[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]



 
                       PRIORITY GROUP 8 VETERANS

=======================================================================


                                HEARING

                               before the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 20, 2007

                               __________

                           Serial No. 110-29

                               __________

       Printed for the use of the Committee on Veterans' Affairs



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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     RICHARD H. BAKER, Louisiana
Dakota                               HENRY E. BROWN, Jr., South 
HARRY E. MITCHELL, Arizona           Carolina
JOHN J. HALL, New York               JEFF MILLER, Florida
PHIL HARE, Illinois                  JOHN BOOZMAN, Arkansas
MICHAEL F. DOYLE, Pennsylvania       GINNY BROWN-WAITE, Florida
SHELLEY BERKLEY, Nevada              MICHAEL R. TURNER, Ohio
JOHN T. SALAZAR, Colorado            BRIAN P. BILBRAY, California
CIRO D. RODRIGUEZ, Texas             DOUG LAMBORN, Colorado
JOE DONNELLY, Indiana                GUS M. BILIRAKIS, Florida
JERRY McNERNEY, California           VERN BUCHANAN, Florida
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota

                   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.


                            C O N T E N T S

                               __________

                             June 20, 2007

                                                                   Page
Priority Group 8 Veterans........................................     1

                           OPENING STATEMENTS

Chairman Bob Filner..............................................     1
    Prepared statement of Chairman Filner........................    52
Hon. Steve Buyer, Ranking Republican Member......................     2
Hon. Corrine Brown...............................................     5
Hon. Cliff Stearns...............................................     6
    Prepared statement of Congressman Stearns....................    52
Hon. John J. Hall................................................     8
Hon. Phil Hare...................................................     9
Hon. John Boozman................................................    10
Hon. Timothy J. Walz.............................................    11
Hon. Ginny Brown-Waite, prepared statement of....................    53
Hon. Jeff Miller, prepared statement of..........................    53
Hon. Harry E. Mitchell, prepared statement of....................    54

                               WITNESSES

U.S. Department of Veterans Affairs, Hon. Michael J. Kussman, 
  M.D., M.S., MACP, Under Secretary for Health, Veterans Health 
  Administration.................................................    39
    Prepared statement of Dr. Kussman............................    67

                                 ______

American Legion, Peter S. Gaytan, Director, Veterans Affairs and 
  Rehabilitation Commission......................................    28
    Prepared statement of Mr. Gaytan.............................    65
Disabled American Veterans, Adrian M. Atizado, Assistant National 
  Legislative Director...........................................    27
    Prepared statement of Mr. Atizado............................    62
Paralyzed Veterans of America, Carl Blake, National Legislative 
  Director.......................................................    25
    Prepared statement of Mr. Blake..............................    60
Vietnam Veterans of America, John Rowan, National President......    29
    Prepared statement of Mr. Rowan..............................    66
Woolhandler, Stephanie J., M.D., M.P.H., Associate Professor of 
  Medicine, Harvard Medical School, and Co-Founder, Physicians 
  for a National Health Program..................................    12
    Prepared statement of Dr. Woolhandler........................    54

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      Stephanie J. Woolhandler, M.D., M.P.H., Associate Professor 
      of Medicine, Harvard Medical School, letter dated July 19, 
      2007.......................................................    71
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      Carl Blake, National Legislative Director, Paralyzed 
      Veterans of America, letter dated July 19, 2007............    73
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      Adrian M. Atizado, Assistant National Legislative Director, 
      Disabled American Veterans, letter dated July 19, 2007.....    74
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      Peter S. Gaytan, Director, National Veterans Affairs and 
      Rehabilitation Commission, American Legion, letter dated 
      July 19, 2007..............................................    76
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      John Rowan, National President, Vietnam Veterans of 
      America, letter dated July 19, 2007........................    78
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to 
      Hon. R. James Nicholson, Secretary, Department of Veterans 
      Affairs, letter dated July 19, 2007........................    79


                       PRIORITY GROUP 8 VETERANS

                              ----------                              


                        WEDNESDAY, JUNE 20, 2007

                     U.S. House of Representatives,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:07 a.m., in 
Room 334, Cannon House Office Building, Hon. Bob Filner 
[Chairman of the Committee] presiding.

    Present: Representatives Filner, Brown, Michaud, Herseth 
Sandlin, Mitchell, Hall, Hare, Rodriguez, Space, Walz, Buyer, 
Stearns, Miller, Boozman, Brown-Waite, Turner, Lamborn, 
Bilirakis, Buchanan.

              OPENING STATEMENT OF CHAIRMAN FILNER

    The Chairman. The Committee on Veterans' Affairs will come 
to order. I thank all the Members of the Committee and members 
of the audience and panelists who will be here to discuss this 
very important issue.
    The issue of the Administration's continued ban on 
enrollment of Priority 8 veterans is an important one and I 
hope that we will leave here today with a sense as to the cost, 
and the effects of rescinding the ban, as well as the costs, 
measured in the effect of denied access to healthcare, of 
continuing the Administration's policy of shutting the doors to 
an entire class of veterans.
    We are the richest Nation in the history of the world at a 
time when we are spending a billion dollars every 2\1/2\ days 
on a war, and yet we are rationing care to our Nation's 
veterans. I think that is unacceptable.
    We started this era in 1996, Public Law 104-262, the 
Veterans' Healthcare Eligibility Reform Act, and the U.S. 
Department of Veterans Affairs (VA) has remade itself into a 
healthcare system that is really a model. But in January 2003, 
then-Secretary Principi made the decision to bar enrollment of 
new Priority 8 veterans. These veterans are nonservice-
connected and are called ``high income'' because they make 
$27,790 or more. There is also geographic income thresholds.
    Although comparably better off than veterans in lower 
priority groups, they are by no means all rich, as some would 
have you believe. And yet, for 4\1/2\ years, the doors to VA 
healthcare have been closed to them.
    When we submitted the Majority Views and Estimates for the 
budget for fiscal year (FY) 2008, we noted that the authority 
of the Administration to deny enrollment to an entire class of 
veterans was never meant to be an infinite grant of authority. 
It was provided to the VA as a management tool at the time in 
order for it to address unexpected shortfalls that arose. 
Unfortunately, the situation we face today is that this 
continues as a permanent policy and the Administration fails 
year after year to request specific funding for enrolling 
Priority 8 veterans and treats the January 2003 decision as 
permanent.
    The VA has estimated that reopening enrollment will bring 
in an additional 1.6 million veterans and cost an additional 
$1.7 billion. The Independent Budget (IB) prepared by our 
veterans service organizations (VSO's), has estimated that 
reopening enrollment would cost $366 million. So I hope that we 
look at the differences among cost estimates and what it means 
if we continue the ban.
    Taking care of veterans is a continuing cost of war. All 
veterans should have access to their healthcare system. I hope 
the views of our witnesses will help us have a better 
understanding of this issue. As I look at the history again, 
this is rationing of healthcare to veterans, those who have 
served our Nation. And I think it is unacceptable in a nation 
of our wealth and our ability to provide for these veterans.
    For seconding my views on this issue, I call on the Ranking 
Member, Mr. Buyer.
    [The prepared statement of Chairman Filner appears on p. 
52.]

             OPENING STATEMENT OF HON. STEVE BUYER

    Mr. Buyer. Thank you, Mr. Chairman. Mr. Chairman, I have a 
markup today in the Energy Subcommittee, so I probably won't be 
able to stay for your entire hearing and Mr. Stearns will take 
over. Knowing that, I have a little longer statement to 
enlighten you further on my views, Mr. Chairman.
    When I spoke on the floor last week during consideration of 
the VA Appropriations bill, I commended the majority for your 
strong veterans funding. You have broken ranks with your 
predecessors, i.e., the previous Democratic majority of the 
1970's and 1980's that gave us a VA system that was depicted in 
the movie, ``Born on the Fourth of July,'' which is not a 
pleasant picture.
    You also have broken ranks with the Clinton Administration 
whereby they flatlined budgets to this Committee. So 
Republicans, we are not strangers to budget increases. The VA 
funding doubled during our majority after decades of these low 
budgets. So I congratulate you on your veterans funding.
    Our experience teaches us, though, that these increases 
cannot be a substitute for good management. A challenge before 
this Committee will be to ensure that the VA manages its 
resources to produce the best possible outcomes for eligible 
veterans. The values that I have learned in the military have 
taught me that we care first for our wounded and only then do 
we consider ourselves. To do otherwise is shameful conduct and 
contradictory to those values.
    During the 2 years that I chaired this Committee, the 
budgets reflected those values which shape these priorities 
that we must care for veterans who have service-connected 
disabilities, those with special needs, the indigent, veterans 
returning from war, ensure a seamless transition for military 
service to the VA and provide veterans every opportunity to 
live full and healthy lives.
    Veterans with service-connected disabilities, those with 
catastrophic disabilities and the indigent are the core 
constituency, our highest priority, individuals entitled to the 
highest priority of quality care.
    Now, I know, Mr. Chairman, you don't care for the term 
``core constituency'' and we have had this debate over the 
years, but it is not new. VSO's considering eligibility reform 
in 1995 used the term ``core group.'' The Veterans of Foreign 
War has recently also used the term ``core constituency'' to 
identify these particular veterans.
    Providing core constituency veterans with quality care has 
been a traditional mission of the VA. Veterans' Healthcare 
Eligibility Reform, Mr. Chairman, that you referred to, in 1996 
established a system of patient enrollments based on priorities 
in which core veterans were assigned the highest priority.
    So when you use the term ``rationing,'' it was almost meant 
to be a negative term, but when we establish the priority of 
care, it was set up in a system by priorities to make sure that 
we care for individuals according to our military values. Care 
for the nonservice-connected veterans and those with higher 
incomes was authorized only when resources were available, 
meaning lower priority veterans. After care was opened to 
Category 7 and later Category 8 veterans, the number of VA 
patients increased from just under 3 million to over 5 million. 
VA has not been able to keep up, even with the near doubling of 
the healthcare budget.
    We are now learning that waiting times for appointments are 
longer than the VA had reported. Core constituency veterans 
wait longer because of the millions of low priority veterans 
competing against them for healthcare. This was not the intent 
of Congress when House Report 104-190 stated, ``In designing 
the enrollment system and providing care, the VA may not enroll 
or otherwise attempt to treat so many patients as to result in 
either diminishing the quality of care to an unacceptable level 
or unreasonably delaying the timeliness of VA care delivery.''
    VSO's didn't intend this outcome either. Statements by 
major VSO's at the time of eligibility reform showed widespread 
support for giving top priority to veterans with service-
connected conditions. David Gorman, then the Deputy National 
Legislative Director for the Disabled American Veterans, 
referred to ``the priority that must be afforded to service-
connected veterans before you can go ahead and start taking 
care of nonservice-connected veterans.''
    The VFW's National Legislative Service Director, James 
McGill, warned against the VA being ``relieved of its primary 
mission of caring for those who have sustained injuries while 
in the service to the Nation.'' Passage of reform was partly 
based on VA studies indicating that with third-party 
collections, it would be budget neutral and, in fact, that it 
would be revenue enhancing. Reform would encourage veterans to 
seek preventive care in new VA outpatient clinics, reducing the 
need for expensive in-patient treatment. And you and I have had 
this conversation, Mr. Chairman, over the years.
    The Congressional Budget Office (CBO), however, believed 
reform would attract so many enrollees that it would 
dramatically drive up costs. As it turned out, CBO's 
predictions have been the most accurate. My regret at this time 
is that I did not insist on the requirement to use accepted 
healthcare management tools such as the enrollment fees and 
copays and giving the discretion to the Administrations that 
reflected the true value of the costs of healthcare and giving 
them the ability to manage the health system.
    I did that when I created the TRICARE for Life and I regret 
that I created a system for military retirees now that is 
different from that of someone who is a veteran with only 2 
years of service, and they don't have the same enrollment fees 
and copays and deductibles and things like that. So we have a 
very strange system and we did the job half right.
    Congress also gave the Secretary of Veterans Affairs the 
authority to limit enrollment based on funding. The law 
required the Secretary to ensure that high priority veterans 
get the care they need and deserve. In 2003, Secretary 
Principi, as you said, Mr. Chairman, suspended new enrollments 
for Priority Group 8 so that VA could fulfill its obligation to 
core constituency veterans as agreed to by the VSO's in 1996.
    Some say the government is obliged to provide essentially 
free healthcare for life to anyone who served more than 1 or 2 
years in the military, so long as they have an honorable 
discharge. I have concerns about that predicate. The government 
has long agreed to provide healthcare based on the systems of 
priority and I endorse protecting the core constituency first.
    And earlier when I brought up the issue, Mr. Chairman, with 
regard to our retirees, the military healthcare for retirees is 
not free. They must pay the enrollment fees. They make their 
copays according to their TRICARE plans, and I was really 
amazed to hear someone I have known for a lot of years, Steve 
Robertson, with the American Legion, argue against such 
comparisons between TRICARE and the enrollments, whether there 
should be enrollment fees and how we compare Category 7's and 
8's.
    It has been bothersome to me for a long time, because we 
have this military retiree sitting in a waiting room that has 
to pay these fees, Sergeant Major, that is different from 
someone who may have only served one term and they get a better 
deal. So we have some challenges ahead of us.
    The latest Independent Budget cites VA data that indicates, 
and this number, Mr. Chairman, I think is sort of all over the 
place, how many Priority Group 8 veterans are awaiting 
admission, pick a number, it seems. I think once enrollment is 
offered, we have an example, it will open the gates and the 
surge will come in. Those who think that mandatory funding will 
increase access and maintain quality, I think ignore the 
challenges entailed in expanding this system.
    Does VA have the capacity to accept millions of new 
nonservice-connected veterans? Even with this year's funding 
increase, can VA absorb these new patients? How fast can we 
build new clinics? Can VA hire the doctors, the nurses and 
other caregivers when the Nation has experienced a shortage in 
clinicians? How will communities cope with the siphoning of 
scarce clinicians with the opening of these clinics?
    If we cannot satisfactorily answer these questions, then we 
have merely raised expectations and I think that is wrong. The 
VSO's advocate opening the doors to Priority 8 veterans and 
simultaneously complain about the waiting times for 
appointments. But more money isn't the solution. As we have 
learned, the VA carries over hundreds of millions in healthcare 
dollars. And for example, in 2005-2006 alone, take the money 
that we put in on a bipartisan basis for mental health, they 
couldn't even spend all the money we gave them.
    This is not to say that the VA hasn't tried. Over the past 
several years, the Department has worked hard to manage not 
only the waiting times, they have opened 800 outpatient clinics 
and improved collections, but there is still much work yet to 
be done. We are working to improve the centralization of the IT 
system. Mr. Chairman, you and I worked jointly together on 
this, along with other Members of this Committee. We 
implemented an advanced clinic access program. The VA has 
provided the priority care to the veterans returning from 
Global War on Terror. The Department's developed a system of 
barcoding to reduce medical efforts, but there is still a lot 
of coding and in-coding challenges.
    VA instituted a patient safety program, but a system of 
electronic health records still has a way to go. And on top of 
this, the VA's Secretary has told us regarding the medical 
center directors, he has ordered them to stay open longer to 
ensure their facilities ``are available when veterans need 
them.'' Despite these improvements, core constituency veterans 
are waiting too long, meaning they are being crowded out by the 
lower priority veterans.
    So I am cringing at the moment. I am glad you are having 
the hearing. We can talk about it. But we better move 
carefully.
    And Mr. Michaud, there is great pressure upon you. You are 
going to be like the auto mechanic, to make sure that the 
systems are there and it works and it is prepared to receive, 
because I know you don't want to recreate the problems that 
were created when we had the majority, when we opened the doors 
and didn't prepare a system to receive.
    And so I look forward to working with you, but we need to 
be mindful of the challenge ahead of us. Just don't throw the 
money and say well, we are going to open it up if we have not 
prepared the system. And I thank you for your indulgence.
    The Chairman. I thank the Ranking Member for being so clear 
as to the differences on this panel and for making clear why 
your side may support a surge when it comes to military action, 
but we cannot have a surge, in your words, when it comes to 
treating our veterans.
    Is there anybody that wants to make an opening statement on 
this side? Ms. Brown?

            OPENING STATEMENT OF HON. CORRINE BROWN

    Ms. Brown of Florida. Thank you, Mr. Chairman, and I have 
to leave also because we have a Transportation and 
Infrastructure (T&I) markup. I want to thank the Chairman for 
holding this hearing, long overdue, on the reasons for 
excluding 1.7 million veterans from the VA system and the 
promises made when they put their life on the line to defend 
this Nation.
    I am reminded of the words of the first President of the 
United States, George Washington, whose words are worth 
repeating at this time. ``The willingness with which our young 
people are likely to serve in any war, no matter how justified, 
shall be directly proportional as to how they perceive the 
veterans of earlier wars were treated and appreciated by their 
country.''
    President Bush failed to maintain veterans medical care 
funding over time. The Bush budget asked veterans to pay new 
and increased healthcare fees and after 2008 cut veterans 
funding. Over 5 years, those cuts total $3.4 billion below the 
level needed to maintain the 2007 level. President Bush's 
priorities included imposing enrollment fees and increasing 
copayments for veterans--the budget raises fees on veterans for 
their healthcare by $355 million in 2008, $2.3 billion over 5 
years and $4.9 billion over 10 years.
    We, in the Congress, on a bipartisan basis, have rejected 
it in each of the last 4 years and we will continue to reject 
these schemes. President Bush can send 484 tons of money, now, 
that is $12 billion to Iraq and this $12 billion cannot be 
accounted for. Now, $12 billion is a cruise ship full of one 
hundred dollar bills. We can't tell you what happened to $12 
billion. One billion dollars would serve these 1.7 million 
veterans.
    So we need to close up the waste, fraud and abuse that has 
existed in sending money over to Iraq. This House just passed 
the largest increase in veterans healthcare in the history of 
VA and what does that President do? He threatens to veto it. I 
don't believe it. We are going to put it on his desk. What is 
the priority of President Bush? He threatens to deny coverage 
to veterans who serve this country, those Priority 7 and 8 
veterans who do not have service-connected disabilities rated 
above zero percent, have an income above $27,790.
    You know, we all, everybody up here, we talk the talk. It 
is time that we walk the walk. And I yield back the balance of 
my time.
    The Chairman. Thank you, Ms. Brown.
    Mr. Stearns?

            OPENING STATEMENT OF HON. CLIFF STEARNS

    Mr. Stearns. Mr. Chairman, thank you very much. I might 
just correct a couple items here. You had mentioned the surge 
and likened it to this Priority 8 and I am not sure a lot of 
the Members realize that the Priority 8 was established when 
Republicans were in the majority. In 1996, the Veterans' 
Healthcare Eligibility Reform Act was passed and then in 2001 
the new Category Priority 8 for veterans was created for those 
who had served, but who had income or net worth above the VA 
income threshold.
    So, Mr. Chairman, it was under Republican watch. I think it 
was Chairman Stump who got the legislation passed and the 
President signed, so it really is a Republican accomplishment 
in that respect.
    I would say to my distinguished colleague----
    The Chairman. Thank you for taking the credit.
    Mr. Stearns [continuing]. Colleague Ms. Brown, that the 
Milcon-VA Appropriations bill I think the President is going to 
sign and I, like many of the Members, support increased funding 
for veterans and we applaud the amount of the increase.
    But again, Mr. Chairman, I would like to point out 
something that all of us, even though we have been veterans or 
not veterans, we serve on this Committee. We expect to be 
accountable and to understand that the dollars that are being 
spent are spent wisely. Now, you mentioned, Mr. Chairman, that 
the salary of a veteran is $27,000, I think you said. But I 
think the Members should realize that a Priority 8 veteran is a 
nonservice-connected, his income has to be above the Priority 
7, plus it is U.S. Department of Housing and Urban Development 
geographic means tested that varies based upon where you live.
    So the quote you gave of $27,000 doesn't apply to San 
Francisco. It does not apply to Boston. It does not apply to 
New York. Do you know what it is for San Francisco, the means 
test? It goes up to $63,400. That is a single veteran. Then 
when you add that he has one dependent, it goes up another six 
and it keeps going up. When you talk about New York, it is over 
$40,000.
    So you are talking about something that is much higher and 
allows people that are making $70,000 with one dependent to be 
eligible. Now, I am not saying that we should not stop that, 
but I am saying let's be understanding that even the Disabled 
American Veterans (DAV) have come out to say that they have 
some concerns. And let me read what they say. ``The Category 8 
issue is only a symptom of a larger problem and not the source 
of the problem itself.'' And they caution us because they say 
that the budget restraints in the appropriation process and 
conditions still do not provide the disabled veterans all the 
funds they need.
    Now, these are people that have served, are disabled, are 
functioning in a limited capability and we should obviously, as 
Members of this Committee, look at these people first and make 
sure that all the resources go to these people and not 
necessarily disadvantage them to somebody who is a Priority 8 
with nonservice-connected, no disability, who is making almost 
$70,000 a year. Obviously, Secretary Principi was trying to say 
to us, and it was a very difficult thing for him to do, was to 
say listen, I want to see the disabled veterans get the money 
first and then if we can, let's take care of Priority 8.
    Having said that, maybe with this new surge in the budget 
that the Chairman has provided this for, that we can take care 
of the disabled veteran to the point where the DAV is not 
feeling that they are disadvantaged, and then we can provide 
money to the Priority 8. But I do caution the Members that our 
job is to make the hard choices, not come up here and just 
continually vote to service more and more programs at the 
expense of the people who really need it.
    So that is the only point I try to make.
    Ms. Brown of Florida. Mr. Stearns--would you yield for a 
second?
    Mr. Stearns. Sure.
    Ms. Brown of Florida. In those categories that you were 
discussing, the financial area, you do know that our district, 
the $27,000 would apply?
    Mr. Stearns. In your congressional district?
    Ms. Brown of Florida. Not just my congressional district. 
My congressional district borders your congressional district. 
So we are talking about our mutual constituents.
    Mr. Stearns. No, and I--we have one of the poorest in----
    Ms. Brown of Florida. Okay. I just wanted you to know----
    Mr. Stearns. I understand that.
    Ms. Brown of Florida [continuing]. That we share these 
constituents----
    Mr. Stearns. You know, from Jacksonville, which is a large 
city in my congressional district, and yours, we both go 
through the University of Florida and Gainesville. But we also 
have portions--I have Bradford County and other counties where 
obviously this would apply. But again, I think you will agree 
with me, that we want to make sure the people that need it, get 
it without any problems and that is what my----
    Ms. Brown of Florida. Yes. And one other thing, I wish as 
you are discussing, that waste, fraud and abuse I brought up, 
the $12 billion that we can't account for and if we were more 
conservative with the dollars, then we would be able to serve 
more veterans and make sure that they have the care that they 
need.
    Mr. Stearns. Well, I will just conclude by saying, the 
Ranking Member Buyer made this point well when he talked about 
all the different problems that exist in the VA and we have 
been trying--interoperability, transparency, being able to get 
a hold of IT. I mean he has gone through a litany of these 
problems that he feels are pretty important to servicing our 
veterans with not allowing waste, fraud and abuse. So with 
that, Mr. Chairman, and I ask that my prepared statement, can 
that be part of the record?
    [The prepared statement of Congressman Stearns appears on 
p. 52.]
    The Chairman. Without objection.
    Mr. Hall?

             OPENING STATEMENT OF HON. JOHN J. HALL

    Mr. Hall of New York. Thank you, Mr. Chairman. I also have 
a T&I markup to go to in a little bit. So let me just say that 
this Priority 8 veterans situation is one of the things I hear 
about the most in my district from veterans. I do understand 
Mr. Stearns' concern and the Ranking Member's concern about 
being able to provide service for an additional returning group 
of veterans at the same time that we are trying to bring the 
waiting times down and the service up for the veterans who are 
already taken care of.
    So I am here to learn and to hear all the various facets of 
it. But I would just mention that this geographical adjustment 
that allows the numbers to float from $27,000 to $40,000 or 
higher, in my district, and especially the County of 
Westchester, one of the five counties I represent, 23 percent 
of our homeless population are veterans and one of the reasons 
that might be is that $40,000 doesn't go very far in 
Westchester County, nor does it in any of the other counties, 
and Hudson Valley.
    So those numbers might sound like a lot of money, but I 
think it is all relative and one needs to--and the law is 
written to try to take in these geographical differences. But I 
really would like, if we can do this, I would be in favor of 
providing for our Priority 8's and that is what we are here to 
learn about. So thank you very much, Mr. Chairman. I yield 
back.
    The Chairman. Any others on the Republican side?
    Ms. Brown-Waite. Mr. Chairman?
    The Chairman. Yes. Ms. Brown-Waite?
    Ms. Brown-Waite. I did prepare a statement which I would 
ask unanimous consent to be able to submit.
    The Chairman. Without objection, all written statements 
will be made a part of the record.
    Ms. Brown-Waite. I appreciate that very much. Thank you.
    [The prepared statements of Congresswoman Ginny Brown-
Waite, Congressman Miller and Congressman Mitchell appear on 
pgs. 53 and 54.]
    The Chairman. Thank you. Mr. Hare?

              OPENING STATEMENT OF HON. PHIL HARE

    Mr. Hare. Thank you, Mr. Chairman. I too have a markup here 
in a few minutes. I admit to being new on this Committee and I 
understand there has been terms to describe me such as 
youthful, exuberant and, but you know, I just want to make 
myself very clear when it comes to this issue. The reason that 
I am on the Committee, it seems to me, is to do everything I 
can as a Member of Congress to provide benefits for every 
veteran this country has. I don't care whether you are a 
Filipino veteran, Merchant Marine veteran, whether you happen 
to fall into this particular category that we are talking about 
today.
    And I would just have to say to my friends across the curve 
here, and I repeat this often. The question I think that we 
should be handling here, Mr. Chairman, is not can we afford to 
do these things. The question is, the statement is we can't 
afford not to do these things. We make promise after promise 
after promise to different groups and yet we don't keep them. 
We are told we don't have the money. We do have the money. We 
don't have the will, it seems to me, and we don't have a 
President, but that will change, to get somebody to stand up 
for our Nation's veterans.
    If you put people in harm's way, you protect them from the 
minute you send them to the minute they come home and beyond. 
That is what we are supposed to be about. The VA estimates that 
lifting the ban would result in approximately 1.6 million 
veterans seeking healthcare. Well, that is just a tragedy. You 
know, woe to the poor VA. Last year, Democrats estimated it 
would cost $341 million, including subtracting estimated 
collections to lift the enrollment ban.
    And again, I know this may not seem like a lot of money to 
my friends, but again, I still, with all due respect, shake my 
head and wonder when we talk about, well, we have to make sure 
we have the money, but we doled out almost, the VA doled out 
almost $4 million of their money to give benefits to people 
that most of them didn't even have coming from my perspective.
    And I am angered by this because I--we had bills yesterday 
that came up. We had a VA person come up who couldn't answer us 
when these bills were going to--the VA hadn't even taken a look 
at them yet, and they were to help widows. And they were to 
help people who had been injured, a person who lost his leg on 
a aircraft carrier in a training episode and the VA sits and 
tells us we will get back to you when the time is right for us.
    Well, the time for us now, Mr. Chairman, I think is now. 
And there are people that try to live on $27,000. They are not 
high income. And those who are combat decorated are shut out of 
the system because they make as little as $27,000. My 
statement, again I go back, and I will continue to say this as 
long as I serve on this Committee and I support legislation to 
help veterans and I will continue to do that. This is not 
whether or not we can afford to do this. This is we cannot 
afford not to do this.
    And every time we have a piece of legislation that I 
believe is in the best interest of veterans in this country, I 
am not going to ask how much is it going to cost. I am going to 
want to know how many veterans are going to be served by what 
we do here today. That is how we should be judged, not on a 
dollar and cents basis. I think that when we start doing that 
to our veterans, I think we diminish their service, because if 
you are serving--I don't know what the pricetag is for that 
widow who lost her husband in the United States Marine Corps.
    I have to make a call today to a mother who lost her son in 
Afghanistan. What is the price? I think enough of this whether 
or not we can afford it. And I will say to you, Mr. Chairman, I 
will continue to work on this stuff. But I applaud you for 
being steadfast in this and for standing up for what you 
believe in. And you know, we are going to have battles on this 
Committee and we will have disagreements on this Committee. But 
those disagreements should never be over whether or not we 
think we have the cash available to help any group of veterans 
out that served this country.
    And with that, I just want to say to the Priority 8 
veterans from my perspective, you have these benefits coming 
and we are going to work very hard to make sure you get them. 
To our Filipino vets, to our Merchant Marines and to our other 
people, I am not going to quit working and this Committee is 
not going to quit working until we provide the benefits that we 
promised people over 60 years ago.
    And with that, Mr. Chairman, I thank you and I yield back.
    The Chairman. I thank the gentleman.
    Mr. Boozman. Mr. Chairman?
    The Chairman. Mr. Boozman?

