The fiscal year 1985 budget contains a proposal that the VA no longer respond to defaults on VA guaranteed loans by acquiring foreclosed properties but rather pay all lending institutions the guaranteed portion of the loan following foreclosure. The lending institution would then have to dispose of the property. This policy change is construed as a budgetary savings. This Committee is very concerned about this type of policy change. According to a CBO draft on the impact of this policy on the VA loan guaranty program, any savings realized from the implementation of this type of policy would be short-lived and would ultimately create larger deficits in future years than continuing with existing policy. DEPARTMENT OF MEDICINE AND SURGERY The Veterans' Administration's Department of Medicine and Surgery has arrived at a crossroads in terms of fulfilling its mission of providing quality health care to our Nation's veterans. As the average age of America's veterans rises, their demand for health care services from the Veterans' Administration is expected to increase dramatically. The Veterans' Administration expects to announce later this year its estimate of that demand and its plan for meeting it. Thus, this budget is likely to be the benchmark by which future budgets are compared. Without anticipating the estimates and projections which are likely to be announced, it appears that the facilities which the Veterans' Administration presently operates, and which it plans to build or renovate with the funds requested in its fiscal year 1985 budget request, will not accommodate by any measure the anticipated demand for services over the next 20 years. It is patently clear that the level of constant dollar resources must increase over this period in order to meet this increased demand while maintaining the quality of care being provided. The VA is requesting funds to operate 97,580 beds in fiscal year 1985, including 10,676 VA nursing home care beds. This is an overall increase of only 128 beds over the number operated at the end of fiscal year 1983. The VA projects that the number of inpatients treated in fiscal year 1985 will be roughly equal to the 1983 level1.3 million veterans. The projections for outpatient visits are similar-18.7 million visits in 1985 compared to 18.5 million in 1983. Yet by 1987, the number of veterans age 65 and over is expected to roughly double when compared to the 1980 number. Despite this projected increase the VA has only asked for a net increase of $21 million for workload related changes in 1985. The following chart shows the straight line budget effect on medical care funds when adjusted to the Consumer Price Index. The VA's construction plans anticipate enactment of $822 million in new budget authority for 1985, plus the application of $120 million in accumulated savings from projects where costs were less than anticipated. These funds will permit planning and design for five major replacement or modernization projects which have a total estimated cost of some $784 million. $78 million would be made available in 1985 for these projects. The construction budget request also includes new funding for construction of facilities containing 777 new nursing home care beds, so that by late 1985, the VA will operate 10,676 beds. The budget request also includes $350 million for 19 outpatient and clinical improvement projects. The Committee is very concerned about the persistent underestimates in the number of outpatients which the VA expects to treat. There is evidence that an artificial "cap" has been placed on the resources available for outpatient treatment, resulting in denial of treatment to eligible veterans in some cases, and in other cases resulting in an inappropriate admission as an inpatient. The Committee is pleased with the Administration's decision to request increased funds for grants for construction of State nursing homes. The Committee believes that this increased level of funding commitment is necessary in view of the $120 million backlog in applications and the cost savings which result from care of veterans in State homes. The Committee expects that this level of funding will not be a one-time increase; but rather a continuing commitment over the next 4 years which will be necessary to meet the demand for these grants. VETERANS' BENEFITS AND SERVICES AS PART OF THE TOTAL FEDERAL BUDGET The following table indicates total Federal outlays, veterans benefits and services outlays (function 700), and the percentage for benefits and services for fiscal years 1975 through 1985. TOTAL AND VETERANS' BENEFITS AND SERVICES OUTLAYS, FISCAL YEARS 1975-85 As the above table indicates, in 1975 the percentage of total Federal outlays spent on veterans' benefits and services was 5.1 percent. Since that time there has been a steady decrease, with the estimate for fiscal year 1985 at 2.9 percent. From 1950 to the present, the veteran population has increased from approximately 18.5 million to 28.2 million. Two major GI bill programs educated millions of veterans. Twenty-one major veteran health care measures were approved by the Congress and 19 hospitals were added to the VA hospital system. Yet, Federal outlays for veterans' benefits and services have increased only by a ratio of 3 compared to 332 for social security and medicare; 123 for health; 116 for education, training, employment and social services; and 28 for income security. The following table indicates Federal outlays for human resources programs for selected years from 1950-85: FEDERAL OUTLAYS FOR HUMAN RESOURCES PROGRAMS, SELECTED YEARS 1950-85 Source: Office of Management and Budget, Federal Government Finances. 1985 Budget Data (February 1984 edition), table 6. Federal spending for health and medicare programs is expected to total almost $102,599 million in 1985. This total has been broken down by the Office of Management and Budget into several categories. The following table indicates the total Federal outlays for health and for veterans' hospital and medical care, and the percentage attributable to the Veterans' Administration. It is interesting to note the steady decline of Federal outlays attributed to veterans' health care since fiscal year 1974. FEDERAL OUTLAYS FOR HEALTH, MEDICARE AND VETERANS' HOSPITAL AND MEDICAL CARE, 1975-85 VETERANS' ADMINISTRATION PROGRAMS BY FUNCTIONAL DISTRIBUTION The programs under the Committee's jurisdiction are administered by the Veterans' Administration and are broken down into several subfunctional classifications. There follows a list of the functions and programs included in the Veterans' Administration budget for fiscal year 1985, as well as a comparison of total budget authority and outlays recommended by the Administration and that proposed by the Committee on Veterans' Affairs. For purposes of clarity, the functions and their respective programs defined by OMB are as follows: 701. Income security for veterans Compensation and pensions: Service-connected compensation Other veterans income security programs Insurance programs: Veterans insurance and indemnities 702. Veterans education, training, and rehabilitation Readjustment benefits Vocational rehabilitation revolving loan fund 703. Hospital and medical care for veterans Medical care Medical and prosthetic research Medical administration and miscellaneous operating expenses Construction, major projects Construction, minor projects Grants for construction of State extended-care facilities Assistance for health manpower training institutions 704. Veterans housing Loan guaranty revolving fund Direct loan revolving fund 705. Other veterans benefits and services General operating expenses Canteen service revolving fund Supply fund Consolidated working fund General post fund Grants for construction and operation of State ceme |