Committee for a Responsible Federal Budget

VA Compromise Announced

Jul 28, 2014

This afternoon, Chairman Bernie Sanders (I-VT) and Chairman Jeff Miller (R-FL) announced compromise legislation to address the serious problems at the Department of Veterans Affairs. The authors said that the legislation would fund private health care for certain veterans, provide for hiring of additional health care providers by the VA, and make other changes in the VA health care system with a reported net cost of $12 billion.

Although full details have not officially been released yet and a final CBO estimate is not available, press reports indicate the agreement would provide $17 billion in new funding for the VA with offsetting savings reducing the net cost to $12 billion. The $12 in unoffset spending would be designated as emergency spending, exempting it from PAYGO requirements requiring offsets for increased mandatory spending and adding the costs to the deficit.

According to press reports, the agreement would provide a capped mandatory appropriation of $10 billion to fund the private care option and $5 billion for hiring additional health care personnel, with additional mandatory spending for leases of medical facilities. The agreement reportedly would achieve some savings by limiting VA bonuses.  In addition, CBO cost estimates of earlier versions of the legislation indicated that providing funding for veterans to receive care from private health care providers would result in (1) savings in the Medicare program and (2) increased revenues resulting from lower costs of employer-provided health insurance.

Importantly, this legislation appears to be a significant improvement from the original Senate bill in terms of fiscal responsibility. The original Senate bill would have essentially given the VA a blank check and, if extended, could cost $500 billion over ten years. Instead, the compromise appears to offer a fixed pot of funds for additional VA health spending, meaning that additional money would need to come from the appropriations process.

Still, this compromise appears to fall short of what is necessary to avoid adding to the debt. The backlogs at the VA, though of very serious concern, do not fit the definition of an “emergency,” and should be fully offset with savings elsewhere in the budget.

We noted this in our letter to the conferees, and also pointed the conferees to a huge number of possible offsets.

As more information becomes available, CRFB will provide additional coverage and analysis.

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