Cold War Veterans Blog

VA UNDERESTIMATES CARE COSTS:

The government used prewar data to estimate the cost of caring for veterans from Iraq and Afghanistan, contributing to a $3 billion budget shortfall at the Veterans Affairs Department since 2005, congressional investigators say.

The department used "unrealistic assumptions, errors in estimation and insufficient data" to project its budget, the Government Accountability Office (GAO) said in their report.

Investigators also said VA failed to estimate correctly the costs for these war veterans partly because the agency could not get accurate information from the Defense Department. In addition, the VA agency failed to tell Congress in a timely way that it was struggling to meet its expenses. The problems led officials to make requests for an extra $3 billion last year, according to the GAO.

Department officials said they agreed with the findings and were working to improve. Secretary Jim Nicholson said in a statement that VA uses "highly reliable actuarial projections of health care demand" but that the agency continues to "refine" it’s modeling.

Democrats who requested the report used it to criticize the Bush administration for what they said was inadequate care of veterans from the two wars. VA will receive about $31.5 billion to provide health care for about 5.4 million patients this year. They also urged Nicholson to provide an accurate plan for how the VA will meet veterans' needs in the future while the House Democrats began circulating a letter to President Bush asking that he "fully fund" the VA so it will not have to rely on "accounting gimmicks" and "inaccurate health care projections" when developing its budget.

Investigators said the VA knew 2005 would be a tight budget year and attempted to manage the expenses and cut costs. But officials were overly optimistic - and sometimes plain wrong - about how effective the changes could be, the GAO found.

One plan called for VA to reduce the average daily patient workload in its nursing homes. But the proposal would have required the agency to cut staff and discharge or transfer in a short time potentially thousands of veterans with severe, chronic physical or mental disabilities. The plan also would have forced the veterans to dip into Medicaid, private insurance or their own savings to pay for care, the GAO found.

Instead, in June 2005, with three months left in the budget year, the administration requested an extra $975 million from Congress to meet its expenses. That included $273 million for Iraq and Afghanistan veterans. A month later, the administration asked for an additional $1.977 billion for the 2006 budget year.

In response, Congress required VA to provide quarterly status reports. But the GAO review found the agency has omitted important information from the reports about the cost to treat patients. The agency has since worked to improve its estimates and its coordination with Congress and the administration's budget office, according to the GAO. [Source: AP, 21 Sep 06]