VA Undersecretary for Health Shereef Elnahal, MD, spoke in November at a Toms River, NJ< VA Clinic opening.
Source: Elnahal’s X account
WASHINGTON, DC — At a public examination of VA’s ongoing budget crisis, Republican legislators accused agency leaders of general incompetence and of using the budget as political leverage during an election season.
“Over the last 6 months, we have not been able to get a straight answer from VA about how much money they have and how much they are spending,” declared House VA Committee Chairman Michael Bost (R-IL). “All the estimates are wrong. Basic figures about how much they have already spent are wrong too. And large parts of the budget request seem to be made up. If you ran a small business this way, you would soon be out of business.”
In July, VA informed Congress that they expected shortfalls in both VBA and VHA’s budgets and would require a $2.8 billion in the 2024 budget in order to pay veteran benefits through the end of the year, and an additional $12 billion in the 2025 budget for VA healthcare. Congress appropriated the $2.8 billion and was debating the $12 billion when the department announced that while the VBA bank account had been low, the expected shortfall had not manifested and that the 2025 need at VHA had been halved.
“Turns out the healthcare budget wasn’t any tighter in 2024 than any other fiscal year,” Bost declared. “VA carried over 12 billion in unspent taxpayer money into 2025. Community care and payroll costs didn’t rise any faster than normal. Now we’re being told the healthcare shortfall is $6.6 billion, not $12 billion, but the explanations are the same, and they still don’t add up. I suspect these confusing stories about VA’s budget shortfall were cooked up in the White House. … Scaring veterans and their families for political gain should be off-limits.”
VA leaders testified that the changing narrative was not nefarious intent but the result of standard delays in budget reconciliation.
“It takes about a month on average to close the books and really understand how much we were obligated to spend in the prior fiscal year,” explained Under Secretary for Health Shereef Elnahal, MD. “I’m under oath, Mr. Chairman. We verified the numbers; and, as soon as we had that verification, we ran them through [the Office of Management and Budget] and came forward with them.”
That $6.6 billion is still needed, he argued.
Nearly half of that need is due to medical inflation in drugs and prosthetics. VA’s drug costs increased by just over 13% in 2024 compared to the 9% increase estimated in the 2025 president’s budget, and the department is estimating further cost escalation.
“Medical inflation in recent years has exceeded 20% in some items in prosthetics and pharmaceuticals,” Elnahal explained. “We’re also seeing the introduction of new drugs for obesity that are quite expensive [as well as] new drugs that are for [conditions] common in veterans, like metabolic dysfunction associated with steatohepatitis. [This cost increase] is a mix of drugs that are becoming more expensive with a good effect on veterans’ health and general medical inflation overall, which far exceeds the consumer price index.”
Despite this outsized inflation, VA managed to stay within its budget in 2024, but many of the cost-cutting measures they employed cannot be replicated in 2025, he explained.
“We cannot continue to delay purchases or upgrades of certain medical equipment year over year,” he said. “We were able to delay $600 million this year that we won’t be able to delay next year.”
If the department does not get that additional $6.6 billion, the next administration will find itself forced to make some tough choices, Elnahal said. “We don’t want that to happen. We want to transition this agency responsibility.”
Despite VA’s explanations, some legislators were still unconvinced the at the budget back-and-forth of recent months wasn’t the result of intent. Rep. Matt Rosendale (R-MT) said he suspected the White House purposefully shorted its budget request as a way to get around Congressional spending caps.
VA’s Office of the Inspector General is currently auditing the circumstances around the supplemental funding request, and Elnahal said he’s planning to arrange an external review, not just on the circumstances of what happened this year but on VA’s budget management as a whole.
“[The goal is to] try to find ways to map and observe expenses as little more closely,” he said.
