can be expanded.

Despite the fact that the prospective increase is supported or at least not opposed by both sides of the aisle, both Houses of Congress and both ends of Pennsylvania Avenue, we still have no appropriation.

In the past 19 years, we have had a Democratic President with a Republican Congress, a Republican President with a Democratic Congress, a Republican President with a Republican Congress, and a Democratic President with a Democratic Congress.  And only twice could they get the job done on time. Even at a time of war when obligations to America's veterans are clearer than ever, VA healthcare funding is still late.

Is there really any doubt that it is the system for funding VA healthcare that is broken?

Mr. Chairman, today's budget process itself has basically paralyzed VA officials from more properly managing, planning, and operating the VA system.  Not knowing when or what level of funding they would receive from year to year or how Congress would deal with policy proposals directly affecting the budget severely impairs their ability to recruit and retain staff, contract for services, procure equipment and supplies, and conduct planning and administrative matters across a wide path of necessary and even routine matters.

Congress can only fully solve this problem by enacting real reform that results in sufficiency, predictability, and timeliness of VA healthcare funding.  I want to repeat that again because it is important.  Sufficiency, predictability, and timeliness of VA healthcare funding.

In past Congresses, we have worked with both chambers to craft legislation that would solve this problem.  The current version of that bill is H.R. 2514, the "Assured Funding for Veterans Healthcare Act," introduced by the Honorable Phil Hare of Illinois and 77 original cosponsors including you, Mr. Chairman, and several Members of this Committee.  The bill now has 85 cosponsors and the Partnership's full endorsement.

Opponents of this reform have made a number of charges, specifically that it would create a new entitlement, that Congress would lose its oversight power, and that it would cost too much.  The Partnership rejects these skeptics. 

Shifting VA healthcare to a mandatory status would not create an individual entitlement for veterans nor would it change the current benefit package.  Many veterans today have private health insurance and would not seek VA care merely because of a change in the funding mechanism.  Congress would retain all oversight authority.  What the shift would do is remove politics from determining the budget for VA healthcare. 

Most importantly, the Partnership rejects the argument that it would cost too much.  Funding VA healthcare is a continuing cost of war and our national defense. 

At a Senate hearing in July on the same subject, Dr. Ewe Reinhardt, a distinguished Professor of Economics at Princeton University pointed out that the increase in VA healthcare over the past decade is less than that of private healthcare systems, Medicare, and the overall national average for healthcare.  Dr. Reinhardt made persuasive arguments for the proposition that the VA system can be sustained and is affordable and that it would be more efficient with funding through a mandatory rather than a discretionary system.

I commend this testimony and that of other witnesses to this Committee.

Mr. Chairman, our goal is to ensure sufficient funding is made available to provide healthcare services to veterans whom VA enrolls, no more, no less.  Today and in the future, there is so much at stake.  A young American servicemember wounded today, particularly one with severe injuries such as limb loss, blindness, or traumatic brain injury, must be able to rely on VA healthcare system for decades. 

The goal of the Partnership is for Congress to enact a long-term funding solution that guarantees all enrolled veterans will have a dependable VA system, not just today while the war is in the news, but far in the future when the headlines of these wars have faded from our national memory.

Mr. Chairman, Members of the Committee, the Partnership is looking to this Committee to move forward with legislation to create a mandatory and guaranteed funding system for VA healthcare to become effective in 2009. 

If the Committee chooses a different method than offered in H.R. 2514, the Partnership will study that proposal to determine whether it meets our three key standards for reform, sufficiency, timeliness, and predictability.  If that alternative measure meets our standards, the Partnership will support it with a great deal of enthusiasm and appreciation.  If it does not, we will tell you why.  The time for change is now.  We ask all of you to please stand up for veterans.

And, again, I know we are going to have testimony from other witnesses who are going to talk about this bill as an entitlement.  And, again, I could not disagree more strongly that it is not an individual entitlement.  It does not change the way in which VA provides care or to whom it provides care.  So I would ask the Members of this Committee to understand that fact.

Again, thank you for holding this crucial and long-awaited hearing.  I will be pleased to answer your questions.  Thank you.

