[Senate Report 109-138]
[From the U.S. Government Publishing Office]
Calendar No. 217
109th Congress Report
SENATE
1st Session 109-138
======================================================================
VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2005
_______
September 21, 2005.--Ordered to be printed
_______
Mr. Craig, from the Committee on Veterans' Affairs, submitted the
following
R E P O R T
[To accompany S. 1234]
The Committee on Veterans' Affairs (hereinafter,
``Committee''), to which was referred the bill (S. 1234) to
increase, effective as of December 1, 2005, the rates of
compensation for veterans with service-connected disabilities
and the rates of dependency and indemnity compensation for the
survivors of certain disabled veterans, having considered the
same, reports favorably thereon, and recommends that the bill
do pass.
INTRODUCTION
On June 14, 2005, Committee Chairman Larry E. Craig
introduced S. 1234, a bill to increase, effective as of
December 1, 2005, the rates of compensation for veterans with
service-connected disabilities and the rates of dependency and
indemnity compensation for the survivors of certain disabled
veterans. The bill was referred to the Committee on Veterans'
Affairs.
COMMITTEE HEARING
On June 23, 2005, the Committee held a hearing on
legislation pending before the Committee. Among the measures on
which the Committee received testimony was S. 1234. The
Committee received testimony from, among others,
representatives of the Department of Veterans Affairs
(hereinafter, ``VA''), and from representatives of The American
Legion, the Veterans of Foreign Wars, the Disabled American
Veterans, AMVETS, and the Paralyzed Veterans of America.
COMMITTEE MEETING
On July 28, 2005, the Committee met in open session to
consider legislation pending before the Committee. Among the
measures so considered was S. 1234. The Committee voted by
unanimous voice vote to report favorably S. 1234, as
introduced, to the Senate.
SUMMARY OF THE COMMITTEE BILL AS REPORTED
The Committee bill contains freestanding provisions that
would require the Secretary of Veterans Affairs to increase,
effective December 1, 2005, the rates of and limitations on
certain benefits paid by VA by the same percentage as the cost-
of-living adjustment (hereinafter, ``COLA'') provided to Social
Security recipients and VA pension beneficiaries that become
effective on the same date. The COLA would apply to:
1. basic compensation rates for veterans with service-
connected disabilities and the rates payable for certain severe
disabilities;
2. the allowance for spouses, children, and dependent
parents paid to service-connected disabled veterans rated 30
percent or more disabled;
3. the annual clothing allowance paid to veterans whose
compensable disability requires the use of a prosthetic or
orthopedic appliance (including a wheelchair) that tends to
tear or wear out clothing, or requires the use of a medication
prescribed by a physician for a service-connected skin
condition if the medication causes irreparable damage to the
veteran's outer garments; and
4. the dependency and indemnity compensation (hereinafter,
``DIC'') rates paid to:
(a) surviving spouses of veterans whose deaths were
service-connected;
(b) surviving spouses for dependent children;
(c) surviving spouses who are so disabled that they need
aid and attendance or are permanently housebound;
(d) surviving spouses covered under 38 U.S.C. Sec. 1318(b);
and
(e) the children of veterans whose deaths were service-
connected if no surviving spouse is entitled to DIC, the child
is age 18 through 22 and attending an approved educational
institution, or the child is age 18 or over and became
permanently incapable of self-support prior to reaching age 18.
The Congressional Budget Office (hereinafter, ``CBO'')
currently estimates that the COLA to be provided to Social
Security recipients in 2006 will be 2.3 percent.
DISCUSSION
BACKGROUND
Disability compensation
The service-connected disability compensation program under
chapter 11 of title 38, United States Code, provides monthly
cash benefits to veterans who have disabilities incurred or
aggravated during active duty in the Armed Forces.
The amount of compensation paid depends on the nature of
the veteran's disability or combination of disabilities and the
extent to which the disability impairs earning capacity. VA
rates compensable disabilities according to its Schedule for
Rating Disabilities on a graduated scale ranging from 0 to 100
percent, in 10 percent increments. VA pays higher monthly rates
(known as ``special monthly compensation'') to totally disabled
veterans with certain specific, very severe disabilities or
combinations of disabilities.
According to its fiscal year 2006 budget, VA estimates that
it will provide disability compensation to 2,688,248 veterans
with service-connected disabilities in fiscal year 2006. Among
the veterans estimated to receive such compensation are 12
World War I veterans; 347,126 World War II veterans; 162,549
Korean-conflict veterans; 944,799 Vietnam-era veterans; and
639,690 veterans of the Persian Gulf War era.
