The message, according to some of the people in the room, was that if the groups do not like this idea, they need to come back with another way of saving or raising revenue for the VA.

"I got the distinct impression that the only hope of this plan not being enacted is for an alternative plan to be developed that would generate the desired $540 million in revenue, " Cmdr. David Rehbein of the American Legion said in a written statement.

But the chairman of the Senate Committee on Veterans' Affairs vowed Tuesday that the plan would never gain the panel's approval.

"VA's sacred duty is to care for veterans injured in honorable service to our nation, and the department should not turn to wounded warriors' private insurance to pay for combat injures, " said Sen. Daniel Akaka, D-Hawaii. "Under my chairmanship, the Veterans' Affairs Committee will not advance any such legislation."

White House spokesman Robert Gibbs said no decision has been made.

"The president and the [veterans service organizations] had a good conversation, and veterans can be assured that the president understands any concerns that they would have, " Gibbs said. "The budget the president has proposed represents an historic increase in discretionary spending to take care of our wounded warriors: those that have been sent off to war, have protected our freedom and have come back wounded."

He added, "this president takes very seriously the needs of our wounded warriors that have given so much to protect our freedom on the battlefields throughout the world."