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

The CHAIRMAN.  Thank you, Mr. Violante, and thank you for your long-time leadership on this.

Mr. Stearns had some objections.  One, I think, is not real, that is limiting this Committee or the Congress' flexibility.  Obviously we could do whatever we want in addition to any assured funding or if any needs arise, we could act and change any formula.  I do not think it in any way limits the flexibility.

The one thing he did mention that I thought we ought to think about is the effect of the PAYGO rules.  We are not in competition with other mandatory funding because all mandatory funding comes first. 

But in terms of any changes that may occur and offsets required, how would you answer Mr. Stearns' objection about the PAYGO situation?

Mr. VIOLANTE.  Well, my understanding is that PAYGO would be applicable, but Congress has a way of doing things that need to be done when they need to be done without following the rules that they have in place.

You know, we have enough money for a lot of programs.  We could certainly find the necessary money to support this change from a discretionary to a mandatory pot.

The CHAIRMAN.  Okay.  By the way, another thing that we need to consider as a Committee because the situation is moving rapidly, is that the President asked for a supplemental on the war totaling almost $200 billion.  That does not include the cost of the injuries produced by that war.  And I think we ought to demand that the supplemental for the war include a supplemental for the warrior, even if it is long term.  These costs obviously do not happen in the current fiscal year, but they are there.

And I think the President and this Administration is vastly understating the cost of the war by not including the long-term effects that the war produces, including injured veterans.  So I do hope we can move on this.  As you know, there are institutional objections.  But I would hope we would move on that.

I would call on Mr. Buyer for his five minutes.

Mr. BUYER.  Thank you.

A couple of things really jumped out at me when I read your statement.  One of them in particular when you mentioned the "Balanced Budget Act of 1997" and you blame the "Balanced Budget Act" on flatlining of budgets and, therefore, Congress created a system that put it into crisis.

What a warped dimension in which you define the world back then.  The reason I say that so strongly is I recall all this.  I recall back in 1997 that what we did is we took the third-party medical collections that were going to the Treasury and we said, no, you, the VA, get to keep them.  You do not recognize that point.

The other point we did is in the "Balanced Budget Act," we exempted the VA.  We exempted the VA in "Balanced Budget Act."  So do not blame the "Balanced Budget Act." 

And you do not even mention them, i.e., the Clinton Administration.  You do not do that at all.  Now, I compliment the Clinton Administration, in particular Ken Kizer who was there at the time, and you know this, restructuring the program. 

But when you do not do those kinds of things in your statement, it bothers me.  So I just want to bring that to your attention.

The other thing is that very cleverly, you bring up Gail Wilensky or the Co-Chair of her task force.  The reason I use cleverly is that you excerpted particular statements to make it appear as though that Presidential task force was in support of what you are advocating here today.

Well, I have her testimony.  So I go back to read her testimony on page 25.  This is a hearing of the Committee of Veterans' Affairs, the First Session of the 108th Congress, June 3rd, 2003.  In response to then Chairman Simmons, Ms. Wilensky testifies there is no recommendation for mandatory funding.  Cleverly written in your statement.

The other thing I would like to ask, is it not true that with mandatory funding, Congress would be able to change the funding formula or place caps on spending through the budget reconciliation language which would limit spending?

Mr. VIOLANTE.  I am sorry?

Mr. BUYER.  Is it not true that with mandatory funding, Congress would be able to change the funding formula or place caps on spending through budget reconciliation language?

Mr. VIOLANTE.  I am still having a problem.  You are reading something that—

Mr. BUYER.  What I am saying is when we go through budget reconciliation with the House and the Senate, it addresses mandatory programs.  So if we do not exempt the VA like we did back in the "Balanced Budget Act," it is subject to caps.  So I guess I will give it as a statement rather than as a question.

Mr. VIOLANTE.  Well, having VA exempted during the "Balanced Budget Act," I do not recall that because maybe it was on the mandatory side, but it certainly was not on the discretionary side because VA—

Mr. BUYER.  We did.

Mr. VIOLANTE.  —did not receive any additional funding.

