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Mr. Dorx. The anthors of each of the bills pending before the subcommittee have been advised of these hearings and have been invited to testify if they wish to do so before the subcommittee at the session scheduled for tomorrow.

The first witness will be Mr. Rufus Wilson, the new Chief Benefits Director of the Veterans Administration, whom many of you will recall from his years as legislative director of AMVETS. We bid you welcome, Mr. Wilson, and wish you well.

I might say at this juncture, for the benefit of others who are present this morning, Mr. Wilson did an outstanding job as legislative director of AMVETS a number of years ago. We have known him since that time. We are very happy to have you, Mr. Wilson, before the committee this morning. You may proceed. If you want to read your full statenient, you may do so. If you want to summarize, you may do so. We are glad to have you before the committee.

STATEMENT OF RUFUS H. WILSON, CHIEF BENEFITS DIRECTOR,

VETERANS ADMINISTRATION; ACCOMPANIED BY J. C. PECKARSKY, DEPUTY CHIEF BENEFITS DIRECTOR; J. T. TAAFFE, DIRECTOR, COMPENSATION, PENSION, AND EDUCATION SERVICE; AND HOWARD BERNSTEIN, ASSISTANT GENERAL COUNSEL

Mr. Wilson. First, I want to thank

you

for the very fine comments. I do recall with extreme pleasure the many opportunities I had to appear before the committee in a different capacity.

We are pleased to be here to discuss the various subjects represented by the approximately 50 bills which have been listed for these hearings. At the outset, I would like to introduce the Veterans Administration officials who accompany me. They are: Mr. J. C. Peckarsky, Deputy Chief Benefits Director; Mr. J. T. Taaffe, Director, Compensation, Pension, and Education Service; and Mr. Howard Bernstein, Assistant General Counsel.

For the most part, the bills deal with the Veterans' Administration's dependency and indemnity compensation program. There are included, however, some measures dealing with certain aspects of our pension and disability compensation programs and related matters.

We have submitted to the committee, after clearance with the Bureau of the Budget, reports on representative bills covering all subjects to which these hearings relate. I understand that our reports will be incorporated in the record of these hearings. For the convenience of the subcommittee, I will briefly outline the various proposals and summarize the Veterans Administration position respecting them as reflected by our reports.

A. DIC PROPOSALS

The first category of bills would provide various liberalizations in our dependency and indemnity compensation program, generally known as DIC, which provides monthly benefits for the widow, children, and parents of veterans who die from service-connected causes. These measures fall into six groups.

(1) Several bills would liberalize the DIC payments for widows. Presently a widow's DIC benefit is equal to a constant factor of $120 plus 12 percent of the basic pay, computed at current rates, of the deceased veteran. Included among the pending proposals is one to increase the constant factor to $130, with provision for a minimum widow's monthly DIC payment of $165. Under existing law, the minimum payment is $134 per month. Other bills would increase the constant factor to $130 or $135 without specification of a minimum rate.

Two proposals would divide the military pay schedule into five groups by grade and authorize an increase in the constant factor in a varying amount for each group. One bill would provide an alternate rate for widows of $120 plus 12 percent of the monthly disability compensation being received by the veteran at time of death, with payment to be at the greater amount as between that rate and one computed on the present 12-percent-of-basic-pay formula.

(2) Six of the pending measures would provide a monthly DIC allowance to be paid to widows for each child under 18. With two limited exceptions, no additional DIC is payable to a widow on account of children of the veteran. The mentioned exceptions are based on rather involved formulas, including one which is tied in with social security or railroad retirement payments. The pertinent proposals would provide for payment of $20, $25, or $30 per month to the widow for each child under 18, unrelated to other payments.

(3) A number of bills would provide an additional monthly DIC allowance to widows who are so seriously disabled as to require the regular aid and attendance of another person. The proposed amounts are $50, $75, and $85. Currently, there is no such allowance for these widows, but such an allowance, in the amount of $50 monthly, is payable as pension to the widows of veterans who died of non-serviceconnected causes.

