A federal program designed to improve long-term care for some of the nation's most severely disabled veterans is having the opposite effect, according to veterans, their families and many state veterans' homes that want to provide that care. Maine Congressman Mike Michaud has introduced a bill to try to resolve the problem. But in the meantime, veterans homes are being forced to turn some qualified veterans away or risk losing millions of dollars.

No one knows exactly how many veterans are affected. The U.S. Department of Veterans Affairs is unable to come up with the numbers. But in state veterans' homes around the country, including Maine, a veterans benefits program that was supposed to help some of the nation's most vulnerable veterans is causing financial problems and emotional heartache.

"I was upset. I couldn't believe it. I was dumbfounded. It's like -- how can that be? If he needs long-term care, is that going to be available at some point?" says Lori Martin, the wife of 77-year-old Carlton Martin, a 100-percent disabled veteran who served in the Korean and Vietnam wars and retired from the Army after 20 years.

Martin says her husband had a stroke in 2005. When he recently took a fall at home, Martin was told he needed rehab. But when Martin contacted the Maine Veterans' Home in Augusta she was told Carlton could not be admitted. "They weren't able to take him because of his status. Anybody over 70 percent was not allowed to come," she says.

That's because under new regulations, the VA only reimburses state veterans homes for two-thirds the cost of care if a veteran is more than 70 percent disabled.

Martin could have chosen to pay for her husband's care out of pocket. Her other choice was to put him in a private facility using Medicare, which she did, even though she says her husband's first choice was to be around other veterans.

It's activity time -- a balloon toss -- in the rehab unit known as C-Company at the Maine Veterans' Home in Augusta, one of six similar facilities across the state. The 26-year-old home has 150 beds for veterans and their family members needing a variety of care. Gail Hillstrom is the home's administrator. She says most of the veterans are in their 70s and 80s.

"They really feel much more comfortable, I think, with -- they refer often to their comrades-- and these are their comrades," she says. "Their spouses have been through similar kinds of things as well. A lot of our spouses stayed home during World War II while their spouse was gone for a long time, so they can share some of that history together. There's lots of commonalities and support for each other that they get by being here."

But lately, state veterans' homes have been put in a dilemma: Because the VA won't reimburse them for the full cost of care, they must turn some veterans needing skilled nursing care away or absorb financial losses themselves.

"If we were to accept everybody that could reasonably seek admission under this program we'd lose about eight-to-16 million dollars a year and we would likely be bankrupt in one-and-a-half to three years," says Kelley Kash, the CEO of Maine's six veterans' homes.

Kelley recently testified at a hearing before the U.S. House Veterans Affairs Subcommittee on Health, which is looking into the unintended consequences of the so-called "70 Percent Program" which was supposed to help severely disabled service connected veterans get better access to treatment.

Kash says the same dilemma is being faced by his colleagues in other states. Veterans groups and governors have expressed alarm about it. And subcommittee chair Maine Congressman Mike Michaud has introduced legislation to fix the problem.

"Basically, the legislation will make sure that state veterans' homes are adequately reimbursed for the actual cost of care for disabled veterans," Michaud says. "That was the whole intent of the original law, and it's unfortunate some within the VA decided to take it an extra step further and make it really difficult for the state veterans' nursing homes to survive."

A call to the VA seeking comment for this story was not returned by airtime. But in testimony to the Veterans Affairs Subcommittee on Health, VA geriatrics consultant Dr. James Burris said Michaud's bill would require additional VA expenditures of $17.5 million dollars in the first year and more than $200-million dollars over the next ten years.

Burris said the VA could work with individual states to correct the problem. Some veterans remain skeptical. Lori Martin says her husband only wants to know one thing: "The way he was there for his country. he says 'Are they going to be there for me?'"