[Congressional Record Volume 147, Number 131 (Wednesday, October 3, 2001)]
[Senate]
[Pages S10156-S10158]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (by request):
  S. 1488. A bill to amend title 38, United States Code, to authorize a 
cost-of-living adjustment in the rates of disability compensation for 
veterans with service-connected disabilities and dependency and 
indemnity compensation for the survivors of certain disabled veterans, 
to make modifications in the veterans home loan guaranty program, to 
make permanent certain temporary authorities, and for other purposes; 
to the Committee on Veterans' Affairs.
  Mr. ROCKEFELLER. Madam President, today I introduce legislation 
requested by the Secretary of Veterans Affairs, as a courtesy to the 
Secretary and the Department of Veterans Affairs, VA. Except in unusual 
circumstances, it will be my practice to introduce legislation 
requested by the administration so that such measures will be available 
for review and consideration.
  This ``by-request'' bill is titled the ``Veterans' Benefits Act of 
2001.'' It would, among other things, authorize a cost-of-living 
adjustment for fiscal year 2002 for VA disability compensation, make 
modifications the VA home loan guaranty program, and make permanent 
certain temporary authorities.
  I ask unanimous consent that the text of the bill and Secretary 
Principi's transmittal letter that accompanied the draft legislation be 
printed in the Record.
  There being no objection, the bill and the letter were ordered to be 
printed in the Record, as follows:

                                S. 1488

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES 
                   CODE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Veterans' 
     Benefits Act of 2001''.
       (b) References.--Except as otherwise expressly provided, 
     whenever in this Act an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of title 38, United States Code.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Section 1. Short title; references to title 38, United States Code; 
              table of contents.

                     TITLE I--COMPENSATION PROGRAM

Sec. 101. Increase in compensation rates and limitations.
Sec. 102. Rounding down of cost-of-living adjustments in compensation 
              and DIC rates.

                        TITLE II--HOUSING LOANS

Sec. 201. Vendee loan authority.
Sec. 202. Loan fees.
Sec. 203. Procedures on default.

            TITLE III--TEMPORARY AUTHORITIES MADE PERMANENT

Sec. 301. Income verification authority.
Sec. 302. Limitation on pension for certain recipients of medicaid-
              covered nursing home care.
Sec. 303. Health-care and medication copayments.
Sec. 304. Third-party insurance collections.

                     TITLE I--COMPENSATION PROGRAM

     SEC. 101. INCREASE IN COMPENSATION RATES AND LIMITATIONS.

       (a) Rate Adjustment.--The Secretary of Veterans Affairs 
     shall, effective on December 1, 2001, increase the dollar 
     amounts in effect for the payment of disability compensation 
     and dependency and indemnity compensation by the Secretary, 
     as specified in subsection (b).
       (b) Amounts To Be Increased.--The dollar amounts to be 
     increased pursuant to subsection (a) are the following:
       (1) Compensation.--Each of the dollar amounts in effect 
     under section 1114 of title 38, United States Code.
       (2) Additional compensation for dependents.--Each of the 
     dollar amounts in effect under section 1115(1) of such title.
       (3) Clothing allowance.--The dollar amount in effect under 
     section 1162 of such title.
       (4) New dic rates.--The dollar amounts in effect under 
     paragraphs (1) and (2) of section 1311(a) of such title.
       (5) Old dic rates.--Each of the dollar amounts in effect 
     under section 1311(a)(3) of such title.
       (6) Additional dic for surviving spouses with minor 
     children.--The dollar amount in effect under section 1311(b) 
     of such title.
       (7) Additional dic for disability.--The dollar amounts in 
     effect under sections 1311(c) and 1311(d) of such title.
       (8) DIC for dependent children.--The dollar amounts in 
     effect under sections 1313(a) and 1314 of such title.
       (c) Determination of Increase.--(1) The increase under 
     subsection (a) shall be made in the dollar amounts specified 
     in subsection (b) as in effect on November 30, 2001.
       (2) Except as provided in paragraph (3), each such amount 
     shall be increased by the same percentage as the percentage 
     by which benefit amounts payable under title II of the Social 
     Security Act (42 U.S.C. 401 et seq.) are increased effective 
     December 1, 2001, as a result of a determination under 
     section 215(i) of such Act (42 U.S.C. 415(i)).
       (3) Each dollar amount increased pursuant to paragraph (2) 
     shall, if not a whole dollar amount, be rounded down to the 
     next lower whole dollar amount.
       (d) Special Rule.--The Secretary may adjust 
     administratively, consistent with the increases made under 
     subsection (a), the rates of disability compensation payable 
     to persons within the purview of section 10 of Public Law 85-
     857 (72 Stat. 1263) who are not in receipt of compensation 
     payable pursuant to chapter 11 of title 38, United States 
     Code.
       (e) Publication Requirement.--At the same time as the 
     matters specified in section 215(i)(2)(D) of the Social 
     Security Act (42 U.S.C. 415(i)(2)(D)) are required to be 
     published by reason of a determination made under section 
     215(i) of such Act during fiscal year 2002, the Secretary 
     shall publish in the Federal Register the amounts specified 
     in subsection (b) as increased under this section.

