Introduction

The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility criteria. These benefits and services include, among other things, hospital and medical care;¹ disability compensation and pensions;² education;³ vocational rehabilitation and employment services;⁴ assistance to homeless veterans;⁵ home loan guarantees;⁶ administration of life insurance, as well as traumatic injury protection insurance for servicemembers; and death benefits that cover burial expenses.⁷

The department carries out its programs nationwide through three administrations and the Board of Veterans Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing compensation, pensions, and education assistance. The National Cemetery Administration (NCA)⁸ is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. The BVA reviews all appeals made by veterans or their representatives for entitlement to veterans' benefits, including claims for service connection, increased disability ratings, pensions, insurance benefits, and educational benefits, among other things.

Scope and Limitations of This Report

This report provides an overview of the FY2021 President's request for the VA and subsequent congressional action. It begins with a discussion of various appropriations and funds that constitute the VA's budget, followed by a brief overview of the FY2020 congressional appropriations process and enacted amounts for FY2020, including coronavirus supplemental funding. It then discusses the President's request for FY2021 for care, benefits, and services for veterans and administration of the department and congressional consideration. The report provides funding levels for the accounts as presented in the Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill; it does not provide funding levels at the subaccount, program, or activity levels. Appendix B lists appropriations to the VA from FY1995 to FY2020. Funding amounts shown in the appendices of this report may include transfers in and out of accounts as calculated by the VA and therefore may be different from those shown in Table 1, which is based on budget authority amounts shown in the MILCON-VA appropriations bills, accompanying committee reports, and explanatory statements.

The Department of Veterans Affairs Budget

The VA budget includes both mandatory⁹ and discretionary funding.¹⁰ Mandatory accounts fund disability compensation for veterans, the survivor's Dependency and Indemnity Compensation (DIC) program, pensions, vocational rehabilitation and employment, education, life insurance, housing, clothing allowances, and burial benefits (such as burial allowances, grave liners, outer burial receptacles, and headstones and markers), among other benefits and services. Discretionary accounts fund medical care, medical research, construction programs, information technology, the Office of Inspector General, BVA, and general operating expenses, among other things. These accounts are further supplemented by revolving funds, such as the Canteen Service Revolving Fund and the Pershing Hall Revolving Fund; trust funds, such as the Department of Veterans Affairs Cemetery Gift Fund and the General Post Fund; and special funds, such as the Medical Care Collections Fund and the Capital Asset Fund.¹¹

Advance Appropriations¹²

The VA has advance appropriation authority for specified medical care and benefits accounts. In 2009, Congress enacted the Veterans Health Care Budget Reform and Transparency Act of 2009 (P.L. 111-81), authorizing advance appropriations for three of the four VHA accounts: medical services, medical support and compliance, and medical facilities.¹³ In 2014, Congress passed the Consolidated and Further Continuing Appropriations Act, 2015 (H.R. 83; P.L. 113-235), which amended 38 U.S.C. §117 and included three more accounts to the advance appropriations list of accounts. This act authorized advance appropriations for three mandatory VA benefits programs within the Veterans Benefits Administration: compensation and pensions, readjustment benefits, and veterans insurance and indemnities. Beginning with the FY2016 Military Construction and Veterans Affairs, and Related Agencies Appropriations Act (MILCON- VA; P.L. 114-113), those accounts received advance appropriations for the first time in FY2017, in addition to the three VHA accounts already authorized to receive advance appropriations.

Section 4003 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) required the establishment of a separate new account for medical community care, beginning with the FY2017 appropriations cycle. The Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 (P.L. 114-315) authorized advance appropriations for the medical community care account.

Congress has authorized (through P.L. 111-81, P.L. 113-235, and P.L. 114-315) advance appropriations of new budget authority for these VBA and VHA accounts to prevent potential delays in the delivery of care and benefits to veterans that may arise in the event of a funding lapse.

Under present budget scoring guidelines, advance appropriations are scored as new budget authority in the fiscal year in which they become available for obligation, not in the fiscal year the appropriations are enacted and required to be accommodated within the statutory spending caps for that year.¹⁴ Therefore, throughout the funding tables in this report, advance appropriations numbers are noted by the label "memorandum" and in the corresponding fiscal year column.

Historical Perspective

Figure 1 provides funding trends for mandatory, discretionary, and total VA-enacted appropriations from FY1995 through FY2020. Between FY1995 and FY2020, total mandatory appropriations grew from $19.5 billion to $124.7 billion in nominal dollars, a compound annual growth rate (CAGR) of 7.7%.¹⁵ During this same period, discretionary appropriations grew from $18.0 billion to $112.1 billion, a CAGR of 7.6%. The total VA appropriations from FY1995 through FY2020 grew from $37.5 billion to $236.8 billion, a CAGR of 7.7%.

Figure 1. VA Appropriations, FY1995-FY2020

Source: Figure prepared by CRS based on figures from the Department of Veterans Affairs, Office of Management, Office of Budget (see, Appendix B). Notes: Amounts in in nominal, or noninflation-adjusted, dollars, and discretionary funding excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF).

FY2020 Budget Summary

President Trump submitted his FY2020 budget request for the VA on March 11, 2019. The Administration requested a total $216.1 billion for the VA. This amount included $123.2 billion in mandatory appropriations and $92.9 billion in discretionary funding. The President's request also included advance appropriations for FY2021 for specific medical care and mandatory veterans' benefit programs. For medical care accounts, the budget request included $87.6 billion in discretionary advance appropriations and $129.5 billion in advance appropriations for mandatory benefits.