Mr. BUYER.  We exempted Social Security benefits, veterans' programs, net interest, and low-income programs.

Is it not true that Congress would need to take money from other Federal programs or increase taxes to meet the increased share of the Federal budget going to the VA for healthcare if we adopted mandatory spending?

Mr. VIOLANTE.  Under your rules, you would.  You would have to find savings from other programs or other avenues to save money.

Mr. BUYER.  Currently there are about 7.9 million enrollees, but only 5.5 million veterans are using the VA healthcare system.  The mandatory formula is based on the number of enrollees in the healthcare system.

Would we not be basing the budget on this extra 2.4 million veterans who do not use the healthcare system?

Mr. VIOLANTE.  Well, the way the formula is set up, the per capita basis is based on enrollees.  I think if you were to change that formula, you could use unique patients or those who are using the system and probably still come out ahead of where we are now. 

But the idea was, I mean, obviously the per capita cost per enrollee is less than the per capita cost per user.  So either way, it does not make a difference.  You are still coming to the same end result.

Mr. BUYER.  I have had difficulty in getting the Disabled American Veterans as an organization to take a position on this Committee on a party line vote having overturned the Hartness decision.

What is the position of the Disabled American Veterans with regard to denying a pension benefit to wartime, elderly, indigent, disabled, or homebound veterans?

Mr. VIOLANTE.  Mr. Chairman, as we have explained to your staff and we are in the process of responding to you in writing, DAV does not take positions on pension issues.  We do have concerns and we have shared that with the leadership of the House that we would not like to see the funds taken from a change in the court ruling in Hartness to be used for other than U.S. veterans programs. 

Mr. BUYER.  Thank you.

I yield back.

The CHAIRMAN.  Mr. Michaud, you are recognized for five minutes.

Mr. MICHAUD.  Thank you very much, Mr. Chairman, Mr. Ranking Member, for having this hearing today because I think it is extremely important that we finally talk about mandatory funding or assured funding, whatever you want to call it, because I do think there is a problem out there as far as the timing when the VA receives their budget.  And I think there has to be some assurance that they will get their budget on time.

My question is, hearing your testimony that you are not really wedded to the idea in this legislation, you are more concerned about a process where we go from here on out and you are amenable to whatever that process is as long as it meets some of your criteria. 

When you look at the funding formula within the VA system, do you have any specific recommendations on how that could or should be changed?

Mr. VIOLANTE.  Yes.  To answer your question, we are not married to that formula.  There could be changes to it as I pointed out with Mr. Buyer.  I think VA would be ahead of where it is now even if you were to change that formula to use the users or unique patients as VA refers to them in that equation.

Senator Stabenow has introduced legislation over in the Senate that would create a hybrid which would provide a certain level of discretionary funding.  Using the same formula, it would then determine what additional needs VA would need on October 1st.  And they would know beforehand what that additional money would be and they would receive it on October 1st. 

That is another means to accomplish what we are trying to accomplish and there are other avenues out there.  Advanced budgeting comes to mind.  There are other ways to ensure that we meet the sufficiency, timeliness, and predictability requirements that we have.

Mr. MICHAUD.  When you look at the Senate legislation compared to this one, which is DAV's or the organizations you represent, what is your preference, the Senate version or the House version or either one will do?

Mr. VIOLANTE.  Well, with the Senate version again there, it makes it a little more palatable for appropriators because they still have part of that money coming through their subcommittees or committees.

For us, I think either one accomplishes our goals.  The House version, H.R. 2514, certainly takes any of the politics out of it that could still go on with the Senate amendment if the appropriators decide to try to cut discretionary to match the increase in the mandatory side.

Mr. MICHAUD.  Thank you.

I yield back, Mr. Chairman.

The CHAIRMAN.  Thank you.

Mr. Brown?

Mr. Stearns?

Mr. STEARNS.  Yes.  Thank you, Mr. Chairman.

And, Mr. Violante, thank you for testifying here.  And I just assure you that all of us on both sides just want to do the right thing and we appreciate your courage for coming here to talk about this.  You have your particular point of view.