(4) One proposal would increase monthly DIC payments which are made directly to the children of veterans whose deaths were serviceconnected. Those who receive such payments are (a) children in cases where there is no eligible widow, and (b) children over 18 and attending school, where there is a widow also receiving DIC benefits, and helpless children. The pertinent bill would increase the statutorily prescribed rates for all such children by approximately 10 percent.

(5) One measure would eliminate a bar to payment of DIC which presently exists with regard to a limited number of cases. They are instances wherein a veteran died in service while not paying full premiums on his U.S. Government life insurance or National Service Life Insurance. The DIC restriction which would be removed applies to widows, children, and parents.

(6) The final group of measures relating to our DIC program would pay that service-connected benefit, in cases of non-service-connected death, based on a presumption of service connection.

The predicates for such payment specified in the several bills would be, respectively, (a) death while receiving compensation for a serviceconnected disability which was permanently and totally disabling for 20 years or longer, excepting only accidental cases; (b) death while entitled to retired or retainer pay under certain conditions; and (c) death while suffering from service-connected permanent and total disability.

The DIC program is under continuing study. Our review thus far has revealed certain potential problem areas, but we have not completed our analysis to the point of reaching a decision on a supportable comprehensive approach for remedial action.

Definite conclusions have been drawn, however, regarding two of the various types of DIC proposals discussed above. First, the proposed $50 additional monthly allowance for widows who are in need of the regular aid and attendance of another person appears clearly warranted. Denial of it to the widows of veterans whose deaths were service connected, while paying it to the widows of veterans who died of non-service-connected causes, would be definitely discriminatory. We also favor such an allowance for widows on the death compensation rolls.

Second, respecting the proposals for presuming certain deaths to be service connected, we believe that existing laws and regulations provide very liberal and equitable conditions for determining that death is service connected. Moreover, there is no justification for presuming a death to be service connected when the evidence does not support such finding. For these reasons, as well as the discriminatory and precedential features of the proposals, we are opposed to all the measures providing a presumption of service-connected death.

In summary, with regard to DIC proposals, we recommend as follows, (i) favorable consideration of a $50 aid and attendance allowance for widows, (ii) that the presumption of service-connected death bills be not favorably considered, and (iii) deferral of consideration of all other dependency and indemnity compensation proposals pending completion of our review of the program.

B. PENSION PROPOSALS

This second category embraces bills which would provide libelalizations in our non-service-connected disability and death pension programs. We have arranged these measures in three groups.

(1) The first group is concerned with exclusions from annual income in determining eligibility for pension. Currently all payments are counted as annual income except as specifically excluded by law. Bills under consideration propose five additional exclusions: (a) annuity payments to the surviving spouse or children of a retired member of the Armed Forces, payable at the option of such member under the retired serviceman's family protection plan; (b) payments of servicemen's group life insurance; (c) amounts equal to prepayments on mortgages in certain cases; (d) amounts in joint bank accounts acquired by reason of death of a joint owner; and (e) payments by a former employer to a retired employee as reimbursement for premiums paid by the retiree for supplementary medical insurance benefits through the social security program. The proposed new annual income exclusions would permit

persons who are ineligible for pension because of excess income to become eligible therefor by not counting as income money actually available for their support. They are consequently not consonant with the philosophy of the Veterans' Administration pension programs which provide benefits based on need. Furthermore, they would discriminate in favor of certain classes of beneficiaries. Enactment of those five proposals is therefore not favored.

(2) The second type of pension proposals relates to present mandatory requirements for annual reports on income and net worth. One measure would remove the statutory requirement for such reports in cases of persons age 72 or older who have received pension for 2 or more years. This provision would reasonably assure submission of the reports for at least 2 years, thus affording ample opportunity to determine if income and net worth have stabilized in individual cases. The authority of the Administrator to require clarification and proof of income and net worth when indicated would be retained. Consonant therewith, the affected cases would be verified through random sampling or other techniques. We favor enactment of the mentioned proposal.

