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The DAV therefore supports H.R. 7345 as the higher increase proposed by the House bill would provide much needed relief for needy pensioners and for those mothers and fathers who have lost a son in the military service of their country. In conclusion, Mr. Chairman, I would like to comment briefly on one other aspect of the service-connected disability and death programs that is of great importance to the members of our organization.

I refer to a long-standing legislative objective of the DAV which would provide a presumption of service-connection for the cause of death in those cases where the veteran concerned was totally and permanently disabled as the result of a service-connected disability at the time of his death.

As you know, Public Law 93-295 (enacted 5/31/74) directed the Administrator of Veterans' Affairs to conduct a detailed study of DIC claims filed by survivors of veterans who were permanently and totally disabled from service-connected causes at the time of death. This study consisted of such claims filed during the period December, 1973, through May, 1974, and indicated at that time a VA denial rate of 24.9 percent.

After reviewing those results, the Senate Committee on Veterans' Affairs favorably reported, and the Senate included in its amendments to H.R. 7776, the Veterans Disability Compensation and Survivor Benefits Act of 1975, a provision, Section 204, requiring the payment of DIC to the survivors of all veterans who were in receipt of compensation for a total and permanent service-connected disability rates as such for at least one year prior to the date of the veteran's death.

In the measure enacted as Public Law 94-71, however, that requirement was deleted and, in its stead, Section 204 of the Act mandated the Administrator to conduct a second study in regard to applications for DIC benefits. That study covered a six-month period from September 1, 1975, to March 1, 1976. The denial rate for DIC claims during that period was found to have declined to 12.9 percent.

As a result of this marked decrease in the denial rate, no further legislative action was taken. And, in an effort to determine if the liberal rating policy would continue when the VA was no longer required to report to the Congress on the disposition of these claims, the DAV conducted a third DIC study of its own.

This study was conducted during the period from July 1, 1976, through December, 1976. Within that time frame DAV National Service Officers throughout the country were instructed to forward to Washington information on all DIC rating decisions rendered at the VA Regional Office level where the DAV held a power of attorney and where the deceased veteran had been permanently and totally disabled from service-connected causes at the time of death.

In accordance with these instructions, a total of 239 rating decisions were sent to Washington by the National Service Officers. Of that figure, 181 (75.7%) claims for DIC benefits were allowed and 58 (24.3%) were denied; a denial rate which, we wish to point out, is almost identical to the level of denials (24.9%) which existed prior to the enactment of Public Law 93-295 in May of 1974. We therefore feel that if this situation is to be effectively and permanently remedied, it will require Congressional action similar to that taken by the Senate when it passed S. 1597 in June of 1975. To that end, we respectfully request that this necessary and humane proposal be included in any compensation bill that will be reported by this Committee.

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In closing, Mr. Chairman, I wish to thank you again for your efforts in behalf of America's veterans and for giving us this opportunity to present the views of the Disabled American Veterans on these important matters.

Senator TALMADGE. The Chair at this time would like to recognize the presence of Mr. Harold Say, the representative of Veterans of World War I. He is not seated at the table but he is on the front row back there, the gentleman with glasses and the white suit. We are happy to have you, Mr. Say. Your statement has been inserted in full in the record, and we welcome your presence here, sir.

The next witness is Mr. Larry Roffee, national legislative director, Paralyzed Veterans of America, Inc.

Mr. Roffee, your full statement will be inserted in the record, and you may summarize it, sir.

TESTIMONY OF LARRY W. ROFFEE, JR., LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA, INC.

Mr. ROFFEE. The two bills provide a 6.3-percent cost-of-living increase in disability compensation, and a 6.7-percent increase in pension have PVA's support.

If you look at the record, traditionally Congress has kept compensation and pension levels slightly above inflation. For example, if inflation is at 6 or 7 percent, the rate in the bill passed came out to 7 or 8 percent. Essentially, this has been kept a percent or two above the inflation rate.

The two bills now provide cost of living increase directly proportional to the increase in the CPI. We view this very conscious decision on the part of the committee, we view this decision favorably. It comes, in part, from your realization of the limits imposed by the committee in the first concurrent resolution on the budget. Spending priorities must be set. Finite funds must be spent where they are most needed.

It is PVA's position that this year we can forego larger cost-of-living increases. This allows this committee the option of considering the other bills and other amendments, and you obviously are considering some of those this morning.

PVA has a suggested amendment that we feel would help a great many veterans.

We are proposing to create a two-step aid and attendance system. I'm sure the chairman is aware that disabled veterans' in need of aid and attendance currently pays $528 per month for that aid and attendance. Regardless of their disability-whether they're paraplegics, severe double amputees, multiple sclerosis, quadriplegics or quadriamputees all of them receive $528 a month.

This is quite adequate for the lower level of disability, such as the paraplegic. When you get up to the quadriplegic and the quadriamputee, $500 a month does not come anywhere close to meeting their aid and attendance expenses.

