on incomes below the poverty level. Something must be done to correct this situation. As I am sure the Committee is aware, the Reform Bill did not pass the House of Representatives. Public Law 94-432 instead directed the VA to do a comprehensive analysis of the pension system. It was to examine the income characteristics of veteran pensioners, their long term financial characteristics, and it was to identify existing inequities, anomalies and inconsistencies in the current pension program. The study is also to consider the "particular problems and needs of catastrophically disabled non-service connected pensioners.

PVA is very interested in this study. We hope it will result in a pension reform proposal that will take into consideration the different needs of different groups of pensioners. Basically a pension system must recognize the needs of four distinct, but not necessarily separate, groups of pensioners: first, those veterans and dependents in the upper income levels on the VA pension roles; second, the aged veterans and dependents; third, the very poor veterans and dependents; and fourth, the younger catastrophically disabled veterans and their dependents. PVA's major concern is with the catastrophically disabled veteran. It must be recognized that these veterans are much younger than the average pensioner. They do not have a presumed disability due to age, but are very seriously disabled. They face high extraordinary expenses due to their disability. We believe their financial needs are very high in relation to their income. Most exist on VA pension and Social Security income.

It must also be recognized that many of these veterans would be at their peak income producing years if it were not for their disability. We have found that 87 percent of these veterans are unemployed. We believe that there are two major reasons for this high unemployment rate. First, these veterans have not had adequate vocational rehabilitation services and counseling. In effect, they have been socialized into accepting an unproductive lifestyle. PVA has taken steps to correct this situation. Under a grant from the Rehabilitation Services Administration of HEW we have a sponsored prototype workshop designed to help state vocational rehabilitation counselors provide non-service connected disabled veterans better services. Local DVR counselors and local VA personnel were brought together in Albuquerque, New Mexico to develop ways they could coordinate and improve their services to veterans. While this conference was a success, a great deal of work remains to be done in this area. A short paper describing the workshop is attached to these statements.

A second factor contributing to the high unemployment of the catastrophically disabled veterans on pension is the negative incentive to work inherent in the pension program. If a veteran's income goes over the income limit, his pension is immediately cut off. Perhaps most important is the fact that when a pensioner goes over the income limit and loses a pension, he or she also loses eligibility for VA supplied medicines and prostheses. Given the high cost of these items and the total dependence of these veterans on the VA medical supplies and treatment there is a tremendous incentive not to increase their outside income. The loss both in pension and in VA health care eligibility is too great. We know of many instances of catastrophically disabled quitting jobs when their Social Security ended or when income reporting time came.

We believe a pension system for the younger catastrophically disabled veteran must be designed to remove these negative incentives. We suggest one alternative is a nine month adjustment period similar to that under Social Security disability insurance. Handicapped individuals receiving SSDI can continue to receive those payments for nine months after they have returned to gainful employment. We hope the VA will study this alternative.

PVA has now completed a major survey of our membership. We now have an excellent data base on the income and employment characteristics of 500 randomly selected catastrophically disabled veterans. The survey also includes data on the levels of self confidence and personal efficacy of these veterans. We will be using this data to propose alternatives in the pension program study. We have already informed the VA we will supply them with information from our data base. We hope to work closely with the VA on the section of the study we are vitally interested in.

It is appropriate at the time to make comments on one last issue. The issue is dependency and indemnity compensation for service connected deaths. It has long been the position of PVA that there should be a non-rebuttable presumption of service connected death for any veteran who has been totally and permanently disabled.

96-189 O-77 - 13

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? Were there significant insurance policies? Would the surviving family be well provided for? The implication seems to be that if the total and permanently disabled veteran left the family well provided for the presumption of service connected death and payment of DIC benefits could be questioned.

PVA fails to see the rationale of this line of thought. There is no income limitation for payment of DIC benefits to spouses of veterans who died in service. Is there a difference in needs of the spouses here and the spouses of totally and permanently disabled? We think not. We doubt that totally and permanently disabled veterans have been able to accumulate significant estates. Section IV of the VA study of Claims Filed for Dependency and Indemnity Compensation certainly does not give the impression that spouses denied DIC benefits were by any means well off.