[[Page S10157]]

     SEC. 102. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN 
                   COMPENSATION AND DIC RATES.

       (a) Compensation COLAs.--Section 1104(a) is amended by 
     striking out ``fiscal years 1998 through 2002.''
       (b) DIC COLAs.--Section 1303(a) is amended by striking out 
     ``fiscal years 1998 through 2002.''

                        TITLE II--HOUSING LOANS

     SEC. 201. VENDEE LOAN AUTHORITY.

       (a) Termination of Vendee Loan Authority.--Section 3733(a) 
     is amended by striking out paragraphs (1) and (2) in their 
     entirety and inserting in lieu thereof:
       ``(1) Prior to October 1, 2001, the Secretary may sell real 
     property acquired by the Secretary as the result of a default 
     on a loan guaranteed or made under this chapter with the 
     purchase financed by a loan made by the Secretary.''
       (b) Internal Revenue Code Amendment.--Section 6103(I)(7)(D) 
     of the Internal Revenue Code of 1986, is amended by striking 
     out ``Clause (viii) shall not apply after September 30, 
     2003.''

     SEC. 302. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF 
                   MEDICAID-COVERED NURSING HOME CARE.

       Section 5503(f) is amended by striking out paragraph (7).

     SEC. 303. HEALTH CARE AND MEDICATION COPAYMENTS.

       (a) Section 1710 is amended by striking out ``before 
     September 30, 2002,'' in subsection (f)(2)(B).
       (b) Section 1722A is amended by striking out subsection 
     (d).

     SEC. 304. THIRD-PARTY INSURANCE COLLECTIONS.

       Section 1729 is amended by striking out ``before October 1, 
     2002,'' in subsection (a)(2)(E).
                                  ____