PVA has done a study 2 years ago and we came to a finding that to purchase the total aid and attendance services necessary a person would have to pay about $1,500 a month. The current aid and attendance payment is about a third of that a month.

We're proposing a two-stage aid and attendance system. The lower level injury paraplegic would continue to be paid at the lower rate. We suggest the second higher level of pay, to be approximately another $300 a month, for a total of $828 to support the aid and attendance for the quadriplegic or the quadriamputee.

The criteria for eligibility we believe would be the need for constant medical aid and attendance.

With our statement, Mr. Chairman, we have a more detailed paper. And I hope that the committee would consider the amendment to this bill.

Senator TALMADGE. Thank you very much, Mr. Roffee, for a very fine and comprehensive statement.

Mr. ROFFEE. Can I continue, Mr. Chairman? I have some more comments, if I could continue.

Senator TALMADGE. Oh, sure, go ahead.

Mr. ROFFEE. Several proposals are pending before this committee and the House of Representatives to index pension and compensation. And at this time the PVA would like to go on the record as opposing these.

Again, looking at the tradition of Congress, veterans would fare better under specifically authorized cost-of-living proposals as compared to an index similar to social security. Furthermore, having to sponsor the specific bills creates a chance for oversight hearings on the part of this committee into compensation and pension programs. I think this hearing today is an excellent example of that oversight. We would lose that sort of impetus if compensation and pension were indexed at this time.

A proposal often coupled with indexing is that of a "pass through” or "disregard" with respect to social security. Increases in social security would not count in computing the income of pension levels.

PVA totally opposes this type of proposal. It would create a favored class of veterans. Veterans with identical amounts of income but from different sources would receive different amounts of pension.

There's also been a proposal to pay a pension to veterans without regard to financial need. As was pointed out to you this morning, this would be tremendously contrary to the entire history of the pension program. We hope that the committee would not see fit to pass any bill which would pay special pension to any group of veterans.

It has been pointed out by other witnesses this morning that DIC benefits are coming toward a controversy. We do hope that this committee will proceed with an amended bill for a nonrebuttal presumption of service-connected death for any veteran who has been rated permanently and totally disabled.

In the case of veterans with spinal cord injuries, the disability does shorten their life expectancy. With the injury, minor medical conditions can quickly become fatal.

With these considerations we do not believe there is any credence to the argument that presuming service-connected death would dilute the honor and tribute to those killed in action.

It has also been suggested that one should look at the financial status of the deceased veteran's spouse and family. Did the veteran leave an estate?

Did he leave life insurance policies?

Would the surviving family be well provided for?

A look at the most recent VA study of DIC benefits, certainly would not give the impression that the totally and permanently disabled veteran is by any means well off.

We urge the committee to consider the amendment or a separate bill with an automatic presumption of service-connected death, for the totally and permanently disabled.

Senator TALMADGE. Thank you very much, Mr. Roffee, for a very fine and comprehensive statement. And I congratulate you also on the restraint of your recommendations. As you pointed out, our priorities are very complex. We have a national deficit of about $65 billion.

Every member of this committee is dedicated to the idea that one of the greatest priorities of the Government is to try to provide for the needs of those veterans and their widows and their children who have

contributed everything they have to give to the Government of the United States of America.

Senator Matsunaga?

Senator MATSUNAGA. No questions, Mr. Chairman.

Senator TALMADGE. Thank you.

[The previously referred to prepared statement of Lawrence W. Roffee, Jr. and other material follows:]

PREPARED STATEMENT OF LAWRENCE W. ROFFEE, JR., LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA

Mr. Chairman, distinguished members of the Senate Committee on Veterans' Affairs, on behalf of the Paralyzed Veterans of America it is a privilege to appear before you this morning to present our views on cost-of-living increases for the disability compensation and pension programs.

The two bills provide a 6.3 percent cost-of-living increase in disability compensation. Dependency and indemnity compensation rates are increased accordingly. The payment levels for disability pension are raised by 6.7 percent. With the projected increase of approximately 6 percent in the Consumer Price Index from the last round of cost-of-living increases until the effective dates of S. 1703 and S. 1642, PVA views the increases provided by the bills as appropriate. Traditionally, Congress has kept compensation and pension levels slightly ahead of inflationary increases in the cost-of-living. For example, Public Law 94-71 provided a 12 percent increase in compensation for more seriously disabled veterans. This was passed with the inflation rate at slightly over 10 percent between May 1974 and April 1975. Public Law 94-433 provided an 8 percent increase in compensation while inflation was at 6 percent. Similar increases have been granted pensioners.

PVA certainly appreciates the generosity of Congress. The veteran has not been hurt by inflation, in fact, Congress has kept him a step ahead. We view the increases this year which are more in line with the projected increase in the CPI, as reflective of a conscious policy decision on the part of this Committee. We view this decision favorably. It seems the decision comes, in part, from a realization of the limits imposed by the First Concurrent Resolution on the Budget. Spending priorities must be set by this Committee. Finite funds must go to where they are most needed. It is PVA's position that this year we can forego large cost-of-living increases. This allows the option of putting the funds in other program areas.