On May 9, 2019, the House Appropriations Committee approved the FY2020 Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) bill (H.R. 2745; H.Rept. 116-63). The Senate Appropriations Committee did not mark up or report its version of the FY2020 MILCON-VA bill. After the passage of several continuing resolutions (CRs), on December 20, 2019, the President signed the Further Consolidated Appropriations Act, 2020 (H.R. 1865; P.L. 116-94), providing regular appropriations for FY2020. Division F of this act contained the Military Construction, Veterans Affairs, and Related Agencies Appropriations (MILCON-VA) Act, 2020.¹⁶ The act provides $217.9 billion for the VA. This amount includes $125.4 billion in mandatory appropriations and $92.5 billion in discretionary funding. P.L. 116-94 provided advance appropriations for FY2021 totaling $87.6 billion for medical care accounts (medical services, medical community care, medical support and compliance, and medical facilities) and $131 billion for mandatory veterans benefits (compensation and pensions, readjustment benefits, and veterans insurance and indemnities). All amounts are prior to the enactment of COVID-19 supplemental funding. Table 1 provides total funding levels that include the regular appropriations provided in P.L. 116-94 and the supplemental appropriations discussed below. Figure 2 provides an overview of FY2020-enacted mandatory and discretionary appropriations.

COVID-19 Pandemic FY2020 Supplemental Appropriations¹⁷

In response to the rapidly evolving COVID-19 pandemic, Congress provided supplemental funding for FY2020 for several VA accounts. The total amount of supplemental funding for FY2020 is $19.63 billion. This amount includes $60.0 million provided in the Families First Coronavirus Response Act (P.L. 116-127) and $19.6 billion provided in the Coronavirus Aid, Relief, and Economic Security Act, "CARES Act" (P.L. 116-136).

Families First Coronavirus Response Act (P.L. 116-127)

On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (P.L. 116-127). The act provides $30 million for VHA's medical services account to fund health services and related items pertaining to COVID-19, and $30 million for VHA's medical community care account (see Table 1). These funds are designated as emergency spending and are to remain available until September 30, 2022.

Coronavirus Aid, Relief, and Economic Security Act, "CARES Act" (P.L. 116-136)

On March 27, the President signed into law the CARES Act (P.L. 116-136). Division B of this act included an emergency supplemental appropriations measure. Title X of Division B provides supplemental appropriations for FY2020, designated as emergency spending, for certain VA accounts totaling $19.6 billion. Unless otherwise noted below, funds remain available until September 30, 2021. Funding provided in the CARES Act is broken down as follows (see Table 1):¹⁸

• VHA, medical services account, $14.4 billion, for increased telehealth services; purchasing of additional medical equipment and supplies, testing kits, and personal protective equipment; and to provide additional support to homeless veterans, among other things.
• VA, information technology systems account, $2.2 billion, for increased telework capacity, purchasing additional laptops for telework and telehealth-enabled laptops for VHA providers to work from home, and to increase bandwidth and IT infrastructure needs, among other things.
• VHA, medical community care account, $2.1 billion, for increased emergency room and urgent care usage in the community.
• VHA, medical facilities account, $606 million, for the procurement of mobile treatment facilities, improvements in security, and nonrecurring maintenance projects.
• VA, grants for construction of state extended care facilities account, $150.0 million, to help state homes renovate, alter, or repair facilities to respond to COVID-19.
• VHA, medical support and compliance account, $100 million, for the provision of 24-hour emergency management coordination overtime payments, and for costs associated with travel and transport of materials.
• VBA, general operating expenses account, $13.0 million, for enhancing telework support for VBA staff and for additional cleaning contracts.
• VA, Office of Inspector General account, $12.5 million, for increased oversight of the VA's preparation and response to COVID-19 (funds remain available until September 30, 2022).
• VA, general administration account, $6.0 million, for maintaining 24-hour operations of crisis response and continuity of operations plans at VA facilities, among other things.

Figure 2. Enacted Appropriations, FY2020, by Major Program and Spending Category

Source: Figure prepared by CRS based on based on the Further Consolidated Appropriations Act, 2020 (P.L. 116-94); the Families First Coronavirus Response Act (P.L. 116-127); the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) and U.S. Congress, House Committee on Appropriations, Military Construction, Veterans Affairs, and Related Agencies Appropriations Bill, 2021, report to accompany H.R. 7609, 116th Cong., 2nd sess., July 13, 2020, H.Rept. 116-445, pp. 131-141. Notes: Total budget authority excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF). Percentages may not add up due to rounding.

Budget Request for FY2021 and Congressional Action

President Trump submitted his budget proposal for FY2021 on February 10, 2020. The President's budget requested $240.2 billion for VA. This amount included $135.4 billion in mandatory benefits funding and $104.8 billion in discretionary funding. When compared with the FY2020-enacted amount for VA of $237.5 billion—which included regular appropriations provided by the Further Consolidated Appropriations Act, 2020 (P.L. 116-94), and supplemental funding provided by the Families First Coronavirus Response Act (P.L. 116-127) and the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136)—this was an increase of $2.752 billion. Additionally, the Administration's budget request included an advance appropriation request of $239.5 billion for FY2022 to fund the seven advance appropriations accounts—compensation and pensions, readjustment benefits, insurance and indemnities, medical services, medical community care, medical support and compliance, and medical facilities. Figure 3 provides the FY2021 President's requested mandatory and discretionary appropriations by major program.

Figure 3. Budget Request, FY2021, by Major Program and Spending Category

Source: Figure prepared by CRS based on U.S. Congress, House Committee on Appropriations, Military Construction, Veterans Affairs, and Related Agencies Appropriations Bill, 2021, report to accompany H.R. 7609, 116th Cong., 2nd sess., July 13, 2020, H.Rept. 116-445, pp. 131-141. Notes: Total budget authority excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF). Percentages may not add up due to rounding.

