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Veterans wtih disabilities rated less than 50 percent are generally more able to supplement their compensation payments with other income. In view of the basic justification for the additional allowance for dependents, we do not believe that these veterans as a group need such supplemental assistance from the Government to the extent proposed by the bill. Accordingly, the Veterans' Administration does not recommend favorable consideration of H.R. 177, or the provision of H.R. 5653 here involved.

RATES

EQUALIZATION OF PEACETIME-WARTIME DISABILITY COMPENSATION H.R. 7851. Under existing law the monthly rates of compensation for disability incurred in or resulting from military service during peacetime (and the amounts of additional compensation payable for dependents of veterans disabled by peacetime service) are 80 percent of those authorized for comparable wartime service. H.R. 7851, which was introduced at the request of the Veterans' Administration, proposes to remove this disparity and thus authorize the same rates of compensation, and amounts of additional compensation, whether the service of the veteran concerned was during wartime or peacetime.

The general pension law of July 14, 1862, provided pension (now designated compensation) for service-connected disability or death and made no distinction between service in time of war and peacetime service. The amendment of October 6, 1917, to the War Risk Insurance Act was the first law which recognized a distinction for compensation purposes between peacetime and wartime service in that it established a new compensation program for veterans of World War I. This separate compensation program was restated and continued under the World War Veterans' Act, 1924. Meanwhile peacetime veterans were eligible only for lesser compensation rates under the general pension law.

The so-called Economy Act in 1933 repealed most of the then existing veterans' laws, including the World War Veterans' Act, 1924, and established certain broad guidelines for a new compensation program. Among such guidelines was a recognition of a distinction between wartime and peacetime service. The President was authorized to promulgate by Executive orders detailed provisions for eligbility. Under this authority Veterans Regulation No. 1(a) established basic rates for compensation with the peacetime rates generally 50 percent of the wartime rates. By 1939 this differential was narrowed to 75 percent, and in 1948 the peacetime rates were set at 80 percent of the wartime rates, where they remain today.

This compensation rate differential has apparently been maintained in view of the historical policy running through several benefit programs that war veterans should be accorded preferential treatment. Such policy is also reflected in more liberal criteria for establishing service connection applicable to war veterans.

Peacetime veterans are entitled, however, to receive wartime rates of compensation if the disability is found to have resulted from an injury or disease received in line of duty "as a direct result of armed conflict” or “while engaged in extraha zardous service, including such service under conditions simulating war" (38 U.S.C. 336 and 343).

A major change in the established policy in the service-connected benefit programs was made by the Congress in 1956 following an extensive study and recommendations made by the House Select Committee on Survivor Benefits. A new program of dependency and indemnity compensation was authorized by the Servicemen's and Veterans' Survivor Benefits Act, August 1, 1956, for all service connected deaths occurring on or after January 1, 1957, with a right of application for persons otherwise eligible for the old death compensation benefit. Under this new program for service-connected deaths, no distinction in the rates payable is made between peacetime and wartime service.

In connection with the evaluation of disability for disability compensation purposes, the law for many years has required that the Administrator of Veterans' Affairs adopt and apply a schedule of ratings of reductions in earning capacity from specific injuries or combination of injuries. This provision (now 38 U.S.C. 355) provides that the “rating shall be based, as far as practicable, upon the average impairments of earning capacity resulting from such injuries in civil occupations."

We believe that there may well be ample justification for continuing the more liberal eligibility criteria applicable to war veterans and we do not recommend any change in such criteria. It seems quite apparent, however, that a veteran who has suffered a disability as the result of peacetime military service has the same loss of earning capacity as the veteran who suffered the identical disability (which is disabling to the same degree) during wartime service. It follows that we are unable to justify a continuance of the differential in the rates of disability compensation on any basis which is consistent with the nature and purposes of that benefit. We accordingly recommend the enactment of H.R. which would authorize payment in peacetime cases of the present wartime rates of disability compensation and additional compensation for dependents.

It is estimated that the bill, if enacted, would affect approximately 148,000 cases the first year at an additional cost of about $28 million. The additional costs would increase during the succeeding 4 years to about $37.9 million during the fifth year.

H.R. 5960 also proposes to remove the peacetime rate differential and authorize the same rates of disability compensation and amounts of additional compensation whether the veteran served during peacetime or wartime. In addition, it would amend the provisions of law governing the payment of death compensation to the widows, children, and dependent parents of veterans who died before January 1, 1957, so as to remove the rate differential in connection with those payments. Moreover, H.R. 5960 would extend the more liberal eligibility criteria (see the presumptions of sound condition upon entrance into service in 38 U.S.C. 311 and 332 and the presumptions regarding certain diseases in 38 C.S.C. 312 and 333) now applicable in the case of war veterans to those who served during peacetime.