             OPENING STATEMENT OF HON. JOHN BOOZMAN

    Mr. Boozman. I would just--and again, I don't disagree with 
what Mr. Hare is saying or the sentiment that he is expressing. 
On the other hand, one of the things that we have worked really 
hard to do as a Committee--and everybody that is on this 
Committee, this certainly is not, we are not here for the 
glamour of the Committee or whatever. We are here because we 
want to help people and want to help veterans.
    But one of the things that we have really worked hard, and 
I think Congressman Stearns was alluding to this and Mr. Buyer 
and others, but we have really worked hard to get our wait 
times down. That is the other thing that veterans get so 
frustrated, those that are in the system, you know, having to 
wait for appointments. But I think at the very least--and 
again, I am sympathetic. But in looking at the potential of 
going forward, then I would think that we probably want the VA 
to come up with a plan and tell us what kind of staffing we are 
talking about.
    What would that do to wait times? How would you--what kind 
of facility increase and things as you put hundreds of 
thousands of people in the system, because again, I think we 
can be very proud that--we have two problems. We want to serve 
as many people as we can. On the other hand, those that we do 
serve, we want to do a very good job of serving. And that has 
not always been the case in the past.
    And to the Committee's credit, working together in a very 
bipartisan way, I think we have worked very hard on that and we 
are continuing, I think we are going to continue to work on 
that under Mr. Michaud's leadership, to continue to get our 
wait times down. But that is a real problem.
    So I would encourage, just like I said, at the very least, 
we need something from the VA as to how this would affect the 
system. Thank you.
    The Chairman. Thank you, Mr. Boozman.

           OPENING STATEMENT OF HON. TIMOTHY J. WALZ

    Mr. Walz. Well, thank you, Mr. Chairman, and to the Ranking 
Member. And thank you, all the witnesses. I know we are here to 
hear you. And Dr. Woolhandler, thank you for your patience. It 
is you that we are here to hear. This is a very complicated 
issue and you hear the passion on both sides. The one thing 
that is consistent amongst the people up here and with each of 
you is how best to treat our veterans, how best to ensure that 
they get the care that they so richly deserve and this Nation 
has an obligation to provide.
    I am glad to hear my colleague from Florida discuss the 
Disabled American Veterans and their concern about Priority 8. 
And I know when our friends get up here and discuss that, they 
will take that, to which I think they are probably right on, 
the next step on this is full funding, mandatory funding. So 
you can't have half of that argument without making the second 
half of their argument, which is don't just go with the 
Priority 8's. We need to get this all the way right with the 
full funding.
    So I hope my colleague will embrace that along with me. And 
I agree with my colleagues. There are limited amounts of 
resources and it is very, very clear that when you make a 
budget, it is a monetary exercise in terms of balancing a 
budget sheet. But the second part of that is, it is a moral 
imperative, an ethical imperative.
    And make no mistake about it, when we create a budget, what 
we are doing with those limited amounts of resources is 
prioritizing our collective values as a nation. And I do not 
disagree that you must balance it. I am absolutely adamant 
making sure with PAYGO and making sure we balance our budget. 
It is very difficult for me, though, when you put all of these 
things out there on the budget sheet, be very clear about what 
you are saying yes to and what you are saying no to.
    It is very difficult for me to justify throwing Priority 8 
people off of the rolls when we have the most massive tax cuts 
to the wealthiest amongst us, at a time when we are doing that, 
when we have massive subsidies to oil and gas companies at the 
same time we are telling veterans we don't have the resources 
to accept them.
    I will agree and absolutely adhere to the policy that there 
is limited resources that must be allocated according to our 
Nation's priorities. My difficulty is when people prioritize 
those other things over what I believe is in the best interest 
of this Nation, not just morally taking care of our veterans, 
but from a security standpoint.
    So I thank you. I don't want to take up any more of our 
distinguished witness' time and I hope you can help enlighten 
us how we can best do this and serve all of our veterans.
    So I yield back, Mr. Chairman.
    The Chairman. Thank you, Mr. Walz. And we will use that as 
an introduction to our panelist, Dr. Stephanie Woolhandler, who 
is Associate Professor of Medicine at Harvard Medical School 
and Co-Founder of Physicians for a National Health Program. We 
thank you for being here and look forward to your testimony. We 
hope you will summarize your written statement which will be 
made part of the record, in about 5 minutes and then we will be 
asking you questions.

STATEMENT OF STEPHANIE J. WOOLHANDLER, M.D., M.P.H., ASSOCIATE 
PROFESSOR OF MEDICINE, HARVARD MEDICAL SCHOOL, AND CO-FOUNDER, 
            PHYSICIANS FOR A NATIONAL HEALTH PROGRAM

    Dr. Woolhandler. Okay. Well, in my written testimony I am 
going to present, I detail information on health insurance 
coverage and problems and access to care for America's 
veterans. But all of this is data based on Federal studies, 
surveys carried out annually, one by the Census Bureau, and 
this is a 2005 Census Bureau data, and the other one, the 
National Health Interview Survey. So it is mostly going to be 
about the data on how many veterans are actually uninsured.
    We are going to find out how many veterans are uninsured 
and also, do these uninsured veterans suffer the same kind of 
problems and access to care that other uninsured Americans 
suffer. Okay.
    So based on the Census Bureau's 2005 data, in 2004 there 
were 1.8 million military veterans who had neither health 
insurance, nor ongoing care at Veterans Health Administration's 
(VHA) hospitals. Now, you have to note the survey did ask 
veterans if they had health insurance and if they had veterans 
or military healthcare. And we counted them as uninsured only 
if they answered no to both questions, that is, they had no 
insurance, they had no veterans or military healthcare.
    The number of uninsured veterans was 1.8 million and it had 
increased by nearly 300,000 since 2000. The proportion of non-
elderly veterans who are uninsured rose from less than one in 
ten in 2000 and is currently one in eight. One in eight non-
elderly veterans has no health coverage. An additional 3.8 
million members of veterans' households were also uninsured and 
of course, they are going to be ineligible for VA care.
    And then when we looked at who these uninsured veterans 
are, we found that virtually all Korean War and World War II 
veterans were covered by Medicare. They are over the age of 65. 
However, among Vietnam-era veterans, there were nearly 700,000 
who had no health coverage. Among veterans who served in other 
eras, which would include the Persian Gulf War, 12.9 percent, 
1.1 million veterans had no health coverage. So people are 
returning from the Persian Gulf, 1.1 million of them have no 
health coverage when they get back.
    Almost two-thirds of the uninsured veterans were employed 
and nearly nine out of ten had worked in the past year. So 
these are indeed working Americans. Most uninsured veterans, 
like other uninsured Americans, are working. Many earn too 
little to afford health insurance, but too much to qualify for 
the means test at the VA or obviously from Medicaid.
    Now, uninsured--when we looked at the problems that people 
had getting care, it turned out that uninsured veterans have 
the same problems getting care they need as other uninsured 
Americans. Moreover, many of them have serious illnesses that 
should be getting medical care from doctors like me.
    Among uninsured veterans older than the age of 45, nearly 
one out of five were in fair or poor health, so they had health 
problems. And nearly one in three uninsured veterans of all 
ages had at least one chronic condition that limited their 
ability to function. A disturbingly high number of uninsured 
veterans reported needing medical care and not being able to 
get it in the past year. More than a quarter of uninsured 
veterans failed to get needed care due to cost. Thirty-one 
percent had delayed care due to cost. And among uninsured 
veterans, 44 percent had not seen any doctor or any nurse 
within the past year, and two-thirds said they got no 
preventive care anywhere.
    By almost any measure, these uninsured veterans had as much 
trouble getting healthcare as any other uninsured American. And 
that is the data part. And now I am going to get to the opinion 
part of what I am going to say.
    We believe the Veterans Health Administration is a rare 
success story in the American healthcare system. Currently the 
VA offers more equitable care and higher quality care than the 
average care in the private sector. And I have provided 
citations for that, several studies, scientific studies 
comparing care, show higher quality in the VA than the average 
care in the private sector. And the VA has become a medical 
leader in research, primary care and computerization.
    And while we support opening VA enrollment to all veterans, 
this would still leave many veterans unable to access care 
because they live far from VA facilities. Moreover, even 
complete coverage of veterans would leave 3.8 million of their 
family members uninsured. Hence, my colleagues and I support a 
universal national health insurance program that would work 
with and learn from the VA Health Administration system in 
covering all Americans.
    Any questions?
    [The prepared statement of Dr. Woolhandler appears on pg. 
54.]
    The Chairman. Thank you. How would you, Doctor, respond to 
the basic issue raised by the Republican side here that you 
have just got to go with core constituencies which has no basis 
in law, as far as I know, by the way, that term, and other 
people will suffer if we allow, if we open the system up to 
more----
    Dr. Woolhandler. Okay. Well, I am a physician and when I 
think about priorities, I think the sickest people have the 
most priority. So a sick person to me has a priority, whether 
they earn $28,000 or $26,000 a year. The priority is to take 
care of sick people and what our data is showing is that many 
veterans have no coverage and they are sick and need care and 
can't get it.
    The Chairman. Okay. Questions from those who didn't have 
opening statements? Ms. Brown-Waite, did you have any 
questions?
    Ms. Brown-Waite. I would just like to ask the doctor, 
certainly you are a proponent of universal healthcare. So if 
there is universal healthcare, do you see also the need for the 
VA healthcare system, or do you envision it all being under one 
universal healthcare?
    Dr. Woolhandler. Okay. Well, the VA has turned into a 
leader in American medicine. It wasn't that way when I went to 
medical school. But in the years I have been practicing, it has 
gone from, if you will, something of a backwater of American 
medicine to a real leader. Their computer systems are the best. 
Their quality is the best. So I think a national health 
insurance system should build on what is best in American 
healthcare and that is why I think the VA should and would 
continue to exist as an option with some sort of national 
health insurance system.
    Ms. Brown-Waite. So your concept would be universal 
healthcare for everyone in America and simultaneously the VA 
system to be there and to expand because of its excellence?
    Dr. Woolhandler. Yes.
    Ms. Brown-Waite. Because we hear so many people tearing 
down the VA healthcare system, and certainly as a doctor you 
know there are errors made, unfortunately, every place, because 
it is a system that is carried out mostly by human beings and 
so there are certainly medical errors and bad judgment that 
takes place, whether it is in the VA or whether it is in the 
proprietary hospital setting.
    But, so your concept is to have a VA run healthcare system 
along with universal healthcare?
    Dr. Woolhandler. Okay. Yes, it is--I don't work for the VA. 
I don't work in a VA hospital. What I am reporting is actually 
the scientific evidence that has come out in the medical 
literature over the last 5 years or so which does show that the 
quality is better at the VA than the average in the civilian 
sector. National health insurance would give people their 
choice. They could go to a private hospital, a public hospital, 
a VA hospital. But if people are smart, they would take the 
national health insurance and in many instances choose VA care 
because the data is that the quality at the VA is at least as 
good, in many cases better, than civilian sector.
    Ms. Brown-Waite. You are absolutely right. I have a huge, I 
have the second highest or the highest number of veterans of 
any Member of Congress. Representative Miller from the 
panhandle and I, each year we go back and forth as to who has 
the highest number of veterans. And I can tell you that my 
veterans are very, very supportive of the VA healthcare system, 
because they know that the quality exists there.
    I yield back the balance of my time.
    The Chairman. Thank you.
    Ms. Herseth Sandlin?
    Ms. Herseth Sandlin. Thank you, Mr. Chairman. Just maybe a 
couple of questions. I understand there is a followup study 
that you and your colleagues have been undertaking; is that 
correct?
    Dr. Woolhandler. Yes, there is. These numbers that I gave 
today are the most recent numbers.
    Ms. Herseth Sandlin. Okay.
    Dr. Woolhandler. But there is a full publication coming out 
this December.
    Ms. Herseth Sandlin. And are there any trends that you have 
been able to identify or changes? I know there are some 
statistics here about half of the uninsured veterans in the 
survey had incomes that would make them completely ineligible 
for VHA enrollment because of the Priority Group 8 freeze. What 
changes have you been able to determine for those Priority 
Group 8 veterans that were able to enroll prior to the freeze, 
their access to primary healthcare and to outpatient services 
as it relates to annual appointments with doctors and 
preventive care? Are you doing anything to compare the relative 
health of those Priority Group 8 veterans versus those that are 
uninsured that are Priority Group 8 that didn't get access to 
the veterans, to VHA?
    Dr. Woolhandler. Okay. The Census Bureau is not detailed 
enough for us to figure out precisely who is a Priority 8 and 
who isn't. Specifically, we don't have any information in the 
Census Bureau about assets. There is an assets test. And so we 
can just be kind of approximate. But things have not changed. 
That is, about half of uninsured veterans have incomes above 
250 percent of poverty and that hasn't changed over the years. 
And virtually none of them would be eligible other than as a 
Priority 8. They would flunk the means test because of their 
income.
    Ms. Herseth Sandlin. I appreciate the response.
    Mr. Chairman, I would just suggest that perhaps working 
with the doctor or working with those that we meet with on a 
regular basis, with the veterans service organizations or 
officials in the VA, that it would be, I think, worthwhile to 
inquire as to a study--my concern here, separate from the 
equity issues and some of the statements made by my colleagues 
at the outset, is the issue of access to primary healthcare and 
the importance of cost savings over time of annual doctor's 
appointments and preventive care and whether or not we can get 
an analysis of the healthcare received by Priority Group 8 
veterans who got into the system before the freeze versus a 
subset of Priority Group 8 veterans who are uninsured and not 
getting access to that type of primary healthcare, to help make 
the case about the importance of having access to the system, 
understanding as most of the veterans I talked to who are 
Priority Group 8, that service-connected disabled veterans who 
are lower income are first in line, but they shouldn't be 
disallowed from even getting into line. And it might be 
something that would help shed light on the importance of the 
access to care.
    I thank you and I yield back.
    The Chairman. Thank you very much. Any questions on this 
side?
    Mr. Buyer?
    Mr. Buyer. Thanks. Mr. Chairman, you mentioned about the 
reference to core constituency, you are correct, is not in law, 
but looking at the eligibility reform, it sets out for the 
Secretary the priorities of care that we all know about. There 
is even a provision in here that says in the case of a veteran 
who is not described in the above paragraphs, the Secretary has 
the extensive resources and facilities available and subject to 
the provisions of F and G, has furnished hospital care, medical 
services and nursing home care which the Secretary determines 
to be needed. I just wanted to let you know that when you say 
it is not in law, it is in law.
    To the witness, I would just like for you to know that when 
you come to Congress and you want to present your paper, it was 
one of the most challenging things for me to get beyond your 
title. You titled it ``Stains on the Flag'' to promote your 
view of a social policy for a national healthcare system. Very 
challenging for me to get beyond the title--I just want you to 
know that, very difficult and challenging to me, especially 
coming--now I will give you this view--from Harvard, from 
Harvard that has a faculty with an anti-military bias, so much 
so--let's see, Harvard, you don't even allow ROTC.
    You don't allow military recruiters on your campus. But 
that same Harvard, let's see, you take the money. You take 
students who go to Harvard who have ROTC, who will pay the 
money, but they have to go to class at MIT. And you will take 
DoD grants because you want the money to enrich your school.
    But there is this 1960's style of anti-military bias that 
still permeates at Harvard. And when you come here and you 
title your paper about a stain on the flag, I just want you to 
know, to me as a veteran who served my country for 27 years in 
uniform, in war and in peace, I can't get--it is hard for me to 
get beyond the title when I look at Harvard as an intolerant 
institution at times. So I just share that with you.
    Dr. Woolhandler. Okay.
    Mr. Buyer. It was challenging for me. But I dove into this. 
And so I just want to share with my VSO colleagues that are 
here, all right, we weren't so crazy after all. All of our 
offsites and things, where I went and shared with you that 
there is a huge challenge here, a philosophical difference 
between those who believe in a private health system versus 
those who believe in a national health system or single-payer 
system.
    And that is why the Chairman has this witness here. And I 
don't question the Chairman's sincerity. He told me in our 
budget hearing 2 years ago, I want the VA to be there to open 
up to all veterans and their dependents. And so it is a bigger 
puzzle in the national health insurance pie and that is a 
reality that we have to challenge, that we have to struggle 
with, that I am going to try to struggle with.
    But I just want to end with this. One thing that we didn't 
talk about in our opening statements--that was a very good 
dialogue, Mr. Chairman. I am glad you allowed that to happen, 
because we also have all this influx of our veterans who are 
returning from the war and we just, you know, we just voted 
here to open it up for 5 years, which is even more.
    So it is about preparing the system to receive them and we 
have been challenged here over the years in preparing that 
system and I think that is when the Secretary closed off the 
8's. And he closed off the 8's thinking that we could be a good 
mechanic--and I wish Mr. Michaud were still here--on all these 
systems' analytical approaches and working with the VA and then 
we end up ourselves in a war.
    And that was one of the reasons we wanted to give 
discretionary authority to the Secretary, because we couldn't 
foresee what would happen into the future.
    But thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Buyer.
    Dr. Woolhandler. I just want to respond to that.
    The Chairman. Please.
    Dr. Woolhandler. With all due respect, sir, I think you are 
changing the subject. This hearing is actually not about 
Harvard. This hearing is about 1.8 million uninsured veterans. 
And I grew up in Shreveport, Louisiana. I have lived in a lot 
of different places. And it breaks my heart to see veterans 
come in and not have any health coverage. People come in, they 
haven't had their blood pressure taken care of. They haven't 
had their diabetes taken care of. They are selling their homes 
in order to pay for medicines. And they are veterans. But they 
just can't get access to the VA care. And the VA should be an 
important safety net for my patients and it is not. And I do 
consider that a stain on America's flag.
    The Chairman. Thank you.
    Mr. Rodriguez?
    Mr. Rodriguez. First of all, let me thank you for being 
here with us today. And I wanted to ask you, we haven't been 
able, apparently as a nation, haven't had the will or the votes 
to be able to come up with any form of universal healthcare. So 
we have tried to go after it incrementally. So looking at it 
from an incremental perspective, do you have any suggestions as 
to how we can deal with--I know we have some 46, 48 million 
Americans uninsured. But for those veterans, that 1.7 or 1.8 
million that are out there, what approaches might there be--I 
know we have the State Children's Health Insurance Plan 
(SCHIP). Maybe we could include the parents of those veterans 
as part of that SCHIP program that takes care of their kids and 
includes the parents and provides some kind of access to 
healthcare to maybe veterans, where we could include them, if 
nothing else. If we don't include the rest, maybe we could do 
that. And I wonder if you have any other options there, any 
other alternatives in terms of approaching it incrementally and 
trying to cover our veterans.
    Dr. Woolhandler. Okay. Well, the VA has become a safety net 
for low-income and middle-income people. Most have been male. 
The SCHIP and Medicaid programs have primarily served children 
and women. While we support national health insurance, we also 
support maintaining a safety net for the time being. I think 
clearly the most straightforward way to provide a safety net 
for veterans is through the VHA system. The SCHIP program has 
not been very successful in enrolling men.
    The Chairman. Is your microphone on, Mr. Rodriguez?
    Mr. Rodriguez. It isn't. Is there a possibility of maybe 
looking at some options that allow, for example, some kind of a 
program that ties them to the VA and their families if they are 
uninsured? We have been able to come up with Medicare for our 
seniors, Medicaid for our indigent, the SCHIP for those 
uninsured kids. But maybe we ought to come up with a program 
that is just for veterans period and their families that could 
be comprehensive in nature, that if they join the military, 
that is maybe something that they can bet on and where they 
could participate, maybe something similar to TRICARE that is 
out there right now that could be comprehensive, and, at least 
that population could have some degree of access, and 
especially their families, because right now their families are 
not included in that. Has anybody given some thought in that 
area?
    Dr. Woolhandler. We have mostly given thought to the idea 
of national health insurance that covered everyone, nonprofit 
national health insurance.
    Mr. Rodriguez. But as you heard from the Ranking Minority 
Member, there are a lot of people who feel that way, for us to 
be, we haven't been able to pull it off and historically we 
haven't, and that would be the ideal. But in the meantime, what 
do we do?
    Dr. Woolhandler. Okay. Well, I think you do need to defend 
the pieces of the safety net that you can defend and for this 
Committee that would be the Veterans Health Administration by 
making sure the funding is adequate to take care of all 
veterans in need and get rid of the problem of 1.8 million 
uninsured veterans. I personally think that is unacceptable in 
any system.
    Mr. Rodriguez. And I agree with you. But I am more 
concerned about them and their families----
    Dr. Woolhandler. Mm-hmm.
    Mr. Rodriguez [continuing]. And their kids.
    Dr. Woolhandler. Yeah. Well, the problem with trying to 
extend coverage without national health insurance has to do 
with the question, how are you going to pay for it? The idea 
behind national health insurance is you get tremendous savings 
through administrative simplification. So by having a single 
payer like Social Security or Medicare, if you will, and 
expanding Medicare, you get tremendous administrative savings. 
We estimate that you could cut the administrative costs from 
about $700 billion a year to $350 billion a year in the U.S. 
and then you use the savings to cover people.
    If you try to cover people without going to a national 
health insurance model, you don't get the administrative 
savings and you have to come up with more money.
    Mr. Rodriguez. And I agree with you, because I know that 
when the other side pushed the privatization of Medicare and 
Medicare Plus versus straight Medicare/Medicaid to the 
taxpayers, they sold it to us that it was going to be cheaper, 
but as we all know, the Medicare Plus, even though they pay 
$300 out of their own pocket, to the regular taxpayer it still 
costs us more. So it hasn't worked and so I am hoping we can 
come to grips with that.
    Thank you.
    The Chairman. Thank you, Mr. Rodriguez.
    Mr. Stearns?
    Mr. Stearns. Doctor Woolhandler, thank you for being here. 
I know how busy you are. We don't want to take a lot of your 
time because we have other witnesses. But I did want to just 
clarify a couple things.
    You had indicated that obviously you support universal 
healthcare. You are the Co-Founder of Physicians for a National 
Health Program, as I understand it.
    Dr. Woolhandler. Yes, but I am mostly here to present this 
data. I don't know that I was brought primarily to express my 
opinion, but----
    Mr. Stearns. Well, the difficulty is, because of your 
desire for universal healthcare, that would influence how you 
felt about veterans. For example, you have indicated to my 
colleague from Florida that you would like to see a universal 
healthcare. So my question to you, if I am a veteran in the 
veterans program, under your understanding of a universal 
healthcare, would I as a veteran have a choice to stay in the 
VA or would I have a choice to have my private doctor in this 
universal healthcare system that you advocate?
    Dr. Woolhandler. Absolutely. Under national health 
insurance, everybody gets a card like a Social Security card 
and they can use it at any doctor or hospital. So if they want 
to go to a private doctor, they can. If they want to go to the 
VA, they can.
    Mr. Stearns. Okay. So you advocate giving all veterans a 
choice, so they could----
    Dr. Woolhandler. Giving all Americans a choice, yes.
    Mr. Stearns. So veterans could opt out of Veterans Affairs 
and go to the private, to this universal healthcare that you 
advocate; is that correct?
    Dr. Woolhandler. Well, they will have insurance which would 
allow them to do that. As you are probably aware, most of the 
veterans who use the VA actually have some form of health 
insurance. So many people who do have a choice about where to 
go end up going to the VA.
    Mr. Stearns. But isn't it possible, would you perhaps 
comment on the fact that if you do that, that we might--
deterioration of the Department of Veterans Affairs because a 
lot of these people would opt out and it might in a sense, the 
Veterans Affairs medical system would deteriorate because a lot 
of these people would be leaving. Is that a possibility?
    Dr. Woolhandler. I don't actually think that is true, 
because one of the things you would want to do is provide 
people better information about where the quality programs are. 
People are often very confused and they assume that private is 
always going to be better. But if they have good, solid 
information, scientific information that compares quality, I 
think they will see that the current standard is that Veterans 
Affairs is at least as good as the private 
sector, and by many measures higher quality than the private sec
tor.
    So I am not very worried about the VA shriveling up and 
dying. I don't think that is going to happen if people get 
good, accurate information.
    Mr. Stearns. So it is your universal----
    Dr. Woolhandler. A lot of it--the Member was talking about 
the primary care system at the VA is excellent. The drug 
coverage system is excellent. The computer system is excellent, 
better than most of what is out there in the private sector.
    Mr. Stearns. I will just tell you that the staff told me 
that the DAV does not share your idea that if that occurred, 
they think there would be deterioration. But let me just go on 
here.
    Dr. Woolhandler. I am sorry. Who is that who didn't----
    Mr. Stearns. Disabled Veterans Association.
    Dr. Woolhandler. I----
    Mr. Stearns. The DAV.
    Dr. Woolhandler. That may be----
    Mr. Stearns. I don't expect you to know. Let me ask you 
this----
    Dr. Woolhandler. No, I have heard of them, of course. I 
just didn't know their opinion on this particular issue.
    Mr. Stearns. Right now a veteran's family is not covered. 
Would you advocate, in addition to the Priority 8, would you 
say, for example, a family of four, a veteran who is a Priority 
8, that both his wife and his four children should also be 
covered in terms of your advocacy?
    Dr. Woolhandler. Okay. Well, we did identify 3.8 million 
family members of veterans who have no health coverage.
    Mr. Stearns. Is this under Priority 8, what you are talking 
about?
    Dr. Woolhandler. No. That is, that is all priorities.
    Mr. Stearns. Let's focus just on the Priority 8.
    Dr. Woolhandler. As I mentioned before, the data from the 
Census Bureau doesn't actually tell us if they are Priority 8 
or Priority 7, for instance.
    Mr. Stearns. Well, forgetting the data, in terms of your 
advocacy, if there is a Priority 8 that has, that is married 
and has two children, would you advocate that the VA cover the 
wife and the two children?
    Dr. Woolhandler. I would advocate that they be covered in a 
national health insurance program. Covering them in the VA is 
not something we have advocated. That might be reasonable as a 
stop-gap measure, but that is not something our group has 
advocated.
    Mr. Stearns. Okay. And, when I got back to my opening 
statement, in Boston the threshold is, for a Priority 8 is 
$84,100 for a family of four. And so with an income that high, 
I think both the service organizations and others are saying 
the long waiting list that we have trying to get veterans in, 
and we have a lot of veterans coming back who are disabled, who 
are harmed or have post-traumatic stress disorder (PTSD), and 
the dollars can't seem to flow there, do you think sometimes in 
your mind's eye, isn't there a case where there is a priority 
of one veteran group getting at least service completely before 
another or are you saying whatever it takes, we should make 
sure that all the Priority 8's get service with a person who 
comes back with post-traumatic stress disorder?
    Dr. Woolhandler. We were able to look at where most 
uninsured veterans live, because that is very clear in the 
Census Bureau data. And they don't mostly live in high-cost 
cities like San Francisco or Boston. Most of them live in the 
American southeast, in rural parts of the country. So picking 
and choosing high-cost cities and paying attention to those 
cut-offs is not actually going to tell you the reality that 
most veterans face. Most of them live in areas where the cut-
off is closer to that $27,000, $28,000 a year.
    Mr. Stearns. No. I think that is a valid point, yeah.
    On that, Mr. Chairman, thank you.
    The Chairman. Thank you. Are there further questions for 
the panelist?
    Mr. Miller?
    Mr. Miller. Thank you, Mr. Chairman. Tagging on to what my 
colleague just asked, first of all, I apologize for being late. 
I am going through your resume as well, and how many times have 
you testified before Congress?
    Dr. Woolhandler. I think this may be the first time. Our 
organization has testified----
    Mr. Miller. No, you.
    Dr. Woolhandler. Personally?
    Mr. Miller. Yes, it just said you----
    Dr. Woolhandler. This might be the first.
    Mr. Miller. It just said you have spoken to several 
congressional conferences and Committee meetings. I just wanted 
to help you understand, we know what you may have been called 
here to talk about, but sometimes Members of Congress would 
like to talk about other things.
    Dr. Woolhandler. Well, that is fine. That is fine. Okay.
    Mr. Miller. You also, in your resume, say that you brief 
Members of Congress and Presidential candidates of any party. 
Can you tell me what Presidential candidates currently running 
for office you have been briefing lately?
    Dr. Woolhandler. Lately?
    Mr. Miller. Well, in this, in the 2008 campaign.
    Dr. Woolhandler. The only one I have briefed so far who is 
declared in the 2008 is Kucinich. In previous years we have 
briefed a variety of Democratic candidates. I don't work for 
them and I don't lobby, but----
    Mr. Miller. Well, you said that you briefed any party, and 
I am just trying to find out which Republicans you have 
briefed.
    Dr. Woolhandler. Well, any Republican who calls me and 
wants information, I would be happy to speak with them.
    Mr. Miller. That is not what your vitae says. It says you 
have briefed them, and I just wanted to know who they were.
    Dr. Woolhandler. I was a congressional health policy 
research fellow here in 1990-91, and I met with several dozen 
Congressmen and if you----
    Mr. Miller. You can't remember any names?
    Dr. Woolhandler. If you would like, I can get you the 
names.
    Mr. Miller. Okay.
    Dr. Woolhandler. I would have to go over my calendar----
    Mr. Miller. Okay. Yes.
    Dr. Woolhandler [continuing]. And get that, but that is 
already, you know, 15 years ago.
    Mr. Miller. Well, you feel strongly enough to put it in 
your resume. I would just like to know other than Mr. Kucinich, 
who you have been briefing. Now----
    Dr. Woolhandler. Okay. You asked the 2008 year and that 
would be----
    Mr. Miller. Well, you decided to go back to 1990, not me, 
you did.
    Dr. Woolhandler. Okay.
    Mr. Miller. Would you----
    Dr. Woolhandler. The vitae----
    Mr. Miller. Excuse me. That is all I need to know.
    Dr. Woolhandler [continuing]. Covers my career. Yes, okay.
    Mr. Miller. For the record, if you would provide that for 
me.
    Dr. Woolhandler. Mm-hmm.
    [The following was subsequently received.]