On July 6, 2020, the House Committee on Appropriations, Subcommittee on Military Construction, Veterans Affairs, and Related Agencies held a markup of the FY2021 Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill, and the draft bill was approved. On July 9, the House Appropriations Committee held a markup of the FY2021 MILCON-VA appropriations bill and the bill was ordered reported to the full House on July 13 (H.R. 7609; H.Rept. 116-445). Subsequently, the text of H.R. 7609 was included in a four-bill appropriations package (H.R. 7608, the State, Foreign Operations, Agriculture, Rural Development, Interior, Environment, Military Construction, and Veterans Affairs Appropriations bill 2021) and passed by the full House on July 24. The House-passed measure (Division D of H.R. 7608) provided a total of $240.2 billion for VA, which included $135.4 billion in mandatory funding and $104.8 billion in discretionary funding. Within the overall total of $104.8 billion in discretionary funding, $12.5 billion is designated as emergency funding.

On November 10, 2020, the chair of the Senate Committee on Appropriations, Senator Richard Shelby, released drafts of all 12 annual appropriations bills along with draft accompanying explanatory statements including the FY2021 MILCON-VA appropriations bill.¹⁹ The release of the draft bills was intended to further negotiations on annual appropriations between the House and the Senate.²⁰ The majority draft FY2021 MILCON-VA appropriations bill recommended $243.1 billion for VA, including $138.7 billion in mandatory spending and $104.4 billion in discretionary spending. Similar to the House-passed measure, the Senate majority draft version of the MILCON-VA appropriations bill has designated $12.5 billion as emergency spending within the recommended $104.4 billion discretionary spending level.

Continuing Appropriations (P.L. 116-159; P.L. 116-215; P.L. 116-225; P.L. 116-226; P.L. 116-246)²¹

Since none of the regular appropriations bills were enacted at the beginning of the fiscal year on October 1, Congress passed five continuing resolutions (CRs) to continue funding at FY2020 levels. Since seven accounts (compensation and pensions, readjustment benefits, insurance and indemnities, medical services, medical community care, medical support and compliance, and medical facilities) received advance appropriations budget authority for FY2021 in P.L. 116-94, these accounts were not affected by the CRs. However, the first CR (Division A of P.L. 116-159) provided exceptions to specific accounts, or programs below.

Section 161—Compensation and Pensions

Section 161 made a technical correction to the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2020 (Division F of P.L. 116-94), related to the Department of Veterans Affairs' (VA's) "Compensation and Pensions" account. This provision authorized advance appropriations for the "Compensation and Pensions" account provided in P.L. 116-94 that became available on October 1, 2020, to remain available until expended. This change allowed unobligated carryover appropriations and funds in this account to remain available beyond FY2021.

Section 162—Veterans Electronic Health Record

Section 162 provides authority to the VA to apportion funds up to the rate of operations necessary for activities related to the implementation, preparation, development, management, rollout, and maintenance of the veterans Electronic Health Record (EHR) system, including salaries and expenses of VA employees associated with the development and deployment of the EHR system.

Section 163—Canteen Service Revolving Fund

Section 163 provides authority to the VA during FY2021 to transfer up to $140 million of unobligated balances provided by the CARES Act (P.L. 116-136) for the Medical Services account to the Canteen Service Revolving Fund. Operations of the Canteen Service Revolving Fund are generally financed by collections from the sale of meals, merchandise, and services at VA medical facilities. However, due to a decline in collections as a result of the COVID-19 pandemic, the Administration requested this transfer authority to offset these losses.

Consolidated Appropriations Act, 2021 (P.L. 116-260)

Based on negotiations between the House and Senate Appropriations Committees, the then-Chairwoman of the House Committee on Appropriations, Representative Nita Lowey, offered a House amendment to the Senate amendment to H.R. 133. On December 21, 2020, both the House and Senate agreed to the measure, and President Trump signed the legislation on December 27, 2020, as the Consolidated Appropriations Act, 2021 (H.R. 133, P.L. 116-260). Division J of this act contained the FY2021 Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) Appropriations Act. The act provides $243.2 billion for VA for FY2021, which includes $104.4 billion in discretionary funding and $138.7 billion in mandatory funding (see Table 1). In March 2021, the American Rescue Plan Act (P.L. 117-2) was enacted and provided approximately $17.1 billion in mandatory funding in addition to amount enacted in P.L. 116-260 (see text box below).

Mandatory Programs Funding

Major mandatory program funding includes VA's disability compensation program; pensions to low-income veterans, their surviving spouses, and dependent children; education and vocational rehabilitation assistance; and the provision of life insurance.

Compensation and Pensions

The Compensation and Pensions category includes payments for benefits such as disability compensation; dependency and indemnity compensation (DIC); pension benefits for low-income disabled or elderly wartime veterans and their survivors; burial benefits (allowances, flags, headstones, etc.); and a clothing allowance for certain disabled veterans.

For FY2021, VA requested $121.1 billion for the Compensation and Pensions account, an increase of $2.8 billion over the FY2021 advance appropriations. The largest portion of this budget item is disability compensation, which VA estimated would be $115.8 billion in compensation payments to an estimated 5.3 million veterans, 456,000 survivors, and 1,266 children. Pension payments were estimated to be $4.9 billion to approximately 231,100 veterans and 161,300 survivors. Finally, an estimated $355 million would be allocated for burial benefits.

An increase in disability compensation obligations most significantly comes from the expansion of benefits under the Blue Water Navy Vietnam Veterans Act of 2019 (P.L. 116-23).²² In general, the average payments for benefits, including disability compensation, pension, and survivor benefits, would be expected to increase due to the annual cost-of-living adjustment (COLA).

