On the 19th, Mr. Backhus from the General Accounting Office also quoted from the Commission on the Future of Long-Term Care, to which Mr. Schoeps referred, indicating their estimate that the VA was now meeting only about 20 percent of the need for nursing home care on the part of veterans with service-connected disabilities.

Given all of the complexities of this issue, and the fact that we've only just heard today of these estimates from Mr. Schoeps, that's about as far as I can go at this point to compare the two estimates. Obviously, we would like very much to work with the VA staff and learn more about the information underlying their estimate and to share with them further details underlying ours.

One final point: our methodology does not assume, as I think you seem to conclude that it did, that everyone who is or might potentially be seriously impaired in the activities of daily living would necessarily go into a nursing home. The databases that we used indicate that obviously people prefer to avoid going into nursing homes, if they can avoid it-particularly people with spouses or other family members who are able to give care. They would much prefer to stay at home and receive care in that setting. That preference is reflected in the databases which we used, which reflect the experiences of real people.

That returns to my initial point: that we're both trying to extrapolate from past behavior, and as always, when you extrapolate, you can get different results. But we're eager to pursue this conversation with the VA.

Mr. STEARNS. Fine.

Just yes or no. Have you heard of the National Database Expenditure Survey?

Mr. VAN DE WATER. You mean the National Medical Expenditure Survey?

Mr. STEARNS. Yes.

Mr. VAN DE WATER. Oh, yes, indeed.

Mr. STEARNS. Mr. Doyle, my colleague from Pennsylvania.

Mr. DOYLE. Thank you, Mr. Chairman.

First, Mr. Chairman, I would like to ask that my statement be made part of the record.

Mr. STEARNS. By unanimous consent, so ordered.

[The prepared statement of Congressman Doyle appears at p. 28.]

Mr. DOYLE. Mr. Van de Water, I just want to follow up a little bit on what we've been hearing. Mr. Schoeps said that their model was more reality based and yours was more theoretical. You were just speaking to the fact that you used different databases than Mr. Schoeps used in his model, but you're saying the databases that you used are also real-life situations.

Mr. VAN DE WATER. Exactly.

Mr. DOYLE. So you don't really concur that you have some theoretical model and he has some reality based model, that you're both using data that's based on actual

Mr. VAN DE WATER. We both have data regarding actual people, and we both have to extrapolate from those data into a situation that none of us has observed.

Mr. DOYLE. And you got two different results when you looked at those two different databases, obviously.

Mr. VAN DE WATER. That may be part of it. Again, without going into the details, we can't explain this morning what part of the difference between the estimates may reflect differences in the starting data or in some of the other assumptions that we applied to those data. We will obviously look into that.

Mr. DOYLE. I'm curious. When CBO is putting estimates together, is it common practice for you to be in communication with the Department of Veterans Affairs in this particular case, and did any interaction like that take place prior to your issuing numbers to this committee?

Mr. VAN DE WATER. Yes, indeed, it is our practice. We're "hounds" for data. We're always looking for more information from whatever source we can get it, and clearly, any executive branch department (in this case, the VA) is going to have many more resources in a particular area than we do. So we are very eager to make use of any data that we can get. In fact, we have made use of data from the VA. The National Survey of Veterans that we've used extensively is, I believe, a VA database.

Mr. DOYLE. I think I also heard you mention that you thought earlier in the process, when Dr. Kizer testified before the committee, that it was your feeling that VA's estimates of the cost of this legislation were more in line with what you're estimates were, but that obviously has changed somewhat?

Mr. VAN DE WATER. That appears to be the case.

Mr. DOYLE. What do you think took place between that period of time and today, and where did the lines of communication between CBO and the-when did you first start to realize that veterans had a much different outlook on this bill than what you first thought they had? Was it this morning?

Mr. VAN DE WATER. If I may, I would like Dr. Miller to answer that question.

Mr. MILLER. In the process of preparing our estimate, we were aware of Dr. Kizer's testimony, and his statement that it would entail significant costs seemed to coincide with our analysis of the data. At the same time, had conversations with staff at VA that suggested their estimates were considerably lower than that, along the lines of what Mr. Schoeps has described.

