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Striking Back Against the VA’s Bonuses

Thursday June 12th, 2014   •   Posted by Craig Eyermann at 7:15am PDT   •  

We’ve been following the story of the perverse incentives that the VA’s administrators had in creating the secret wait lists to ration and restrict needed medical care to American veterans. The latest salvo in fixing that problem was just fired in the U.S. House of Representatives, where a ban on further bonuses to the VA’s senior leadership was included in an amendment to the Military Construction and Veterans Affairs Act, which went on to pass in the House. The Washington Post reports:

The House on Wednesday passed a bill amendment that would ban bonuses for senior executives with the Department of Veterans Affairs.

Rep. Tim Huelskamp (R-Kan.), a co-sponsor of the proposal and a member of the House Veterans Affairs Committee, said the measure is needed because of “systematic leadership failures,” including preventable deaths at VA health centers, a backlog of longstanding disability claims and extensive delays for many of the department’s construction projects.

“This culture of anything-goes has got to stop,” Huelskamp said in a statement on Wednesday. “And the best way to stop this is to send a strong signal across the Department of Veteran Affairs that Congress means business.”

To understand why the issue of bonuses for the VA’s veteran health care rationing scheme is so important, let’s review how the VA has been spending money during the past 10 years. The following chart shows where the VA spent its rapidly increasing budget for each year since 2003:


Political Calculations describes the evolution of that spending over time, but more importantly, provides some background into the VA’s last scandal involving bonuses paid to its staff in 2011:

Here, we find that the VA’s spending for the compensation and pensions of its employees have grown the most since 2003, followed by spending on the medical services consumed by veterans who successfully obtained care from the VA, and then followed in a distant third place by spending to support education and vocational job training programs for U.S. veterans.

But beyond that, we find that the spending to support the pay, bonuses and pensions of VA employees has grown considerably faster than that to provide medical care to veterans – particularly in the period since 2008, which corresponds to President Obama’s tenure in office.

We also observe an unusual “spike” in the amount spent on VA employee compensation and pensions in 2011. This corresponds to the 2011 VA Bonus Scandal, in which the Department issued over $400 million in “merit” bonuses to VA employees with little evidence of actual merit in their work, inflating the amount of employee compensation that year.

The effect of the scandal was such that VA administrators and others who benefited from the lavish outpouring of bonuses in 2011 were denied bonuses in 2012, causing the amount of compensation and pensions paid to VA employees to dip in that year.

As you can see next, the compensation and pensions of VA employees surged to new highs in 2013. This increase corresponds to the re-establishment of the VA’s employee bonus programs in 2013, this time based on the false merit of their having “successfully” met President Obama’s goal of reducing the backlog and wait times for veterans seeking medical care.

It would seem that no one in a position of responsibility at the VA learned anything from the Department of Veterans Affair’s 2011 bonus scandal. Keep that in mind when considering the reaction of VA officials to the House’s action to sever their bonuses:

The VA has pushed back against the proposed restriction on executive bonuses, saying in a statement on Wednesday that the department must “remain competitive to recruit and retain the best people” to ensure quality service.

The VA also downplayed the notion of widespread problems at the department, highlighting some of its accomplishments in recent years, including enrolling 2 million former troops into the VA health-care system, reducing veterans homelessness by 24 percent and trimming its backlog of longstanding disability claims by 44 percent.

The Senior Executives Association said it “strongly disagrees” with Wednesday’s vote. “A blanket ban on performance awards only serves to punish those senior executives who are high performing and those who may not have a direct line of responsibility for the issues being raised in Congress,” the group said in a statement.

The bureaucrats behind this statement really want people to think that they have no responsibility for the Department’s health care rationing scheme, which allowed them to claim big bonus payouts even as they denied medical care to America’s veterans.

That’s a lot of money that could have instead gone to provide veterans with medical care outside of the VA’s system, if only they really cared about connecting U.S. veterans with the health care they need. But it was and is more important to the VA’s bureaucrats that they have both bonuses and absolute control over when and where U.S. veterans receive health care.

That bureaucratic reaction is why the House’s bill to ban bonuses for the VA’s top officials doesn’t go anywhere near far enough. Instead of denying them future bonuses, the Congress should act to claw back their previous ones.

And then we’ll find out if they really get the message this time.

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June 2014