And as the Chairman mentioned, one of the concerns I had was the PAYGO rules.  And I think you indicated that we should probably just waive those.  You might have said it more diplomatically, but I think that is what you are saying.

Mr. VIOLANTE.  That would certainly be nice.  It would help us immensely.

Mr. STEARNS.  Yeah.  Now, the Congressional Budget Office (CBO) has come out and indicated this bill would cost half a trillion dollars.  And I guess the question would be, under that scenario, assuming they are approximately correct, where would Congress get this money under the PAYGO rules?  And you can see that would be, even as the Chairman recognized in his comments, that still is a problem.  And your solution would be, I guess, just to waive the PAYGO rule for the mandatory for veterans.

Mr. VIOLANTE.  That would be my suggestion.  Now, again, this is Congress' rule.

Mr. STEARNS.  Right.

Mr. VIOLANTE.  Not mine.  I believe that regardless of what we do at this point in time, our government is going to continue to pay out money.  I believe that half a trillion dollars is incorrect.  I disagree with CBO's estimate on that.

Mr. STEARNS.  Okay.  I understand.

Mr. VIOLANTE.  But the thought is that this money is going to be paid out.  Professor Bilmes from Harvard has said that the cost just for new veterans coming into the system over their lifetime is going to be $350 billion to $700 billion.  Regardless of the price tag, we have to pay it.

Mr. STEARNS.  On another matter, the Chairman has instituted these joint hearings between the Senate and the House to review the budget every year.  But that would no longer be necessary.  And I think as a Member of Congress and others probably enjoy those joint hearings, have the opportunity to talk about, and I think veterans have an opportunity to talk about their problems.

Now, this particular mandatory spending, as I understand it, does not include construction or research.  Is that your understanding?


Mr. STEARNS.  Now, so construction and medical and prosthetic research would still be subject to annual appropriations is the way we understand it. 

So to use your own language in your opening statement, predictability, timeliness, reliability, still they would not be fulfilled under your opening statement because these two very important areas, research and construction, would have to still be appropriated.  Is that the way you understand it?

Mr. VIOLANTE.  That is correct.  And the thought behind that was to not include that in the mandatory program.  We would not be adverse to it, but—

Mr. STEARNS.  I guess my question is, would you like to include construction and research in the mandatory program? 

Mr. VIOLANTE.  Certainly I think there is a strong argument that could be made for construction.  But the thought was in an effort to keep down the overall costs of mandatory funding and to provide Congress with the discretion to work with VA on their needs for construction, it was left out of the legislation.

Mr. STEARNS.  Yeah.  And maybe the idea is that Members of Congress would like to have a say in their Congressional districts where this money is being spent.  Many of them are touring the facilities.  And if you leave it to the bureaucracy or the Veterans Administration perhaps the flexibility that I brought up in my opening statement would not be there.

So I submit that getting these construction funding, updating for facilities that are important, I think is the responsibility of Congress and not the bureaucrats.

The last area I wanted to talk to you about is the VA system, as many of us know, is inefficient in many areas.  And my colleagues have had bills.  We have talked about how long it takes for the appeal process and for the processing of claims.

Do you think the efficiency would increase under a mandatory funding rather than us supervising overview, bringing the Secretary in, and talking about these problems? 

It seems to me that the care and performance and the innovative management that would be necessary might be lost under an automatic funding that Congress has no control over. 

Mr. VIOLANTE.  I would disagree with that statement.  I think it would provide Congress with more opportunity to do oversight to ensure that the money that VA was receiving was being properly used.

Right now we spend an awful lot of time fighting on what that amount is going to be and there is not enough time spent on efficiencies.  And I do not believe that just getting a mandatory funding stream will stop VA from trying to be efficient in spending this money wisely.  And, again, Congress still has oversight of that.

Mr. STEARNS.  My last point is just my experience here in Congress, the power of the purse is pretty powerful.  If you control the purse, you control a lot better than if you do not.  And I think we see that with our children.  We see that in business that the power of the purse is such that you get things done better than if you just have automatic spending.

Thank you, Mr. Chairman.

The CHAIRMAN.  Thank you.

