Department of Veterans Affairs

The Department of Veterans Affairs (VA) has a profound effect on the welfare of the nation's 26 million veterans. In fiscal year 1996, VA's 222,000 workers delivered a wide array of medical, disability compensation, pension, housing, insurance, education, and burial services in more than 1,000 facilities at a cost of more than $38 billion. This testimony discusses some of the steps taken to boost the efficiency of VA's health care system and VA's progress in addressing some of the challenges GAO testified on two years ago. GAO also discusses (1) challenges facing the Veterans Business Administration in handling compensation and pension benefits, (2) VA's efforts to implement the Government Performance Review Act and other recent legislation designed to improve the management of government programs, and (3) changes that could be made in veterans' benefits and in the operation of VA programs to help reduce the budget deficit. the budget deficit.

GAO noted that: (1) significant improvements have occurred in the efficiency of the VA health care system; (2) VA's new management and Veterans Integrated Service Network (VISN) structure clearly values efficiency and customer service; (3) in addition, legislation was enacted: (a) expanding eligibility for VA health care; (b) making it easier for VA to contract for and sell services to the private sector; and (c) requiring VA to develop a plan for more equitably allocating resources to its VISNs; (4) these decisions bring with them both solutions to old problems and significant new challenges, such as developing an enrollment process consistent with the priorities established under the eligibility reform legislation and determining when to buy services from the private sector rather than provide them in VA facilities; (5) the Veterans Benefits Administration also faces major challenges; for example: (a) the disability rating schedule has not been updated for over 45 years; (b) VA faces the prospect of late or inaccurate compensation and pension payments to millions of veterans if it is unable to resolve the "year 2000" computer problem; (c) veterans often wait over 2 years for resolution of compensation and pension claims by the time the appeals process has been completed; and (d) VA could avoid millions of dollars in overpayments of compensation and pension benefits by strengthening its ability to prevent such payments; (6) recent legislation, including the Government Performance and Results Act, the Chief Financial Officers (CFO) Act, and the Paperwork Reduction Act, provides a basis for addressing long-standing management challenges; (7) VA has begun to use the legislation to improve its mission performance and results, its financial reporting, and its information resources management; (8) for example, VA included strategic plans for its health and benefits programs in its fiscal year 1998 budget submission, and it has been preparing audited financial statements since 1986, well in advance of the requirements imposed by the CFO Act; (9) multiple options exist for supporting deficit reduction through changes in VA benefits and programs; (10) although some of the changes could be achieved through administrative action, others would require legislation; and (11) the options include: (a) redefining compensation benefits to eliminate compensation for diseases that are not related to military service; (b) imposing higher cost sharing for nursing home and other long-term care services; (c) limiting enrollment in the VA health care system; and (d) closing underused hospitals.