We believe that the spouse of a deceased totally and permanently disabled veteran deserves automatic DIC benefits for another reason. That spouse helped the veteran live with a long and severe disability. We believe the surviving spouse deserves recognition.

As I am sure this Committee is quite aware, Public Law 94-433 directed the VA to make a study of the current DIC payment system. Under the current system, DIC payment levels are dependent on the deceased veteran's military rank or grade. The VA study is to consider alternative criteria for determining the amount of DIC payments.

It has long been PVA's position that DIC benefit levels should not be based on military rank. The widow of a private has the same expenses as the widow of a general. Yet, the private's spouse receives $260 a month in DIC benefits while the surviving spouse of an officer at the rank of 0-10 receives $664 monthly. The inequity is obvious.

Upon receipt of the study we hope this Committee will set to work designing a DIC benefit system under which payments are both equitable and adequate. In conclusion, PVA would like to compliment this Committee on its excellent work and attention to veterans' income needs. You have provided the leadership for innovations in the pension and compensation programs.

Enclosure.

PROPOSAL OF PVA

The following is a proposal by the Paralyzed Veterans of America to amend Title 38 U.S.C., to create a two-step aid and attendance payment system. Currently, veterans with service connected disabilities qualifying them for compensation and aid and attendance receive $528. a month for that aid. This amount is not adequate for veterans who must provide themselves with 24-hour medical aid in order to live semi-independently out of a VA hospital. It is proposed to increase aid and attendance paid to this small group of veterans to a level at or near the actual necessary expenses.

A catastrophic injury which results in paraplegia, quadriplegia or even amputation or loss of use of several limbs, is for one, very expensive. It is expensive both to the individual and society, both for short term and long term costs. A recent study by the Insurance Institute for Highway Safety has found that the 1974 costs of a hospitalized person with a new spinal cord injury were $245,000. This includes the cost to society of the individual's foregone productivity.

Catastrophic injuries which leave the person totally and permanently disabled also involve significant continuing costs. Rehospitalization, rehabilitation, drugs and medicines continue throughout the individual's life. Many times the individual is rendered so physically helpless he or she must continue to pay for almost 24-hour medical aid and attendance.

Fortunately, for those veterans with a service connected injury and many nonservice connected catastrophically disabled veterans, the cost impact is mitigated by their eligibility for VA hospital care. Service connected veterans also have VA disability compensation which makes up for their lost productivity. Most of the aid and attendance requirements are met, for many, by the payment of $528. a

month (under 94-433), if in a medical decision they are determined to be in "need of regular aid and attendance".

Unfortunately, for many of the most seriously disabled veterans, this level of aid and attendance payment does not meet their requirements. Many of these veterans need 24-hour medical aid and attendance if they are to lead any type of independent life out of a hospital environment. A list of many of the required aid and attendance type services is shown in Table I.

In late 1975, PVA did a national survey of 56 private companies or firms which provide these services. Our purpose was to determine how much a non-hospitalized veteran would have to pay for the optimum services. The results from 43 agencies indicated a range of monthly rates from $760.42 to $3,193.73. The variance is attributed to geographic regions and the qualifications of the personnel available for service. The medical rate per month is $1,499.50, which accurately represents the rate range for all 43 agencies.

A single disabled veteran who is drawing compensation under Title 38 Sec. 314 (p) and aid and attendance under 314 (r) receives a total of $1,759. monthly. If he needs and purchases constant medical aid type attendance, it is obvious that he has less than $300. monthly for his normal living expenses. Unfortunately, as indicated in a survey of our membership, most of the veterans do without the services, or stay dependent upon their family.

