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  • CBO Budget Cuts

     

    Mandatory Spending Options

    Option 34: Narrow Eligibility for Veterans’ Disability Compensation by Excluding Certain Disabilities Unrelated to Military Duties

    CBO 001

    Background

    Veterans may receive disability compensation from the Department of Veterans Affairs (VA) for medical conditions or injuries that occurred or worsened during active duty military service. Such service-connected disabilities range widely in severity and type, from migraines and treatable hypertension to the loss of limbs. VA also provides dependency and indemnity compensation (DIC)— payments to surviving spouses or children of a Veteran who died from a service-related injury or disease. The Department of Defense (DoD) has a separate compensation system for service members who can no longer fulfill‌ their military duties because of a disability.

    Not all service-connected medical conditions and injuries are incurred or exacerbated in the performance of military duties. For example, a qualifying injury could occur when a service member was at home or on leave, and a qualifying medical condition, such as Parkinson’s disease, could develop independently of a service member’s military duties. In 2017, VA paid a total of $2.7 billion, the Congressional Budget Office (CBO) estimates, to compensate for seven medical conditions that, according to the Government Accountability Office (GAO), military service is unlikely to cause or aggravate. Those conditions are arteriosclerotic heart disease, chronic obstructive pulmonary disease, Crohn’s disease, hemorrhoids, multiple sclerosis, osteoarthritis, and uterine fibroids. There were‌ 758,085 instances of those conditions in 2017.

    Disabilities being considered as not a qualifying injury for compensation.

    Option

    Beginning in January 2020, this option would cease‌ Veterans’ disability compensation for the seven medical conditions GAO identified. Under the option’s first alternative, Veterans now receiving compensation for those conditions would have their compensation reduced or eliminated, and Veterans who applied for compensation for those conditions in the future would not be eligible for it. The second alternative would affect only new applicants for disability compensation. The option would not alter DoD’s disability compensation system.

    Effects on the Budget

    By CBO’s estimates, the savings from the first alternative, in which VA would no longer make payments to all Veterans for the seven medical conditions, would be $33 billion between 2020 and 2028. Most of the savings would result from curtailing payments to current recipients of disability compensation. In 2020, VA would no longer provide compensation for about 846,000 cases of those seven conditions, CBO estimates. That number would rise to 976,000 cases in 2028. (The number of Veterans affected by the option would be fewer than the number of cases because some Veterans would have more than one of the seven conditions.) In addition, CBO estimates that Veterans’ loss of eligibility for the seven conditions would result in fewer cases of DIC. The option would result in about 1,200 fewer of those cases in 2028, CBO estimates.

    Savings from the second alternative, in which only new applicants for disability compensation would be ineligible to receive payments for the seven conditions, would be about $4 billion over the 2020–2028 period, CBO estimates. The number of cases for which VA would not provide compensation would increase from 15,000 in 2020 to approximately 225,000 by 2028.

    The largest source of uncertainty in estimating the savings from this option is the estimate of the population receiving benefit payments for each of the seven conditions. CBO projects the number of Veterans receiving payments for those conditions on the basis of historical information on the number of Veterans receiving a disability rating for such conditions, the growth of the overall disability compensation program, the mortality rate of the disability compensation population, and other factors. Savings per Veteran are estimated by calculating the average rating and payment for each of the seven conditions and reducing the Veteran’s payment by a corresponding amount.

    Other Effects

    An argument in support of this option is that it would make the disability compensation system for military Veterans more comparable to civilian systems. Few civilian employers offer long-term disability benefits, and among those that do, benefits do not typically compensate individuals for all medical problems that developed during employment.

    An argument against this option is that Veterans’ compensation could be viewed as a lifetime indemnification the federal government owes to people who become disabled to any degree during service in the armed forces.

    Option 35: End VA’s Individual Unemployability Payments to Disabled Veterans at the Full Retirement Age for Social Security

    CBO 002

    Background

    In 2017, 4.5 million Veterans with medical conditions‌or injuries that were incurred or that worsened during active-duty service received disability compensation from the Department of Veterans Affairs (VA). The amount of compensation such Veterans receive depends on the severity of their disabilities (which are rated between zero and 100 percent in increments of 10), the number of their dependents, and other factors—but not on their income or civilian employment history.

    In addition, VA may increase certain Veterans’ disability compensation to the 100 percent level, even though VA has not rated their service-connected disabilities at that level. To receive the supplement, termed an Individual Unemployability (IU) payment, disabled Veterans must apply for the benefit and meet two criteria. First, Veterans generally must be rated between 60 percent and 90 percent disabled. Second, VA must determine that Veterans’ disabilities prevent them from maintaining substantially gainful employment—for instance, if their employment earnings would keep them below the poverty threshold for one person. In 2017, for Veterans who received the supplement, it boosted their monthly VA disability payment by an average of about $1,200. In September 2017, about 380,000 Veterans received IU payments. Of those Veterans, the Congressional Budget Office estimates, about 180,000 were age 67 or older. That age group has‌ been the largest driver of growth in the program.

    In addition, VA may increase certain Veterans’ disability compensation to the 100 percent level, even though VA has not rated their service-connected disabilities at that level. To receive the supplement, termed an Individual Unemployability (IU) payment, disabled Veterans must apply for the benefit and meet two criteria. First, Veterans generally must be rated between 60 percent and 90 percent disabled. Second, VA must determine that Veterans’ disabilities prevent them from maintaining substantially gainful employment — for instance, if their employment earnings would keep them below the poverty threshold for one person. In 2017, for Veterans who received the supplement, it boosted their monthly VA disability payment by an average of about $1,200. In September 2017, about 380,000 Veterans received IU payments. Of those Veterans, the Congressional Budget Office estimates, about 180,000 were age 67 or older. That age group has‌ been the largest driver of growth in the program.

    Option

    This option consists of two alternatives, both beginning in January 2020. Under the first alternative, VA would stop making IU payments to Veterans age 67 or older (the full retirement age for Social Security benefits for those born after 1959). That restriction would apply to both current and prospective recipients. Therefore, at age 67, VA disability payments would revert to the amount‌ associated with the rated disability level.