A veteran with a disability rated at 30 percent or more may
receive additional compensation on behalf of the veteran's
spouse, children, and dependent parents. These dependents'
allowances are prorated according to the percentage of
disability.
Dependency and indemnity compensation
Under chapter 13 of title 38, United States Code, VA pays
DIC to the survivors of servicemembers or veterans who died on
or after January 1, 1957, from a disease or injury incurred or
aggravated during military service. Survivors eligible for DIC
include surviving spouses, unmarried children under the age of
18, children age 18 or older who are permanently incapable of
self-support, children between the ages of 18 and 22 who are
enrolled in school, and certain needy parents. Under section
5312 of title 38, parents' DIC rates are adjusted automatically
at the same time and by the same percentage as Social Security
and VA pension benefits. Surviving spouses, children, and
parents who are receiving death compensation based on deaths
before January 1, 1957, may elect to receive DIC instead of
death compensation.
For deaths prior to January 1, 1993, surviving spouses
received DIC at rates determined by the pay grade (service
rank) of the deceased veteran. For deaths on or after January
1, 1993, surviving spouses currently receive $993 per month
and, if the deceased veteran was totally disabled for 8 years
prior to death, an additional $213 per month. Surviving spouses
who had been receiving benefits under the prior DIC program are
paid under whichever program will pay the higher benefit.
A surviving spouse who is so disabled as to be housebound
or in need of regular aid and attendance is eligible to receive
an additional amount. A surviving spouse also may receive
additional allowances on behalf of the veteran's surviving
children.
Children are entitled to DIC if there is no surviving
spouse, if they are 18 years or older and became permanently
incapable of self-support before reaching age 18, or if they
are 18 to 22 years old and pursuing an approved course of
education.
In its fiscal year 2006 budget, VA estimates that it will
pay DIC benefits to 335,081 survivors, a sum that includes
surviving spouses, children, and needy surviving parents.
Under section 1318(b) of title 38, VA pays benefits at DIC
rates to the surviving spouses and children of veterans whose
deaths are not service-connected if the veteran, immediately
prior to his or her death, had been receiving (or had been
entitled to receive) compensation at the 100 percent rate
continuously for 10 or more years or for at least 5 years from
the date of discharge or release from active duty. VA also pays
DIC benefits to the surviving spouses and children of veterans
who were former prisoners of war and, after September 30, 1999,
whose deaths were not service-connected if the veterans had
been receiving (or had been entitled to receive) compensation
at the 100 percent rate continuously for not less than one year
preceding death.
History of cost-of-living increases
The Committee periodically reviews the service-connected
disability compensation and DIC programs to ensure that the
benefits provide reasonable and adequate compensation for
disabled veterans and their families. Based on this review, the
Congress acts periodically to provide a cost-of-living
adjustment in compensation and DIC benefits. In fact, the
Congress has provided annual increases in these rates for every
fiscal year since 1976. The following table shows the
percentage increases since 1975.
HISTORY OF SERVICE-CONNECTED DISABILITY COMPENSATION INCREASES
(1975 TO PRESENT)
----------------------------------------------------------------------------------------------------------------
Increase Cumulative
Fiscal year Effective date (percent) (1969=$100)
----------------------------------------------------------------------------------------------------------------
1976.......................................... August 1975..................... 11.8 158.55
1977.......................................... October 1976.................... 8.0 171.23
1978.......................................... October 1977.................... 6.6 182.53
1979.......................................... October 1978.................... 7.3 195.86
1980.......................................... October 1979.................... 9.9 215.25
1981.......................................... October 1980.................... 14.3 246.03
1982.......................................... October 1981.................... 11.2 273.58
1983.......................................... October 1982.................... 7.4 293.82
1984.......................................... April 1983...................... 3.5 304.11
1985.......................................... December 1984................... 3.2 313.84
1986.......................................... December 1985................... 3.1 323.57
1987.......................................... December 1986................... 1.5 328.42
1988.......................................... December 1987................... 4.2 342.22
1989.......................................... December 1988................... 4.1 356.25
1990.......................................... December 1989................... 4.7 372.99
1991.......................................... December 1990\1\................ 5.4 393.13
1992.......................................... December 1991................... 3.7 407.68
1993.......................................... December 1992................... 3.0 419.91
1994.......................................... December 1993................... 2.6 430.83
1995.......................................... December 1994\2\................ 2.8 442.89
1996.......................................... December 1995\2\................ 2.6 454.41
1997.......................................... December 1996................... 2.9 467.59
1998.......................................... December 1997\2\................ 2.1 477.41
1999.......................................... December 1998\2\................ 1.3 483.62
2000.......................................... December 1999\2\................ 2.4 495.23
2001.......................................... December 2000\2\................ 3.5 512.56
2002.......................................... December 2001\2\................ 2.6 525.89
2003.......................................... December 2002\2\................ 1.4 535.88
2004.......................................... December 2003\2\................ 2.1 547.13
2005.......................................... December 2004\2\................ 2.7 561.90
2006.......................................... December 2005\2\................ \3\2.3 \3\574.82
----------------------------------------------------------------------------------------------------------------
\1\Payment of the December 1990 increase was delayed until January 1992 by section 8005(b) of Public Law 101-
508.
