Mr. Carl Blake
Chairman Miller, Ranking Member Michaud, and members of the Committee, as one of the four co-authors of The Independent Budget (IB), Paralyzed Veterans of America (PVA) is pleased to present the views of The Independent Budget regarding the funding requirements for the Department of Veterans Affairs (VA) for FY 2014.
As the country faces a difficult and uncertain fiscal future, the VA likewise faces significant challenges ahead. Congress and the Administration continue to face immense pressure to reduce federal spending. With these thoughts in mind, we cannot emphasize enough the importance of ensuring that sufficient, timely and predictable funding is provided to the VA. While we are disappointed that it has taken nearly two additional months for the Administration to release its funding recommendations for VA programs for FY 2014, and the advance appropriation recommendation for FY 2015, we are particularly interested in reviewing in greater detail the updated analysis of the funding needs for health care programs for FY 2014 in light of the complex budget deficit and debt negotiations that have been going on for over a year now.
Meanwhile, The Independent Budget co-authors are particularly concerned that the broken appropriations process continues to have a negative impact on the operations of the VA. Once again this year Congress failed to fully complete the appropriations process in the regular order, instead choosing to fund the federal government through a 6-month Continuing Resolution and subsequently completing the appropriations work for the current fiscal year nearly 6 months into the year. As a result of the enactment of advance appropriations, the health care system is generally shielded from the difficulties associated with late appropriations (an occurrence that has become the rule, not the exception). However, we cannot be certain that health care operations have not been negatively impacted by this 6-month continuing resolution. Moreover, the rest of the operations of the VA have most certainly been hampered by this broken process.
The Independent Budget co-authors remain concerned about steps VA has taken in recent years in order to generate resources to meet ever-growing demand on the VA health-care system. The Administration continues to rely upon “management improvements,” a popular gimmick that was used by previous Administrations to generate savings and offset the growing costs to deliver care. Unfortunately, these savings were often never realized leaving VA short of necessary funding to address ever-growing demand on the health-care system.
Additionally, the VA continues to overestimate and underperform in its medical care collections. Overestimating collections estimates affords Congress the opportunity to appropriate fewer discretionary dollars for the health care system. However, when the VA fails to achieve those collections estimates, it is left with insufficient funding to meet the projected demand. As long as this scenario continues, the VA will find itself falling farther and farther behind in its ability to care for those men and women who have served and sacrificed for this nation. The fact that the VA continues to experience problems with its medical care collections reflects an even greater need to Congress to properly analyze, and if necessary, revise the advance appropriations from the previous year to ensure that the VA health care system is getting the resources it needs.
Funding for FY 2014
For FY 2014, The Independent Budget recommends approximately $58.8 billion for total medical care, an increase of $3.3 billion over the FY 2013 operating budget. Meanwhile, the Administration recommended, and Congress recently approved in P.L. 113-6, the “Full-Year Continuing Appropriations Act,” an advance appropriation for FY 2014 of approximately $54.4 billion in discretionary funding for VA medical care. When combined with the $3.1 billion Administration projection for medical care collections, the total available operating budget recommended for FY 2014 is approximately $57.5 billion. We will be very interested to see if the Administration thoroughly revises the original advance appropriations estimate for FY 2014 in the budget for this year.
The medical care appropriation includes three separate accounts—Medical Services, Medical Support and Compliance, and Medical Facilities—that comprise the total VA health-care funding level. For FY 2014, The Independent Budget recommends approximately $47.4 billion for Medical Services, approximately $800 million more than the advance appropriations included in P.L. 113-6 (when medical care collections are also taken into account). Our Medical Services recommendation includes the following recommendations:
Current Services Estimate…………………………$45,552,079,000
Increase in Patient Workload………………………..$1,184,999,000
Additional Medical Care Program Costs…..………….$675,000,000
Total FY 2014 Medical Services……………….…..$47,412,078,000
Our growth in patient workload is based on a projected increase of approximately 81,200 new unique patients—priority groups 1¬–8 veterans and covered nonveterans. We estimate the cost of these new unique patients to be approximately $827 million. The increase in patient workload also includes a projected increase of 96,500 new Operation Enduring Freedom and Operation Iraqi Freedom (OEF/OIF), as well as Operation New Dawn (OND) veterans at a cost of approximately $358 million. Our recommendations represent an increase in projected workload in this population of veterans over previous years as a result of the withdrawal of forces from Iraq, the drawdown of forces in Afghanistan, and a potential drawdown in the actual number of service members currently serving in the Armed Forces. And yet, we believe that growth in demand for this cohort specifically could be far greater given the changing military policies mentioned above. In fact, we believe that recent reporting from the VA suggests that the actual number of new unique OEF/OIF/OND veterans is greater than 120,000. This leads us to conclude that our estimate of cost for this population should be even greater.