    Under the second alternative, Veterans who begin receiving the IU supplement after January 2020 would no longer receive those payments once they reach age 67.‌

    In addition, no new applicants who are age 67 or older would be eligible for IU benefits after that date. Unlike under the first alternative, Veterans who are already receiving IU payments and are age 67 or older after the effective date of the option would continue to collect the IU supplement.

    Effects on the Budget

    By CBO’s estimates, the savings from the first alternative, in which Veterans age 67 or older may no longer collect the IU supplement, would be $48 billion between 2020 and 2028. That reduction in spending is the result of a decrease in the number of Veterans who would qualify for the supplement. CBO estimates that the number of Veterans who would no longer receive or qualify for the IU supplement would total nearly 235,000 in 2020. That number would increase to 382,000 Veterans in 2028, with savings totaling $7 billion in that year. Disability payments for those who lost eligibility would be reduced by an average of $1,300 per month in 2020, increasing to $1,600 by 2028.

    The savings from the second alternative, which would end IU payments to new recipients and bar applications from Veterans who are age 67 or older after the effective date of the option, would total $7 billion between 2020 and 2028. The number of Veterans who would not collect IU payments under this alternative grows from 8,300 in 2020 to 83,000 in 2028. The savings from this alternative equal $2 billion in that final year of the projection period.

    CBO projects the number of Veterans receiving the IU supplement on the basis of past growth in the number of new recipients (by age) and adjusts that number to account for the morbidity of beneficiaries and other factors, such as the backlog of disability cases to be decided. For IU recipients who would no longer receive the supplement under this option, CBO determines per-Veteran savings by reducing the payment amount to a level that corresponds to the Veteran’s overall disability rating.

    CBO estimates that rating on the basis of historical data on IU recipients and anticipated changes in the distribution of their ratings. The largest sources of uncertainty in the estimate of savings over the next 10 years are CBO’s estimates of the number of participants who would be affected by the option and of the disability ratings of those affected. Changes in policy, such as increased efforts by VA and private organizations to inform Veterans about this benefit or the level of assistance given by those entities in developing a claim, may affect the number of applicants with fully developed claims, and consequently contribute to uncertainty regarding the savings from this option.

    Other Effects

    One argument for this option is that most Veterans older than Social Security’s full retirement age would not be in the labor force because of their age, so their lack of earnings would probably not be attributable to service-connected disabilities. In 2017, about 35 percent of men ages 65 to 69 were in the labor force; for men age 75 or older, that number dropped to about 10 percent. In addition, most recipients of IU payments who are older than 65 would have other sources of income: They would continue to receive regular VA disability payments and might also collect Social Security benefits. (Recipients of the IU supplement typically begin collecting it in their 60s and probably have worked enough in prior years to earn Social Security benefits.)

    An argument for retaining the current policy is that IU payments should be determined solely on the basis of a Veteran’s ability to work due to his or her disabilities and that age should not be a factor in deciding a claim. In addition, replacing the income from the IU supplement would be hard or impossible for some disabled Veterans. If they had been out of the workforce for a long time, their Social Security benefits might be small, and they might not have accumulated much in personal savings.

    Option 36: Reduce VA’s Disability Benefits to Veterans Who Are Older Than the Full Retirement Age for Social Security

    CBO 003

    Background

    In 2017, 4.5 million Veterans with medical conditions or injuries that occurred or worsened during active duty service received disability compensation from the Department of Veterans Affairs (VA). Service-connected disabilities vary widely in severity and type: Some examples are the loss of a limb, migraines, and hypertension. The amount of base compensation Veterans receive depends on the severity of their disabilities (which are rated between zero and 100 percent in increments of 10). In calendar year 2018, base compensation rates generally ranged from $135 to $2,975 per month. Additional compensation may be awarded to Veterans based on the number of their dependents and other factors. By law, VA’s disability payments are intended to offset the average earnings that Veterans would be expected to lose given the severity of their service-connected medical conditions or injuries, whether or not a particular Veteran’s condition actually reduced his or her earnings. Disability compensation is not means-tested: Veterans who work are eligible for benefits, and, in fact, most working-age Veterans who receive such compensation are employed. (In contrast, Social Security Disability Insurance pays cash benefits to adults who are judged to be unable to perform “substantial” work because of a disability, and they eventually lose the benefits if they return to work and earn more than the program’s limit on earnings—for most beneficiaries, $1,180 a month in calendar year 2018. Those Social Security disability benefits are based on previous earnings and usually rep ace wages and salaries on less than a one-to-one basis.)

    Even after Veterans reach full retirement age, VA’s disability payments continue at the same level. By contrast, the income that people receive after they retire (from Social Security or private pensions) usually is less than their earnings from wages and salary before retirement. For instance, the ratio of benefits from Social Security to average lifetime earnings is usually much less than 1 to 1. For workers who have earned relatively low wages over their career, the ratio is around one-half; for higher-income workers, it is around one-quarter or less. As a consequence, once Veterans reach retirement age, the combination of their VA disability payments and Social Security benefits may be more than the income of comparable Veterans without a service-connected disability. In 2016, about 87 percent of Veterans who received VA’s disability compensation and who were age 67 or older were out of the labor market.

    Option

    Under this option, VA would reduce disability compensation payments to Veterans by 30 percent at age 67 for all Veterans who begin receiving those benefits after January 2020. (Social Security’s full retirement age varies depending on beneficiaries’ birth year; this option uses age 67, which is the full retirement age for people born after 1959.) Social Security and pension benefits would be unaffected by this option. Veterans who are already collecting disability compensation as of January 2020 would see no reduction in their VA disability benefits when they reach age 67.

    Effects on the Budget

    By the Congressional Budget Office’s estimates, the savings from this option would be about $11 billion between 2020 and 2028. CBO estimates that the number of Veterans age 67 and older who would no longer receive their full preretirement disability compensation from VA would increase from 60,000 in 2020 to about 470,000 in 2028. On average, Veterans’ benefit would be reduced by about $320 per month in 2020, increasing to a reduction of $385 per month in 2028.

    The largest source of uncertainty in the estimate of savings over the next 10 years involves determining the number of new disability beneficiaries who will be 67 after January 2020. The number of Veterans age 67 and older who receive disability compensation has increased in the past decade as Vietnam Veterans have aged. CBO projects that the number of new recipients age 67 and older will decline in the coming years as the share of the Veterans’ population in that age group falls. However, the health of the Veteran population also affects the number of older Veterans on the rolls, as do outreach efforts by VA and others to inform Veterans about the benefit and other factors.

