To amend title 38, United States Code, to ensure that the Secretary of Veterans Affairs has the necessary authority and flexibility to provide staffing levels for the Veterans Health Administration of the Department of Veterans Affairs as necessary to meet the responsibility of the United States to provide health care services to eligible veterans and to permit implementation of national health care reform by the Department.

Prohibits, during FY 1995 through 1999, any reduction in the number of full-time employees in the Veterans Health Administration of the Department of Veterans Affairs other than as specifically required by law or by the availability of funds. Requires such personnel to be managed during such period on the basis of the needs of eligible veterans and the availability of funds.

Provides that, during such period, whenever an activity at a Department health-care facility is converted from performance by Federal employees to performance by contracted employees, the Secretary of Veterans Affairs shall: (1) require the contractor to give an employee preference to former Department employees displaced by the award of such contract; and (2) provide to such former employees all possible assistance in obtaining other Federal employment or entrance into job training and retraining programs. Requires information concerning the use of such contracting-out authority to be included in the Secretary's annual budget and activities report to the Congress.