          Here is what I could glean from my records (and memory) 
        regarding national level politicians whom I have briefed. My 
        records do not include a complete list of attendees at meetings 
        with multiple attendees, and all of my calendar records from 
        1992 have been lost. Occasionally, meetings occurred on short 
        notice, and would not have been recorded in my calendar.
          I have had meetings with Senators Sanders, Wellstone, Kohl, 
        Rockefeller and Daschle. 
        I have met with Congressmen Pete Stark and Jim McDermott. While 
        I worked with Senator Paul Wellstone and Congressman Bernie 
        Sanders, I participated in briefings for the delegations from 
        Minnesota and Vermont respectively. I was keynote speaker at a 
        conference in Shreveport, Louisiana, organized by Republican 
        Congressman Jim McCrery, who attended along with several other 
        local politicians. I spoke at a similar event organized by 
        then-Congressman Sanders in Vermont. I have met with most of 
        the Congressmen and Senators in the Massachusetts delegation at 
        one time or another, and have spoken at town meetings that they 
        have sponsored in different parts of the State. I presented 
        information on national health insurance at a meeting sponsored 
        by Congressman John Conyers which was attended by 14 Members of 
        his Committee (at the time, Government Operations). I have 
        spoken at two other briefings on the Hill organized by 
        Congressman Conyers, most recently in the House Judiciary 
        Committee room. Several Congressmen (whose names I do not have 
        on my records) were present at each. One of the Congressmen at 
        the most recent briefing identified himself as a Republican. 
        During their campaigns for the Presidency (various years), I 
        met with Jerry Brown, Bill Clinton, Ralph Nader, Jessie 
        Jackson, and Dennis Kucinich. I have met with Hillary Clinton, 
        although not during this campaign season. In addition, I spoke 
        at two congressional briefings in 1991, one attended by five 
        Congressman and about 200 congressional staff. The second 
        briefing was attended by about 80 congressional staffers, but 
        there were, to my knowledge, no Members in attendance. I 
        recently spoke at a meeting of the Kentucky Medical 
        Association, which was attended by the recently elected 
        Congressman from that district.

    Mr. Miller. Back to Mr. Stearns' question, do you advocate 
getting rid of all of the categories, 1 through 8, within the 
VA system?
    Dr. Woolhandler. I don't have a specific position on that. 
My position is everyone should be eligible for all the medical 
care they need.
    Mr. Miller. Should they be treated equally?
    Dr. Woolhandler. I think they should all get full access to 
care.
    Mr. Miller. Should they be treated equally?
    Dr. Woolhandler. I think they should be treated equally in 
terms of their access to medical care. There may be access----
    Mr. Miller. That is not what I am asking.
    Dr. Woolhandler [continuing]. To other----
    Mr. Miller. Again, that is not what I am asking. Their 
access to care is one thing.
    Dr. Woolhandler. Mm-hmm.
    Mr. Miller. When they get access, should they be treated 
the same?
    Dr. Woolhandler. Yes. I think that is--well, my 
understanding is that is the current policy in the VA. Once you 
are enrolled, you have equal access.
    Mr. Miller. Category-wise, 1 through 8, who comes first?
    Dr. Woolhandler. Okay. It is my understanding that the 
categories are about enrollment----
    Mr. Miller. I know how it works.
    Dr. Woolhandler [continuing]. And once you are enrolled----
    Mr. Miller. What do you advocate?
    Dr. Woolhandler. I think I advocate equal access to medical 
care for everyone----
    Mr. Miller. Okay.
    Dr. Woolhandler [continuing]. Including all veterans 
throughout the VA.
    Mr. Miller. I think based on your extensive writings about 
the Canadian healthcare system, am I correct that you write 
extensively about their universal healthcare system? Could you 
explain to me----
    Dr. Woolhandler. I most----
    Mr. Miller. No. My question----
    Dr. Woolhandler. I mostly write comparisons of the U.S. and 
Canada. I am not----
    Mr. Miller. Could you explain to me, please, while I ask 
the questions, how do the Canadians deal with their veteran 
population? How do they handle the healthcare for their 
veterans?
    Dr. Woolhandler. Well, every Canadian has a card like a 
Social Security card that they can use to go anywhere they 
want.
    Mr. Miller. Veterans?
    Dr. Woolhandler. Yeah, I am not----
    Mr. Miller. Do they have a VA system?
    Dr. Woolhandler. I am not sure. I can look that up for you.
    Mr. Miller. Let me, let me tell you----
    Dr. Woolhandler. But they can go anywhere they want.
    Mr. Miller. My time is about to run out. Let me explain how 
the Canadians do it. They don't have a VA. They buy slots 
within their system. I know you are hoping it will turn to red, 
but they will buy slots within their system for veterans. So 
veterans go in the same system everybody else goes in.
    I think that is what my colleague, Mr. Stearns, was saying. 
We do have some very strong concerns with universal healthcare 
and what it will do to the VA system, because to cover people 
universally, that money is going to come from somewhere. I 
believe that you are talking about putting veterans in the same 
healthcare system with everybody else, and I don't think you 
will find that the veterans service organizations think that is 
a good idea.
    If anybody would like the rest of my time----
    Ms. Brown-Waite. Would the gentleman yield?
    Mr. Miller. I have just run out of time.
    Ms. Brown-Waite. Would the gentleman----
    Mr. Miller. I am sorry.
    The Chairman. Okay. Again, the hearing is on Priority 8 
veterans, not on national healthcare. But we have--any final 
questions?
    Ms. Brown-Waite, would you like to ask the panelist a 
question?
    Ms. Brown-Waite. Following up on my colleague's statement 
about Canada and questioning about Canada, before Dr. Boozman 
left I told him that I was on vacation and met a doctor from 
Canada who had a heart attack and he happened to have it in 
Florida. And he said he was so grateful that he had it in 
Florida because of the quality of care in the United States. 
And he said that was an absolute to him, the differentiation 
between the Canadian healthcare system and the healthcare 
system in the United States. This, mind you, was a doctor.
    What I don't want to be hearing if we ever went to such a 
system is from veterans that their care was diminished in one, 
in any way, shape or form, because the doctor from Canada who 
once embraced universal healthcare tells me that he was so glad 
that he had the heart attack, if he had to have it, that he had 
it in the United States. That tells me a lot about the Canadian 
universal healthcare system.
    And I have heard that from other Canadians also and I am 
a--while I live in Florida now, I am originally from New York. 
And I can just tell you that the hospitals along the border 
have always been filled with Canadians who buy that extra 
insurance, who can come here for quality healthcare, because 
they know the long waiting times in Canada. I do not want that 
for my veterans or veterans in anybody else's congressional 
district.
    And I yield back the balance of my time.
    Dr. Woolhandler. Well, again, I think we would have to look 
at the data and not just an anecdote. The data is that 
Canadians live 2 to 3 years longer than Americans, that death 
rates are lower from preventable and treatable cancers, that 
death rates are lower from heart disease. When people look to 
see if Canadians are coming across the border, they find that 
fewer than 1 percent of Canadians get any healthcare outside of 
Canada in any given year and the vast majority of them just got 
emergency care when they were on vacation and got ill.
    So the rumor that there are lots of Canadians in American 
hospitals isn't true. I have to say that I attend at 
Massachusetts General Hospital sometimes. I would get people 
from all over the world flying in to get care because it is 
such a famous hospital. And I don't remember ever seeing a 
Canadian there. So, that is, again, just an anecdote. But if 
you look at the data on America's 60 most famous hospitals, 
they treat very, very few Canadians.
    So the data, in fact, shows the quality is as good or 
perhaps better in Canada. I think it is a similar situation to 
what you are facing in the VA. You get--the VA has a 
reputation. Maybe it is based on movies or old information. But 
the current information on the VA is your quality is pretty 
good.
    The Chairman. Thank you, Dr. Woolhandler. We appreciate 
your testimony here and----
    Mr. Buyer. Mr. Chairman?
    The Chairman [continuing]. We will call on the next----
    Mr. Buyer. Mr. Chairman?
    The Chairman. I am going to call on the next panel. If they 
will come forward, the next panel. Thank you.
    Mr. Buyer. So you are not going to allow me to ask a 
question?
    The Chairman. You had your time.
    Mr. Buyer. You, you are not going to allow----
    The Chairman. We will have the second panel, please. Thank 
you, Dr. Woolhandler.
    Mr. Buyer. What happened to this bipartisan spirit of 
cooperation?
    The Chairman. It has got to be bipartisan, Mr. Buyer.
    Will the second----
    Mr. Buyer. So you are not going to allow me to ask a 
question of a witness? Mr. Bilirakis didn't even get a chance 
to ask a question.
    The Chairman. Will the second panel please come forward?
    Mr. Buyer. Mr. Bilirakis----
    The Chairman. If you want to take part in the hearing, 
follow the rules. The second panel will come forward, please.
    Mr. Buyer. Follow the rules. If you want me to follow the 
rules, we will do that, Mr. Chairman.
    Mr. Bilirakis. Mr. Chairman?
    The Chairman. Yes? Go ahead.
    Mr. Bilirakis. Mr. Chairman, I have a question. I have a 
question to the panelist.
    The Chairman. We have moved on to the second panel, Mr. 
Bilirakis. I asked if anybody had any questions----
    Mr. Buyer. This is outrageous.
    Mr. Bilirakis. Mr. Chairman----
    The Chairman. I asked if anybody had any questions and you 
didn't indicate that and no one else did. So----
    Mr. Buyer. Mr. Bilirakis has a hearing aid, too.
    The Chairman. Mr. Buyer, would you please quiet down?
    Mr. Bilirakis. I did at one time. I did ask and--but all 
right. Okay, Mr. Chairman. Thank you.
    The Chairman. Thank you.
    Mr. Buyer. You have rights.
    The Chairman. We have a panel consisting of members of 
various veterans service organizations, the Paralyzed Veterans 
of America, Disabled American Veterans, the American Legion and 
Vietnam Veterans of America.
    Mr. Blake, who is the National Legislative Director for 
PVA, you have 5 minutes and we appreciate your being here--we 
appreciate all of you taking part in this hearing today.

   STATEMENTS OF CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, 
  PARALYZED VETERANS OF AMERICA; ADRIAN M. ATIZADO, ASSISTANT 
  NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS; 
PETER S. GAYTAN, DIRECTOR, VETERANS AFFAIRS AND REHABILITATION 
     COMMISSION, AMERICAN LEGION; AND JOHN ROWAN, NATIONAL 
             PRESIDENT, VIETNAM VETERANS OF AMERICA

                    STATEMENT OF CARL BLAKE

    Mr. Blake. Chairman Filner, Ranking Member Buyer, Members 
of the Committee, on behalf of PVA, I would like to thank you 
for the opportunity to testify today on the ongoing policy to 
prohibit enrollment of Category 8 veterans into the VA 
healthcare system.
    Due to severely constrained budgets, former Secretary 
Anthony Principi made an administrative decision to place a 
prohibition on enrollment of new Category 8 veterans into the 
VA healthcare system beginning in January of 2003. As you know, 
PVA, along with the co-authors of the Independent Budget, 
strongly opposed this decision at that time.
    However, the VA assured us that the decision was strictly a 
1-year moratorium. And yet, more than 4 years later, these 
veterans are still prohibited from enrolling in the VA 
healthcare system. In accordance with the recommendations of 
the Independent Budget, we urge the VA to take the steps 
necessary to reopen the system to the Category 8 veterans.
    We believe that adequate resources should be provided to 
overturn this policy decision. Current VA estimates suggest 
that as many as one and a half million Category 8 veterans will 
be denied enrollment in the VA healthcare system by fiscal year 
2008.
    When budget estimates are developed for the cost of 
providing care to Category 8 veterans, often a worst-case 
scenario whereby all one and a half million of these veterans 
will seek care in the VA healthcare system is considered. 
However, we believe this is simply unrealistic.
    In a report entitled, ``The Potential Cost of Meeting 
Demand for Veterans' Healthcare,'' published by the 
Congressional Budget Office in March of 2005, the CBO explained 
the actual utilization rate of Category 8 veterans was only 
about 20 percent. Based on this information, the Independent 
Budget estimated that only about 314,000 Category 8 veterans 
would have actually used the system for fiscal year 2008, 
meaning that the VA would only be responsible for the costs for 
that number of veterans. With this in mind, for fiscal year 
2008, the Independent Budget estimates that the VA will need 
approximately $366 million in real appropriated dollars to 
reopen the system.
    We would also like to draw your attention to a particular 
concern that we have regarding a seemingly inequitable 
application of the enrollment policy. As you all know, current 
law allows Operation Enduring Freedom/Operation Iraqi Freedom 
(OEF/OIF) veterans to receive 2 years of healthcare from VA 
immediately following their release from active duty. Once that 
2-year period expires, any OEF/OIF veteran who sought care from 
the VA is permanently enrolled in the healthcare system in the 
enrollment category that they would have otherwise been 
assigned.
    This means that any OEF/OIF veteran who is a Category 8 
veteran is allowed to permanently enroll in the VA healthcare 
system, despite the current prohibition on similar enrollments. 
PVA certainly has no objection to these men and women receiving 
the care that they have earned and deserve from the VA 
healthcare system.
    However, we believe this is wholly unfair to any other 
veteran who would qualify for enrollment in Category 8, and 
whose service was no less important. The example has been used 
many times, but is certainly worth repeating about the World 
War II veteran who stormed the beaches at Normandy and spent 
nearly a year of continuous combat service and subsequently 
returned home without injury or illness and eventually went on 
to lead a successful life.
    However, because he now has a yearly income above the 
maximum allowed by the VA for Category 8 veterans, he is denied 
enrollment. We do not see how this veteran's service is any 
less honorable or important than the young man or woman 
currently serving in the Global War on Terror.
    Finally, I would like to emphasize that PVA believes that 
we would not be having the discussion about who can or cannot 
get into the VA if the Veterans Health Administration was 
funded through assured funding. The simple fact is that despite 
positive steps in the appropriations process and a positive 
outlook for fiscal year 2008, nothing will prevent the VA from 
facing the same uncertainty in coming years. Recall that even 
though the VA received a very good appropriation for fiscal 
year 2007, which is something we thank all of you for, it was 
still provided nearly 5 months into the current fiscal year. 
This is no way for the VA to be forced to manage healthcare 
systems.
    In the end, none of these veterans should be denied 
enrollment into the VA healthcare system. No veteran's service 
is any more or less honorable than another, and it should not 
be treated as such. We hope the VA will choose to overturn this 
policy without being forced by Congress to do so. It is the 
right thing to do.
    Mr. Chairman and Members of the Committee, I would like to 
thank you again for the opportunity to testify and I would be 
happy to answer any questions you might have.
    [The prepared statement of Mr. Blake appears on p. 60.]
    The Chairman. Thank you, Mr. Blake.
    Mr. Atizado, the Assistant National Legislative Director 
for Disabled American Veterans.

                 STATEMENT OF ADRIAN M. ATIZADO

    Mr. Atizado. Mr. Chairman, Members of the Committee, I want 
to thank you for inviting the DAV to testify regarding the 
current VA policy for Priority Group 8 veterans who are 
presently barred from enrollment in the VA healthcare system.
    It would seem natural to ask why DAV would be concerned 
about Category 8 veterans given our focus on the service-
disabled veteran populations, the veterans who are guaranteed 
by law high-priority access in VA healthcare. The DAV has 
conditionally supported re-entry of Category 8 veterans because 
we believe that when VA manages a proper mix of veteran 
patients, it offers a better healthcare plan to all veterans, 
including service-disabled veterans.
    Mr. Chairman, putting this issue in historical context, 
when Congress authorized the Veterans' Healthcare Eligibility 
Reform Act of 1996, it did so fully cognizant that the veterans 
classified in the current Category 8 would enroll and bring 
with them additional funding sources. Since the delivery of VA 
healthcare underwent a systematic change, in the midst of this 
change Congress passed the Balanced Budget Act of 1997, and 
during the 3-year life of that law aggravated VA's financial 
situation.
    This resulted in the supplemental appropriations in 2000 at 
the urging of both this Committee and your Senate counterpart 
which could not undo what had been done in the last 3 years. By 
2002, the list of veterans waiting to receive medical care 
inched toward 300,000 nationwide. The following year, Secretary 
Principi himself said it publicly that VA faced ``a perfect 
storm'' of insufficient funding and overwhelming demand. And 
accordingly, VA used the au- 
thority provided to it by the Veterans' 
Healthcare Eligibility Reform Act of 1996 and barred new 
enrollment of Category 8 veterans.
    Since the January 2003 decision, the frustration over this 
policy has been subject to congressional administration 
proposals, from the splintering of VA medical's benefits 
package to a prescription only benefit, to a 
VA+Choice Medicare and later still, VAAdvantage, much to the 
concern of DAV.
    Moreover, we are troubled by the differentiation among 
veterans through the policy of providing timely access for our 
newest generation of combat veterans in contrast to the policy 
on Category 8 veterans as my colleague had just mentioned. 
While it is clear that the VA opposed the decision to bar 
enrollment to Category 8 veterans, we were not surprised by it. 
In fact, the decision fueled our determination at DAV to seek 
legislation reforming VA's budget formulation and discretionary 
appropriations process.
    We acknowledge and applaud the continued support from this 
Committee to VA's healthcare funding over the last several 
budget cycles and hope the Committee will schedule a hearing in 
the near future to consider funding reformations to help 
stabilize the system.
    In summary, Mr. Chairman and Members of the Committee, we 
believe VA's current policy on Category 8 veterans is largely 
about sufficiency, reliability and dependability of the 
discretionary appropriations process for VA healthcare. At 
present, the DAV is reluctant to endorse immediate readmission 
of Category 8 veterans without major reformation of VA's 
funding system addressing VA's capital and human resource 
needs. Such are the things that will hold that ``perfect 
storm'' at bay.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer any questions you may have.
    [The prepared statement of Mr. Atizado appears on p. 62.]
    The Chairman. Thank you.
    Peter Gaytan is Director of the Veterans Affairs and 
Rehabilitation Commission of the American Legion. Thank you for 
being here.

                  STATEMENT OF PETER S. GAYTAN

    Mr. Gaytan. Thank you, Mr. Chairman. Mr. Chairman, Ranking 
Member, again, thank you for this opportunity and I appreciate 
this healthy debate on this issue that has been of concern to 
the veterans community since the enactment in 2003.
    The American Legion strongly believes that all veterans who 
are eligible to receive benefits from VA should have timely 
access to the VA healthcare system. For VA to operate under a 
policy that restricts veterans who, prior to the enactment of 
this policy, were eligible for VA healthcare is unacceptable. 
Honorable military service qualifies a veteran for access to 
the VA healthcare system and the American Legion opposes any 
policy that redefines eligibility for benefits in an attempt to 
limit enrollment.
    The response from new veterans enrolling when the change 
occurred during the eligibility reform was somewhat 
overwhelming, largely unanticipated and drastically 
underfunded, leading to an unprecedented backlog of veterans 
waiting to receive timely access to quality care at VA medical 
facilities across the country.
    In an effort to reduce that backlog, then VA Secretary 
Principi suspended enrollment of new Priority Group 8 veterans 
in January 2003, as we all know and have heard this morning. 
The American Legion strongly opposed this decision when it was 
first made and we continue to call for the reinstatement of the 
enrollment of Priority Group 8 veterans.
    In FY 2007, we have seen a continuation of suspension of 
enrollment of new Priority Group 8 veterans due to the 
increased demand for services. According to VA, the number of 
Priority Group 8 veterans denied enrollment in the VA 
healthcare system as of January this year is over 378,000. And 
then, as the Global War on Terrorism continues, fiscal 
resources for VA will continue to be stretched and veterans 
will continue to urge their elected officials to provide the 
funds needed to create a viable VA.
    The American Legion shares the concerns that were expressed 
by my colleague from PVA regarding the enrollment of Priority 
Group 8, or the 2-year access to VA healthcare by any combat 
veteran coming back from OIF/OEF. While we applaud that and we 
welcome that and we appreciate the support for increasing that 
2-year window to 5 years, what the American Legion questions is 
the fairness of allowing a Priority Group 8 veteran from OIF 
and OEF to remain enrolled in the VA healthcare system when 
other Priority Group 8 veterans are denied access to the very 
same system.
    Unfortunately, as we have heard this morning, we have heard 
over the years since 2003, some believe that Priority Group 8 
veterans are not the core of VA's patient population. The 
American Legion believes every servicemember is a core element 
of the national security--the total force. The willingness of 
young Americans to serve will diminish if this country 
continues to neglect those who have served. Timely access to 
quality healthcare offered by VA is an earned benefit and 
should not be denied.
    The American Legion strongly supports lifting the 
suspension of enrollment of Priority Group 8 veterans in the VA 
healthcare system. VA can no longer restrict enrollment due to 
inability to meet the demand of care. Those who have served 
have earned the right to choose healthcare at VA.
    Thank you again for this opportunity and I look forward to 
answering any questions you may have.
    [The prepared statement of Mr. Gaytan appears on p. 65.]
    The Chairman. Thank you so much.
    And concluding this panel, John Rowan, who is the National 
President of Vietnam Veterans of America.