The Consolidated Appropriations Act, 2021 (H.R. 133, P.L. 116-260) provides $124.4 billion for VA's FY2021 Compensation and Pension account. This is $13.9 billion over the FY2020-enacted amount, $6.1 billion over the FY2021 advance appropriations, and $3.3 billion over VA's requested amount for FY2021 (see Table 1). These increases reflect the increased number of disability compensation claims that will be granted and paid out on a monthly basis. These funds will also continue to support VA programs to address root causes of veterans' financial hardships and to improve communications with Veterans Service Organizations (VSOs).²³ The explanatory statement raises concerns about VA's accounting measures for this account and directs VA to submit a plan to both the Senate and House Appropriations Committees addressing required accounting adjustments and reconciliation of FY2020 funds. The committees requested this plan to be submitted no later than 60 days after the FY2021 MILCON-VA appropriations bill is enacted.²⁴ The explanatory statement also expresses concern about the high denial rate for Gulf War veterans disability claims and directs VA to submit a report on its efforts to improve the claim approval rate and the feasibility of eliminating the deadline for filing presumptive claims for Gulf War veterans. The committees request this report no later than 180 days after FY2021 MILCON-VA appropriations bill is enacted.²⁵

Readjustment Benefits

The Readjustment Benefits category reflects several benefits related to the transition of servicemembers from active duty status to veteran status, as well benefits for disabled veterans. Some of these programs include education benefits for veterans, survivors, and dependents; vocational rehabilitation and employment training for service-connected disabled veterans; and financial assistance for adaptive automobiles, equipment, and housing grants for disabled veterans.

For FY2021, VA requested appropriations of $12.6 billion to provide sufficient mandatory funding for Readjustment Benefits, approximately $1.5 billion less than the amount enacted in FY2020. The decrease in readjustment benefits funding between FY2020 and FY2021 is largely due to the carryover of $2.9 billion in unobligated benefits from prior years and $191.2 million in offsetting collections from the Department of Defense (DOD).²⁶

P.L. 116-260 provides $12.6 billion for FY2021, the same as VA's requested amount, for the Readjustment Benefits account (see Table 1). In the explanatory statement, the committees direct VA to submit a report on the feasibility and advisability of, and a cost estimate for, granting eligible disabled veterans with an additional adaptive automobile grant if at least 10 years have passed since their initial grant or assistance. The Committees on Appropriations request the report within 270 days of the enactment of this act.²⁷

Veterans Insurance and Indemnities (VI&I)

The Veterans Insurance and Indemnities (VI&I) account is the mandatory funding mechanism for several government life insurance programs for veterans. In addition to direct payments made to insured veterans and their beneficiaries, this category includes supplemental funding for National Service Life Insurance (NSLI),²⁸ Service-Disabled Veterans Insurance (S-DVI),²⁹ and Veterans Mortgage Life Insurance (VMLI).³⁰

For FY2021, VA estimates $6.3 million in collections from premiums, interest on investments, and extra hazard payments from military service branches. In addition, VA has $2.1 million in previously appropriated funds to use until expended. In addition to the advance appropriated funds, VA requested $129.2 million, bringing the total amount to $131.4 million, an estimated $2.4 million increase from the FY2020-enacted budget. This increase would enable VA to transfer $40,000 to the NSLI, program, $43 million to the VMLI program, and $96.6 million to the S-DVI program.³¹ P.L. 116-260 provides the same amount for the Insurance and Indemnities account for FY2021 as requested in the Administration's budget request (see Table 1).³²

Medical Care and Medical Research Discretionary Programs Funding

Background

The Veterans Health Administration (VHA) operates one of the nation's largest integrated direct health care delivery systems.³³ Although Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) are also publicly funded programs, most health care services under these programs are delivered by private providers in private facilities. In contrast, the VA health care system could be categorized as a veteran-specific national health care system, in the sense that the federal government owns the medical facilities and employs the health care providers.³⁴

The VA's health care system is organized into 18 geographically defined Veterans Integrated Service Networks (VISNs). Although policies and guidelines are developed at VA headquarters to be applied throughout the VA health care system, management authority for basic decisionmaking and budgetary responsibilities is delegated to the VISNs.³⁵ As of FY2020, the VHA operates 148 hospitals, 135 nursing homes, 765 community-based outpatient clinics (CBOCs),³⁶ and 300 Readjustment Counseling Centers (Vet Centers).³⁷ In 2009, the VA began a pilot Mobile Vet Center (MVC) program to improve access to services for veterans in rural areas, and the department has deployed 80 MVCs, to date.³⁸

Although the VHA provides most health care services to eligible veterans through its integrated network of facilities, it does pay for care in the community under certain circumstances. The Veterans Community Care Program (VCCP) applies eligibility for care in the community broadly to all enrolled veterans based on specific criteria.³⁹ The VA is authorized to provide care in the community through individual agreements with community providers, called veterans care agreements. The VA is also authorized to reimburse for emergency care visits if specific criteria are met.⁴⁰ Inpatient and outpatient care are provided in the private sector to eligible dependents of veterans under the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA).⁴¹ In addition, the VHA provides grants for construction of state-owned nursing homes and domiciliary facilities⁴² and collaborates with DOD in sharing health care resources and services.

Apart from providing direct patient care to veterans,⁴³ the VHA's other statutory missions are to conduct medical research,⁴⁴ serve as a contingency backup to the DOD medical system during a national security emergency,⁴⁵ provide support to the National Disaster Medical System and the Department of Health and Human Services as necessary,⁴⁶ and train health care professionals to provide an adequate supply of health personnel for the VA and the nation.⁴⁷

The Veteran Patient Population⁴⁸

In FY2020, approximately 9.3 million of the 19.5 million total veterans were enrolled in the VA health care system.⁴⁹ The VA estimates that in FY2021, enrollment will grow by 33 thousand. Of the total number of enrolled veterans in FY2020, the VA anticipated treating approximately 7.1 million unique veteran and nonveteran patients.⁵⁰ For FY2021, the VHA estimates that it will treat about 7.2 million unique veteran patients, or 1.0% over the FY2020 estimate (see Appendix A for veteran population, VA enrollees, and VA patients from FY2000-FY2021).