                            The Secretary of Veterans Affairs,

                                       Washington, August 2, 2001.
     Hon. Richard B. Cheney,
     President of the Senate,
     Washington, DC.
       Dear Mr. Vice President: There is transmitted herewith a 
     draft bill, the ``Veterans' Benefits Act of 2001,'' to 
     authorize a cost-of-living adjustment (COLA) for fiscal year 
     (FY) 2002 in the rates of disability compensation and 
     dependency and indemnity compensation (DIC), to make 
     modifications in the veterans home loan guaranty program, to 
     make permanent certain temporary authorities, and for other 
     purposes. All of the bill's provisions are in support of the 
     President's FY 2002 budget request for the Department of 
     Veterans Affairs (VA). I request that this bill be referred 
     to the appropriate committee for prompt consideration and 
     enactment.
     Compensation and DIC COLA
       Section 101 of the draft bill would direct the Secretary of 
     Veterans Affairs to increase administratively the rates of 
     compensation for service-disabled veterans and of DIC for the 
     survivors of veterans whose deaths are service related, 
     effective December 1, 2001. As provided in the President's FY 
     2002 budget request, the rate of increase would be the same 
     as the COLA that will be provided under current law to 
     veterans' pension and Social Security recipients, which is 
     currently estimated to be 2.5 percent. We estimate that 
     enactment of this section would cost $376 million during FY 
     2002, $7.1 billion over the period FYs 2002-2006 and $27.6 
     billion over the period FYs 2002-2011. Although this section 
     is subject to the pay-as-you-go (PAYGO) requirement of the 
     Omnibus Budget Reconciliation Act of 1990 (OBRA), the paygo 
     effect would be zero because OBRA requires that the full 
     compensation COLA be assumed in the baseline. We believe this 
     proposed COLA is necessary and appropriate in order to 
     protect the benefits of affected veterans and their survivors 
     from the eroding effects of inflation. These worthy 
     beneficiaries deserve no less.
       Section 102 of the draft bill would amend 38 U.S.C. 
     Sec. Sec. 1104(a) and 1303(a), respectively, to provide that, 
     in calculating the cost-of-living adjustment in the rates of 
     disability compensation and dependency and indemnity 
     compensation pursuant to the enactment of authorizing 
     legislation governing payment of benefits in FY 2002 and 
     thereafter, the Secretary of Veterans Affairs shall round 
     down to the next lower whole dollar any rate that is not 
     evenly divisible by one dollar. Currently, section 1104(a) 
     requires the Secretary to utilize this round-down 
     calculation method during FYs 1998 through 2002. This 
     requirement was added by Public Law No. 105-33, 
     Sec. 8031(a)(1), 111 Stat. 251, 668 (1997). This section 
     was renumbered (from 1103 to 1104) by Public Law No. 105-
     368, Sec. 1005(a), 112 Stat. 3315, 3364 (1998). Section 
     102 is subject to the PAYGO requirement of OBRA. Enactment 
     of this section would result in no cost savings in FY 
     2002, but would result in savings of $14.5 million in FY 
     2003, $196 million over the period FYs 2002-2006 and $996 
     million over the period FYs 2002-2011.
     Housing Loans
       Section 201 of the draft bill would terminate, effective 
     October 1, 2001, the authority of the Secretary to provide 
     financing in connection with the sale of a single-family home 
     acquired by (VA) following the foreclosure of a loan 
     guaranteed or made by VA. Such financing is commonly referred 
     to as a ``vendee loan.'' After that date, purchasers of VA-
     owned properties would need to obtain financing from private 
     lenders. Vendee loans are not a veterans benefit. Currently, 
     all members of the public may purchase VA-owned homes and 
     obtain vendee financing. Veterans receive a very limited 
     preference with regard to purchasing such properties.
       Subsection (a) would amend 38 U.S.C. Sec. 3733 to terminate 
     vendee loans effective October 1, 2001, except with respect 
     to properties for which VA accepted a purchase before such 
     date.
       Subsection (b) would make a conforming amendment to 38 
     U.S.C. Sec. 3720 regarding the powers of the Secretary to 
     dispose of property acquired under the housing loan program.
       Section 201 is subject to the PAYGO requirement of OBRA. 
     Enactment of this section would result in a cost of $18 
     million in FY 2002, and then savings of $50 million over the 
     period FYs 2002-2006 and savings of $227 million over the 
     period FYs 2002-2011.
       Section 202 of the draft bill would make permanent the 
     increases in the fees collected from most veterans obtaining 
     or assuming a loan guaranteed, insured, or made by VA. These 
     increases were originally enacted by the Omnibus Budget 
     Reconciliation Act of 1993 (OBRA '93). OBRA '93 increased the 
     fees for most VA guaranteed housing loans by 75 basis points, 
     or 0.75 percent of the loan amount, and established a fee of 
     3 percent of the loan amount on veterans who obtain a second 
     no-downpayment loan under the VA program. The increased fees 
     are now set to expire on September 30, 2008.
       Section 202 is subject to the PAYGO requirement of OBRA. 
     The enactment of section 202 would not result in cost savings 
     until FY 2009. In FY 2009, cost savings would be $275 
     million, and cost savings for the period FYs 2002-2011 would 
     be $841 million.
       Section 203 would make permanent the VA ``no-bid formula'' 
     contained in 38 U.S.C. Sec. 3732(c). This formula determines 
     VA's liability to a loan holder under the guaranty and 
     whether or not the holder would have the election to convey 
     the property to VA following the foreclosure. As amended by 
     OBRA '93, the no-bid formula requires VA to consider, in 
     addition to other costs, VA's loss on the resale of the 
     property. The no-bid formula currently applies to all loans 
     closed before October 1, 2008.
       Section 203 is subject to the PAYGO requirement of OBRA. 
     The enactment of section 203 would not result in cost savings 
     until FY 2009. In FY 2009, $23 million would be saved as a 
     result of enactment of this section. Total savings from FYs 
     2002-2011 would be $2 million.
     Extension of Temporary Authorities
       Section 301 of the draft bill would amend 38 U.S.C. 
     Sec. 5317 and 26 U.S.C. Sec. 6103, respectively, to 
     permanently authorize VA to verify the eligibility of 
     recipients of, or applicants for, VA's needs-based programs 
     through data matching with the Internal Revenue Service and 
     the Social Security Administration. VA's authority under 38 
     U.S.C. Sec. 5317 expires on September 30, 2008. However, 
     authority under the Internal Revenue Code for this data 
     matching expires on September 30, 2003. This section is 
     subject to the PAYGO requirement of OBRA. Enactment of this 
     section would result in cost savings of $6 million in FY 
     2004, and would result in cumulative cost savings of $18 
     million for the period FYs 2002-2006 and $48 million for the 
     period FYs 2002-2011.
       Section 302 of the draft bill would make permanent the $90 
     limitation on monthly VA pension payments that may be made to 
     beneficiaries, without dependents, who are receiving 
     Medicaid-covered nursing-home care by removing the existing 
     September 30, 2008, expiration date set forth in 38 U.S.C. 
     Sec. 5503(f). By reducing pension income, this provision 
     reduces beneficiaries' share of their nursing home expenses. 
     State Medicaid programs pay the difference, with a percentage 
     of their expenditures reimbursed by the Federal government. 
     This section is subject to the PAYGO requirement of OBRA. 
     While section 302 would maintain higher State and Federal 
     Medicaid costs, enactment of this section would result in VA 
     cost savings of $527 million in FY 2009. VA cost savings for 
     the period FYs 2002-2011 would be $1.6 billion.
       Section 303(a) would amend 38 U.S.C. Sec. 1710(f)(2)(B) to 
     make permanent a requirement that veterans eligible for 
     health care under 38 U.S.C. Sec. 1710(a)(3) pay a copayment 
     of $10 for each day they receive VA hospital care. The 
     requirement that veterans pay the copayment expires on 
     September 30, 2002. Section 303(a) would also extend the 
     current $5 copayment for each day a veteran receives nursing 
     home care. However, that $5 copayment will continue only 
     until such time that VA publishes final regulations 
     establishing a new copayment for nursing home care in 
     accordance with requirements of 38 U.S.C. Sec. 1710B, a new 
     provision added to title 38 by the Millennium Health Care and 
     Benefits Act, Public Law No. 106-117. This section is subject 
     to the PAYGO requirement of OBRA; however, the PAYGO effect 
     would be zero because OBRA requires that collections be 
     assumed in the baseline. Enactment of this section would 
     result in continued collections of $8 million beginning in FY 
     2003. For FYs 2002-2006, the collections would total $40 
     million. For the period FYs 2002-2011, total collections 
     would be $80 million.
       Subsection (b) would amend 38 U.S.C. Sec. 1722A to make 
     permanent a requirement that certain veterans pay VA a 
     copayment for each 30-day supply of medication that they 
     receive on an outpatient basis. The requirement that veterans 
     pay the copayment expires on September 30, 2002. The 
     copayment amount is currently $2 for each prescription, but 
     section 1722A contains provisions allowing VA to increase the 
     copayment