                    STATEMENT OF JOHN ROWAN

    Mr. Rowan. Thank you, Mr. Chairman, Mr. Buyer, other 
Members of the Committee. We thank you for giving us this 
opportunity here this morning.
    The bottom line is very simple. You have heard why and when 
this happened and all of a sudden what was a temporary thing 
has now become a permanent fixture. What really happened was, 
the VA put a big sign on Uncle Sam out there. But instead of 
saying ``We want you,'' it is ``We don't want you.'' And they 
have really gotten that word out.
    And what they have also done is cut outreach to veterans 
for healthcare, period. And we think that this came at a 
particularly bad time for Vietnam veterans in particular 
because, unfortunately, we just started to finally get 
presumption for many diseases related to Agent Orange and many, 
many veterans did not know that occurred. And it is my opinion 
that many of these Category 8, or so-called Category 8, 
veterans might very well rise up into the ranks of other 
categories if they got into the VA system and learned about 
what was going on in veterans healthcare.
    Interestingly, in the discussion earlier about whether or 
not we had a national healthcare, would we still have the 
veterans healthcare, I believe we should definitely still have 
a veterans healthcare. Serving in the military sets people 
apart. Not just setting them apart as being different than 
other citizens, but by going out to war, by going into combat 
zones, by going into foreign areas where they are exposed to 
certain elements in that particular area, parasites, et cetera, 
which again are also hurting many people many years after the 
fact, that sets them apart. It is not that they are any 
different just because they raised their right hand, it is that 
military and veteran healthcare needs and knowledge must be 
continued inside the VA. But it also needs to be expanded to 
private-sector physicians. It really bothers me that every time 
I run into a Vietnam veteran, the first question I ask him, and 
I get into conversations all the time, is, ``How is your 
health?'' How are you doing, and time after time I have run 
into people who say well, I am doing okay, but I have a touch 
of diabetes, or well, I have prostate cancer. We are more 
likely to have prostate cancer than anybody else. We are more 
likely to have diabetes than anybody else. We have all of these 
things.
    I am the classic case. I am a Category 1. I am rated 90 
percent by the VA. That only occurred in the last 6 years, when 
they finally presumed diabetes was related to Agent Orange 
exposure. When I filed for diabetes the first time in 1994, I 
got denied. I was still a Category 8 because I made too much 
money. I think many of these people need to come into the 
system. We need to bring all the veterans into the veterans 
healthcare system and that is the bottom line, because we need 
to get all the veterans to understand that being in the 
military may have an impact on their long-term health and life.
    And unless they are in the system and unless that system 
starts looking at what being in the military means, which is 
another issue in the VA, we are not going to get the real 
treatment needed for all veterans. And that is simply it. And 
we really think, frankly, the veterans' organizations were 
fooled. We accepted that temporary respite because of various 
issues and now it has become a permanent fact of life and they 
say well, we can't change it now.
    [The prepared statement of Mr. Rowan appears on p. 66.]
    The Chairman. Thank you, Mr. Rowan.
    Ms. Herseth Sandlin, would you like to ask any questions?
    Ms. Herseth Sandlin. Yes. And before I ask my question, I 
do want to make it a part of the record that I did clearly see 
Mr. Bilirakis seek recognition at the same time Mr. Miller did. 
However, I would suggest that in the future it will be easier 
to identify those seeking recognition if those of us perhaps 
more senior on the Committee, once we have our 5 minutes of 
questioning, would defer and make sure that others on the 
Committee who have not, clearly get an opportunity to seek it 
with the Chairman.
    I certainly agree, Mr. Rowan, with you about the importance 
of being in the system and I agree with the statements of some 
of my colleagues, as well as with the position of the Disabled 
American Veterans Organization about the importance of a 
predictable and adequate funding system so that we can serve 
effectively those who, as I mentioned earlier, all veterans 
agree should be first in line receiving the care in the VA 
system.
    And I think particularly as you described, the diagnostic 
screening and the line of questioning I pursued with the first 
witness on the first panel, about primary healthcare and annual 
doctor visits and preventive care and these diagnostic 
screenings that are so important, particularly given the 
importance of being in the system so that the healthcare 
professionals in the VA who understand the longer term impacts 
of military service and what they, a veteran may or may not 
have been exposed to and the presumptions that you had 
mentioned in your testimony.
    Now, you had stated that you think that the veterans 
service organizations maybe got duped back when there was this 
need for a temporary freezing of Priority 8 veterans, the 
freezing of their enrollment. If Congress were to act to open 
up enrollment to Priority 8 veterans, how would each of your 
organizations address the very real concerns--well, let me--I 
think I want to ask a different question.
    Assuming adequate funding was provided, would there be any 
tools or authority that you would feel comfortable with or that 
you would recommend providing to the Secretary of the VA to 
meet unexpected emergencies either dealing with unforeseen lack 
of resources or unforeseen demand and would that include a 
temporary ban on enrollment for certain priority groups?
    Mr. Gaytan. Well, on behalf of the American Legion, because 
the action to restrict enrollment of any eligible veteran is so 
drastic, I think any specific situation would have to be taken 
into account. Your number of enrolled veterans changes daily. 
We are in two wars right now. The number of eligible veterans 
we are creating every day as a nation at war increases. So as a 
blanket response to your question, I personally am not prepared 
enough to speak for the American Legion. But I will say that 
that situation has to be taken into consideration individually.
    And what the American Legion supports is, of course, what 
you have heard here and everybody knew before the hearing even 
took place, that the American Legion supports lifting the 
suspension on enrollment. However, I urge the Chairman and the 
Members of this Committee to remember that the suspension of 
enrollment was decided by the Secretary. The Secretary stopped 
that enrollment. So I suggest the Chairman listen closely to 
Dr. Kussman's testimony and maybe even give a call over to 
Secretary Nicholson and ask him what his position is and if he 
feels we have overcome whatever situations have occurred that 
caused then-Secretary Principi to suspend enrollment.
    The decision is made by the Secretary in this case and 
right now. I suggest we back up, ask that question to the 
Secretary. But in response to your direct question, because 
that is such a large issue and affects so many veterans, on 
behalf of the American Legion, we would have to take that into 
consideration in specific cases.
    Ms. Herseth Sandlin. Well, let me just rephrase the 
question though and maybe for the benefit of everyone. Do you 
think that the Secretary should continue to have that 
discretion, or if we lifted the restriction, do you think it 
should require congressional action to impose a temporary ban 
or should we leave it within the discretion of the Secretary?
    Mr. Rowan. I would not leave it at the discretion of the 
Secretary. I don't think there is a reason for it and I think 
the issue should be adequate funding, which is the question you 
mentioned earlier. If you had adequate funding?
    I can remember back in the day when my father was in the 
system and we had the huge number of World War II veterans 
around. I was still relatively young when my father was in his 
50's receiving healthcare through the VA. He happened to have 
some slight disability. I think he was getting 10 percent or 
something. But there was even a priority then. And very 
clearly, obviously, if somebody--if you had to choose between 
two patients, you know, somebody who had the higher rating 
probably got a little faster service.
    But the doctor had the real question earlier. The priority 
should be to the sick person, not to an artificial priority. I 
am a Priority 1, but if I happen to be okay today, it doesn't 
mean I automatically get to see the cardiac surgeon that day, 
if I have no need to see that person, whereas if some Category 
8 needs to see the cardiac surgeon, they ought to see the 
cardiac surgeon. It is a healthcare question, not an artificial 
category necessarily.
    I can understand some priorities. We do have priorities. We 
make that understood. But if the system is there and available 
and I think the VA is doing a very good job of expanding the 
system. All healthcare is changing. We are getting away from 
the monolithic hospital systems. They are creating this 
substantial outpatient clinic system, which is what happens 
everywhere else.
    I happen to be one of those people that does have private 
healthcare, that I got through my retirement from my employer, 
which I pay for partially, by the way, as was mentioned earlier 
with the TRICARE folks, who are also retirees getting 
healthcare.
    But I still have to wait to see my doctor. I still have to 
get an appointment when I go to see, even in the so-called 
private sector, a particular physician to get some service, I 
still may have to wait somewhat. There is no system that is 
going to automatically give everybody everything every day of 
the week.
    Ms. Herseth Sandlin. Mr. Chairman, I know my time is 
expired, but if any of the other witnesses on this panel would 
be inclined to want to respond to the question about the 
Secretary's authority?
    Mr. Atizado. Thank you. I just want to make one brief 
comment. I was not here and I am not well versed in the 
discussion that was had by this Committee when they passed the 
Eligibility Reform Act. But I think the idea that the main goal 
of this Act which allowed the Secretary to manage a program 
that he is responsible for, which includes this tool to ensure 
the quality and the access standards that they hold it to, does 
so well. I would have to say that I think it is proper that the 
Secretary have the tool that he has, since he is responsible 
for this program.
    And I think one thing that has not been, that I wish would 
be addressed is the accountability of this Act. If the 
Secretary decides that the budget he requests or submits to 
Congress for his program does not include Priority Group 8 
veterans, then I think we should ask the question why. Is this 
in fact a shift in priority of not only the Secretary or the 
Administration, that Priority Group 8 veterans shouldn't be 
allowed? And if so, then is it incumbent upon my community and 
my organization to advocate otherwise?
    The Chairman. Thank you.
    Mr. Bilirakis, I am sorry I didn't see you in the last 
panel. You are recognized for any questions for this----
    Mr. Bilirakis. I don't have any questions for this panel. 
Thank you.
    Mr. Buyer?
    Mr. Stearns?
    Mr. Buyer. Mr. Rowan, I have here in front of me the 
testimony of VVA when we were doing the eligibility reform. And 
it says, ``VVA believes that service-connected disabled 
veterans and low-income veterans should always remain VA's 
highest priority.'' Do you still believe that to----
    Mr. Rowan. Yes.
    Mr. Buyer. Okay.
    Mr. Rowan. If I have to have priorities, yes.
    Mr. Buyer. All right. I know the Chairman threw a lifeline 
to rescue the first witness at the first panel and was perhaps 
disturbed that Members were asking questions about the 
universal national health insurance program and said, you know, 
we are here only to talk about 8's. She came here to testify 
and in her written testimony, I just want all of you to know, 
about her support for the universal national healthcare system 
and how it is to work also with the VA. It is her testimony, 
okay?
    So let us think about that, because that is what is in 
front of us. I serve on the Health Subcommittee over there on 
the Commerce Committee. I know what the goals and the aims are, 
and I respect them. It is their belief about the incremental 
approach. I mean that is, in fact, what is happening. So we 
better talk about this.
    So if that is, in fact, where we are headed and the 
Chairman brings his witness from Harvard here to testify, to 
give counsel 
to this Committee and her counsel to this Committee--this is 
really close. I don't want to put words in her mouth. But given 
Mr. Miller's questioning that the priorities and the categories 
that we created, she really doesn't see those priorities and 
categories, they all should be treated the same.
    Now, she is looking through the prism as a doctor, I 
suppose. So let me ask this question of you. Should we get rid 
of the system of priorities and categories as was espoused in 
the 1996 Act? Let's go right down the line. Yes or no?
    Mr. Blake. No.
    Mr. Atizado. No.
    Mr. Gaytan. No.
    Mr. Rowan. No.
    Mr. Buyer. Thank you. The first witness also talked about 
her idea of a national health, single-payer system whereby 
everyone could have a card and those veterans then could have 
that card and they get to choose whether to be in the VA system 
or go into the private system. Do you advocate such an idea? 
Yes or no?
    Mr. Blake. No.
    Mr. Gaytan. No, but may I add something? I am sorry that we 
are spending our time debating this. As was mentioned, our 
focus is Priority 8 veterans. I am sorry.
    Mr. Buyer. It is the big picture though.
    Mr. Gaytan. I understand it and I just, I am sorry that it 
has come into our picture of focusing on providing quality 
healthcare in a timely manner for----
    Mr. Buyer. It is pretty important----
    Mr. Gaytan. I am not discounting----
    Mr. Buyer. It is where they are going.
    Mr. Gaytan. I am not discounting the need to discuss it. It 
is just a shame that we spent time today in this hearing 
talking about an issue that is not directly relating to 
veterans. I am saying, I see the big picture, but also the 
debate that we spent time on today talking about the behavior 
of Members of the Committee.
    Mr. Buyer. Mr. Gaytan, you have been around here long 
enough to know that when the Chairman calls a hearing and he 
puts his first witness forward, that is telling everybody where 
he is going. So I have been around here 15 years, so I 
understand this system. So----
    Mr. Gaytan. I appreciate the hearing and it is valuable 
time and I hope we spend it productively.
    Mr. Buyer. Thank you, me too.
    Mr. Rowan. Can I--however, I understand that everybody 
wants to jump on the national health insurance angle of the 
witness, but I also listened to what the witness had to say, 
and about all the uninsured veterans there are out there. And 
again, I get to the point of the VA telling people don't come. 
Don't even bother to show up at the door because you are not 
qualified unless you have been disabled.
    Mr. Buyer. Mr. Rowan----
    Mr. Rowan. And what I am saying is, a lot of those people 
that are sitting out there, those million, 1.1 million----
    Mr. Buyer. John----
    Mr. Rowan [continuing]. Should very well, in fact, be 
entitled to compensation.
    Mr. Buyer. John, this was a witness that said she is not 
distinguishing the Category 8's. So of the number that she 
gave, many of these, of the uninsured could be covered in these 
categories. So that is----
    Mr. Rowan. If they were, in fact, knowledgeable about the 
VA issues and what they were entitled to.
    Mr. Buyer. And let me ask----
    Mr. Rowan. And what I suggest to you is when the VA cut the 
outreach----
    Mr. Buyer. John, I don't have the time.
    Mr. Rowan [continuing]. I don't have the ability to 
understand that.
    Mr. Buyer. Come on. The Independent Budget, you estimated 
about $366 million to care for the Priority 8's and you said 
that that would be offset by collections. I don't know how you 
got to that number. It is unusual for the Independent Budget to 
do that, because you never really wanted to do that. You always 
wanted a separate appropriation. So help me on that. And did 
you take, when you came up with this number, did you take into 
account estimates for the costs of services to lift the 
suspension, facilities, operations, personnel?
    Mr. Blake. Mr. Buyer, I feel like that is probably my 
principal focus area, so I will try to explain it as best I can 
how we got to that number and how it relates to what the VA has 
testified to. First, I would say that last year the IB made the 
decision not to include our recommendation for funding for 
Category 8's in our medical care recommendation, and that is 
reflected in 2007 and 2008. So it is not a part of the line 
items that make up our recommendation.
    If we took the 2008 number that we believe it would cost 
for Category 8 veterans, being consistent with the way that we 
have always done our budgeting, the actual number that would 
have to be added to our medical care number would be the $1.1 
billion that you see reflected in our testimony. That would be 
consistent with the way we have always done our budgeting.
    However, trying to be realistic and just give an honest 
assessment of what we believe the costs would be and something 
for the Committee to chew on, the cost that we believe in real 
appropriated dollars would be about $366 million. The way we 
figured this out is, the overall cost per user was principally 
what we used as our baseline number. In our testimony, I 
believe I mentioned that was about $3,500. When you back out 
the collections that would be recognized from Category 8 
veterans, that cost per user goes down significantly, something 
on the order of $1,165, or something like that.
    I believe that the VA principally sees it the same way we 
do. And where we differ in our cost estimate is the one 
assumption about what would be the utilizing of those new 
Category 8 veterans. The VA testified, I believe, earlier this 
year that they estimate the cost to them would be about $1.7 
billion, somewhere in that range, if they open the system up 
again.
    If you take the 1.5 million thereabout estimate that we 
have heard from them in various opportunities earlier this year 
that they have testified to, if you take the 1.5 million 
projected denied enrollment up to fiscal year 2008 and took the 
$1,165 and applied it to it, that cost would come out somewhere 
pretty close to the $1.7 billion. Whereas, we looked at what 
the utilization rate was prior to the closure of enrollment for 
Category 8 veterans that was about 20 percent at the time.
    Now, I would be foolish to say that I thought that that 
universally still applied, because we just don't know. So we 
take that as our assumption as to what the utilization rate 
would be and come up with the number of users we believe would 
be using the VA system. That is how we came up with the 300 
plus thousand Category 8 veterans who would use the system. And 
the cost associated with those veterans is $366 million in 
appropriated dollars. That is what the Committee or what 
Congress would have to appropriate additionally to provide for 
their care.
    Short of that, I think the major question that still lies 
out there is the assumption of what will the utilization be. An 
honest answer is, we don't know. I would say it is unreasonable 
to take the worst case scenario which is the 1.5 million, 
because the entire VA healthcare system has far more enrollees 
than they have actual users of the system.
    The Chairman. Thank you, Mr. Blake.
    Mr. Rodriguez?
    Mr. Rodriguez. Thank you very much and let me--it is 
unfortunate but I heard very clearly there is 1.8 million or 
1.7 million veterans that are uninsured and we know that there 
are some 46 million people out there, Americans that are 
uninsured. And there is a real need for us to see how we can 
incorporate and provide the need for everyone, and have some 
degree of access, because it is still a system--and you can 
tell by the debate that is going on that it is an area that at 
least a lot of us feel that some degree of access needs to 
occur. And when it comes to veterans, it has to happen.
    Let me ask you, one more step in one of the areas--because 
I know that there is a tendency to pit one group against the 
other. They have done it all the time, and I apologize, but on 
Social Security they pit the young against the elderly, on 
education the private against the public, in VA, one group 
against the other. The problem is right now, if you look at the 
veteran, I know I would be concerned also about my family as a 
veteran and whether they have access or not.
    And I don't want you to respond now, but there is a real 
need--and I am proud to say I can't pull it off, something I am 
going to try incrementally. How do we begin to look at 
providing access to Priority 8 and others, but also family 
members of veterans? Because I am sure that maybe not through 
the VA system, but through another process that is out there, 
and I had mentioned the SCHIP program, because that begins to 
at least take care of some of the kids of those working 
families that are out there. They are paying their taxes, make 
$60,000, $40,000, but find themselves uninsured. How do we take 
care of the families of veterans that are uninsured and--
because I presume the others have some degree of insurance--if 
there would be a way either through the system or an external 
group, a process like TRICARE that we try to provide that care 
for?
    Mr. Gaytan. Not that the American Legion ignores the 
healthcare needs of the family members of veterans, but when we 
were wrapped in debate over veterans alone receiving access to 
the VA healthcare system, I think it is a little bit premature 
to debate the ability or process that VA would use to open up 
the doors or provide as a payer to the family members of 
veterans. So with that in mind, taking one step at a time, I 
think fighting for all veterans, eligible veterans to receive 
healthcare would be the first step. Getting VA established----
    Mr. Rodriguez. I don't disagree with you.
    Mr. Gaytan [continuing]. To handle that task would be, is 
monumental already. And then not ignoring the needs of the 
family members is something that needs to be taken into account 
further down the road. And I appreciate your concern over the 
family members of veterans who need healthcare as well. But we 
can work together to hopefully achieve that as well.
    Mr. Rodriguez. And it could be a separate system that 
responds to that, like we have had the SCHIP program now.
    Mr. Rowan. Actually, my wife signs people up for that every 
day. She works in the New York City Department of Health and 
signs people up for Child Health Plus Programs every day. It is 
a maddening system and I don't wish anybody into that system.
    Truthfully, as my colleague said, we are dealing with 
veterans. We don't deal with the families. However, the one 
difference is, when the families are impacted by military 
service and we only have in the Agent Orange category the spina 
bifida children. That is the only one we have. We believe there 
are probably many others, unfortunately, that have never been 
done.
    But one area where there has been studies is the area of 
PTSD. Post-traumatic stress disorder has a big impact on the 
family. And unfortunately, in the vet center program we need to 
get more funding and more impact and more working with treating 
the entire family unit. And it is going to--obviously I think 
with new troops, given the fact that many of them are Guard and 
Reserve and many of them are older, many of them have families, 
I mean in the Vietnam era, most of us were not. I mean most of 
us were not married, didn't have kids, et cetera, et cetera. We 
were single.
    But the new folks are in a different ball game. And that 
part, only because the service-connection, if you will, having 
had PTSD from military service which impacts in the secondary 
condition into your family life is something that definitely 
needs to be addressed and needs to be thought of. And quite 
frankly, our colleagues in Australia, while they may have 
screwed up their healthcare system by putting the veterans into 
the general population which is, by the way, what was mentioned 
earlier with Canada. They did that in Australia.
    What they have done right is they treat the children of 
veterans for PTSD issues up to the age of 40 and they keep 
raising the age for the Vietnam veterans' children.
    Mr. Rodriguez. And at the present time I understand that we 
don't treat any of the family members unless it is directly 
tied into it. Is that the way it is worded?
    Mr. Rowan. Yes.
    Mr. Rodriguez. Okay.
    Mr. Atizado. If I may, the whole idea--first of all, I 
would like to echo Peter's comments about making sure that we 
take care of the veterans first. On a second note, I would like 
to emphasize the fact that the discussion with regards to 
providing care to family members, spouses or parents, whoever 
is caring for the veteran, is very, is not nearly as mature as 
it should be for us to legislate on it, in my opinion.
    I believe that, because of the change of the delivery of 
healthcare by VA from inpatient to outpatient, this is a very 
timely conversation to have, particularly with our newest 
generation of combat veterans whose family, spouse and children 
are very much an integral part of healthcare. Whether or not VA 
has spoken about it, they are in fact placing a lot of 
responsibility and burden of that care on the family member. 
And I think it is high time that this Committee, if not this 
Committee, somebody speak about this issue and have a healthy 
debate about it.
    The Chairman. Mr. Stearns, briefly?
    Mr. Stearns. Thank you, Mr. Chairman. I will be quick here. 
Just two points I wanted to make that the witnesses mentioned. 
We have quadrupled the number of outpatient clinics in America. 
They are up to 800. So every veteran should be able to get 
access and they should do that.
    Second of all, the priorities, the categories are set up 
just for enrollment. They are not set up for priorities in 
health and I think we should establish that.
    Mr. Atizado, you mentioned that you support the Priority 8 
with a caveat and you mentioned that as long as the capital 
resources and the human resources are provided. I thought you 
might just expand briefly on this caveat. You are saying you 
would support the Priority 8 reinstitution only under these two 
conditions and you might explore those for me.
    Mr. Atizado. Well, it is quite simple. What we would like 
is not to have what had happened--what we would like is not to 
have the situation that led up to the January decision, which 
is that access and quality care were being placed in danger of 
veterans who were already using the VA healthcare system.
    And having said that, I think the idea of providing simply 
money is not enough. It was mentioned earlier about increases 
in funding cannot be a substitute for good management. I think 
that in order for us to provide the kind of care that private 
groups say they are going to need is not only going to include 
additional resources as far as funds, capacity as far as the 
number of providers, and obviously a number of providers 
themselves and the infrastructure.
    Much was talked about last, I believe it was 1 or 2 years 
ago, about the idea of what kind of care Priority Group 8 
veterans are seeking and in fact, out of that, one of the main 
thrusts was their high utilization or their seeking 
prescription benefits from VA. In fact, there was a whole 
hearing by the Subcommittee about that one issue, about parsing 
out the pharmacy benefits of VA.
    And all we are saying is, while that is probably not a very 
good idea, we should ensure that VA has what it needs to keep 
itself intact. If, in fact, they need X number of staff, you 
know, X number of examining rooms and however much more dollars 
it needs to provide whatever care this group of veterans is 
going to need, then that really is what we recommend, is that 
be provided to VA.
    Mr. Stearns. I thank you and I think your statement 
providing more money is now a substitute for good management is 
a telling statement. Thanks.
    The Chairman. Thank you, Mr. Stearns.
    We do have to adjourn for votes. I do want to say I thank 
this panel. I think there is remarkable unanimity. I would 
point out to the Ranking Member, if he were here, that those 
Members who represent the core constituency which he keeps 
referring to, favor including Priority 8 veterans, provided 
there is funding, providing nobody else is disadvantaged.
    I am sorry? Recess, okay. If I said adjourned, I meant 
recess for the votes.
    That is, we want to, and I think you want to, provide for 
all veterans, but we have to have and we are going to take up 
this issue of mandatory funding in coming months. But clearly 
as a nation, we have a responsibility to fund the needs of our 
veterans. I don't care what category they are in. I know the 
Ranking Member forced you to say you believe in categories. You 
believe in adequate funding for everybody, I think is your 
first priority, if I really had to poll you.
    And I appreciate that. I appreciate DAV and PVA working for 
a certain group of veterans, but saying the quality of care for 
the whole system would be improved if we can serve all our 
veterans. So I appreciate your willingness to do that and we 
commit to you that if we get to this, if we do have any 
legislation about Priority 8 veterans, there will be sufficient 
funding for all the veterans to receive it. So I thank you so 
much.
    And we will recess until 12:30 and hear from the Under 
Secretary for Health.
    [Recess.]
    The Chairman. The meeting will come back to order.
    I apologize, Dr. Kussman, for the intrusion. You never know 
when the votes are going to occur. And we look forward to your 
testimony.
    Dr. Michael Kussman, Under Secretary for Veterans Health in 
the U.S. Department of Veterans Affairs.
    Dr. Kussman. Is your microphone on?
    The Chairman. Mine is on.
    Dr. Kussman. Then maybe it is my hearing. I need to get 
tested really.
    The Chairman. Well, you are going to have to confront the 
VA bureaucracy and it may take about 6 or 7 years before----
    Dr. Kussman. I was going to start off by saying good 
morning, but it is good afternoon, Mr. Chairman, and I don't 
see any other Members of the Committee. So----
    The Chairman. Is your microphone on, Dr. Kussman?
    Dr. Kussman. It is on.
    The Chairman. Okay.
    Dr. Kussman. Am I too far away? Is that better?
    The Chairman. Perfect.
    Dr. Kussman. Okay.

 STATEMENT OF HON. MICHAEL J. KUSSMAN, M.D., M.S., MACP, UNDER 
  SECRETARY FOR HEALTH, VETERANS HEALTH ADMINISTRATION, U.S. 
    DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY PATRICIA 
  VANDENBERG, MHA, BSN, ASSISTANT DEPUTY UNDER SECRETARY FOR 
HEALTH FOR POLICY AND PLANNING, VETERANS HEALTH ADMINISTRATION, 
   U.S. DEPARTMENT OF VETERANS AFFAIRS; AND WALTER A. HALL, 
   ASSISTANT GENERAL COUNSEL, HEALTHCARE, ETHICS, AND HUMAN 
         RESOURCES, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Dr. Kussman. I am pleased to address the current policy and 
status of Priority Group 8 veterans. I would like to request 
that my written statement be submitted for the record. Joining 
me today are Walter A. Hall, the VA Assistant General Counsel, 
and Patricia Vandenberg, Assistant Deputy Under Secretary for 
Health for Policy and Planning.
    The Veterans Health Administration's mission is to provide 
healthcare to enrolled veterans. Before 1996, VHA offered 
primarily a hospital-based healthcare system. Over the last 
decade, with the support of Congress, we moved from an 
inpatient model of care characterized by a limited number of 
specialized facilities often far from veterans homes to an 
outpatient model which provides care at more than 1,400 
locations.
    VA's resources are focused on our highest priority medical 
care mission--to provide care to recent combat veterans and 
veterans with service-connected disabilities, lower incomes, 
and special needs. Before 1999, veterans not meeting this 
criteria were able to receive VA healthcare only on a case-by-
case, space-available basis. In the Veterans' Healthcare 
Eligibility Reform Act of 1996, Public Law 104-262, Congress 
directed the VA to establish a system of annual patient 
enrollment managed in accordance with priority groups, first 
seven, and later eight, and contingent upon available 
resources.
    In 2003, after careful consideration, VA discontinued 
enrollment of additional Priority Group 8 veterans to ensure 
that we could provide timely and quality healthcare to those 
most in need. Our research indicated nearly 90 percent of non-
enrolled veterans who would have entered as Priority 8's had 
access to other healthcare systems. Based upon the services 
currently used by Priority 8's, it appears that most in need 
entered the system prior to the change.
    Today, meeting the healthcare needs of our current 
enrollees and effectively responding to the needs of a new 
generation of veterans from Operation Enduring Freedom and 
Operation Iraqi Freedom are VA's highest priorities.
    The President's FY 2008 budget is based on the Department's 
needs for providing enrolled veterans with timely, high-quality 
healthcare. Patients in Priorities 1 through 6 will comprise 68 
percent of the total patient population in 2008, but they will 
account for 85 percent of our healthcare costs. The number of 
patients in Priorities 1 through 6 will grow by 3.3 percent 
from 2007 to 2008.
    Based upon the President's FY 2008 budget, we expect to 
treat about 263,000 veterans who served in Operation Enduring 
Freedom and Operation Iraqi Freedom. Currently, the President's 
budget fully funds enrolled veterans in Priority Groups 1 
through 7. Our budget also fully funds those Priority Group 8 
veterans already in the system, as well as those returning 
veterans who will migrate to this group after the expiration of 
their post 2-year enhanced enrollment authority. This will 
ensure that no veteran currently in the system will be denied 
care.
    However, as demand for healthcare services continues to 
grow, VA must allocate resources according to the priorities 
set by law. In keeping with Congress' requirement to establish 
and manage a system of annual patient enrollment, VA annually 
reviews the demand for services and the resources required to 
assure timely and high-quality services.
    We believe the current restriction on enrollment of new 
Priority Group 8 veterans is necessary to maintain the 
timeliness and quality of the healthcare we provide to 
currently enrolled veterans. This policy allows VA to focus on 
fulfilling our mission of meeting the healthcare needs of those 
veterans given higher priority by Congress, service-connected 
veterans, those returning from combat, those with special needs 
and those with lower levels of income.
    This concludes my prepared statement and I would be pleased 
to answer your questions.
    [The prepared statement of Dr. Kussman appears on p. 67.]
    The Chairman. Thank you, Dr. Kussman. Did you say 90 
percent of Priority 8 veterans have insurance, other insurance?
    Dr. Kussman. My understanding is the surveys that we have 
done on people who are in the systems, the Priority 8 people 
and others, is that nine out of ten have access to some other 
kind of insurance. It could be Medicare or something like that.
    The Chairman. So why are you worried about bringing them in 
if you can get third-party collections, right? I mean----
    Dr. Kussman. Well, first of all, we don't get a payment 
from Medicare and----
    The Chairman. What if they are on Medicaid?
    Dr. Kussman. The third party doesn't pay the whole cost.
    The Chairman. Okay. But that is at variance with the 
testimony we had earlier that 1.8 million did not have any 
health insurance. Did you see that at variance with your 
statistic?
    Dr. Kussman. Yes, Mr. Chairman. I heard that. But I believe 
that the witness at that time was talking about the 24 million 
veterans that are in the country, the total, and used census 
data to determine that. And quite frankly, and I haven't 
reviewed her study and I haven't talked with her, so I will 
just tell you what my impression is, is that of those 1.7 
million veterans that are in the 24 million that don't have 
access, some of them may be already enrolled in our system as 
Priority 1's through 6's or 7's because indeed, when the Census 
Bureau asks do you have insurance, the person may say no which 
is indeed true. But they are a veteran who is enrolled in our 
system. So I don't know exactly what the 1.8----
    The Chairman. I think she said, although I won't--I have to 
let her speak for herself, but the census asked two questions. 
Do you have VA care or are you insured? And she only took the 
ones that said no, I think. Is that what she said?
    Dr. Kussman. I didn't understand that. If that is true, 
then I----
    The Chairman. Anyway, we should check on those statistics, 
obviously. But you don't see any basic contradiction right now 
based on what you know of those two numbers?
    Dr. Kussman. Of the 1.7 million that----
    The Chairman. Yeah, and the 90 percent?
    Dr. Kussman. I don't know if that is----
    The Chairman. Okay.
    Dr. Kussman [continuing]. Correct or not.
    The Chairman. All right. Now, as I understand it, and 
according to the VSO's who met with the Secretary at that time, 
this Category 8 enrollment ban was meant to be a temporary 
thing. Have you asked in your budget request to fund the 
Category 8's so it would not continue to be a permanent ban?
    Dr. Kussman. Mr. Chairman, I think that the issue here is 
that, as prescribed by law, every year the Secretary has to 
look at that. I don't think it is meant to be permanent in any 
way because it is supposed to be reviewed on a yearly basis.
    The Chairman. Yes, but the original request came because 
supposedly there were insufficient resources. So why don't you 
just ask for sufficient resources so you don't have to make the 
determination that you can't enroll Category 8's? I mean do you 
ask for the--you expect it to cost, is that $1.6 billion an 
accurate figure?
    Dr. Kussman. I believe from our estimate that if 8's were, 
if it was open again for 8's to come in, it would be 1.7 
enrolled, 1.7 enrollees. There is a difference between----
    The Chairman. Okay.
    Dr. Kussman [continuing]. Enrollees and unique people and a 
cost of about $1.8 billion.
    The Chairman. So did you ask for that money so you wouldn't 
have to reject their enrollment?
    Dr. Kussman. I think we asked for a budget that would allow 
us to continue to expand what we were doing for the enrollees 
that we had and----
    The Chairman. So you didn't ask for the resources, to get 
rid of the Category 8 ban, you didn't ask for the money?
    Dr. Kussman. The budget request presumed that the 
prohibition on Priority 8's would continue. But as you know----
    The Chairman. I just find that backward. Again, the request 
for a ban or the determination there should be a ban is based 
on insufficient resources.
    Dr. Kussman. Well----
    The Chairman. Just ask for sufficient resources.
    Dr. Kussman. But it is more--as was commented on in the 
second panel, it is more than just resources that drive what 
our primary, what Congress said for us to determine, is access 
and quality. And if that came in, we would be challenged to be 
able to maintain the access and quality with a large bolus of 
people coming in irrespective of the money.
    The Chairman. So ask for that money to keep the quality up. 
I mean I think you have decided that you don't want the 
Category 8's--not that you don't want but, I don't mean that as 
a personal decision. But the system cannot deal with Category 
8's so you just make all your projections and all your budgets 
based on the decision that we are not going to treat them, 
rather than asking, ``What do we need to treat them,'' and 
getting the resources to do that. I mean is that an accurate 
conclusion that I should draw?
    Dr. Kussman. No, sir. I don't agree with that conclusion.
    The Chairman. Then why don't you just ask for the money?
    Dr. Kussman. Because as I mentioned to you, the priority is 
to maintain the quality and access and we----
    The Chairman. So what do you need to maintain the quality?
    Dr. Kussman. We would--the infrastructure and the ability 
to hire people. We still have opportunities to improve----
    The Chairman. So ask for that.
    Dr. Kussman [continuing]. Veterans that we have taken care 
of with the waiting times and things and we are spending----
    The Chairman. Well, can you tell me--you don't have to do 
it this minute--how much money, or whatever else you need to 
ensure access and quality to take care of the Category 8's? 
Tell me what you need. You can't very well say you don't have 
the resources when you haven't asked Congress to make it 
happen. I mean I don't understand how you can just assume you 
can't do it when you haven't even talked about doing it.
    Dr. Kussman. We cannot do it with the infrastructure and 
the--as you saw in the Washington Post yesterday, an article 
was written on the fact that even in the civilian community 
they are building a lot of infrastructure but cannot hire the 
number of people that they need to provide adequate and quality 
care because we are faced with----
    The Chairman. I read that, but tell us what you need. I 
mean if you are telling me that because you have 300 vacancies 
in diabetes specialists or something, whatever, I can tell you 
that Congress can find a way to incentivize programs so we will 
get those cardiac or diabetes specialists. You can't assume we 
can't do it if you don't ask for it. And unless you specify 
what you need, we can't provide it. We needed scientists and 
engineers in 1957 after Sputnik went up.
    So we just gave scholarships to everybody who had a signer 
on their pass, including me. They were going to make me an 
engineer so we could keep up with the Russians. So we got all 
the engineers we needed. We could do that to anything if you 
just tell us what it is that you need--you can't keep saying 
the infrastructure is not there if you don't tell us what 
infrastructure you need. Then it is your fault, not our fault, 
because you keep saying you don't have it.
    But the VSO's said that, they estimated something around 20 
percent of the Category 8's would actually utilize the system. 
How come you don't have any utilization percentage? You are 
assuming everybody is going to utilize it? What is your 1.7 or 
1.8 billion based on?
    Dr. Kussman. As I mentioned, Mr. Chairman, those are the 
number of people who would take advantage of the opportunity to 
enroll. About half, 800,000 would actually come in and be 
categorized as uniques, the people we would have to provide 
care for.
    The Chairman. So you are assuming 50 percent and they 
assume 20 percent; is that fair?
    Dr. Kussman. I don't know where they got their number from. 
I think that----
    The Chairman. Where did you get your number from?
    Dr. Kussman. Historical data of what happened to 8's when 
it was open.
    The Chairman. So yours is based on historical data or 
theirs is?
    Dr. Kussman. I think ours is derived from--let me ask Pat.
    The Chairman. So what is our database, or your database? I 
don't take any ownership of it.
    Ms. Vandenberg. Our databases are actual enrollment 
experience. Prior to the suspension of Priority 8's, we had a 
pattern of enrollment and utilization among the Priority 8's 
and today we still have Priority 8's in the system who had been 
enrolled prior to the suspension. And so we extrapolate from 
that pattern of utilization what the demand for service would 
be if we reopened Priority 8's.
    The Chairman. Mr. Blake, you testified a minute ago. Can 
you just say, do you agree or disagree with that utilization 
rate estimate?
    Mr. Blake. I think it is not the same thing. I think it is 
100 percent based on users and the system and there is some 
variation on enrollment and my statement is what I am saying, 
that our assumption is based on the CBO report. Now, it is not 
accurate, but our assumption is based on that. Given that I 
don't work for the VA, I don't have all the same data that is 
available to them.
    The Chairman. Okay. Again, Dr. Kussman, I want a request 
from you, not just generalities, but to serve with high 
quality, however you want to caveat it, the Priority 8 veterans 
that will use the system, what do you need from Congress to do 
that? Is it, you said $1.8 billion to serve them? Do you need 
more clinics? Do you need more hospitals? If you want to do it 
now, fine, or give us a report on it.
    Dr. Kussman. Let me, that $1.7 billion was for 1 year. Over 
10 years, the estimated cost would be cumulatively $33 billion 
to bring in the Priority 8's that we believe would take 
advantage of----
    The Chairman. Thirty-three billion dollars?
    Dr. Kussman. Thirty-three billion dollars.
    The Chairman. Let's see. That is about 8 months of the war 
going on now. So it is a question of priorities. We have the 
money. Do we want to spend it as a nation? I mean $33 billion 
doesn't scare me, if that is what you were trying to do. We can 
accommodate that. So ask us for it. I want you to tell this 
Committee and this Congress and the American people what it 
takes to serve those who have served us. I mean that is a 
pretty simple question. And somehow you are not taking it as a 
simple question.
    I don't think you are prepared now to do it. I agree with 
you. I don't think you are prepared now for the OEF/OIF 
veterans. So you need some more resources. So tell us what you 
need. I think the American people understand that it is a cost 
of war to treat our veterans. I don't care whether they are 
from World War II or they are from yesterday in Baghdad.
    But you have to tell us if we gave you another $1.8 
billion, could you take all the Category 8's?
    Dr. Kussman. No.
    The Chairman. What else do you need?
    Dr. Kussman. It would take----
    The Chairman. I have asked this five times now.
    Dr. Kussman. It would take us a great deal of time to be 
able to put an infrastructure and hire people that could absorb 
800,000 projected in 1 year. We----
    The Chairman. But the $1.7 billion will pay for the 
infrastructure. You just need time to put it in place?
    Dr. Kussman. It would--I don't know how long that would 
take to be able to increase the capacity and the only other way 
to do it would be to outsource the care to maintain access and 
quality. I believe that if all 800,000 came in, even with the 
$1.7 billion that came, we would find ourselves in the same 
situation that drove the decision in 2003 with increasing 
access, wait times and concerns about getting appropriate care.
    The Chairman. So what does the $1.7 billion cover then, if 
it doesn't cover that? I want the cost of giving the new folks 
access and quality without diminishing the access and quality 
of those in the system now. What does the $1.7 billion give us 
then, if you keep telling us that is the cost for the 800,000?
    Dr. Kussman. I believe it is an estimate of actually if we 
were going to provide the care and had the access and capacity 
to do it, that is what it would cost in-house.
    The Chairman. Okay. I will ask one more time, and again, I 
want a report from you. What would it take, and how long would 
it take, to absorb all the 800,000 Category 8's that exist now? 
What is the cost, how long, what do you need to do, what 
infrastructure do you need, what capital costs, what costs for 
new hires, whatever? That is what we thought we were getting 
when we get a number like $1.7 billion. I thought that is what 
that means. And you are saying no, it doesn't mean that.
    Let me ask you one more thing--so I hope you can get us 
that.
    Dr. Kussman. Yes, Mr. Chairman.
    The Chairman. How many, you have almost 250,000 employees 
in the system, 235,000 or something like that?
    Dr. Kussman. It is around 200,000 for the VHA, around 
235,000 for the whole VA.
    The Chairman. How many of those, I mean is it one person or 
is it 10,000 people, who are dealing with these eligibility 
questions for healthcare? Someone has to determine if you are 
eligible, I assume, when you come to the VA, right?
    Dr. Kussman. Right.
    The Chairman. How many people are involved in that, would 
you estimate?
    Dr. Kussman. I apologize. I will have to get you that 
number. I think every facility has a process under which the 
eligibility is determined. I don't know how many people work in 
that, but I will be happy to get you that number.
    [The following was subsequently received.]