One of the things that we wrestled with over a period of several days was how to reconcile Dr. Kizer's statement and our analysis of the data with the kinds of estimates that you heard this morning. In the end, not knowing exactly how to eliminate every difference, we trusted the analysis that we had done and published that. That is the estimate that we appended to Mr. Van de Water's testimony today.

Mr. DOYLE. So you both agreed to disagree in the end?
Mr. MILLER. Yes.

Mr. DOYLE. Mr. Schoeps, am I hearing you correctly, that you're telling us that we can provide this long-term care benefit? This is going to be great news in Pittsburgh if it has any ounce of reality to it. You're saying that we can do this benefit and we're going to save money from the copayment section of this bill, and it's going

to be a wash and life it going to be wonderful for our veterans now; is this what you're telling the committee?

Mr. SCHOEPS. This is what our best estimate is, that it would appear that we're probably on stronger analytical grounds on the cost side than we are on the copayment side. I'm much more comfortable on the cost side than on the copayment side.

Mr. DOYLE. So you feel pretty comfortable about your estimate. This is going to be somewhere in the $200 million range as far as the cost, but you're less confident that the money brought in from the copayment will wash that out?

Mr. SCHOEPS. That's correct. There is-

Mr. DOYLE. You wouldn't want to stake your reputation on this? Mr. SCHOEPS. No, I would not.

Mr. DOYLE. And I'm not asking you to.

Mr. SCHOEPS. Our estimate of the copayment is less than CBO's. I'm still not sure that ours may be too high. We had to make some national assumptions, given the time we had and the databases we had access to. To do this correctly, I think you would want to spend a lot of time with the staff at the National Governors Association and look at what medical assistance policies look like in each State. Otherwise, you would tend to create either tremendous windfalls for residents of certain States, and then in other States you would place them in a terrible disadvantage.

You would have to do something quite sensitive and probably State-based so that you weren't upsetting the marketplace, the decision-making processes of people, and really denying access in one State and promoting access in another, which we would find to be quite unfair.

Mr. DOYLE. Thank you, Mr. Schoeps.

I see my time is up, Mr. Chairman. Thank you.

Mr. STEARNS. Just for clarification of Mr. Doyle, you said $150 million, not $200 million, is the estimated cost for long-term care. Mr. SCHOEPS. Our range was between $115 million to $184 million in the first year.

Mr. STEARNS. Okay. That's good.

Mr. Reyes, the gentleman from Texas.

OPENING STATEMENT OF HON. SILVESTRE REYES

Mr. REYES. Thank you, Mr. Chairman.

I guess part of the frustration that I feel is the same as expressed to me continuously in the district, and really in other parts of the country as I visit other districts with colleagues, that there is a disconnect between the reality of what's occurring in terms of services for veterans and even, in the opinion of veterans-and I tend to agree with them-the marginal passing interest in the bureaucracy to accommodate their needs, to accommodate their desire for service.

I get frustrated just listening to some of the terms that I have heard here this morning, in terms of the difference in estimates and the difference in the kinds of budgetary language that you apparently now disagree on. That creates a problem for us because we cannot provide good representation to our veterans if we don't have you gentlemen provide us the information on a timely basis.

I think it's a very serious issue when we're unable to mark up legislation because we haven't gotten an estimate out of the CBO. I think it's a very serious issue when there is disagreement. At least from everything I have seen and read, there is enough empirical data within the system of the VA and CBO to come to the table and discuss whatever differences you might have in terms of your estimates and give us one, comprehensive agreed upon estimate so that we can do our jobs.

Part of the frustration that I think we all feel on this committee is the failure on your part, on the part of the Veterans' Administration and also the CBO, in giving us the information so we can make a decision based on the best judgment that you can provide

us.

I don't think at this point, Mr. Chairman, I have any questions. I just get frustrated in not being able to do our job because some others don't do theirs.

Thank you.

Mr. STEARNS. I thank my colleague. Dr. Snyder.

OPENING STATEMENT OF HON. VIC SNYDER

Dr. SNYDER. Thank you, Mr. Chairman.

