It is the Committee's further understanding that the OMB refused to fund any of the program initiatives requested by the VA, and refuses to permit expansion of such programs until their "cost effectiveness" has been demonstrated. The Committee finds this approach to innovative health care initiatives short-sighted; it conflicts with the very real imperative to find alternatives to long-term institutionalization of older veterans who require medical attention. Further, it ignores empirical evidence and common sense to suggest that programs such as adult day health care and hospital-based home care might not be cost effective, when the alternative is to build additional hospital and nursing care beds and provide staff to care for patients 24 hours a day.

With respect to geriatric evaluation units, a recent report in the New England Journal of Medicine found that the units had a dramatic impact on the death rate of patients who spent time in the units. Further, in the year following admission to a unit, patients ran up substantially fewer expenses for hospital readmissions and nursing home care.

Activation of Geriatric, Research, Education, and Clincial Centers (GRECCS) has slipped far behind schedule in the past two years because of lack of funding. The cost effectiveness of research performed in such units is without doubt demonstrable; however, the Committee views their utility in more far-reaching terms. GRECCS are essential to the development of approaches to geriatric medicine which are humane, effective and of appropriate quality.

The Subcommittee on Hospitals and Health Care has held several hearings on the treatment of Vietnam veterans who are suffering psychological disorders (Post-Traumatic Stress Disorder (PTSD))} related to their wartime experience. The Committee believes that emphasis on meeting the needs for health care of veterans suffering from PTSD is both appropriate and necessary.

The VA's Department of Medicine and Surgery since its inception has had an intrinsic relationship between advancing science through research and providing the finest care to millions of veterans who come to the VA. As a consequence, the Department of Medicine and Surgery is a leader at the cutting edge of the modern art of medicine.

The Committee has long recognized that high technology is costly but that at least modest funding must be provided to ensure high quality health care for our nation's veterans.

This funding will provide "high tech" or advanced diagnostic equipment in very limited amounts to laboratories or medical facilities. Last year, the Committee recommended a small procurement of Nuclear Magnetic Resonance (NMR) units. This year, it is recommending funding for procurement of two state-of-the-art units now known as Magnetic Resonance Imaging Units (MRIU) which provide a new method of imaging body structures. The Committee also recommends procurement of three Digitalized Vascular Imaging (DVI) units which use computerized enhancement of images (similar to that used by NASA for space probes) to study blood vessels. DVI can be used as a screening device on an outpatient basis, thereby greatly reducing the cost of providing this service. Committee recommendation also includes funding for expanding a nuclear teletransmission network, as well as enhancements to the very successful Decentralized Hospital Computer Program system.

The

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The budget contains $6 million for land acquisition costs for the establishment of a national cemetery in northern California.

The Committee does not support the VA request to pay the General Services Administration for land to establish a national cemetery when such land belongs to the Department of Defense and is excess to its needs. The Armed Services Committee set a recent precedent by denying the Air Force and other agencies money to purchase property in three separate cases.

The Committee therefore recommends that these funds not be used to purchase land as there is an alternate site in Merced County available at no cost to the Federal Government. This site has been designated by the VA as one of the two sites currently under consideration.

As there is a critical need for a veterans cemetery in northern California, the Committee recommends that these funds be used in conjunction with the development of land and other such planning costs as may be necessary for the establishment of such cemetery in Merced County.

I have read with great interest and considerable misgivings
Secretary Regan's proposal to tax service-connected veterans'
compensation. These benefits have from their inception been
exempted from taxation, and I cannot imagine any justification
that would warrant a departure from this long-standing policy.
Veterans compensation is designed to replace lost earning
capacity attributable to disability. Since the benefit has
traditionally been tax exempt, the rates reflect this status.
For example, the rate for a single veteran who is totally
disabled is only $15,540 per year. The difference between this
rate and the average earnings of wage earners today reflects the
tax exempt status of compensation benefits. To use the language
of Treasury policy analysts, the present benefit rates are
calculated on a "net replacement" basis. If the benefit were to
be taxed, we in the Congress would have to raise the rates to
their average earning loss equivalent. This action would
probably more than offset the increased taxes to be realized.

Taken

Consider also that in addition to a proposed tax on the benefit, it has been proposed to deny a COLA in FY 1986. together, the effect of these two policies is a double penalty imposed on some of our most deserving citizens, those who suffered grievous loss in the service of our country. It is indeed ironic that some of our most deserving citizens should have to bear an unjustly heavy tax burden.

The Congress has long recognized that changes in the
structure of the labor market also change the effects that
We have
various disability levels have on earning capacity.
adjusted to this by making the compensation rates incremental
rather than straight line. For example, the rate for a 10%
disability ($66 per month) is only 5% of the rate for total