In FY2002, Congresscreated a new fund (Health Services Improvement Fund) to collect increases inpharmacy copayments (from $2 to $7 for a 30-day supply of outpatient medication)that went into effect on February 4, 2002. Theprogram was created by the Veterans' Omnibus Health Care Act of 1976 ( P.L.94-581 ) to provide rehabilitative services to certain veteran beneficiaries receivingmedical care and treatment from VA. Funds collected in this program are derivedfrom goods and services produced and sold by patients and members in VA healthcare facilities. Theprogram was established by the Veterans' Benefits Act of 1992 ( P.L.102-568 ). Underthis program, veterans who do not have either a spouse or child may have theirmonthly pension reduced to $90 after the third month a veteran is admitted for nursing home care. The difference between the veteran's pension and the $90 is usedfor the operation of the VA medical facility. Collections to this revolving fund are realized from the transferon any interest in real property that is owned by VA and has an estimated value inexcess of $50,000. Appendix 2. VHA's New Account Structure

Medical Services. Provides fundsfor treatment of veterans and eligible beneficiaries in VA medical centers, nursinghomes, outpatient clinic facilities, and contract hospitals. Overhead costs associated with medical and prosthetic researchis also funded by this account. Medical Administration. Providesfunds for the management and administration of VA's health care system. Funds areused for the costs associated with the operation of VA medical centers, otherfacilities, VHA headquarters, costs of Veterans Integrated Service Network (VISN)offices, billing and coding activities, and procurement. Provides funds for medical, rehabilitative, and health services research. In addition to funds fromthis appropriation, reimbursements from the Department of Defense (DOD), grantsfrom the National Institutes of Health (NIH), and private sources supports VAresearches. Appendix 3. VHA's Appropriation for Capital Investments

Medical Administration. Providesfunds for capital projects costing $7 million or more that are intended to design,build, alter, extend or improve a VHA facility. As part of VA's budget process,Congress reviews, approves, and funds major construction on a project by projectbasis. Appendix 4.
The Department of Veterans Affairs (VA) provides services and benefits such as hospital andmedical care, rehabilitation services, and pensions, among other things, to veterans who meet certaineligibility criteria. VA provides these benefits and services through four administrative units: theVeterans Health Administration (VHA), the Veterans Benefits Administration (VBA), the NationalCemetery Administration (NCA), and the Board of Veterans' Appeals. VHA is primarily a directservice provider of primary care, specialized care, and related medical and social support servicesto veterans through an integrated health care system.
Funding for VHA is an issue of perennial interest to Congress, especially with the increasingdemand for VA medical services and with some veterans increasingly having to wait more than sixmonths for a primary care or speciality care appointment. VHA is funded through multipleappropriation accounts, which are supplemented by other sources of revenue. Over the past decade,the composition of VHA's funding has changed. Not only has VA's appropriation account structurebeen modified, but also VA's ability to retain nonappropriated funds has increased. These changespresent challenges in comparing VHA funding over a period of time.
Between FY1995 and FY2004, appropriations for VA medical care grew by 63%. For thefirst four years of this time period, from FY1995 through FY1999, appropriations for VA medicalcare grew by 6.7%, from $16.2 billion in FY1995 to $17.3 billion in FY1999. In comparison, duringthe last five years of this time period, from FY1999 through FY2004, VA medical careappropriations grew by 52.7%, from $17.3 billion in FY1999 to $26.4 billion in FY2004. Theseamounts do not include appropriations for medical research, medical administration andmiscellaneous operating expenses (MAMOE), and funds from nonappropriated funding sources.
The total number of veteran enrollees has grown by 76.9% from FY1999, the first year VHAinstituted an enrollment system, to FY2004. During this same period the number of veteransreceiving medical care has grown by almost 50%, from 3.2 million veterans in FY1999 to anestimated 4.7 million veterans in FY2004.
This report will not be updated.