Ms. Herseth Sandlin?


Ms. HERSETH SANDLIN.  Thank you, Mr. Chairman.  I want to commend you for having this hearing.

And I want to commend Mr. Violante for his testimony.  I am one of the 85 cosponsors of this bill and I am pleased to know that the DAV and the Partnership are open to other proposals because I think, you know, we are all trying to figure out a way to make the current system better.  We are forming the budget process. 

We had hearings in the last Congress under Ranking Member Buyer that took a look at the formula and whether or not we can improve that formula given that at that time, there did not seem to be momentum behind the assured funding proposal.

I think now, you know, in the world of PAYGO, those of us who want to move to mandatory spending recognize that that is a hurdle to cross whether, as you suggested, the rules are waived or whether, you know, there are some difficult decisions and taking a closer look at the CBO estimate based on how many years of spending over the next five we anticipate in discretionary spending.  And, of course, looking at how we use a formula for predictability, as you state, is one of the key standards in how we reform this process is what we have to grapple with.

And so I would just encourage you, Mr. Violante, and the rest of the Partnership while waiving PAYGO rules is always a possibility, we have not done it yet.  And we want to make sure that we are working closely with you so that we can perhaps achieve both objectives, reforming this budget process and doing it within PAYGO.

And so I would just encourage us to continue a dialogue on how we move either to the assured funding bill of Mr. Hare's or Senator Stabenow's proposal and that is a hybrid to work through some of those other budget issues because in the world of PAYGO, it is the world of priorities. 

And I think we have done pretty well in this Congress of identifying priorities.  We certainly have done it in the discretionary spending process as well that is reflected in the prioritization of healthcare for our Nation's veterans. 

But what we need to focus on today and next week and next month is how in this Congress, in the 110th, do we protect ourselves, the country, our veterans from the potential neglect in future Congresses of the need for spending on healthcare for veterans when the pressure is off, so to speak, when the current conflict ends and hopefully we are at a time of peace because care for veterans is a cost of national security whether we are at war or whether we are at peace.

And that is why I think that this hearing is so important today, so that we can identify and reiterate the problems with the current system.  As the Chairman said, it is reflected in the fact that it is October 3rd and we still do not have appropriations for fiscal year 2008 other than the Continuing Resolution.

And as some of the questions already posed to you have indicated, there may be problems, similar budget pressures or even some political pressures that come into bear in a mandatory system, but do we improve the process by making it direct spending?  Is it improvement to reform the process in that way because it does a better job of meeting sufficiency, timeliness, and, of course, the predictability that you mentioned?

And I also appreciate the point that you made about oversight.  We do spend a lot of time on a number of issues in this Committee.  But in my opinion, in past Congresses, I think we have certainly been more aggressive in our oversight in this Congress, but it would free us up in some ways if it were mandatory spending to then get at the cost efficiencies, to really get it through oversight of how the money is being spent.

I would raise, as an example, the issue of the money, the increases in money that we have spent for PTSD and mental health counseling for veterans.  Some of the questions that have been raised since that money was allocated, how many case workers have they hired versus how many supervisors and people in mid-level management, how many people have been hired to actually treat the veterans day to day on the ground in the medical centers across the country.

So as we raise those issues based on either changes to formulas or other decisions that we would make in the mandatory sphere, I agree with you that it would be an improvement, although not without some pitfalls that we have to be aware of, not without some problems in the budget process, but clearly an improvement from the current situation, particularly given the historical background that you provide at the outset of your testimony.

So thank you.  And, again, we will look forward to working with you on some of the issues, the hurdle of PAYGO to see if we can find a way across that as we continue to debate the proposals.

Thank you, Mr. Chairman.  I yield back.

[The statement of Ms. Herseth Sandlin appears in the Appendix.]

The CHAIRMAN.  Thank you.

Ms. Brown-Waite?

Ms. BROWN-WAITE.  Thank you, Mr. Chairman.  Thank you very much for being here and presenting your views on mandatory funding.

Jeff Miller from the panhandle and I go back and forth each year as to who has the highest number of veterans.  So obviously veterans' care and veterans' healthcare is very important to both of us.

