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Enactment of section 7 would give the aged veteran who is able to defray medical costs access to a Veterans' Administration bed when otherwise he would not qualify and in some instances would deprive a younger veteran of prompt admission for needed care who is clearly unable to defray the cost. To this extent the bill is discriminatory. It would inspire unfavorable comparisons at the community level and subject the entire veterans hospital program to criticism.

We note that this section is similar in purpose to section 1 of H.R. 693 which passed the House on June 2, 1969, and is now pending before the Senate Committee on Labor and Public Welfare.

For the outlined reasons, we are unable to recommend favorable consideration of this proposed amendment to section 622 of title 38, United States Code.

On the basis of current estimates, enactment of section 7 could be expected to generate an additional census of approximately 1,000 patients at an additional cost of $1,825,000 for the first year. It is further estimated that by the third year, and thereafter, the number of patients annually would approximate 2,000 at an annual cost of approximately $3,650,000.

Section 8 of H.R. 372 would set January 1, 1969, as the effective date of the proposal. The bill, if favorably considered, should be prospective in effect, and because of budget stringencies we recommend an effective date of July 1, 1970. This amendment would require changing the date December 31, 1968, in line 21, page 2, and line 21, page 3, to June 30, 1970.

This will also serve as a response to your requests for reports on (a) H.R. 2091, H.R. 3281, H.R. 7767, H.R. 9125, H.R. 9455, H.R. 9876, and H.R. 12411, which_bills are identical with or similar in purpose to H.R. 372; (6) H.R. 687, H.R. 3304, H.R. 3326, H.R. 5517, H.R. 7451, and H.R. 7735, which have the same or similar objective as section 1 of H.R. 372; (c) H.R. 3325, H.R. 4597, H.R. 6263, H.R. 7629, H.R. 7790, and H.R. 8638, which relate to removal of income reporting requirements; and (d) H.R. 369, H.R. 3077, H.R. 3302, and H. Ř. 6983, which propose an exclusion from annual income of inherited bank accounts, like one of the exclusions provided by section 6 of H.R. 372.

In summary, except for sections 6 and 7 we favor enactment of H.R. 372 with the suggested amendments.

Advice has been received from the Bureau of the Budget that there is no objection to the presentation of this report from the .standpoint of the administration's program. Sincerely,

FRED B. RHODES,
Deputy Administrator,

(For and in the absence of DONALD E. JOHNSON, Administrator.

VETERANS' ADMINISTRATION,
OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS,

Washington, D.C., August 29, 1969.
Hon. OLIN E. TEAGUE,
Chairman, Committee on Veterans' Affairs,
House of Representatives,
Washington, D.C.

DEAR MR. CHAIRMAN: We are pleased to respond to your request for a report on H.R. 3079, 91st Congress.

The purpose of the bill is to authorize in certain cases payment of service-connected dependency and indemnity compensation to the widow, children, and parents of a veteran who died of a non-serviceconnected cause, but was at the time of his death in receipt of, or entitled to receive, compensation for a service-connected disability which had been permanently and totally disabling for 20 or more years. The proposal would not apply where death occurred as a result of accidental causes having no relationship to the service-connected disability.

Non-service-connected death pension based upon need is payable by the Veterans' Administration to qualified widows and children of war veterans. In cases of service-connected deaths, dependency and indemnity compensation is payable to widows and children of veterans of war or peacetime service without regard to need and at higher rates than are generally applicable to pension in non-service-connected cases. Death pension is not payable to parents, but they may qualify for dependency and indemnity compensation for a service-connected death on the basis of income.

Where service-connected disability is found to be the principal or contributory cause of death, such death is considered to be service connected. These determinations are made on a very liberal basis. For example, there are disabilities which by their very nature are so overwhelming that eventual death can be anticipated irrespective of coexisting conditions. Even though such disabilities are non-serviceconnected and the primary cause of death, consideration is given as to whether the coexisting service-connected conditions were of such severity as to have a material influence in accelerating death. Where death has been so accelerated it will be considered service connected.

Under H.R. 3079, certain non-service-connected deaths would be conclusively presumed service connected if, at the time of the veteran's death he was in receipt of, or entitled to receive, compensation for a service-connected disability which had been permanently and totally disabling for 20 or more years. Such presumption of service connection would be specifically inapplicable where death occurred as a result of accidental causes having no relation to the service-connected disability.