    Other Effects

    Because earnings from wages and salaries typically decline when people retire, this option would better align Veterans’ benefits with the loss in income after retirement that is typical of the general population.

    An argument against this option is that it would reduce the support available to disabled Veterans. If they had been out of the workforce for a long time, their Social Security benefits might be small, and they might not have accumulated much personal savings. In addition, VA’s disability payments may be considered compensation owed to Veterans—particularly combat Veterans— because they faced special risks and became disabled in the course of their military service.

    The reduction in VA’s disability benefit could affect older Veterans’ participation in the labor force and the age at which they would begin claiming Social Security benefits. This option might induce some older Veterans with disabilities to remain in the labor force longer or work more hours than they would have under the current system in order to preserve their income; some Veterans, however, would not be able to maintain employment that would accommodate their disabilities as they age.

    Option 37: Narrow Eligibility for VA’s Disability Compensation by Excluding Veterans with Low Disability Ratings

    CBO 004

    Background‌

    In 2017, 4.5 million Veterans with medical conditions or injuries that were incurred or that worsened during active-duty service received disability compensation from the Department of Veterans Affairs (VA). Such

    service-connected disabilities range widely in severity and type, from migraines and treatable hypertension to the loss of limbs. The base amount of compensation Veterans receive depends on the severity of their disabilities, which are rated between zero and 100 percent in increments of 10; a 100 percent rating means that Veterans are considered totally disabled and probably unable to support themselves financially. The most common rating is 10 percent. In 2018, base compensation rates generally ranged from about $140 to $3,000 per month. Additional compensation may be awarded based on the presence of dependents and other factors. The amount of compensation is intended to offset the average amount of income Veterans lose as a result of the severity of their service-connected medical conditions or injuries.

    Option

    Under this option’s first alternative, VA would narrow eligibility for compensation to Veterans with disability ratings of 30 percent or higher. The second alternative would impose the same limits on eligibility, but it would only affect new applicants for disability compensation.

    Effects on the Budget

    By the Congressional Budget Office’s estimates, the savings from the first alternative, in which current and future recipients would be ineligible for payments for disability ratings of less than 30 percent, would be $38 billion over the 2020–2028 period. In 2017, about 1.3 million Veterans received compensation for a rating of less than 30 percent. Under current law, that number is projected to rise to 1.5 million in 2020 and then to 1.9 million by 2028. Under the first alternative, VA would discontinue compensation for those Veterans.

    Savings from the second alternative, in which VA would no longer make payments for future cases in which Veterans’ disability rating was less than 30 percent, would be $6 billion between 2020 and 2028. The number of Veterans who would no longer qualify for compensation under this alternative would be small at first but would rise to 500,000 by 2028.

    Additional savings would be possible if eligibility was further limited to Veterans with disability ratings higher than 30 percent. However, the amount saved would not be proportional to the level of the disability rating, because neither payment amounts nor the beneficiary population increase at the same rate as their associated disability ratings.

    The largest source of uncertainty in estimating the savings from this option is the future size of the population with disability ratings of less than 30 percent. CBO projects that number based on the number of Veterans who received such disability ratings in the past, the growth of the overall disability compensation program, the mortality rate of Veterans receiving disability compensation, and other factors.

    Other Effects

    One argument for this change is that it would permit VA to concentrate spending on Veterans with the greatest impairments. Furthermore, there may be less need than in the past to compensate Veterans with milder impairments. Many civilian jobs now depend less on physical labor than was the case in 1917, when the disability-rating system was first devised; the rating system that is the basis for current payments has not undergone major revisions since 1945. In addition, medical care and rehabilitation technologies have made great progress. Thus, a physical limitation rated below 30 percent might not substantively reduce a Veteran’s earning capability, because it would not preclude work in many modern occupations.

    An argument against this option is that Veterans’ compensation could be viewed as a lifetime indemnification the federal government owes to people who become disabled to any degree during service in the armed forces.

    Discretionary Spending Options

    Option 30: End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8

    CBO 005

    Background

    The Department of Veterans Affairs (VA) offers a wide range of medical care to Veterans, including providing inpatient and outpatient care, filling prescriptions, and offering assistive devices to Veterans. That care is provided at little or no charge to enrolled Veterans. Veterans who seek medical care from VA are assigned to one of eight priority groups on the basis of disability status and income, among other factors. For example, enrollees in priority groups 1, 2, and 3 generally have service-connected disabilities (as determined by VA), and their income does not affect eligibility for VA medical care. Veterans in priority group 7 do not have service-connected disabilities, and their annual income is above a national threshold (about $32,000 for a household of one in 2017) set by VA but below a (generally higher) geographically adjusted threshold.

    Those in priority group 8 do not have service-connected disabilities, and their income is above both the national and the geographic thresholds. In 2017, about 2 million Veterans were in priority groups 7 and 8.

    Although Veterans in priority groups 7 and 8 do not pay enrollment fees, they make copayments, and VA can bill their private insurance plans for reimbursement. Together, the copayments and reimbursements cover about 14 percent of VA’s costs of care for those groups. In 2017, VA incurred $6 billion in net costs for those patients, or about 9 percent of the department’s net spending for Veterans’ medical care. When priority groups were established in 1996, the Secretary of the Department of Veterans Affairs was given the authority to decide which groups VA would serve each year.

    Because of budgetary constraints, VA ended enrollment of Veterans in priority group 8 in 2003. Veterans who were enrolled at that time were allowed to remain in VA’s health care system. In 2009, enrollment was reopened to certain Veterans in that group.

    Option

    This option would end enrollment in VA’s health care system for Veterans in priority groups 7 and 8: No new enrollees would be accepted, and current enrollees would be disenrolled starting in October 2019.

    Effects on the Budget

    The Congressional Budget Office estimates that ending enrollment for Veterans without service-connected disabilities and whose income exceeds the national threshold would reduce discretionary spending by $57 billion from 2020 through 2028. Under this option, about 2 million fewer Veterans would be enrolled in VA’s health care system each year. Because not all enrolled Veterans use VA medical care each year, an average of about 1 million Veterans would no longer be treated by VA in any given year. The result would be an average annual savings of about $6,000 per disenrolled patient over that period.