Mandatory funding would obviously be very costly.  And Representative Stearns mentioned the amount. 

Are you advocating an increased tax or I know it is Congress' role to find the money, but where would you suggest cutting?  

Mr. VIOLANTE.  It is not my job.  Again, I mean, that is Congressional rules that you have to deal with.  My belief is that caring for veterans is a continuing cost of war.  If we could find the money to continue to prosecute this war, we should be able to find the money to care for those men and women and or older generations of veterans who need this care.

I mean, I cannot tell you, you know, to cut taxes or to increase taxes—

Ms. BROWN-WAITE.  It would be increased.  It would not be cut.

Mr. VIOLANTE.  I mean, that is not what I am here for.

Ms. BROWN-WAITE.  Let me ask you a question.  If we go home and we are talking to veterans' groups and, you know, mandatory funding really does sound like a good thing, it is kind of like the—in Florida, we passed Bullet Train until people found out how much it cost and then they quickly repealed it because taxpayers realized how much it would cost.

So if I say to the veteran, well, it may require raising taxes, I do not think I would get a very positive response from the veterans in my district.  I do not represent a wealthy area.  Maybe the other coast of Florida, maybe those veterans would be more inclined to say tax me more, but I do not think that because of the cost here.

Now, have you considered anything such as a phase-in of mandatory funding?

Mr. VIOLANTE.  As I mentioned in my statement, we are willing to discuss any mechanism that will meet the requirements and that is sufficiency, timeliness, and predictability.  If we can achieve those three goals, we do not care what is done to get us to that point. 

But the problem right now is, as I said earlier, we are at war.  There is great support for the MilCon bill in both the House and Senate and we still do not have an appropriations bill.  So something needs to change.

Ms. BROWN-WAITE.  Well, sir, obviously the people in charge have not taken that action.  People have not even been appointed to a committee for the conference.  And that is wrong.  I do not want to see the VA back to the 2007 funding.  I want to see that increase there.  That is obviously out of this side of the aisle's control.

I think we have mutual goals in certainly wanting to have a healthcare system that is adequate.

Before this hearing, I called my various hospitals and clinics and found that every OIF and OEF veteran is being seen within 30 days.  And, you know, I would encourage other Members to do the same thing, to track that.  And they are doing that with a growing population.  And I am very glad to see that that is happening and I hope that it is happening around the country.

And with that, Mr. Chairman, I yield back.

The CHAIRMAN.  Thank you.

I am not sure that is happening around the country.  There was, I think, an Inspector General's report on these waiting times and how they may be manipulated.  And I know from personal testimony that some hospitals are responding to our concern for waiting times by just having people call back and not keeping any real list.  So you cannot judge it—

Ms. BROWN-WAITE.  Mr. Chairman, if you will yield?


Ms. BROWN-WAITE.  I found the same thing.  When I first got elected, I tracked this.  I dogged it.  And I was wise to what they were doing and the games that they were playing.  Both Tampa, as well as Gainesville, know that we track this regularly.  They are not playing the games.  And I also checked with veterans in my district also.

The CHAIRMAN.  Thank you for your leadership there.

Dr. Snyder?

Mr. SNYDER.  Thank you, Mr. Chairman, and thank you for holding this hearing because this is an issue that is not only very important to veterans' groups and veterans and the Congress, but it is also very complicated. 

And I think you put together a series of panels today that helps sort this out involving both people within the veteran service organization community but also think tankers and from the VA because I think it is real important. 

I have just a couple questions.  I tried to find it in your written statement.  I think you used the phrase that agencies, the VA is severely impaired, I think was your word when it comes to hiring and those kinds of things.  And I can understand that when you are not sure what your budget is going to be and you are trying to hire, you know, a cardiac surgeon or something and we think the funding is going to be there but we are not a hundred percent sure, it makes recruiting hard.

But those kinds of concerns, I mean, it is a bit of the nature of government; is it not?  You know, I think that is one of the arguments people argue for going to a two-year budget cycle.

