Action in Congress

April 1, 2004

Lawmakers Eye CARES Moves

The planned overhaul of the mammoth Department of Veterans Affairs health care system took a hit, and lawmakers were anxious to see how VA responds.

A 16-member commission created by VA Secretary Anthony J. Principi recommended rolling back key parts of a comprehensive VA staff plan to restructure the $29 billion network of hospitals. VA’s Capital Asset Realignment for Enhanced Services (CARES) draft plan completed last August had called for major changes at 13 sites and smaller realignments at hundreds of other locations.

However, in a move applauded by lawmakers, the panel in February rejected the CARES recommendation to close major VA facilities at Canandaigua, N.Y., Lexington, Ky., and Livermore, Calif.

Principi, who established the panel, said he would review its recommendations and accept or reject them as a whole.

In other action, panel members affirmed the CARES plans to:

  • Close major facilities in Pittsburgh (Highland Drive), Brecksville, Ohio, and Gulfport, Miss., and downsize facilities in Waco, Tex.
  • Build new hospitals in Orlando, Fla., and Denver.

The panel, on its own, recommended building a single new facility in Boston to replace four VA hospitals in the area.

The commission was chaired by Everett Alvarez Jr., a Vietnam prisoner of war and former deputy VA administrator. Principi said VA’s objective is not to reduce spending on veterans’ health care but, rather, to increase efficiency by closing outdated, underused facilities and opening modern hospitals and clinics where they are most needed.

New Reserve Retirement Age

Sen. Lindsey Graham (R-S.C.), Sen. Tom Daschle (D-S.D.), and 25 other Senators introduced a bill to relax the retirement age for members of the Guard and Reserve.

At present, a member with 20 years of service may retire and draw benefits but not until he or she reaches age 60.

The Guard and Reserve Readiness and Retention Act of 2004 (S. 2035) would change that. Under its provisions, a reservist could draw retirement annuities at an age as low as 53, if he or she had served 34 years.

The bill proposes these combinations of ages and minimum years of service:

  • Age 54 and 32 years
  • Age 55 and 30 years
  • Age 56 and 28 years
  • Age 57 and 26 years
  • Age 58 and 24 years
  • Age 59 and 22 years
  • Age 60 and 20 years

A member could qualify for the earlier retirement age if he or she spent the last six years in the Guard or Reserve.

Pay, Benefits in DOD Budget

The Pentagon budget request for Fiscal 2005 contains two important provisions for service people:

Pay Raise: It seeks a 3.5 percent basic pay increase for all service personnel, starting Jan. 1, 2005. If Congress agrees, this would be the first across-the-board military pay raise since 1999. Recent basic pay increases, including last January’s average increase of 4.1 percent, have been “targeted”—that is, doled out in differing amounts by member pay grade and, in some cases, length of service. The 3.5 percent raise would be the fifth straight to exceed, by at least a half percentage point, annual wage growth in the private sector, as measured by the Labor Department’s Employment Cost Index.

BAH Hike: The budget calls on Congress to approve the last in a series of extra-large increases in the Basic Allowance for Housing. Next January’s BAH hike would exceed rental cost growth nationwide by 3.5 percent, enough to eliminate the remaining “gap” between local average rents and monthly BAH. With the 2005 BAH increase for 820,000 service members living off base in the United States, the Defense Department will reach a goal adopted in the final years of the Clinton Administration to eliminate a 22 percent gap between housing allowances and average rent paid by service members for adequate off base housing.

VA Health Care Spending

The newly proposed VA budget would climb to $67.7 billion in 2005, a nine percent increase over this year’s plan. Of that amount, $29.5 billion would be devoted to veterans’ health care. That is a one-year increase of 4.1 percent.

Critics say $29.5 billion is not sufficient to cover health care costs for all eligible veterans. Veterans’ groups want full funding of VA health care to open the system to all eligible vets and wipe out long waiting lists.

In response, VA officials note that the health care budget has undergone tremendous growth—40 percent since 2001—and now funds treatment of 5.2 million patients—one million more than in 2001.

Principi noted, however, that the health budget request was $1.2 billion short of what he sought. VA officials concede that veterans with no service-connected ailments still face long waits or denial of enrollment, but those with service-connected injuries or ailments or low incomes—the highest-priority groups—have found greater access to care.

VA officials said veterans in these highest priority groups will comprise 71 percent of the total patient population in 2005, up from 66 percent in 2003.