This inequity to these veterans could be corrected by creating a two-step aid and attendance system in Sec. 314(r) of Title 38. The first or lower step could be the current payment system. Veterans receiving compensation under Sec. 314 (0) and (p) and who are “in need of regular aid and attendance" are currently paid $528. monthly. The proposed second step or higher level of aid and attendance could be paid to those veterans eligible for the lower level but are also “in need of constant medical aid and attendance". The level of payments to veterans in this higher category ideally would approach their expenses incurred. Initially, however, a rate which takes into account other spending and VA budget priorities would be acceptable.

It is important to further develop the distinction between the two proposed levels of aid and attendance. Those veterans who would receive the current lower level are for the most part paraplegics, triple amputees and amputees with loss of both legs and loss of 1 or both hands. Many of these veterans do lead very independent lives. Typically, a veteran must pay for help to do household chores if he or she is single. If the veteran is married and maintains his own home, he must pay for ordinary household maintenance jobs. Most of these veterans do not need a personal aide to assist them with personal care and bowel and bladder functions.

This relative independence is not found among quadriplegics and other very seriously disabled veterans. In 1975 PVA contracted with the VA to produce a comprehensive study of the function and prosthetic needs of high-level quadriplegics. After an intensive national survey they concluded, in part, “approximately two-thirds of the quadriplegics interviewed in this survey depend heavily on others in their day-to-day activities". (A Survey of Quadriplegic Prosthetic Function and Needs, PVA, Oct. 1975 p. 59) "The truly painful facts compiled in this survey show a staggering level of dependency on attendants among quadriplegics". (Ibid, p. 62) The survey found quadriplegics were most dependent on aids for the following activities: bed mobility, transfer activities, bowel and bladder care, dressing activities, and cooking activities. As can be seen, most of these functions require a trained aide who is constantly available. The current payment level of aid and attendance is not sufficient to pay for this type of care. The distinction in the proposed two-step aid and attendance system is then between those in need of regular aid and attendance and those in need of constant medical aid and attendance. Assignment of a veteran to the upper level could be contingent on his meeting several criteria (these criteria, we believe, could be brought out in the Committee report establishing Congressional intent).

1. Needs almost constant medical aid and attendance for daily living,

2. With the additional payment has the capability to live out of a hospital. We suggest an amendment to Title 38 Sec. 314 (r) by inserting "or $---- per month if the veteran is in need of constant medical aid and attendance", after "aid and attendance at the rate of $528. per month".

1. Physical therapy:

TABLE I.-SERVICES PROVIDED

a. Range of motion, or b. Passive exercise.

2. Personal care:

a. Grooming;

b. Dressing;

c. Clothes care;

d. Transferring;

e. Night rotation; and

f. Other (feeding, errands).

3. Personal hygiene:

a. Bowel care;

b. Catheter care;

c. Bathing; and

d. Equipment maintenance.

4. Household care:

a. Cooking;

b. Cleaning (dusting-vacuuming);

c. Laundry; and

d. Heavy cleaning (floors, windows, etc.).

5. Travel:

a. Shopping;

b. Events; and

c. Out of town.

VETERANS' PENSION LEGISLATION

This paper outlines the position of the Paralyzed Veterans of America on two legislative proposals affecting the current veteran pension program. Some have proposed that Social Security increases be "disregarded" or "passed through” and thus not counted in income determinations for VA pension purposes. There are other proposals, often coupled with the "pass through" to automatically increase the pension levels and income limits as the Consumer Price Index increases. After extended study we believe that PVA must oppose any proposed changes of this type to the current pension system. There are four main reasons. First, in relation to the "pass through," any measure which would not count increases in Social Security income, but would count other increases would be inequitable. This would be a move away from a need-based pension program and create a class of favored pensioners. Similarly circumstanced veterans would not be treated alike; veterans with identical amounts of outside incomes but from different sources would receive different pensions. Additionally, a Social Security "pass through" would also have the effect of giving larger percentage federal income increases to those in the higher income brackets. This again would run contrary to the concept of pension as a need-based program.