[[Page S10158]]

     amount and VA is likely to increase the amount during FT 
     2002. This section is subject to the PAYGO requirement of 
     OBRA; however, the PAYGO effect would be zero because OBRA 
     requires that collections be assumed in the baseline. 
     Assuming continuation of only a $2 copayment, enactment of 
     this section would result in collections of $100 million in 
     FY 2003, $500 million over the period FYs 2002-2006, and $1 
     billion over the period FYs 2002-2011. In addition, enactment 
     of this section would allow VA to implement the provision of 
     the Veterans Millennium Health Care and Benefits Act 
     increasing co-payments, which would result in collections of 
     $268 million in FY 2003.
       Section 304 would amend 38 U.S.C. Sec. 1729(a)(2)(E) to 
     permanently authorize VA to collect from third-party private 
     insurers for care VA provides to insured service-connected 
     veterans for their nonservice-connected disabilities. Under 
     existing law, the authority to collect from insurers expires 
     on September 30, 2002. This section is subject to the PAYGO 
     requirement of OBRA; however, the PAYGO effect would be zero 
     because OBRA requires that collections be assumed in the 
     baseline. Enactment of this section would result in 
     collections of $591 million in FY 2003. It would result in 
     collections of $2.5 billion for the period FYs 2002-2006 and 
     $5.9 billion over the period FYs 2002-2011.
       Because this draft bill would affect direct spending and 
     receipts, it is subject to the PAYGO requirement of OBRA. The 
     Office of Management and Budget estimates that the provisions 
     authorized by this draft bill would result in a total PAYGO 
     cost of $19 million for FY 2002, but a PAYGO savings of $265 
     million for FYs 2002-2006, and $2.6 billion for FYs 2002-
     2011.
       The Office of Management and Budget has advised that there 
     is no objection to the submission of this legislative 
     proposal to the Congress, and that its enactment would be in 
     accord with the program of the President.
           Sincerely yours,
                                              Anthony J. Principi.
                                 ______