Finally, The Independent Budget believes that there are additional projected funding needs for VA. Specifically, we believe there is real funding needed to address issues in the VA’s long-term care program and to provide additional centralized prosthetics funding (based on actual expenditures and projections from the VA’s prosthetics service). In order to support the rebalancing of VA long-term care in FY 2014, we believe $112 million should be provided. Additionally, we believe $75 million should be targeted at the VA’s Veteran Directed-Home and Community Based Services (VD-HCBS) program. The remainder of the $375 million that the IB recommends for long-term care services would begin to restore the VA’s long-term care capacity to the level mandated by Public Law 106-117, the “Veterans Millennium Health Care and Benefits Act.” In order to meet the increase in demand for prosthetics, the IB recommends an additional $300 million. This increase in prosthetics funding reflects an increase in expenditures from FY 2012 to FY 2013 and the expected continued growth in expenditures for FY 2014.
For Medical Support and Compliance, The Independent Budget recommends approximately $5.84 billion. Finally, for Medical Facilities, The Independent Budget recommends approximately $5.57 billion. While our recommendation does not include an additional increase for nonrecurring maintenance (NRM), it does reflect a FY 2014 baseline of approximately $750 million. While we appreciate the significant increases in the NRM baseline over the last couple of years, total NRM funding still lags behind the recommended two to four percent of plant replacement value. In fact, VA should actually be receiving at least $1.7 billion annually for NRM. Meanwhile, we have serious concerns with the fact that the advance appropriation for Medical Facilities included in P.L. 113-6 slashes funding for this account and for NRM specifically. This level of funding, particularly if the trend continues in the coming years, will have a devastating impact on the ability of the VA to meet the maintenance needs of the health care system.
For Medical and Prosthetic Research, The Independent Budget recommends $611 million. This represents approximately a $28 million increase over the FY 2013 appropriated level. The VA research program is a jewel within the VA that we support without hesitation or reservation. That program and its nearly 4,000 principal investigators have made myriad improvements not only to veterans’ health in VA care, but have elevated the standard of health care of the nation and the world. Despite scientific discoveries and prosthetic inventions too numerous to mention here but that are well known, the Administration for the third year running requested either reduced or flat funding for VA research, and Congress effectively acquiesced. From FY 2011 through the FY 2013 appropriation, virtually nothing has been added by Congress to that program’s budget baseline. No allowance has been made to cover uncontrollable research inflation, which averages around 3 percent annually; no funds have been provided for new initiatives beyond the baseline; and no funds have been requested or provided to help repair or upgrade VA’s research laboratories, concerning which a 2012 independent evaluation estimated that almost $800 million would be required to bring them up to par. And disappointingly, no funds have been requested for special research initiatives focused on the needs of Iraq and Afghanistan veterans. These are major lapses that deserve correction.
Advance Appropriations for FY 2015
As explained previously, P.L. 111-81 required the President’s budget submission to include estimates of appropriations for the medical care accounts for FY 2013 and subsequent fiscal years. With this in mind, the VA Secretary is required to update the advance appropriations projections for the upcoming fiscal year (FY 2014) and provide detailed estimates of the funds necessary for the medical care accounts for FY 2015.