The second main reason is the administrative problems of such a provision. The situation has been most succintly summarized in the Senate Committee on Veterans' Affairs report on S. 2635 (Report No. 94-532) :

"Nor would such a system even be workable. The Veterans' Administration has repeatedly informed Congress that a so called pass along of social security increases creates the most complex administrative problems imaginable, and could result in the complete breakdown of the veterans' pension system. The Committee is all too aware that the Government often has problems administering certain programs where it believes itself capable. Accordingly the Committee believes that Congress should be prepared to give the full benefit of the doubt in those cases where the executive branch admits it cannot. In this connection the Veterans' Administration has previously supplied a memorandum to the committee outlining in greater detail the problems that the proposal would engender."

The third reason relates to the automatic cost-of-living increases. There have been several proposals to automatically increase pension levels when the consumer price index increases. The amount of the increase would be proportional to the CPI increase. Social Security payments are currently increased in this man

ner. Our first objection to this is that if the consumer price index should ever decrease, pension levels would follow. Secondary, and most important, Congress has traditionally given larger percentage increases in pension and compensation than the percentage increase in the CPI. Between July 1933 and April 1976, the CPI increased 341.5%. During the same years pension levels have been increased by 596.7%. With this historical precedent it would seem unwise to tie pension increases to an automatic formula. Another prime example is the pending pension cost-of-living increase in the House, H.R. 1863. This Bill would authorize a 6% increase while the administration's recommendaton has been 5.3%.

The fourth reason also relates to the automatic increases. If the cost-of-living increases as it has in the last decade, and there is no automatic increase in pension each year, Congress must explicity consider a cost-of-living increase. Bills must be introduced, hearings held, and for several weeks all attention is turned to the pension program. It is an opportune time to closely examine the pension system and correct relatively minor inequalities which time and experience show in any federal program. An excellent example of this is the provision in P.L. 94-432 (a 7% cost-of-living increase in the pension program) which provided for a dollaring down of aid and attendance payments as the veteran's income increases. This corrected the inequity of a veteran losing aid and attendance payments in one lump sum.

With these arguments, we have felt it inadvisable to support any legislation which would provide social security pass throughs or automatic increases. It must be pointed out that these considerations apply only to the current pension system. If a pension reform measure similar to S. 2635 is introduced in the 95th Congress the problem with "pass through" would not exist. It might also be possible to seek a very liberal formula for the automatic cost-of-living increases. We must evaluate any future pension reform proposal with three criteria. First, does it meet the needs of the younger catastrophically disabled veteran? Second, does it meet the needs of the very poor veteran? No veteran or person eligible for a veteran's pension should be forced to exist at the poverty level. Thirdly, the overall pension system must be one that is meeting the needs of all veterans and is defendable against any proposals to integrate veterans pension into the HEW system.

LAWRENCE W. ROFFEE, Jr.,
Legislative Director.

Senator TALMADGE. The next witness is Mrs. Jean Arthurs, legislative director, Society of Military Widows.

Mrs. Arthurs, you may proceed with your statement for the record.

TESTIMONY OF JEAN A. ARTHURS, LEGISLATIVE DIRECTOR, SOCIETY OF MILITARY WIDOWS

Mrs. ARTHURS. Senator Talmadge and members of the Subcommittee on Compensation and Pensions, I am Jean Arthurs, legislative director of the Society of Military Widows. Our organization is national in scope, is located with national offices in Coronado, Calif., and is chartered in that State. Our membership includes widows of career men and reservists in all branches of the uniformed services whose husbands died either during active service or following disability or nondisability retirement.

We appreciate the privilege of appearing before you today.

The goal of the Society of Military Widows is to obtain for widows of career men the same survivor benefits-55 percent of current pay for total years of service and highest attained pay grade-that the Congress has provided for widows of civil service career personnel. In the last Congress, it was brought out that the current DIC and pension program "just is not working the way it should." and, more shockingly, that "over half of the veterans and survivors have incomes below the poverty level." A truer observation was never made, and it