Two Army veterans talk as they wait at a health care crisis center set up by the American Legion in Phoenix, Arizona, on June 10, 2014.

Two Army veterans talk as they wait at a health care crisis center set up by the American Legion in Phoenix, Arizona, on June 10, 2014. Ross D. Franklin/AP

The One Thing Holding Back Congress From Fixing the VA

Everyone wants to fix the Veterans Affairs Department - but how to pay for it? By Stacy Kaper

The House and Senate have agreed it's time for reform of the Veterans Affairs Department. Now they have to agree how to pay for it—and they have to do it quickly.

More than two dozen House and Senate lawmakers meet Tuesday to formally begin negotiations aimed at merging the two chambe''s VA reform bills into one. The measures have some minor discrepancies, but the big challenge is how much the reforms will cost and where the federal government will find the funding.

It was a question the chambers largely sidestepped as they rushed to pass reforms in the wake of the VA scandal, which revealed that veterans were being placed on "secret" waiting lists for treatment, and that some had died during the wait.

The Senate deemed the reforms imperative and authorized emergency funding to provide whatever resources necessary to carry them out. Cementing that sentiment, 75 senators voted to waive budget offsetting pay-as-you-go rules to protect that provision. The House bill would instead require that the reforms be funded by Congress's appropriations process.

The tension over payment has been heightened as the Congressional Budget Office has projected the measures to cost more than expected.

CBO has said the Senate bill could add as much as $35 billion in direct spending over 10 years, and ultimately cost the federal government an additional $50 billion a year as vets pursue additional health care options. The House bill—which seeks to slash health care wait times more expeditiously—is expected to entice more veterans into VA and private health care than the Senate bill would, costing the federal government a projected $54 billion per year.

"Their initial urge was to forget about funding altogether and get it past them, and now, of course, the whole process has slowed down, so now they are stuck with having to deal with budget reality. It's going to be difficult," said Joseph Antos, the Wilson H. Taylor Scholar in health care and retirement policy at the conservative American Enterprise Institute. "This is a problem for Republicans and Democrats alike."

But as Congress explores funding solutions, veterans groups will be watching carefully, pushing the lawmakers to provide specific, long-term funding for the reforms. Temporary funding or budget tricks, the groups say, could lead to a return to the status quo, where veterans continue to suffer from inadequate care.

"Congress and VA must not rely on budgetary gimmicks, such as unrealistic estimates of operational improvements, efficiencies, collections, carryovers, and contingencies. These undocumented 'savings' have rarely materialized and have contributed significantly to funding shortfalls that have plagued VA for more than a decade," the heads of more than a dozen veterans organization wrote to congressional leaders last week.

The groups fear that, given the political sensitivity of the issue and the coming Fourth of July recess, the groups will rush the bill through with an incomplete funding arrangement.

"They are not going back home for the July Fourth recess without having a bill on the president's desk. They all want something to go home and champion," said Louis Celli, the legislative director for the American Legion. "I think they have to with all the exposure on this.… The veterans need help, they need to be seen."

Analysts and congressional aides following the process expect lawmakers to pull out their fiscal tricks, including the use of arguably bogus funding sources or adoption of rose-colored assumptions about cost savings from certain programs. Alternatively, lawmakers could attempt cost-cutting by tightening restrictions on who would be eligible for care or limiting access by other means.

Most of the real wheeling and dealing is expected to take place behind closed doors, and negotiations among staffers have already begun.

Beyond funding woes, the lawmakers have a host of in-the-weeds details to hammer out before sending the bill to President Obama.

Both bills make it easier to fire incompetent senior VA leaders and aim to improve veterans' access to health care within and outside the VA.

But while the Senate bill would create an appeals process for fired VA leaders to contest their dismissal, the House bill lacks that provision. The Senate bill would also expand the GI bill's in-state tuition benefits further than separate House legislation would, including funding to the spouses of deceased veterans who would have qualified for the tuition break.