The Veterans' Benefits and Health Care Act of 1989. 4. 5. As ordered reported by the Senate Committee on Veterans' BILL PURPOSE: To increase the monthly rates of disability compensation and dependency and indemnity compensation, to increase services available to veterans suffering from post-traumatic stress syndrome, to require VA to establish and maintain levels of pay for nurses that are competitive with the prevailing wages in each labor market area, to establish a new revolving fund to finance the VA home loan guaranty program, and for other purposes. The effects of this bill would fall in budget functions 700 and 900. Unless otherwise identified, savings are to function 700. Basis of Estimate The following section-by-section cost analysis addresses only those sections of the bill that could be expected to have a significant budgetary impact. Section 101. This section would increase the rates of disability compensation and dependency and indemnity compensation (DIC) on December 1, 1989, by the same percentage that Social Security benefits are increased on that date. In calculating the new monthly benefits rates, which are rounded to the nearest whole dollar, the rates for 10 and 20 percent disabilities would be rounded down to the next lower dollar. This increase in benefits would include an increase in the rate payable under paragraph k, section 314, title 38, U.S.C., but the increase in these rates would not be effective until August 1990. The CBO baseline, which was prepared using February 1989 economic assumptions, assumed that a 4.9 percent cost-ofliving adjustment (COLA) would be made in Social Security benefit rates on December 1, 1989. The above estimate reflects the cost of a 4.9 percent COLA in compensation rates with the new rates for 10 and 20 percent disabilities rounded down. A more recent economic forecast indicates that the Social Security COLA is more likely to be 5.2 percent. Under this scenario, the compensation COLA authorized by section 101 would increase function 700 budget authority and outlays by $476 million and $429 million, respectively. These estimates were calculated by multiplying the average costs in each year for all disability compensation cases and for all DIC cases by the COLA percentage. The resulting average increase in costs per year were then multiplied by the estimated number of cases in each program each year to calculate the annual cost. Future average cost and caseload levels were projected according to historical trends for recipients by period of service. The effects of rounding down in the benefit calculation were estimated by determining the number of beneficiaries with combined degrees of disability of 10 or 20 percent. Because each of these beneficiaries would have his monthly check reduced by $1 under the rounding down calculation, the number of affected beneficiaries was multiplied by the number of benefit payments in the year to estimate the savings from rounding down. With a 5.2 percent COLA, only veterans with 10 percent ratings would be affected, because the new monthly benefit amount for 20 percent disability would round down under normal rounding rules. Section 103. Under current law, a veteran-pensioner who has no dependents and who is hospitalized or in a nursing home at VA expense will have his pension reduced to no more than $60 a month after the fourth month of care. Under this provision, pension benefits to such veterans would be reduced to no more than $105 a month. For hospitalized veterans, section 103 also would delay the reduction until after the ninth month of care. The changes would be effective on January 1, 1990. (by fiscal years, in millions of dollars) 1992 1993 1994 Budget Authority 1990 1991 This estimate is based on a one-month count of pension benefits withheld from veterans in hospitals or nursing homes at VA expense. According to this data, 4,052 veterans had $1,059,707 withheld from their pension checks for this reason in February, 1989. The increase in the maximum allowable pension benefit was assumed to affect all 4,052 veterans, increasing their pensions by $45 a month. The estimated cost of the delay in the benefit reduction for hospitalized veterans assumes that 30 percent of the withholdings were from hospitalized veterans (as opposed to veterans in nursing homes) and that 73 percent of such veterans would be hospitalized for less than the eight months required for a reduction under this provision. These assumptions are based on a distribution of VA inpatients by length of stay. Section 201. This section would provide entitlement to inpatient or outpatient psychiatric care to veterans who are diagnosed by a VA mental-health professional as suffering from post-traumatic stress disorder (PTSD) that is related to their military combat duty. Under current law, the disorder would have to be formally adjudicated as a service-connected condition before the veteran would be considered entitled to medical care. (by fiscal years, in millions of dollars) 1990 1991 1992 Estimated Authorization 1993 1994 According to VA data, there are around 39,000 veterans each year who are referred by Vet Centers to VA medical centers to be evaluated for PTSD. of these, VA estimated that approximately 13,000 veterans needing outpatient treatment do not receive care, because the VA outpatient mental-health treatment capacity is insufficient to handle the workload. This estimate assumes that the outpatient capacity would be expanded under this provision to accommodate the treatment needs of these veterans. According to VA sources, veterans with PTSD usually receive an average of 10 visits per year at an average 1988 cost of $46.51 per visit. This average cost amount was increased for anticipated inflation. In addition, there are currently about 500 veterans on waiting lists for places in PTSD inpatient treatment programs. This estimate assumes that inpatient treatment facilities would be expanded to accommodate the veterans on the waiting lists. Also based on VA information, it was assumed that inpatient PTSD treatment would involve approximately 90 days of inpatient care over a one-year period. The average per diem cost for all psychiatric inpatient care ($184 in 1988) was used to calculate the cost. Section 203. This section would extend for three years the program of community-based residential treatment for chronically mentally ill veterans. In fiscal year 1989, $13.3 million was appropriated for residential treatment of chronically mentally ill veterans. This amount was increased for anticipated inflation to estimate the authorization level in 1990-1992. The full authorized amount was assumed to be appropriated. Outlays were estimated according to historical spending patterns for this activity. Section 204. This section would require VA to establish a network of five regional centers for mental-illness related research, education, and clinical activities. In 1990, $3.125 million is authorized to be appropriated for this activity, and $6.25 million in each of fiscal years 1991-1993. The authorization levels stated in the bill were assumed to be fully appropriated. The outlays were estimated according to historical spending patterns adjusted to reflect the slower initial spending of a new program. Section 211. This section would authorize VA to provide services to achieve pregnancy to a veteran or a veteran's spouse where such services are necessary to overcome a service-connected disability that impairs the veteran's ability to procreate. The above estimate includes the cost of three treatment modalities: artificial insemination, in vitro fertilization, and drug and hormonal therapy. If any of these modalities are prohibited, or if new forms of treatment are developed, the cost of this provision could be significantly different from the estimate above. This estimate is based primarily on data from two studies published by the Office of Technology Assessment (OTA): Infertility: Medical and Social Choices (OTA-BA-358, May 1988) and Artificial Insemination: Practice in the United States (OTA-BP-BA-48, August 1988). According to these sources, there are nearly 16,000 male veterans and 1,200 female veterans who are under age 55 and who have service-connected conditions related to infertility. It was assumed that all affected male veterans would be potential candidates for artificial insemination, involving either the veteran's sperm or donor sperm. Since some of |