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President Obama Signs Veterans Affairs Reform Compromise Into Law

By Shai Akabas, Brian Collins

Thursday, August 7, 2014

Alex Cave contributed to this post.

Several weeks ago, we blogged about bills circulating in the House and Senate that would reform the Department of Veterans Affairs (VA) and provide new healthcare options for veterans. Today, President Obama signed a compromise bill championed by Sen. Bernie Sanders (I-VT) and Rep. Jeff Miller (R-FL), the leaders of a conference committee tasked with ironing out differences between the two bills. The Bipartisan Policy Center (BPC) applauds lawmakers for reaching across the aisle on this critical issue, though we are concerned about the bill’s fiscal implications.

The conference bill’s reforms are largely drawn from the Senate bill. The agreement makes only minor tweaks to the Senate bill’s proposal to furnish non-VA-provided care to veterans who live far from VA facilities or cannot be treated promptly by the VA. (The House bill had a similar, more-expansive proposal that would have allowed veterans to begin receiving outside care somewhat sooner.) The compromise also includes language expanding access to sexual trauma services, directing the VA to lease 27 new medical facilities, and providing funding for new medical personnel, policies which were all included in the original Senate bill but not the House bill. Moreover, the final legislation restricts the performance metrics that the VA can use to evaluate its employees, limits bonuses for VA employees, and expands the VA secretary’s power to remove VA officials – all of these are less controversial items upon which both chambers generally agreed.

The major difference between the original House and Senate bills concerned funding. The Senate bill had opted for an open-ended funding mechanism that would appropriate “such sums as may be necessary” to carry out its provisions and designated this as “emergency spending,” meaning that the bill’s entire cost would be added to the budget deficit and would not require offsets. The House bill, on the other hand, was funded through the normal appropriations process, meaning that the added VA funding would have to compete with other priorities in order to avoid breaching discretionary spending caps.

The conference agreement bridges this gap by authorizing and appropriating specific amounts of money for each reform, designating these amounts as emergency spending, and offsetting a portion. The bill appropriates $10 billion to a new “Veterans Choice Fund,” which will be used to fund outside care provided to veterans. The VA will also receive $5 billion to hire new medical personnel and lease new medical facilities as well as $2 billion for the expansion of sexual trauma services and other miscellaneous benefits for veterans. Out of the bill’s $17 billion total cost, $5 billion will be offset by provisions limiting tuition assistance for veterans, extending fees collected on housing loans guaranteed by the VA, and capping bonuses for VA employees. The remaining $12 billion (less any savings to other federal programs, such as Medicare, resulting from the provision of non-VA care to veterans) will be added to the budget deficit.

BPC is encouraged that leaders in Congress and President Obama have come to a bipartisan agreement to address the failures at the VA, and we are pleased to see that the conference committee has avoided creating an open-ended spending obligation. Nonetheless, we are disappointed that congressional leaders chose to add the majority of the agreement’s cost to the deficit rather than finding ways to pay for the important promises that we have made to our veterans. While much of the bill’s funding – intended to address a real crisis for veterans in the short term – will sunset after two years, Congress will face pressure to extend it permanently. In response to this pressure, Congress should fix the systemic issues at the VA, improve the department’s cost-efficiency, and fully pay for any reauthorization of funding.

Lawmakers must remain mindful of our nation’s serious long-term fiscal challenges as they tackle difficult policy issues such as reforms to the VA. As Sen. Bob Corker (R-TN) said recently, “Our veterans deserve solutions to the deep-rooted problems plaguing the VA, and they also deserve a Congress that has the discipline to pay for legislation it passes.”

KEYWORDS: BERNIE SANDERS, BOB CORKER, JEFF MILLER, PRESIDENT BARACK OBAMA, VETERANS AFFAIRS