This ... could worsen the challenges VA already faces when formulating its health care budget.

by Larry Scott, VA Watchdog dot Org

Yesterday we reported that advance funding (advance appropriation) for the VA health care budget was getting closer to reality.

"The spending blueprint lawmakers are expected to ratify this week ... clears the way for much-needed legislation to ensure sufficient, timely and predictable funding for veterans health care."

The concept of advance funding ... or advance appropriation ... or year-ahead funding for the VA health care budget is another step closer to reality.

Congress has paved the way by adopting the Obama administration's budget plan.

The Senate adopted the plan by a 53-43 vote just hours after a 233-193 House tally.

I had opined that if Congress approved, then only the VA itself could foul up the concept of advance funding ... because they couldn't get their budget figures together in time.

Well, according to the GAO, I was half-right.

During a hearing of the House Committee on Veterans' Affairs titled Funding the U.S. Department of Veterans Affairs of the Future, the Government Accountability Office (GAO) said the VA was the major hurdle to making advance funding work.

But, not because of late budget figures, but because the VA budget process is so screwed-up ... read below ...

VA Health Care: Challenges in Budget Formulation and Issues Surrounding the Proposal for Advance Appropriations GAO-09-664T, April 29, 2009 Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 14 pages)   Accessible Text

Why GAO Did This Study:

The Department of Veterans Affairs (VA) estimates it will provide
health care to 5.8 million patients with appropriations of about
$41 billion in fiscal year 2009. It provides a range of services,
including primary care, outpatient and inpatient services, long-term
care, and prescription drugs. VA formulates its health care budget by
developing annual estimates of its likely spending for all its health
care programs and services, and includes these estimates in its annual
congressional budget justification.

GAO was asked to discuss budgeting for VA health care. As agreed, this
statement addresses (1) challenges VA faces in formulating its health
care budget and (2) issues surrounding the possibility of providing
advance appropriations for VA health care.

This testimony is based on prior GAO work, including VA Health Care:
Budget Formulation and Reporting on Budget Execution Need Improvement (GAO-06-958) (Sept. 2006); VA Health Care: Long-Term Care Strategic Planning and Budgeting Need Improvement (GAO-09-145) (Jan. 2009); and VA Health Care: Challenges in Budget Formulation and Execution (GAO-09-459T) (Mar. 2009); and on GAO reviews of budgets, budget resolutions, and related legislative documents. We discussed the contents of this statement with VA officials.

What GAO Found:

GAO’s prior work highlights some of the challenges VA faces in
formulating its budget: obtaining sufficient data for useful budget
projections, making accurate calculations, and making realistic
assumptions. For example, GAO’s 2006 report on VA’s overall health care
budget found that VA underestimated the cost of serving veterans
returning from military operations in Iraq and Afghanistan. According
to VA officials, the agency did not have sufficient data from the
Department of Defense, but VA subsequently began receiving the needed
data monthly rather than quarterly. In addition, VA made calculation
errors when estimating the effect of its proposed fiscal year 2006
nursing home policy, and this contributed to requests for supplemental
funding. GAO recommended that VA strengthen its internal controls to
better ensure the accuracy of calculations used to prepare budget
requests. VA agreed and, for its fiscal year 2009 budget justification,
had an independent actuarial firm validate savings estimates from
proposals to increase fees for certain types of health care coverage.
In January 2009, GAO found that VA’s assumptions about the cost of
providing long-term care appeared unreliable given that assumed cost
increases were lower than VA’s recent spending experience and guidance
provided by the Office of Management and Budget. GAO recommended that
VA use assumptions consistent with recent experience or report the
rationale for alternative cost assumptions. In a March 23, 2009, letter
to GAO, VA stated that it concurred and would implement this
recommendation for future budget submissions.

The provision of advance appropriations would “use up” discretionary
budget authority for the next year and so limit Congress’s flexibility
to respond to changing priorities and needs. While providing funds for
2 years in a single appropriations act provides certainty about some
funds, the longer projection period increases the uncertainty of the
data and projections used. If VA is expected to submit its budget
proposal for health care for 2 years, the lead time for the second year
would be 30 months. This additional lead time increases the uncertainty
of the estimates and could worsen the challenges VA already faces when
formulating its health care budget.

Given the challenges VA faces in formulating its health care budget and
the changing nature of health care, proposals to change the
availability of the appropriations it receives deserve careful
scrutiny. Providing advance appropriations will not mitigate or solve
the problems we have reported regarding data, calculations, or
assumptions in developing VA’s health care budget. Nor will it address
any link between cost growth and program design. Congressional
oversight will continue to be critical.