          In Fiscal Year 2007 (FY 2007), VHA employed 4,581 persons in 
        eligi-
        bility and related administrative support activities at an 
        annual cost of $185,549,820. These employees served at 153 VA 
        medical centers and 895 outpatient sites of care, including 
        America Samoa, Guam, the Philippines, Puerto Rico, and the 
        Virgin Islands. Employees in these positions work with veterans 
        to ensure they receive every benefit for which they are 
        eligible. In FY 2007, more than 5.5 million people received 
        care or services in VA healthcare facilities. On a day-to-day 
        basis, VHA intake and eligibility staff members work with 
        veteran and other eligible beneficiaries to ensure they receive 
        their VA healthcare benefits.
          VHA's intake and eligibility staff members are often the 
        first points of contact for veterans and other beneficiaries as 
        they seek healthcare services from VA, they provide an 
        important first impression. These staff members provide 
        invaluable assistance by educating and supporting veterans as 
        they complete their Department of Veterans Affairs (VA) 
        healthcare enrollment application, either in person or by 
        phone. The intake and eligibility employees are essential 
        participants in VA's revenue process by ensuring VA possesses 
        accurate demographic information, including military service 
        and health insurance information. Our eligibility team members 
        fulfill an important role in our outreach efforts, like the 
        ``Stand Downs'' VA holds for homeless veterans. Our eligibility 
        staff educates beneficiaries on VA's comprehensive Medical 
        Benefits Package and other services, including the provision of 
        prosthetics, sensori-neural aids, extended care services, 
        beneficiary travel, non-VA fee care, dental care, and, as 
        needed, the appellate process. VA staff provides benefits 
        counseling for special veteran populations, such as combat 
        veterans of Operation Enduring Freedom/Operation Iraqi Freedom 
        (OEF/OIF), former prisoners of war, service-connected veterans 
        and others. In addition, these staff members help determine 
        applicable health benefits for persons who are eligible for 
        treatment under other authorities, including the dependents of 
        veterans, Allied Beneficiaries, Department of Defense (DoD) 
        beneficiaries, and beneficiaries of other types of sharing 
        agreements.

    The Chairman. If you could figure that out. It would seem 
to me that if we didn't have all these people working in 
eligibility, those resources could be used for care of our 
veterans. We are spending all this time dividing people into 
categories, determining whether they are eligible one way or 
the other. To me, if they can prove they are a veteran, take 
them in, assuming we have the resources that you outlined 
earlier.
    Wouldn't that save a whole lot of pressure on the system, 
to take that kind of burden off it for all the eligibility 
determinations?
    Dr. Kussman. Are you suggesting, Mr. Chairman, that we 
would potentially take care of 24 million veterans?
    The Chairman. Potentially, yes. I mean why don't 20 million 
come in now?
    Dr. Kussman. I presume that they have chosen for whatever 
reasons not to use the system. But the priority system that we 
are using right now has been defined and established, as I 
understand it, by Congress who has told us what to do.
    The Chairman. Yes, but we also told you--we didn't tell you 
to establish a ban on Category 8's, so don't say----
    Dr. Kussman. No, no----
    The Chairman [continuing]. In this case we told you to do 
it and in the other case----
    Dr. Kussman. No, I am not trying to----
    The Chairman. You have to tell us what you think is 
necessary and what you think is good for the veteran 
population.
    Dr. Kussman. It says, the criteria that we are operating 
under clearly says that the priorities are established and it 
is up to the Veterans Health Administration and the VA to 
determine how many veterans and what priorities can be seen, 
giving, maintaining the quality and the access. And that exists 
right until today.
    The Chairman. Right. But as I said earlier, that was meant 
to be a responsive action, not a proactive action, that you 
then plan, so it seems to me that you are doing, for continuing 
the ban on Category 8's. You are ignoring them now, because 
they are not part of the system. That is not what was intended. 
The intention was if something happened that led you to a 
decrease of resources, you would have to temporarily start 
limiting access.
    But at some point then, you should say well, we had this 
emergency in 2006 so now in 2007 we are going to have the 
resources to deal with them. And you need to ask for that and 
we need to give that to you.
    Mr. Stearns, did you have some questions?
    Mr. Stearns. I did. Thank you, Mr. Chairman. I am glad I 
got back in time.
    And let me just say that we all appreciate your advocacy 
for veterans and, I think a lot of people may disagree on 
different points, but the Chairman is making a strong case to 
help our veterans and we are all on the same side of the aisle 
here on that effort.
    When the second panel was on, Atizado was asked a question 
about more resources and of course he is the Assistant National 
Legislative Director for the DAV. And I thought he said 
something that was pretty striking. He came out with some 
caveats, before we do the Priority 8's in which we must have 
the capital resources and the human resources. I asked him to 
go forward on that and talk about it.
    He indicated that throwing more money at a problem is no 
substitute for good management. And I think, if I understand 
you, Dr. Kussman, that you are saying that if we give you more 
money, we are not sure you have the ability to actually 
implement this, because you might not have--in addition to not 
having the full amount of money, you might not have the human 
and capital resources. I thought you might follow up on what 
the DAV from the second panel said.
    Dr. Kussman. Well, thank you for the question and I 
basically concur with what DAV said. I would caveat it a little 
bit though. When he said it was due to mismanagement or 
inadequate management, I don't think that is the issue. The 
challenge is to use the money that the taxpayer and the 
Congress so graciously gives us, to use it effectively. And we 
have been challenged in the past of being able to hire people 
and things of that sort that are in great demand in the 
civilian community as well as ours.
    And before you came back, sir, I mentioned the article in 
the Washington Post yesterday, which I think was on the second 
page, that really went over the problem that exists in the 
country. There is a verse of resources and certain disciplines 
and you can build all the infrastructure you want, but if you 
can't get people to come and work there, then you haven't 
effectively accomplished what you----
    Mr. Stearns. Like a nurse shortage with that.
    Dr. Kussman. A nurse shortage, other provider shortages as 
well, physician and nonphysician.
    Mr. Stearns. I think you touched on, either in your opening 
statement or your written statement, another possibility that 
you don't necessarily support, but the idea you would have to 
outsource some of this. You might just give me a clarification 
what you mean by that.
    Dr. Kussman. Well, in my opinion, as a physician and the 
Under Secretary for Health, if we are going to enroll people 
and provide them a full range of benefits package, you have 
three opportunities of what to do there. One is unacceptable. 
First is in-house, second is you buy it, and the third is not 
to provide it. And the third one is unacceptable under 
anybody's opinion. So if we don't have the infrastructure and 
the personnel capacity to do it, we would have to go out and 
buy it.
    Mr. Stearns. So the question next is, do you have the 
authority to outsource the VA activities?
    Dr. Kussman. Yes, sir. We contract and fee base all the 
time in certain disciplines, in areas of the country where we 
can't provide----
    Mr. Stearns. No, I mean for Priority 8's, I am talking 
about.
    Dr. Kussman. Whether it is a Priority 8 or anybody else. 
They are enrolled in the system. We would----
    Mr. Stearns. So you have the authority to outsource the 
Priority 8 if you want, if you so choose, taking your three 
occasions, not doing anything, outsourcing, doing it in-house. 
And you indicated that perhaps outsourcing is an alternative.
    Dr. Kussman. Right. And we do that now for the whole 
spectrum of 1 through 8's that are enrolled in the system.
    Mr. Stearns. So you do have the authority to do that?
    Dr. Kussman. Yes, sir.
    Mr. Stearns. Now, I don't know if Congress, Dr. Kussman, I 
don't know if Congress gave you the authority to outsource. I 
am not familiar with that. Just a moment, just let me ask the 
staff here a second.
    Okay. Well, in the 1996 bill it appears, staff is saying 
that we gave you the authority to outsource, so----
    Dr. Kussman. Sir, I would ask my legal counsel.
    Mr. Hall. Yes, sir. We have authority to contract for 
healthcare resources under our general--it is called share and 
authority, general contract authority for healthcare resources. 
And it wouldn't be limited to--we couldn't outsource one 
particular priority group. We couldn't outsource all Category 
8, Priority 8 care.
    But I think Dr. Kussman's point was to get the resources we 
needed to take care of everybody, we would have to acquire 
services, resources, facilities by contract.
    Mr. Stearns. It usually doesn't happen that the Chairman 
leaves and lets the minority take over. So I have a distinct 
opportunity here to continue beyond the red light. So I will 
take--by unanimous consent, the Ranking Member----
    Dr. Kussman. I didn't hear the gavel go down----
    Mr. Stearns [continuing]. Is allowed to continue for as 
much time as he may consume. Not hearing any objections, so 
ordered.
    [Laughter.]
    Well, frankly, I don't know how pleased the VSO's will be 
with the idea that you can outsource, because I think they and 
others want to make sure the veterans have the responsibility 
and the authority and the money to do the job without 
outsourcing it. And so I am not sure that is a viable thing. 
But you know, I guess earlier you indicated you would need an 
additional $33 billion to Category----
    Dr. Kussman. Over 10 years, sir.
    Mr. Stearns. Over 10 years, okay. So that would be $3.3 
billion. I think that is doable, that is feasible. But if we 
gave that money to you today for the next 10 years, you are 
saying you still could not satisfy taking care of Priority 8 
because you don't have the human and capital resources. That is 
what you are saying?
    Dr. Kussman. That is correct.
    Mr. Stearns. Okay. So if you follow what the DAV said, then 
they do not believe they could support doing the Priority 8 
because you have just admitted you can't take care of them 
because of the two caveats that they conclude. So I think the 
question would be then, how do we get where you have these 
capital and human resources? I mean what in your mind with all 
your background--and you have been in charge of a large 
hospital, a VA hospital. I mean what in your mind, if you could 
wave a magic wand, could we in Congress or could you do other--
is outsourcing the only way you could solve the problem?
    Dr. Kussman. Well, there are--I think there are multi-
disciplinary ways to look at that. One would be to allow the 
people we have in the system to be more efficient. And as you 
know, we have some challenges in our infrastructure. Our 
hospitals are on the average of 57 years old. We have some 
challenges in minor construction and nonrecurring maintenance.
    So there would be ways to--using advanced clinic access, 
and we are putting in place some initiatives to expand the 
hours that the clinics are open to be more efficient, not only 
to allow us to see more patients, but particularly to allow 
veterans to come in at times that are more convenient for them, 
particularly when they work. So those are things we could do.
    One of the challenges is there aren't enough nurses in the 
country. There aren't enough gastroenterologists in the 
country. There aren't enough dermatologists in the country. And 
so even with the very generous pay bills that the Congress 
approved 2 years ago--and we are making some headway. But we 
are still at a challenge to hire some of the subspecialty 
clinics. We are making some headway in mental health services. 
We hired more social workers, psychiatrists and psychologists, 
but we still have a ways to go.
    And part of it is driven by availability and the other is 
geography, is that we have, you know, 1,400 sites of care all 
over the country. People sometimes don't want to live in some 
of the areas that we would like to hire people. So it is a 
multi-faceted problem that limits our ability to take in large 
numbers of people and keep them in the system.
    And by the way, I might add, we want to keep them in the 
system because we believe that we are the best quality 
healthcare system in the country. And one of the ways we do 
that is keeping track of our patients with our pharmacy 
benefit, our electronic health record, our performance 
standards. And when you outsource, then you lose some of that 
edge with that because of the inability to--even though we want 
to monitor quality, we will be sure that who we hired were good 
quality, but they don't have all the things, the infrastructure 
that we have.
    Mr. Stearns. Following what you said then, the limitations 
that you talked about are also the limitations in the private 
sector too. So you might not be able to even outsource these 
successfully in the private sector.
    Dr. Kussman. That is correct.
    Mr. Stearns. So knowing that and what you said, then is 
there compromise that if we and Congress decide to allow 
Priority 8 veterans to come into the system, it should be 
phased over a period of time? I mean what do we do? What would 
you suggest legislatively? Are you saying today you do not want 
to do Priority 8 ever or are you just saying you don't want to 
do them immediately?
    Dr. Kussman. I don't think anybody in the VA is saying 
never----
    Mr. Stearns. Right.
    Dr. Kussman [continuing]. With the Priority 8's. I think 
that we need to sit down and figure out a way that would make 
sense to incorporate, and maybe not all at once and some 
criteria----
    Mr. Stearns. So over a time phased in?
    Dr. Kussman. The same----
    Mr. Stearns. Yeah, and what time phase-in do you think that 
could be?
    Dr. Kussman. I hadn't really thought about that, but I 
think over--together maybe over the next 6 months or a year we 
could come up with a plan that would look at how we would try 
to incorporate the maximum number of Priority 8's back into the 
system given the rules of engagement that exist now.
    Mr. Stearns. Well, I think that is probably a good way to 
end this and I would suggest--I am a Member of this. I am the 
Vice Ranking Member. But I would suggest that you put together 
your thoughts on that and send it to the Chairman and to the 
Ranking Member, Mr. Buyer, on how you would incorporate this 
over the 6 months to a year and perhaps we don't need 
legislation, because the Secretary himself put in the 
requirement that you could take them, so obviously he has the 
authority to start taking them. And if you could come up with 
some definitized plan, I think that would go to helping us 
solve this problem. Hold on 1 second.
    [Pause.]
    Well, the staff had reminded me that some of this money 
that you need could be found through third-party collections 
and some of the problems the VA has had in linking billing to 
services provided in clinical care and, this billing for third-
party collections has always been a problem as long as I have 
been on Veterans, so that there are ways to even make this 
money up by $3.3 billion a year without necessarily an 
appropriation, an authorization from this Committee.
    But I think that would be one way to do it, is to see your 
written explanation how we could solve this problem from the 
Administration. And with that, there are no further Members. I 
think we will thank you for your testimony and for waiting 
through the other two panels. Is there anything that perhaps in 
the other two panels you would like to comment on?
    I know it is an open-ended, but is there something you 
would like to clarify that was said by the early panelists? We 
welcome your comment.
    Dr. Kussman. I will probably terrify my staff by 
volunteering anything, but----
    Mr. Stearns. No, I know.
    Dr. Kussman [continuing]. I just wanted to make a point 
that I think came up, about the issue of clinical need driving 
the availability of care. And I think you mentioned, sir, that 
once you are enrolled, then the clinical acuity drives what is 
going on. It doesn't make any difference whether you are a----
    Mr. Stearns. Yeah.
    Dr. Kussman [continuing]. Priority 1 versus a Priority 8. I 
just wanted to make sure everybody understood that. If you are 
not enrolled with us, that is a moot question actually, because 
we don't know who they are. But when you are in with us, the 
clinical thing, not the priorities, take precedence.
    Mr. Stearns. I wanted to make that--after Mr. Rowan, the 
National President of the Vietnam Veterans of America, because 
when he was talking, he sort of implied that people are not 
getting services because of this priority system and that is 
not the case.
    That priority is just set up to get them enrolled and then 
from there, they are all set. So I think, you know, we have 
established that and I think that is important.
    With that, I think the Committee will be adjourned and we 
thank everybody.
    Dr. Kussman. Thank you, sir.
    [Whereupon, at 1:20 p.m., the Committee was adjourned.]



                            A P P E N D I X

                              ----------                              

                 Prepared Statement of Hon. Bob Filner
             Chairman, Full Committee on Veterans' Affairs
    The Committee on Veterans' Affairs will come to order. I would like 
to thank the Members of the Committee for being here this morning.
    The issue of the Administration's continued ban on enrollment of 
new Priority 8 veterans is an important one. I hope that we will leave 
here today with a sense as to the costs and effects of rescinding the 
ban, as well as the costs, measured in the effect of denied access to 
healthcare, of continuing the Administration's policy of shutting the 
doors to an entire class of veterans.
    P.L. 104-262, the ``Veterans' Healthcare Eligibility Reform Act of 
1996'' ushered the VA into the modern era of medicine. In the decade 
that has followed, VA has remade itself into a healthcare system that 
is a model to others.
    In January 2003, then-Secretary Anthony Principi made the decision 
to bar enrollment of new Priority 8 veterans. These veterans are 
noncompensable, nonservice-connected, and have incomes above $27,790. 
They also fall above the geographic income threshold established by 
HUD. Although comparably better off than their fellow veterans who fall 
within Priority Group 7, they are by no means all rich veterans, as 
some might have you believe. For 4\1/2\ years, the doors to VA 
healthcare have been closed to these veterans.
    In the Majority Views and Estimates that we submitted to the Budget 
Committee for FY 2008, we noted that ``the authority of the 
Administration to deny enrollment to an entire class of veterans was 
never meant to extend ad infinitum, but was provided to the VA as a 
management tool in order for it to address unexpected shortfalls that 
might arise during the course of the year.''
    Unfortunately, that is the situation we face today--the 
Administration fails year after year to request specific funding for 
enrolling Priority 8 veterans and treats the January 2003 decision as 
permanent.
    The VA has estimated that reopening enrollment will bring in an 
additional 1.6 million veterans and require an additional $1.7 billion. 
The Independent Budget has estimated that reopening enrollment would 
cost an additional $366 million. I look forward to our witnesses 
addressing, with specificity, the various cost estimates regarding the 
effects of rescinding the enrollment ban. I also look forward to our 
witnesses today addressing the continued costs of maintaining the ban.
    Taking care of veterans is a continuing cost of war. All veterans 
should have access to ``their'' healthcare system. The Committee looks 
forward to hearing the views of our witnesses as we examine the effects 
of the Administration's ban on our Nation's veterans.

                                 
                Prepared Statement of Hon. Cliff Stearns
         a Representative in Congress from the State of Florida
    Mr. Chairman:
    I appreciate the opportunity to be here today at this important 
hearing on the eligibility of Priority 8 veterans for VA healthcare. 
There are many issues that must be considered before any changes are 
proposed, and I look forward to hearing the insight of our panels of 
witnesses on these issues.
    As many of us are aware, the Veterans' Healthcare Eligibility 
Reform Act of 1996 reformed the very confusing previous system of 
categorizing the eligibility of veterans for enrollment in the VA 
system. In the new legislation, seven categories were created, ranging 
from those veterans with 50% or more service-connected disabilities to 
veterans not covered by other classifications but who cannot afford to 
defray the cost of necessary care. Then in 2001, the new category of 
Priority 8 veterans was created for those who had served but have 
income or net worth above the VA income threshold, but who would agree 
to paying copayments for their care.
    This eligibility category was later suspended under former VA 
Secretary Anthony Principi. His reasoning was that, ``both quality of 
care and timeliness are placed at risk by the larger number of veterans 
seeking VA medical care.'' I believe that all of us want to ensure that 
all veterans have healthcare coverage. That is absolutely one of my 
primary goals as I serve on this Committee. In our search for providing 
for veterans, it is important that we care for our disabled veterans, 
veterans with special needs, and our country's poorest veterans.
    We are all aware that the VA is operating under an enormous burden 
at present. Currently, the VA has about 7.9 million enrollees in its 
system. Returning veterans from Afghanistan and Iraq will continue to 
swell the number of veterans seeking care, with anticipated new 
enrollments in the coming year of about 5.8 million veterans. The 
concern is that without wise budgeting and prioritizing spending, the 
resources will be stretched so thinly that the incorporation of 
Priority 8 veterans will inhibit the VA's ability to provide quality 
care for all the veterans in the system, including the disabled and 
lower income vets. As we consider incorporating Priority 8 veterans 
into the system, let us also consider how we are getting the resources 
for the Department to care for them and practice fiscal discipline to 
ensure the needs of no veterans are overlooked.

                                 
              Prepared Statement of Hon. Ginny Brown-Waite
         a Representative in Congress from the State of Florida
    I want to thank Chairman Filner for holding this hearing today.
    Everyone on this Committee is aware of the restriction imposed in 
2003 upon the enrollment of new Category 8 veterans into the VA 
healthcare system. While these individuals might be fortunate enough to 
have access to healthcare from other sources, there are instances where 
this policy is unfair and arbitrary. In my district, I hear from 
countless veterans who want to know when this prohibition will end. 
Some have been waiting for over 4 years for an opportunity to access VA 
care. Unfortunately, we do not always have a clear answer for them.
    While I was not in Congress when the Department of Veterans' 
Affairs Healthcare Program Enhancement Act passed, I do recall the 
legislation was popular. I look forward to hearing from the VA about 
its plans to address the needs of Category 8 veterans.
    Thank you.

                                 
                 Prepared Statement of Hon. Jeff Miller
         a Representative in Congress from the State of Florida
    Thank you, Mr. Chairman.
    Since its inception, the Priority 8 veteran category has caused its 
share of controversy. The arguments made for its creation and the 
suspension of Priority 8 enrollment raise very valid points and 
concerns. The Department of Veterans Affairs has a grave responsibility 
to ensure our brave veterans receive top-notch healthcare in a timely 
fashion. On that same line, this healthcare should be for all veterans.
    Levels of disability, both service-connected and nonservice-
connected, are a fact of life, and there are different disabilities 
that require more frequent and more urgent care. However, I do not 
think that VA should address the more urgent healthcare needs by 
completely shutting out those with less urgent needs. A veteran is a 
veteran, and VA needs to adjust its operations, its budgeting, and its 
healthcare system so that all veterans can be treated.
    For several years, this Committee has seen requests from the 
Administration in its annual budget requests to establish enrollment 
fees and increase pharmacy copayments for certain Priority 8 veterans. 
Consistently, Congress has overwhelmingly not supported those 
proposals. The message is clear that all veterans have earned quality 
care. I look forward to today's testimony and hope that some 
constructive solutions can be offered so that veterans are not shut out 
of the system. If VA cannot adequately address the issue with their 
current structure, perhaps a more significant change needs to be 
proposed.

                                 
              Prepared Statement of Hon. Harry E. Mitchell
         a Representative in Congress from the State of Arizona
    Thank you, Mr. Chairman.
    The eyes of our country are on this Congress as we continue to 
learn about the difficulties of not only our newest generation of 
veterans, but also those who served many decades ago. Each group 
presents its own set of needs to the veterans health system, and we 
must determine how best to care for these needs in as equitable and 
efficient a manner as possible.
    My thanks to the members of the panel who are here today. I look 
forward to hearing your thoughts and recommendations and working with 
this Committee to ensure that we do the best we can for our Nation's 
veterans.