For the first time this year, The Independent Budget offers baseline projections for funding for the medical care accounts for FY 2015. While we have previously deferred to the Administration and Congress to provide sufficient funding through the advance appropriations process, we have growing concerns that this responsibility is not being taken seriously. The fact that for two fiscal years in a row the Administration recommended funding levels that were not changed in any appreciable way upon review, and the fact that Congress simply signed off on those recommendations without thorough analysis, leads us to conclude that VA funding is falling farther and farther behind the growth in demand for services. We believe the continued feedback from veterans around the country about long wait times and lack of access to services affirms this belief. As such, we have decided to offer our own estimates of what we believe the true resource needs will be for the VA health care system in FY 2015.
For FY 2015, The Independent Budget recommends approximately $61.6 billion for total medical care. Our recommendation includes approximately $49.8 billion for Medical Services. Our Medical Services recommendation includes the following recommendations:
Current Services Estimate…………………………$48,042,797,000
Increase in Patient Workload………………………..$1,105,821,000
Additional Medical Care Program Costs…..………….$675,000,000
Total FY 2015 Medical Services……………….….$49,823,618,000
Our growth in patient workload is based on a projected increase of approximately 60,000 new unique patients—priority groups 1¬–8 veterans and covered nonveterans. We estimate the cost of these new unique patients to be approximately $737 million. The increase in patient workload also includes a projected increase of 96,500 new OEF/OIF/OND veterans at a cost of approximately $369 million. Meanwhile, we are particularly interested to see the trends that the VA Budget Request projects for new utilization in the coming years. While the growth in utilization of some new unique patients seems to be trending downward, we believe that the OEF/OIF/OND population will continue to trend upward as the military services drawdown their forces and as worldwide conflicts end. Additionally, it remains to be seen what impact the full implementation of the Affordable Care Act will have on utilization of VA health care services.
As with FY 2014, The Independent Budget believes that there are additional projected funding needs for VA. In FY 2015, the IB once again believes that $375 million should be directed towards VA’s long-term care program. Additionally, we believe that a continued increase in centralized prosthetics funding will be essential. In order to meet the continued increase in demand for prosthetics, the IB recommends an additional $300 million. Finally, for Medical Support and Compliance, The Independent Budget recommends approximately $6.14 billion. Meanwhile, for Medical Facilities, The Independent Budget recommends approximately $5.69 billion.
Additionally, GAO’s responsibility is more important than ever, particularly in light of their findings concerning the FY 2012 budget submission last year. The GAO report that analyzed the FY 2012 Administration budget identified serious deficiencies in the budget formulation of VA. Yet these concerns were not appropriately addressed by Congress or the Administration. This analysis and the subsequent lack of action to correct these deficiencies simply affirm the ongoing need for the GAO to evaluate the budget recommendations of VA. For this reason, we would like to thank Representative Brownley for introducing H.R. 806, the “Veterans Healthcare Improvement Act.” This legislation permanently establishes the Government Accountability Office’s reporting requirements as a part of VA advance appropriations. We hope that the Committee will give this legislation consideration as soon as possible, and we urge all members of the Committee to support the bill.
Finally, we would like to applaud Chairman Miller and Ranking Member Michaud for introducing H.R. 813, the “Putting Veterans Funding First Act of 2013.” This legislation requires all accounts of the VA to be funded through the advance appropriations process. It would provide protection for the operations of the entire VA from the political wrangling that occurs as a part of the appropriations process every year.
In the end, it is easy to forget that the people who are ultimately affected by wrangling over the budget are the men and women who have served and sacrificed so much for this nation. We hope that you will consider these men and women when you develop your budget views and estimates, and we ask that you join us in adopting the recommendations of The Independent Budget.
This concludes my testimony. I will be happy to answer any questions you may have.
Information Required by Rule XI 2(g)(4) of the House of Representatives
Pursuant to Rule XI 2(g)(4) of the House of Representatives, the following information is provided regarding federal grants and contracts.
Fiscal Year 2013
No federal grants or contracts received.
Fiscal Year 2012
No federal grants or contracts received.
Fiscal Year 2011
Court of Appeals for Veterans Claims, administered by the Legal Services Corporation — National Veterans Legal Services Program— $262,787.