The VHA also estimates that outpatient visits will increase from 123.8 million in FY2020 to 126.5 million in FY2021, an increase of 2.7 million, or 2.2%. It also anticipates an increase in inpatients treated from 928,552 in FY2020 to 936,639 in FY2021, an increase of 8,087, or 0.9%.

President's Request and Congressional Action

The VA's annual appropriations for the medical services, medical community care, medical support and compliance, and medical facilities accounts include advance appropriations that become available one fiscal year after the fiscal year for which the appropriations act was enacted. Therefore, funding levels for FY2021 for these four accounts were provided by the Further Consolidated Appropriations Act, 2020 (P.L. 116-94). However, in any given year the Administration could request additional funding for the upcoming fiscal year and Congress could revise these amounts through the annual appropriations process. Across all four accounts, the President's budget increased by $2.3 billion over the advance appropriations amount in FY2021.⁵¹ The VA attributed the increase largely to revised actuarial trends based on recent data. In total, the FY2021 budget request for VHA was $95.2 billion, including medical care collections (see Table 1).⁵²

As required by the Veterans Health Care Budget Reform and Transparency Act of 2009 (P.L. 111-81), the President's budget requested $94.2 billion in advance appropriations for the four medical care appropriations (medical services, medical community care, medical support and compliance, and medical facilities) for FY2022, an increase of approximately 3.85% over the FY2021-requested amount of $90.8 billion for the same four accounts. In FY2022, the Administration's budget request would have provided $58.9 billion for the medical services account, $20.1 billion for medical community care, $8.4 billion for the medical support and compliance account, and $6.7 billion for the medical facilities account (see Table 1).

Both the House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) and the Senate Appropriations Committee majority draft bill provided FY2021 VHA appropriations higher than the President's request ($67.5 million and $13 million higher, respectively). The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides VHA appropriations of $90.6 billion ($160 million less than the request) for FY2021. Amounts requested for each VHA account for FY2021 in both the House-passed bill and the Senate Appropriations Committee majority draft bill recommended amounts, as well as the final amounts provided by the Consolidated Appropriations Act, 2021, for each account are detailed in subsequent sections.

Medical Services

The medical services account covers expenses for furnishing inpatient and outpatient care and treatment of veterans and certain dependents, including care and treatment in non-VA facilities; outpatient care on a fee basis; medical supplies and equipment; salaries and expenses of employees hired under Title 38, United States Code (U.S.C.); cost of hospital food service operations;⁵³ aid to state veterans' homes; and assistance and support services for family caregivers.

For FY2021, the President's budget requested $56.7 billion for the medical services account. This amount is $497.5 million over the FY2021 advance appropriated amount of $56.2 billion. According to the VA, this increase reflects implementation of the Precision Oncology initiative, as well as increased staff and funding for pain management and suicide prevention efforts.⁵⁴

The House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) amount for FY2021 was $514 million over the FY2021 advance appropriation amount. This was $16.5 million more than the President's request while the FY2022 advance appropriation amount for the medical services account was the same as the President's request. The Senate Appropriations Committee majority draft bill recommended amount for FY2021 and for the FY2022 advance appropriations was the same as the President's request (see Table 1).

Within the total amount for medical services in the House-passed bill for FY2021, which is $56.7 billion, the committee provided the following:⁵⁵

• for mental health care, an additional $40 million, for a total of $10.3 billion;
• for homelessness initiatives, an additional $40 million, for a total of $1.9 billion;
• for rural health, an additional $30 million, for a total of $300 million;
• for gender-specific care for women, an additional $35 million, for a total of $660.7 million;
• for Whole Health initiatives, an additional $20 million, for a total of $83.6 million;
• for suicide prevention efforts, an additional $85.1 million, for a total of $312.6 million;
• for a new Precision Oncology initiative, $75 million; and
• for opioid prevention and treatment, an additional $64.7 million, for a total of $503.7 million;

Within the total amount for medical services in the Senate Appropriations Committee majority draft bill for FY2021, which is $56.7 billion, the committee provided the following:

• for mental health care, an additional $40 million, for a total of $10.3 billion;
• for homelessness initiatives, an additional $40 million, for a total of $1.9 billion;
• for telehealth, a total of $1.3 million, equivalent to the request; and
• for suicide prevention efforts, an additional $85.1 million, for a total of $312.6 million.

In addition, the House-passed bill included new authorizing language that would permanently authorize the use of medical services appropriations for assisted reproductive technology treatment and adoption reimbursement for certain veterans with service-connected disabilities that results in being unable to procreate without in vitro fertilization (IVF) treatment or other forms of assisted reproductive technology services.⁵⁶ The Senate Appropriations Committee majority draft bill temporarily would have authorized the use of medical services appropriations for the same services.⁵⁷

The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $56.6 billion for the Medical Services Account in FY2021 and $58.9 billion in advance appropriations for FY2022. The explanatory statement accompanying the act included a number of initiatives funded through the Medical Services account.⁵⁸ Some are highlighted below:

• for caregiver support, a total of $1.2 billion to fund a recent expansion of the program;
• for mental health and suicide prevention, a total of $10.3 billion, with language encouraging the VA to use machine-learning software to prevent suicide, add functionality to the veterans crisis line, and utilize a specified pilot program;
• for homelessness initiatives, a total of $1.9 billion;
• for rural health care, a total of $300 million;
• for telehealth, a total of $1.3 billion; and
• for gender-specific care for women, a total of $661 million.

