H.R. 3863, VA Mental Health Outreach and Engagement Act

Bill Summary

H.R. 3863 would require the Department of Veterans Affairs (VA) to offer annual mental health consultations and provide information on the availability of mental health care from the department to veterans who are receiving disability compensation for mental health conditions that are connected to their military service. The bill also would require VA and the Government Accountability Office (GAO) to conduct several studies and submit reports. Finally, the bill would extend the higher rates for fees that VA charges borrowers for home loan guarantees.

Estimated Federal Cost

The estimated budgetary effects of H.R. 3863 are shown in Table 1. The costs of the legislation fall within budget function 700 (veterans benefits and services).

Basis of Estimate

For this estimate, CBO assumes that H.R. 3863 will be enacted in fiscal year 2026 and that outlays will follow historical spending patterns for affected programs.

Provisions That Affect Direct Spending and Spending Subject to Appropriation

The bill would require VA to offer annual mental health consultations to veterans who are receiving disability compensation for a service-connected disability relating to a mental health diagnosis. It also would require the department to contact veterans with those conditions to inform them about the department’s mental health care services. On the basis of information from VA about the number of veterans receiving disability compensation for a service-connected mental health condition and the cost of mental health consultations, CBO estimates that about 250,000 veterans, on average, would receive one consultation annually at an average cost of $280. In total, those consultations would cost $750 million over the 2026-2036 period.

The bill also would require VA to inform veterans about the availability of mental health consultations and other mental health services either electronically or by mail. CBO estimates that VA would notify an average of about 2 million veterans annually. Of those, 1.5 million veterans would be notified electronically at an average cost of about $0.25 per notification, and the remaining 500,000 veterans would be notified by mail at an average cost of about $2 per notification. After adjusting for inflation, CBO estimates that implementing the outreach requirement would increase administrative costs by $20 million over the 2026‑2036 period.

In total, CBO estimates that implementing the consultation and notification requirements would cost $770 million over the 2026–2036 period.

VA uses several appropriation accounts to pay for the costs of health care, disability claims processing, medical research, and information technology (IT) modernization. One of those accounts, the Toxic Exposures Fund (TEF), is a mandatory appropriation that can be used to pay for some of the costs of those activities if they support veterans who were exposed to toxic substances or environmental hazards.^[1] The other accounts are discretionary appropriations. H.R. 3863 would affect health care that benefits veterans with and without toxic exposures; therefore, enacting the bill would increase direct spending from the TEF as well as spending subject to appropriation. CBO allocates the estimated costs of legislation between the TEF and the discretionary appropriation accounts on the basis of the portion of all funding for those activities that are projected, in CBO’s baseline, to come from the TEF.

On that basis, CBO estimates that over the 2026-2036 period, implementing the consultation and notification requirements of H.R. 3863 would increase direct spending by $289 million and spending subject to appropriation by $481 million.

Direct Spending

In addition to requiring VA to offer annual mental health consultations that would partly be covered by the TEF, enacting the bill would affect direct spending by extending higher fees for VA home loan guarantees. In total, CBO estimates that enacting H.R. 3863 would decrease net direct spending by $313 million over the 2026-2036 period (see Table 2).

Home Loan Fees. The bill would extend—for about 11 months—the higher fees that VA charges borrowers for its loan guarantees.VA provides loan guarantees to lenders that allow eligible borrowers to obtain better loan terms—such as lower interest rates or smaller down payments—to purchase, construct, improve, or refinance a home. VA typically pays lenders up to 25 percent of the outstanding mortgage balance if a borrower’s home is foreclosed upon. Those payments, net of fees paid by borrowers and recoveries by lenders, constitute the subsidy cost for the loan guarantees.^[2]

CBO’s baseline projects that, on average, VA will annually guarantee around 600,000 loans of roughly $490,000 each at a subsidy rate of 0.93 percent, and that those loan guarantees will cost $27.5 billion over the 2026-2036 period.Under current law, the rates for most of the fees that borrowers currently pay average of about 2.3 percent of the loan amount; for loans guaranteed after June 9, 2034, those rates will drop to about 1.2 percent of the loan amount. H.R. 3863 would extend the higher rates through May 12, 2035, which would reduce the subsidy cost of loans guaranteed during that period.

Using its forecast of loan volume based on data provided by VA, CBO estimates that extending the higher fee rates as specified in the bill would reduce the subsidy cost of the loans—and thereby decrease net direct spending—by $602 million over the 2026‑2036 period.

Spending Subject to Appropriation

In addition to requiring VA to offer annual mental health consultations to certain veterans, the bill would require GAO and VA to conduct studies and submit reports related to mental health outreach and consultation outcomes. On the basis of the costs of similar activities, CBO estimates that satisfying those requirements would cost less than $500,000 over the 2026-2036 period; such spending would be subject to the availability of appropriated funds.

In total, CBO estimates that implementing H.R. 3863 would increase spending subject to appropriation by $481 million over the 2026-2036 period (see Table 2).

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in direct spending outlays that are subject to those pay-as-you-go procedures are shown in Table 2.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting H.R. 3863 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2037.

CBO estimates that enacting H.R. 3863 would not increase on‑budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2037.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Estimate Prepared By

Federal Costs:

Noah Callahan (for veterans’ health care) 
Paul B.A. Holland (for veterans’ home loans)

Mandates: Brandon Lever

Estimate Reviewed By

David Newman
Chief, Defense, International Affairs, and Veterans’ Affairs Cost Estimates Unit

Kathleen FitzGerald 
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

Estimate Approved By