                                 
      Prepared Statement of Stephanie J. Woolhandler, M.D., M.P.H.
      Associate Professor of Medicine, Harvard Medical School, and
          Co-Founder, Physicians for a National Health Program
             Uninsured Veterans: A Stain on America's Flag

Summary/Oral Testimony
    In my written testimony I present detailed information on the 
health insurance coverage and problems in access to healthcare of 
America's veterans, based on analyses of multiple years of data from 
two annual national surveys carried out by the government: The Current 
Population Survey and the National Health Interview Survey.
    I will address two questions: (1) How many veterans are currently 
uninsured? And (2) Do uninsured veterans suffer problems in access to 
care--similar to other Americans who are uninsured?
    In 2004, 1.8 million military veterans neither had health insurance 
nor received ongoing care at Veterans Health Administration (VHA) 
hospitals. Note that the surveys asked veterans if they had health 
insurance, and if they had veterans or military healthcare. We counted 
them as uninsured only if they answered no to both questions. The 
number of uninsured veterans has increased by 290,000 since 2000. The 
proportion of non-elderly veterans who were uninsured rose from less 
then one in ten (9.9%) in 2000 to more than one in eight (12.7%) in 
2004.
    An additional 3.8 million members of veterans' households were also 
uninsured and ineligible for VHA care.
    Virtually all Korean War and World War II veterans are over age 65 
and hence covered by Medicare. However, 645,628 Vietnam-era veterans 
were uninsured (8.5% of the 7.56 million Vietnam-era vets). Among the 
8.6 million veterans who served during ``other eras'' including the 
Persian Gulf War, 12.9% (1,105,891) lacked health coverage.
    Almost two-thirds (64.3%) of uninsured veterans were employed and 
nearly nine out of ten (86.4%) had worked within the past year. Most 
uninsured veterans, like other uninsured Americans, were in working 
families. Many earned too little to afford health insurance, but too 
much to qualify for free care under Medicaid or VA means testing.
    Uninsured veterans have the same problems getting the care they 
need as do other uninsured Americans. Moreover, many uninsured veterans 
have serious illnesses requiring extensive care. Among uninsured 
veterans older than 45 years, nearly one in five (19.1%) were in fair 
or poor health. Nearly one in three uninsured veterans (of all ages) 
reported at least one chronic condition that limited their daily 
function.
    A disturbingly high number of uninsured veterans reported needing 
medical care and not being able to get it within the past year. More 
than a quarter (26.5%) of uninsured veterans failed to get needed care 
due to costs; 31.2% had delayed care due to costs. Among uninsured 
veterans, 44.1% had not seen a doctor or nurse within the past year, 
and two-thirds failed to receive preventive care. By almost any 
measure, uninsured veterans had as much trouble getting medical care as 
other uninsured persons.
    The VHA is a rare success story in our healthcare system. The VHA 
offers more equitable care \1\ and higher quality \2\ \3\ \4\ care than 
the average care in the private sector, and has become a medical leader 
in research, primary care, and computerization.
---------------------------------------------------------------------------
    \1\ Jha AK, Shlipak MG, Hosmer W, Frances CD, Browner WS. Racial 
differences in mortality among men hospitalized in the Veterans Affairs 
healthcare system. JAMA. 2001; 285:297-303.
    \2\ Asch SM, McGlynn EA, Hogan MM et al. Comparison of quality of 
care for patients in the Veterans Health Administration and patients in 
a national sample. Ann Int Med 2004; 141:938-945.
    \3\ Petersen LA, Normand S-LT, Leape LL, McNeil BJ. Comparison of 
use of medications after acute myocardial infarction in the Veterans 
Health Administration and Medicare. Circulation 2001; 104:2898.
    \4\ Kerr EA, Gerzoff RB, Krein SL et al. Diabetes care quality in 
the Veterans Affairs healthcare system and commercial managed care: The 
TRIAD Study. Ann Intern Med 2004; 141:272.
---------------------------------------------------------------------------
    While we support opening VHA enrollment to all veterans, this would 
still leave many veterans unable to access care because they live far 
from VHA facilities. Moreover, even complete coverage of veterans would 
leave 3.8 million of their family members uninsured. Hence, my 
colleagues and I support a universal national health insurance program 
that would work with and learn from the VHA system in covering all 
Americans.
                               __________
                      Additional Written Testimony
Background
    Forty-five million Americans were uninsured in 2005, the latest 
year for which reliable data are available. While the Census Bureau's 
annual survey on health insurance includes questions about previous 
military services, the Bureau's report on coverage does not include 
tabulations of veterans' coverage. In addition to the sources of health 
coverage available to other Americans--Medicare, Medicaid and private 
coverage--some military veterans obtain care through the network of 
hospitals and clinics run by the Veterans Health Administration (VHA).
    While many Americans believe that all veterans can get care from 
the VHA, even combat veterans may not be able to obtain VHA care. The 
1996 Veterans' Healthcare Reform Act expanded eligibility for VHA care 
to all veterans, but instructed the VHA to develop priority categories 
for enrollment. The VHA priority list includes eight priority 
categories, with veterans offered care based on their priority status 
and the resources available (Appendix).
    As a rule, VHA facilities provide care for any veteran who is 
disabled by a condition connected to his/her military service, and care 
for specific medical conditions acquired during military service. Any 
veteran who passes a means test is eligible for care in VHA facilities 
but has lower priority status (Priority 5 or Priority 7, depending upon 
income level) and is enrolled on a space-available basis. Veterans 
without service-connected illnesses or disabilities, and with incomes 
above 80% of 
the median income in their area are classified in the lowest priority gr
oup, Priority 8.
    In the 7 years after the passage of the Veterans' Healthcare Reform 
Act, VHA enrollment grew 141%, from 2.9 million to 7.0 million. 
However, funding increased by only 60%. Because VHA funding did not 
keep pace with the demand for care, long waiting lists developed at 
many VHA facilities. By 2002, there were almost 300,000 veterans either 
placed on waiting lists for enrollment or forced to wait for 6 months 
or more in order to receive an appointment for necessary care 
(Memorandum from Department of Veterans Affairs to Chairs and Ranking 
Members of Senate and House Veterans' Committees and VA-HUD 
Appropriations Subcommittees, July 2002).
    In January 2003, President Bush's Secretary of Veterans Affairs 
halted enrollment of Priority 8 veterans. Since that time these 
veterans have remained ineligible for VHA enrollment.
    VHA analysts have estimated that about three-quarters of VHA-
enrolled veterans have other health coverage such as Medicare or 
private insurance, and that 1.013 million VHA patients were uninsured 
in 1999 (Donald Stockford et al. Uninsured Veterans and Veterans Health 
Administration Enrollment System, 2003. Department of Veterans Affairs, 
April 2003.). The 2001 National Survey of Veterans (NSV) found that 
10.0% of veterans--2.52 million vets--were uninsured, 0.9 million of 
whom used VHA hospital, outpatient or emergency care (2001 National 
Survey of Veterans: Final Report and supplemental tabulations, 
available at: http://www.VHA. gov/vetdata/SurveyResults/). Thus, the 
NSV data indicate that more than 1.6 million veterans had neither 
health insurance nor VHA care in 2001.
    This report uses data from two large, recent surveys of the U.S. 
population to examine two related questions: (1) How many veterans and 
their family members lacked any health coverage in 2005 (i.e. they had 
neither insurance nor VHA care)?; and (2) What problems in access to 
healthcare did these uncovered veterans and their families experience?
                                Methods
    Our principal analysis used data from two large surveys of the U.S. 
population: the Current Population Survey Annual Social and Economic 
Supplement (CPS) for multiple years (most recently March 2005), and the 
2002 and 2004 National Health Interview Survey (NHIS).
    The CPS is the standard source for estimates of health insurance 
coverage in the U.S. We used weights supplied by the Census Bureau to 
extrapolate the findings to the entire U.S. population. The CPS asks 
only about prior U.S. military service. Hence, both honorably 
discharged and other veterans are included under the rubric 
``veteran.'' We considered a person insured if they had any private 
insurance, Medicaid, SChip, Medicare, other insurance, or were 
``covered by Champus, veterans or military healthcare.'' Thus, persons 
enrolled in VHA (or military) healthcare were classified as insured 
even if they had no other coverage. We considered a person to be a 
veteran's family member if they resided in a household with a veteran. 
Because the CPS is considered the standard source for data on health 
insurance coverage, we based most of our analyses of veterans' 
insurance coverage on these data.
    Because the NHIS includes more detailed healthcare access and 
utilization measures than the CPS, we used the NHIS for analyses of 
these issues. This survey is conducted annually by the National Center 
for Health Statistics of the U.S. Department of Health and Human 
Services. We used the NHIS to analyze health status and healthcare 
utilization--questions that are not asked in the CPS. The NHIS asks if 
subjects have been ``honorably discharged'' from the armed forces, and 
hence identifies slightly fewer persons as veterans than does the CPS. 
Because the NHIS is specifically designed to assess health and 
healthcare issues, its questions are generally more specific than those 
on the CPS. For instance, the NHIS survey allows differentiation of 
persons who have only ``veterans or military healthcare'' from those 
who have military-paid insurance plans such as Champus, ``ChampusVA,'' 
or TRICARE. NHIS also contains information on specific medical 
conditions, access to medical care and use of healthcare services.
    Data were analyzed using SAS statistical software.
            Lack of Health Coverage is Common Among Veterans
    1.77 million American veterans were uninsured in 2004, according to 
the CPS data, including 12.7% of all non-elderly (age <65) veterans. In 
this survey, veterans with ``Champus, TRICARE, veterans or military 
healthcare'' were categorized as having health coverage. Hence, the 
1.77 million figure represents persons with neither health insurance 
nor ongoing access to VHA medical facilities.
    As expected, because of their age, virtually all World War II and 
Korean War veterans had Medicare coverage. However, many veterans with 
more recent military service were uninsured. Among the 7.56 million 
Vietnam-era veterans, 646,000 (8.5%) lacked any coverage. Among the 8.6 
million veterans who served during ``other eras,'' including the 
Persian Gulf War, one in eight was uninsured.


         Table 1--Number and Percentage of Uninsured Veterans for Recent Veterans, by Service Era, 2004
----------------------------------------------------------------------------------------------------------------
                                                  Number of Living       Number Lacking        Percent Lacking
            Era of Military Service                Veterans, Total       Health Coverage       Health Coverage
----------------------------------------------------------------------------------------------------------------
Other (includes Gulf War)                              8.60 million             1,105,891                 12.9%
----------------------------------------------------------------------------------------------------------------
Vietnam                                                7.56 million               645,628                  8.5%
----------------------------------------------------------------------------------------------------------------
Source: Analysis of Current Population Survey, March 2005 Supplement.


    The 2004 figures represent an increase of 290,000 in the number of 
uninsured veterans since 2000. In 2000, 9.9% of veterans under the age 
of 65 were uninsured, rising to 12.7% in 2004.
    In addition to the 1.77 million uninsured veterans in 2004, 3.8 
million members of veterans' families lacked coverage.
 Veterans Without Health Coverage Are Not Currently Receiving VHA Care
    According to the NHIS, 1,670,410 honorably discharged veterans had 
neither health insurance nor ``military or veterans' healthcare'' in 
2002. This number is statistically indistinguishable from the CPS-based 
estimate of uninsured veterans for that year. In the NHIS, an 
additional 1,426,897 veterans indicated that they had military or 
veterans' healthcare but no other coverage.


  Table 2--Health Insurance of Veterans and Their Family Members--2002
------------------------------------------------------------------------
                                 Family Members of
                                      Veterans             Veterans
------------------------------------------------------------------------
Private coverage                             73.2%                70.6%
------------------------------------------------------------------------
Medicaid coverage                             6.4%                 2.3%
------------------------------------------------------------------------
Medicare coverage                            19.1%                37.1%
------------------------------------------------------------------------
Champus/TRICARE/ChampusVA                     5.5%                 7.2%
------------------------------------------------------------------------
Military/veterans' medical                    0.8%                 6.3%
 care only
------------------------------------------------------------------------
Uninsured and no military/VHA                 9.4%                 7.4%
 Care
------------------------------------------------------------------------
Source: Analysis of National Health Interview Survey, 2002. Public Use
  Data Release, December 2003.
Note: Individuals may have more than one type of coverage.

                     Which Veterans Are Uninsured?
    The typical uninsured veteran was an employed male in his late 
forties living with one or two family members. Compared to the 
uninsured nonveteran population, uninsured veterans were older, and 
more often employed, male and high school graduates (data not shown).
    Compared to veterans with health coverage, uninsured veterans were 
younger, more likely to be working, and had lower incomes. 64.3% of 
uninsured veterans were working at the time of the survey, and 8.7% 
were in the labor force but currently unemployed or laid off. 70.1% of 
uninsured veterans had family incomes at or above 150% of the Federal 
poverty level, and 46.7% had incomes above 250% of poverty (a level 
that would likely place them above the income threshold for Priority 
Group 7, leaving them ineligible for VHA enrollment).


    Table 3--Veterans' Demographic and Employment Characteristics, by
                         Insurance Status--2004
------------------------------------------------------------------------
                                            Insured         Uninsured
                                            Veterans         Veterans
------------------------------------------------------------------------
Female                                            5.4%             7.4%
------------------------------------------------------------------------

------------------------------------------------------------------------
Age <18                                             0%               0%
------------------------------------------------------------------------
    18-44                                        16.3%            44.5%
------------------------------------------------------------------------
    45-64                                        40.7%            55.2%
------------------------------------------------------------------------
    >64                                          43.0%             1.3%
------------------------------------------------------------------------
Income <150% of poverty                          11.4%            29.9%
------------------------------------------------------------------------
Income <250% of poverty                          28.9%            53.3%
------------------------------------------------------------------------
Currently employed                               48.8%            64.3%
------------------------------------------------------------------------
Currently unemployed or laid off                  1.9%             8.7%
------------------------------------------------------------------------
Source: Analysis of Current Population Survey, March 2005.


        Veterans Lacking Health Coverage Are Not in Good Health
    Many uninsured veterans had serious health problems. When asked to 
rate their health as ``excellent,'' ``very good,'' ``good,'' ``fair'' 
or ``poor,'' less than one-quarter of uninsured veterans indicated that 
they were in excellent health; one in six had a disabling chronic 
illness.

              Table 4--Share of Veterans in Fair or Poor Health, by Age and Insurance Status--2004
----------------------------------------------------------------------------------------------------------------
                                                                  Insured Veterans (%)    Uninsured Veterans (%)
----------------------------------------------------------------------------------------------------------------
Fair or poor health (%)
----------------------------------------------------------------------------------------------------------------
    Age 0-17                                                                       N/A                      N/A
----------------------------------------------------------------------------------------------------------------
        18-24                                                                      5.6                     3.7*
----------------------------------------------------------------------------------------------------------------
        25-44                                                                      7.7                   7.9
----------------------------------------------------------------------------------------------------------------
        45-64                                                                     18.8                  19.1
----------------------------------------------------------------------------------------------------------------
        >64                                                                       30.3                      N/A
----------------------------------------------------------------------------------------------------------------
* Based on small numbers of respondents--note almost all persons over 65 are covered by Medicare.
Source: CPS March 2005 Supplement. Respondents were asked to rate their health as excellent, very good, good,
  fair or poor.

 Uninsured Veterans and Family Members Forego Needed Healthcare Due to 
                                  Cost
    Uninsured veterans indicated that they faced major barriers to 
obtaining medical care. Among veterans age 18-64, those without 
coverage were five times more likely than insured veterans to delay 
care because of costs, five times more likely to forego medications 
because of costs, and six times more likely to forego medical care 
because of costs than those with insurance (Table 5).

    Table 5--Healthcare Access Problems During the Past 12 Months of
            Veterans and Family Members 18-64 Years Old--2004
------------------------------------------------------------------------
                                                           Uninsured
                                     Insured Veterans       Veterans
------------------------------------------------------------------------
Delayed care due to cost                        6.6%              31.2%
------------------------------------------------------------------------
Didn't get needed care due to cost              4.3%              26.5%
------------------------------------------------------------------------
Couldn't afford medications                     5.5%              25.1%
------------------------------------------------------------------------
Couldn't afford glasses                         5.3%              20.8%
------------------------------------------------------------------------
Source: Analysis of the National Health Interurvey, 2004.

                 Uninsured Veterans Use Less Healthcare
    Our analyses of the amount of care actually used by uninsured 
veterans and their families confirmed that they, indeed, lacked access 
to care. Two-thirds of uninsured veterans did not get any preventive 
care. Nearly half of uninsured veterans had not made any office visits 
to any health professional in the past year, and a similar number had 
no usual place to go when they got sick (Table 6).

    Table 6--Healthcare Access and Utilization of Veterans and Family
             Members Under Age 65, By Insurance Status--2004
------------------------------------------------------------------------
                                            Insured         Uninsured
                                            Veterans         Veterans
------------------------------------------------------------------------
No office visits, past year                      15.5%            49.1%
------------------------------------------------------------------------
Did not get preventive care anywhere             51.8%            66.4%
------------------------------------------------------------------------
No contact with health professional in           14.9%            44.9%
 past year
------------------------------------------------------------------------
No usual place to go when sick                    8.9%            51.4%
------------------------------------------------------------------------
Source: Analysis of National Health Interview Survey, 2004.

 Uninsured Veterans' Access is No Better, and in Most Respects Worse, 
                  Than That of Other Uninsured People
    Indicators of access to care for uninsured veterans were strikingly 
similar, and in some cases worse, than those for other uninsured 
individuals (Table 7). This indicates that VHA care did little or 
nothing to fill the gaps for uninsured veterans.

    Table 7--Healthcare Access and Utilization of Uninsured Veterans
              Compared to Other Uninsured People, Age 18-64
------------------------------------------------------------------------
                                               Other
                                             Uninsured       Uninsured
                                              Persons        Veterans
------------------------------------------------------------------------
No contact with health professional,              42.3%           44.9%
 past year
------------------------------------------------------------------------
Doesn't get preventive care anywhere              69.8%           66.4%
------------------------------------------------------------------------
No usual place to go when sick                    48.9%           51.4%
------------------------------------------------------------------------
Delayed care due to cost                          26.3%           31.2%
------------------------------------------------------------------------
Didn't get needed care due to cost                22.1%           26.5%
------------------------------------------------------------------------
Couldn't afford medications                       23.9%           25.1%
------------------------------------------------------------------------
Couldn't afford glasses                           17.5%           20.8%
------------------------------------------------------------------------
Source: Analysis of National Health Interview Survey, 2004.

                               Discussion
    Almost 5.6 million American veterans and members of veterans' 
families are uninsured and not receiving care in the VHA system. They 
account for 1 out of 8 uninsured people in our Nation. Like other 
uninsured adults, most of the uninsured veterans were working; many had 
two jobs. All Americans deserve access to high-quality, affordable 
healthcare. Yet it is especially troubling that many who have made 
sacrifices and often placed themselves in harm's way are later denied 
the healthcare they need.
    Were the veterans who were classified as uninsured in the surveys 
we analyzed truly denied access to the care they need? Several pieces 
of evidence suggest that the doors to medical care--including the VHA 
system--are effectively closed to most of this group.
    First, both surveys we analyzed asked respondents if they had 
``veterans or military healthcare'' and considered anyone answering 
``yes'' as insured. The National Health Interview Survey was highly 
specific in this regard. We considered all veterans reporting veterans 
or military healthcare to have coverage. Hence, veterans who lacked 
insurance but were enrolled in the VHA system would be considered 
insured in our analysis. The data suggest that the VHA currently cares 
for only about 45% of the more than 3 million veterans without any 
other coverage.
    Second, the veterans we identified as lacking coverage had 
substantial problems in gaining access to healthcare. Like other 
uninsured people, they were often unable to afford care, had low rates 
of healthcare utilization, and frequently went without needed services. 
Indeed, for virtually every measure of access to care, uninsured 
veterans were indistinguishable from other uninsured persons, and they 
fared much worse than insured veterans. Even if some of these uninsured 
veterans are theoretically eligible for VHA care, their real-world 
access to healthcare is just as bad as--and by some measures worse 
than--that of other uninsured people.
    Finally, about half of the uninsured veterans had incomes that 
would make them completely ineligible for VHA enrollment (Priority 8). 
For many others (Priority 7), care would only be available with 
substantial copayments (e.g. $50 for specialty care). Moreover, low-
priority veterans are generally ineligible for free transportation to 
VHA facilities, leaving care inaccessible to many vets.

                               __________
                                Appendix
             Priority Groups for VHA Healthcare Enrollment
Priority 1
    Service-connected disability rated 50 percent or more disabling.
Priority 2
    Service-connected disability rated 30 percent or 40 percent 
disabling.
Priority 3
    Former POWs.
    Purple Heart recipients.
    Discharged for a disability that was incurred or aggravated in the 
line of duty.
    Service-connected disability rated 10 percent or 20 percent 
disabling.
    Special-eligibility classification under ``benefits for individuals 
disabled by treatment or vocational rehabilitation.''
Priority 4
    Veterans who are receiving aid and attendance or household 
benefits.
    Veterans who have been determined by the VHA to be catastrophically 
disabled.
Priority 5
    Income and net worth below VHA Means Test threshold.
    Receiving VA pension benefits.
    Eligible for Medicaid benefits.
Priority 6
    World War I veterans.
    Mexican Border War veterans.
    Veterans solely seeking care for disorders associated with:

      Exposure to herbicides while serving in Vietnam.
      Exposure to ionizing radiation during atmospheric testing 
or during the occupation of Hiroshima or Nagasaki.
      Disorders associated with service in the Gulf War.
      Any illness associated with service in combat in a war 
after the Gulf War or during any period of hostility after November 11, 
1998.
Priority 7
    Veterans who agree to pay copayments with income and/or net worth 
above the VHA Means Test threshold and income below the HUD geographic 
index.
Priority 8 (Not currently eligible for enrollment)
    Veterans who agree to pay specified copayments with income and/or 
net worth above the VHA Means Test threshold and the HUD geographic 
index.

                                 
                    Prepared Statement of Carl Blake
      National Legislative Director, Paralyzed Veterans of America
    Chairman Filner, Ranking Member Buyer, and Members of the 
Committee, on behalf of Paralyzed Veterans of America (PVA), I would 
like to thank you for the opportunity to testify today on the ongoing 
policy within the Department of Veterans Affairs (VA) to prohibit 
enrollment of Category 8 veterans into the healthcare system. As our 
position is consistent with the policy recommendations of the 
Independent Budget, I will comment on this issue accordingly.
    With the establishment of eligibility reform in 1996, the Secretary 
of Veterans Affairs was given the authority to manage the enrollment 
categories established by that law. Subsequent to eligibility reform, 
the VA witnessed a dramatic increase in veterans enrolling in the VA 
healthcare system. Unfortunately, the pace of appropriations did not 
keep pace with this rapidly growing demand on the system.
    Due to severely constrained budgets only a few years ago, former 
Secretary Anthony Principi made the administrative decision to place a 
prohibition on enrollment of new Category 8 veterans into the VA 
healthcare system beginning in January 2003. PVA, along with the co-
authors of the Independent Budget--AMVETS, Disabled American Veterans, 
and the Veterans of Foreign Wars--strongly opposed this decision at 
that time. However, the VA assured us that the decision was strictly a 
1-year moratorium as the VA sought to improve healthcare services while 
dealing with chronic and severe underfunding.
    And yet, more than 4 years later, these veterans are still 
prohibited from enrolling in the VA healthcare system. Despite repeated 
calls by Congress as well as all veterans service organizations for the 
VA to overturn this policy decision, the policy remains unchanged. In 
accordance with the recommendations of the Independent Budget, we urge 
the VA to take the steps necessary to reopen the system to Category 8 
veterans.
    As we testified back in February at the time of the release of the 
President's Budget Request for FY 2008, the healthcare funding 
recommendations of the Independent Budget do not include additional 
money to provide for the healthcare needs of Category 8 veterans now 
being denied enrollment into the system. We made the decision 2 years 
ago to include this as a separate line-item as it would have 
artificially inflated our overall healthcare recommendation, 
particularly since the VA did not seem to have any interest in 
reversing the policy. We felt that it was not appropriate to build our 
healthcare budget recommendation on the desired change.
    However, we certainly believe that adequate resources should be 
provided to overturn this policy decision. Due to ever-growing 
difficulty in seeking care in the broader healthcare market, more and 
more veterans have chosen to seek care from the VA. They have also 
chosen to seek care from the VA because they, as we all do, recognize 
that VA healthcare is the best option in this country. With this in 
mind, it makes no sense on a larger scale to turn these veterans away 
from the most cost-effective and cost-efficient healthcare system in 
America. Ultimately, the cost of their care in the private sector will 
be even greater.
    Current VA estimates suggest that as many as 1.5 million Category 8 
veterans will be denied enrollment in the healthcare system by FY 2008. 
When budget estimates are developed for the cost of providing care to 
Category 8 veterans, often a worst-case scenario whereby all 1.5 
million of these veterans would seek care in the VA healthcare system 
is considered. However, this is simply unrealistic. In a report 
entitled ``The Potential Cost of Meeting Demand for Veterans' 
Healthcare,'' published by the Congressional Budget Office (CBO) in 
March 2005, the CBO explained that the actual utilization rate of 
Category 8 veterans, prior to the enrollment prohibition being put in 
place, was only about 20 percent. Based on this information, the 
Independent Budget estimated that only about 314,000 Category 8 
veterans would have actually used the system, meaning that the VA would 
only be responsible for the cost for that number of veterans.
    For FY 2008, the Independent Budget estimates that the VA will 
require approximately $366 million in real appropriated dollars to 
reopen the healthcare system to Category 8 veterans. Initially, we 
determined that the overall cost to allow 314,000 Category 8 veterans 
back into the system would be approximately $1.1 billion. This was 
based on an estimated average cost-per-user of approximately $3,500. 
However, the simple fact is that if Congress makes the decision to 
allow these men and women to enroll, these veterans will be paying 
copayments and any other required fees. As a result, the real dollars 
cost-per-user drops significantly to approximately $1,165. As a result, 
the actual money that Congress would be responsible for providing to 
allow the estimated number of new Category 8 users into the system is 
$366 million.
    We would also like to draw your attention to a particular concern 
that we have regarding a seemingly inequitable application of the 
enrollment policy. As you all know, current law allows for a veteran of 
Operation Enduring Freedom (OEF) or Operation Iraqi Freedom (OIF) to 
receive 2 years of healthcare from the VA immediately following his or 
her release from active duty. Once that 2-year period expires, any OEF/
OIF veteran who sought care from the VA is permanently enrolled in the 
VA healthcare system in the enrollment category that they would 
normally be assigned. This means that any OEF/OIF veterans who are 
Category 8 veterans are allowed to permanently enroll in the VA 
healthcare system, despite the current prohibition on similar 
enrollments. PVA certainly has no objection to these men and women 
receiving the care that they have earned and deserve.
    However, this is wholly unfair to any other veteran who would 
qualify for enrollment in Category 8, and whose service was no less 
important. The example has been used many times, but it certainly is 
worth repeating about the World War II veteran who stormed the beaches 
at Normandy and spent nearly a year of continuous service in combat and 
subsequently returned home without injury or illness. Following the 
War, that veteran took advantage of the GI Bill to get an education, 
and eventually lead a successful life. However, because he now has a 
yearly income above the maximum allowed by VA for Category 8 veterans, 
he is prohibited from enrolling in the VA healthcare system.
    We do not see how this veteran's service is any less honorable or 
important than the young man or woman currently serving in the Global 
War on Terror. There is simply no reason for that veteran to be turned 
away from the system. Just as we fully support the enrollment of the 
OEF/OIF veterans into the VA healthcare system, so too should any 
previous veteran who would otherwise be a Category 8 veteran be allowed 
into the system.
    Finally, I would like to emphasize that PVA believes that we would 
not be having any of this discussion about who can get into VA and who 
cannot if the Veterans Health Administration was funded through assured 
(or mandatory) funding. The simple fact is that despite positive steps 
in the appropriations process and a positive outlook for FY 2008, 
nothing will prevent the VA from facing this same uncertainty in coming 
years. The budget and appropriations process over the last number of 
years demonstrates conclusively how the VA labors under the uncertainty 
of not only how much money it is going to get, but, equally important, 
when it is going to get it. Recall that even though the VA received a 
very good appropriation for FY 2007, it was still provided nearly 5 
months into the fiscal year. This is no way for the VA to be forced to 
manage its healthcare system. It is not surprising that the VA took 
such a drastic step in 2003 given the budget climate at that time.
    In the end, none of these veterans should be denied enrollment into 
the VA healthcare system. No veteran's service is any more or less 
honorable than another, and it should not be treated as such. We hope 
that the VA will choose to overturn this policy without being forced by 
Congress to do so. It is the right thing to do.
    Mr. Chairman and Members of the Committee, once again I would like 
to thank you for the opportunity to testify. I would be happy to answer 
any questions that you might have.

