VA Faces $2.6 Billion Shortfall in Medical Care
Agency Undercounted Size of Returning Force

By Thomas B. Edsall
Washington Post Staff Writer
Wednesday, June 29, 2005; A19

The Bush administration disclosed yesterday that it had vastly underestimated the number of service personnel returning from Iraq and Afghanistan seeking medical treatment from the Department of Veterans Affairs, and warned that the health care programs will be short at least $2.6 billion next year unless Congress approves additional funds.

Veterans Affairs budget documents projected that 23,553 veterans would return this year from Iraq and Afghanistan and seek medical treatment. However, Veterans Affairs Secretary Jim Nicholson told a Senate committee that the number has been revised upward to 103,000 for the fiscal year that ends Sept. 30. He said the original estimates were based on outdated assumptions from 2002.

"The bottom line is there is a surge in demand in VA [health] services across the board," Nicholson told the Senate Veterans Affairs Committee.

Just last week, the VA revealed that the rise in demand for VA health facilities had caused a $1 billion shortfall in operating funds for the current year. That would more than double in the coming year without congressional intervention.

Senate Republicans, embarrassed and angered over the revelations, yesterday announced plans to pass emergency legislation this morning to add $1.5 billion to the fiscal 2005 appropriation. The move is designed to appease angry veterans groups and preempt a Democratic proposal calling for $1.42 billion in increased VA spending.

The action represents a reversal of GOP policies toward the VA. For the past four months, House and Senate Republicans have repeatedly defeated Democratic amendments to boost VA medical funding.

Nicholson, a former chairman of the Republican National Committee, faced criticism from House and Senate committee chairmen at two hearings.

"I sit here having recently learned that the information provided to me thus far has been disturbingly inaccurate," Senate Veterans Affairs Committee Chairman Larry E. Craig (R-Idaho) told Nicholson. House Appropriations Committee Chairman Jerry Lewis (R-Calif.) told Nicholson that the failure to alert Congress earlier to the VA's money problems "borders on stupidity."

"Somebody was hoping they could hide the ball for a while and talk about it later, and frankly in this arena you can't afford to do that," Lewis said.

As GOP House and Senate leaders scrambled to deal with the politically damaging shortfall and quell criticism from veterans' advocacy groups, Democrats intensified charges that the Bush administration and the Republican congressional majorities are failing to care for those who put their lives on the line for the country.

Rep. Chet Edwards (Tex.), the ranking Democrat on the subcommittee on military quality of life and veterans affairs, said the administration and Republican leadership had been made aware of the problems as far back as 2004 when Reps. Chris Smith (R-N.J.) and Lane Evans (Ill.,), then chairman and ranking Democrat on the Veterans Affairs Committee, called for major increases in spending.

Instead of dealing with the problem, Edwards said, the House Republican leadership "fired Smith," forcing him out of the chairmanship.

The Democratic Senatorial Campaign Committee issued a release declaring: "Republicans can't hide from their record of neglecting our nation's veterans." The release cited repeated rejection by the Senate Republican majority of amendments sponsored by Sen. Patty Murray (D-Wash.) to boost spending.

The new efforts by Republican leaders to increase veterans' spending may jeopardize administration and congressional efforts to reduce the budget deficit. The budget resolution already passed by Congress calls for $31 billion for VA health care in fiscal 2006, a limit that now appears virtually certain to be broken.

The House yesterday rejected an Edwards move to boost 2005 VA spending on a party-line vote, 217 to 189.

By all accounts, there have been dramatic improvements in VA health care, and its accessibility, over the past 15 years. In addition, the current co-payment on prescription drugs is $7, far lower than that of private plans and the new drug benefit under Medicare.

Nicholson said the VA and its actuarial advisers based their calculations for the patient load in 2005 on data from 2002, before the Iraqi and Afghanistan conflicts were fully engaged. The revised projection of 103,000 new enrollees this year includes some of the 13,700 veterans wounded in action in Iraq and Afghanistan, as well as others who served overseas seeking medical care.