\2\December 1994-1995 and 1997-2006 increases are rounded to the next lower dollar amount pursuant to sections
2(c)(2) of Public Law 103-418 and Public Law 104-57, section 8031 of Public Law 105-33 and section 205 of
Public Law 107-103, and section 706 of Public Law 108-183.
\3\Estimate.
COMMITTEE BILL
The Committee bill would direct VA to compute and provide
increases in the monthly rates of compensation and DIC,
effective December 1, 2005. The rates would be increased by the
same percentage as the Social Security and VA pension COLA that
will take effect on that date. In accordance with section 8031
of the Balanced Budget Act of 1997 (Public Law 105-33), amounts
of compensation so computed that are not even multiples of $1
will be rounded down to the next lower whole dollar amount. In
2003, this provision was extended until 2013 by section 706 of
Public Law 108-183.
The increases in DIC automatically would result in
identical percentage increases in benefits paid at DIC rates
under section 1318 of title 38, United States Code, to the
surviving spouses and children of veterans who had a service-
connected disability at the time of death for which they
continuously were rated totally disabled for at least (1) 10
years, (2) 5 years from the date of discharge from active duty,
or (3) 1 year if the veteran was a former prisoner of war.
Under section 156(e)(1)(A) of Public Law 97-377, the DIC
increases also automatically would result in the same
percentage increases in Social Security benefits that were
terminated by section 2205 of the Omnibus Budget Reconciliation
Act of 1981 (hereinafter, ``OBRA 1981'') (Public Law 97-35).
Prior to OBRA 1981, those benefits had been paid to certain
surviving spouses of those who died on active duty or from a
service-connected disability on behalf of their children under
18 and children over age 19 who were secondary-school students;
OBRA 1981 reduced the eligibility cutoff age from 18 to 16
years old.
Section 314 of Public Law 100-322 amended section 156(a)(1)
of Public Law 97-377 to restore the benefits eliminated by the
OBRA 1981. The DIC increase also would apply to these restored
benefits, effective December 1, 2000.
The Congressional Budget Office (hereinafter, ``CBO''), in
its most recent baseline, estimated that the Social Security
COLA affecting fiscal year 2006 payments, and thus the COLA
provided for by the Committee bill, will be 2.3 percent. The
actual Social Security COLA could differ from this estimate.
Rather than selecting any particular percentage adjustment at
the time the Committee ordered the bill reported, the Committee
followed its prior practice of setting the COLA by reference to
the Social Security increase. The Committee believes this is
the most equitable means of providing increases in these
important service-connected benefits.
COST ESTIMATE
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the Committee, based on
information supplied by the CBO, estimates that enactment of
the Committee bill would, relative to current law, increase
spending by $538 million in 2006 and by $720 million annually
in subsequent years, but that such increases in spending are
assumed in the budget resolution baseline and thus will have no
budgetary effect relative to the baseline. Enactment of the
Committee bill would not affect the budget of state, local, or
tribal governments.
The cost estimate provided by CBO, setting forth a detailed
breakdown of costs, follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 3, 2005.
Hon. Larry E. Craig,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman. The Congressional Budget Office (CBO)
has prepared the enclosed cost estimate for S. 1234, the
Veterans' Compensation Cost-of-Living Adjustment Act of 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
S. 1234--Veterans' Compensation Cost-of-Living Adjustment Act of 2005
S. 1234 would increase the amounts paid to veterans for
disability compensation and to their survivors for dependency
and indemnity compensation by the same cost-of-living
adjustment (COLA) payable to Social Security recipients. The
increase would take effect on December 1, 2005, and the results
of the adjustment would be rounded to the next lower dollar.