H.R. 4380 and H.R. 6161 would not go as far as the two preceding measures, They propose to amend 38 U.S.C. 336 (which now authorizes payment of wartime disability compensation rates for disabilities resulting from injuries or diseases received in line of duty was a direct result of armed conflict” or “while engaged in extrahazardous service, including such service under conditions simulating war") to authorize wartime rates for disabilities resulting from injury or disease received, after the date of enactment, while performing active duty outside the United States and its possessions and the Commonwealth of Puerto Rico.

H.R. 6161 would also establish a program of $10,000 free insurance coverage payable to surviving beneficiaries of a designateci class in the event of the death of the serviceman while on active duty outside the United States, its territories and Puerto Rico.

INCREASED COMPENSATION FOR SHORTENED LIFE EXPECTANCY

H.R. 173, H.R. 174, H.R. 175 are designed to authorize payment of additional compensation to veterans whose life expectancy has been reduced by certain serious service-connected disabilities. H.R. 174 would authorize payment of a monthly statutory award under 38 U.S.C. 314(k) ($17 in wartime cases) to any veteran who has suffered a reduction of not less than 5 years in his otherwise expected lifespan because of service-connected disability rated as 60 percent or more disabling. H.R. 175 would authorize payment to veterans entitled to compensation for permanent service-connected disabilities 60 percent or more disabling of a lump sum equal to $150 ($120 in peacetime cases) multiplied by the number of months by which his life expectancy has been reduced by his service-connected disabilities. Both bills provide that the reduction in life expectancy would be determined in accordance with actuarial tables to be prescribed by the Administrator. H.R. 173 lists certain specific disabilities in four categories and would authorize payment of additional monthly compensation according to the level of severity ($150, $100, $75, and $50 in wartime cases) to veterans suffering from such disabilities—when they are at least 60-percent disabling-as compensation for reduction in the veteran's life expectancy.

Throughout the history of the disability compensation program its basic purpose has been to provide relief for the impaired earning capacity of disabled veterans. The amount payable is proportionate to the degree of disability which in turn represents, to the extent practicable, the average impa ent in earni capacity resulting from such disability or combination of disabilities in civil occupations. The instrument used in determining the degree of a given veteran's loss of earning capacity is the schedule for rating disabilities. These bills would give consideration for the first time to the noneconomic factor of shortened life exportancy in setting compensation rates.

Under 38 United States Code 355, the Administrator is required to adopt and apply a schedule for ratings and to readjust it from time to time in accordance with experience. Over the years, adjustments have been made on numerous occasions based on the cumulative experience of the Veterans' Administration in rating cases; in the light of social, economic, and medical progress; and on the recommendations of eminent medical consultants. The schedule, however, has never been statistically validated. Toward that end the Veterans' Administration, employing the facilities of the Bureau of the Census, has recently assembled considerable data through a pilot study designed to develop techniques for use in a contemplated full-scale study which will test whether the schedule accurately represents the degree of average economic impairment resulting from disability. We are now in the process of analyzing the information collected during the pilot study and expect to undertake the full-scale study early in calendar year 1966.

We recognize, of course, that human life has values outside the economic sphere and that an equitable, comprehensive, and well-balanced system of disability compensation should compensate veterans for such noneconomic factors and shortened longevity, loss of physical integrity, and social inadaptability, as well as the loss of earning capacity, the factor of primary importance. It seems logical that in order for any noneconomic schedule to equitably supplement the basic economic schedule the latter should first be established as correctly reflecting the reduction in earning capacity. Moreover, we believe that supplemental awards of compensation based on noneconomic factors should be approached on a uniform and equitable basis and should also take into account the avail. ability of effective survivorship protection. There are yet many unresolved practical and technical problems on how to solve this problem.

In connection with the economic validation study of the basic schedule, the Veterans' Administration plans an extensive study looking toward the development for submission to Congress, of an approach which will make equitable provision for noneconomic factors such as those mentioned above. Shortened life expectancy will constitute one phase of that study, within the disability and death compensation system.

In considering special compensation for shortened longevity it will be necessary to take a number of factors into account, including the difficulty in assigning a specific dollar value directly to shortened longevity; the fact that those who have experienced the greatest shortening of longevity are already dead; the fact that the diseases to be compensated are primarily in the chronic disease category and are not necessarily those closely associated with disabilities incurred as a result of combat; and the relationship between special compensation for shortened longevity and that provided under the existing system of survivor benefits. Since H.R. 174 and H.R. 175 would each require the promulgation of actuarial tables to effectuate their provisions and since it is reasonable to conclude that the source material and data upon which such tables must be based will not be available for a considerable period of time after the accumulation of such data is begun, it follows, of course, that it would be impossible to carry out in any practicable manner the provisions of either H.R. 174 or H.R. 175. Although H.R. 173 is feasible of administration, in the absence of the data that will be developed by the noneconomic impairment study we are unable to state whether it accurately reflects the relationship between the disabilities specified and shortened longevity.