    Mandatory spending for other federal health care programs—such as Medicare and Medicaid and federal subsidies provided through the health insurance marketplaces established under the Affordable Care Act— would increase because enrollees would seek medical care through other sources. (More than half of the enrollees in priority groups 7 and 8 are over the age of 65.) CBO estimates that, overall, mandatory spending would option.

    The greatest sources of uncertainty in this estimate of savings over the next 10 years are CBO’s estimates of the number of Veterans affected by the option and how their reliance on other forms of health care might change. Under current law, enrollees in priority groups 7 and 8 receive nearly 20 percent of their medical care from VA. As the health care delivery and insurance markets evolve over the projection period, that pattern of reliance might change.

    Other Effects

    An advantage of this option is that VA could focus on Veterans with the greatest service-connected medical needs and the fewest financial resources. In 2017, nearly 90 percent of enrollees in priority groups 7 and 8 had other health care coverage, mostly through Medicare or private health insurance. As a result, the vast majority of Veterans who would lose access to VA health care would have other sources of coverage, including the health insurance marketplaces.

    A disadvantage of the option is that Veterans in priority groups 7 and 8 who have come to rely on VA, even in part, might find their health care disrupted. Some Veterans—particularly those with income just above the thresholds—might find it difficult to obtain other care.

    Revenue Options

    CBO 006

    Include Disability Payments From the Department of Veterans Affairs in Taxable Income

    Background

    The goal of the Department of Veterans Affairs (VA) disability system is to compensate Veterans for earnings lost as a result of service-connected disabilities. By law, that compensation is meant to equal the average reduction in earnings experienced by civilian workers with similar medical conditions or injuries.

    Compensable service-connected disabilities are medical problems incurred or aggravated during active duty, although not necessarily during the performance of military duties. Applicable conditions range widely in severity and type, from scars and hypertension to the loss of one or more limbs. The amount of a Veteran’s base payment is linked to his or her composite disability rating, which can account for multiple disabilities and is expressed from zero to 100 percent in increments of 10 percentage points. Lower ratings generally reflect that Veterans’ disabilities are less severe; in 2017, about one in three recipients of disability compensation were rated as either 10 percent or 20 percent disabled. Beneficiaries do not have to demonstrate that their conditions have reduced their earnings or interfere with their daily functioning.

    Disability compensation is not means-tested (that is, restricted to those with income below a certain amount), and payments are exempt from federal and state income taxes. Veterans who have a job are eligible for benefits, and most working-age Veterans who receive disability benefits are employed. Payments are in the form of monthly annuities and typically continue until the beneficiary’s death. Because disability benefits are based on VA’s calculation of average earnings lost as a result of specific conditions, payments do not reflect disparities in earnings that might result from differences in Veterans’ education, training, occupation, or motivation to work.

    Although the number of Veterans in the total population is declining, the number receiving VA disability payments has risen each year. Both the share of Veterans receiving disability payments and the average amount of those payments have increased. Today, about 20 percent of Veterans receive disability compensation; in 2000, only 9 percent of all Veterans did. In 2017, VA paid about 4.6 million Veterans an average of $15,400 each in disability benefits. Of those Veterans, 1.3 million had a disability rating of 20 percent or less; their average payment was $2,200.

    Option

    This option consists of two alternative approaches to taxing VA disability benefits under the individual income tax. The first alternative would include all such disability payments in taxable income. The second alternative would include disability payments in taxable income only for Veterans with a disability rating of 20 percent or less.

    Effects on the Budget

    The staff of the Joint Committee on Taxation (JCT) estimates that, if implemented, the first alternative would increase federal revenues by $93 billion from 2019 through 2028. The second alternative would raise federal revenues by a smaller amount—$4 billion—over that period, according to JCT’s estimates.

    The total benefits included in taxable income would be much larger under the first alternative than under the second alternative. As a result, the second alternative would raise federal revenues by a much smaller amount. Estimates of both alternatives reflect the scheduled increase in individual income tax rates that begins

    in 2026.

    The estimates are uncertain for two main reasons. First, they rely on the Congressional Budget Office’s projections of the Veteran population and disability compensation, which are inherently uncertain. Second, they rely on estimates of how individuals would respond to the change in tax policy. Those estimates are based on observed responses to prior changes in policy, which might differ from the response to this option.

    Other Effects

    An argument in favor of the option is that including disability payments in taxable income would increase the equity of the tax system. Taxing VA disability payments would make tax liabilities similar among taxpayers with comparable amounts of combined income (from disability payments, earnings, and other sources). Eliminating income exclusions in the tax system moves the system toward one in which people in similar financial and family circumstances face similar tax rates. Further, military disability retirement pay—a type of disability compensation received by those who retired from service because of a disability—is included in taxable income unless it is related to combat injuries. Including VA disability benefits in taxable income would make the treatment of the two types of benefits more similar.

    An argument against this option is that VA disability payments are connected to military service, which is unlike civilian employment because it confers distinctive benefits to society and imposes special risks on service members. By that logic, enhancements to pay and benefits for service members — including the current exclusion of disability compensation from taxation — could be seen as a way to recognize the hardships of military service. However, Veterans are entitled to disability payments even for medical conditions unrelated to military duties, as long as those conditions were incurred while the individuals were serving on active duty. By contrast, disability benefits received by civilian workers for nonwork-related injuries are taxable if the employer paid the premiums.

    FULL REPORT

  • Shut Down

     

    The talk on Capitol Hill is that the government will shut down over border security as we march into Christmas, which may have some Veterans concerned based on past experiences.

    Around 8 years ago, a government shutdown did impact Veterans where some did not receive their disability pay or other benefits. VA took no substantive steps to ensure Veterans were prepared for rough waters going into November at the time.

    Fortunately, the Department of Veterans Affairs is fully funded through fiscal year 2019 according to the Secretary:

    “Thanks to the leadership of President Trump and Congress, VA is fully funded for fiscal year 2019, and in the event of a partial government shutdown, all VA operations will continue unimpeded.

    “We thank the president and Congress for their commitment to our nation’s heroes in funding VA, and stand ready to provide all of the VA benefits and services our Veterans have earned.”