Medical Community Care

Section 4003 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) required the establishment of a separate new account for medical community care, beginning with the FY2017 appropriations cycle. The Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 (P.L. 114-315) authorized advance appropriations for the medical community care account. The account is intended to consolidate all community care programs under a single appropriation, and it is the funding source for care that the VHA provides to eligible veterans through community health care providers.

The President's budget requested $18.5 billion for the medical community care account. This amount is $1.381 billion over the FY2021 advance appropriated amount of $17.1 billion. This increase was largely driven by more recent projections for community care and the cost of establishing a community care network.⁵⁹

The House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) amount for FY2021 was $1.377 billion over the FY2021 advance appropriation amount. This was $4.0 million less than the FY2021 request, while the FY2022 advance appropriation amount was the same as the request. The Senate Appropriations Committee majority draft bill recommended amount for FY2021 and the FY2020 advance appropriation was the same as the President's request. The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $18.5 billion for the Medical Community Care account in FY2021 and $20.1 billion in advance appropriations for FY2022, the same as the President's request (see Table 1).

Medical Support and Compliance

This account provides for expenses related to the management, security, and administration of the VA health care system through the operation of VA medical centers and other medical facilities, such as community-based outpatient clinics (CBOCs) and Vet Centers.⁶⁰ The account also funds 21 Veterans Integrated Service Network (VISN)⁶¹ offices and facility director offices; chief of staff operations; public health and environmental hazard programs; quality and performance management programs; medical inspection; human research oversight; training programs and continuing education; security; volunteer operations; and human resources management.

The President's budget requested $8.2 billion for the medical support and compliance account. This amount is $300 million over the FY2021 advance appropriated amount of $7.9 billion.⁶²

The House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) provided $282 million over the FY2021 advance appropriation of $7.9 billion, a decrease of $18 million from the request, while the FY2022 advance appropriation amount was the same as the request. The Senate Appropriations Committee majority draft bill recommended amount for FY2021 and the FY2020 advance appropriation was the same as the President's request. The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $8.2 billion for medical support and compliance in FY2021 and $8.4 billion in advance appropriations for FY2022 (see Table 1).

Medical Facilities

The medical facilities account funds expenses pertaining to the operations and maintenance of the VHA's capital infrastructure. These expenses include utilities and administrative expenses related to planning, designing, and executing construction or renovation projects at VHA facilities. It also funds leases, laundry services, grounds maintenance, trash removal, housekeeping, fire protection, pest management, and property disposition and acquisition.

The President's budget requested $6.6 billion for the medical facilities account. This amount is $150 million over the FY2021 advance appropriated amount of $6.4 billion. This increase was largely driven by infrastructure improvements to ensure compatibility for the Electronic Health Record Modernization (EHRM) project.⁶³

The House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) provided $170 million over the FY2021 advance appropriation of $6.4 billion, an increase of $20 million from the request, while the FY2022 advance appropriation amount was the same as the request. The Senate Appropriations Committee majority draft bill recommended amount for FY2021 and the FY2020 advance appropriation was the same as the President's request. The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $6.4 billion for Medical Facilities in FY2021 and $6.7 billion in advance appropriations for FY2022, the same as the President's request (see Table 1).

Medical and Prosthetic Research

As required by law, the medical and prosthetic research program (medical research) focuses on research into the special health care needs of veterans. This account provides funding for many types of research, such as investigator-initiated research; mentored research; large-scale, multisite clinical trials; and centers of excellence. VA researchers receive funding not only through this account but also from DOD, the National Institutes of Health (NIH), and private sources.

In general, VA's research program is intramural; that is, research is performed by VA investigators at VA facilities and approved off-site locations. Unlike other federal agencies, such as NIH and DOD, the VA does not have the statutory authority to make research grants to colleges and universities, cities and states, or any other non-VA entities.

The President's budget requested approximately $787 million for the medical and prosthetic research account, an increase of $37 million, or 5%, above the FY2020-enacted amount of $750 million. The VHA's major research priorities in FY2021 include, among others, suicide prevention, opioid safety and pain management, post-traumatic stress disorder (PTSD), traumatic brain injury (TBI), mental health, and Gulf War illness.⁶⁴

The House-passed version of the MILCON-VA appropriations bill (H.R. 7608; H.Rept. 116-445) provided $840 million for FY2021 for the medical and prosthetic research account, an increase of $53 million from the request. The Senate Appropriations Committee majority draft bill recommended amount for FY2021 is $800 million, an increase of $13 million from the President's request. The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $795 million for Medical and Prosthetic Research in FY2021 (see Table 1).

Nonmedical Discretionary Programs Funding

National Cemetery Administration (NCA)

The majority of NCA's discretionary funding falls into the Operations and Maintenance category. VA requested a total of $360 million in FY2021 for this account. This is a $32 million, or 9.8%, increase for NCA's operations and maintenance expenses over the FY2020 enacted amount and would have provided for hiring an additional 77 full-time equivalents (FTEs).⁶⁵ In addition, the increase would have supported the costs encountered with opening four new cemeteries in New York, Indiana, Wyoming, and Utah during 2021. There are also associated expenses for an additional 11 cemeteries transferred from the Department of the Army bringing the total number of national cemeteries to 156. Finally, VA anticipated a 2.1% increase in the number of interments during FY2021 compared with FY2020.⁶⁶

Within the Operations and Maintenance appropriations category, VA requested funds to support extending its historical knowledge and public outreach programs. NCA plans to implement these efforts by continuing its digital memorial platform, which will preserve the 3.5 million veterans interred and in future phases will allow the public to post memories and photographs of each veteran. To complement NCA's digital efforts, they will continue to develop onsite interpretive signs, exhibits, and publications to increase the public's knowledge of NCA's history.

