VA Still Underestimating Cost of Veterans’ Health Care, New Report Finds

The Department of Veterans Affairs' long-term budget plan for rehabilitating veterans in nursing homes, hospices and community centers is flawed and underestimates costs by millions of dollars, according to a Government Accountability Office report released Friday, the AP/Philadelphia Inquirer reports.

In 2005, VA informed congressional lawmakers that the department faced a $1 billion shortfall after failing to take into account the additional cost of caring for veterans injured in Iraq and Afghanistan.

GAO subsequently determined that VA repeatedly miscalculated -- possibly deliberately -- figures using questionable methods used to justify Bush administration cuts to health care amid the wars in Iraq and Afghanistan, the AP/Inquirer reports.

The new GAO report determined that VA used similarly unrealistic assumptions and projections in the department's budget estimate that was submitted in August 2007.

According to the report, VA's strategic plan for 2007 to 2013 inflated the number of veterans that would be treated at hospices and community centers based on a questionably low budget and did not account for nearly three-quarters of its veterans, about 25,000 patients, who receive treatment annually at nursing homes that VA and state governments operate.

The report states, "VA's use, without explanation, of cost assumptions and a workload projection that appear unrealistic raises questions about both the reliability of VA's spending estimates and the extent to which VA is closing previously identified gaps in noninstitutional long-term care services."

In addition, the report states that VA is believed to have:

• Undercut its 2009 budget estimate for nursing home care by about $112 million;
• Underestimated costs of care in noninstitutional settings by up to $144 million; and
• Overstated the amount of noninstitutional care.

In the report, VA acknowledged problems with its long-term care plans. The Inquirer reports that in many cases, VA officials told GAO that the department was aiming to be "conservative" in its appropriations requests to Congress to "stay within anticipated budgetary constraints."

VA Response

In a Jan. 5 response to the report, outgoing VA Secretary James Peake said, "VA supports GAO's overarching conclusion that the long-term care strategic planning and budgeting justification process should be clarified." He said the department would develop an action plan within 60 days of the report's release date.