(3) The one proposal in this third classification of pension measures would increase the special allowances for serious disability which are presently available under our pension programs. The aid and attendance allowance of $100 per month for veterans would be increased 50 percent, to $150; and the veteran's housebound allowance of $40 would be increased 25 percent, to $50. The existing widow's pension aid and attendance allowance of $50 would also be increased 50 percent, to $75 monthly.

We believe it apparent that the proposed special allowance increases are not supportable on the basis of increases in the cost of living. Additionally, the proposal to increase the pension aid and attendance allowance for veterans to $150 monthly would bestow upon these veterans with non-service-connected disabilities a greater benefit than the $100 aid and attendance allowance now paid to certain veterans for service-connected disability. It is accordingly recommended that this proposal be not favorably considered.

C. DISABILITY COMPENSATION PROPOSALS

There are two types of measures in this category.

(1). One proposes to extend to otherwise eligible veterans who are receiving regularly scheduled hemodialysis, which is medically indicated,” the housebound rate of service connected disability compensation payable under current law and such rate would be payable for a period of 2 years after hemodialysis is discontinued. (In similar manner, the bill would also have application to the comparable provisions of the disability pension laws for “housebound” veterans.)

The question of whether a disability actually results in the veteran being housebound is one of fact which may be determined by evidence reflected in official physical examination or hospital reports, statements from persons who know of the facts, or evidence developed by field examination, social service survey, or other methods. The Veterans’ Administration has consistently held that occasional, or even daily, brief excursions from the house or hospital ward for therapeutic purposes will not preclude a finding that the individual concerned is housebound.

We know that as the result of individual factual determinations, the housebound rate of compensation has been authorized for a substantial number of veterans who are receiving regularly scheduled hemodialysis which is medically indicated. Nevertheless, with respect to those veterans who, while they are receiving required hemodialysis, are not confined to their homes, we are unable to justify the enactment of legislation which would require payment to them of the housebound rate of benefits, thus equating them with those individuals who are, in fact, housebound.

Under this bill, the housebound rate would continue for a period of 2 years after hemodialysis has been discontinued. Under current medical knowledge and skills, the discontinuance of required hemodialysis is likely only in cases involving the successful transplantation of a kidney. Any veteran who has received a transplanted kidney would require hospitalization for a considerable period and convalescence for a rather lengthy period thereafter. A veteran being paid disability compensation would, in accordance with the Veterans' Administration's schedule for rating disabilities, be rated as totally disabled during those periods. Moreover, if he is in fact housebound during these periods, he will be paid the housebound rate of compensation or pension even though the hemodialysis has been discontinued. However, once the individual has undergone a kidney transplantation and the transplanted kidney is functioning, he has no further need for hemodialysis. It clearly follows, we believe, that it would be improper to require, as the measure proposes, the payment of the increased rate of compensation or pension predicated on a need for hemodialysis during any period of time after the veteran's need for that treatment has ended.

(2) Another pending bill proposes to liberalize the provisions of law under which the Administrator is required to recoup from disability compensation otherwise payable to certain disabled veterans amounts of disability severance pay paid to such veterans by the service departments in lieu of disability retirement pay.

Experience has shown that in certain instances this mandatory recoupment provision has had harsh effects. For example, a disabled veteran may have elected disability severance pay at a time when his service-connected disability was minimal in degree. Later his condition increases in severity, possibly to a condition of total disability. Nevertheless, he is unable to receive any compensation from the Veterans' Administration until the lump sum severance pay, which may have been expended long before, has been fully recouped. This bill, which is proposed and recommended by the Veterans' Administration, would limit the rate at which the disability severance pay would be recouped to a monthly amount not in excess of the compensation to which the former member would currently be entitled, based on the degree of his disability as determined on the initial rating by the Veterans Administration. We believe that this approach, while precluding double compensation for the veterans concerned and ultimately permitting recoupment of the disability severance pay, would at the same time alleviate hardship situations that develop under the present law.

D. PROPOSALS ON RELATED MATTERS

The bills in this final category are divided into four groups.

(1) Measures in this subdivision propose a major liberalization with regard to payment of death benefits to widows of veterans. Under current law, widows who remarry are permanently barred from benefits administered by the Veterans' Administration unless the remar

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