VA devotes 88 percent of its medical care budget to the needs of these highest-priority veterans, said officials.

VA User Fees, Rx Co-Pays

As it did last year, the Bush Administration proposes that veterans in priority categories 7 and 8—those with no service-connected disabilities and with incomes above federal poverty level guidelines by geographic region—pay a $250 annual usage fee for access to VA health care.

Also, they would see co-payments on prescription drugs not tied to service-related conditions rise from $7 up to $15.

However, service-disabled and indigent veterans—those in categories 2 through 5—would no longer have to make a $7 co-payment on drugs for nonservice-related conditions. At present, only the most seriously disabled receive free prescription drugs.

Under VA’s plan, prescriptions would be free to former prisoners of war. VA also would pick up the cost of emergency care received in a non-VA facility, and co-payments would end for VA hospice care.

Congress again is expected to reject the user fee and higher drug co-payments.

Expanded VA Burial Benefits

Another VA initiative before Congress calls for multiyear expansion of the veterans’ cemetery system. Five new national cemeteries would provide service in the areas of Atlanta, Detroit, Pittsburgh, Sacramento, Calif., and south Florida.

Taken together, they would provide burial spaces for up to 1.7 million veterans.

By October 2005, 83 percent of veterans will live within 75 miles of a national or state veterans’ cemetery, up from 73 percent in 2001, said VA officials.

To comply with a direction from Congress, the new VA budget would fund studies aimed at opening six new national cemeteries. They would be in Philadelphia, Jacksonville, Fla., Sarasota, Fla., Birmingham Ala., Columbia/Greenville, S.C., and Bakersfield, Calif.

Save the Claims Processors!

Veterans’ groups have implored Congress to block a proposed reduction in the number of VA claim processors.

The 2005 budget would fund 12,200 full-time staff members to support six benefit programs: disability compensation, pensions, education, housing, vocational rehabilitation and employment, and life insurance.

That marks a one-year cut of 1,000 claims processors.

VA officials explained that the compensation and pension claims backlog has plunged from 432,000 to about 250,000 and that the average wait time had dropped from 223 to 150 days.

“We are on track to reach an average processing time of 100 days by the end of 2004,” Principi said. The department expects the 100-day wait to be a standard which can be sustained through 2005.

Veterans’ advocates are skeptical and have urged Congress to fund a claim processing staff of 13,200 to match 2003 levels.

Affordable SBP Reform

Reform of the Survivor Benefit Plan became more affordable with introduction of related bills by Rep. Jeff Miller (R-Fla.) and Sen. Mary Landrieu (D-La.).

A major Congressional objective has been to phase out the sharp, sometimes surprising, drop in SBP payments to a survivor when he or she reaches age 62. Fixing this problem of the “SBP offset,” however, would carry a hefty price tag.

Now, the Military Survivor Benefits Improvement Act of 2004 (S. 1916 and H.R. 3763) would cut the cost of eliminating the so-called “SBP offset” by $800 million over 10 years.

The savings would result from a one-year open enrollment opportunity for nonparticipating retirees, who would, in turn, pay higher premiums for SBP coverage tied to number of years since they retired.

Military service and veterans’ organizations helped develop the less costly bill to meet budget committee requirements and to improve the chances of passage in 2004.

The Landrieu and Miller bills both call for a 10-year phase out of the age 62 reduction in SBP, when benefits fall from 55 percent of the covered annuity down to as low as 35 percent.

More on Keeping the Promise

Sens. John McCain (R-Ariz.) and Tim Johnson (D-S.D.) have introduced legislation identical to H.R. 3474, the House’s Keep Our Promise to America’s Military Retirees Act.

“In 2000,” said Johnson, “Congress enacted my Tricare for Life legislation, which provided health care to Medicare-eligible military retirees. This bill takes the next step and improves those benefits.”

Under the Senate bill, retirees who entered service before Dec. 7, 1956, would have no obligation to pay Medicare Part B premiums, now $66 a month, to be able to enroll in the Defense Department’s Tricare for Life program.

Also, retirees and their dependents could enroll in the Federal Employees Health Benefits Program, the same menu of insurance options available to federal civilians.

Moreover, drug reimbursement at Tricare network rates would be available to beneficiaries who lack access to a pharmacy in the Tricare retail network.

The House bill, introduced by Rep. Chris Van Hollen (D-Md.), had 181 co-sponsors by early March.