Because the actuarial ables that would provide the basis for payments under H.R. 174 and H.R. 175, if enacted, are not available, it is not possible to develop an estimate of the cost effect of either bill. It is estimated that H.R. 173 would affect about 16,700 cases at an additional cost during the first year of approximately $11.500,000. The cost should decrease during each of the ensuing 4 years.

The Veterans' Administration believes that when the present schedule is validated and complete data on the noneconomic study is available, the committee will be in a better position to fully appraise the entire compensation program and determine the areas of desirable and sound improvement. Meanwhile, we do not recommend favorable action on any of the pending bills on this subject.

ADDITIONAL STATUTORY AWARDS

H.R. 179 and H.R. 5511 propose to amend 38 United States Code 314(k) to provide for the payment of the additional award of $47 monthly to those veterans who have suffered the loss or complete loss of use of a kidney as the result of service-connected disability incurred in or aggravated by wartime service. H.R. 180 would authorize this additional award for any such veteran who has suffered the loss of a lung. This additional award is currently paid to veterans who have suffered the anatomical loss or loss of use of a creative organ, or one foot, or one hand, or both buttocks, or blindness of one eye having only light perBy

ception, or deafness of both ears, having absence of air and bone conduction, or complete organic aphonia, with constant inability to communicate by speech..

As previously noted, the basic purpose of the disability compensation program. is to provide relief for the impaired earning capacity of disabled veterans. law, the Administrator is required to adopt and apply a Schedule of Ratings of average reductions in earning capacity in civil occupations resulting from specific disabilities and combination of disabilities. The Rating, Schedule provides several ratings for disabilities involving kidneys. For example, a rating of total disability is provided for the removal of one kidney with severe nephritis, infection, or pathology of the other; of 60 percent where there is a mild to mod-erate involvement of the other kidney; and of 30 percent where the second kidney is functioning normally. Again, the Schedule provides a rating of 50 per-cent for the permanent complete collapse of a lung and 60 percent for the removal of a lung. The latter evaluations are frequently augmented by evaluations for rib loss or for the basic disease, if such continues to exist in the other lung.

Our proposed study to develop a program to establish supplemental awards: making equitable provision for noneconomic factors, discussed above, will include, as one phase, awards for the loss of physical integrity. The losses named in. H.R. 179, H.R. 180, and H.R. 5511, all of the losses presently mentioned in 38 U.S.C. 314(k), and other similar losses would all be encompassed within this. phase of that study.

It seems clear that the enactment of any of these bills—with their according of special recognition, for the first time, of an internal organ—would establish a precedent for similar consideration of the loss or loss of use of other internal organs, such as spleen, gall bladder, pancreas, etc.

We believe that the basic principle that the amount of compensation payableshould be proportionate to the degree of disability is sound, and that proposals to establish additional supplemental awards should await the completion of the anticipated noneconomic study of noneconomic factors. Once this is available the Congress will be in a better position to appraise the entire compensation pro gram and determine those areas of desirable and sound improvement.

PRESUMPTION OF SERVICE CONNECTION FOR CHRONIC AND TROPICAL DISEASES

The present law governing presumptive service connection for chronic diseases provides generally that a chronic disease (other than active tuberculosis, multiple sclerosis, and Hansen's disease (leprosy)) becoming manifest to a degree of 10 percent or more within 1 year from the date of separation from active service shall, subject to rebuttal, be considered to have been incurred in or aggravated by such service. With respect to Hansen's disease and all types of active tuberculosis, a 3-year presumptive period is provided. With respect to multiple sclerosis, the law provides a 7-year presumptive period. This presumption re-quires at least 90 days' service during a period of war. A similar 1-year presumption is applicable to tropical diseases and is available to wartime and peace-time veterans, but the latter must have had 6 months' or more service.

