1966 APPROPRIATION AND 1967 BUDGET REQUEST Senator MAGNUSON. The subcommittee will come to order. We have before us this morning the Veterans' Administration. Mr. Driver, the Administrator, is here, with Mr. Brickfield and other members of his staff. We will place in the record the names of those present. We will take up these items one at a time. For the record, the appropriation last year was $6,001,226,600 and this year the budget estimate is $5,959,024,000. The recommended House amount is $5,958,807,000, including the amount added for nursing homes. This is $42,419,000 less than last year's appropriations. Mr. DRIVER. That is right. Senator MAGNUSON. All right proceed. Mr. DRIVER. Thank you, Mr. Chairman. Mr. Chairman and gentlemen of the committee, I appreciate this opportunity to discuss the programs of the Veterans' Administration and to explain our appropriation requirements for fiscal year 1967. Except for a reduction of $217,000 in "Medical administration and miscellaneous operating expenses," the appropriation bill, as passed by the House on May 10, provides the full amount of our budget estimates. We believe we can meet program requirements with the House allowance and do not request restoration of this item. The House bill provides appropriations for the Veterans' Administration totaling $5,959,477,000 for fiscal year 1967, compared with $6,003,259,000 appropriated for 1966, or a net decrease of $43,782,600 in 1967. By program categories, the net decrease is made up of decreases of $61.5 million veterans benefits, $38.3 million in construction, and $2.9 million in general operating expenses, and an increase of $58.9 million in medical services. A table comparing amounts by appropriation for 1966 and 1967 is attached. (The table follows:) 1 Includes permanent indefinite: Fiscal year 1966, $650; fiscal year 1967, $670. VETERANS READJUSTMENT BENEFITS ACT OF 1966 Mr. DRIVER. These comparisons are exclusive of fiscal year 1967 requirements for Public Law 89-358. "Veterans Readjustment Benefits Act of 1966", approved last March 3. While 1967 costs of this act are not fully developed, we estimate that they will approximate $350 million. A supplemental request for this purpose will be submitted early in fiscal year 1967. The second supplemental appropriation bill for 1966 provided $1 million for administrative expenses for the new act for the remainder of fiscal year 1966. Our appropriation requests for 1967 reflect our continued efforts to reduce administrative costs to minimum amounts, consistent with high quality service to veterans. They also reflect expansion in the nursing care program, extension of new medical treatment programs and staffing improvements in hospital care programs. The program highlights reflected in our 1967 budget are as follows: GENERAL OPERATING EXPENSES This appropriation provides for administrative expenses of the Department of Veterans Benefits, the Department of Data Management, and central office staff elements. Our estimate of $159.3 million for fiscal year 1967, exclusive of additional requirements for the new Veterans Readjustment Benefits Act, is $1.9 million less than the current year appropriation, despite additional full-year costs of the 1965 pay raise of $1.3 million. Average net employment of 16,503 is estimated for general operating expenses programs in 1967. This is 697 below the current year estimate and is the lowest since the appropriation was first established in 1954. The decrease from 1966 is comprised of reductions of 634 in veterans benefits programs, 35 in the Department of Data Management, and 28 in the staff offices. Our estimates contemplate continued emphasis on the use of automatic data processing to improve operations and reduce costs. In March of this year, we completed installation of an automated personnel and accounting integrated data system. We are now handling all personnel and payroll transactions for our 167,000 employees from a central computer operation in Chicago. Previously, we had automated the compensation and pensions, insurance, and management information systems. Additional ADP applications are planned for fiscal year 1967 in the areas of construction, logistics, and the loan guarantee program. VETERANS' BENEFITS PROGRAMS The sum of $4,420.6 million-74 percent of the total 1967 Veterans' Administration request is for veterans' benefits appropriations, as follows: Compensation and pensions. Readjustment benefits.. Veterans' insurance and indemnities.. Millions $4, 374. 0 42. 4 4. 2 All of these represent moneys paid directly to veterans or their dependents. COMPENSATION AND PENSIONS The request for compensation and pensions is down $66 million from fiscal year 1966. The decrease is due primarily to the inclusion of $40 million in 1966 for death gratuity payments authorized by Public Law 89-214 for service-connected deaths occurring between January 1, 1957, and September 28, 1965. These are one-time pay ments. This, coupled with projected decreases in caseloads, more than offset increased requirements for the full-year costs of compensation rate increases effective December 1, 1965. READJUSTMENT BENEFITS The $42.4 million request for readjustment benefits is an increase of $900,000 over 1966. It provides for an increase of 1,900 in the vocational rehabilitation training load, but a decrease of 1,800 in the average number of trainees in the "sons and daughters" category. As I have previously noted, our request is exclusive of requirements for the "new GI bill." VETERANS' INSURANCE AND INDEMNITIES Veterans' insurance and indemnities is down $6.4 million in 1967 from 1966. The decrease results principally from the phasing out of "Servicemen's indemnity" payments from a $5 million level in 1966 to less than $600,000 in 1967. HOUSING LOAN PROGRAMS The House-proposed language for the loan guarantee revolving fund establishes a limitation of $375 million on 1967 expenditures and a limitation of $200 million on the amount that may be transferred from the direct loan revolving fund in 1967. The budget had requested the elimination of these limitations because of the uncontrollable and unpredictable nature of expenditures in the loan guarantee program. Although it may become necessary for us to request an increase in these limitations during fiscal year 1967, we are not protesting