Actually, I have a little different take on this. While I share the frustration in not having the numbers, I hope that people who have divergent views won't feel an obligation to homogenize before they formally release numbers. I kind of like the fact that we've got a difference of views. It gives us a chance to kind of learn more about how you arrived at your numbers and the different approaches.

I wanted to ask, Mr. Van de Water, I'm really interested in the extended care line, the home care and nursing home line. Your total in 2004 is right at a billion dollars, your estimate. Did you come to any conclusions within that number of how much savings there would have been to either the Medicare or Medicaid numbers of veterans and their families who would have chosen to go the VA route, which would have been a savings in the other programs? Mr. VAN DE WATER. Yes, we did, Dr. Snyder.

With regard to Medicare, there is not much of an offset because Medicare basically doesn't provide long-term care-

Dr. SNYDER. It does provide services.

Mr. VAN DE WATER. -except under very limited circumstances. Dr. SNYDER. Yes.

Mr. VAN DE WATER. Medicaid is another story because, as you know, Medicaid does pay for a very substantial portion of nursing home services delivered in this country. I think it's in excess of 40 percent.

Now, of course, something close to half of that amount is paid for by the State governments. Medicaid is a joint Federal/State program.

Finally, there is an interesting analogy between Medicaid and the VA health system, in that the demands for medical services under Medicaid tend to be pushing up against the available resources, just as they are in the case of the VA. So it is our experience that if some sort of fiscal relief were provided to the Statesas would, in effect, happen if H.R. 2116 were enacted and the VA were to expand substantially its provision of long-term care-the

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States would elect to divert a substantial portion of the resources that they might otherwise use for long-term care to other needs, or perhaps provide additional long-term care to low-income people who are not now receiving it.

Taking all of that into account, our staff estimates that the amount of the offset to the Federal Government might be on the order of $150 million or so annually in the long term in the Medicaid program.

Dr. SNYDER. Once we get to the billion dollar total of that.
Mr. VAN DE WATER. Right.

Dr. SNYDER. It's interesting how different States work. In Arkansas, we round up. But about three-fourths of our nursing home beds are paid for by Medicaid, and we have a three to one match. We have a State that has great respect for our veterans hospital system, so we may even have a greater proportion that may want to go to the VA if they had that option.

Dr. Garthwaite, you have this divergence of views. It seems to me that you've got one estimate that kind of took the dark side and said, if everything went wrong, this is what it would be. Then you've got your own in-house estimate. I guess you all have already stated that you could certainly live with this program.

It seems to me that, even if everything went wrong, it still, by the year 2004, would be a manageable program; is that a fair assessment? I mean, even the billion dollar estimate, I had actually expected it to be several billion dollars. I think it's because I didn't realize how much of this care you're already providing.

Dr. GARTHWAITE. My crystal ball is probably not any better than anyone else's, and they have more numbers than I do, probably. But I commend the effort here because we know that there's a massive unmet need for long-term care. We clearly know that it's expensive. This is a very legitimate attempt to try to raise some revenues and clarify prioritization and eligibility and to involve us in what we know is an evolving need of our aging population of World War II veterans.

I think, if Dan's numbers are correct, then it's a relatively minor issue. If it is significantly higher than that, it can call into question the prioritization of whether we deliver basic medical benefits to an expanded population or more comprehensive benefits, including long-term care, to a more confined population of veterans. I think that depends a lot on how it plays out. But ignoring the problem doesn't make it go away.

Dr. SNYDER. Mr. Van de Water's estimate is that by the year 2004 we will have history and experience to go by, and certainly this committee is going to be interested in which estimate turns out to be accurate and what kind of moneys need to be out of the budget. Thank you for your time.

Mr. STEARNS. I thank my colleague.

Mr. Shows?

Mr. SHOWS. I have no specific comment. I appreciate your having this hearing.

Mr. STEARNS. My colleague, Mr. Buyer from Indiana.

Mr. BUYER. Thank you, Mr. Chairman. I appreciate having the opportunity to appear before your subcommittee.

Mr. STEARNS. We're very glad to have you.