    Source

    {jcomments on}

     

  • Lack of Controls

     

    Review finds lack of controls, documentation

    INDIANAPOLIS — A state audit issued Friday sharply criticized the Indiana Department of Veterans Affairs and the Indiana Veterans’ Affairs Commission for its “lack of controls” and mishandling of the Military Family Relief Fund, money generated from specialty license plates meant to help Veterans with food, utilities and other needs.

    The audit comes after a Call 6 Investigation found the former director of the Indiana Department of Veterans Affairs Jim Brown approved some of his own employees to receive benefits from the Military Family Relief Fund beyond the $2,500 lifetime limit while the agency denied hundreds of other Veterans.

    The 17-page audit released by the State Board of Accounts found from July 1, 2014 to Nov. 30, 2018, at least 88 applicants received more than $2,500 from the Military Family Relief Fund, totaling $350,493.

    Five of the applicants who received more than the $2,500 limit were employed by the Indiana Department of Veterans Affairs, the audit read.

    A resolution used by IDVA states “at the discretion of the director of the IDVA on a case by case basis and with a demonstrated, justified need, a Veteran’s lifetime award may exceed $2,500.”

    However, in a sample of expenditures, the State Board of Accounts found applicants who exceeded the $2,500 lifetime maximum did not provide evidence of a “demonstrated, justifiable need” as required.

    More than 4,604 applicants were approved for Military Relief Fund Benefits between July 2014 and November 30, 2018 totaling $8.8 million.

    During that time, 979 applicants were denied for various reasons including that they had exceeded the $2,500 limit, they did not provide evidence of financial hardship, they did not meet the minimum months (12)of active duty, or they were not an Indiana resident.

    The newly released audit also found dozens of people who received benefits from the Military Family Relief Fund did not provide documentation proving their hardship was a result of their military service, as required by Indiana law.

    The law also says only qualified service members are supposed to receive benefits, however, the State Board of Accounts found a recipient who was dishonorably discharged and another who did not provide discharge documentation.

    The State Board of Accounts said IDVA did not provide sufficient internal controls over the Military Family Relief Fund, including the following deficiencies:

    • Procedures to document justification and approval for awards over the $2,500 lifetime maximum.
    • The effective date of the Standard Operating Procedures was not included.
    • How documentation to support the applicant's eligibility will be maintained.
    • What documentation is acceptable to support the applicant's eligibility.
    • Procedures to follow if the applicant is an employee of the IDVA.
    • Procedures to track awards provided to recipient in total.
    • Procedures to document the person who processed and made the initial determination of the application.
    • Procedures to document the person who made the final review of initial determination.

    At a Military Veterans Coalition meeting Friday, Veterans were upset by the State Board of Accounts’ findings.

    “I am surprised by the numbers,” Lisa Wilken, Veteran and advocate, said. “We knew that some IDVA employees had gotten above the $2,500, but we had no idea how many individuals throughout several years had received more than the $2,500 so I was very surprised.”

    Wilken blew the whistle in our original Call 6 Investigation about misuse of the Military Family Relief Fund.

    Wilken said the audit outlined exactly what she’s been claiming.

    “It does validate what I’ve been saying all along,” Wilken said. “We would never make these allegations unless we had proof something was going on that shouldn’t be.”

    IDVA director Jim Brown resigned effective Dec. 28, but Wilken said the governor needs to look at the rest of the agency’s leadership.

    “What we haven’t seen is accountability. We also need checks and balances and controls put on the Military Family Relief Fund,” Wilken said. “The most important thing we need is we need our Indiana Veterans’ Commission to oversee this fund in a way that Veterans expect them to do.”

    Governor Eric Holcomb has not yet named Brown’s replacement.

    The State Board of Accounts audit also criticized the Indiana Veterans’ Affairs Commission, a panel appointed by the governor, for not having internal controls in place.

    The audit found from 2012 to 2018, the commission did not provide documentation on votes, copies of rules and resolutions created, as well as signatures by commission members on meeting minutes.

    State auditors questioned why the commission had not adopted a final rule for the provisions of grants from the Military Family Relief Fund, even though a formal rulemaking process began in May 2018.

    Brigadier General James Bauerle told RTV6 Friday he too raised concerns about misuse of the fund back in 2014 when he was chairman of the Veterans’ Affairs Commission.

    “People were abusing it and asking for $5,000 a year and getting it,” Bauerle said. “That’s abuse.”

    Bauerle said his commission changed the limit to $2,500.

    Bauerle blamed former IDVA director Jim Brown and other IDVA leadership as well as the commission’s legal counsel for not fixing the problem sooner.

    “It’s clearly a scandal,” Bauerle said. “It’s due to a lack of leadership and good judgment on the part of the Indiana Department of Veterans Affairs. IDVA abused the privilege from a management perspective in the applications they approved and the fact that there was not a true need.”

    The SBOA audit also found IDVA and the commission did not have rules or written policies on the Indiana State Veterans’ Cemetery, Veterans Disability Clinic Fund, Veterans’ Affairs Trust Fund, Grants for Veterans’ Services, and Hoosier Women Veterans Program.

    In a written response to state auditors, the chairman of the Indiana Veterans’ Affairs Commission and former IDVA director Jim Brown vowed to make improvements.

    “The Commission and Department will improve written policies and procedures over each of the enumerated programs (except for the Veterans Disability Clinic Fund, for which no monies have never been appropriated),” read the response. “In addition, future Commission minutes will record votes, be appropriated signed, and documentation of policies created will be preserved.”

    The response, also indicated that the commission was operating under several resolutions to manage the Military Family Relief Fund.

    “We understand that those policies and procedures did not provide the necessary system of controls,” read the response.

    On Thursday, the Veterans’ Affairs Commission approved new rules that say IDVA staff can only allow Veterans to receive up to $2,500 from the Military Family Relief Fund and anything beyond the cap has to go through the commission.

    Commission member and lawmaker Rep. Karlee Macer, D-Indianapolis, pointed out legislation is in the works that would strip the Veteran Affairs Commission of its oversight.

    “Now legislation is being worked on to completely undo everything that we're doing, so it's a complete waste of time,” Macer said. “It will be groundhog day for me again.”