P.L. 116-260 provides $352 million for NCA expenses for FY2021, $8 million less than VA's requested amount, but $23 million more than the FY2020-enacted amount⁶⁷ (see Table 1). The explanatory statement accompanying the bill explains that committee believes that these funds will adequately address the needs of NCA to meet its increased workload and burial expansions, but stresses that NCA should prioritize services at existing cemeteries and opening new cemeteries for increased burial access.⁶⁸ An area of ongoing concern is the way VA is addressing the Prisoner of War headstones with German inscriptions and emblems on them and how VA plans to provide historical context for the headstones of prisoners of war.⁶⁹ The committee would like NCA to continue providing reports to Congress on this matter.

The explanatory statement also recognizes the advancement NCA has achieved in expanding burial spaces to underserved populations in rural communities; however, the committee remains concerned about limited infrastructure at these sites that could detract from cemetery operations and committal services. Therefore, the committees direct VA to assess the potential for permanent infrastructure enhancements at each Rural Initiative national cemetery and to submit a report to the Committees on Appropriations no later than 180 days after enactment of this act.⁷⁰

VBA, General Operating Expenses

VA requested $3.21 billion in funding for VBA general operating expenses for FY2021. This was an estimated $69 million increase over the enacted FY2020 budget. The largest portion of this funding request, approximately $2.5 billion, was for the general operating expenses associated with the compensation and pension (including burial benefits) categories.⁷¹

Within the compensation service category, an estimated $1.9 billion of VBA's request was for FTE salaries and benefits. This amount would have provided for an additional 691 FTEs in support of the processing and adjudication of Blue Water Navy claims. With this increase, VBA projected having 16,682 FTEs supporting the delivery of veterans' compensation benefits, equating to 72% of the program's operating expenses.⁷² In addition to staffing, processing, and IT investments to implement the Blue Water Navy Act (P.L. 116-23), funding allocations would have gone toward implementing the Forever GI Bill (P.L. 115-48); supporting economic development initiatives along with transition assistance programs; and funding mission-critical agency operations.⁷³

The Consolidated Appropriations Act provides $3.19 billion for VBA operating expenses for FY2021, $27 million less than VA's request (see Table 1).⁷⁴ The committee report stresses the importance of timely processing of claims, including those associated with the Blue Water Navy Act (P.L. 116-23). The committee did highlight a few items it would like to see VBA improve upon during FY2021, including ways to improve the accessibility of benefits to veterans.

These areas include efforts to mitigate veteran underemployment; studying the feasibility of funding a veteran benefit counselor position within states' VA departments; expanding the Solid Start program for transitioning servicemembers; and expanding awareness and use of GI Bill apprenticeships and on-the-job training. In addition, the committee requests a report from VA to both Appropriations Committees on Open Air Burn Pit claims within 180 days of the enactment of the act. The report is to include a list of conditions for which veterans filed benefits, the locations veterans are claiming exposure, and the reasons for the denial of claims. Finally, the accompanying report directs VA to assess the feasibility to expand eligibility for VA benefits to individuals who served honorably in Laotian and Hmong Special Guerilla Units and other irregular forces supporting the U.S. during the Vietnam War. This report should include a cost estimate and is to be submitted to the Committees on Appropriations no later than a year after enactment of this act.⁷⁵

Information Technology

The information technology (IT) account provides funding for department-wide IT activities such as IT and telecommunications support, management of data systems, and acquisition of IT systems and department-wide cybersecurity efforts, among other things.

For FY2021, the Administration requested $4.9 billion for the information technology budget. This amount would have funded IT activities across the VA, including modernizing Veterans Benefits Management to automate Blue Water Navy veterans' claims, implementing the VA MISSION Act, implementing a new health care logistics information system, and improving cybersecurity among other things.

The House-passed bill (Division D of H.R. 7608) provided approximately $4.9 billion for the IT systems account, $8.5 million less than the President's request (see Table 1). This level of funding would have provided for developing clinical applications, maintaining and improving health management platforms, IT systems associated with veterans' benefits and memorial affairs, cybersecurity and information infrastructure, among others.⁷⁶ Furthermore, the committee (H.Rept. 116-445) provided funding within the $4.9 billion for a digital protection initiative to protect veterans, and Congressionally Chartered VSOs "from both foreign and domestic threats across the digital landscape attempting to steal money, pilfer personal information or peddle foreign influence via social media or other online campaigns."⁷⁷

The Senate Appropriations Committee majority draft bill recommended $4.9 billion for IT systems, and this amount was equal to the President's request. To provide better oversight on how IT funds are executed by the VA, the Senate Appropriations Committee majority draft explanatory statement provided funding for the IT systems account as three subaccounts: $1.2 billion for salaries and expenses, $3.2 billion for operation and maintenance of existing IT systems, and $495.5 million for IT program development.⁷⁸

The Consolidated Appropriations Act, 2021 (P.L. 116-260), provides $4.9 billion for the IT systems account (see Table 1). This amount includes a $37.5 million rescission as required by Section 254 of the MILCON-VA Appropriations Act, 2021 (Division J of P.L. 116-260). The explanatory statement to accompany the Consolidated Appropriations Act, 2021, includes $1.2 billion for staff salaries and expenses, $3.2 billion for operation and maintenance of existing IT systems, and $495.5 million for IT program development.⁷⁹ Within this account, $111.1 million is provided for the Financial Management Business Transformation (FMBT) program.⁸⁰

Electronic Health Record Modernization

On May 17, 2018, the VA signed a contract with Cerner Corporation to modernize its electronic health care record system. This account provides funding for activities required to plan and deploy the Cerner Millennium electronic health care record system at VA medical facilities. Beginning with the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act for FY2018 (P.L. 115-141), Congress established this new account, "intended to be the single source of funding within VA for the electronic health record effort" (H.Rept. 115-673).