The COLA that would be authorized by this bill is assumed
in CBO's baseline, pursuant to section 257 of the Balanced
Budget and Emergency Deficit Control Act, and savings from
rounding it down were achieved by the Balanced Budget Act of
1997 (Public Law 105-33) and extended to 2013 by the Veterans
Benefits Act of 2003 (Public Law 108-183).
Because the COLA is assumed in CBO's baseline, the COLA
provision would have no budgetary effect relative to that
baseline. Relative to current law, CBO estimates that enacting
this provision would increase spending for these programs by
$538 million in 2006. (The annualized cost would be $720
million in subsequent years.) This estimate assumes that the
COLA effective on December 1, 2005, would be 2.3 percent.
S. 1234 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
On June 29, 2005, CBO transmitted a cost estimate for H.R.
1220, the Veterans' Cost-of-Living Adjustment Act of 2005, as
ordered reported by the House Committee on Veterans' Affairs on
June 23, 2005. H.R. 1220, as ordered reported, contains
provisions that are not included in S. 1234--specifically,
provisions that would increase the amount of additional
assistance paid to surviving spouses with dependent children
under age 18; direct the Department of Veterans Affairs (VA) to
conduct a demonstration project to improve business practices
within the Veterans Health Administration for recovering
payments from third-party payors; and authorize VA to establish
six centers to conduct research, education, and clinical
activities related to Parkinson's disease. Differences in the
estimated costs reflect differences in the two bills.
On June 2, 2005, CBO transmitted a cost estimate for H.R.
1220, as introduced on March 10, 2005. S. 1234 contains similar
language to H.R. 1220, as introduced, and the associated costs
are identical.
The CBO staff contact is Dwayne M. Wright. This estimate
was approved by Peter H. Fontaine, Deputy Assistant Director
for Budget Analysis.
REGULATORY IMPACT STATEMENT
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee on Veterans'
Affairs has made an evaluation of the regulatory impact that
would be incurred in carrying out the Committee bill. The
Committee finds that S. 1234 would not entail any regulation of
individuals or businesses or result in any impact on the
personal privacy of any individuals and that the paperwork
resulting from enactment would be minimal.
TABULATION OF VOTES CAST IN COMMITTEE
In compliance with paragraph 7 of rule XXVI of the Standing
Rules of the Senate, the following is a tabulation of votes
cast in person or by proxy by members of the Committee on
Veterans' Affairs at its July 28, 2005, meeting. On that date,
the Committee, by unanimous voice vote, ordered to report S.
1234, a bill to increase, effective as of December 1, 2005, the
rates of compensation for veterans with service-connected
disabilities and the rates of dependency and indemnity
compensation for the survivors of certain disabled veterans.
AGENCY REPORT
On June 23, 2005, VA Under Secretary for Benefits, the
Honorable Daniel L. Cooper, appeared before the Committee on
Veterans' Affairs and submitted testimony on, among other
things, S. 1234. Excerpts from this statement are reprinted
below:
statement of daniel l. cooper, under secretary for benefits, department
of veterans affairs
Mr. Chairman and members of the Committee, I appreciate
this opportunity to testify today on several bills concerning
important programs administered by the Department of Veterans
Affairs (VA).
* * * * * * *
S. 1234
Section 2 of S. 1234, the ``Veterans' Compensation Cost-of-
Living Adjustment Act of 2005,'' would direct the Secretary of
Veterans Affairs to administratively increase the rates of
disability compensation for veterans with service-connected
disabilities, additional compensation for their dependents, the
clothing allowance, and dependency and indemnity compensation
for the survivors of veterans whose deaths are service related,
effective December 1, 2005. As provided in the President's
fiscal year (FY) 2006 budget request, the rate of increase
would be the same as the cost-of-living adjustment (COLA) that
will be provided under current law to veterans' pension and
Social Security recipients. We believe this proposed COLA is
necessary and appropriate to protect the benefits of affected
veterans from the eroding effects of inflation. These worthy
beneficiaries deserve no less.
We estimate that enactment of this bill would cost $399
million during FY 2006 and $5.5 billion over the period FYs
2006-2015. However, because the cost is already assumed in the
Budget baseline, enactment of this provision would not result
in any additional cost.
* * * * * * *
CHANGES IN EXISTING LAW MADE BY THE COMMITTEE BILL AS REPORTED
Since the Committee bill would not repeal or amend any
provisions of current law, this report does not contain the
material described in clauses (a) and (b) of paragraph 12 of
rule XXVI of the Standing Rules of the Senate.