    Call 6 Investigates caught up with the commission chairman before the meeting and asked for her reaction to our findings that IDVA employees received more than the $2500 limit.

    “Perhaps it wasn’t the wisest made, but it wasn’t illegal,” Chairman Maj. Gen. Erika Steuterman said.

    The rules approved by the commission now head to the Attorney General’s office and the Governor’s office for review and approval.

    After that, the commission can make amendments to the rules.

    The Veteran Affairs Commission also plans to monitor any legislation that will impact IDVA, the commission and the Military Family Relief Fund.

    Wilken said the commission also needs to look into why National Guard members are being denied assistance from the Military Family Relief Fund.

    Former IDVA director Jim Brown has not responded to repeated requests for an on camera interview.

    Call 6 Investigates spoke with Holcomb on Friday who said he had not yet seen the audit.

    “The rules process concluded yesterday and will go to the Attorney General and then to my office but I'm happy with the progress looking forward to getting a new leader in there who will make all the changes that are recommended, but need to be made," Holcomb said.

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  • Robert Wilkie 17

     

    In President Trump’s fiscal year (FY) 2020 budget, he has once again demonstrated his ongoing commitment to Veterans, ensuring greater quality, efficiency and timely service that our Veterans have earned and deserve.

    The budget funds our highest priorities, including the Maintaining Internal Systems and Strengthening Integrated Outside Networks Act (MISSION Act) implementation, Electronic Health Record Modernization, Business Transformation and Customer Service. It also provides a significant increase for our top clinical priority — suicide prevention.

    VA’s portion of the budget is based on its solid financial foundation. VA recently received its 20th consecutive clean audit opinion, the highest possible, by the Inspector General and a qualified audit firm.

    With VA’s financial strength we are achieving noticeable results with the resources provided:

    Dartmouth’s Annals of Internal Medicine reported that “VA health care is as good, or better, than any care our American people receive in any part of the country.”

    Journal of the American Medical Association study found Veterans’ access to VA care “appears to have improved between 2014 and 2017 and appears to have surpassed access in the private sector for three of the four specialties evaluated.”

    VA has rapidly moved beyond being on the cusp of the most significant transformation in VA’s history to being fully immersed in the transformation campaign. The FY 2020 budget reflects this reality.

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  • Largest VA Budget

     

    WASHINGTON — President Donald Trump signed the Department of Veterans Affairs fiscal 2019 budget into law on Friday, giving the department a funding boost of more than 6 percent and pushing the agency’s total spending over $200 billion for the first time.

    The president finalized the bill at a ceremony held in the North Las Vegas VA Medical Center, surrounded by federal officials and local Veterans. He praised the massive spending measure as another promise kept by his administration.

    “With this funding bill we have increased the VA’s budget to the largest ever,” he said. “We are delivering the resources to implement crucial VA reforms.”

    The bill includes $1.1 billion for the start of a VA electronic health records overhaul and $400 million for opioid abuse prevention within the department, both efforts touted by Trump in the past.

    The final deal also includes a $1.75 billion increase in money tied to the VA Mission Act, passed at the start of the summer. The legislation will rewrite the department’s community care programs, expanding Veterans ability to access private health care at taxpayer expense.

    That money had stalled negotiations on the budget bill for months, and Democrats said they still are not satisfied with the short-term spending plug to cover what is expected to be an even bigger financial hole next year.

    “The bill the president signed today leaves a funding gap in May of 2019, expected to grow to more than $8 billion in fiscal year 2020,” Sen. Patrick Leahy, D-Vt., the top Democrat on the Senate Appropriations Committee, said in a statement after the signing.

    “We do our Veterans no favors when we make promises we do not keep, and I will continue to fight in Congress to make sure they receive the care they deserve.”

    The VA funding legislation also includes $10.3 billion in military construction funding for fiscal 2019 as well as the full-year budgets for the legislative branch and federal energy programs.

    Trump’s signature came just a day after he blasted a similar sprawling budget package focused on the Department of Defense as a “ridiculous spending bill” because it omitted border wall funding he has demanded from Congress.

    The House is expected to finalize that legislation next week. If the president chooses to Veto it, most federal departments would face a partial government shutdown. VA would be exempted from those problems, however, since their fiscal 2019 funding is now in place.

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  • VA Spending

     

    WASHINGTON — President Donald Trump is proposing another big increase in Veterans Affairs spending for fiscal 2020 — but also reintroducing a controversial cost-savings measure that Veterans groups have long opposed.

    The increased VA spending — up to $216 billion, an increase of $19 billion or 9.5 percent from fiscal 2019 — comes as a host of non-defense programs face steep cuts in the budget proposal. The Departments of Transportation, Education, Energy and State all face double-digit funding cuts under the president’s plan, which is already facing fierce opposition from Democrats in Congress.

    In a statement, VA Secretary Robert Wilkie said the increase in his department’s budget “supports the most significant transformation of VA since its inception, positioning the department as the premier provider for Veterans’ services and benefits.” He also called it a continuation of the administration’s commitment to supporting Veterans.

    Under Trump and his predecessors, the department has seen steady budget increases since the start of the wars in Iraq and Afghanistan.

    The fiscal 2020 budget request is nearly double the total VA funding level from 10 years ago and more than four times the total in fiscal 2001, when the entire budget was about $45 billion.

    But a 9.5 percent jump in total VA funding would be among the largest single-year increases over that span. The total includes about $123 billion in mandatory funding and $93 billion in discretionary programs.

    Medical costs alone account for more than $80 billion of the discretionary money. Community care funding will increase by about $1 billion from fiscal 2019 levels, accounting for about 19 percent of the total VA medical budget.

    That’s in line with the ratio of spending in recent years for appointments and care outside the VA system, but it is certain to undergo extra scrutiny as department leaders introduce new rules for community care eligibility in June.

    The overhaul of private-sector medical appointment availability has been a centerpiece of Trump’s promised VA reforms but has also draw criticism as a privatization of VA responsibilities. Some Veterans groups worry too much funding will be shifted to those programs and away from VA health care.

    Another budget item certain to draw criticism is the reintroduction of plans to “round down” Veterans’ annual cost-of-living increases to the nearest whole dollar. The move would cost an individual Veteran no more than $12 annually, but it has been decried by Veterans groups in the past as unfairly using their earned benefits to balance the budget.