The President's budget proposal requested $2.6 billion for activities related to the development and rollout of VA's Electronic Health Record Modernization (EHRM) initiative, including interoperability with the DOD electronic health record.

The House-passed MILCON-VA Appropriations bill for FY2021 (Division D of H.R. 7608; H.Rept. 116-445) provided the same amount as the President's budget request (see Table 1). Funding provided for this account is available until September 30, 2023, "due to the uncertainty of the timing" of the EHRM initiative.⁸¹ The committee report accompanying the MILCON-VA Appropriations bill went on to state that "[the] VA transition to a commercial-based EHR system continues to be challenging, and it is uncertain if this capability will be delivered across the enterprise by 2027."⁸²

The Senate Appropriations Committee majority draft MILCON-VA Appropriations bill for FY2021 recommended the same amount as the budget request. Additionally, the majority draft bill included an administrative provision that makes 25% of funding based on certification by the Secretary regarding any changes to the EHRM deployment schedule.⁸³

The Consolidated Appropriations Act, 2021 provides $2.6 billion for the EHRM program (see Table 1). This amount includes a $20 million rescission as required by Section 254 of the MILCON-VA Appropriations Act, 2021(Division J of P.L. 116-260). The explanatory statement to accompany P.L. 116-260 requires VA to provide regular status updates to the Senate and House Appropriations Committees on the progress of the EHRM program including spending and oversight of the program.

While the Committees remain supportive of the EHRM initiative, as with any acquisition of this size and magnitude, there are implementation concerns, including maintaining budget, scope, implementation and deployment schedules, security, reporting, and interoperability. As such, the agreement directs the Secretary to continue to provide quarterly reporting of obligations, expenditures, and deployment implementation by facility. Additionally, the agreement directs the Department to provide updates on plans and efforts to integrate community care providers into the system. Such updates should be submitted concurrently with the quarterly reports. Moreover, the agreement directs the Department to continue quarterly briefings on performance milestones, costs, and progress towards or changes to implementation and management plans, and directs the Department to provide an accurate up-to-date deployment schedule with each quarterly briefing. Should there be any deviation from the deployment schedule, the agreement directs the Department to formally submit in writing a proposed updated deployment schedule within seven days of notification of any potential change, and prior to implementation of the updated deployment schedule, to the Committees. The Secretary is not provided transfer authority and is directed to continue using this account as the sole source of funding within the Department for EHRM. Further, the agreement continues to direct the Secretary to manage EHRM at the headquarters level in the Office of the Deputy Secretary.⁸⁴

Construction

Construction accounts include major construction, minor construction, and construction and renovation grants for state extended care facilities, as well as grants for state veterans cemeteries.

The major construction account provides funds for capital projects costing $20 million or more that are intended to design, build, alter, extend, or improve a VHA facility. Projects identified through the Strategic Capital Investment Planning (SCIP) process are submitted for congressional authorization. Congress reviews, approves, and funds major construction on a project-by-project basis. Typical major construction projects are replacements of hospital buildings, the addition of large ambulatory care centers, and new hospitals or nursing homes.

The minor construction account provides funds for capital projects costing less than $20 million that are intended to design, build, alter, extend, or improve a VHA facility. The total cost of a minor construction project cannot be greater than this statutory threshold. Minor construction projects are approved by the Office of Capital Asset Management and Support at the VA Central Office through the SCIP process. The grants to state-extended care facilities account provides grants to states for construction or acquisition of state home facilities, including funds to remodel, modify or alter existing buildings used for furnishing domiciliary, nursing home or hospital care to veterans. A grant may not exceed 65% of the total cost of the project. Lastly, the grants for construction of veterans cemeteries account provides grants to states, territories, and federally recognized tribal governments for the establishment, expansion, or improvement of state and tribal veterans cemeteries.

For FY2021, the President's budget requested $1.9 billion for the VA's total construction program. This amount included $1.77 billion for the VA's major and minor construction programs, $90 million for construction and renovation grants for state-extended care facilities, and $45 million for grants for state veterans cemeteries.

The House-passed bill (Division D of H.R. 7608; H.Rept. 116-445) provided approximately $1.9 billion for the department's total construction program for FY2021. All amounts recommended for the VA's major and minor construction programs, and grants for construction of veterans' cemeteries accounts, were the same as the President's request for FY2021 (see Table 1). However, for grants for construction of state extended care facilities the measure provided $93 million—$3 million more than the Administration's request.

The Senate Appropriations Committee majority draft bill recommended approximately $1.8 billion for the department's total construction program for FY2021, which is $67 million below budget request. For the major construction projects the committee recommendation was $57 million below the requested amount of $1.37 billion, and for minor construction projects the majority draft bill recommendation was $10 million below the President's request of $400 million (see Table 1).

The Consolidated Appropriations Act, 2021, provides approximately $1.8 billion for the total construction program. This includes $1.3 billion for the major construction program and $354.3 million for the construction minor program, which includes $35.7 million rescission as required by Section 254 of the MILCON-VA Appropriations Act, 2021(Division J of P.L. 116-260), $90 million for construction and renovation grants for state-extended care facilities, and $45 million for grants for state veterans cemeteries (see Table 1).

Appendix A. Veteran Population, VA Enrollees, and VA Patients, FY2000-FY2021

Appendix B. Department of Veterans Affairs, Enacted Appropriations FY1995-FY2020