PVA's priorities have traditionally been in the areas of the income maintenance programs, the quality of VA health care and rehabilitation and readjustment programs. In the coming weeks we will be making our recommendations to the appropriate subcommittees.

We would like to take this opportunity to explain to this Subcommittee a proposal by PVA for a change in the aid and attendance payments made to veterans with service connected disabilities under Section 314 (r) of Title 38. Currently all veterans eligible for aid and attendance, whether they are low level paraplegics, triple amputees, blinded veterans with complicating disabilities, severe cases of multiple sclerosis, quadriplegics or quadriamputees, receive $528 monthly.

Studies by PVA and other organizations have shown that the actual cost of purchasing a full complement of aid and attendance services is approximately $1,500 a month. The current aid and attendance payment level is only a third of that amount. To correct this inequity and hardship on very seriously disabled veterans, PVA is proposing that a two-step aid and attendance system be developed.

The current level or the low first step, is for the most part adequate for many veterans with less serious disabilities. For example, a low level paraplegic normally does not need a trained medical aid and attendant. With appropriate cost-of-living increases veterans in this situation could continue to receive this lower level of aid and attendance.

It is proposed to pay veterans in this situation a much higher level of aid and attendance. Eligibility would be based on a medical determination for the

need of constant medical aid and attendance. We believe this second high level of aid and attendance should start at $878 monthly.

We have prepared a detailed paper on this proposal. That paper is attached to these statements, and we ask that it be submitted for the record.

Mr. Chairman, there have been several other legislative proposals effecting the compensation and pension programs which we would like to comment on. First, it has been proposed that pension and compensation be indexed to the Consumer Price Index. As the CPI rises, or falls, compensation and pension would be automatically increased or decreased. In the past PVA has opposed such proposals. Our reasons are detailed in an attached paper on Veterans Pension Legislation. Basically we feel we have fared better under specifically authorized cost-of-living increases. Furthermore, the specific bills have called the attention of this Committee to the compensation and pension system each year. This has resulted in very effective oversight over the programs.

I must point out that our opposition to indexing will be re-evaluated in the future. A pension reform measure similar to S. 2635 would require a reconsideration. Under that type of pension system automatic cost-of-living increases might be preferable.

A second proposal often coupled with indexing is that of a "pass through" or "disregard" for Social Security increase in computing income for veterans pension. PVA is opposed to this type of proposal with regard to the current pension system. Briefly such a provision would create a favored class of pensioners. Individuals with the same income level would draw pension amounts. Secondly, the provision would be very difficult to administer. Again our position on these proposals is detailed in the attached Veterans Pension Legislation position paper. There have been another series of proposals which would pay a pension to a group of veterans without regard to need. PVA is adamantly opposed to any veterans pension bill which would grant a pension without consideration of the individual veteran's financial need.

Since the first veterans pension bill passed by Congress in 1818 for Revolutionary War veterans, the express purpose of the veterans pension program has been to insure that no individual who has served his country faithfully should ever exist as a pauper. Eligibility for the very early pension bills was always determined first by qualifying service, and, second, by need. The major restructuring of the pension program in 1959 under Public Law 86-211 continued and refined that tradition. This law removed the all or nothing pension system and instituted one that was more reflective of the needs of individual recipients. Congress decided that variations in the amounts of pensioners' incomes required graduation in the amounts of pension entitlement. This law also took into consideration, in determining need, the number of veterans' dependents. In 1968, Public Law 90-275 replaced the three-level system with a multi-level increment system. Each of these changes in the pension system reflected the principle that the veteran most in need should receive the greatest pension.

The most recent pension reform measure, S. 2635, passed by the Senate in December 1975, explicitly continues this long standing principle. According to the Committee Report, the intent of the Bill is to: first, assure a level of income above the minimum subsistence level allowing veterans and their survivors to live out their lives in dignity; second, to prevent veterans and widows from having to turn to welfare assistance; third, to treat similarly circumstanced pensioners equally; and fourth, to provide the greatest pension for those with the greatest need.

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Most recently, Public Law 94-432 directed the VA to conduct a "comprehensive investigation, analysis, and evaluation of existing and alternative non-serviceconnected pension programs The points Congress directed the VA to consider in the study make it quite clear that any proposed pension reform just be an explicit needs-based program.

It is PVA's strong position that in considering any pension proposal Congress should not deviate from the needs-based principle. Any provision which would pay a pension without regard to need, is in clear violation of this principle. We feel it would be a dangerous precedent to break the needs-based principle. One cannot discuss changes in the pension system without mentioning the Pension Reform Bill S. 2635 the Senate passed in the 94th Congress. It strikes PVA as apalling that approximately one third of the single pensioners exist

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