                                 
                Prepared Statement of Adrian M. Atizado
  Assistant National Legislative Director, Disabled American Veterans
    Mr. Chairman and other Members of the Committee:
    Thank you for inviting the Disabled American Veterans (DAV) to 
testify today. DAV is an organization of 1.4 million service-disabled 
veterans, and along with our auxiliary, we devote our energies to 
rebuilding the lives of disabled veterans and their families. Thank you 
for scheduling this hearing to consider current policy of the 
Department of Veterans Affairs (VA) for Priority Group 8 (PG8) 
veterans. New veterans who seek access to VA healthcare and fall into 
this category are presently barred from enrollment in the VA healthcare 
system.
    DAV is an organization that advocates beneficial Federal policy and 
legislation on behalf of 2.6 million American veterans who were wounded 
or made ill during wartime service. Given our focus on the service-
disabled veteran population--veterans who are guaranteed by law high-
priority access to VA--it would seem natural to ask why DAV would be 
concerned about the absence in VA healthcare of nonservice-
connected veterans with incomes above the geographically adjusted Means 
Test threshold. DAV, along with the other veterans service 
organizations making up the Independent Budget, has supported reentry 
of PG8 veterans because we believe that to be a viable healthcare 
system, VA needs a wide range of patients, including those who are 
physically well and want to maintain their good health, those with 
acute and chronic illnesses, and veterans with catastrophic healthcare 
problems who need highly specialized services. When VA manages a proper 
mix of patients, it offers a better healthcare plan to all patients and 
is a more attractive place of employment for clinical and health 
professions, educational, and research professional staff. For DAV, a 
better system for all veterans' care means a better system for service-
disabled veterans.
    Mr. Chairman, while DAV opposed the decision taken by then-
Secretary of Veterans Affairs Anthony J. Principi to close further PG8 
enrollments on January 17, 2003, we were not surprised by that 
decision. As Secretary Principi himself stated publicly, VA faced ``the 
perfect storm,'' with insufficient funding and overwhelming demand. 
Going back to that time, VA was under a tremendous workload strain, 
with eventually more than 300,000 enrolled veterans waiting more than 6 
months for their initial primary care appointments, and with all 
enrolled veterans' care being rationed. We understood then and now the 
reason for this decision--clearly, VA was suffering from severe 
underfunding across its healthcare programs. The run-up to that 
decision by Secretary Principi also fueled our determination at DAV to 
seek legislation reforming VA's healthcare budget formulation and 
discretionary appropriations process. The system in place then and now 
does not fund known and expected needs and remains subject to political 
manipulation, the imposition of gimmicks and questionable policy 
proposals. To address these issues the then-Chairman of this Committee, 
the Honorable Christopher H. Smith, introduced legislation 
(H.R. 5250) in the 107th Congress; in the 108th and 109th Congresses 
the then-
Ranking Member, the Honorable Lane Evans, introduced similar bills, 
H.R. 2318 and H.R. 515, respectively. No congressional actions were 
taken on those bills.
    Enactment of these proposals would have established certainty of VA 
healthcare funding through the application of a defined formula based 
on the actual cost of care and the actual number of veterans under VA 
care, with a built-in inflation adjustment. Under these bills, the 
Administration and Congress would retain their executive and oversight 
responsibilities as under current law. While we supported these bills 
in part because of our desire that PG8 veterans be readmitted to the 
system, the PG8 issue is only a symptom of the larger problem and not 
the source of the problem itself. Obviously, even with the exclusion of 
the PG8 veterans, now numbering more than 1 million veterans, those 
budget and appropriations conditions continue to exist today. We at DAV 
remain hopeful that funding reforms will eventually permit reentry of 
PG8 veterans to VA healthcare.
    Mr. Chairman, when Congress authorized the Veterans' Healthcare 
Eligibility Reform Act of 1996, Public Law 104-262, it did so fully 
cognizant that employed veterans with higher incomes and workplace-
based health insurance--most being classified in the current PG8 
category--would enroll in VA healthcare, and that their costs as 
consumers of VA healthcare would be offset or significantly subsidized 
by first- or third-party insurance collections. The primary objective 
of the Act was dissolving the irrational eligibility system in place 
before, that prevented some veterans, even service-disabled veterans, 
from receiving holistic care by VA, particularly in the outpatient 
setting. Also, the Act eliminated a tangled web of rules and internal 
VA policies that made healthcare eligibility decisions bureaucratic, 
complicated, confusing, and harmful to the health of veterans who 
depended on VA to meet their vital healthcare needs.
    Mr. Chairman, the decision to exclude PG8 veterans from VA 
healthcare en-
rollment at the beginning of 2003 also must be taken into historical 
context. While
the Veterans Health Administration (VHA) was in the midst of 
unprecedented
systemic--even revolutionary, change, closing 25,000 hospital beds, 
shifting its emphasis to community-based primary and preventative 
services and moving away from reliance on complicated inpatient 
services and medically unnecessary hospital admissions, Congress passed 
the Balanced Budget Act (BBA) of 1997, Public Law 105-33. That Act was 
intended to flatline all increases in domestic discretionary Federal 
spending, across the board, including funding for VA healthcare. As the 
effects of the BBA took hold during the 3-year life of that law, VA's 
financial situation shifted from challenging to that of crisis. In 
2000, at the urgings of both this Committee and your Senate 
counterpart, Congress relented and provided the Veterans Health 
Administration (VHA) a supplemental appropriation of $1.7 billion. 
Nevertheless, a 3-year funding drought built up conditions that could 
not easily be surmounted by one infusion of new funding. VHA began 
queuing new veteran enrollees, the waiting list lengthened and 
rationing of care was commonly reported. Eventually, by 2002, the list 
of veterans waiting more than 6 months for their first primary care 
appointment inched toward 300,000 nationwide. Given an Administration 
that would not permit additional funding to stem the waiting list 
buildup, Secretary Principi, using the policy available to him, shut 
off new enrollments of PG8 veterans and set about a plan to get the 
waiting list under control.
    Another consideration important to this discussion is that the BBA 
also authorized a ten-site ``Medicare subvention'' demonstration 
project within the Department of Defense (DoD) healthcare system as a 
precursor to the advent of Medicare subvention in VHA. This program 
eventually failed in DoD and, later known as ``VA+Choice Medicare'' and 
later still, ``VAAdvantage,'' never got off the ground in VA due to 
opposition by the Office of Management and Budget (OMB) and the 
Department of Health and Human Services. This failure meant that no 
Medicare funds would ever be received by VHA for the care it had been 
providing (and is still providing) to fully Medicare-eligible veterans 
receiving care as enrolled VA patients, at a huge savings to the 
Medicare trust funds. Approximately one-half of VHA's enrolled 
population is eligible for Medicare. Many PG8 veterans, in and out of 
VA, are Medicare eligible as well.
    By 2002, DAV and the veterans organization community began 
advocating for significant change in VA's funding system, by shifting 
the budget function to a mandatory formula. It was and is obvious to us 
that this system of an ``educated guess'' made almost 2 years in 
advance of what level of funding VHA would actually need, including 
gimmicks and other manipulations, is fatally flawed. Given what is at 
stake, we will continue to press for assured funding for VA healthcare 
or some alternative method to achieve timely and adequate budgets for 
veterans healthcare. We acknowledge and applaud the continued support 
from this Committee to increase VA healthcare funding over the last 
several budget cycles and hope the Committee will schedule a hearing in 
the near future to consider funding reforms to help stabilize the 
system.
    An additional perspective to consider with respect to funding and 
the status of PG8 veterans is that of the President's Task Force to 
Improve Healthcare Delivery for Our Nation's Veterans. Dr. Gail 
Wilensky, Co-Chair of that Task Force, testified before your Committee 
on March 26, 2003, 2 months following the exclusion of PG8 veterans 
from VA enrollment. She stated:

          ``As I noted earlier, as the Task Force addressed issues set 
        out directly in our charge, we invariably kept coming up 
        against concerns relating to the current situation in VA in 
        which there is such a mismatch between the demand for VA 
        services and the funding available to meet that demand. It was 
        clear to us that, although there has been a historical gap 
        between demand for VA care and the funding available in any 
        given year to meet that demand, the current mismatch is far 
        greater, for a variety of reasons, and its impact potentially 
        far more detrimental, both to VA's ability to furnish high 
        quality care and to the support that the system needs from 
        those it serves and their elected representatives.
          The PTF members were very concerned about this situation, 
        both because of its direct impact on VA care as well on how it 
        impacted overall collaboration [with DoD]. Our discussion on 
        the mismatch issue stretched over many months and, as anyone 
        following the work of the Task Forces already knows, it was the 
        area of the greatest difference of opinion among the members.
          Although we did not reach agreement on one issue in the 
        mismatch area--that is, the status of veterans in Category 8, 
        those veterans with no service-connected conditions with 
        incomes above the geographically adjusted means test 
        threshold--we were unanimous as to what should be the situation 
        for veterans in Categories 1 through 7, those veterans with 
        service-connected conditions or with incomes below the income 
        threshold.''

    Unfortunately, we must surmise based on the above historical 
recounting and our analysis that the readmission of PG8 veterans to 
VHA, absent a major reformation of VA's funding system, will stimulate 
and trigger a new funding crisis in VA healthcare. While Congress is 
poised to add a significant new funding increase to the VA medical 
accounts for fiscal year 2008, one that we deeply appreciate, we are 
uncertain that even that generous increase will be sufficient to offset 
all of VA's financial requirements. Also, it should be pointed out that 
the needs of these newly-admitted patients would be challenging for 
VHA's human resources and capital programs. We are concerned whether 
sufficient health professional manpower could be recruited to enable 
VHA to put them into place in an orderly fashion to meet this new 
demand. Also, VA's physical space may be insufficient to accommodate 
the new outpatient visits that PG8 patients will generate.
    In summary, Mr. Chairman and Members of the Committee, the question 
about PG8 veterans reenrolling in VA healthcare is not a question only 
about them and their needs for healthcare. It is also a larger question 
about the sufficiency, reliability and dependability of the current 
system of funding VA healthcare through the domestic discretionary 
appropriations process. As far as DAV is concerned, we should not have 
one without the other. To that end, DAV challenges this Committee to 
identify an American business that could operate successfully and 
remain viable if, in 12 consecutive years, it had no advance confidence 
about the level of its projected revenues or the resources it needed to 
bring a product or service to market, no ability to plan beyond the 
immediate needs of the institution day-to-day, and no freedom to 
operate on the basis of known or expected need in the future. In fact 
this has been the situation in VHA, with 12 consecutive Continuing 
Resolutions to begin its fiscal years, creating a number of conditions 
that are preventable and avoidable with basic reforms in funding. Until 
those reforms are enacted to guarantee that on October 1 of each year, 
VHA will have a known budget in hand, will have the means and methods 
to spend those funds in accordance with need, and that VA's budget will 
be based on a stable, predictable and sufficient methodology, we are 
reluctant to endorse immediate readmission of PG8 veterans into the VA 
healthcare system. We take this position despite our acknowledgement 
that PG8 veterans bring vitality to the system that is important to 
service-disabled veterans who need sustained VA healthcare.
    One final matter warrants attention of the Committee on the 
question of PG8 veterans. Veterans of our current overseas wars are 
granted 2 years of eligibility for VA healthcare post-discharge. For 
those without service-connected disabilities, they are enrolled as PG8 
veterans. When that 2-year eligibility window closes, those who are 
enrolled remain enrolled as PG8. A nonservice-connected Vietnam 
veteran, or a veteran of an earlier war, who applies for enrollment and 
whose income exceeds the PG8 threshold, is denied access under the 
current policy. This kind of differentiation between classes of 
veterans sets the stage for a ``two-tiered'' healthcare system, one 
that provides ready access to the newest veterans but may deny any 
access to older ones. DAV is very troubled by this inequity.
    Mr. Chairman, this concludes my statement, and I will be pleased to 
respond to your questions and those of other Members of the Committee.

                                 
            Prepared Statement of Peter S. Gaytan, Director
    Veterans Affairs and Rehabilitation Commission, American Legion
    Mr. Chairman and Members of the Committee:
    Thank you for this opportunity to present The American Legion's 
views on the current policy of the Department of Veterans Affairs (VA) 
on Priority Group 8 veterans.
    The American Legion strongly believes that all veterans, who are 
eligible to receive benefits from VA, should have timely access to the 
VA healthcare system. For VA to operate under a policy that restricts 
veterans who, prior to the enactment of this policy, were eligible for 
VA healthcare is unacceptable. Honorable military service qualifies a 
veteran for access to the VA healthcare system and The American Legion 
opposes any policy that redefines eligibility for benefits in an 
attempt to limit enrollment.
    In passing the Veterans' Healthcare Eligibility Reform Act of 1996, 
P.L. 104-262, Congress required VA to furnish hospital care and medical 
services to, among others, any veteran with a compensable service-
connected disability or who is unable to defray the expenses of 
necessary medical care and services. It further authorized VA, with 
respect to veterans not otherwise eligible for such care and services, 
to furnish needed hospital, medical, and nursing home care within 
existing appropriations. To help supplement the discretionary 
appropriations, Congress required certain veterans, desiring to enroll 
in the VA healthcare delivery system, to agree to make copayments and 
allow VA to seek third-party reimbursement from private health 
insurers, with the exception of the Centers for Medicare and Medicaid 
Services (CMS) for those beneficiaries.
    Although a small percentage of the total veterans population 
enroll, the response from new veterans enrolling was somewhat 
overwhelming, largely unanticipated, and drastically underfunded, 
leading to an unprecedented backlog of veterans waiting to receive 
timely access to quality care at VA medical facilities across the 
country. In an effort to reduce that backlog, then VA Secretary Anthony 
Principi suspended enrollment of new Priority Group 8 veterans in 
January 2003. The American Legion strongly opposed this decision and 
continues to call for the reinstatement of enrollment for Priority 
Group 8 veterans.
    FY 2007 saw the continuation of suspension of enrollment of new 
Priority Group 8 veterans due to the increased demands for services. 
According to VA, the number of Priority Group 8 veterans denied 
enrollment in the VA healthcare system as of January 2007 is 378,495. 
The American Legion believes this number would be significantly higher 
if it were possible to include those veterans who have not even tried 
to use the VA since the suspension took effect. The American Legion 
does not agree with the decision to deny healthcare to veterans simply 
to ease a backlog. Denying earned benefits to eligible veterans does 
not solve the problems resulting from an inadequate Federal budget.
    As the Global War on Terrorism continues, fiscal resources for VA 
will continue to be stretched and veterans will continue to go begging 
to their elected officials for the money to sustain a viable VA. A 
viable VA is one that cares for all eligible veterans, not just the 
most severely wounded or the poorest among us. VA is often the first 
experience veterans have with the Federal Government after leaving the 
military. This Nation's veterans have never let our country down; 
Congress should do its best to not let them down.
    Currently, recently separated veterans of Operation Iraqi Freedom 
(OIF) and Operation Enduring Freedom (OEF) are granted access to the VA 
healthcare system for 2 years regardless of possible priority group 
ranking. By the time the 2 years expires, they are placed in their 
appropriate priority group, to include Priority Group 8. Veterans of 
OIF/OEF who, after the initial 2 years are placed in Priority Group 8, 
remain enrolled and continue to receive healthcare (even though they 
are Priority Group 8). Those placed in Priority Groups 7 or 8 must 
agree to make copayments and allow VA to bill, collect, and receive 
third-party reimbursements from private health insurers in order to 
receive healthcare through VA.
    Veterans of OIF/OEF who chose not to use VA for their healthcare 
needs within the 2-year time period, and fall into the Priority Group 8 
category, will be denied access under the current regulations. This is 
a travesty, as many times service-connected injuries and illnesses do 
not manifest until much later in life. For these veterans, medical care 
must be sought outside of VA.
    Access to VA healthcare will only result in one of two ways. The 
first way is when a veterans' claim for disability is granted as 
service-connected and compensable (a 0 percent service-connected 
disability that is noncompensable will not lift a veteran out of the 
Priority Group 8 category). This process can take years if the claim is 
initially denied. The other is if the veteran's income level falls 
below the income threshold. That threshold is based on the Department 
of Housing and Urban Development's geographical index; therefore, the 
veteran's official zip code influences the formula.
    Legislation has been introduced that seeks to increase the amount 
of time a combat veteran of OIF/OEF can access the VA healthcare system 
from 3 to 5 years. While The American Legion supports this legislation, 
we also strongly urge Congress to recognize the needs of all eligible 
veterans and repeal the denial of access to VA healthcare for veterans 
in Priority Group 8.
    Unfortunately, some believe Priority Group 8 veterans are not the 
``core'' of VA's patient population. The American Legion believes every 
servicemember is a ``core'' element of the national security--the total 
force. The willingness of young Americans to serve will diminish if 
this country continues to neglect those who have served. Timely access 
to quality healthcare offered by VA, the Nation's best integrated 
healthcare delivery system, is an earned benefit.
    The American Legion strongly supports lifting the suspension of 
enrollment of Priority Group 8 veterans in the VA healthcare system. VA 
can no longer restrict enrollment due to inability to meet the demand 
for care. Those who have served have earned the right to choose 
healthcare through the very system created to meet their unique needs.
    If an increase in existing appropriations is the problem, then The 
American Legion strongly recommends looking to alternative revenue 
streams. Currently, VA is authorized to bill Medicare for the treatment 
of nonservice-connected medical conditions of enrolled Medicare-
eligible veterans in order to collect from private Medicare supplement 
insurers; however, VA does not receive any reimbursements from CMS for 
allowable services. This means Medicare, the Nation's largest health 
insurance program, is literally subsidized by VA. Over half of VA's 
enrolled patient population is currently Medicare-eligible--most of 
these veterans are currently in Priority Groups 7 and 8.
    The American Legion believes many of the veterans currently 
prohibited from enrolling in Priority Group 8 may very well have 
alternative health insurance--whether Medicare, TRICARE, TRICARE for 
Life or private health insurance. Please remember, these veterans agree 
to make copayments and allow third-party reimbursement from health 
insurance companies to cover their cost of care. Therefore, the focus 
should be on collection of accounts receivable from private insurance 
companies, improvements in billing and coding, and a serious re-
evaluation of Medicare reimbursements.
    Thank you again for this opportunity to present the views of The 
American Legion on this important issue. I look forward to working with 
you and all of the Members of the Committee to ensure VA is capable of 
providing quality healthcare in a timely manner to all eligible 
veterans.

                                 
                    Prepared Statement of John Rowan
            National President, Vietnam Veterans of America
    Good morning, Mr. Chairman, Mr. Buyer, and Members of this 
Committee. On behalf of the families and members of Vietnam Veterans of 
America (VVA), I thank you for the invitation to testify on an issue of 
significant importance to us--and to thousands of eligible veterans who 
are now denied access to the VA healthcare system.
    It is VVA's unwavering position that the VA healthcare system 
should be re-opened to Priority 8 veterans. The decision to close the 
system to new Priority 8's in January of 2003 was supposed to be a 
temporary palliative for a system that was hemorrhaging, a system that 
was unable to provide, VA officials argued, high-quality healthcare for 
an influx of new Priority 8's. But temporary quickly morphed into 
permanent--and we now wonder if this was the intent of the 
Administration at the time--because no VA planning document we've seen 
since accounts for new Priority 8's entering the system.
    Who are these veterans? They are, as you know, individuals who have 
an income in excess of just under $27,000 a year, are not afflicted 
with a service-connected disability, and agree to make a copayment for 
their healthcare and prescription drugs. They are also veterans who are 
unaware that they have a condition associated with their military 
service; when this malady flares up, they may be facing imminent 
poverty. Their banishment from the system not only hurts those who 
would choose the VA for their healthcare needs, it also hurts the VA: 
Priority 8 and 7 veterans account for some 40 percent of third-party 
collections.
    A little history is instructive.
    Back in 1996, when Congress passed the Veterans' Healthcare 
Eligibility Reform Act, the VA was able to implement major cornerstones 
of its plan to reform the manner in which it provided healthcare. The 
rationale behind this initiative was to ensure a patient base that 
would support the infrastructure needed to develop a modern, integrated 
healthcare system. This the VA has accomplished, and in the process has 
transformed a mediocre, inefficient system into a national model that 
has won praise and plaudits.
    However, the law--Public Law 104-262--gave the Secretary of 
Veterans Affairs the authority and the responsibility to determine 
eligibility for enrollment based on available resources in any given 
fiscal year. Although the law did not mandate a level of funding or a 
standard of care, it did establish an annual enrollment process and 
categorized veterans into ``priority groups'' to manage enrollment.
    On January 17, 2003, the Secretary made the decision to 
``temporarily'' suspend Priority 8 veterans from enrolling. While this 
decision may be reconsidered on an annual basis, every budget proposal 
from the Administration since has omitted funding for Priority 8 
veterans not previously enrolled and has attempted to discourage use by 
and enrollment of those ``higher income'' veterans.
    Priority 8 veterans are, for the most part, working- and middle-
class Ameri-
cans without compensable disabilities incurred during their military 
service. In its budget proposal for the current fiscal year, the VA 
estimated that some 1.1 million of these ``higher income'' veterans 
would be discouraged from using their healthcare system because of an 
enrollment fee and increased copays for prescription drugs. Thankfully, 
you in Congress have not let this scheme get much beyond the proposal 
phase.
    Still, it has been estimated that in excess of a quarter of a 
million veterans who would be classified as Priority 8's have been 
barred from enrolling in the system since January 2003.
    Readmitting those Priority 8's who might choose to enroll in the VA 
healthcare system if given the opportunity is yet another reason to 
hold hearings and move to pass Congressman Hare's assured funding bill, 
H.R. 2514. Because, no matter how you cut it, the bottom line is 
funding. And there should be enough funding in a compassionate nation 
that respects the service and sacrifice made by those who don the 
uniform to give this more than lip service. We can, and we should, 
accommodate Priority 8's who opt to use the VA's healthcare system.
    We strongly urge that you truly honor the commitment we as a Nation 
have made that honors our veterans. Of course, we recognize that the 
bottom line is funding--the funding Congress provides--to enable the VA 
to accommodate those Priority 8 veterans who want to avail themselves 
of the VA's healthcare services. We recognize the realities of ``PAY-
GO.'' But we hope you will recognize the inherent justice in 
reopening the VA healthcare system to those who have earned the right to
 utilize it.
    Thank you for considering these comments. We would be pleased to 
answer any questions you might have.

                                 
    Prepared Statement of Hon. Michael J. Kussman, M.D., M.S., MACP
       Under Secretary for Health, Veterans Health Administration
                  U.S. Department of Veterans Affairs
                              INTRODUCTION
    Good morning, Mr. Chairman and Members of the Committee. I am 
pleased to be invited here today to address the current policy and 
status of Priority Group 8 veterans.
    The Department of Veterans Affairs (VA) mission is to serve 
veterans through a variety of benefits and services. Prior to 1996, VA 
was primarily a hospital-based healthcare system. Over the last two 
decades, VA has moved to an outpatient-care-based system with over 
1,200 access points. This shift enhances service and access to 
healthcare for veterans and has been accomplished with the support of 
Congress, veterans' service organizations, and other stakeholders.
                    VETERANS HEALTHCARE ELIGIBILITY
    VA resources are focused on its highest priority medical care 
mission--to provide service to recent combat veterans and veterans with 
service-connected disabilities, lower incomes, and special needs. 
Veterans not meeting these criteria (higher-income and nondisabled) 
were able to receive VA medical care only on a case-by-case, space-
available basis until 1999. Implementation of the Veterans' Healthcare 
Eligibility Reform Act of 1996 (Public Law 104-262) directed VA to 
establish a system of annual patient enrollment managed in accordance 
with seven priority groups and contingent upon available resources. 
Congress further required the enrollment system be managed in a manner 
ensuring the provision of timely and high-quality care to enrollees.
    Between 1999 and 2002, the Secretary determined each year that all 
categories of veterans were able to enroll. However, greater 
recognition of the high-quality care provided by VA, more accessible 
locations, and rapid growth in the population of higher-income and 
nondisabled veterans (from 2% to over 30% of enrollees) threatened VA's 
ability to deliver quality and timely care to service-connected and 
lower-income veterans. In the Department of Veterans Affairs Healthcare 
Programs Enhancement Act of 2001, (Public Law 107-135) Congress created 
another priority level--Priority Group 8. Priority Group 8 includes 
veterans who do not have compensable service-connected disability and 
whose household incomes exceed geographical based means test. To 
preserve care for higher-priority veterans, VA discontinued enrolling 
Priority Group 8 in 2003. Lower-priority veterans who were already 
enrolled as Priority 8's in the system before 2003, however, retained 
their eligibility and today comprise 27 percent of all enrollees. 
Moreover, VA has authority to enroll combat-theater veterans returning 
from OEF/OIF in VA's healthcare system during their period of 
eligibility, making them able to receive any needed medical care or 
services.
    To understand Priority Group 8 veterans, it is important to 
understand the priority group system established by law for the 
Department. Our priorities are as follows:
Priority Group 1
      Veterans with service-connected disabilities rated 50% or 
more disabling.
Priority Group 2
      Veterans with service-connected disabilities rated 30%-
40% disabling.
Priority Group 3
      Veterans who are former POWs.
      Veterans awarded the Purple Heart.
      Veterans whose discharge was for a disability that was 
incurred or aggravated in the line of duty.
      Veterans with service-connected disabilities rated 10% or 
20% disabling.
      Veterans disabled during VA treatment or vocational 
rehabilitation.
Priority Group 4
      Veterans who are receiving aid and attendance or 
housebound benefits.
      Veterans who have been determined by VA clinicians to be 
catastrophically disabled.
Priority Group 5
      Nonservice-connected veterans and noncompensable service-
connected veterans rated 0% disabled whose annual income and net worth 
are below the established VA Means Test thresholds.
      Veterans receiving VA pension benefits.
      Veterans eligible for Medicaid benefits.
Priority Group 6
      World War I veterans.
      Veterans of the Mexican Border period.
      Veterans solely seeking care for disorders associated 
with:

        Exposure to herbicides while serving in Vietnam; or
        Exposure to ionizing radiation during atmospheric 
testing or during the occupation of Hiroshima and Nagasaki; or
        For disorders associated with service in the Gulf War 
or for any illness associated with service in combat in a war after the 
Gulf War or during a period of hostility after November 11, 1998.
        Who participated in a test conducted by the DoD Desert 
Test Center (i.e., Project Shipboard Hazard, and Defense (SHAD)).

      Compensable 0% service-connected veterans.
Priority Group 7
      Veterans who agree to pay specified copayments with 
income and/or net worth above the VA Means Test threshold and income 
below the VA's Geographic Means Test.
Priority Group 8
      Veterans who agree to pay specified copayments with 
income and/or net worth above the VA Means Test threshold and above the 
VA Geographic Means Test threshold.

    In enacting this legislation, Congress recognized the great 
obligation owed to veterans requiring care for their service-connected 
disabilities, with special needs, and low-income veterans--these groups 
encompass our highest priority.
    In 2003, to ensure the quality and improve the timeliness of 
healthcare provided to veterans in higher enrollment-priority 
categories in an environment of increased demand from older veterans, 
VA suspended the enrollment of additional veterans who are in the 
lowest statutory enrollment category (Priority Group 8), as required by 
the Eligibility Reform Act.
    Today, meeting the healthcare needs of our current enrollees and 
effectively responding to the needs of a new generation of veterans 
from Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF) 
are VA's highest priorities.
                       CURRENT DEMAND AND POLICY
    In FY 2006, VA enrolled approximately 200,000 additional enrollees 
raising the total to nearly 7.9 million enrollees. In FY 2006, VA 
provided care to almost 5.5 million unique patients, an increase of 
200,000 from the previous year. VA projects that number to rise to 
approximately 5.8 million unique patients in FY 2008. These figures 
represent significant increases from the 2.7 million veterans receiving 
care in 1996.
    The President's FY 2008 budget is based on the Department's needs 
for providing enrolled veterans with timely, high-quality healthcare. 
Changes in the demographic characteristics of our previously enrolled 
patient population account for a significant portion of the increased 
resource requirements in our FY08 budget request. Our patients, as a 
group, will be older, will seek care for more complex medical 
conditions, and will be more heavily concentrated in the higher-cost 
priority groups.
    Patients in Priorities 1-6--veterans with service-connected 
conditions or special healthcare needs, or lower incomes, and recently 
discharged combat veterans--will comprise 68 percent of the total 
patient population in 2008, but they will account for 85 percent of our 
healthcare costs. The number of patients in Priorities 1-6 will grow by 
3.3 percent from 2007 to 2008.
    Based on the President's FY08 budget, we expect to treat about 
263,000 veterans who served in Operation Enduring Freedom and Operation 
Iraqi Freedom (OEF/OIF), an increase of 54,000 (or 26 percent) from our 
2007 estimates and 108,000 (or 70 percent) more than the number we 
treated in 2006.
    VA assigns great importance to the prompt processing of disability 
compensation claims, which veterans are submitting for an increasing 
number and variety of medical conditions, resulting in the need for 
more complex, costly, and time-intensive disability compensation 
medical examinations by the Veterans Health Administration. These 
projected changes in the case mix of our patient population and the 
growing complexity of our disability claims process result in greater 
resource needs, which we have included in our FY08 budget request. Many 
of the benefits claims awaiting decision will require a medical 
evaluation, and VHA's projections for demand and our budget is based on 
providing this service and reducing this backlog.
    Since the onset of combat operations in Iraq and Afghanistan, VA 
has provided new services and adjusted our resource allocations to 
address the unique medical needs of returning veterans. VA established 
the Polytrauma System of Care, expanded our Readjustment Counseling 
Service by establishing new Vet Centers across the country, and 
instituted significant changes to our mental health system to address 
post-traumatic stress disorder (PTSD) and suicide, among other issues. 
VA has authority to enroll combat-theater veterans returning from OEF/
OIF in VA's healthcare system, making them eligible to receive any 
needed medical care or services. When OEF/OIF veterans seek care from 
VA they are placed in Priority Category 6 and make no copayments for 
covered conditions potentially related to their theater of combat 
service. Veterans with service in Iraq and Afghanistan continue to 
account for a rising proportion of our total veteran patient 
population. In 2008, they will comprise 5 percent of all veterans 
receiving VA healthcare compared to the 2006 figure of 3.1 percent.
    Currently, the President's Budget fully funds enrolled veterans in 
Priority Groups 1 through 7. Our budget also fully funds those Priority 
Group 8 veterans already in the system--as well as those returning 
veterans who will migrate to this group at the expiration of their post 
2-year enhanced enrollment authority. This will ensure no veteran 
currently in the system will be denied care. However, as demand for 
healthcare services continues to grow, VA must, of course, allocate 
resources according to the priorities set by law.
    The increased demand for VA services is set against a backdrop of 
changes in the overall healthcare system. The shift from inpatient to 
outpatient care, increased emphasis on health promotion, and disease 
prevention has made new demands on infrastructure and resources, while 
the increased use of new technologies and pharmaceuticals has added 
significantly to costs.
    In keeping with Congress' requirement to establish and manage a 
system of annual patient enrollment, VA annually reviews the demand for 
services and the resources required to assure timely and high-quality 
services.
    We believe the current restriction on enrollment of new Priority 
Group 8 veterans is necessary to maintain the timeliness and quality of 
the healthcare we provide to currently enrolled veterans. This policy 
allows VA to focus on fulfilling its mission of meeting the healthcare 
needs of those veterans given higher priority by Congress, i.e., 
service-connected veterans, those returning from combat, those with 
special needs, and those with lower levels of income.
    The restriction on enrollment of new Priority 8 veterans has proven 
to be effective in focusing our healthcare resources on these highest 
priority patients. This system is consistent with the priority 
healthcare structure enacted by Congress.
    This concludes my prepared statement. I would be pleased to answer 
any questions you or any of the Members of the Committee may have.
          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007

Stephanie J. Woolhandler, M.D.
Associate Professor of Medicine
Harvard Medical School
1493 Cambridge St.
Cambridge, MA 02139

Dear Stephanie:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,
                                                         BOB FILNER
                                                           Chairman
                               __________
                  Hearing on Priority Group 8 Veterans

    1.  The VA is part of our overall national healthcare system, and 
changes to one part of our system have effects that ripple to other 
segments of our healthcare system.