The VA is not the only group that has that problem.  Almost all of government has that problem whether it is State or Federal.  And I mean, if we use that argument, we would say somehow we ought to go to a formula-like system where every tax dollar flows in, tax dollar flows out.  We come in here and meet and nibble around the edges.

Is that not kind of the nature of government, kind of some built-in inefficiency that is going to be hard to overcome and provide the kind of oversight and scrutiny that the public expects?

Mr. VIOLANTE.  Well, certainly it is the nature of government.  But what we are talking about here are men and women, less than ten percent of our population who have served our country and for whatever reason need the VA for their healthcare.

I think that trumps any other issue that needs to be looked at aside from ensuring that young men and women who are fighting our wars are properly equipped.

Mr. SNYDER.  Well, I mean, you know, I am a veteran.  I share your concern about that, but I think we need to be careful about overstating.  I would think the people that do food safety, I think the American public would not like all the meat inspectors to be laid off or food and safety inspectors. 

They want to know that toys are safe.  That is a big issue right now.  Do we have adequate funding.  I think you can go through a lot of different branches of agencies and say, I mean, as a veteran who has a baby, these things that involve toy safety are important to me.

So I think we need to recognize there is a built-in, inherent inefficiency of government that is part of the system of checks and balances.  So when I hear you say severe impairment, well, maybe that is a bit of an overstatement because the reality is the funding is going to come through. 

I know we have got this discussion going on with a speaker about how to approach the President on these bills and his threats of vetoes on appropriations bills and what is the best package to put together.  That is part of the dance that goes on in terms of coming up with what the American people expect from their elected representatives.  But I do not know that there is any magic way of getting rid of that inherent inefficiency.

With regard to the PAYGO rules, when you first suggested, and I understand that they could be waived, they are our rules, and there was a little bit of a snickering in the audience and the Members.  The reality is the PAYGO rules are real rules.  And I think you have probably been involved on the Armed Services Committee. 

I mean, I am no longer the Chairman of the Personnel Subcommittee, but those are real rules and, you know, the intent is that we will indeed pay  for things.  Good things for our men and women in uniform and their families, we are going to find a way to pay for that, and hopefully that does not run up the budget deficit.

And so there are things we would like to do whether it is, you know, GI Bill or Survivor Benefit Plan or we had to deal with it on TRICARE and those kinds of things.  We had to find money.  That is why the President, when he comes out with these budgets with these efficiency wedges, it really puts us in a bind because we have to somehow find funding for those under our rules.  And so they are not easily waived. 

And I think we will get to our second panel that will discuss the impact of PAYGO rules are both good and bad on mandatory funding, but it is not going to be a solution to that challenge if we were to go this route in Mr. Hare's bill just to say, well, we can just waive them because we certainly have not waived them on some of the issues that you and I probably are in agreement with with regard to some of the benefits for our retirees from the military.

I think the research was mentioned.  I think the staff pointed out under Mr. Hare's bill, research probably is included.  It includes all the functions, but that is of great concern to a lot of Members of the Committee.

But I appreciate you being here today because I think it is a very important issue.  And you have certainly acknowledged the complexities of it.

Thank you, Mr. Chairman.

The CHAIRMAN.  Thank you, Dr. Snyder.

Mr. Turner?

Mr. TURNER.  Thank you, Mr. Chairman.  I want to thank you for holding this hearing and for the discussion that is occurring because this certainly is an important issue.

I want to say that I agree with Mr. Snyder and I agree with Ms. Herseth Sandlin that the discussion between the two of them of the points that they raise are exactly the type of deliberative discussion that you need to undertake when looking at an issue like this.

And I appreciate in your testimony that you recognize that.  You have in your testimony even in budget years like this one when the anticipated level of funding for VA healthcare appears to be sufficient, your acknowledgement of the work that this Committee is doing and that this Congress is doing in rising to the need of funding what our veterans require.

In looking at this, obviously we all struggle with the issue that nationally, everyone is currently aware and discussing the budgetary pressures on this country and whether or not we can withstand the spending levels that we currently have and how we are going to shift our priorities and/or find resources to fund those priorities.

In that context, a proposal like this being