H.R. 183, H.R. 539, and H.R. 2822 would extend from 1 to 2 years the present presumption for psychoses; H.R. 182 and H.R. 2821 would extend the period to 2 years for malignant tumors (cancer); and H.R. 181 would extend the period from 1 to 7 years with respect to amyotrophic lateral sclerosis. H.R. 1170 proposes a 3-year presumption for heart disease and H.R. 1762 would create a 1-year presumption for poliomyelitis. The purpose of H.R. 3408 is to extend the 3-year presumptive period for active tuberculous disease to 6 years with respect to any veteran who was held as a prisoner of war for any period of time while in active service. In the case of veterans who are entitled to disability compensation for the loss of one or both feet, H.R. 185 would presume that heart failure which they may suffer at any time during the remainder of their life was incurred in or aggravated by their military service. H.R. 1744 purports to include within the 3-year presumptive period for tuberculosis the reinfection type of pulmonary tuberculosis. This bill is unnecessary, however, since under existing law the reinfection type of tuberculosis is included within the 3-year presumption. Under all of these bills the presumption that would be accorded would be rebuttable, as under existing law.

The 1-year presumptive period for the service connection of a chronic disease, previously covered by administrative regulation based upon sound medical judg. ment, was in 1933 incorporated in Veterans' regulations promulgated under Public Law 2, 73d Congress. In 1948 Congress specified certain diseases which, among others, should be deemed chronic, but did not extend the uniform 1-year

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presumptive period (Public Law 748, 80th Cong.). It was not until 1950 that an exception to the general rule was made in the case of active pulmonary tuberculosis (Public Law 573, 81st Cong.), and in 1951 a further presumption was authorized in the case of multiple sclerosis (Public Law 174, 82d Cong.). In 1951, the Congress also extended the presumptive period for an active psychosis for the limited purposes of hospital and medical treatment (Public Law 239, 82 Cong.), and in 1953 extended the presumptive period for all other types of active tuberculosis to 3 years (Public Law 241, 83d Cong.). In 1959, the presumption for multiple sclerosis and Hansen's disease was extended to 3 years (Public Laws 86–187 and 86–188). Finally, in 1962, the presumption for multiple sclerosis was extended to 7 years (Public Law 87-645).

From a medical viewpoint, present provisions of the law and regulations on this subject are considered quite liberal and ample provision is made for those diseases that have a long incubation period. In addition, there are administrative provisions whereby chronic diseases generally incurred within a reasonable time after the present presumptive period following active military service can be and are handled on an individual basis where there is a likelihood that the condition or disease had its inception during military service. The Veterans' Administration does not recommend any further extension of the presumptive periods for granting service connection with respect to any of the chronic or tropical diseases.

It is not possible to furnish an estimate of the cost of any of the bills in this group, if enacted, in view of the many unknown and variable factors. However, it is apparent that the cost involved in most of them would be very substantial.

PRISONER OF WAR PROPOSALS

H.R. 1027 proposes to deem any veteran who was held as a prisoner of war for :36 months or more during World War II or the Korean conflict to have a serviceconnected disability rating of 50 percent. H.R. 5589 would grant such rating to those veterans who were held prisoners of war for 12 months or more.

The language of the bills is ambiguous. Literally they would require assigning to those former prisoners of war within their scope “a service-connected disability rating of 50 per centum" even though they are now entitled to greater disability evaluations under the Veterans' Administration Schedule for Rating Disabilities. We feel sure that it is not intended to reduce existing ratings. Hence, the intention behind these bills must be to grant either a minimum rating or an additional 50-percent rating to those who meet the criteria specified.

As stated previously, existing law requires the Administrator to apply a schedule of ratings based upon average impairments of earning capacity in civil occupations resulting from specific injuries and combinations of injuries. H.R. 1027 and H.R. 5589 would create an exception to this statutory requirement. They would be discriminatory against all other veterans whose disabilities are rated in accordance with that concept and particularly against those veterans who were prisoners of war for less than 36 (or 12) months but whose sufferings and deprivatiosn were equal to or greater than those of the veterans within the bills' scope.

Former prisoners of war are given special consideration under the laws we administer and our regulations and procedures contain liberal provisions with respect to prisoner of war cases. We believe that this is only right and we try to make sure that they receive the veterans' benefits which the laws provide, in full measure. But we do not believe the fact that a veteran was a prisoner of war for 1 or 3 years—and that fact alone justifies a guaranteed disability rating of 50 percent, which would be compensable under current rates at $107 per month for the balance of his life. For these reasons, we recommend that your committee not favorably consider either of these bills.

Since we are unable to identify the veterans who would benefit from these bills, we cannot furnish an estimate of the cost of the measures.

H.R. 1507 would presume that any disability incurred by any veteran who was held as a prisoner of war by the Japanese for 2 years or more during World War II (and who was not furnished the quantity or quality of food to which he was entitled under the Geneva Convention) is a service-connected disability. The bill is not clear as to whether this presumption could be rebutted by affirmative evidence that the disability was not incurred in or aggravated by that service or would, to the contrary, be a conclusive presumption. However, since the proposal, in referring to "disabilities,” would apply to injuries as well as

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