H.R. 3481 would change how the Department of Veterans Affairs (VA) corresponds with people receiving education benefits and modify the pension program administered by VA. CBO estimates that enacting the bill would increase spending subject to appropriation by $54 million and decrease direct spending by $56 million over the 2025-2035 period (see Table 1). The budgetary effects of the legislation fall within budget functions 550 (health) and 700 (veterans benefits and services).
Spending Subject to Appropriation. Section 3 of H.R. 3481 would require VA to allow people receiving education benefits to correspond with the department via email, texting, or other forms of electronic messaging. Currently, that correspondence is carried out through the mail. VA is implementing a digital platform (the Digital GI Bill) through which it plans to modernize its processes regarding education benefits claims and payments. However, the department testified that the Digital GI Bill does not have the capability for electronic correspondence and would require additional funding to build the capability. Once built, VA would incur ongoing expenses for maintaining that capability; however, CBO expects that those costs would be offset by savings from a reduced number of mailings. On the basis of information related to the contract costs of the Digital GI Bill and personnel costs for contract management, CBO estimates that VA would require $54 million to develop and implement information technology systems to electronically correspond with beneficiaries, over the 2025‑2035 period. Such spending would be subject to the availability of appropriated funds.
Direct Spending. Under current law, VA reduces pension payments to veterans and survivors who reside in Medicaid nursing homes to $90 per month. That required reduction expires November 30, 2031. Section 4 of H.R. 3481 would extend that reduction for 14 months, through January 31, 2033. CBO estimates that extending that requirement would reduce VA benefits by $10 million per month. (Those benefits are paid from mandatory appropriations and are therefore considered direct spending.) As a result of that reduction in beneficiaries’ income, Medicaid would pay more of the cost of their care, increasing spending for that program by $6 million per month. Thus, enacting section 4 would reduce net direct spending by $56 million over the 2025-2035 period.
The CBO staff contact for this estimate is Paul B.A. Holland. The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.
