Veterans Affairs' $1 billion shortfall in health care prompts budget scrum

The Veterans Affairs Department is facing a $1 billion shortfall for critical healthcare services this year, after an internal review in April found there were insufficient funds to meet current needs, the department revealed Thursday.

Under questioning at a House Veterans Affairs Committee hearing, department officials told lawmakers that the agency has had to shift $410 million intended for use in fiscal 2006 to meet this year's VA healthcare needs, and also to move another $600 million from maintenance, repairs and equipment accounts to fill the rest of the gap.

Some lawmakers are already calling for emergency supplemental funds to cover this year's costs without dipping into important funding for capital projects. Since the accounting moves create a similar funding gap for next year, discussions are taking place about whether an amended fiscal 2006 budget request might be necessary.

The House has already passed an $85.2 billion Military Quality of Life and Veterans Affairs appropriations bill, so veterans' advocates are looking to the Senate Appropriations Committee to restore the funds.

The VA healthcare shortfall has already been the subject of some wrangling between OMB and the VA Department about how best to handle the matter, and appropriators plan to work with the Veterans Affairs panels over the next month.

The Senate Military Construction and Veterans Affairs Appropriations Subcommittee had planned to take up its FY06 bill next week, but now will wait until July 19 to assess the situation.

Senate Military Construction and Veterans Affairs Subcommittee Chairwoman Kay Bailey Hutchison, R-Texas, planned to take up the matter with OMB Director Bolten Thursday. "I would like to avoid another supplemental," Hutchison said. Veterans Affairs Secretary Nicholson briefed senators on the shortfall Thursday.

Department officials told the House panel the shortfall was due to the large number of reservists returning from overseas and enrolling in the VA healthcare system, along with unanticipated and unexpectedly high dental costs.

But the chairmen of the House and Senate Veterans Affairs committees criticized the department for mismanagement and inability to forecast demand for healthcare services, pledging to haul in department officials for more hearings next week.

"This situation is unacceptable and we will solve the problem," House Veterans Affairs Chairman Buyer said. Senate Veterans Affairs Chairman Craig called it "extremely frustrating" to learn the agency had inadequate healthcare funds available, after being told there would be sufficient money.

Some Democrats are using the situation to castigate Republicans and the Bush administration for inattention to the needs of veterans, a key constituency for both parties. Sen. Patty Murray, D-Wash., called the healthcare shortfall "appalling, but not surprising," as she introduced legislation that would provide $2 billion in emergency funds to plug this year's gap and avoid another cash crunch in fiscal 2006.

Senate Appropriations Committee members brought up the issue during consideration of unrelated spending bills Thursday, including a $3.8 billion fiscal 2006 Legislative Branch measure.

The measure originally contained continuity of Congress legislation, also in the House bill, that would require special elections if more than 100 House members are killed or incapacitated in an attack.

But an amendment from Appropriations ranking member Robert Byrd, D-W.Va., struck the measure from the bill, setting up a conference battle with the House.

Byrd argued the matter did not belong on an appropriations bill. House Speaker Hastert is backing inclusion because the Senate has not yet scheduled floor time on a House-passed stand-alone version.