the House action at this time. MEDICAL PROGRAMS MEDICAL ADMINISTRATION AND MISCELLANEOUS OPERATING EXPENSES The House bill provides $14 million for central office administration and supervision of all medical programs and for postgraduate and inservice training for medical, professional, and administrative staff throughout the system. While this represents a reduction of $217,000 from our request, we believe that we can meet program requirements within this allowance and restoration is, therefore, not requested. The allowance of $14 million will permit continuation of current year average employment and limited expansion of training programs through increases in tuition, lecture fees, and travel support. Last July, we eliminated area medical offices and consolidated all field supervision in central office. In lieu of area offices, we established an operations staff responsible for the broader management aspects of directing and evaluating field activities reporting direct to the Chief Medical Director. If I could interpose at this moment, Mr. Chairman, the Chief Medical Director who was appointed since we were here last, Dr. Engle, is with us this morning. Senator MAGNUSON. We are pleased to have you here. Mr. DRIVER. While this consolidation produced some manpower savings, it has been largely offset by additional manpower requirements for management of the new nursing home care program and additional support for new medical programs and administrative research. MEDICAL AND PROSTHETIC RESEARCH Our 1967 request for research activities totals $43,629,000, of which $42,292,000 is for medical research and $1,337,000 is for prosthetic research. This represents increases of $2,309,000 and $62,000 for the respective programs, or a total of $2,371,000. For medical research, the increase will provide for higher costs of salaries, supplies, and equipment and also permit a modest amount of program expansion. Likewise, the increase for prosthetic research will provide for rising costs of operations and a small increase in program activities. MEDICAL CARE The medical care 1967 appropriation request totals $1,265,437,000, which represents an increase of $56,031,000 over 1966. The increase over 1966 is, in part, a reflection of rising costs of medical care. It also provides for expansion of the nursing home care program to a level of 4,000 beds by the end of 1967 fiscal year, activation of 5 replacement hospitals, and expansion of new medical treatment programs. In addition to supporting larger workloads, the budget provides a significant improvement in the level of staffing. I appreciate the concern of this committee regarding the problem of adequate staffing of medical programs, as stated in your report on the 1966 appropriation. need for additional medical personnel to implement new treatment programs and to intensify patient care is of major concern to the entire medical community. This is, in part, a problem of scarce professional personnel and, in part, the continually rising cost of hospital operations which tends to impair financial ability to add staff. Our budget request provides for a significant improvement over the current year level. It will permit an increase of 3,121 in average employment and increase the current ratio of employees per 100 hospital patients from 104.3 to 106.1. We believe that the amount of this increase is essential to maintain the quality of VA medical care, and that it is realistic in terms of our ability to recruit professional staff. In fiscal year 1967, we plan to operate 120,034 hospital and nursing home care beds and 14,334 domiciliary and restoration beds, or a total of 134,368 beds in VA facilities. The daily average beneficiary load cared for in VA facilities will be 124,647, an increase of 1,437 over 1966. We project that 745,000 patients will be treated in VA hospitals in 1967, an increase of 15,000 over 1965. Of great signifi cance is the fact that, with fewer operating beds, we are treating 100,000 more patients than were treated in 1960. In addition, a daily average of 14,015 beneficiaries will receive care in other Federal, State, and community facilities, which is an increase of 440 above 1966 levels. We estimate that outpatient medical visits will increase by 11,900 for a total of 6.2 million visits to VA and hometown physicians in 1967. The budget provides increased emphasis on new and expanded treatment programs, laboratories, and clinics related to kidney, heart, emphysema, stroke, cancer, pulmonary, and other specialty diseases. Provision for additional medical and surgical services in our psychiatric hospitals and expansion of mental hygiene and day treatment centers for psychiatric outpatients is also made in the budget. GRANTS TO THE REPUBLIC OF THE PHILIPPINES We are requesting $386,000 for grants to the Republic of the Philippines in 1967. These grants are in the nature of reimbursements for medical care and treatment of eligible Philippine Commonwealth Army veterans. The request is predicated on current year levels of an average daily patient load of 149 and a cost of $7.03 per day, per patient. CONSTRUCTION PROGRAMS CONSTRUCTION OF HOSPITAL AND DOMICILIARY FACILITIES The request of $52.1 million for "Construction of hospital and domiciliary facilities" in 1967 provides the seventh annual increment in our long-range plan to replace, relocate, and modernize obsolete facilities initiated in 1961 and includes Planning funds for (a) 480 psychiatric beds at Hines, Ill. (b) A 328-bed addition at Phoenix, Ariz. (c) A 178-bed addition and outpatient clinic consolidation. at Indianapolis, Ind. (d) Air conditioning and modernization of the Dallas, Tex. hospital. Site funds for a new 960-bed hospital at Detroit, Mich. (a) Replacement of 480 beds at Northport, N. Y., and Design funds for additional phases of modernization at- (b) Fort Meade, S. Dak. (c) Palo Alto, Calif. Other improvement projects of lesser scope totaling $14.3 million; and expansion of medical research facilities in the amount of $2.7 million. GRANTS FOR CONSTRUCTION OF STATE NURSING HOMES The program of "Grants for the construction of state nursing homes" was authorized in 1964. In 1966, $2.5 million was appropriated. The request of $4 million for 1967 will provide a cumulative total of $6.5 million under this authorization. The 1966 appropria |