        As to the VA, if enrollment was reopened, would you 
have any recommendations as to how it should address the reality of a 
finite budget and increased demand for services?

    2.  Your research shows that uninsured veterans were ``younger, 
more likely to be working, and had lower incomes.'' Currently, 
servicemembers returning from Afghanistan and Iraq have 2 years of 
eligibility for healthcare in the VA. If they fail to seek care in that 
2 years and would be classified as a Priority Group 8 veteran they 
would not have access to VA care.

        How many, as a percentage, would not have private 
insurance and hence be without healthcare options?
        If current trends continue over the next 10 years, do 
you believe we will see a greater percentage of those under 50 without 
healthcare insurance?

    3.  The VA is often held up as a model of healthcare delivery.

        What lessons should other providers learn from the VA's 
experience?
        Is there anything that the VA is doing now in the 
healthcare delivery arena that it should be doing more of?

                               __________
                                                         Boston, MA
                                                    August 15, 2007

The Honorable Bob Filner
Chairman, Committee on Veterans' Affairs
335 Cannon House Office Building
U.S. House of Representatives
Washington, DC 20515

Dear Chairman Filner:

    I am responding to your letter of July 19, 2007. You posed several 
questions as followup to my testimony at the Committees June 20 
hearing. Let me respond to your questions in the order that you posed 
them.

    1.  In my view, the VA budget should be expanded to accommodate all 
veterans, regardless of their economic and medical circumstances. There 
is substantial evidence (much of it presented at the hearing) that 
uninsured veterans who do not have access to the VA health system 
forego needed primary and preventive care. Such an expansion would be a 
highly cost effective means of providing quality care for uninsured 
veterans. As you know, these uninsured veterans often forego care at 
present. It seems probable that care provided to them within the VA 
will be both less costly and of higher quality than other strategies 
(short of national health insurance) for assuring access to care for 
this population.
         Such a VA expansion should not come at the expense of 
downsizing other VA programs. In particular, the VA research program 
has been vital in providing objective data in many medical fields, and 
in many cases may lead to long-term cost savings. For instance, VA 
hospitals were key participants in a recent study showing that cardiac 
stenting (a treatment for angina and related conditions) is overused in 
the United States. This study has already led to a substantial decrease 
in expensive stenting procedures.
         Several ``ripple effects'' are possible, but speculative. 
First, improved access to care for currently uninsured patients may 
decrease Medicare spending in future years. Recent data indicates that 
the previously uninsured incur substantially greater Medicare 
expenditures once they turn 65 than do individuals who were insured 
prior to age 65. Second, opening access to care for uninsured veterans 
may somewhat decrease emergency department utilization by this group, 
partially relieving the growing burden carried by community hospital 
ERs.

    2.  I cannot give a precise answer to your query regarding the 
insurance status of veterans returning from Afghanistan and Iraq. A 
rough estimate can be derived from the fact that at present, about 72% 
of veterans under 65 have at least some private coverage. Hence 38% 
rely on government programs or have no coverage. I expect that somewhat 
fewer Afghanistan and Iraq veterans will have private coverage, since 
they will be (on average) a bit younger than the other under 65 
veterans and younger individuals are more likely to lack private 
coverage.
         The number of Americans without health insurance has been 
rising slowly, but steadily, since at least the late 1980s. This is due 
to an erosion in employment-related health insurance. Hence, we predict 
that the number of unin- sured, non-
elderly Americans (including veterans) will increase in coming years.

    3.  The VA is one of the few recent success stories in American 
medicine. The lessons from this story include:

      A.  Publicly funded healthcare systems can work. Care decisions 
based on medical necessity (rather than patient's ability to pay) can 
improve both quality and efficiency.
      B.  Innovation is possible (and indeed facilitated) within 
publicly funded health systems. The VA has made major innovations by 
reorganizing itself around a primary care model, developing a ``home-
grown'' computer system, and focusing on quality improvement.
      C.  An emphasis on primary care improves quality and efficiency.
      D.  Computer systems that are developed with patient care rather 
than business needs in mind (and that are not based largely around the 
exigencies of billing) can improve quality.

       The success of the VA is now touted by many analysts (myself 
included). VA staff could be more active in assessing and publicizing 
their own successes. In particular, the administrative costs of the VA 
should be compared with those in the U.S. private sector. Such a 
comparison is likely to provide further documentation of the efficiency 
advantages of the VA relative to private-sector medicine.
         Given the documented successes of the VA, it may be worthwhile 
to expand the VA's mission to include caring for the families of 
veterans; serving as a purchasing agent for prescription drugs for 
other government health programs (e.g. Medicare Part D); and building 
additional VA facilities to expand geographic access to care, rather 
than relying on care purchased from the private sector for veterans who 
reside in regions remote from current VA facilities.
         Thanks to you and your colleagues for offering me the 
opportunity to testify before your Committee. I look forward to working 
with you and your staff on these issues in the future, and am happy to 
provide any additional assistance that you may deem worthwhile.

            Yours sincerely,

                                  Steffie Woolhandler, M.D., M.P.H.
                                    Associate Professor of Medicine

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007
Carl Blake
National Legislative Director
Paralyzed Veterans of America
801 18th Street, NW
Washington, DC 20006

Dear Carl:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,
                                                         BOB FILNER
                                                           Chairman
                               __________
    Questions from Hon. Bob Filner, Chairman, Committee on Veterans'
         Affairs, to Carl Blake, National Legislative Director,
                     Paralyzed Veterans of America

                                      Paralyzed Veterans of America
                                                     Washington, DC
                                                     August 1, 2007
Honorable Bob Filner
Chairman
House Committee on Veterans' Affairs
335 Cannon House Office Building
Washington, DC 20515

Dear Chairman Filner:

    On behalf of Paralyzed Veterans of America (PVA), I would like to 
thank you again for the opportunity to testify before the House 
Committee on Veterans' Affairs during the hearing on June 20, 2007. We 
greatly appreciate the renewed focus that you have placed on 
eliminating the prohibition of enrollment of new Priority Group 8 
veterans into the Department of Veterans Affairs healthcare system.
    I have included with this letter a response to each of the 
questions that you presented following the hearing on June 20. If you 
have any additional questions, please feel free to contact me. We look 
forward to working with the Committee toward reopening the VA 
healthcare system to those veterans who have earned this care. Thank 
you very much.

            Sincerely,
                                                         Carl Blake
                                      National Legislative Director

                               __________
    Question 1: Your organizations take the position that the VA 
healthcare system should be re-opened to Priority Group 8 veterans. 
Current law provides the Secretary with the authority to prescribe 
regulations to ``establish and operate a system of annual patient 
enrollment[.]'' It was clearly not the intention of Congress to 
permanently close out access to VA care to a group of veterans, while 
at the same time it was felt necessary to provide the VA with the 
flexibility necessary to meet an unexpected shortfall in resources and 
to provide care to those veterans in higher priority groups.
    If the ban on enrolling Priority 8 veterans was lifted statutorily, 
how much latitude do your organizations believe the Secretary should 
retain in the future to limit enrollment and to ``establish and operate 
a system of annual patient enrollment?''

    Answer: The Secretary should retain the authority that Congress 
provided to manage the Department for which he or she is responsible. 
To remove such an important management tool would relieve him or her of 
some of the responsibility and by extension some of the accountability 
for the system and the veterans who seek care in it. Also, losing this 
management tool may deter future candidates who would otherwise be 
drawn to the opportunity to serve in such a position of distinction.
    However, we do have some concerns about giving the Secretary 
unilateral authority to make this decision. We believe that the 
Secretary should be required to submit to Congress in advance his 
intentions to make a decision regarding closing enrollment, and at the 
same time, he should be required to submit to Congress what resources 
would be required to prevent this decision. This would allow Congress 
to provide whatever additional resources necessary to allow veterans 
who have earned and deserve this care to continue to enroll and receive 
it.

    Question 2: Arguably, the VA has sufficient resources this year, 
and it looks like it will have sufficient resources in the coming 
fiscal year.
    If Congress were to act to open up enrollment of Priority 8 
veterans, how would your organizations address the very real concerns 
that VA won't be able to adequately treat higher priority veterans or 
that veterans would once again face long waiting times for basic 
healthcare?

    Answer: First and foremost, we would urge Congress to ensure that 
reliable and adequate funding is provided for VA. We would argue that 
sufficient resources have not been provided since no specific, 
dedicated funding has been appropriated for the purpose of reopening 
the healthcare system to Priority 8 veterans. In fact, as it stands 
right now, it appears that the VA may once again be forced to deal with 
a situation where they do not receive their funding prior to the start 
of the new fiscal year on October 1. Moreover, while the funding 
included in the already approved House VA appropriations bill and the 
yet to be completed Senate VA appropriations bill nearly matches the 
recommendations of the Independent Budget for FY 2008, none of these 
funding levels provide additional resources to open enrollment to 
Priority 8 veterans.
    Secondly, since it has been more than 4 years since the VA made the 
decision to close enrollment to Priority 8 veterans, Congress must 
ensure that the VA has the infrastructure and workforce capacity to 
meet this new demand before reopening the system. As was discussed 
during the hearing, we remain concerned that the VA does not actually 
have the capacity to address this new demand across the broader system. 
While some areas may have excess capacity, other areas in the VA 
healthcare system are currently operating well above capacity. However, 
we recall that Dr. Kussman did offer to work with the Committee to 
ensure that the VA system is prepared for this new demand. Without 
taking these steps, we believe that longer waiting times and healthcare 
rationing could be a real possibility.

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007
Adrian M. Atizado
Assistant National Legislative Director
Disabled American Veterans
807 Maine Avenue, SW
Washington, DC 20024

Dear Adrian:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                                           Chairman
                               __________

    Questions from Hon. Bob Filner, Chairman, Committee on Veterans'
Affairs, to Adrian M. Atizado, Assistant National Legislative Director,
                       Disabled American Veterans

    Question: In your testimony you note that returning servicemembers 
have 2-year access to VA healthcare. You also note that a nonservice-
connected combat Vietnam veteran who applies for enrollment but is a 
Priority Group 8 veteran would be denied access. You state that ``DAV 
is very troubled by this inequity.''

      Absent classifying VA funding as direct spending rather 
than discretionary spending, what would DAV recommend that we in 
Congress do to address this inequity?

    Answer: The inequity of a ``two-tiered'' healthcare system is 
created by providing access to VA medical care to one group of veterans 
while denying access to another. In this instance, the 2-year access to 
VA care for servicemembers returning from combat in the Persian Gulf 
War as contemplated under Section 102 of Public Law 105-368, the 
Veterans Programs Enhancement Act of 1998, ensures a continuation of 
healthcare benefits for servicemembers transitioning from active duty 
to veteran status despite the lack of definitive evidence that 
unexplained illnesses are related to wartime service. This is likewise 
being applied to Operations Enduring and Iraqi Freedom (OEF/OIF) combat 
veterans and the delayed onset of post-traumatic stress disorder and 
traumatic brain injury.

    Noteworthy is Congress' intent to extend the access period for OEF/
OIF combat veterans to satisfy concerns that some of the newest 
generation of combat veterans may be denied access to VA healthcare due 
to the policy decision to bar enrollment for Priority Group 8 veterans. 
Indeed, enactment of H.R. 612 or S. 383 would allow some form of 
guaranteed access to VA medical care; however, it only partly addresses 
the inequity between demand and health resources that lead to the ban 
on en- 
rollment for Priority Group (PG) 8 veterans. Moreover, it does not 
provide parity 
to combat veterans of previous wars when they are denied access to VA 
medical 
care.

    As you are aware, the DAV opposed the decision to close future 
enrollment of PG 8 veterans and supports the extension of access to VA 
medical care for our newest combat veterans. Further, as Congress is 
poised to add a significant new funding increase to the VA medical 
accounts for fiscal year 2008, one that we deeply appreciate, we are 
uncertain that even that generous increase will be sufficient to offset 
all of VA's financial requirements. Accordingly, the DAV recommends 
this Committee conduct hearings on the source of this issue which is 
the sufficiency, reliability, and dependability of VA healthcare 
funding through the discretionary appropriations process. In addition, 
we recommend the Committee conduct hearings on VA's workforce and 
infrastructure issues to include discussion on the effects of lifting 
the ban on Priority Group 8 enrollment. Finally, we encourage the 
Committee to ensure VA timely provides the report requested by 
Committee Members on VA's plan to reverse the enrollment decision on 
Priority Group 8 veterans.

                                 
                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007
Peter S. Gaytan
Director, Veterans Affairs
  and Rehabilitation Commission
The American Legion
1608 K Street, NW
Washington, DC 20006

Dear Peter:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,
                                                         BOB FILNER
                                                           Chairman
                               __________
    Questions from Hon. Bob Filner, Chairman, Committee on Veterans'
  Affairs, to Peter S. Gaytan, Director, National Veterans Affairs and
               Rehabilitation Commission, American Legion

                                                The American Legion
                                                     Washington, DC
                                                 September 12, 2007
Honorable Robert Filner, Chairman
Committee on Veterans' Affairs
United States House of Representatives
Room 335, Cannon HOB
Washington, DC 20420

Dear Chairman Filner:

    Thank you for allowing The American Legion to participate in the 
Committee hearing on Priority Group 8 Veterans on June 20, 2007. I am 
pleased to respond to your specific questions concerning that hearing:

    1.  Your organization takes the position that the VA healthcare 
system should be re-opened to Priority Group 8 veterans. Current law 
provides the Secretary with the authority to prescribe regulations to 
``establish and operate a system of annual patient enrollment[.]'' It 
was clearly not the intention of Congress to permanently close out 
access to VA care to a group of veterans, while at the same time it was 
felt necessary to provide the VA with the flexibility necessary to meet 
an unexpected shortfall in resources and to provide care to those 
veterans in higher priority groups.

    Question: If the ban on enrolling Priority 8 veterans was lifted 
statutorily, how much latitude does your organization believe the 
Secretary should retain in the future to limit enrollment and to 
``establish and operate a system of annual patient enrollment''?

    Answer: The American Legion believes that the Secretary of VA, 
being aware of the workload VA can handle, should be first to announce 
when and why any limit to enrollment might be needed due to a lack of 
resources (or expansion of enrollment due to adequate funding). Any 
announcement of such an event should be subject to strict congressional 
oversight. Before a final decision is made on denying access to 
benefits that were earned through honorable service to our country, 
Congress, along with the veterans service organizations, should be able 
to weigh in on the decision.
    2.  Arguably, the VA has sufficient resources this year, and it 
looks like it will have sufficient resources in the coming fiscal year.

    Question: If Congress were to act to open up enrollment to Priority 
8 veterans, how would your organization address the very real concern 
that VA won't be able to adequately treat higher priority veterans or 
that veterans would once again face long waiting times for basic 
healthcare?

    Answer: The American Legion believes all eligible veterans in need 
of timely access to quality healthcare earned the right to enroll in 
the VA healthcare delivery system as an earned benefit of honorable 
military service. The American Legion is outraged any time a veteran 
presents him or herself to the VA healthcare delivery system and is 
turned away. The American Legion remembers when VA was open to all 
veterans prior to means testing in the 1980s and the rationing of 
healthcare.
    In order to ensure timely access to VA healthcare for all veterans, 
VA must be adequately staffed and therefore adequately funded. The 
American Legion believes that the solution to the Veterans Health 
Administration's (VHA) recurring fiscal difficulties will only be 
achieved when it's funding becomes a mandatory spending item. Under 
mandatory funding, VA healthcare funding would be guaranteed by law for 
all eligible enrollees--patient-based rather than budget-driven annual 
Federal appropriations.
    The American Legion will continue to support legislation that would 
establish a system of capitation-based funding for VHA. This new 
funding system would provide all of VHA's funding, except that of the 
State Extended Care Facilities Construction Grant program, which would 
be separately authorized and funded as discretionary appropriations. 
VHA is currently struggling to maintain its global preeminence in 21st 
century integrated healthcare delivery systems with funding methods 
that were developed in the 19th century for an antiquated inpatient 
delivery system. No other modern healthcare organization could be 
expected to survive under such an inconsistent budget process. 
Healthcare rationing for veterans must end. It is time to guarantee 
healthcare funding for all veterans seeking VA healthcare.
    It is The American Legion's understanding that when Eligibility 
Reform was enacted in 1996 to reopen access to VA healthcare, the 
public law was quite clear that all veterans' enrolling would be 
subject to copayments and third-party reimbursements from health 
insurers, both public and private.
    The VA Secretary's decision to prohibit the enrollment of new 
Priority Group 8 veterans had nothing to do with their ability to pay 
or not pay for healthcare services. It was clearly a management tool to 
stop the number of veterans enrolling in the Nation's best healthcare 
system, although their enrollment carried with it the agreed obligation 
to make copayments and allow VA to bill their third-party insurers. In 
essence, it stopped the largest potential source of nonappropriated 
dollars from entering the system, even as Congress was increasing the 
VA's MCCF collection goals.
    The American Legion was disappointed to learn that the largest, 
federally mandated, public health insurer (Centers for Medicare and 
Medicaid Services) was exempted from making allowable third-party 
reimbursements to VA for the treatment of nonservice-connected medical 
conditions of enrolled Medicare-eligible veterans. Since over half of 
VA current enrolled patient population lists Medicare as their health 
insurer, the economic impact severely restricts a major revenue stream 
for the Medical Care Collection Fund (MCCF) to supplement the annual 
discretionary appropriations.
    VA should no longer be prohibited from collecting any Medicare 
reimbursements for the treatment of allowable, nonservice-connected 
medical conditions. As do most American workers, veterans pay into the 
Medicare system without choice throughout their working lives, 
including while on active duty. A portion of each earned dollar is 
allocated to the Medicare Trust Fund and, although veterans must pay 
into the Medicare system, VA is prohibited from collecting any Medicare 
reimbursements for the treatment of allowable, nonservice-connected 
medical conditions. This prohibition constitutes a multi-billion dollar 
annual subsidy to the Medicare Trust Fund.
    Thank you once again for all of the courtesies provided by you and 
your capable staff. The American Legion welcomes the opportunity to 
work with you and your colleagues on many issues facing veterans and 
their families throughout this Congress.

            Sincerely,
                                                       Peter Gaytan
                                         National Veterans' Affairs
                                      and Rehabilitation Commission

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007

John Rowan
National President
Vietnam Veterans of America
8605 Cameron Street, Suite 400
Silver Spring, MD 20910

Dear John:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                                           Chairman

                               __________
   Questions from Hon. Bob Filner, Chairman, Committee on Veterans' 
Affairs, to John Rowan, National President, Vietnam Veterans of America

                                        Vietnam Veterans of America
                                                  Silver Spring, MD
                                                    August 17, 2007

The Honorable Bob Filner
Chair
House Committee on Veterans' Affairs
335 Cannon House Office Building
Washington, D.C. 20515

Dear Congressman Filner,

    Attached please find the responses of Vietnam Veterans of America 
(VVA) to the questions posed to us in your letter of July 19th 
concerning Priority 8 veterans.
    On behalf of the members of VVA and our families, I want to thank 
you for having held in June the hearing on Priority 8 veterans. It is 
our hope that Congress will succeed in reopening the VA healthcare 
system to these veterans, many of whom are just a paycheck or illness 
away from hitting the financial shoals. It is time to restore this 
earned benefit to these veterans.

            Sincerely,

                                                         John Rowan
                                                 National President

    Question: If Congress were to act to open up enrollment to Priority 
8 veterans, how would your organizations address the very real concerns 
that VA won't be able to adequately treat higher priority veterans or 
that veterans would once again face long waiting times for basic 
healthcare?

    Answer: First off it's a fundamental matter of fairness: Priority 8 
veterans ought to have the same right to access the VA healthcare 
system as higher priority veterans have. Nowhere in Title 38 is there a 
demarcation between higher priority--or what some had touted as ``core 
constituency''--veterans and ``other'' veterans. Many veterans are just 
a paycheck or two away from hitting the financial shoals; in fact, 1.8 
million veterans are among the 43 million Americans who are without 
health insurance.
    Secondly, if the VA healthcare system were to be driven by need 
rather than having to shoehorn veterans in because of a shortfall in 
funding, this question would not come up. It is the responsibility, 
indeed the obligation of the American people through the agency of 
government to live up to the social contract entered into with those 
who donned the uniform and placed life and limb on the line in defense 
of the Constitution.
    Thirdly, we do not believe there will be any rush by so-called 
Priority 8's to enter the system. Although it has been estimated that 
some 250,000 veterans were denied service since the system was closed 
to additional Priority 8's in January 2003, some older Priority 8 
veterans reportedly use the VA only to fill their drug prescriptions.
    Furthermore, some veterans who are now classified as Priority 8, or 
who were earlier classified Priority 8 subsequent to January 2003, have 
since either become so ill that they cannot work and now qualify as 
indigent under the income guidelines for nonservice-connected veterans 
and therefore have been able to access the system. And other veterans 
who initially wanted to use the VA healthcare system because of 
conditions or maladies related to their military service have since 
been adjudicated by VA to be service-connected compensable, and 
therefore can access the medical system as Priority 1 or Priority 2 
veterans. This ``migration,'' if you will, from Priority 8 to a higher 
priority is very common, VVA contends.
    It may be helpful for the Committee to request of VA how many 
veterans formerly classified as Priority 8 have subsequently become 
Priority 5 or Priority 1, Priority 2, Priority 3, Priority 4, Priority 
5, or Priority 6 by year of the above noted change. Many of these 
veterans would have been reclassified years ago to a priority group 
eligible to register for the first time if the Compensation and Pension 
adjudication system were not such a mess.
    Finally, Priority 8 veterans are not a drain on the system. Because 
Priority 7 and 8 veterans account for some 40 percent of third-party 
collections, these veterans likely bring more money into the system 
than the cost of their healthcare. Hence, they will be in some major 
part paying for themselves.

    Question: If the ban on enrolling Priority 8 veterans was lifted 
statutorily, how much latitude do your organizations believe the 
Secretary should retain in the future to limit enrollment and to 
``establish and operate a system of annual patient enrollment''?

    Answer: The short answer is none, as it is clear that they cannot 
be trusted. Just as the VA ought to function in the benefits arena as 
an advocate for the veterans it serves, so should the right and proper 
role of the VA be as an advocate for veterans who need to, or want to, 
choose the VA as their healthcare provider. The Secretary, as the CEO 
of the system, certainly needs the flexibility to make adjustments in 
the face of an economic downturn, other economic realities, and/or ally 
influx of enrollees. Unlike the adjustment made by Secretary Principi 
4\1/2\ years ago, the system should request an infusion of funds in the 
form of a supplemental appropriation from Congress should the need 
arise. Under a system of ``mandatory,'' or ``assured'' funding, the 
system should have the capacity to grow with its patients.

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                      July 19, 2007

Honorable R. James Nicholson
Secretary
Department of Veterans Affairs
Washington, DC 20420

Dear Mr. Secretary:

    In reference to our Full Committee hearing on Priority Group 8 
Veterans on June 20, 2007, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on August 31, 
2007.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Please fax your response to Debbie Smith at 202-225-2034. If you 
have any questions, please call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                                           Chairman

                               __________

    Questions from Hon. Bob Filner, Chairman, Committee on Veterans'
            Affairs, to Hon. R. James Nicholson, Secretary,
                     Department of Veterans Affairs

    Question 1: Since fiscal year (FY) 2004, VA has omitted specific 
requests for funding that would allow for the lifting of the enrollment 
ban on Priority Group 8 veterans. Would you tell us:

    Question 1(a): If the enrollment was lifted, how many PG 8 veterans 
do you estimate would enroll into the system?

    Response: Resumption of Priority 8 enrollment is estimated to 
increase enrollment by 1.6 million in FY 2008 and 2.4 million by FY 
2017.

    Question 1(b): How much additional funding would VA need to request 
in order to properly provide healthcare services to all veterans in PG 
1-8?

    Response: Resumption of Priority 8 enrollment would increase 
budgetary requirements by $1.7 billion in FY 2008 and $4.8 billion in 
FY 2017. Over the next 10 years, resumption of Priority 8 enrollment 
would require $33.3 billion in budgetary resources. This does not 
include the cost of any capital expenditures needed to meet this 
increased demand or the additional cost associated with purchasing this 
care in the private sector until the Department of Veterans Affairs 
(VA) can build the capacity to provide the care internally.

    Question 1(c): Does that figure take into account that PG 8 
veterans, if allowed back in, would bring $571 million into the VA 
system through third-party and first-party reimbursements?

    Response: The $1.7 billion appropriation requirement is net of $592 
million in collections. VA expects to collect, on average, $685 from 
each new Priority 8 patient and his/her insurer, or 26 percent of the 
cost of their healthcare based on historical collection rates.

    Question 2: PVA states in their testimony that VA's budget estimate 
of providing care to Priority Group 8 veterans is unrealistic. Instead 
the Independent Budget used a utilization figure from a report entitled 
``The Potential Cost of Meeting Demand for Veterans' Healthcare,'' 
published by the Congressional Budget Office (CBO) in March 2005. The 
CBO explained that the actual utilization rate of Category 8 veterans, 
prior to the enrollment prohibition being put in place, was only about 
20 percent. Based on this information, the Independent Budget estimated 
that only about 314,000 Category 8 veterans would have actually used 
the system, meaning that the VA would only be responsible for the cost 
for that number of veterans.

    Question 2(a): Would you please tell us what the actual utilization 
rate of the current Priority Group 8 population is?

    Response: Based on historical data reflecting the number of 
Priority 8 enrollees who become patients in any given year, VA expects 
that about 55 percent, or 863,000 of the 1.6 million new Priority 8 
enrollees, will use the system (be patients) in FY 2008.

    Question 2(b): Do you really believe that all of the newly enrolled 
Priority Group 8 veterans would utilize the system?

    Response: Based on historical use patterns, VA expects that about 
55 percent of the 1.6 million Priority 8 veterans projected to enroll 
in FY 2008 will be patients in FY 2008.
    Question 3: With the imposition of the enrollment ban in January 
2003, the Administration has not requested funding needed to lift the 
enrollment ban. It certainly seems that the Administration is perfectly 
happy with continuing the enrollment ban permanently.

    Question 3(a): Is it the VA's intention to permanently maintain the 
enrollment ban?

    Response: In keeping with Congress' requirement to establish and 
manage a system of annual veteran enrollment, VA annually reviews the 
demand for services and the resources required to assure timely and 
high-quality services. We continue to act in accordance with Public Law 
104-262, as we annually evaluate enrollment of VA's healthcare system 
in order to ensure that VA has capacity to provide timely, high-quality 
care for veterans for whom our Nation has the greatest obligation: 
those with service-connected disabilities, lower-income veterans, and 
those needing specialized care.

    Question 3(b): Do you believe that we should amend Title 38 to 
permanently ban new Priority Group 8 veterans?

    Response: In enacting this legislation, Congress recognized the 
great obligation owed to veterans requiring care for their service-
connected disabilities, veterans with special needs, and low-income 
veterans. However, as demand for healthcare services continues to grow, 
VA must allocate resources to the extent resources and facilities are 
available. Title 38 allows VA to fulfill its mission of meeting the 
healthcare needs of veterans based on available resources.