The proposal would thus place the survivors of certain veterans who die of a non-service-connected cause on a parity with the survivors of veterans who die of an actually service-connected cause. In the cases of war service veterans, the bill would have the liberalizing effect of providing (a) greater benefits for widows and children with no requirement as to need; and (b) basic eligibility of parents for benefits where none now exists. In the cases of veterans of peacetime service, the bill would provide basic eligibility for widows, children, and parents, for monetary death benefits where none now exists.

By presuming, contrary to the evidence, service-connection as to cause of death in cases covered by H.R. 3079, enactment of the bill would constitute a major departure from the policy of the Congress in maintaining separate systems of monetary benefits for deaths due to service and those not due to service. Its enactment would be tantamount to superimposing on the present pension program new nonservice-connected death benefits equivalent to the present serviceconnected benefits, and would result in new and highly discriminatory benefits for surviving dependents of certain disabled veterans.

This will also serve as a report on H.R. 13166, 91st Congress, which is similar in principle to H.R. 3079 except it would not make the

presumption of service connection inapplicable where death occurred as a result of accidental causes having no relation to the service-connected disability. H.R. 13166 would further extend the presumption of service connection to death compensation cases under chapter 11, title 38, United States Code.

Due to the lack of necessary data, we are unable to estimate the cost of either bill, if enacted.

The Veterans Administration believes that existing law 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 a finding.

For these reasons, and in view of the discriminatory and precedential features of H.R. 3079 and H.R. 13166, I recommend that the bills be not favorably considered.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely,

FRANK B. RHODES,

Deputy Administrator

(For and in the absence of Donald E. Johnson, Administrator).

VETERANS' ADMINISTRATION,
OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS,

Washington, D.C., August 29, 1969.
Hon. OLIN E. TEAGUE,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: We are pleased to respond to your request for a report on H.R. 4613, 91st Congress.

The purpose of the bill is to eliminate the present restriction on the payment of dependency and indemnity compensation in certain cases where death of a veteran occurs while his U.S. Government or National service life insurance is in force under the in-service waiver of premium provisions of 38 U.S.C. 724.

Public Law 23, 82d Congress (65 Stat 33), effective April 25, 1951, terminated the general authority of the Government to issue national service life insurance to members of the Armed Forces. It substituted therefor automatic free $10,000 maximum servicemen's indemnity benefits for death in active service. Such benefits were reduced by any amount of Government life insurance in force at the time of death.

Persons in active service who were insured under U.S. Government life insurance or national service life insurance policies could lapse or cash-surrender their policies and be protected under the free servicemen's indemnity program, or they could apply for and be granted waiver of all premiums on term insurance and the pure insurance risk portion of the premiums on permanent plan insurance.

Public Law 881, 84th Congress (70 Stat 857), effective January 1, 1957, consolidated the servicemen's indemnity and death compensation programs into a dependency and indemnity compensation program for survivors of veterans whose deaths were service connected. It provided generally that no dependency and indemnity compensation shall be paid to a widow, child, or parents of any veteran dying after April 30, 1957, having in effect at the time of such death a policy of U.S. Government life insurance or national service life insurance under the mentioned in-service waiver of premium provisions. In such cases, the survivors may receive only death_compensation payments. The new law terminated the right to apply for in-service waivers and permitted servicemen a period of 4 months (January 1 through April 30, 1957) during which they could elect to terminate such waivers and pay the insurance premiums.

H.R. 4613 would remove the restriction on payments of dependency and indemnity compensation to the otherwise eligible widow, children, or parents of any veteran dying after April 30, 1957, with an in-service waiver of premiums, by repealing 38 U.S.C. 417(a). The bill also re

peals the authority (38 U.S.C. 321, 341, and 417(a)) to pay death compensation in such cases.

It is estimated that H.R. 4613 would benefit 3,400 veterans' survivors the first year at a cost of $3,500,000. The cost should remain about the same in the succeeding four years.

This will also serve as a report on H. Ř. 13396, 91st Congress, which has the same general purpose as H.R. 4613.

The dependency and indemnity compensation program is under continuing study. Our review thus far has revealed certain potential problem areas, including the restriction on payment of dependency and indemnity compensation which would be removed by the bills covered by this report. We have not completed our analysis, however, to the point of reaching a decision on a supportable comprehensive approach for remedial action.

It is accordingly recommended that the committee defer consideration of the subject measures pending completion of our review of the dependency and indemnity compensation program.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely,

FRED B. RHODES,
Deputy Administrator,

(For and in the absence of Donald E. Johnson, Administrator.)

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