    White House officials have countered that rounding down annual benefit hikes was VA policy from the late 1990s until 2013. Returning to the move will save $36 million in fiscal 2020 alone, and more than $2 billion over the next 10 years.

    Administration planners also want to place education benefit caps on flight training schools, a proposal that many Veterans advocates have backed but has faced strong opposition from education lobbyists. That move would save about $30 million annually.

    Under the president’s plan, VA would spent more than $1.6 billion in fiscal 2020 on improvements to electronic medical records, part of the department’s 10-year plan to bring those files in line with Defense Department health computer systems.

    That’s up nearly 45 percent from spending totals this year and has raised concerns from some congressional Republicans in recent months.

    While most VA accounts would see significant increases, medical research would be cut by about $17 million (2 percent), and construction accounts would be cut by more than $1.3 billion (45 percent). Both moves are likely to raise concerns about the administration’s long-term plans to maintain and advance department medical care.

    About $9.4 billion would be spent on programs to prevent suicide among Veterans (4.5 percent more than fiscal 2019) and about $1.8 on outreach to homeless Veterans. The number of full-time VA employees would rise to nearly 394,000 individuals.

    Per law, the budget request also includes advance appropriations for fiscal 2021, to ensure a government shutdown or other political stalemate won’t disrupt any needed medical or support programs. That funding will top $217 billion.

    Lawmakers will spend the next several months debating both the details of the VA funding proposal and how it fits with Trump’s broader budget priorities. Congress must adopt a new federal budget by Sept. 30 or face another partial government shutdown.

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  • VA Budget

     

    President Donald J. Trump is proposing a total of $220.2 billion in his fiscal year (FY) 2020 budget for the U.S. Department of Veterans Affairs (VA), a 9.6 percent increase above fiscal 2019.

    “The budget request will ensure the nation’s Veterans receive high-quality health care and timely access to benefits and services,” said VA Secretary Robert Wilkie. “The budget supports the most significant transformation of VA since its inception, positioning the department as the premier provider for Veterans’ services and benefits. This is a significant increase in VA funding and demonstrates the administration’s commitment to supporting our Veterans.”

    The FY 2020 budget includes $97 billion (an increase of $6.8 billion, or 7.5 percent) in discretionary funding, including resources for health care, benefit administration, and national cemeteries, as well as $123.2 billion (an increase of $12.3 billion or 11.1 percent) in mandatory funding above 2019 for benefit programs inclusive of Compensation and Pensions, Readjustment Benefits, Housing and Insurance. This budget provides robust funding for the secretary’s top priorities.

    MISSION Act: $8.9 billion for implementation of the Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (MISSION Act) to provide greater choice on where Veterans receive their care, maintain care for current Choice Program users, provide a new urgent care benefit and expand the Caregivers program.

    Electronic Health Record Modernization (EHRM): $1.6 billion ($496 million above FY 2019) to create and implement a single longitudinal electronic health record for military service members from their active duty to Veteran status, and ensure interoperability with the Department of Defense. The increase will support ongoing activities at the three initial deployment sites and the deployment to further sites, as well as additional site assessments.

    Transforming Business Systems:Funds the continued deployment of a modern integrated financial and acquisition management system ($184.9 million) and implementation of the Defense Medical Logistics Standard Support ($36.7 million).

    Improving Customer Service: $8.1 million to maintain VA’s trajectory of improving its customer service. The results of a recent customer-experience feedback survey of Veterans regarding their trust of the department’s health care outpatient services showed ”trust scores” for outpatient services increased from 84.7 percent in June 2017 to 87.9 percent in January 2019.

    Preventing Veteran Suicide: $9.4 billion ($426 million above 2019) for mental health services, which includes $222 million for suicide-prevention outreach, a $15.6 million increase over 2019.

    Women’s Health: $547 million ($42 million above 2019) for gender-specific women’s health care. This increase will help meet VA’s goals of developing Designated Women’s Health Primary Care Providers at every site where women access VA care, and improve the availability and quality of services to women Veterans.

    Capital Investments: $1.6 billion for major and minor construction, including $410 million for the construction of a new hospital in Louisville, Kentucky, and $150 million for the Manhattan, New York, medical center.

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  • DVA 003

     

    Newly released emails about the three Trump associates who secretly steered the Department of Veterans Affairs show how deeply the trio was involved in some of the agency’s most consequential matters, most notably a multibillion-dollar effort to overhaul electronic health records for millions of Veterans.

    Marvel Entertainment chairman Ike Perlmutter, West Palm Beach physician Bruce Moskowitz and lawyer Marc Sherman — part of the president’s circle at his Mar-a-Lago resort in Florida — reviewed a confidential draft of a $10 billion government contract for the electronic-records project, even though they lack any relevant expertise.

    In preparing the contract, the agency consulted more than 40 outside experts, such as hospital executives, according to the records, which were released under the Freedom of Information Act. The Mar-a-Lago trio were listed among those experts. Perlmutter, a comic book tycoon, appears on the list between representatives from the University of Washington Medical Center, Intermountain Healthcare and Johns Hopkins University.

    But none of the three men has served in the U.S. military or elsewhere in government, and none of them has expertise in health information technology or federal contracting.

    The list is one of hundreds of newly released documents about the so-called Mar-a-Lago Crowd’s sway over VA policy and personnel decisions. The records show them editing the budget for a government program, weighing in on job candidates and being treated as having decision-making authority on policy initiatives.

    In a June 2017 email, a VA official identified Perlmutter alongside then-VA Secretary David Shulkin as “top principles [sic].” In another message, Moskowitz named himself, Perlmutter and Sherman to an “executive committee.”

    Since the role of the troika was exposed by ProPublica in August, lawmakers have called their influence “wildly inappropriate” and “textbook corruption and cronyism.” A liberal Veterans group sued to block them under a Watergate-era sunshine law on advisory committees. House Democrats and the nonpartisan Government Accountability Office said they would investigate.

    VA Secretary Robert Wilkie has repeatedly distanced himself from the trio. His spokesman, Curt Cashour, blamed previous leaders. “Although his predecessors may have done things differently, Sec. Wilkie has been clear about how he does business,” Cashour said in a statement. “No one from outside the administration dictates VA policies or decisions — that’s up to Sec. Wilkie and President Trump. Period.”

