Senator Sanders Proposes Emergency VA Authorization

In response to the recent VA scandal and hospital backlogs, Senate Veterans Affairs Committee Chairman Bernie Sanders (I-VT) has proposed legislation that would address the situation and authorize additional funding for the Department of Veterans' Affairs (VA). Congressional Quarterly's (subscription required) Alan Ota explains:

"Senior Senate Democrats said Tuesday they are determined to push through a new proposal to improve medical services and benefits to veterans — as a domestic emergency without matching offsets — and would seek to bring the measure to the floor by the end of the week...

The plan is for the measure to move to the floor directly without a markup, and the bill could include provisions to allow veterans to receive health care from different sources, including private doctors, Defense Department facilities for Native Americans and community health care centers. The measure may also include language on loan forgiveness and scholarships for some medical students."

There have been some claims (subscription required) that the legislation would provide emergency spending above the the current budgetary caps, but in fact it does not include such spending. Instead it authorizes appropriations for new spending, meaning that any actual spending to implement the provisions of the bill would still need to be provided through appropriations. Moreover, while the legislation describes the authorization as being for "emergency appropriations" it does not include an emergency designation or any provision providing that funds appropriated subject to the authorizations in this bill would be treated as emergency spending. An emergency designation would need to be included in the actual appropriations legislation appropriating funds; absent such a designation, spending to fund proposals within the legislation would have to be provided within the current discretionary spending caps.

Still, some have suggested that when it is time to appropriate money for this bill, Congress should use the emergency designation to avoid meeting the current discretionary caps. However, doing so would represent a step backward for responsible budgeting.

The emergency designation is designed for spending needs that are sudden, unforeseen, and temporary. The recent VA backlogs, though troubling, do not meet this definition. The problems facing the VA health system have been building for several years and the increased demands being placed on the system are likely to continue for many years. Indeed, to the extent the backlogs are result of insufficient funding they are likely in part a consequence of the tight budget Congress has imposed on itself through sequestration, instead of agreeing to a more thoughtful set of fiscal reforms.

While a strong case can be made that the VA health system needs additional funding to meet the increased demands resulting from the surge of wounded warriors returning from Iraq and Afghanistan, it also seems apparent that the VA health system faces management and other structural issues that need to be addressed. Any increase in funding should be accompanied by reforms to ensure that the additional funding is spent in the most efficient and effective manner possible.

If Congress increases spending to improve VA health care, it should provide additional funding within the current caps through the normal appropriations process or else offset any cap adjustments. Working within the current caps  may require devoting more funds to the Military Construction-Veterans Affairs appropriations bill and less to other appropriations bills; or it could involve new fees and changes in mandatory programs (CHIMPs) to offset discretionary spending in the bill.

But given the need for reforms, offsets could come from freeing up room within the VA budget to meet the growing demands facing the VA health system. These reforms could include streamlining programs and better targeting eligibility for VA health care and other benefits. As one example, the Congression Budget Office found that ending VA enrollment for high-income veterans with no service-related injuries would save nearly $5 billion in the first year and nearly $50 billion through 2023 (though about half those savings would be lost in mandatory cost increase that would have to be offset). But more modest reforms are also possible.

We applaud Senate Appropriations Committee Chairwoman Barbara Mikulksi (D-MD) for supporting such an approach, saying “When it comes to the floor, if there are those who want to add more money, they would have to come and provide an offset. When it comes to the full floor of the Senate, whoever has the will to do that will also have to find the wallet.”

Importantly, if Congress concludes it is not able to provide sufficient funding for the VA under the current caps, an alternative is to increase the caps and offset the costs over a reasonable period of time as happened in the Murray-Ryan agreement. The offsets could theoerically come from anywhere in the budget, but policymakers might consider identify mandatory savings in veterans programs.

Again, a large number of options exist. The table below describe some of the savings included in Chairman Sanders' bill, S. 1982, the Comprehensive Veterans Health and Benefits and Military Retirement Pay Restoration Act of 2014, as well as options identified by CBO, and in the President's FY 2015 Budget.

Potential VA Funding Offsets (Mandatory)
Provision 2015-2024 (billions)
Extension of Reduced Pension for Certain Veterans in Medicaid Nursing Homes* $2
Increase Fees for Guaranteed Loans* $2
In State Tuition for Post 9/11 GI Bill and Montgomery GI Beneficiaries* <$0.2
Reduce Reporting Fees* <$.05
Resources Disposed of for Less than Fair Market Value by Individuals Applying for Pensions* <$.05
Extension of Authority for VA to Obtain Information for IRS Income Verification Match* <$.05
Eliminate Concurrent Receipt of Retirement Pay and Disability Compensation for Disabled Veterans** $121
Narrow Eligibility for Veterans' Disability Compensation by Excluding Certain Disabilities Unrelated to Military Duties** $23
Restrict VA's Individual Unemployability Benefits to Disabled Veterans Who Are Younger Than the Full Retirement Age for Social Security**
Extend round-down of cost of living adjustments (compensation)*** $2
Extend round-down of cost of living adjustments (education)*** <$.05

Source: CBO

*S. 1982

**CBO Options

***President's FY2015 Budget

Finding offsets for new spending requires Congress to consider trade-offs and make choices about priorities. If lawmakers decide to provide additional discretionary funding to better serve veterans, they should either incorporate it within the existing spending caps or find a way to raise revenue or cut spending elsewhere instead of adding to the unsustainable national debt.