Congress should be fiscally prudent with VA funding


Congress should be fiscally prudent with VA funding

Sep 1, 2015 3 min read

Former Director, Grover M. Hermann Center

Romina was a leading fiscal and economic expert at The Heritage Foundation and focused on government spending and the national debt.

Congress is trying to figure out how best to address the recent scandal over poor medical care at the Department of Veterans Affairs (VA). But will it make an accurate diagnosis? Lawmakers should exercise care so as to not make current problems worse and ensure that eligible veterans receive proper care in a fiscally responsible way.

Costs could double

There are currently two major bills seeking to address issues that led to long waiting periods for veterans seeking care within the VA health system. Both would allow more eligible veterans to get care elsewhere.

According to a preliminary Congressional Budget Office (CBO) score, provisions in the House (H.R. 3230) and Senate (S. 2450) bills for two years would cost the federal government $44 billion and $35 billion. Once the provisions are fully phased in, should Congress extend them past the initial two-year pilot, the House bill could cost about $54 billion a year and the Senate bill about $50 billion. That's in addition to the current cost of veteran healthcare.

Veterans' medical care in 2013 cost $52.5 billion (see Table 16.1 at the Office of Management and Budget). This means that the current approach discussed in Congress could double what the nation currently pays to provide healthcare to veterans. A previous set of House bills (H.R. 4810 and H.R. 4031) are the likely basis for an upcoming conference with the Senate to arrive at a compromise solution. With such a steep price tag, Congress should think carefully about how to best improve healthcare for deserving veterans.

Enrollment would expand

Part of the increase in cost would stem from more veterans enrolling in the VA system over time. The CBO estimates that there are about 8 million additional veterans who would qualify for veterans' healthcare, but that are not participating in the current system. They are relying on Medicare, Medicaid, the military healthcare system, and private healthcare instead. The CBO estimates that at least one quarter of these veterans could be induced to enroll in the proposed system.

Moreover, the CBO assumes that today's VA costs only cover about 30 percent of the healthcare received by the 8.4 million enrolled veterans. Those veterans are also expected to increase their use of VA healthcare by about 75 percent.

Although Congress's current approach would only expand veterans' access to private-sector care for two years, Congress may face pressure to extend the law's provisions beyond that time horizon. The CBO also stresses that its estimates are preliminary. Much uncertainty remains over the effects Congress's provisions would have.

The Heritage Foundation previously recommended that the VA should focus on the unique needs of military medicine. A recent Congressional Research Service fact sheet revealed that more than one out of every 10 VA patients is not a veteran, and the number of non-veterans using the VA's healthcare services has increased faster in recent years than has the number of veteran patients. Scarce VA healthcare should first and foremost focus on deserving veterans.

Impact on the debt

There are substantial differences between the two chambers' approaches that are important to consider for this new spending's impact on the national debt. The Senate would make the expanded health benefit into an entitlement, authorizing "such sums as may be necessary" that could grow on autopilot in the future. The Senate's emergency designation also prevents Congress from having to prioritize among taxpayer dollars. The spending would simply pile on top of the existing $17.5 trillion debt.

The House, on the other hand, would seek to appropriate discretionary funding for the provisions. Discretionary spending is capped at more than $1 trillion this year. Without resorting to the emergency designation loophole, Congress would have to select some lower-priority programs for cuts and elimination to fund the expanded health benefit — or risk sequestration. The VA is exempt from sequestration, so any sequester would fall on other domestic programs unless Congress changes the Budget Control Act.

Entitlements are the main drivers of spending and the debt. Because they grow on autopilot once enacted, Congress fails to make important reforms when appropriate and necessary. While the federal government bears the responsibility of caring for veterans with service-related injuries, it should carry out this responsibility in a fiscally responsible way.

An opportunity for reform

Recent revelations of scandals at the VA require action, but Congress should consider its options carefully and perform its responsibility to care for America’s veterans in a fiscally responsible manner.

-Boccia is the Grover M. Hermann Fellow in Federal Budgetary Affairs in the Roe Institute for Economic Policy Studies at the Heritage Foundation.

This piece originally appeared in The Hill

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