    But that posture carries risk for Wilkie; his predecessor was fired after losing favor with the Mar-a-Lago Crowd.

    A representative of Perlmutter, Moskowitz and Sherman declined to comment, as did Shulkin and the White House.

    Before they could review the government contract in March 2018, Perlmutter, Sherman and Moskowitz had to sign non-disclosure agreements, according to the newly released records. Sherman edited the agreement to allow him, Perlmutter and Moskowitz to discuss the details with one another and with the president or other administration officials, according to the emails.

    The newly released emails also detail Moskowitz’s effort to get the VA and Apple to adapt his app. As a VA IT official described it in a May 2017 email, “We are utilizing the native iOS mobile app, Emergency Medical Center Tracker, that Dr. Moskowitz developed.”

    VA health officials offered their own ideas for how a collaboration with Apple could benefit Veterans, such as working on credentialing, data exchange and analytics, and suicide prevention research. But Moskowitz rejected the VA doctors’ ideas in favor of his own. “These are good areas but not the emergency ones which my group of experts have identified,” he said in a May 2017 email. “I sent an email to outline the recommendations.”

    Darin Selnick, a VA official who previously signed onto a 2016 proposal to dismantle the agency’s government-run health service, agreed with Moskowitz’s low estimation of the VA doctors’ input. “The VA staff has limited knowledge and experience, which is why you and the” academic medical centers “are so important to help the VA move forward,” Selnick wrote.

    Selnick, who is now a special adviser to Wilkie, was the point person working with Moskowitz on the app, the emails show. “I like you are the implementer for VA,” he told Moskowitz in March 2017.

    When Selnick said the VA’s information technology division could start working on the app, Moskowitz replied, “We need our specialist.” He then connected Selnick with his son Aaron, and Selnick introduced Aaron Moskowitz to Apple. (Aaron Moskowitz’s name is redacted from the emails, but his involvement was confirmed by four people familiar with the matter. He didn’t respond to a request for comment.)

    VA officials identified major problems with the app’s usability and functionality. “Some of the code needs to be refactored and even rebuilt,” the IT official said in the May email.

    Nevertheless, Moskowitz’s son Aaron joined a June 2017 conference call with executives from top medical systems and from Apple, including CEO Tim Cook. Moskowitz wanted the app discussed for five to seven minutes, according to the emails. After the call, Moskowitz named his son as one of the project’s “mid-level project managers.”

    In preparation for the conference call, Apple employees and medical experts circulated a memo that assessed Moskowitz’s proposals, which were identified as coming from “the VA and the White House.” In the memo, Apple’s experts pushed back on Moskowitz’s app, saying that the VA’s website already offered a similar tool and that the national databases needed to make the app accurate didn’t exist. Instead, the memo encouraged pursuing a different idea (giving Veterans a way to store their health data on their cellphones), which it said would “achieve the greatest benefit for our Veterans in the shortest amount of time.”

    Apple spokesman Josh Rosenstock didn’t answer requests for comment.

    Months later, Moskowitz fumed that the Apple partnership didn’t go his way. “We had an excellent group assembled on the call with Tim Cook,” he said in a March 2018 email. “The VA dropped all contact and proceeded on its own. So now we have a product of limited value.”

    Moskowitz also used his influence at the VA to get the agency to convene a meeting on registries for medical devices. Moskowitz started a foundation (whose board included Perlmutter’s wife) that lobbied medical institutions to start such registries so patients could be notified of recalls. Aaron Moskowitz drew a $60,000 salary as the foundation’s director, according to tax filings.

    The VA already had a system to notify patients within 10 days of a recall, with a 99 percent success rate, according to internal emails. And the Food and Drug Administration already has a nationwide program to track medical devices. Nevertheless, Moskowitz spurred the VA to organize a conference on the subject, with extensive input from him and his son, according to notes from weekly 7:30 a.m. planning calls. Planning documents named Moskowitz’s foundation as a “participating partner” and a “private interest.”

    Moskowitz even had say over the conference’s budget: In an April 2018 email, the VA official running the effort said, “I owe Dr. Moskowitz a budget — Bruce and I are editing it.” Cashour, the VA spokesman, declined to say how much the program cost.

    The Mar-a-Lago Crowd’s interventions sometimes bumped into each other. Once, in May 2017, when Selnick tried to schedule a call about the Apple partnership, Moskowitz replied that the time conflicted with another call he had with the acting head of the VA’s health division.

    When Wilkie first met the Mar-a-Lago Crowd, they seemed to get along.

    “For the first time in 1½ years we feel everyone is on the same page,” Perlmutter said in an email after the meeting at Mar-a-Lago in April. “Everybody ‘gets it.’”

    Wilkie returned the enthusiasm, thanking the men for providing a foundation to build on.

    “I was honored to visit with you,” Wilkie, who at the time was the acting secretary, wrote. “No matter how long I am here, there is a template in place based on your efforts to move this institution out of the Industrial Age.”

    (That last sentence was redacted when the VA originally disclosed the email to ProPublica under the Freedom of Information Act; the agency cited an exemption for internal deliberations. After ProPublica challenged that redaction, the VA released the full message.)

    But since that initial meeting in April, Wilkie’s relationship with the Mar-a-Lago Crowd has frayed. Under pressure from lawmakers after ProPublica’s investigation, Wilkie said in September that his team cut off contact with the trio.

    The loss of access has stung Perlmutter, according to a person close to the administration. But Perlmutter remains close to Trump: he spent election night with him and saw him over the Thanksgiving holiday weekend at Mar-a-Lago.

    The person, who spoke on the condition of anonymity to describe confidential discussions, said Perlmutter has begun criticizing Wilkie — as he had Wilkie’s predecessor, Shulkin, before the president fired him.

    Perlmutter faults Wilkie, the person said, for snubbing Perlmutter’s calls and for sidelining one of his top allies, former acting secretary Peter O’Rourke. Additionally, the person said, Perlmutter is displeased with the agency’s releasing emails about him and with the course of its electronic health records overhaul.

    “It’s very clear that Ike is going to war against Wilkie in a similar way to the way he did against Shulkin,” the person familiar with the matter said. “It’s gotten that bad.”

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