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Bush VA Appointees Diverted Healthcare Funds for Illegal Studies

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One of the maxims of the Bush administration is: Never let the law get in your way. The political appointees who run the Department of Veterans' Affairs (VA) certainly know how to play by those rules.

Between 2001 and 2004 the VA illegally diverted funds earmarked for veterans' healthcare to pay for studies on outsourcing jobs at VA facilities and to fund other studies on closing VA hospitals. The report detailing the VA's misdeeds was released last week by the Government Accountability Office (GAO). (The full GAO report is available here --

The VA officially denies any wrongdoing. VA Secretary Jim Nicholson argued, "Congress clearly did not intend to preclude all manner of cost analysis necessary for the day-to-day administration of our health-care system -- However, Congress did pass legislation in 1981 that prohibits the diversion of funds appropriated to VA medical care accounts for studies on the cost of keeping work in-house versus that of contracting it out.

During the time VA officials were misappropriating funds they were working with Republicans in Congress to try to change the 1981 law that they were breaking. Senator Larry Craig (R-ID), Chairman of the Senate Committee on Veterans' Affairs, introduced legislation (S. 1182 Sec 7) to do away with the prohibition and allow the VA to spend healthcare funds on outsourcing studies.

Also during this time the VA asked Congress for funds to conduct outsourcing studies. The amounts ranged from $16 million to $50 million. The VA was turned down every time. Since the VA couldn't get the funds, they just broke the law.

This came to public attention earlier this year when the American Federation of Government Employees (AFGE), the union that represents many VA employees, began a concerted effort to halt Senator Craig's legislation.

The AFGE maintained that 36,000 VA jobs could be lost to outsourcing. And, one-third of those positions were filled by veterans, many of them with service-connected disabilities. The cost of the studies could be staggering, running from $10,000 to $40,000 per job studied. At a minimum this would be an expenditure of $360 million.

How much the VA actually spent on outsourcing studies is a matter of debate because, according to the GAO, the VA failed to track the expenditures.

The VA was also caught with its hand in the healthcare till on another group of studies, these done for the Capital Assessment Realignment for Enhanced Services (CARES) Commission. CARES was set up to study how many VA hospitals should be closed. The CARES report was issued late last year and recommended the closing of a number of VA facilities. Again, the VA did not track the amount of money taken from the healthcare budget to pay for the CARES reports.

What does all this mean?

What we are seeing is an intensive effort to privatize the VA led by the political appointees who run the agency. A large, publicly-funded healthcare system that performs well runs contrary to the Bush administration's philosophy.

It's vital to note that previous outsourcing studies contracted by the VA have not returned the results they wanted. When studies compared the VA's AFGE workers and private-sector workers performing similar jobs, the government employees outperformed their "civilian" counterparts 91 per cent of the time.

The outsourcing studies are just one example. The completed illegal outsourcing studies had to do with VA laundry facilities and whether or not they are as efficient as commercial laundries. The proposed outsourcing studies cover 36,000 VA jobs in a variety of areas. If these studies become a reality, we could see many VA jobs go to the private sector. Since one-third of these jobs are held by veterans, the specter of increased unemployment in the veterans' community is a grim reality.

The illegal studies for the CARES Commission are another example of a giant step toward privatization of the VA. CARES recommended closing a number of VA hospitals and building smaller clinics surrounding the soon-to-be-closed hospitals.

There would be no problem closing VA hospitals. But, there are no funds in the VA budget to build the clinics. And, there are no funds to staff the clinics. But, what if the VA closed their hospitals and built empty clinics? What would be the easiest way to staff those clinics? Put the services out to contract and have the clinics taken over by private-sector providers.

Currently, most VA hospitals are operating under a hiring freeze because they do not have the funds to hire the doctors, nurses and technicians needed to provide necessary healthcare to veterans.

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Larry Scott served four years in the U.S. Army with overseas tours as a Broadcast Journalist in Korea and the Azores and a stateside tour as a Broadcast Journalism Instructor at the Defense Information School (DINFOS). He was awarded DOD's First Place Thomas Jefferson Award for (more...)
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